CMS today issued its Price Transparency Requirements for Hospitals Final Rule, which will go into effect on January 1, 2021. (CMS had initially proposed that it go into effect January 1, 2020, but agreed that that deadline was too “challenging”).  Hospitals will be required to post on a public website, among other things, the “payer-specific negotiated charges” for each payer and plan.  These negotiated rates have typically been subject to lock and key treatment through confidentiality agreements.  Noncompliance with the rules may result in corrective action plans (CAPs), civil monetary penalties (CMPs) of $300 per day (indexed to an inflation factor), and a public notice of the CMP on a CMS website. Under the rules, CMS can issue “subsequent” CMPs for continued noncompliance. A link to the Final Rule is here: https://www.hhs.gov/sites/default/files/cms-1717-f2.pdf.

The Trump Administration has also issued a proposed “Transparency in Coverage” rule that would require plans to give consumers access to a tool providing an estimate of their cost-sharing liability for all covered healthcare items and services.  It would also require plans to list on a website their negotiated rates for in-network providers and the allowed amounts paid for out-of-network providers.  A link to the Proposed Rule is here: https://www.hhs.gov/sites/default/files/cms-9915-p.pdf. 

We will continue to analyze and monitor these rules.  Stay tuned.

We previously reported that District Court Judge Reed O’Connor of the Northern District of Texas declared on December 14, 2018 (1) that the Affordable Care Act’s (ACA) individual mandate is unconstitutional and (2) that the remaining provisions of the ACA are “inseverable” and therefore invalid.

Following the Order, commenters largely believed that the Order had no immediate effect.  Supporting this view, the U.S. Department of Health and Human Services (HHS) said that the Order does not have any impact on 2019 enrollment or coverage and that the Order does not have any immediate effect on its enforcement of any portion of the ACA.  Continue reading…

A Houston federal judge preliminarily enjoined the government from recouping alleged Medicare overpayments made to an ambulance service company facing bankruptcy.  See Adams EMS, Inc. v. Azar, No. H-18-1443, 2018 BL 391263 (S.D. Tex. 2018).

As you may be aware, there is a massive backlog in the Medicare appeals process for alleged overpayments.  The government can begin recouping at step 3 of the arduous 4-step administrative appeal process for overpayment demands.  In a nutshell, the process involves: (1) seeking a redetermination from the Medicare Administrative Contractor (MAC), (2) asking for reconsideration from a Qualified Independent Contractor, (3) requesting a hearing before an administrative law judge (ALJ) of the Office of Medicare Hearings and Appeals, and (4) appealing to the Medicare Appeals Council.  The law requires a decision on Step 3 within 90 days, but there is currently a 3-5 year backlog. Continue reading…

Last Friday, in Texas v. United States, Judge Reed O’Connor of the Northern District of Texas (1) declared the Affordable Care Act’s (ACA) individual mandate to be unconstitutional.  In so doing, the Judge, a President George W. Bush appointee, also (2) declared the remaining provisions of the ACA to be “inseverable” and therefore invalid.

Individual Mandate.  As you might recall, the Supreme Court’s 2012 NFIB v. Sebelius decision held that the individual mandate and the shared-responsibility penalty (when viewed as a whole) were constitutional because they fell within Congress’ power to tax.  The provision at the time was found to be a “tax” because, among other things, it produced revenue for the government.  (Under the shared responsibility penalty, non-exempt individuals without health insurance had to pay this tax.).  The Tax Cuts and Jobs Act of 2017 subsequently amended the ACA by reducing the shared-responsibility payment to zero, starting in 2019.  According to the District Judge, when the shared-responsibility payment becomes zero, the individual mandate and the shared-responsibility payment together can no longer be classified as a “tax” and therefore lacks a constitutional hook. Continue reading…

