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…

CMS outlined changes to the nursing home survey process in a October 2017 memo to state survey agency directors, which scaled down the use and severity of civil monetary penalties (CMPs) for certain nursing home deficiencies. Shortly thereafter, CMS released a November 2017 memo that among other things, outlined an 18-month moratorium on the imposition of CMPs, discretionary denials of payment for new admissions and discretionary termination by surveyors for survey deficiencies identified by the following eight  “F” tags: Continue reading…

Word spread quickly Monday (December 20, 2016) about CMS’ issuance of final regulations (to be published in the Federal Register on January 3, 2017) rolling out new mandatory bundled payments models for Acute Miocardial Infarction (AMI), Coronary Artery Bypass Graft (CABG), Surgical Hip and Fracture Treatment (SHFFT), a Cardiac Rehabilitation (CR) incentive model and Track 1+ Accountable Care Organizations. Speculation that President-elect Donald Trump’s nominee for HHS secretary, Rep. Tom Price, would move to roll the regulations back spread just as quickly.

The new regulations mandate bundled payment models (covering the period from admission to ninety days post-discharge) for AMI and CABG in 98 geographies covering 1,120 hospitals; for SHFFT in the 67 geographies where the Comprehensive Joint Replacement (CJR) has already been mandated covering 850 hospitals and for CR in 90 geographies covering 1,320 hospitals. CMS’ chart of geographies covered by each program is set forth here. The AMI, CABG and SHFFT programs give participant clinicians the opportunity to be excluded from Medicare and CHIP Reauthorization Act of 2015’s (MACRA) Medicare Incentive Payment System (MIPS) and to qualify under MACRA’s Advanced Alternative Payment Model (AAPM). Continue reading…

In a final rule published today in the federal register (“Final Rule”), CMS announced numerous changes to the consolidated Medicare and Medicaid requirements for participation for long term care (LTC) facilities (42 CFR part 483, subpart B), which take effect on November 28, 2016 (see the March 7, 2016 blog for information about the July 16, 2015 proposed rule (“Proposed Rule”)). Much to the satisfaction of elder care advocates, the Final Rule provides that nursing homes may no longer require prospective nursing home residents to agree to binding arbitration. This strikes a blow at LTC facilities, which generally used arbitration as a tool to avoid incurring the onerous costs associated with litigation.

CMS’ position in the final rule isn’t shocking as it had expressed concern about the use of arbitration agreements in nursing homes in its Proposed Rule. Although no longer permissible for LTC facilities to use as a condition of admission, according to Andy Slavitt, CMS’ Acting Administrator, and Kate Goodrich, Director of the Center for Clinical Standards & Quality, “facilities and residents will still be able to use arbitration on a voluntary basis at the time a dispute arises.” However, such agreements will still need to be “clearly explained” to residents.

Nursing homes that have traditionally asked residents to sign binding arbitration agreements should revisit their admissions processes and implement revised policies and procedures to ensure compliance with the Final Rule, so that, beginning November 28, 2016, residents at such LTC facilities are no longer required to agree to binding arbitration. LTC facilities may also consider revising their policies and procedures to incorporate recommending the use of arbitration to residents following disputes that may arise, and to ensure that any such recommendations are clearly explained to their residents.

For more information regarding the voluntary use of arbitration agreements in the nursing home context, contact J. Nicole Martin, Dana Petrillo or any member of Cozen O’Connor’s health care law team.

On September 8, 2016, CMS announced in its blog that it will allow physicians to select their level of participation for the first performance year of the Medicare Access and CHIP Reauthorization Act of 2015 (“MACRA”) Quality Payment Program, which begins January 1, 2017. Importantly, during the first performance year (2017), “[c]hoosing one of these options would ensure [physicians] do not receive a negative payment adjustment” under MACRA in 2019.

Under the Quality Payment Program physicians will fall under the Merit-Based Incentive Payment System (“MIPS”) if they do not qualify under the Advanced Alternative Payment Model (“Advanced APM”) option.  In 2019, physicians who are in the MIPS default option could face Medicare rate adjustments of up to 5% based on their performance under four weighted performance categories: quality (50%); resource use (10%); advancing care information (25%); and clinical practice improvement (15%). Advanced APMs include, for example, Track 2 and 3 MSSP ACOs; next generation ACOs; and bundled payment models, and physicians who qualify under the Advanced APM option earn a 5% incentive, are excluded from MIPS adjustments and receive higher fee schedule updates after 2024.

