Tag: CMS

Top Questions Health Care Providers Should Consider in a Post-Chevron World – A Polsinelli Round Table Discussion

Health Care is one of the most regulated industries in the country, and for many years, one of the key administrative agencies overseeing health care in the United States, the Department of Health and Human Services’ (“HHS”) Centers for Medicare & Medicaid Services (“CMS”), has enjoyed broad authority to regulate health care under the “Chevron doctrine.” Under this doctrine, CMS and other federal agencies were granted broad discretion to interpret and implement the law, thus allowing them to drive how care is delivered and paid for in the United States. It was difficult for providers to successfully challenge agency rulemaking in federal court, even if they thought the agency’s interpretation of the law was incorrect. The Supreme Court’s dismantling of Chevron doctrine will have a significant impact on health care providers, which we may begin to see as we move into CMS’s annual rulemaking cycle.

The Supreme Court’s decision to overturn Chevron was expected, but it is still too soon to truly understand the full impact of the decisions on the health care industry. A round table of attorneys and policy advisors from Polsinelli’s Health Care, Public Policy and Government Investigations Department discussed the potential short and long-term implications of the decision and offer the following insights for health care providers across this ever-changing industry for navigating the web of statutes, rules and other sub-regulatory guidance post-Chevron.

1. What do the Loper/Relentless Decisions Change for Health Care Organizations in the Short-Term? Has CMS’s Authority to Regulate Health Care Gone Away or Been Substantially Limited?

“Likely, not. Many of the health care regulations are based on clear statutory language and will continue to give providers the rules for the road from a compliance standpoint. More controversial rules – like mental health parity, payment cuts, surprise billing, antidiscrimination, etc. – may be further delayed or even tabled for the short term while we learn more about how these challenges will be viewed by the courts. To the extent health care providers are struggling with a rulemaking negatively impacting them, it is worth beginning to evaluate whether challenging it may be warranted.” – Bragg Hemme

“CMS’s authority to regulate today is just like yesterday and probably tomorrow. Without a challenger to a rule, any rule continues unchanged – at least for the short-term. We have already seen; however, some regulated entities challenge a particular rule to a federal court and get some immediate regulatory relief. Members of Congress who want to see large scale changes to regulatory authority may well pursue identification of rules that were upheld in lower courts citing Chevron with an eye towards vitiating those rules with broad Congressional action. There are thousands of such cases and potentially impacted rules.” – Jennifer Evans

“Where the crux of Loper Bright unravels the courts’ existing practice of deferring to regulators’ interpretation of a statute that is unclear or ambiguous, we can expect to see increased litigation that challenges agency action arguing that the foundational law for such action was ambiguous and the agency has exceeded its statutory authority. It is unlikely we will see any change in regulator action or regulatory enforcement unless and until courts begin to overturn agency action on the basis that a statute is ambiguous and the agency that interpretated the statute was incorrect. We can also expect to see increased legislation explicitly delegating more authority to agencies.” – Meredith Duncan and Sara Avakian

2. What are Some Specific Areas of Health Care Regulation that may be Impacted?  

Health Care Fraud, Waste, and Abuse Laws

“The overruling of Chevron may have a significant effect on the application of the health care fraud and abuse laws, particularly the Physician Self-Referral Law (“Stark Law”) and Anti-Kickback Statute (“AKS”). Over the years, agencies including the HHS Office of Inspector General (“OIG”) and CMS have published hundreds of pages of rules, preamble language, and explanatory sub-regulatory guidance regarding the application of these laws. Some of these interpretations favor regulated entities, while others favor enforcers. To the extent Loper Bright represents a fundamental change in the role of agencies in clarifying or refining the scope and effect of statutory language, these implementing regulations and, thus, some longstanding health care industry practices could be impacted.” – Neal Shah

Reimbursement

“Coverage and payment rules from CMS (Medicare and Medicaid) and DHA (TriCare) may be ripe for attack. It will be interesting to see if the agencies are able or willing to engage in active negotiations to avoid or settle litigation that they did not face with Chevron deference.” – Jennifer Evans

“I anticipate that many of the routine Medicare reimbursement-related rulemakings (e.g., IPPS, OPPS, Physician Fee Schedule) will continue as they have in the past. Certain aspects of those rules or any controversial rulemakings may now be up for challenge. For instance, rules related to Disproportionate Share Hospitals have already been challenged since the Loper Bright decision. Any type of payment cut or agency effort to rein in health care costs, like Medicare drug pricing rules, surprise billing, mental health parity will also be closely scrutinized and likely challenged.” – Bragg Hemme

FDA

“Immediate impact is likely to be felt by the Lab Developed Test rule FDA is trying to finalize. Congress tried, but failed, to give the FDA statutory authority in this space via the VALID Act. The FDA went ahead and went through the rulemaking process in one year. This was lightspeed for the FDA. The rule was challenged prior to the reversal of Chevron. I expect to see the plaintiff amending their complaint now.”  – Michael Gaba

Surprise Billing

“I expect the Loper/Relentless decisions will impact the continued rollout of the regulations implementing the No Surprises Act. Since the law went into effect in 2022, regulations and guidance implementing the No Surprises Act have been vacated following challenges under the Administrative Procedures Act on four separate occasions – and that was under the prior Chevron standard, which of course was more deferential to agency decisions. But there are more rules that the Agencies are expected to issue – both as a result of the prior lawsuits and as part of their ongoing obligation to implement the law – that will have a significant impact on how the No Surprises Act functions in practice. These rules will also likely depend on the Departments’ interpretation of the No Surprises Act, and such interpretation will now not be afforded the deference that existed in the pre-Loper/Relentless landscape.” – Josh Arters

