AC_Mar2011_Kerry - The American Health Lawyers Association

ahla
March 2011 Volume 15 Issue 3
For the health and life sciences law community
Don’t Miss AHLA’s ACO Program
and Medicare/Medicaid Institute
(page 7)
Incorporating Employed
Physicians into an ACO:
Easy as Pie?...
or Recipe for Disaster?
(page 12)
A “Responsible Corporate
Officer” Defense Plan
(page 28)
OFFICIAL MAGAZINE OF AmericaN Health Lawyers AssOCIAtion

In this issue
COLUMNS
1 First Reflections
This month, AHLA President Rick
Shackelford looks at the hot topic
of Accountable Care Organizations
(ACOs) and the potential they have to
transform the healthcare industry, and
where members can find the information
they need to understand ACOs.
40 Last Word
AHLA CEO Peter Leibold reflects
the different types of friendships
formed through AHLA, with
members and sponsors. the many
friendships he has formed through
his work with AHLA, and the ways
AHLA members and supporters
have also bonded through shared
experiences.
DEPARTMENTS
12
22
28
Incorporating Employed Physicians into an ACO:
Easy as Pie? . . . . or Recipe for Disaster?
This month’s Feature article, by Maria Greco Danaher, Ogletree Deakins Nash
Smoak & Stewart PC, discusses issues related to the direct employment of physicians
by hospitals and healthcare systems and how the formation of an ACO might affect
such relationships.
Attack of the Medicaid RACs
In this month’s Member Forum, Sara Kay Wheeler and Stephanie L. Fuller of King
& Spalding LLP, give an overview of the anticipated framework of the Medicaid
Recovery Audit Contractor (RAC) program, given the guidance that has been
released by CMS to date, since providers will soon face additional RAC scrutiny.
A “Responsible Corporate Officer” Defense Plan
This month’s Analysis, by Michael W. Peregrine and Joshua T. Buchman, McDermott
Will & Emery LLP, details new developments related to the Responsible Corporate
Officer Doctrine’s application in the healthcare industry.
6 Connections to Learning
10 2011 Annual Meeting
and In-House Counsel
Program
18 Public Interest
22 Member Forum
26 Young Professionals
28 Analysis
33 Member News
35 Classified Advertising
Postmaster: Send address changes to AHLA
Connections, AMERICAN HEALTH LAWYERS
ASSOCIATION, 1620 Eye Street, NW, 6th Floor,
Washington, DC 20006-4010.
Printed on Recycled Paper
2 AHLA Connections March 2011

Member Forum
Attack of the Medicaid RACs
By Sara Kay Wheeler and Stephanie L. Fuller, King & Spalding LLP, Atlanta, GA
Providers will soon face additional Recovery Audit
Contractor (RAC) scrutiny, as Section 6411 of the
Patient Protection and Affordable Care Act of 2010, 1
as amended by the Health Care and Education
Reconciliation Act of 2010 2 (collectively, PPACA),
expands the RAC program to Medicaid. 3 Like
Medicare Part A and Part B RACs, Medicaid RACs
are charged with identifying overpayments and
underpayments. 4 This article provides an overview of the
anticipated Centers for Medicare and Medicaid Services (CMS)
framework of the Medicaid RAC program, given the guidance
that has been released by CMS to date.
Goal of the Medicaid RAC Program
The purpose of the Medicaid RAC program is to identify
improper Medicaid payments. CMS estimates that the
Medicaid RAC program could save the federal Medicaid
program $80 million in fiscal year (FY) 2011, $170 million in
FY 2012, $250 million in FY 2013, $310 million in FY 2014, and
$330 in FY 2015. 5 CMS notes, however, that these estimates
are “highly uncertain.” 6 It is clear that states currently are
under pressure to balance their budgets, given that Medicaid
spending has expanded dramatically while state revenue has
declined.
CMS Prepares for Medicaid RAC Implementation
CMS is preparing for the implementation of the Medicaid
RAC program. 7 CMS issued a proposed rule for the Medicaid
RAC program on November 10, 2010 (the Proposed Rule).