A home health agency has scored a second win in its fight to prevent CMS from withholding Medicare payments (to effectuate a recoupment of alleged overpayments), at least for the time being.  We previously reported on the home health agency’s first win before the Fifth Circuit (which reversed the Northern District of Texas’s jurisdictional dismissal of the lawsuit).  See Family Rehab., Inc. v. Azar, 886 F.3d 496 (5th Cir. 2018).  We now report on its second win: the Northern District of Texas’s decision, on remand, to grant the home health agency’s temporary restraining order (TRO) motion and to at least temporarily enjoin CMS from withholding further Medicare payments.  See Family Rehab., Inc. v. Azar, No. 3:17-CV-3008-K, 2018 BL 196462 (N.D. Tex. Jun. 4, 2018), TRO extended by Order of Jun. 18, 2018.

To recap, a Zone Program Integrity Contractor (ZPIC) in 2016 alleged that the Medicare program had overpaid a home health provider, Family Rehab, nearly $7.9 million.  Family Rehab asked for a redetermination from its Medicare Administrative Contractor (MAC).  The MAC, however, affirmed the ZPIC’s conclusion.  The provider then asked a Qualified Independent Contractor (QIC) to reconsider the decision.  The QIC slightly reduced the demand to over $7.6 million.  Since the MAC by regulation can begin recouping overpayments after the QIC issues its decision, the MAC then noticed its intention to begin recouping the alleged overpayment.  Family Rehab then requested an ALJ hearing. Continue reading…

The Fifth Circuit has recently held that its courts have jurisdiction to hear a lawsuit seeking to enjoin Medicare from recouping funds until after a hearing because (1) the provider’s claim is collateral to the underlying recoupment and (2) the recoupment may result in the provider’s bankruptcy and in a disruption to its patients.

In 2016, a Zone Program Integrity Contractor (ZPIC) concluded that Medicare had overpaid Family Rehab (a home health provider) nearly $7.9 million.  Family Rehab asked for a redetermination from its Medicare Administrative Contractor (MAC); the MAC affirmed the ZPIC’s conclusion.  The provider then asked a Qualified Independent Contractor (QIC) to reconsider the decision.  The QIC slightly reduced the demand to over $7.6 million.  The MAC then noticed its intention to begin recouping the overpayment.  (The MAC can begin recouping overpayments after the QIC issues its decision.)  Family Rehab then requested an ALJ hearing.

Despite the statutory requirement for an ALJ to issue a decision within 90 days of a request for a hearing, the hearing is not projected to occur until at least 3 to 5 years from now.  Since the recoupments will continue during the delay, the provider faces the possibility of going bankrupt and terminating operations before it could even conclude the 4-part Medicare appeal process (which has been described by the court as Byzantine).  The recoupments would cut off nearly all of the provider’s revenue stream.  Faced with these issues, Family Rehab sued the Secretary of Health and Human Services (HHS) in federal court and sought a temporary restraining order and an injunction to prevent the recoupment of any overpayments until the conclusion of the administrative appeals process. Continue reading…

As a first in the history of the Medicaid program, the Centers for Medicare & Medicaid Services (CMS) approved, on January 12, 2018, Kentucky’s section 1115 waiver application that imposes on many beneficiaries a “community engagement” requirement as a condition of Medicaid eligibility.  This is commonly referred to as a “work” requirement, given that it can be satisfied through employment.  The prior administration had rejected similar work requirements proposed under an Arkansas waiver requirement as falling outside the boundaries of the Secretary’s statutory authority under Title XIX of the Social Security Act to provide “medical assistance” to designated indigent populations.

The following are some takeaways from the Kentucky HEALTH approved demonstration project.

What must affected beneficiaries do?  Beneficiaries subject to the requirement must demonstrate completion of 80 hours (each month) of community engagement activities.  Otherwise, they will lose Medicaid coverage.  Beneficiaries can fulfill the requirement through a combination of employment, education, job skills training, or community service. Continue reading…

Since 1973, the Social Security Act has mandated that states provide retroactive Medicaid benefits for three months prior to the individual’s application.  SSA § 1902(a)(34).  Congress enacted this provision to provide coverage to those lacking knowledge about their Medicaid eligibility and to those whose sudden illness prevented them from applying.  Senate Report No. 92-1230, at 209 (Sept. 26, 1972).  Providers benefit from retroactive eligibility through the ability to enroll uninsured patients in Medicaid retroactively, including after discharge, to avoid uncompensated care costs.

