Tag: hospital

EPA Registers New Uses for Existing Products to Help Reduce the Spread of Candida auris

On February 12, 2020, the U.S. Environmental Protection Agency (EPA) announced the availability of 11 products that have been approved for use to disinfect surfaces against the emerging multidrug-resistant fungus Candida auris (C. auris).  C. auris can cause severe infections and spreads easily among hospitalized patients and nursing home residents.  The 11 products are approved for use against C. auris to disinfect surfaces in hospitals, nursing homes, and other healthcare facilities, to help reduce patient infections.  There were no antimicrobial pesticide products registered specifically for use against C. auris prior these new use registrations.

EPA worked in collaboration with the Centers for Disease Control and Prevention (CDC) and other federal partners to ensure that the products would be effective against C. auris.  Previously, on October 16, 2019, EPA had granted public health exemptions under the provisions of section 18 of the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA) as amended, to the CDC, for uses of antimicrobial products, on hard, nonporous surfaces in healthcare settings for disinfection from C. auris.

The 11 products that are now registered for use against C. auris are:

  •  Avert Sporicidal Disinfectant Cleaner (EPA Reg. No. 70627-72);
  •  Blondie (EPA Reg. No. 67619-24);
  •  Dagwood (EPA Reg. No. 67619-25);
  •  Micro-Kill Bleach Germicidal Bleach Wipes (EPA Reg. No. 37549-1);
  •  Oxivir 1 (EPA Reg. No. 70627-74);
  •  Oxivir 1 Wipes (EPA Reg. No. 70627-77);
  •  Oxivir Wipes (EPA Reg. No. 70627-60);
  •  Oxycide™ Daily Disinfectant Cleaner (EPA Reg. No. 1677-237);
  •  Virasept (EPA Reg. No. 1677-226);
  • Wonder Woman Formula B Germicidal Wipes (EPA Reg. No. 9480-12); and
  •  Wonder Woman Formula B Spray (EPA Reg. No. 9480-10).

Because there are few products with C. auris claims at this time, CDC and EPA have identified additional products that are effective against C. auris. Although these products do not yet have formal EPA-registered claims for C. auris, testing at CDC has confirmed they are effective against C. auris.  The label on the product will not include instructions for C. auris.  CDC guidance states to “follow the instructions provided for C. albicans, if included, or else follow those for fungicidal activity.” These products include:

  •  Oxivir TB Spray (EPA Reg. No. 70627-56); and
  •  PDI Super Sani-Cloth (EPA Reg. No. 9480-4).

The CDC Guidance further states that, if none of the above-listed products are available, or any of the EPA-registered products that are newly approved for the specific claims against C. auris, CDC recommends use of an EPA-registered hospital-grade disinfectant effective against Clostridioides difficile spores, because CDC believes these products have been used effectively against C. auris (List K).

Additional information on C. auris is available on EPA’s website and CDC’s website.

©2020 Bergeson & Campbell, P.C.

For more on EPA disinfectant registrations, see the National Law Review Environmental, Energy & Resources section.

2020 Vision: Protecting Your Hospital’s Tax-Exempt Status

The manner in which medical services are being provided to patients is rapidly changing. Procedures that used to be performed in hospitals and required overnight stays are now being performed at outpatient clinics. Similarly, technological advances have decentralized hospital administration and the way in which treatment is provided. This should not come as a surprise to anyone that has any level of familiarity with the health care system, which includes just about anyone who goes to a doctor on a regular basis.

It should also come as no surprise that the law often lags behind technological advances and is often in a state of playing “catch up.” This trend is readily apparent when it comes to the property tax exemption for Wisconsin hospitals. The good news is that the courts are now taking the advances in hospital care into account when affirming eligibility for property tax exemption, particularly as to clinics and outpatient facilities. That said, hospitals must be vigilant in obtaining and maintaining their exemption.

This Legal Update offers guidance for Wisconsin nonprofit hospitals that may be filing tax exemption applications for calendar year 2020. Later in this Legal Update, we briefly discuss recent developments at the federal level involving hospital exemptions under § 501(c)(3) of the Internal Revenue Code.

Property Tax Exemption for Nonprofit Hospitals

In Wisconsin, all property is subject to taxation unless it is explicitly deemed exempt by statute. The Wisconsin Statutes provide that the following type of property is exempt:

(4m) NONPROFIT HOSPITALS. (a) Real property owned and used and personal property used exclusively for the purposes of any hospital of 10 beds or more devoted primarily to the diagnosis, treatment or care of the sick, injured, or disabled…. This exemption does not apply to property used … as a doctor’s office.