According to the Proposed Rule, states must contract with one
or more Medicaid RACs. States were required to submit a State
Plan Amendment attesting that the state will either establish a
Medicaid RAC program or seek exemption from the program
by December 31, 2010, unless the state requested, and CMS
granted, an extension. Importantly, CMS makes clear in the
Proposed Rule that Medicaid RACs are not intended to replace
current Medicaid program integrity or audit efforts.
Industry participants naturally are wondering when to expect
Medicaid RAC activity. Originally, CMS proposed an April 1,
2011, implementation date for state Medicaid RAC programs. 8
On February 1, 2011, however, CMS issued a bulletin specifying
that states will not be required to implement their
Medicaid RAC programs by April 1, 2011. 9 Rather, a new
implementation date will be published in the Medicaid RAC
Final Rule. CMS did not provide additional insight on when it
expects to issue the Final Rule other than it will be issued later
this year. 10
While CMS has not issued the Final Rule, the Proposed
Rule provides some insight on the likely scope of the Medicaid
RAC program. States are required to contract with one or more
Medicaid RACs to audit Medicaid claims to identify underpayments
and overpayments. 11 Medicaid RACs will review
post-payment claims consistent with state laws and regulations.
12 Like Medicare Part A and Part B RACs, Medicaid
RACs will be compensated on a contingency fee basis for the
identification of overpayments. While CMS is allowing states
some flexibility in determining the specific Medicaid RAC
payment formula, resulting contingency fees may not exceed
that of the highest contingency fee Medicare RAC arrangement—which
is currently 12.50%—unless the state submits,
and CMS approves, a waiver of the specified maximum contingency
rate. 13 Any amount exceeding the specified maximum
rate is not eligible for federal financial participation, unless
a waiver of the specified maximum rate has been approved
by CMS. 14 With respect to the identification of underpayments,
the Proposed Rule provides that states may establish a
set fee or reimburse Medicaid RACs on a contingency basis. 15
In addition, while providers must be permitted to appeal
Medicaid RAC determinations, states may utilize their current
appeals structure to handle such appeals. 16 Comments on the
Proposed Rule were due January 10, 2011. Not surprisingly,
several industry participants including, but not limited to, the
Federation of American Hospitals (Federation), the American
Hospital Association (AHA), and former and current Medicare
Part A and Part B RAC contractors submitted comments on
the Proposed Rule.
Medicaid RAC Programs Likely to Vary State to State
As the Proposed Rule indicates, states will have broad discretion
regarding the Medicaid RAC program design and the
number of RACs with which they elect to contract. According
to a supporting statement CMS released in September 2010,
this discretion will enable states to tailor RAC activities to the
uniqueness of their Medicaid program and target areas prone
to improper Medicaid payments. 17 Accordingly, Medicaid RAC
programs are likely to vary from state to state. Although CMS
has not issued the Final Rule, states are beginning to issue
requests for proposals (RFPs). A review of some of the RFPs
issued to date confirms that the structure of the state Medicaid
RAC programs will vary unless CMS issues additional boundaries
in the Final Rule.
For instance, should CMS not establish a national lookback
period in the Final Rule, providers operating in multiple
states would likely be subject to different look-back periods.
For example, the Mississippi Medicaid RAC RFP provides that
22 AHLA Connections March 2011

Medicaid RACs will not be permitted to review claims prior
to January 1, 2008, while Ohio’s Medicaid RAC RFP suggests
that Medicaid RACs may not review claims more than five
years past the date of the initial determination. In addition,
the type of Medicaid claims subject to Medicaid RAC review
may vary if CMS does not outline the specific Medicaid claims
(e.g., Medicaid fee-for-service and/or Medicaid managed care)
subject to Medicaid RAC review in the Final Rule. As noted,
the AHA submitted comments on the Proposed Rule and
urged CMS to exclude Medicaid managed care claims from
Medicaid RAC review. 18 Notably, the Ohio Medicaid RAC RFP
provides that Medicaid RACs are only permitted to review
Medicaid fee-for-service claims. Thus, it is conceivable that
the types of Medicaid claims subject to Medicaid RAC review
could also vary state to state.
