Medicaid

TELEHEALTH PARITY LAWS: THE REAL STORY

Posted by Rene Quashie on September 06, 2017
Healthcare, Medicaid, Telehealth, Telemedicine / No Comments

State telehealth parity laws, which generally require private payers (and occasionally Medicaid programs) to cover telehealth services if those services would be covered if provided in-person, have long been trumpeted as a means to increase telehealth acceptance.  The argument is simple: given how the availability of health care services is usually directly tied to whether (and how) payers cover a particular service, laws that require payers to cover telehealth services should drive utilization.  A recently published report, however, questions the impact these laws have on telehealth utilization.

The Center for Connected Health Policy (CCHP), the federally funded national telehealth resource center, conducted a five-month study to analyze state telehealth parity laws and the impact these laws may have on telehealth utilization.  In an interesting twist, the report’s authors also interviewed health plan executives to gain insight into how plans cover and reimburse telehealth services, and the issues preventing greater telehealth utilization.  The report should be required reading for all telehealth stakeholders seeking to understand the telehealth reimbursement landscape.

Here are some key general highlights:

  • As of September 2016, 31 states and the District of Columbia have passed telehealth private payer laws.
  • How a parity law is drafted can determine “the expansiveness of reimbursement and can predict telehealth utilization.”
  • Inclusion/exclusion of certain language may create barriers to telehealth utilization by allowing payers to limit the types of services that may be reimbursed.
  • Only 3 states have laws that explicitly require payment parity (meaning payers in these states have to reimburse for telehealth at the same rate as they pay for in-person services).
  • Live video is the modality most often referenced in the parity statutory definition of telehealth. Approximately 70 percent of state parity laws reference store-and-forward, and about 55 percent include references to remote patient monitoring.
  • Only 4 states and the District of Columbia include a site limitation in their parity laws.
  • Unlike the Medicare program, parity laws usually do not include explicit exclusions regarding types of services, types of providers, and geographic locations.

Payer Interviews

As I mentioned, the report’s authors interviewed commercial plan executives, medical officers, and other plan representatives in six states (CA, MS, MT, OK, TX, and VA), resulting in a compelling look into how commercial payers view telehealth.  For plans not participating in interviews, CCHP conducted research regarding their telehealth policies.  Some points to highlight from the interviews:

  • The majority of selected plans only reimbursed for live video. Some plans provide limited reimbursement for store-and-forward, but only for certain specialties.
  • Remote patient monitoring is not being reimbursed by any of the payers that were part of the study.
  • The majority of interviewees confirmed that their plans reimbursed telehealth services at the same rate as in-person services.

Plan interviewees also noted that, notwithstanding the increase in state parity laws, telehealth utilization is generally low.  Among the reasons provided:

  • Patients are reluctant to use telehealth, although once they try it, many respond positively.
  • Patients have a preference to see physicians and other providers in-person.
  • Providers are reluctant to use telehealth for a number of reasons ranging from lack of training, skepticism regarding telehealth, or concerns that they could lose business by providing telehealth.
  • Lack of education and awareness regarding the availability and efficacy of telehealth.

Medicaid

CCHP also spoke with Medicaid representatives and concluded that private payer laws have little impact on Medicaid telehealth policies unless the laws explicitly include Medicaid.  The Medicaid representatives also noted that providers face significant challenges in implementing telehealth programs, including the cost of equipment and billing issues.

Moving Forward

While the report acknowledges the promise of telehealth, CCHP concludes that many obstacles remain, including what it describes as “a broad misconception that, because telehealth private payer laws are in place in many states around the country, telehealth is achieving its promise of providing the same patient benefit and payment as in-person care.” Specifically, the report warns that parity laws “have been weakened by their lack of clarity and often contain clauses that may negate much of the intent of the legislation.”  The report encourages more careful drafting of laws and a more comprehensive implementation plan.  CCHP concludes by asking policymakers to consider, among other things, the following steps:

  • Using explicit language in private payer laws.
  • Ensuring that payment or reimbursement parity language is included in the language of these laws assuming it is the intent of policymakers to have telehealth reimbursed at the same rate as in-person services.
  • Developing a comprehensive Medicaid telehealth policy.