(Wis. Stat. § 70.11(4m)). The legislative intent behind this exemption is to encourage not-for-profit hospitals to provide care for the sick.

Applications for property tax exemption must be filed by March 1. This includes exemption applications for newly constructed property as well as for existing and previously non-exempt property whose use has changed in a way that now makes it eligible for exemption. The property owner bears the burden of proving that the property is exempt and the Wisconsin courts interpret the statutory exemptions narrowly. Hospitals should start analyzing and preparing their exemption applications well in advance of the filing deadline.

All real property is assessed based on its “fair market value” as of January 1 of each year. The Wisconsin Property Assessment Manual (“WPAM”) makes it clear that in the case of partially completed improvements, the assessor must value the improvements as they exist on the assessment date. Accordingly, hospitals with facilities currently under construction need to document the state of building as of January 1, 2020. Key documentation may include photographs and time-lapse construction progress videos. Assessors typically conduct an on-site inspection when there have been significant construction changes, and may also request additional documentation such as construction contracts and blueprints.

Assessors frequently utilize the cost approach when valuing new construction. One way to assess value for an under-construction project is to look at construction draws. This method has the appeal of simplicity but does not always produce accurate results. For example, if there have been construction draws of $12 million as of January 1 on a $30 million dollar project, an assessor might be inclined to give the property a fair market value of $12 million as of that date. It is entirely possible, however, that $1 million of that work was done on grading, soil stabilization, or other site development work that adds no value to the building from a “fair market value” perspective. Accordingly, the owner should be armed with knowledge of the actual condition of the building, including statements from the project manager, showing the value of what is “in the ground” as of the assessment date.

While it is important that new exemption applications document value as of January 1, the most important piece of the application involves documentation of exempt use. Recent litigation has focused on whether outpatient clinics or satellite hospital facilities are being used as a “doctor’s office,” which may disqualify the facility from exemption. The Wisconsin courts have identified the following list of factors that must be considered and evaluated when determining whether real property is used as an exempt hospital or as a doctor’s office:

  1. Do physicians own or lease the facility or equipment or are they hospital owned?
  2. Do physicians at the facility receive “variable compensation,” that is, compensation based on their productivity?
  3. Do physicians at the facility employ or supervise non-physician staff, or receive extra compensation for such duties?
  4. Does the facility and hospital generate separate billing statements or use separate billing software?
  5. Do the physicians in the facility have office space in the facility?
  6. Does the facility provide care on an outpatient, as opposed to inpatient, basis?
  7. Is the facility only open during regular business hours during which time the physicians generally see patients by appointment or is there 24/7 urgent care?

It should also be noted that the exemption for a nonprofit hospital is not an all-or-nothing proposition—partial exemptions are permitted. For example, in a seminal case interpreting the breadth of the nonprofit hospital exemption, Covenant Healthcare System, Inc. v. City of Wauwatosa, the Wisconsin Supreme Court upheld Covenant Healthcare System’s application for an exemption for 3 out of 5 floors in an outpatient clinic. The other floors did not fall within the criteria for the hospital exemption because they were doctors’ offices, among other reasons.

Another use-related issue involves the exempt status of vacant space in newly constructed hospital facilities. The WPAM acknowledges that “hospitals often construct oversize additions to anticipate technological and industrial changes and to reduce the unit cost of construction.” Assessors will generally treat this space as exempt so long as it meets the following conditions:

  • The hospital is exempt.
  • The space is attached to an existing hospital.
  • The projected use of the space is declared in the board minutes, in the general building plans, and in the blueprints and is consistent with exempt hospital use.
  • The building specifications and actual construction-to-date include features appropriate for hospital space.
  • The owner annually declares by affidavit that the space will be used as hospital space that would normally be exempt.

Hospitals intending to seek exemption for vacant space in new construction should ensure that they have appropriate documentation for these elements as of January 1.

Wisconsin law states that property tax exemption claims are strictly construed in favor of taxability. Given today’s climate of tight budgets, assessors are understandably conservative in their exemption determinations as they try to protect their tax base. Vigilance and thorough preparation are the keys to obtaining exemption under § 70.11(4m). Hospitals that are planning to file an exemption application by March 1 of this coming year, particularly for property that might have been taxable in the past as a physician clinic, should begin preparing their exemption applications no later than January 1 with an eye on these requirements.