3. What Areas of Health Care Regulation are less Likely to be Impacted?

HIPAA

“From an HHS data privacy/security/breach perspective, the Jarkesy and Chevron decisions will arguably have very little impact unless parties are willing to challenge HHS HIPAA decisions in court. In other words, HHS OCR is proceeding as normal, and will continue to do so, particularly given that the HIPAA Rules were codified and specifically modified by Congress in the HITECH Act in 2009. However, to the extent a client would like to appeal a civil money penalty directly to a district court (Jarkesy) or attack a specific provision of sub regulatory guidance post-Chevron (Loper Bright), we could certainly attempt to do so.” – Iliana Peters

Long-Term Care

“Long term care providers are unlikely to see any immediate changes in regulation or enforcement. In most authorizing statutes, Congress delegated authority to CMS to develop and implement conditions of participation, and the guidance that has been provided interpreting those rules. It is unlikely the Loper Bright decision will cause CMS to change its survey process or the remedies imposed therefrom. However, any regulation or sub-regulatory guidance, such as the State Operations Manual, which is not expressly authorized by statute or otherwise interprets an ambiguous statute could be ripe for litigation to challenge CMS’ authority and/or CMS’ interpretation of the statute. To determine whether specific regulations and guidance is subject to challenge will require careful consideration of the Social Security Act and the deference, if any, afforded to CMS for rulemaking.” – Meredith Duncan and Sara Avakian

State Licensing & Practice Rules

“Many of the laws that impact health care providers, such as professional or facility licensing requirements and corporate practice of medicine prohibitions, are state laws that are unlikely to be immediately impacted by Loper Bright. However, Loper Bright may become a catalyst for new challenges to state-level administrative actions, which could create uncertainty related to state agency actions, such as Medical Board rules or guidance.”  – Kathleen Sutton

4. What Issues Should Health Care Organizations Anticipate in the Long-Term?

“It is unclear if there will be rule/no rule ‘chaos’ for health care organizations. When we think of all of the arrangements that default to ‘compliance with laws’ those provisions may lose meaning and effectiveness if the underlying legal rule-structure is threatened” – Jennifer Evans

“With the rise of litigation to combat potentially adverse rulemakings, we may see disagreement within the provider community to the extent some providers are ’winners’ and others are ‘losers.’ Further, we could see the same rulemaking get treated differently by courts depending on where the rules are being challenged. This will be very difficult to navigate for national providers. Hopefully, this ruling will cause regulatory agencies to take more shareholder feedback in their rulemaking. We will likely see more work needed at a Congressional level, however, if a statute is required for things that have historically been dealt with at a regulatory level, causing a slowdown.  This will be a challenge, particularly for innovative providers that are changing care models or adopting new technology, for instance. Health care rules often were behind the evolution of health care. Requiring Congressional action may present some opportunities but will not make things move faster.” – Bragg Hemme

“In the long-term, health care organizations should anticipate an increased opportunity to challenge unlawful regulations that run afoul of Congressional action. That is generally a good thing. But a negative consequence of the Loper Bright decisions is the likely impact on the agency rulemaking process, and the time it might take for agencies to issue regulations. Agencies are likely to move a bit slower when issuing new regulations in light of the dramatic change to how their rulemaking will be scrutinized by the courts going forward.” – Josh Arters

“It is likely that Congress will carefully craft new statutes and delegate more clear authority to the administrative agencies charged with enforcement. We also anticipate agencies taking more time to carefully craft their rules and guidance to mitigate the challenges that could arise based on these decisions. For providers, this will only further delay an already backlogged process.” – Meredith Duncan and Sara Avakian

“Loper Bright creates opportunities for health care organizations to challenge agency actions, but this opportunity comes at the expense of clarity and certainty that came from deference to agencies. The health care regulatory landscape is already complex and ever-changing, but the lack of uniformity that may result from different courts interpreting the same set of rules is going to create further complexity and confusion. The aftermath of Loper Bright may create a chilling effect for innovation or growth for health care businesses. Health care organizations will have to be strategic and stay up-to-date on the changing laws to maintain and grow their businesses while navigating this uncertainty.” – Kathleen Sutton

5. What can Health Care Organizations do if a CMS Rulemaking Has a Significant Impact on their Organization?

“If a rule isn’t working and there is a reasonable interpretation that the statue enabling the rule offers a better outcome, it may be time for health care organizations to start their engines and challenge rules that don’t match specific statutory requirements and fundamental principles. For example, think about adequate reimbursement and access to care. Does this reopen a provider’s ability to litigate payment rules that do not ensure access to care? Maybe.” – Jennifer Evans

“When faced with rulemaking that has a significant impact on operations, health care organizations might be presented with an opportunity to work with federal agencies to find a resolution without having to resort to litigation. Now that agencies understand that their rulemaking may be challenged under a less deferential standard, and, at least for now, most courts have held that a district court may vacate unlawful rules nationally, agencies might be more willing to find more creative and/or individualized solutions to the unique impact their rules might have on a particular health care organization.” – Josh Arters

6. Does this Decision Provide a Greater Ability for Health Care Providers to Advocate for Laws and Regulations to CMS and/or Congress?

“Providers have always had the opportunity to make a contribution in the public policy process; Loper means it is even more important. Engagement in the public policy process does not guarantee success, but lack of involvement almost certainly means a loss.  Both the legislature and agencies may be more open to negotiated laws and regulations. These processes will take longer, however.” – Julius Hobson

“Being part of the debate in the US Congress on health care legislation (and any legislation for that matter) is now more crucial than ever. Members of Congress will no longer be able to write laws that are ambiguous, which would give the agency of jurisdiction the authority to legislate through regulatory fiat. Congress now will be required to be more prescriptive in their laws, outlining specifically in statute the intent of the law. Congress currently relies on ‘report language’ that accompanies legislation, which expresses the legislative intent; however, the report language is not the black letter of the law and more often than not, the agency of jurisdiction ignores report language.  Finally, now that the Congress will need to be more prescriptive in its drafting of legislation Congress will be required be even more deliberative in crafting a bill. This will mean that laws will require more consensus to get the bills it works on approved.”  – Harry Sporidis