While the precise limits of Medicaid RAC reviews remains
uncertain at this point, one thing is clear, states will influence
the structure of their Medicaid RAC programs. Thus,
providers operating in multiple states will need to understand
the specific Medicaid RAC framework for each state in which
they operate.
• Thomson Reuters
Medicaid (Review of Provider
MIC)
Thomson Reuters
(Review of Provider MIC)
Health Integrity
(Audit MIC)
Strategic Health Solutions
(Education MIC) MIC)
Medicaid Fraud Control Unit of Georgia
(MFCU) Control Unit of
Medicaid RAC(s) (TBD)
Medicaid
• Health Integrity
(Audit MIC)
• Strategic Health
Solutions (Education
• Medicaid Fraud
Georgia (MFCU)
• Medicaid RAC(s)
(TBD)
* Atlanta
Potential Fraud
AdvanceMed Corporation
(ZPIC, Zone 5)
Duplication of Audits
Given that providers are already subject to audits by an array
of entities including, but not limited to, Medicare Administrative
Contractors (MACs), Medicare Part A and Part B RACs,
Zone Program Integrity Contractors (ZPICs), Program Safeguard
Contractors (PSCs), and Medicaid Integrity Contractors
(MICs), the addition of Medicaid RACs into the already
crowded contractor landscape creates some concern as to
how Medicaid RAC audit efforts will be coordinated so as to
avoid duplicative audits. 19 To illustrate the proliferation of the
contractor landscape, below is a map of the various contractors
authorized to review provider claims in Georgia.
As providers are well aware, Medicaid claims already
are subject to audits by the federal MIC program. While
the Proposed Rule provides that states need to ensure that
Medicaid RAC audits do not overlap audit efforts of other
government contractors and state and federal law enforcement
entities, the Proposed Rule does not provide specific guidelines
on how to avoid such duplication. As noted, several organizations
submitted comments on the Proposed Rule, and many
of the comments expressed concern regarding the potential
Medicare
• Cahaba Government Medicare
Benefit Administrators (A/B
MAC, Jurisdiction 10)
• CIGNA Government
(A/B MAC, Jurisdiction 10)
Services (DME MAC,
CIGNA Government Services
Jurisdiction (DME C) MAC, Jurisdiction C)
• Palmetto GBA (Home
Health and Hospice Palmetto MAC, GBA
(Home Health and Hospice
Jurisdiction C)
MAC, Jurisdiction C)
• Connolly Consulting (A/B
RAC, Region C) Connolly Consulting
•Part C and Part (A/B D RAC, Region C)
(TBD)
Cahaba Government Benefit Administrators
Part C and Part D RAC (TBD)
Potential Fraud
• AdvanceMed Corporation
(ZPIC, Zone 5)
healthlawyers.org 23

Member Forum
duplication of audits. 20 Noting the existence of the MICs, the
Federation recommended that the Medicaid RAC program not
be implemented until there are clear guidelines on how coordination
among the various state and federal contractors will
be accomplished. 21 In addition, the Federation suggested that
Medicaid RACs should be excluded from reviewing any claim
for which payment has been denied or issues that are already
addressed by other program integrity contractors. 22 Similarly,
the AHA urged CMS to revise the Final Rule to specifically
prohibit Medicaid RACs from conducting audits on claims
under review by a Medicaid Integrity Program contractor
or other entity. 23 Unless CMS issues clear guidelines on how
states should avoid duplicate audits, states may adopt varying
methods to reduce the risk of duplicative audits. For example,
the Ohio Medicaid RAC RFP provides that the Medicaid RAC
will be required to build and maintain a data warehouse to
minimize duplication of audits.
Conclusion
Providers can monitor the implementation of state Medicaid
RAC programs on CMS’s Medicaid RAC “At-a-Glance”
website, available at www.cms.gov/medicaidracs/home.aspx.