Seeking to trim Medicaid expenditures, Iowa’s Governor this year signed a law requiring the State to seek a CMS waiver from the retroactive eligibility requirement.  When the State agency asked the public for comments on its waiver proposal, only one commenter expressed support.  The vast majority expressed concern that many patients—especially trauma patients who might lack the ability to promptly file Medicaid applications—would face new coverage gaps.  The State itself projected that the waiver would shed 3,000 members (monthly) and would slash Medicaid expenditures by $36.8 million (annually).  Providers unsurprisingly voiced concern that the waiver would increase uncompensated care costs. Continue reading…

In moves that stunned and alarmed insurers, providers, and consumers alike, on October 12, the White House issued an announcement and an Executive Order that appear to be purposefully designed to decimate the Exchanges under the ACA:

1. The White House announced that the government will stop making cost-sharing reduction payments to insurance companies under Obamacare.  According to the White House, there is no appropriation for such payments.  As the Exchange plans will still be obligated to bear the costs of the cost-sharing reductions, premiums for Exchange plans that remain in the market would be expected to rise dramatically.  Many Exchange plans have termination provisions which allow them to terminate their 2018 contracts if the cost-sharing subsidies stop.  On October 13, eighteen states and the District of Columbia sued the administration to restore the funding.
2. The President also issued an Executive Order requiring the relevant agencies to consider regulations or guidance (1) allowing more employers to form association health plans (AHPs) and (2) expanding the availability of short-term, limited-duration insurance (STLDI).  If the regulations come to fruition, younger and healthier people are expected to be siphoned from Exchange products and into cheaper AHPs and STLDI plans (that potentially offer skimpier coverage), creating adverse selection.  Premiums will rise for those left in the Exchanges.

Is the ultimate goal of these moves the total destruction of the Exchanges?  Are they bargaining chips designed to bring Congress back to the table to fix the “problems” with the ACA?  If the latter, will Medicaid spending cuts sought by many Republicans be part of that discussion?  Stay tuned.

On July 23, 2015, the Third Circuit invalidated, as being contrary to the Medicare statute, the U.S. Department of Health and Human Services’ (HHS) Medicare wage index “reclassification rule,” 42 C.F.R. § 412.230(a)(5)(iii). That rule was designed to prevent (and did prevent) urban hospitals that had strategically reclassified as being rural from being reclassified again (based on their newly acquired rural status) to a particular urban area, to benefit from a higher Medicare standardized amount and wage index.

In Geisinger Community Medical Center v. Secretary United States Department of Health and Human Services, the hospital first reclassified, successfully, as a Section 401 hospital (i.e., an urban hospital that elects to be treated as rural). It then sought to reclassify, based on its newly acquired rural status, to the Allentown urban wage index area. The hospital estimated that such a reclassification would increase its Medicare reimbursements by approximately $2.6 million per year. The Allentown urban area is 27 miles from the hospital. To be reclassified to that area, the hospital had to rely on the relaxed 35 mile maximum distance applicable to rural hospitals; it would not qualify under the maximum 15 mile distance applicable to urban hospitals. The reclassification rule, however, prohibited Section 401 hospitals from reclassifying based on their acquired rural status.

The Third Circuit panel majority, under a Chevron Step One analysis, agreed with the hospital that HHS’ reclassification rule is unlawful. It specifically held that the statutory text of Section 401 unambiguously requires HHS, through broad and mandatory language, to treat Section 401 hospitals like hospitals that are actually located in rural areas. The reclassification rule, therefore, unlawfully prevented the Section 401 hospital from being considered as a rural hospital in its application to reclassify to a different wage index area.