“In 2019, when the Supreme Court issued the Azar v. Allina Health Services decision, every component in CMS was tasked with reviewing, analyzing, and verifying that all the guidance materials had regulatory and/or statutory support. For a few years after the decision, CMS went through the rulemaking process for any guidance/policy that was not clearly articulated or supported by regulation. Now that the Supreme Court has overturned Chevron, CMS will likely conduct a similar exercise to determine all of the policy areas where the law is ambiguous, and the Agency has made the determination on how best to carry out the law. CMS will also likely consult with its legislative arm to work with Congress to clarify such laws. This undertaking will take CMS several years to complete. While CMS is engaged its review, there is an opportunity for health care organizations to engage with CMS to review policy position that result from an ambiguous statute and reconsider a more favorable interpretation on of the law.” – Ronke Fabayo

Sara Avakian, Iliana L. Peters, Kathleen Snow Sutton, Julius W. Hobson, Jr., Harry Sporidis, and Ronke Fabayo also contributed to this article.

© Polsinelli PC, Polsinelli LLP in California
by: Bragg E. Hemme, Jennifer L. Evans, Meredith A. Duncan, Neal D. Shah , Michael M. Gaba, and Joshua D. Arters of Polsinelli PC

For more news on the Health Care Industry Post-Chevron, visit the NLR Health Law & Managed Care section.

The 80/20 Rule is Here: CMS Finalizes HCBS Care Worker Payment Requirements

In May 2023, the Centers for Medicare and Medicaid Services (“CMS”) proposed a series of rule changes intended to help promote the availability of home and community-based services (“HCBS”) for Medicaid beneficiaries. Chief among these proposals was a new rule that would require HCBS agencies to spend at least 80% of their Medicaid payments for homemaker, home health aide, and personal care services on direct care worker compensation (the “80/20 Rule”). Intended to help stabilize the HCBS workforce, the proposal faced immediate backlash from HCBS providers and Medicaid agencies, who expressed concern that the 80/20 rule would harm HCBS providers by mandating specific allocations to worker compensation and bogging down providers and Medicaid agencies with burdensome reporting requirements.

After reviewing thousands of comments, CMS released an advance copy of the final rule this week. Defying stakeholder anticipation that the 80/20 Rule would be relaxed, or updated to provide more flexibility for providers, CMS finalized the 80/20 Rule largely as originally proposed, including the following key requirements:

  • HCBS providers must spend at least 80% of Medicaid payments on direct care worker compensation;
  • HCBS providers will have six years (increased from four) from the effective date of the final rule to demonstrate compliance with the 80/20 Rule;
  • States must begin collecting and tracking data on direct care worker compensation within four years of the effective date of the final rule; and
  • States are permitted to establish different standards for smaller HCBS providers and to establish hardship exemptions – in both cases based on objective and transparent criteria.

Under the broad mandate of the 80/20 Rule, there are a number of key definitions that HCBS providers must consider as they evaluate these new requirements:

Direct Care Workers

Because the 80/20 Rule was adopted largely to stabilize the HCBS workforce, a key component is whose compensation qualifies for inclusion. CMS’s proposed definition encompassed almost any person with a role in providing direct care to patients (e.g., RNs, LPNs, individuals practicing under their supervision, home health aides, etc.). Under the final 80/20 Rule, CMS clarified that “direct care workers” also include those whose role is specifically tied to clinical supervision (e.g., nurse supervisors).

Compensation

Compensation of direct care workers means:“[s]alary, wages, and other remunerations as defined by the Fair Labor Standards Act and implementing regulations; [b]enefits (such as health and dental benefits, life and disability insurance, paid leave, retirement, and tuition reimbursement); and [t]he employer share of payroll taxes for direct care workers delivering services authorized under section 1915(c) of the Act.” CMS clarified that “compensation” also includes:

  1. Overtime pay;
  2. All forms of paid leave (e.g., sick leave, holidays, and vacations);
  3. Different types of retirement plans and employer contributions; and
  4. All types of benefits: CMS intentionally used the phrase “such as” to indicate the list of benefits was non-exhaustive, and indicated technical guidance to states on this subject is forthcoming.

Excluded Costs

CMS expressed concern that HCBS providers would include training costs for direct care workers as “compensation,” and that calculating compensation in this way could result in negative outcomes, such as diminished training opportunities. To address these concerns, CMS created the concept of “excluded costs,” which are excluded from the percentage calculations under the 80/20 Rule. See § 441.302(k)(1)(iii) (“costs that are not included in the calculation of the percentage of Medicaid payments to providers that are spent on compensation for direct care workers.”). Excluded costs are limited to:

  1. Costs of required direct care worker training;
  2. Direct care worker travel costs (mileage, public transportation subsidy, etc.); and
  3. Personal protective equipment costs.

Medicaid Payments

CMS largely adopted its expansive view of what qualifies as a “Medicaid Payment” for purposes of 80/20 Rule calculations. CMS clarified that the 80/20 Rule encompasses both standard and supplemental payments and applies regardless of whether HBCS services are delivered through fee-for-service or managed care delivery systems. CMS also declined to create a formal carve-out for value-based care or pay-for-performance arrangements, despite recognizing their value.

What Comes Next?

HCBS providers and state Medicaid agencies have six years to sort out their compliance with the 80/20 Rule (though data tracking and reporting begins after year three). On the provider side, this means carefully evaluating the business and economic impacts of compliance with the 80/20 Rule and monitoring CMS and state-level guidance on implementation as it develops over time. For multi-state providers, this process becomes even more complicated, as there is a high likelihood that states will choose to implement the 80/20 Rule in different, and potentially contradictory, ways.

Providers also need to work with the state agencies to address the adequacy of HCBS rates generally. CMS recognized the important role that the underlying rates play in HCBS sustainability but declined to mandate specific payment rates or methodologies. As a result, positive momentum on the rates themselves must come from state initiatives.