Recognizing that many physicians may face negative payment adjustments under MIPS as a result of participating under the Quality Payment Program, CMS is going to allow eligible physicians to “pick their pace of participation” and ensure they do not receive such negative payment adjustments in 2019 by choosing one of four options for the first performance year:

1. Test the Quality Payment Program;
2. Participate for part of the calendar year;
3. Participate for the full calendar year; or
4. Participate in an Advanced APM in 2017.

The first three options fall under MIPS, while the fourth option falls under the Advanced APM. In the first option, physicians could “submit some data to the Quality Payment Program”, avoid negative payment adjustments and test the waters before broader participation in subsequent years. Under option two, the performance year could begin later than January 1, 2017, a physician practice “could qualify for a small positive payment adjustment”, and a physician would submit Quality Payment Program information for fewer days. The third option is ideal for those physician practices that are ready to participate beginning January 1, 2017 and who are able to submit a full year of quality data. Additionally, physicians “could qualify for a modest positive payment adjustment.” The fourth option would be viable for those physicians or physicians groups who treat enough Medicare beneficiaries and who receive enough of their Medicare payments through an Advanced APM (e.g., MSSP ACOs). Through the Advanced APM option, physicians/physician groups would “qualify for a 5 percent payment in 2019.” It remains unclear what the difference is between a “small” and “modest” payment adjustment. However, CMS may address this in the final rule along with how it will implement MIPS and the Advanced APM. CMS will release the final rule by November 1, 2016.

For more information about MACRA, contact Chris Raphaely, Nicole Martin or a member of Cozen O’Connor’s Health Law team.

As part of admission into a nursing home, a facility typically requires prospective residents to agree to binding arbitration. Arbitrating disputes generally allows nursing facilities to handle disputes without incurring the onerous costs – both of time and money – associated with litigation. Nursing facilities, which operate on razor thin margins, consider the costs of litigation to be an unnecessary burden for resolving disputes that could be resolved more efficiently and just as fairly in the arbitration context. Moreover, nursing facilities fear believe that they are not operating on a level playing field in a jury trial, because juries are typically biased in favor of residents and do not understand the constraints under which facilities operate. At the same time, nursing home resident advocates have long argued that use of arbitration in the nursing home setting is a legitimate concern because residents may feel coerced into signing them and may not fully understand the implications of signing such an agreement–that it means they are waiving their right to a jury trial.

Since last year, the use of arbitration agreements in nursing facilities has been in the forefront, both in state courts, and in the July 16, 2015 CMS proposed rule regarding the regulation of nursing homes, where the Centers for Medicare & Medicaid Services (“CMS”) proposed specific requirements regarding arbitration agreements (“Proposed Rule”).

For example, in Wert v. Manorcare of Carlisle PA, LLC (2015 WL 6499141, No. 62 MAP 2014 (Pa. Oct. 27, 2015)), the Pennsylvania Supreme Court addressed the enforceability of a nursing home’s arbitration agreement. While the Wert Court did not squarely address the issue of whether the arbitration clause is void as against public policy, the Wert Court stated it “recognize[s that premising the integrality of a contractual term on the subjective understanding of a far less sophisticated non-drafting party is ill-advised public policy that would further distort an already lopsided balance of power.” Despite the Wert Court’s acknowledgement of this being a public policy concern, the decision turned on the procedural validity of the clause because it required the use of the National Arbitration Forum’s code, which the Wert Court found the clause unenforceable. However, the brief reference to the public policy implications of arbitration agreements suggests that if the actual clause is called into question—other than for procedural reasons—Pennsylvania courts may void them as against public policy. On February 29, 2016, the United States Supreme Court (GGNSC Gettysburg LP v. Wert, U.S., No. 15-820) refused to review the Wert decision. The United States Supreme Court’s refusal is in line with other states as well, which like Pennsylvania, have found such agreements requiring the use of the National Arbitration Forum’s code to govern and address disputes between nursing homes and residents unenforceable.

In contrast, in Carrigan v. Live Oak Nursing Ctr., LLC (2015 WL6692199, No. 2:15–CV–319 (S.D. Tex. Nov. 3, 2015)), a Texas federal court decided late last year that an arbitration agreement signed along with the resident admission agreement was enforceable and that the parties would have to resolve their dispute through arbitration. The Carrigan Court further found that all parties who benefited from the resident admission agreement would be bound by the arbitration clause even though they did not sign it, that is, those parties who were suing to enforce duties under the resident admission agreement—that existed because of the relationship between the former resident and facility under the resident admission agreement—would also be bound by the arbitration agreement.