Conclusion

I believe the report is significant for two reasons.  First, it dispels the notion that the existence of state parity laws alone will drive greater telehealth utilization.  As the report makes clear, some of this is due to poorly drafted laws in some states—but I believe that much of the disconnect between parity laws and telehealth utilization is tied to broader issues regarding telehealth utilization generally. The lack of knowledge and education on the part of consumers regarding telehealth, for example, is as big a stumbling block as any other. Second, it appears that while plans have bought into the benefits of telehealth they are cautious regarding how to drive utilization. The report points out that most plans prefer a slower approach to telehealth expansion and favor using methods such as pilot projects to assess potential expansion.

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Medical Marijuana in Pennsylvania: What Physicians Should Know

Posted by Chris Raphaely on May 09, 2016
DEA, DOH, Medicaid, Pennsylvania / No Comments

shutterstock_244196869On April 17, 2016, Governor Wolf signed Act 16 of 2016, making Pennsylvania the 24th state (plus the District of Columbia) to legalize marijuana for medical use. The full text of the act is available here.

Physicians, not surprisingly, will play a vital role in making medical marijuana available to Pennsylvanians, while ensuring patient safety in the process.  This is what they should know about Act 16: Continue reading…

Chris Raphaely

Chris Raphaely

R. Christopher Raphaely joined Cozen O'Connor's Philadelphia office in 2014 as co-chair of the Health Care Practice Group. Chris joins the firm from Jefferson Health System, where he served as deputy general counsel and general counsel to the system’s accountable care organization and captive professional liability insurance companies.

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The “Other” Safe Harbor: OIG Warns Healthcare Providers and Vendors Against Information Blocking and Federal Anti-Kickback Violations

golden-whistleblower

For those of us who work in the privacy and security space this past week has been a whirlwind with focus on the ramifications of the European Court of Justice (ECJ) decision invalidating the EU-U.S. Safe Harbor Agreement.  Much has been written on the EU-U.S. Safe Harbor Agreement and much more will be written in the coming weeks.  See Cozen O’Connor’s Cyber Law Monitor recent blog post, The End of Safe Harbor – What Does it Mean?   However, the ECJ decision was not the only news on safe harbor last week.  The U.S. Department of Health and Human Services, Office of Inspector General (“OIG”) issued their thoughts on data arrangements and safe harbor, albeit a much different safe harbor than the EU-U.S. Safe Harbor Agreement.  Healthcare providers and health IT vendors should pay close attention to OIG’s Alert.  See October 6, 2015 OIG Alert.

OIG issued the Alert during National Health IT Week and described it as a “Policy Reminder” on Information Blocking and the Federal Anti-Kickback Statute (42 U.S.C. 1320a-7b (b)).  The Federal Anti-Kickback statute prohibits individuals and entities from knowingly and willfully offering, paying, soliciting, or receiving remuneration to induce or reward referrals of business reimbursable under any Federal health care program (“FHCP”).  The Alert addresses a growing trend in the industry, arrangements involving the provision of software or information technology to a referral source.  Although there is a safe harbor for electronic health records (“EHR”) arrangements it “must fit squarely in all safe harbor conditions to be protected.” 42 CFR § 1001.952(y).

In its alert, OIG focused on the parameters of the safe harbor exception that allows donors to enter into a wide variety of arrangements involving EHR software, IT, and training services, provided there are no restrictions to the use, compatibility, or interoperability of donated items or services.  42 CFR § 1001.952(y)(3).  OIG provided guidance on this issue in 2013, explicitly stating that if the interoperability of an item or service is restricted by the donor or anyone acting on the donor’s behalf, including the recipient, then the donation violates the exemption and thus will be actionable under the Federal anti-kickback statute.

OIG’s Alert highlights practices outlined in its 2013 guidance that would be actionable under the Federal anti-kickback statute.  For example, an agreement between a donor and a recipient to limit a competitor from interfacing with the donated items or services would be actionable.  Even an agreement between a donor and an EHR technology vendor to charge non-recipient providers, non-recipient suppliers, or competitors’ high fees may be actionable.

OIG also provided an open invitation to whistleblowers to report fraud by urging persons with knowledge of violations of the safe harbor to be vigilant in reporting potential violations to their office.  Violations will occur when donors engage in information blocking, which refers to practices that unreasonably block the sharing of electronic health information (EHI).  OIG provided three criteria in a 2015 report for identifying practices that qualify as information blocking:

  1. Interference with the ability of authorized people to access, exchange, or otherwise use EHI.
  2. Knowledge, actual or expected under the circumstances, that the practice will be considered information blocking.
  3. No reasonable justification for limiting sharing of EHI.