© Polsinelli PC, Polsinelli LLP in California
For more news on Healthcare Provider Regulations, visit the NLR Health Law & Managed Care section.

A Time for Clauses – Santa and No Gag

As we approach December, the impending arrival of Santa Claus is no doubt dominating discussions in many households.  However, there is another, perhaps lesser known, “clause”-related item that health plan sponsors need to keep top of mind in the coming month.

Specifically, as discussed in our blog found here, health plan sponsors must remember to file their first annual “no gag clause” attestation on December 31, covering the period from December 27, 2020 through the attestation date.

Here are some quick reminders about the requirement, along with some next steps for plans that are catching up:

  • What is the “No Gag Clause” Attestation?

The “no gag clause” attestation, which must be filed annually by December 31, requires group health plans and issuers to certify that they are not subject to agreements that directly or indirectly restrict them from disclosing provider-specific cost or quality-of-care information to certain parties, electronic accessing de-identified claims and encounter information (consistent with privacy laws) or sharing this information with a business associate.

  • How to File an Attestation

The attestation is filed electronically on CMS’s dedicated website, found here.  Instructions, frequently asked questions and a user manual can be found on CMS’s website here.

  • Who is Responsible for the Attestation?

While self-insured plans retain the ultimate responsibility for ensuring that the attestation is submitted, they can contract with their third-party administrators to file on their behalf.

For fully-insured plans, the insurance issuer’s submission of an attestation will satisfy the attestation requirement for both the plan and the issuer.

  • What Should Plan Sponsors Do Now?

For plans that have not yet begun to address the attestation, there is still time to take the necessary steps as follows:

  • If they have not already done so, plans should review their service agreement(s) to ensure that they do not contain any gag clauses.
  • Plans may also wish to obtain written confirmation from their administrators that no prohibited gag clauses are included in their applicable contracts (and, if any are, that the contracts are amended to remove them effective December 27, 2020).
  • Self-insured plans should contact their administrator(s) to coordinate who will be filing the submission.  At this stage, many administrators already have their processes in place and may not wish to file on the behalf of the plan, in which case the plan will need to do the filing.  This will make accomplishing the first two steps more important.

Getting these tasks accomplished as soon as possible will allow plan sponsors to put these prohibited clauses behind them and focus on the good Clauses of the season—Santa and Mrs.

© 2023 Proskauer Rose LLP.
For more news on No Gag Clauses, visit the NLR Health Law & Managed Care section.

CMS Takes Steps to Lower SNF Medicare Payment Error Rates

With the Medicare Comprehensive Error Rate Testing program projected error rate for skilled nursing facilities (SNFs) showing a significant increase in 2022 (15.1%, up from 7.9% in 2021), the Centers for Medicare and Medicaid Services (CMS) has instructed each of its Medicare Administrative Contractors (MACs) that review SNF Medicare claims to initiate a five-claim probe and educate medical review for each SNF in the MAC’s jurisdiction.

CMS surmises that the source of the increase in improper payments may lie with the change from resource utilization group (RUG) IV to the patient driven payment model (PDPM) and has noted that the primary root cause of SNF errors is missing documentation.

MACs are instructed to implement the five-claim probe on a rolling basis beginning with the top 20% of SNFs that show the highest risk. If any improper payments are identified, the MAC will adjust (or deny) the claim(s) and offer either widespread education or 1:1 individualized education depending on the error rate. 1:1 education will include claim specific information and allow the SNF to review the claim decision, ask questions and receive feedback.

Beginning June 5, 2023, SNFs nation-wide should be on the lookout for a prepayment probe and educate record request from the MAC and be prepared to respond within 45 days.

Copyright © 2023, Sheppard Mullin Richter & Hampton LLP.

For more Healthcare Legal News, click here to visit the National Law Review.

Will CMS’s Proposed Rule on “Identified Overpayments” Increase Reverse FCA Cases?

On December 27, 2022, the Centers for Medicare & Medicaid Services (CMS) published a proposed rule which, in part, seeks to amend the existing regulations for Medicare Parts A, B, C, and D regarding the standard for when an “identified” overpayment must be refunded, pursuant to the Affordable Care Act (ACA) and the False Claims Act (FCA) reverse false claims provision. As written, the proposed rule would remove the existing “reasonable diligence” standard for identification of overpayments, and add the “knowing” and “knowingly” FCA definition. As a result, an overpayment would be “identified” when the entity has actual knowledge of an identified overpayment, or acts in reckless disregard or deliberate ignorance of an identified overpayment. And, a provider is required to refund overpayments it is obliged to refund within 60 days of such identified overpayment.

If this proposed rule is finalized, the Department of Justice (DOJ) and Health and Human Services (HHS) Office of Inspector General’s (OIG) should be applying the same intent standard to their evaluation of potential reverse false claims and Civil Monetary Penalty liability.

The Lay of the Land

Currently, the applicable overpayment regulations state:

A person has identified an overpayment when the person has, or should have through the exercise of reasonable diligence, determined that the person has received an overpayment and quantified the amount of the overpayment. A person should have determined that the person received an overpayment and quantified the amount of the overpayment if the person fails to exercise reasonable diligence and the person in fact received an overpayment.

42 C.F.R. § 401.305(a)(2). In the 2016 Final Rule, CMS agreed “the 60-day time period begins when either the reasonable diligence is completed or on the day the person received credible information of a potential overpayment if the person failed to conduct reasonable diligence and the person in fact received an overpayment.” This reasonable diligence standard allows entities to not only determine credibility of allegations, or issues relating to, a potential overpayment but also, when credible, to conduct a properly scoped internal investigation, during which an entity also accurately quantifies any associated overpayment due for refund.

In the proposed rulemaking, CMS is suggesting instead the following standard:

A person has identified an overpayment when the person knowingly receives or retains an overpayment. The term “knowingly” has the meaning set forth in 31 U.S.C. 3729(b)(1)(A).