The website includes, among other things, whether CMS
has received a SPA, whether an exception to the Medicaid
RAC program has been requested by a state, and the type of
Medicaid RAC fee structure.
In addition to information released by CMS regarding the
Medicaid RAC program, providers should consider monitoring
state information concerning the Medicaid RAC program, as
the ultimate structure of the state Medicaid RAC programs
will be influenced both by CMS and the states. Although CMS
has not issued the Final Rule and some states have yet to issue
RFPs, providers should begin preparing for the arrival of
the Medicaid RACs. Importantly, providers should consider
assessing their contractor preparedness and their ability to
timely respond to Medicaid RACs.
About the Authors
Sara Kay Wheeler (skwheeler@kslaw.com) is a Partner in King
& Spalding’s Healthcare Practice Group in Atlanta, GA. She
has extensive experience in the creation and implementation of
corporate compliance programs and investigations, government
contractor audits (including RACs, MACs, MICs, PSCs
and ZPICs), voluntary disclosure strategies, clinical research
compliance, and managed care arrangements. Ms. Wheeler
also works with King & Spalding’s Special Matters Group to
defend healthcare providers that are investigated by federal
and state enforcement entities.
Stephanie L. Fuller (sfuller@kslaw.com) is an Attorney in King
& Spalding’s Healthcare Practice Group in Atlanta, GA. She
represents healthcare clients in government investigations,
internal investigations, and complex business disputes. In
addition, she advises clients on federal and state regulatory
issues, including Medicare and Medicaid reimbursement,
government contractor audits (including RACs, MACs, MICs,
PSCs and ZPICs), compliance, and fraud and abuse. She is
also a member of AHLA’s Young Professionals Council and
Chair of its Publications Work Group.
Endnotes
1 PPACA, Pub. L. No. 111-148, 124 Stat. 751 (2010).
2 Health Care and Education Reconciliation Act, Pub. L. No. 111-152, 124
Stat. 1029 (2010).
3 Section 6411 of PPACA also expands the RAC program to Medicare Parts
C and D.
4 PPACA, Section 6411.
5 Medicaid Program; Recovery Audit Contractors, 75 Fed. Reg. 69,037 (Nov.
10, 2010) (to be codified at 42 C.F.R. pt. 455).
6 Medicaid Program; Recovery Audit Contractors, 75 Fed. Reg. 69037 (Nov.
10, 2010) (to be codified at 42 C.F.R. pt. 455).
7 See Agency Information Collection Activities: Proposed Collection;
Comment Request; 75 Fed. Reg. 55330 (Sept. 10, 2010); Medicaid
Program; Recovery Audit Contractors, 75 Fed. Reg. 69037 (Nov. 10, 2010)
(to be codified at 42 C.F.R. pt. 455).
8 See Medicaid Program; Recovery Audit Contractors, 75 Fed. Reg. 69037
(Nov. 10, 2010) (to be codified at 42 C.F.R. pt. 455); a copy of the State
Medicaid Director letter is available at www.cms.gov/smdl/downloads/
SMD10021.pdf.
9 A copy of the CMS bulletin is available at www.nebmed.org/uploadedFiles/
RAC%20delay.pdf.
10 Id.
11 See PPACA, Section 6411; Medicaid Program; Recovery Audit Contractors,
75 Fed. Reg. 69037 (Nov. 10, 2010) (to be codified at 42 C.F.R. pt. 455).
12 Medicaid Program; Recovery Audit Contractors, 75 Fed. Reg. 69037 (Nov.
10, 2010) (to be codified at 42 C.F.R. pt. 455).
13 Id.
14 Id.
15 Id.
16 Id.
17 A copy of the supporting statement is available at www.kslaw.com/Library/
publication/HH092010_Statement.pdf.
18 A copy of the AHA letter is available at www.aha.org/aha/
letter/2010/101220-cl-cms-6034.pdf.