If all three criteria are met, then the practice in question is considered information blocking.

For more information on this Alert, contact Ryan P. Blaney or any member of Cozen O’Connor’s Health Care team.

Ryan Blaney

Ryan Blaney

Ryan Blaney joined Cozen O'Connor as a member of the firm's Health Law group. Ryan practices in the firm's Washington, D.C., office. He focuses his practice on representing clients in the health care and life sciences industries in a wide range of matters, including health care fraud and abuse, civil and criminal government investigations, qui tam and whistle-blower disputes under the False Claims Act and other federal and state laws and regulations, HIPAA privacy and data security, compliance and transactional services, and antitrust matters.

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Ignorance Is Not Bliss: The Clock under the ACA’s “60 Day Rule” Can Start Ticking Well Before the Exact Amount of Overpayment is Identified

Posted by Chris Raphaely on August 05, 2015
ACA, Affordable Care Act, False Claims Act, Medicaid, Medicare / No Comments

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On August 3, 2015, a federal judge in the Southern District of New York ruled that the United States’ and state of New York’s complaints in intervention can move forward against a group of hospitals, under the federal False Claims Act (“FCA”) and New York’s FCA corollary. The hospitals allegedly failed to report and return Medicaid overpayments that were brought to their general attention over two years before all of the relevant repayments were made.

The judge’s opinion denying the defendants’ motions to dismiss in Kane v. Health First, et al. and U.S. v. Continuum Health Partners Inc. et. al., should be of particular note to providers because it contains extensive discussion and guidance as to how at least one federal judge interprets the Affordable Care Act’s (“ACA”) “60 day rule.” Specifically, the ACA’s rule requires any provider who receives an overpayment from Medicare or Medicaid to repay such overpayment within 60 days of the “date on which the overpayment was identified.” Further, retention of such an overpayment beyond the sixty-day period can result in liability under the FCA.

Continue reading…

Chris Raphaely

Chris Raphaely

R. Christopher Raphaely joined Cozen O'Connor's Philadelphia office in 2014 as co-chair of the Health Care Practice Group. Chris joins the firm from Jefferson Health System, where he served as deputy general counsel and general counsel to the system’s accountable care organization and captive professional liability insurance companies.

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CMS’ Long Awaited Final ACO Regulations for 2016 and Beyond: Major New Options and Plenty of Fine Tuning

Posted by Chris Raphaely on June 08, 2015
Accountable Care Organizations, Beneficiaries, CMS, Final Rule, Medicaid, Medicare / 1 Comment

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.

Chris Raphaely

Chris Raphaely

R. Christopher Raphaely joined Cozen O'Connor's Philadelphia office in 2014 as co-chair of the Health Care Practice Group. Chris joins the firm from Jefferson Health System, where he served as deputy general counsel and general counsel to the system’s accountable care organization and captive professional liability insurance companies.

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CMS Issues Proposed Rule That Would Extend Provisions of Mental Health Parity

Posted by Gregory M. Fliszar on April 15, 2015
Addiction, CHIP, CMS, MCOs, MCOs, Medicaid, Medicare, Mental Health, PAHPs, PIHPs / No Comments

On April 6, 2015, the Centers for Medicare & Medicaid Services (“CMS”) released a proposed rule that would extend provisions of the Mental Health Parity and Addiction Equity Act of 2008 (the “Mental Health Parity Act”) to Medicaid managed care organizations (“MCOs”) and the Children’s Health Insurance Program (“CHIP”). The Mental Health Parity Act requires health plans that provide mental health and substance abuse disorder benefits to ensure that any financial requirements (e.g., co-pays, deductibles) and treatment limitations (e.g., limitations on visits) applicable to those benefits are no more restrictive than the requirements or limitations applied to medical/surgical benefits. The proposed rule was published in the Federal Register on April 10, 2015 at 80 Federal Register 19418. (Proposed rule). Comments to the proposed rule are due on June 9, 2015.

The proposed rule was drafted to ensure that all Medicaid beneficiaries who receive benefits through MCOs or under alternative benefit plans would have access to mental health and substance use disorders benefits regardless of whether they received those benefits through an MCO or another system. In addition, the proposed rule would also apply to CHIP, whether the care is provided through an MCO or a fee-for-service program.