31 U.S.C. 3729(b)(1)(A) defines “Knowingly” as any circumstance in which “a person, with respect to information—(i) has actual knowledge of the information; (ii) acts in deliberate ignorance of the truth or falsity of the information; or (iii) acts in reckless disregard of the truth or falsity of the information.”

The currently proposed provision has similar effect to the language CMS proposed in 2012 and, after consideration of comments, ultimately rejected in the 2014 Final Rule (Medicare Advantage and Part D) and 2016 Final Rule (Medicare Part A and Part B). In that final rulemaking, CMS removed the “actual knowledge,” “reckless disregard,” and “deliberate ignorance” terms in favor of the reasonable diligence standard, leaving practitioners to argue that CMS had lowered requisite intent to a standard less than required by the FCA.

Potential Impact

The FCA is a fraud statute, requiring intent. If a company investigating the credibility, issue, and scope of a matter (i.e., exercising reasonable diligence) also diligently determines the scope of a possible refund obligation, it would be difficult for DOJ to credibly claim an entity has acted recklessly, or with deliberate indifference to repayment under the FCA. DOJ’s general practice has been to bring reverse FCA cases when a provider does not investigate credible allegations and does not refund associated overpayments, after identifying them. For example, in a 2015 case, DOJ attorneys stated in a court conference, “[T]his is not a question … of a case where the hospital is diligently working on the claims and it’s on the sixty-first day and they’re still scrambling to go through their spreadsheets, you know, the government wouldn’t be bringing that kind of a claim.” United States ex rel. Kane v. Healthfirst, Inc., 120 F. Supp. 3d 370, 389 (S.D. N.Y. 2015).

It remains to be seen whether this change will result in an increased pursuit of reverse FCA cases. The proposed rule would eliminate an explicit diligence period (generally not to exceed six months, except in particularly complicated analyses, such as under the Physician Self-Referral or “Stark” Law) to ascertain the validity and amount of a potential obligation to refund an overpayment. The proposed rule does not explain whether providers, suppliers, and others still will have an opportunity to conduct a reasonably diligent inquiry into whether any obligation to refund exists at all, prior to the ACA 60-day clock starting to run. Ideally CMS would make clear in any preamble that the government still expects reasonable and professional efforts be undertaken before making refunds, even if that process may take some time to complete

Absent such clarity, the fact remains that it is difficult to “identify” an obligation to refund, much less any refundable amounts, without first validating the alleged overpayment and quantifying any obligation.

Additionally, this standard may prompt entities to submit an HHS-OIG self-disclosure before all facts are known. While OIG requires a disclosing party to conduct an internal investigation prior to submission, it is near impossible to thoroughly investigate issues and identify any refund 60 days from learning of a possible issue that might result in a refund (especially when multiple payors are involved). Even if a disclosing party notes within a self-disclosure that an investigation is ongoing, the disclosing party must certify that it will complete its investigation within 90 days of the submission date – which still may not be enough time based on the complexity of the allegations or claims review required. The resulting back-and-forth of incomplete information likely would create unnecessary delays in reaching a resolution and frustration among all parties involved.

We encourage all providers, suppliers, Medicare Advantage organizations, Part D participants, and other stakeholders to submit comments on this proposed rule. The public has until 5 p.m. ET on February 13, 2023 to submit comments, which are accepted, electronically or by mail.

Article By Kara (Schoonover) Sweet, Lisa M. Noller, and Lawrence W. Vernaglia of Foley & Lardner LLP

For more healthcare and health law legal news, click here to visit the National Law Review.

© 2023 Foley & Lardner LLP

CMS Issues Calendar Year 2023 Home Health Final Rule

On November 4, 2022, the Centers for Medicare & Medicaid Services (CMS) published the calendar year 2023 Home Health Prospective Payment System Rate final rule, which updates Medicare payment policies and rates for home health agencies.  Some of the key changes implemented by the final rule are summarized below.

  • Home Health Payment Rates. Instead of imposing a significant rate cut, as was included in the proposed rule released earlier this year, CMS has increased calendar year 2023 Medicare payments to home health agencies by 0.7 percent or $125 million in comparison to calendar year 2022.

 

  • Patient-Driven Groupings Model and Behavioral Changes. A -3.925 percent permanent adjustment to the 30-day payment rate has been implemented for calendar year 2023. The purpose of this adjustment is to ensure that aggregate expenditures under the new patient-driven groupings model payment system are equal to what they would have been under the old payment system. Additional permanent adjustments are expected to be proposed in future rulemaking.

 

  • Permanent Cap on Wage Index Decreases. The rule finalizes a permanent 5 percent cap on negative wage index changes for home health agencies.

 

  • Recalibration of Patient-Driven Groupings Model Case-Mix Weights. CMS has finalized the recalibration of the case-mix weights, including the functional levels and co-morbidity adjustment subgroups and the low utilization payment adjustment thresholds, using calendar year 2021 data in an effort to more accurately pay for the types of patients home health agencies are serving.

 

  • Telehealth. CMS plans to begin collecting data on the use of telecommunications technology under the home health benefit on a voluntary basis beginning on January 1, 2023, and on a mandatory basis beginning on July 1, 2023. Further program instruction for reporting this information on home health claims is expected to be issued in January of 2023.

 

  • Home Infusion Therapy Benefit. The Consumer Price Index for all urban consumers for June 2022 is 9.1 percent and the corresponding productivity adjustment is a reduction of 0.4 percent. Therefore, the final home infusion therapy payment rate update for calendar year 2023 is an increase of 8.7 percent. The standardization factor, the final geographic adjustment factors, national home infusion therapy payment rates, and locality-adjusted home infusion therapy payment rates will be posted on CMS’ Home Infusion Therapy Services webpage once the rates are finalized.