In the Proposed Rule, CMS expressed concern about the use of arbitration agreements in nursing homes. While soliciting comments on whether binding arbitration agreements should be prohibited, CMS nevertheless proposed a new regulation (42 C.F.R. 483.70(n)) with the following requirements:

• The agreement is to be explained to the residents who acknowledge that they understand the agreement;
• The agreement is to be entered into voluntarily;
• Arbitration sessions be conducted by a neutral arbitrator in a location that is convenient to both parties.
• Admission to the facility is not contingent upon the resident or the resident representative signing a binding arbitration agreement.
• The agreement could not prohibit or discourage the resident or anyone else from communicating with federal, state, or local health care or health-related officials, including representatives of the Office of the State Long-Term Care Ombudsman.

Both the Wert case and the Proposed Rule highlight concerns about the use of arbitration agreements in the nursing home world. Given CMS’ expressed concern about them, nursing homes who ask residents to sign binding arbitration agreements would be well advised to look carefully at the process by which the residents agree to binding arbitration and to implement policies that ensure that residents clearly understand what they are signing and that they are not pressured to sign these agreements.

For more information regarding the use of arbitration agreements in the nursing home context, contact J. Nicole Martin or any member of Cozen O’Connor’s healthcare law team.

On July 7, 2015, U.S. Reps. Mike Thompson, Gregg Harper, Diane Black, and Peter Welch announced the introduction of a new version of the July 2014 telehealth legislation (H.R. 5380) called the Medicare Telehealth Parity Act of 2015 (H.R. 2948) (the “Act”). The Act has already been referred to each of the House Energy and Commerce Committee and the House Committee on Ways and Means.

According to Congressman Thompson’s press release, this Act would phase in and expand upon existing telehealth services under Medicare, by, among other changes:

• Removing the geographic barriers under current law and allowing the provision of telehealth services in rural, underserved, and metropolitan areas;

• Expanding the list of providers and related covered service that are eligible to provide telehealth services to include respiratory therapists, physical therapists, occupational therapists, speech language pathologists, and audiologists;

• Allowing remote patient monitoring for patients with chronic conditions such as heart failure, chronic obstructive pulmonary disease, and diabetes; and

• Allowing the beneficiary’s home to serve as a site of care for home dialysis, hospice care, eligible outpatient mental health services, and home health services.

For quite some time reimbursement barriers prevented the expanded use of telehealth/telemedicine under Medicare beyond reimbursement for limited services, limited modes of telehealth, and the “originating site” restriction. Over the last few years, legislation expanding access and reimbursement under Medicare for telemedicine/telehealth services has been introduced, but never passed. This time could be different as the legislation has not only bipartisan support, but also the support of industry groups, including among others, the American Telemedicine Association and the American Heart Association. Stay tuned for additional updates regarding the Act. For further information, contact J. Nicole Martin or any member of Cozen O’Connor’s healthcare law team.

After a significant number of settlement agreements between the U.S. Department of Health and Human Services Office of Inspector General (OIG), OIG decided to release a Fraud Alert reminding physicians, practices and hospitals about the significant compliance risks with medical director agreements. The June 9, 2015 Fraud Alert highlights four issues of concern in medical director agreements and relationships:

1. Agreements providing for medical director compensation based upon a calculation taking into account the volume of a medical director’s referrals to the entity he or she is serving as medical director.
2. Agreements providing for medical director compensation above fair market value for the services to be rendered by the medical director.
3. Medical directors failing to actually render the services set forth in medical director agreements, yet still being compensated for such services.
4. Agreements providing that affiliated health care entities pay for a medical director’s front office staff, thereby relieving the medical director of a financial burden such medical director would otherwise have incurred.

This Fraud Alert offers nothing new in terms of Anti-Kickback regulation and enforcement, reiterating to providers that the Anti-kickback statute generally prohibits a provider from being paid any form of remuneration for referring a patient for federal healthcare business.  It appears to be a not-so-friendly reminder that “remuneration” can come in many shapes and sizes and physicians must continue to be vigilant in their negotiating and entering into medical director agreements, as well as their adherence to same. A physician considering entering into any business venture in the health care sector should proceed with caution, and always confer with a health care attorney before signing on the dotted line.  The complete June 9, 2015 Fraud Alert can be found here: http://oig.hhs.gov/compliance/alerts/guidance/Fraud_Alert_Physician_Compensation_06092015.pdf.