Finally, note that owners of property exempt under sec. 70.11, Wis. Stats., are required to file a Tax Exemption Report form with the municipal clerk in each even-numbered year. Reports are due March 31, 2020.

Federal Tax Exemption under IRC § 501(c)(3)

Hospitals claiming exemption under IRC § 501(c)(3) have been under the microscope for the past several years; judging from events in 2019, that pattern will continue in 2020.

Senator Charles Grassley (R-Iowa) is back at the helm of the Senate Finance Committee and is once again pushing for increased transparency and oversight, including hospital adherence to community benefit requirements. In February 2019, Senator Grassley asked that IRS Commissioner Charles Rettig provide a briefing on the scope of IRS audits of tax-exempt hospitals on matters including charity care, financial assistance, and billing and collection policies. Senator Grassley called into question hospital compliance with the standards set by Congress and made it clear that he expects IRS enforcement to include all of the tools in its toolbox, including denial of exempt status. He specifically asked for details on how many hospitals have been found to be out of compliance with § 501(c)(3) requirements and how the IRS is dealing with noncompliant hospitals. In October of this year, Senator Grassley wrote to the University of Virginia Health System regarding a news report that the System’s financial assistance and debt-collection practices did not comply with its obligations as a tax-exempt entity, as well as regarding possible issues on overcharging.

Nonprofit hospitals and health systems can expect increasing scrutiny on Schedule H of Form 990. Past analyses of Schedule H reporting have found inaccuracies and inconsistencies in reporting of community benefits and financial assistance policies, including how financial assistance policies are publicized – these areas should receive particular attention when preparing 990 forms in the coming year. Form 990 is due on the 15th day of the 5th month following the end of the organization’s taxable year. Hospitals and health systems with September 30 fiscal years will need to file their 990 forms by February 15, while organizations on a calendar year have a due date of May 15.

Conclusion

Nonprofit hospitals remain under attack regarding their tax-exempt status. It is extremely important—now more than ever—for administrators to have a familiarity with the law and the criteria necessary to maintain their exemptions into the future. Proper planning heading into 2020 is an important key to that success.

©2019 von Briesen & Roper, s.c

For more on hospital administration, please see the National Law Review Health Law & Managed Care page.

Medicaid Billing Upcharges Prompts Oklahoma Nurse to Blow the Whistle on Hospital

Oklahoma Heart Hospital (OHH) has agreed to pay $2.8 Million to settle U.S. and Oklahoma government claims that the hospital committed Medicaid Fraud. Jennifferr Baird, a retired registered nurse, filed the complaint, which reported that her former employer, OHH was consistently billing  Oklahoma’s Medicaid insurance program inpatient rates for outpatient procedures – regardless of whether a doctor ordered inpatient care or not.

Ms. Baird’s 2015 complaint, filed under the False Claims Act (FCA) and a similar Oklahoma law because Oklahoma administers its Medicaid program with federal funds. The practice of billing inpatient rates for outpatient service is more commonly known as “upcoding” and is a form of fraud. Specifically, in question was the hospital’s tendency to bill stent procedures at higher inpatient rates, which, according to Ms. Baird, are typically performed on an outpatient basis. According to the prosecutors who investigated the claim, the fraud lasted at least seven years.

Private citizens, like Ms. Baird, play a crucial role in holding healthcare providers accountable for their fraud by acting as whistleblowers on behalf of the government.  These whistleblowers do not go without reward for their assistance. Successful whistleblowers receive up to 25 percent of the settlement amount of the case. “Under the False Claims Act, private citizens, also known as relators, can bring a suit on behalf of the United States and share in any recovery. … [These] relators are awarded 15 to 25 percent of the settlement amount depending on the extent to which the relator substantially contributed to the recovery.”

“Jennifferr did her best to resist the administrators who pushed this fraudulent billing scheme,” said R. Scott Oswald, managing principal of The Employment Law Group. “And she urged everyone she managed to do the same. But when she realized she was fighting a losing battle—and that the true victims were U.S. taxpayers—she appealed to a higher power: The U.S. legal system, which welcomes whistleblowers like her. I am pleased that it delivered.”

