Somehow, although certainly not from a clear reading of the Medicare statute, there was long a perceived rule that Medicare would only cover certain services if the patient was making measurable improvement. This created the perverse circumstance that a provider was discouraged from delivering services that would maintain a patient’s current health level even if the absence of those services would result in the patient declining and then needing even greater services.

Through the hard work and perseverance of six named individual plaintiffs, led by Glenda Jimmo of Vermont, and seven advocacy organizations, the perceived “improvement rule” has been struck down.  (For information on the settlement of the case and the legal ramifications, see information available through the Center for Medicare Advocacy. That’s the good news given the importance of keeping certain patients from getting worse, the bad news is that the settlement of the Jimmo case is not widely enough known.

Reports suggest that claims for skilled maintenance services are still being denied, or, in many instances, providers do not even offer these services to patients based on the assumption that reimbursement will be withheld. As a result of the Settlement, CMS agreed to embark on an education campaign around this ruling. That educational effort will need to be redoubled to get the message out, especially given the reality that many service providers themselves think only in terms of patient improvement and not maintenance, as improvement has long been the primary measure of their effectiveness.

Earlier this week, the Center for Medicare Advocacy convened a group of providers and patient advocates to identify barriers to implementing the Jimmo decision and how to circumvent them. Stay tuned for more!

On June 18, 2015, HHS Secretary Sylvia M. Burwell and DOJ Attorney General Loretta E. Lynch announced nationwide arrests in Medicare fraud schemes amounting to approximately $712 million in false billings.  Attorney General Lynch described the strike as “the largest criminal health care fraud takedown in the history of the Department of Justice, and it adds to an already remarkable record of enforcement.”

According to the Department of Justice Press Release the takedown was led by the Medicare Fraud Strike Force and resulted in 243 individuals, including 46 doctors, nurses and licensed medical professionals, being charged with Medicare fraud.  This Strike Force targeted false billings for the following services:

• Home Health
• Psychotherapy
• Physical and Occupational Therapy
• DME
• Pharmacy Fraud

The nationwide sweep included Florida, Texas, California, Louisiana, New York and Michigan.  Miami was a particular focus with 73 defendants charged and $263 million of false billings for home health, mental health and pharmacy services.

This nationwide sweep involved significant coordination between multiple government enforcement agencies and illustrates the government’s joint efforts to target health care fraud.  Included in the press conference were FBI Director James B. Comey, Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, Inspector General Daniel R. Levinson of the HHS Office of Inspector General (HHS-OIG) and Deputy Administrator and Director of CMS Center for Program Integrity Dr. Shantanu Agrawal.

Assistant Attorney General Caldwell spoke and emphasized the Criminal Division’s increased focus on Medicare fraud stating,  “Every day, the Criminal Division is more strategic in our approach to prosecuting Medicare Fraud.  We obtain and analyze billing data in real-time.  We target hot spots – areas of the country and the types of health care services where the billing data shows the potential for a high volume of fraud – and we are speeding up our investigations.  By doing this, we are increasingly able to stop schemes at the developmental stage, and to prevent them from spreading to other parts of the country.”

For further information contact Ryan P. Blaney or any member of Cozen O’Connor’s health care team.

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.

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.

In a historic bipartisan moment, the U.S. House of Representatives passed a nearly 300-page bill that is intended to “repeal the Medicare sustainable growth rate [“SGR”] and strengthen Medicare access by improving physician payments and making other improvements.” The legislation, titled the Medicare Access and CHIP Reauthorization Act of 2015, which is referred to as the Medicare “doc fix”, is the result of ongoing bipartisan efforts to resolve an unpopular physician reimbursement system that if not overridden each year would cut Medicare doctor’s pay by a notable percentage. The annual reimbursement cut would occur as required under the federal Balanced Budget Act of 1997 (the “BBA”), if not for the annual fixes set into motion by Congress. In a March 25, 2015 letter from the Congressional Budget Office (“CBO”) to House Speaker Boehner, the CBO explained that the BBA established the SGR formula “to ensure that real—that is, adjusted for inflation—spending per [Medicare] beneficiary for physicians’ services would grow on average at a rate of increase in gross domestic protect per capita minus the expected rate of increase in productivity for the economy as a whole.”

According to news outlets and press conferences, President Obama is ready to sign the bill once the Senate passes it. In the CBO’s letter to House Speaker Boehner, it estimated that this bill will increase:

• The federal budget deficits by $141 billion;
• Direct spending by approximately $145 billon; and
• Revenues by approximately $4 billion.

Under the Bill, Medicare’s payment rates for services on the physician fee schedule would increase by 0.5 percent a year for services furnished through 2019.  From 2019 through 2025 payments will remain the same but Medicare doctors will be eligible for merit-based bonus payments consistent with Medicare initiatives such as care models that shift away from fee for services.

Many expected the Bill to pass the Senate on Friday, March 27th but the Bill was not put up for a vote and Senate Minority Leader Harry Reid and Majority Leader Mitch McConnell said the bill will not get a vote until mid-April when the Senate returns from its recess.  CMS has provided notice that they will be able to hold payment for 14 calendar days to avoid a rate cut.

For further information contact Cozen O’Connor’s health care team.  We will continue to monitor and provide updates.

The FDA released draft guidelines (“Guidelines”) on Monday, March 9, 2015 establishing recommendations on the use of e-media and processes to obtain informed consent for clinical investigations (trials) of medical products including human drug and biological products, medical devices and combinations. The Guidelines provide useful insight for how the FDA recommends clinical investigators, sponsors and institutional review boards (“IRB”) should use e-informed consent for a clinical trial.

The FDA defines e-informed consent as “using electronic systems and processes that may employ multiple electronic media (e.g., text, graphics, audio, video, podcasts and interactive Web sites, biological recognition devices, and card readers) to convey information related to the study and to obtain and document informed consent.” The FDA reminds clinical investigators and sponsors that informed consent is more than just a subject’s signature.  Informed consent – whether completed electronically or in paper form – includes providing prospective clinical trial participants with enough information regarding the research to enable them to make an informed decision regarding whether to participate in the study. The subjects must have “adequate information” about the research.  Clinical investigators and sponsors may use video conferencing (i.e. Skype) to answer a subject’s questions about the clinical trial.

The Guidelines also include a question and answer section containing 14 inquires such as:

• How information in an e-informed consent should be presented to subjects;
• How/where e-informed consent processes should be conducted; and
• How/when questions from subjects should be answered.

Similar to CMS and states recognizing the authenticity of e-signatures, this guidance demonstrates the FDA’s desire to digitize health care and respond to the increased patient access to clinical trials in states passing “right-to-try” bills.  Right-to-try bills generally permit doctors and terminally ill patients to negotiate directly with drug companies to obtain experimental drugs that have passed Phase-I trials. Stay tuned for a forthcoming Health Law Informer blog announcing the FDA’s release of the e-informed consent final guidelines, which clinical investigators, sponsors and IRBs will want to consider implementing.

For further information contact the Cozen O’Connor’s health care team or the authors Ryan P. Blaney (Washington, DC) and J. Nicole Martin (Philadelphia, PA).

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.

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.

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.