Presently, a number of states that provide medical benefits through Medicaid MCOs carve out mental health and substance abuse services through other arrangements, which can include prepaid inpatient health plans (“PIHPs”), prepaid ambulatory health plans (“PAHPs”), or even fee-for-service. Under the proposed rule, states would continue to have flexibility in selecting different delivery systems to provide services to Medicaid beneficiaries, but would have to ensure that enrollees of a Medicaid MCOs receive the benefit of mental health and substance abuse parity when provided through these alternative models. States, for example, would be required under the proposed rule to include contract provisions requiring compliance with the Mental Health Parity Act in all applicable contracts with Medicaid MCOs and entities providing services through alternative arrangements such as PIHPs and PAHPs. Further, states would have to provide CMS with evidence of compliance with the Mental Health Parity Act in their provision of mental health and substance services to Medicaid beneficiaries.

In addition, the proposed rule would require Medicaid, MCOs, PIHPs, PAHPs and other alternative benefit plans to make their medical necessity criteria for mental health and substance abuse disorder benefits available to any enrollee or contracted provider upon request. Such Medicaid plans must also make available to enrollees the reason for any denial of reimbursement for services related to mental health and substance use disorder benefits.
For further information contact the author Gregory M. Fliszar (Philadelphia, PA) or other members of Cozen O’Connor’s healthcare team.

Gregory M. Fliszar

Gregory M. Fliszar

Greg Fliszar is member in the firm’s Health Law Group. Greg’s practice focuses on health law litigation and regulatory and compliance matters, as well as compliance with the Medicare Secondary Payer Act and HIPAA. Greg is also a licensed doctoral level clinical psychologist and was a clinical instructor of psychiatry at the MCP-Hahnemann School of Medicine.

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Co-Chair of Cozen O’Connor’s Health Care Practice Discusses the Affordable Care Act in the New York Times

Posted by Chris Raphaely on March 10, 2015
Affordable Care Act, Medicaid / No Comments

Mark H. Gallant, co-chair of Cozen O’Connor’s Health Care practice group and a nationally respected health care lawyer, was quoted in a recent New York Times article discussing the Supreme Court arguments in the case, King v. Burwell. At issue in the case is the right to federal subsidies for the purchase of health insurance by individuals who reside in states that have chosen to have the federal government run their health insurance exchange.  If decided for the plaintiffs, the case could have a drastic effect on the future of the controversial Affordable Care Act.

Mark has been a go-to contact for the press on these type of issues for many years, recently providing insight into another Supreme Court case regarding the rights of providers to sue states over Medicaid payment rates in Bloomberg Business News. With the Affordable Care Act’s mandate to expand health care coverage and states still facing significant budgetary constraints, various media outlets will no doubt be seeking out Mark’s insights as the issues surrounding the payment for expanded health care coverage play out.

Some Supreme Court Justices Cite 2012 Argument Against Health Care Law as Defense for It Now – New York Times – March 8, 2015

Why the Supreme Court’s Medicaid Decision Matters – Bloomberg Business – January 20, 2015

Chris Raphaely

Chris Raphaely

R. Christopher Raphaely joined Cozen O'Connor's Philadelphia office in 2014 as co-chair of the Health Care Practice Group. Chris joins the firm from Jefferson Health System, where he served as deputy general counsel and general counsel to the system’s accountable care organization and captive professional liability insurance companies.

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HHS Ups The Ante: Announces Percentages And Time Frames On Goals For Medicare Pay-For-Value Efforts

Posted by Chris Raphaely on January 27, 2015
Accountable Care Organizations, Affordable Care Act, CMS, HHS, Medicaid, Medicare / No Comments

On January 26, 2015, the Secretary of the United States Department of Health and Human Services (“HHS”), Sylvia Mathews Burwell, announced two important goals for the Department:

  1. Increase the percentage of Medicare provider payments that are made through alternative payment models based on how well the providers care for patients, rather than the amount of care provided. The percentage goals for these alternative payment models are 30% by 2016 and 50% by 2018.
  2. Tie virtually all Medicare fee-for-service payments (85% in 2016 and 90% in 2018) to quality and value.

