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.

Recently, the Office of Inspector General (OIG) of the Department of Health and Human Services (HHS) released its Work Plan for Fiscal Year 2015 (“Work Plan”).  The OIG protects the integrity of HHS programs by identifying fraud and abuse and by suggesting improvements to HHS programs.  The Work Plan informs the public of new and ongoing reviews that OIG plans to pursue during the current fiscal year.

For Fiscal Year 2015 and beyond, OIG intends to focus on emerging payment, eligibility, management, and IT systems security vulnerabilities in the ACA programs, such as the health insurance marketplace.  OIG stated that it would also focus on the efficiency and effectiveness of payment policies in inpatient and outpatient settings, for prescription drugs, and in managed care.

Some specific new items of note include: (1) identifying clinical laboratories that routinely submit improper Medicare claims, (2) reviewing the rate of and reasons for transfers from group homes or nursing facilities to emergency departments as a potential indicator of poor quality, (3) identifying Medicaid MCO payments made on behalf of deceased or ineligible beneficiaries, and (4) assessing the extent to which hospitals comply with the contingency planning requirements of HIPAA.

The Work Plan is a valuable resource annually published by the OIG for providers to identify potential compliance risk areas.

Cozen O’Connor recently published another blog of the Work Plan with the Work Plan’s specific focus on HIPAA and/or information technology that the OIG will examine and address during Fiscal Year 2015.

With little fanfare just before the Labor Day weekend, CMS announced a program in which it would enter into administrative agreements with eligible providers in exchange for the providers’ withdrawal of pending appeals (“Settlement Process”). This announcement follows massive backlogs in administrative appeals resulting from retroactive denials of inpatient claims by Medicare contractors, including recovery auditor contractors (“RAC”), as well as a lawsuit brought by the American Hospital Association challenging these delays. Under the Settlement Process, CMS is willing to pay “68% of the net allowable amount” for eligible claims within 60 days. According to CMS, eligible providers should submit requests to participate in the Settlement Process by October 31, 2014, and eligible providers may file for an extension of time to request a settlement if they are unable submit requests by the end of October. Although this Settlement Process holds promise for certain providers, it does not apply to all providers or all claims.

Eligible Providers

Only acute care hospitals and critical access hospitals may participate in the Settlement Process. The following providers are not eligible to participate:

• Cancer hospitals;
• Children’s hospitals;
• Inpatient rehabilitation facilities;
• Long-term care hospitals; and
• Psychiatric hospitals that are paid under the inpatient psychiatric facility prospective payment system.

CMS may exclude eligible providers from participating in this Settlement Process if they are subject to pending False Claims Act litigation or investigations.

Eligible Claims

Only the following claims are eligible:

• Claims for dates of admissions prior to October 1, 2013;
• Claims for patients that were not Medicare Part C enrollees; and
• Claims that are pending appeals of inpatient-status claim denials, which were rejected by Medicare contractors, including RACs.

An eligible provider may select the eligible claims it would like to settle, while continuing to appeal certain other claims.

For more information regarding the Settlement Process, please contact Mark Gallant, Chris Raphaely, or Ryan Blaney.

On July 29, 2013, the OIG released a memorandum report finding that Medicare paid more on average for short inpatient stays than for observation stays in 2012.  The report, Hospitals’ Use of Observation Stays and Short Inpatient Stays for Medicare Beneficiaries, OEI-02-12-00040, touches on observation versus inpatient status, which has been and continues to be a hot button issue.

Background

Medicare beneficiaries receiving care at a hospital are classified as either inpatients or observation patients.  Observation patients are outpatients who receive treatments and assessments to determine whether they require further treatment as inpatients or can be discharged.  CMS policy provides that observation services are usually needed for 24 hours or less.   Continue reading…