 

  • Finalization of All-Payer Policy for the Home Health Quality Reporting Program. CMS has ended the temporary suspension of Outcome and Assessment Information Set (OASIS) data collection on non-Medicare/non-Medicaid home health agency patients. Beginning in calendar year 2027, home health agencies will be required to submit all-payer OASIS data, with two quarters of data required for program year 2027. A phase-in period will occur from January 1, 2025 through June 30, 2025, and during that time the failure to submit the data will not result in a penalty.

 

  • Health Equity Request for Information. The comments received from stakeholders providing feedback on health equity measure development for the Home Health Quality Reporting Program and the potential future application of health equity in the Home Health Value-Based Purchasing Expanded Model’s scoring and payment methodologies are summarized in the final rule.

 

  • Baseline Years in the Expanded Home Health Value-Based Purchasing (HHVBP) Model. For the Expanded Home Health Value-Based Purchasing Expanded Model, CMS is: updating definitions, changing the home health agency baseline calendar year (from 2019 to 2022 for existing home health agencies with a Medicare certification date prior to January 1, 2019, and from 2021 to 2022 for home health agencies with a Medicare certification date prior to January 1, 2022); and changing the model baseline calendar year from 2019 to 2022 starting in 2023.

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Copyright © 2022 Robinson & Cole LLP. All rights reserved.

Feds Announce More Aggressive Enforcement of Poor Performing Nursing Homes

In February of 2022, during his State of the Union Address, President Biden announced an action plan to improve the safety and quality of care in the nation’s nursing homes.[i] On October 21, 2022, Centers for Medicare and Medicaid Services (CMS) announced new requirements to help with oversight of facilities selected to the Special Focus Facilities (SFF) Program.[ii]

The SFF Program was created to help and oversee the poorest performing nursing homes in the country and improve nursing homes that have a history of noncompliance.  The goal is to improve safety and quality of care. The facilities selected for the SFF Program must be inspected no less than once every six months and if severe enforcement is needed, it is at the discretion of the state surveyors. The main objective for the SFF Program is for facilities to show exponential improvement, graduate from the program, and then maintain compliance and better quality of care and safety.

The new CMS requirements, outlined below, are aimed at facilities that continuously fail to improve and remain in the SFF Program for a prolonged period of time. Health and Human Services Secretary Xavier Becerra stated, “Let us be clear: we are cracking down on enforcement of our nation’s poorest-performing nursing homes. As President Biden directed, we are increasing scrutiny and taking aggressive action to ensure everyone living in nursing homes gets the high-quality care they deserve. We are demanding better because our seniors deserve better.”

CMS announced the following revisions to the SFF Program:

  • Effective immediately, CMS will use escalating penalties for violations for deficiencies cited at the same level in subsequent surveys. This can include possible discretionary termination from Medicare and/or Medicaid funding for facilities that are cited with immediate jeopardy deficiencies on any two surveys while participating the in the SFF Program.
  • CMS will consider facilities’ efforts to improve when considering discretionary termination from Medicare and/or Medicaid programs.
  • CMS will impose more severe escalating enforcement remedies for SFF Program facilities for noncompliance and no effort to improve performance.
  • Increased requirements that nursing homes in the SFF Program must meet to graduate from the SFF Program.
  • For three years after graduation from the SFF Program, CMS will ensure nursing homes consistently maintain compliance with safety requirements by continuing to closely monitor these facilities.
  • CMS is offering more support resources to facilities selected for the SFF Program.

Additionally, the Biden administration released a fact sheet with the steps they are taking to in improve the quality of nursing homes. [iii] Some of the steps mentioned include more resources to support union jobs in nursing home care, establishing minimum staffing requirements, incentivizing quality performance through Medicare and Medicaid funding, and enhanced efforts to prevent fraud and abuse.

  1. https://www.whitehouse.gov/briefing-room/statements-releases/2022/02/28/…
  2. https://www.cms.gov/files/document/qso-23-01-nh.pdf
  3. https://www.whitehouse.gov/briefing-room/statements-releases/2022/10/21/…

Article By Thomas W. Hess, Kelly A. Leahy, Sydney N. Pahren, and Bryan L. Cockroft of Dinsmore & Shohl LLP

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© 2022 Dinsmore & Shohl LLP. All rights reserved.

Medicare CERT Audits and How to Prepare for Them

CERT audits are an unfortunate part of doing business for healthcare providers who accept Medicare. Failing the audit can mean the provider has to pay back overcharges and be subjected to increased scrutiny in the future. 

The best way to be prepared for a CERT audit is to have a compliance strategy in place and to follow it to the letter. Retaining a healthcare lawyer to craft that strategy is essential if you want to make sure that it is all-encompassing and effective. It can also help to hire independent counsel to conduct an internal review to ensure the compliance plan is doing its job.

When providers are notified of a CERT audit, hiring a Medicare lawyer is usually a good idea. Providers can fail the audit automatically if they do not comply with the document demands.

What is a CERT Audit?

The Comprehensive Error Rate Testing (CERT) program is an audit process developed by the Centers for Medicare and Medicaid Services (CMS). It is administered by private companies, called CERT Contractors, which work with the CMS. Current information about those companies is on the CMS website.

The CERT audit compares a sampling of bills for Medicare fee-for-service (FFS) payments, which were sent by the healthcare provider to its Medicare Administrative Contractor (MAC), against medical records for the patient. The audit looks at whether there is sufficient documentation to back up the claim against Medicare, whether the procedure was medically necessary, whether it was correctly coded, and whether the care was eligible for reimbursement through the Medicare program.

Every year, the CERT program audits enough of these FFS payments – generally around 50,000 per year – to create a statistically significant snapshot of inaccuracies in the Medicare program.

The results from those audits are reported to CMS. After appropriately weighing the results, CMS publishes the estimated improper payments or payment errors from the entire Medicare program in its annual report. In 2021, the CMS estimated that, based on data from the CERT audits, 6.26 percent of Medicare funding was incorrectly paid out, totaling $25.03 billion.