19 Id.
20 See, e.g., The AHA’s comments available at www.aha.org/aha/
letter/2010/101220-cl-cms-6034.pdf; The Federation’s comments available
at www.fah.org/fahCMS/Documents/On%20The%20Record/Public%20
Comments/2011/RA_medicaid_comments.pdf.
21 A copy of the Federation’s letter is available at www.fah.org/fahCMS/
Documents/On%20The%20Record/Public%20Comments/2011/RA_
medicaid_comments.pdf.
22 Id.
23 A copy of the AHA letter is available at www.aha.org/aha/
letter/2010/101220-cl-cms-6034.pdf
24 AHLA Connections March 2011

Young Professionals
The Young Professionals Council at Work: Identifying and
Creating Opportunities for AHLA Young Professionals
Last year AHLA launched the Young Professionals
Council (YPC or Council) to promote the interests
of young members by identifying and creating opportunities
to network and develop leadership skills and encouraging
active participation in AHLA activities, events and volunteer
efforts. Over the past several months, the 15 young professionals
who comprise the YPC have been hard at work. Our
Publications Work Group will give you just a flavor of what the
Council has been up to. – Alison Vratil Mikula, Chair
The YPC has been:
❯❯ Planning in-person networking events to take place in
Boston at the 2011 Annual Meeting;
❯❯ Launching the Young Professionals Discussion List as
a forum for sharing insights, collaborating, and engaging in
discussion;
❯❯ Developing a “brown bag” webinar series designed to
address issues of particular interest to young professionals;
❯❯ Collaborating with Practice Group leaders to identify ways
in which young professionals can get involved in Practice
Group activities; and
❯❯ Publicizing opportunities for young professionals to
contribute to Practice Group and AHLA efforts.
The commitment of AHLA leadership and staff to engaging
the Association’s young professional members and developing
the “next generation” of leaders in healthcare law makes this
an exciting time for us, as young professionals, to become
more active participants in AHLA. The members of the
YPC hope that all young professionals will use the YPC as a
resource and look for ways to get involved in and contribute to
the Association through Practice Groups efforts, publication
opportunities, in-person events, public interest initiatives, or
other areas of interest.
Our time and talents, as well as the diversity that we as a
group bring to AHLA, are assets to the Association. Young
professionals, we hope that you will share your time and
talents and, in the process of doing so, deepen your knowledge
of substantive healthcare law, expand your professional
networks, develop your leadership skills, and have a good time!
Network
The YPC Networking Work Group seeks to support young
professionals in the development of strategies for engaging
young professionals and providing opportunities for
networking at three levels (i) attracting and engaging young
professionals as law students; (ii) helping young professionals
connect with their peers and more experienced practitioners,
as they transition from students to practitioners; and (iii)
providing a forum for young professionals to connect with and
develop relationships with other young professionals, other
AHLA members and AHLA leadership.
The YPC Networking Work Group is currently working
on development of a “brown bag” webinar series designed
to address issues of interest to young professionals. The first
webinar, which we hope to hold in May, will kick-off the series
with a panel of individuals in various stages of their career.
The topic of the first webinar will be “When I first started practicing,
I wish I had known…” a candid discussion regarding
the trials and tribulations of developing a practice as a young
professional. The Networking Work Group is soliciting ideas
from young professionals on future webinar topics.
In addition, the YPC Networking Work Group is in the
process of developing strategies to reach out to law students
and is working to put together networking events for young
professionals at the 2011 AHLA Annual Meeting in Boston.
Young professionals who would like more information on
the Networking Work Group’s activities, or have ideas for the
Networking Work Group should contact Council member
Andrea Impicciche at andreai@hallrender.com.
Publish
Getting published is one of the most effective ways to
become involved with AHLA and gain visibility among peers.
The Publications Work Group is exploring several ways to
encourgage young professionals to write and publish for
AHLA. The YPC Publications Work Group helped to review
and provide comments to a proposal for a New Author pilot
program. The new program will provide assistance to young
professionals and other AHLA members in identifying
publishing opportunities and providing guidance on how to
author a publication for AHLA. The pilot program is expected
to last 6-9 months and involve 5-10 teams of “author guides”
and “author apprentices.”