This announcement puts hard numbers on the goal to move away from traditional fee-for-service Medicare payments that has been stated generally since at least 2010 when the Affordable Care Act was enacted. By clearly delineating specific figures for alternative payment models, such as accountable care organizations and bundled payment arrangements, from those figures for payment methods, HHS has made it clear that providers should be thinking not just about different forms of payment but different forms of organizations and relationships with other providers. Alternative payment models generally require coordination among different types of providers who may not otherwise be related to each other.

While the announced goals focus on the Medicare fee-for-service system, it is clear that HHS intends the impact of these goals to be far broader. Ms. Burwell also announced the creation of a Health Care Payment Learning and Action Network to facilitate a public-private sector partnership to “continue to build on our work with state Medicaid agencies, private payers, employers, consumers and other partners,” while welcoming the fact that “our partners in the private sector have the opportunity to be even more aggressive” in establishing alternative payment models and pay-for-value compensation systems. On the same day as Ms. Burwell’s announcement, the Centers for Medicare and Medicaid Services released a fact sheet stating that it is taking action with a goal to spend “our health dollars” more wisely, citing the importance of the goal for patients, families, providers, tax payers, employers, states and insurance companies, and making it clear that HHS and CMS fully intend to have their efforts to transform health care delivery and payment systems to reverberate well beyond the Medicare program.

Chris Raphaely

Chris Raphaely

R. Christopher Raphaely joined Cozen O'Connor's Philadelphia office in 2014 as co-chair of the Health Care Practice Group. Chris joins the firm from Jefferson Health System, where he served as deputy general counsel and general counsel to the system’s accountable care organization and captive professional liability insurance companies.

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CMS Releases Final Rule That Increases Difficulty of Medicare Enrollment

Posted by J. Nicole Martin on December 16, 2014
CMP, HHS, Medicaid, Medicare / No Comments

In early December, CMS released a final rule that implements certain provider (i.e., Hospitals, SNFs, physicians, etc.) and supplier (i.e., DME companies, etc.) enrollment requirements  (“Rule”). The goal of CMS’ implementation of the Rule is two-fold: to (i) “[s]trengthen program integrity;” and (ii) “help ensure that fraudulent entities and individuals do not enroll in or maintain their enrollment in the Medicare program.” The new requirements make obtaining and maintaining Medicare billing privileges for providers and suppliers more cumbersome.

For providers or suppliers treating Medicare patients, enrollment in the Medicare program is required in order to obtain Medicare billing privileges. A provider or supplier may enroll electronically using the Provider Enrollment, Chain, and Ownership System, known as PECOS, or by submitting a paper CMS enrollment form. CMS provides specific enrollment forms for institutional providers (CMS Form-855A: i.e., hospitals, SNFs); other providers (CMS Form 855-B: i.e., clinics/group practices); and physicians and other practitioners (CMS Form 855-I). Further, under Section 6401(a) of the Affordable Care Act, Medicare providers and suppliers that enrolled prior to March 25, 2011 are required to undergo a revalidation process in order to maintain their Medicare billing privileges, wherein the providers or suppliers essentially complete the applicable Medicare enrollment application as if they are a “new” provider or supplier enrollee. However, new enrollee providers and suppliers that submitted their enrollment applications on or after March 25, 2011 are exempt from this revalidation process. MACs are continuing to send out revalidation “requests” on a regular basis to enrollees until March 23, 2015.

The following selected updates to the provider and supplier enrollment requirements in the Rule parallel the recent trend of the federal government expanding its existing authority (i.e., the proposed rule to expand the OIG of the HHS’ exclusion authority) and cracking down on impermissible practices:

  •  “[a]llowing revocation of Medicare billing privileges if the provider or supplier has a pattern or practice of submitting claims that fail to meet Medicare requirements”;
  •  “expanding the instances in which a felony conviction can serve as a basis for denial or revocation of a provider[’s] or supplier’s enrollment”;
  • “if certain criteria are met, enabling [Medicare] to deny enrollment if the enrolling provider, supplier, or owner thereof had an ownership relationship with a previously enrolled provider or supplier that had a Medicare debt”;  and
  • “enabling [Medicare] to revoke Medicare billing privileges if [Medicare] determine[s] that the provider or supplier has a pattern or practice of submitting claims that fail to meet Medicare requirements.”