The vast majority of those incorrect payments, 64.1 percent, were marked as incorrect because they had insufficient documentation to support the Medicare claim. Another 13.6 percent were flagged as medically unnecessary. 10.6 percent was labeled as incorrectly paid out due to improper coding. 4.8 percent had no supporting documentation, at all. 6.9 percent was flagged as incorrectly paid for some other reason.

The CERT Audit Process

Healthcare providers who accept Medicare will receive a notice from a CERT Contractor. The notice informs the provider that it is being CERT audited and requests medical records from a random sampling of Medicare claims made by the provider to its MAC.

It is important to note that, at this point, there is no suspicion of wrongdoing. CERT audits examine Medicare claims at random.

Healthcare providers have 75 days to provide these medical records. Failing to provide the requested records is treated as an audit failure. In 2021, nearly 5 percent of failed CERT audits happened because no documentation was provided to support a Medicare claim.

Once the CERT Contractor has the documents, its team of reviewers – which consists of doctors, nurses, and certified medical coders – compares the Medicare claim against the patient’s medical records and looks for errors. According to the CMS, there are five major error categories:

  • No documentation

  • Insufficient documentation

  • Medical necessity

  • Incorrect coding

  • Other

Errors found during the CERT audit are reported to the healthcare provider’s MAC. The MAC can then make adjustments to the payments it sent to the provider.

Potential Repercussions from Errors Found in a CERT Audit

CERT audits that uncover errors in a healthcare provider’s Medicare billings lead to recoupments of overpayments, future scrutiny, and potentially even an investigation for Medicare fraud.

When the CERT audit results are brought to the MAC’s attention, the MAC will adjust the payments that it made to the provider. If the claims led to an overpayment, the MAC will demand that money back.

But Medicare Administrative Contractors (MACs) can go further than just demanding restitution for overpayments. They can also require prepayment reviews of all of the provider’s future Medicare claims, and can even suspend the provider from the program, entirely.

Worse still, CERT audits that uncover indications of Medicare fraud may be reported to a law enforcement agency for further review. This can lead to a criminal investigation and potentially even criminal charges.

Appealing a CERT Audit’s Results

With penalties so significant, healthcare providers should seriously consider hiring a lawyer to appeal the results of a CERT audit.

Appeals are first made to the MAC, requesting a redetermination of the audit results. The request for redetermination has to be made within 120 days of receiving notice of the audit results. However, if the provider wants to stop the MAC from recouping an overpayment in the meantime, it has to lodge the request within 30 days.

Providers can appeal the results of the redetermination, as well. They can request a reconsideration by a Qualified Independent Contractor within 180 of the redetermination, or within 60 days to stop the MAC’s recoupment process.

Providers who are still dissatisfied can appeal the case to an administrative law judge, then to the Medicare Appeals Council, and finally to a federal district court for review.

How to Handle a CERT Audit

The best way to handle and to prepare for a CERT audit is to hire Medicare audit attorneys to guide you through the process. It would also help to start internal audits within the company.

For providers who have been notified that they are under an audit, getting a lawyer on board immediately is essential. An experienced healthcare attorney can conduct a thorough internal investigation of the claims being audited. This can uncover potential problems before the audit points them out, giving the healthcare provider the time it needs to prepare its next steps.

Providers who are not currently being audited can still benefit from an attorney’s guidance. Whether by drafting a compliance plan that will prepare the provider for an inevitable CERT audit or by conducting an internal investigation to see how well a current compliance plan is performing, a lawyer can make sure that the provider is ready for an audit at a moment’s notice.

Taking these preventative steps soon is important. CMS put the CERT audit program on halt for the coronavirus pandemic, but that temporary hold was rescinded on August 11, 2020. While the CMS has reduced the sample sizes that will be used for its 2021 and 2022 reports, it will likely go back to the original numbers after that. Healthcare providers should prepare for this increased regulatory oversight appropriately.

Article By Dr. Nick Oberheiden of Oberheiden P.C.

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Oberheiden P.C. © 2022

CMS Reduces COVID-19 Vaccine Mandate Surveys and Rescinds Surveyor Vaccination Requirements

In two recent memoranda, the Centers for Medicare and Medicaid Services (CMS) made changes to previously issued survey guidance related to COVID-19 vaccination issues.

In QSO-22-17-ALL, CMS modified the frequency by which State Agencies and Accreditation Organizations will survey for compliance with the federal staff vaccine mandate applicable to health care providers and suppliers (discussed in a prior post).  Noting that 95% of providers and suppliers surveyed have been found in substantial compliance with the rule, CMS is eliminating the previous requirement that State Agencies and Accreditation Organizations survey for compliance with the vaccine mandate during every survey.  Review of compliance with vaccine mandate is still required, however, during initial surveys, recertification surveys, and in response to specific complaint allegations that allege non-compliance with the staff vaccination requirement.  This means that a State Agency or Accreditation Organization is not required to review compliance with the staff vaccination requirement during, for example, a validation survey or a complaint survey unrelated to compliance with the staff vaccination requirement.  A State Agency or Accreditation Organization may still choose to expand any survey to include review of vaccine mandate compliance; however, the new guidance should result in a reduction in survey frequency of this issue for providers and suppliers.

In QSO-22-18-ALL, CMS rescinded, in its entirety, the previously issued QSO-22-10-ALL memorandum, which had mandated that surveyors of State Agencies and Accreditation Organizations be vaccinated for COVID-19.  However, CMS noted that the State Agencies and Accreditation Organizations were responsible for compliance and prohibited providers and suppliers from asking surveyors for proof of vaccination.  While CMS is now encouraging vaccination of surveyors performing federal oversight surveys, the mandate for vaccination is no longer in effect.

Article By Allen R. Killworth of Epstein Becker & Green, P.C.

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©2022 Epstein Becker & Green, P.C. All rights reserved.