For further information contact a member of Cozen O’Connor’s health care team.

Authored by Ryan Blaney (Washington, DC) and Marc Goldsand (Miami, FL).

Tomorrow, the Centers for Medicare and Medicaid Services (“CMS”) will publish final regulations (“Final Rule”)  for its flagship pay-for-performance program, the Medicare Shared Savings Program, in the Federal Register. The Final Rule generally applies to performance years 2016 and beyond and the second three year “agreement period” for the over 400 accountable care organizations (“ACO”) currently in the program.

Stakeholders watched very closely the development of the Final Rule, so they can now begin sizing up future opportunities with some certainty and determine the longer term complexion of the program itself. The regulations contained in the Final Rule were published in proposed form in December 2014, and, the Final Rule adopts most, but not all, of what CMS initially proposed.  It continues the pattern of easing CMS’ ultimate push towards the two-sided risk model for most, if not all, ACOs and contains adjustments that many will consider to be favorable to ACOs.

Among the most significant developments is one in which, as proposed, ACOs that are currently in their first three year agreement period with CMS for participation in the program’s “upside only” risk model, Track 1, will be permitted to remain under the same model for another three years. This covers the majority of ACOs currently in the program. Significantly, however, CMS declined to institute the 10% cut (from 50% to 40%) to the Maximum Savings Rate for the second term Track 1 ACOs that it proposed last December.  The Final Rule comes none too soon for the first set of Track 1 ACOs who will have to make a decision whether or not to re-up for another three years in the program before the end of 2015.

In the other major structural change to the program, CMS, as it proposed to do, created a third double-sided risk, Track 3, for more highly developed ACOs desiring to trade greater upside opportunity (up to a 75% share of savings generated) for greater risk (up to 75% of losses) with both savings and losses being subject to a cap of 15% and 20% of benchmark, respectively. The new track includes a prospective beneficiary assignment model as opposed to the retrospective model that will continue to be used in Tracks 1 and 2. CMS also gives ACOs who choose the new track the option to waive Medicare’s three day hospital stay requirement for reimbursement of skilled nursing services. CMS stated that it will be considering additional waivers in areas like tele-health for Track 3 ACOs in the future.

CMS also included many technical adjustments to the program, some of which will have a significant impact on how the program and ACOs operate. Among the more significant are the following:

• Adjusting the savings benchmark calculation so second term ACOs that generated savings in their first term are not “penalized” by tougher savings targets in the second term as a result;
• Track 2 and Track 3 ACOs will be given new options for setting Minimum Savings and Loss Rates;
• Greater emphasis on primary care services provided by non-physician practitioners such as licensed nurse practitioners in the beneficiary assignment process;
• Enhanced information in the aggregate data reports supplied to ACOs and the inclusion of patients who had one primary care visit with an ACO in the assignment period even if they were not
  preliminarily assigned to the ACO in the aggregate reports supplied to Track 1 and 2 ACOs; and
• A streamlined data opt-out process in which (i) beneficiaries opt out of data sharing only by notifying CMS directly; and (ii) ACOs no longer have to wait thirty days after notifying beneficiaries of their opt-out rights before requesting detailed claims data on such beneficiaries.

The balance of 2015 and 2016 will be critical to the future of the Medicare Shared Savings Program as ACOs who currently participate in the program and others who are considering participation now have definitive guidance as to what the program will look like at least through 2018.

We wrote in late March about the U.S. House of Representatives passing SGR legislation intended to be a permanent cure to Medicare’s “doc fix” legislation. Yesterday evening, the Senate finally passed the SGR legislation to avoid a rate cut. Congress anticipates President Obama will sign the SGR legislation into law fairly quickly. Among other measures, the SGR legislation will amend Title XVIII of the Social Security Act, pertaining to Medicare, to:

• “remove sustainable growth rate (SGR) methodology from the determination of annual conversion factors in the formula for payment for physicians’ services; and
• revise the update in rates for 2015 and subsequent years.”

Notably, the SGR legislation extends the two-midnight Medicare rule through FY2015. The two-midnight Medicare rule only provides coverage for hospital stays when a beneficiary remains in a hospital over two midnights because the beneficiary requires care over this minimum period of time. Medicare generally denies coverage for care provided during shorter length hospital stays. The SGR legislation also extends the CHIP program through FY2017.

For further information contact Cozen O’Connor’s health care team.