As part of an ongoing initiative to promote writing opportunities
among young professionals, the YPC Publications
Work Group is working to identify AHLA publication opportunities
for young professionals and identify young profes-
26 AHLA Connections March 2011

sional volunteers. Individuals are encouraged to consider
writing for the AHLA Connections magazine, Practice Group
publications, and the AHLA Health Law Wiki.
For more information on the YPC Publications Work
Group or publication opportunities please contact Council
member Stephanie Fuller at sfuller@kslaw.com.
Get Involved
The YPC Involvement Work Group seeks to connect young
professionals with opportunities to be more active in Practice
Groups and other AHLA activities. The Council has found
that there are many young professionals in AHLA who want to
be more involved, but young professionals often do not know
currently where to look for those opportunities. AHLA leaders
do not have a resource for directly connecting with interested
young professional members, and our group is working to
facilitate those connections.
Young professionals who want to be more involved in
AHLA should subscribe to the Young Professional Discussion
List and watch for future communications about the different
opportunities that exist for young professionals within AHLA.
In the meantime, young professionals can feel free to contact
any of the Vice Chairs of Membership for the Practice Groups
or Council member Robert Hess at robert.hess@huschblackwell.com.
There are a wealth of opportunities for young
professionals to be involved in AHLA and the Council looks
forward to publicizing those opportunities over the next year.
Give Back
The YPC Public Interest Work Group is dedicated to
supporting AHLA’s public interest programs. Those programs
are designed to help the public to better understand healthcare
issues and prepare for difficult situations, ultimately leading
to better care and planning for both the healthcare consumer
and the community in which he or she lives. This Work Group
fosters young professional involvement in those efforts.
The Council will be sponsoring one of the items to be
presented at the upcoming Public Interest Silent Auction in
Boston during the 2011 Annual Meeting. This item will be a
gift pack designed for young professionals and will include a
registration and lodging at one of AHLA’s in-person programs
as well as several key publications. Proceeds generated from
the Auction will support the public interest mission of AHLA.
If you are interested in getting involved in the Public Interest
Work Group, please contact Council member Tizgel High at
Tizgel_High@chs.net.
Stay Connected
The YPC utilizes different forms of social media, including the
Young Professionals Discussion List, professional networking
(LinkedIn), social networking (Facebook), blogging, Twitter,
RSS, tagging, and podcasts. The YPC Social Media Workgroup
specifically focuses on developing strategies to connect AHLA
members of the past, present and future in a collaborative
forum to facilitate communication, insights, and promotion of
AHLA membership, involvement, networking, publications,
and public interest initiatives.
The AHLA Young Professionals Discussion List provides
a forum for attorneys new to the practice of health law to
share insights, collaborate, and engage in discussion. Join the
Discussion List today!
Recent discussion list topics include: use of social media in
practice; conferences young professionals should attend; educational
materials for new healthcare lawyers; new/hot fields of
practice for healthcare lawyers; health reform implications; and
website resources and blogs for breaking healthcare news.
If you would like to contact the Social Media Workgroup,
please contact Council member Annie Hsu at ahsu@centralhealthplan.com.
Next month: More information about networking events
and opportunities for Young Professionals at the Annual
Meeting and In-House Counsel Program in Boston.
Thanks to the members of the Young Professionals
Council’s Publications Work Group for
this month’s article: Stephanie Fuller, Chair, King
& Spalding, Atlanta, GA; Emily H. Lee, Manatt Phelps
Phillips LLP, New York, NY; Annie Hsu, Central Health
Plan, Irvine, CA; Stacey Lipitz Marder, Kern Augustine
Conroy & Schoppmann, Garden City, NY; Keith J. Seo,
Riddell Williams PS, Seattle, WA; and Daniel F. Shay,
Alice G. Gosfield & Asociates PC, Philadelphia, PA.
healthlawyers.org 27