Medicare Advantage: OIG Report Finds Improper Denials

On April 27,2022, the Office of Inspector General of the Department of Health and Human Services (OIG), Office of Evaluations and Inspections, issued a report on the performance of Medicare Advantage Organizations (MAOs) in approving care and payment consistently with Medicare coverage rules. In its review, OIG found that 13% of MAO denials of prior authorization requests should have been approved and that 18% of payment requests from providers were improperly denied. OIG also made a number of recommendations to the Center of Medicare and Medicaid Services (CMS) with respect to its oversight of MAOs.

Purpose and Method of the Study

OIG undertook the study to assess whether MAOs are appropriately providing access to medically necessary services and making payment to providers consistently with Medicare coverage rules. Since CMS pays MAOs principally by capitation, MAOs have a potential incentive to increase their profits by denying access to care of beneficiaries or by denying payments to providers. CMS’s annual audits of MAOs have indicated some persistent problems related to inappropriate denials of service and payment. As enrollment in Medicare Advantage continues to grow, OIG viewed it as important to ensure that medically necessary care is provided and that providers are paid appropriately.

OIG conducted the review by randomly selecting 250 denials of prior authorization requests and 250 payment request denials by 15 of the largest MAOs during a week in June of 2019. OIG had coding experts review the cases and had physician reviewers examine the medical records. Based on these reviews, OIG estimated the rates at which MAOs issued denials of services or payment that met Medicare coverage rules and MAO billing rules. OIG also examined the reasons for the inappropriate denials and the types of services involved.

Standards

MAOs must cover items and services included in fee-for-service Medicare, and may also elect to include additional items and services. MAOs are required to follow Medicare coverage rules that define what items and services are covered and under what circumstances. As the OIG states in the Report, MAOs “may not impose limitations – such as waiting periods or exclusions from coverage due to pre-existing conditions — that are not present in original Medicare.” In following Medicare coverage rules, MAOs are permitted to use additional denial criteria that were not developed by Medicare when they are deciding to authorize or pay for a service, provided the clinical criteria are “no more restrictive than original Medicare national and local coverage policies.” MAOs may also have their own billing and payment procedures, provided all providers are paid accurately, timely, and with an audit trial.

MAOs utilize prior authorization requests before care is furnished to manage care and payment requests from providers to approve payment for services provided. Beneficiaries and providers may appeal such decisions, and beneficiaries and providers are successful in many of the appeals (for a one-time period, as many as 75% of the appeals were granted).

Findings

Prior Authorization Denials

In the study, OIG found that 13% of prior authorization denials were for services that met Medicare coverage rules, thus delaying or denying care that likely should have been approved. MAOs made many of the denials by applying MAO clinical criteria that are not part of Medicare coverage rules. As an example, a follow-up MRI was denied for a beneficiary who had an adrenal lesion that was 1.5 cm in size, because the MAO required the beneficiary to wait one year for such lesions that are under 2 cm in size. OIG’s experts found such a requirement was not contained in Medicare coverage rules and was therefore inappropriate. Rather, the MRI was medically necessary to determine if the lesion was malignant.

OIG also found instances where MAOs requested further documentation that led to a denial of care when it was not furnished, as such additional documentation was not required to determine medical necessity. OIG’s reviewers found that either sufficient clinical information was in the medical record to authorize the care or the documentation requested was already contained in the medical record.

Payment Denials

OIG found in the study that 18% of payment denials fully met Medicare coverage rules and MAO payment policies. As a result of these denials, payment was delayed or precluded for services that should have been paid.

OIG found that common reasons for these inappropriate payment denials were human error in conducting manual reviews (for example, the reviewer not recognizing that a skilled nursing facility (SNF) was an in-network provider), and inaccurate programming.

OIG also found that advanced imaging services (including MRIs and CT scans), stays in post-acute facilities (including SNFs and inpatient rehabilitation facilities), and injections were the services that were most prominent in the inappropriate denials that should have been authorized for care and payment in accordance with Medicare coverage rules.

OIG Recommendations

Based on the study, OIG recommended that:

  • CMS should issue new guidance on both the appropriate and inappropriate use of MAO clinical criteria that are not contained in Medicare coverage rules. In particular, OIG recommended that CMS should more clearly define what it means when it states that MAO clinical criteria may not be “more restrictive” than Medicare coverage rules.

  • CMS should update its audit protocols to address issues identified in the report such as MAO use of clinical criteria and/or examine particular service types that led to more denials. OIG suggests CMS should consider enforcement actions for MAOs that demonstrate a pattern of inappropriate payment denials.

  • CMS should direct MAOs to identify and address the reasons that led to human errors.

CMS reviewed the OIG report and concurred with each of OIG’s recommendations. Those recommendations can affect future coverage decisions as well as utilization of prior authorization tools. AHIP, a national association of health care insurers, challenged the OIG’s sample size as inappropriate to support the agency’s conclusions, and defended prior authorization tools.

Takeaways

Given CMS’s concurrence with the report’s findings, we recommend that MAOs track these issues over the next several months in advance of CMS’s Final Rate Announcement for CY 2024.

MAOs should also be aware of potential False Claims Act (FCA) exposure in this area. FCA exposure can arise when a company seeks and receives payments despite being out of compliance with the basic terms for its participation. If an MAO knew it was denying claims that should be paid because they would be covered under traditional Medicare, but the MAO was still collecting full capitation, it is possible that a whistleblower or the government may pursue FCA liability. This risk warrants attention because whistleblowers can bring qui tam suits under the FCA, with resulting high costs for defense and potentially high penalties if a violation is proven (or settled to avoid further litigation). That said, an FCA suit based on this theory would raise serious questions, including whether any non-payment actually met the FCA’s “knowingly” standard (which includes reckless disregard), or whether any non-payment met the materiality threshold necessary to demonstrate a violation of the FCA.

Article By Alexis Finkelberg Bortniker, C. Frederick Geilfuss II, Matthew D. Krueger, Maureen F. Kwiecinski, and Kinal M. Patel at Foley & Lardner LLP

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