The Obama administration is “committed to turning the heat up” on Medicare and Medicaid fraud, Health and Human Services Secretary Kathleen Sebelius said as the government announced a new string of indictments alleging $50 million in false Medicare claims.

According to the Wall Street Journal, the U.S. spends $800 billion a year on Medicare and Medicaid, $60 billion of which is estimated to be lost to fraud.

The indictments announced yesterday involved 53 doctors, health-care workers and patients and resulted in arrests in Detroit, Miami and Denver after a joint investigation by HHS and the Justice Department. The alleged schemes focused mainly on the use of “phony prescriptions, cash kickbacks and stolen Medicare and physician ID numbers,” which have all been widely used in schemes in South Florida, according to the Miami Herald.

On 21 May 2009 the Office of Inspector General (OIG) issued an advisory opinion clarifying and confirming its position with respect to on-call compensation arrangements. In Advisory Opinion No. 09-05, the OIG reviewed a proposed arrangement in which a hospital would compensate physicians for on-call services performed on behalf of the hospital’s uninsured patients. The OIG concluded that while the proposed arrangement could potentially generate prohibited remuneration under the anti-kickback statute, it would not impose administrative sanctions on the arrangement.

In the proposed arrangement a 400-bed hospital participates in the state’s Disproportionate Share Hospital program and an on-call coverage policy would be a part of the Hospital’s Bylaws. Under the policy, participating physicians could submit claims to the Hospital for payment for services rendered to certain indigent and uninsured patients. The participating physicians would have to provide on-call coverage in accordance with the Medical Staff on-call schedule.

The OIG noted that while there is “substantial risk that improperly structured payments for on-call coverage could be used to disguise unlawful remuneration” under the anti-kickback statute, the proposed arrangement included the following adequate safeguards against such abuse:

• The payment amounts were fair market value for services rendered regardless of referrals or other business between the parties. The OIG also noted that no “lost opportunity” payments or “other amorphous payments” will be made.
• The hospital had a legitimate rationale for revising its on-call coverage policy (physicians were refusing to provide on-call services).
• The proposed arrangement would be offered uniformly to all physicians on staff, the method of scheduling on-call coverage would be governed by the hospital’s medical staff by-laws, would be uniform within each department or specialty, and would not be used to selectively reward the highest referrers.
• The proposed arrangement is an “equitable mechanism for the Hospital to compensate physicians who actually provide care that the Hospital must furnish to be eligible for the Program funding.”

The OIG expressed its preference for compensation arrangements in which payments are “tailored to cover substantial, quantifiable services, [all or a substantial portion of which] will be furnished to uninsured patients in the ED . . . .” And, the OIG contrasts these payments with “payments that are less plainly tied to tangible physician responsibilities, and which may represent little more than illicit payments for referrals.” In short, the OIG seems focused on, and willing to approve, payments for services rendered rather than payments for “opportunities lost” through on-call coverage.

Effective on 1 July 2009, Indiana corporations will need to revise the manner in which they structure written shareholder consents. Indiana Code § 23-1-29-4 has previously required that written shareholder consents be signed, dated and delivered to the corporation. Now, in order to be effective, written consents of shareholders must also bear the date of the signatures. The new law is a result of Senate Bill 450, which was signed into law on 12 May 2009.

Although shareholder written consents must now bear the date of any signatures, the consent may still have a retroactive effective date so long as such retroactive dating is not otherwise prohibited by the Articles, Shareholder Agreement or by law.

Senate Bill 450 made no similar changes in I.C. § 23-1-34-2, which governs written consents of actions by a corporation’s board of directors. However, a provision was added requiring that written consents of a board of directors must be delivered to the corporate secretary in order to be effective. Previously such written consents merely needed to be included in the minutes or filed with the corporate records.

All of these changes affect the Indiana Business Corporation Law, as amended, in Indiana Code § 23-1. They do not affect written consents of limited liability companies which are governed pursuant to Indiana Code § 23-18.

A recent “Red Flag Rule” aimed at curbing identity theft among creditors will affect many health care providers because of the Rule’s broad definition of “creditors”. The Federal Trade Commission’s mandatory compliance date is 1 August 2009, so it is crucial that applicable healthcare providers act swiftly to implement a written Program.

The Rule is aimed at addressing “red flags” (e.g., patterns, practices or activities) that indicate possible identity theft by requiring the establishment of a written identity theft prevention Program. The Rule requires covered entities to implement a Program to (i) identify red flags relevant to identity theft, (ii) detect red flags incorporated into the Program, (iii) respond appropriately to red flags, and (iv) ensure that the Program is updated periodically as needed. The Program must be approved and administered by the entity’s board of directors (or senior management).

The FTC – the agency which enforce the Rule – has taken the position that the Rule applies to any entity that establishes an ongoing relationship to provide goods or services for personal, family or household purposes with the expectation of subsequent or multiple payments.

Few health care providers collect all fees at or before the times of service, and since health care services are often provided in the context of an ongoing relationship for personal or family purposes, nearly all health care providers will be considered “creditors” and subject to the Rule.
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A relatively poor economy may be tightening the bottom line of some medical practices, but at least one silver lining is the return of some nurses back to the workforce, helping alleviate what had previously been a shortage. The Wall Street Journal reports:

Nearly a quarter-million nurses entered the work force in 2007-08, an 18% surge that was the largest two-year increase in at least three decades . . . About half the increase over the period came from nurses over age 50.