In addition, CMS clarified in the Rule that any final decision regarding the revocation of a provider’s or supplier’s Medicare billing privileges would come from the “CMS central office” rather than the provider’s or supplier’s MAC. CMS further explained that the re-enrollment bar does not apply to a provider’s or supplier’s failure to timely respond to a revalidation request or request for other information.

The regulations implementing this Rule will be effective February 3, 2015. For additional information regarding the new provider and supplier enrollment requirements under the Rule, contact Cozen O’Connor’s health law team.

J. Nicole Martin

J. Nicole Martin

J. Nicole Martin is an associate and practices in the Health Care Practice Group. Nicole assists accountable care organizations, health care systems, long term care providers, behavioral and mental health providers, medical device manufacturers, physician practices and pharmacies with their compliance, regulatory and transactional needs. Nicole’s practice includes providing clients with counsel regarding HIPAA/HITECH and state privacy and security laws, data breaches, business associate and covered entity obligations, licensure laws, Medicare, Medicaid and third-party payer matters, medical staff issues, and fraud and abuse laws. Nicole also represents clients undergoing changes of ownership and changes of control, and assists them with the transactional, regulatory and compliance requirements necessary to finalize the transactions.

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OIG Releases Proposed Gainsharing Regulation

Posted by Chris Raphaely on December 15, 2014
CMP, HHS, Medicaid, Medicare, OIG / No Comments

In early October, the Office of Inspector General (OIG) of the Department of Health and Human Services (HHS) released a proposed rule that included, among other provisions, a proposed gainsharing regulation (“Proposed Rule”), and a specific request for comments on a definition of what it means to “reduce or limit services” under the statutory prohibition against certain “gainsharing” arrangements among hospitals and physicians. The OIG’s goal with this Proposed Rule and subsequent final rule is to “interpret the statutory [gainsharing] prohibition broadly enough to protect beneficiaries and the Federal health care programs, but narrowly enough to allow low risk programs that further the goal of delivering high quality health care at a lower cost.” More specifically, the OIG seeks to implement a “narrower interpretation of the phrase “reduce or limit services.” Industry analysts are touting the final regulation as a potential game changer in the battle to deliver “high quality health care at a lower cost.”

The existing gainsharing civil monetary penalty statute (“Gainsharing CMP”) is a law that broadly “prohibits hospitals and critical access hospitals from knowingly paying a physician to induce the physician to reduce or limit services provided to Medicare or Medicaid beneficiaries who are under the physician’s direct care.” Violation of the Gainsharing CMP by a hospital that makes such payment, and a physician that in turn knowingly accepts the payment, results in CMPs that are no greater than $2,000 per each beneficiary for whom such payment is made.

Determining what does and what does not constitute a payment designed to reduce or limit services can be difficult, particularly because, as HHS has taken pains to point out, the statute technically prohibits payments from hospitals to physicians to limit any services, not just medically necessary services. However, as far back as 2005 the Medicare Payment Advisory Commission and the Chief Counsel to the OIG have supported gainsharing when safeguards are in place to evaluate risks posed by such programs, including “measures that promote accountability, adequate quality controls, and controls on payments that may change referral patterns,” and to date, the OIG has approved 16 gainsharing arrangements through the advisory opinion process.

More recently, under Section 3022 of the Affordable Care Act, the secretary of HHS established  waivers under the Medicare Shared Savings Program (MSSP) with respect to the Gainsharing CMP under certain conditions. These waivers have limited applicability as they apply only to accountable care organizations that participate in the MSSP. The final gainsharing regulations presumably will cover all hospitals and could potentially have a much broader impact upon hospital physician compensation arrangements. Overall, the Proposed Rule and the OIG’s request for comments on what should and should not constitute prohibited payments from hospitals to physicians to reduce or limit services is yet another example of how the regulatory  landscape is changing to adapt to a reimbursement model that is evolving from a fee-for-service dominated model to one in which pay-for-performance will play a much larger role.

The comment period closed under the Proposed Rule in early December, and the final rule is expected in 2015.

 

Chris Raphaely

Chris Raphaely

R. Christopher Raphaely joined Cozen O'Connor's Philadelphia office in 2014 as co-chair of the Health Care Practice Group. Chris joins the firm from Jefferson Health System, where he served as deputy general counsel and general counsel to the system’s accountable care organization and captive professional liability insurance companies.

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