While OHH did not admit to fault outright in the matter of overbilling, the hospital operator did agree to settle the case, paying $2.8 million to both U.S. and Oklahoma government coffers.  Additionally, the hospital operator has vowed to follow a new “Corporate Integrity Agreement” that will be enforced by the Inspector General of the U.S. Department of Health and Human Services.

“I’m hopeful that the culture at Oklahoma Heart Hospital now will change,” said Ms. Baird. “The frontline medical team has always been great, but I think some hospital officials cared more about dollar signs than vital signs.”

Unfortunately, Ms. Baird’s “dollar signs and vital signs” sentiment is laced with fact as, historically, there have been many instances where whistleblowers have exposed healthcare providers that were taking financial advantage of the Medicaid system.

 

© 2019 by Tycko & Zavareei LLP
For more on Medicaid-related cases see the National Law Review Health Law & Managed Care page.

Rethinking Transparency – Inpatient Prospective Payment System Final Rule Rescinds Proposed Survey Disclosure Rule

The 2018 Inpatient Prospective Payment System (IPPS)/Long-Term Care Hospital (LTCH) Prospective Payment System (PPS) proposed rule, published in April 2017, contained a controversial provision that would have required accrediting organizations (AOs) that confer deemed status (such as The Joint Commission and DNV) to make all survey reports and acceptable plans of correction publicly available on their websites within 90 days of issuance (Proposed Transparency Rule). While the proposed rule cited the goal of improved transparency and enhancing patient health and safety, hospitals and other health care facilities that rely on AOs for deemed status voiced significant concerns about the unintended consequences of such disclosures, including providing an AO-slanted view of events, placing health care facilities on the defensive regarding corrective actions, the inability to correct misstatements in survey reports, and the risk that the public would not understand the survey process and become unreasonably biased against certain facilities. The Proposed Transparency Rule also garnered comment as Centers for Medicare and Medicaid Services (CMS) does not require itself to make all of its survey reports publicly available in such a short time frame, and does not presently make full plans of correction for all health care facilities readily available to the public.

To the surprise of some in the industry, the 2018 IPPS/LTCH PPS final rule (Final Rule) released on August 2, 2017, withdrew the Proposed Transparency Rule in its entirety, for a reason entirely unrelated to the main arguments that had been raised: potential conflict with Section 1865(b) of the Social Security Act (Act). Section 1865(b) of the Act provides that:

The Secretary may not disclose any accreditation survey (other than a survey with respect to a home health agency) made and released to the Secretary by the American Osteopathic Association or any other national accreditation body, of an entity accredited by such body, except that the Secretary may disclose such a survey and information related to such a survey to the extent such survey and information relate to an enforcement action taken by the Secretary. See 42 USC 1395bb.

CMS indicated in the Final Rule that it was concerned that implementing the Proposed Transparency Rule would “appear as if CMS was attempting to circumvent” the Act by requiring the AOs to release their own survey reports—a concern that was sufficient for the Proposed Transparency Rule to be withdrawn.

Whatever the basis of the decision, AOs, hospitals and health care facilities must prepare for the next effort to make AO and CMS survey and plan of correction information readily available on-line—transparency may have been delayed by the withdrawal of the Proposed Transparency Rule—but it is on the way, like it or not.

This post was written bySandra M. DiVarco  of McDermott Will & Emery.
More legal analysis available at the National Law Review.

EEOC Alleges Hospital’s Mandatory Flu Vaccine Policy Violates Title VII

Mandatory Flu VaccineAs summer temperatures soar, one might think the last thing to worry about is the upcoming flu season. And while that may be true in most respects, the flu is on the minds of the Equal Employment Opportunity Commission (EEOC). A lawsuit filed by the EEOC sheds light on the issue for healthcare employers who impose mandatory flu vaccine requirements on employees as a condition of continued employment.

The EEOC alleges in EEOC v. Mission Hospital, Inc. – a lawsuit that includes class allegations – that Mission Hospital violated Title VII by failing to accommodate employees’ religious beliefs and by terminating employees in connection with the hospital’s mandatory flu vaccination program. In particular, the EEOC took issue with the hospital’s alleged strict enforcement of its deadlines, which required employees to request an exemption by Sept. 1 and, if the exemption request was denied, to obtain the vaccination by Dec. 1.

According to Lynette Barnes, regional attorney for the EEOC’s Charlotte District Office, “An arbitrary deadline does not protect an employer from its obligation to provide a religious accommodation. An employer must consider, at the time it receives a request for a religious accommodation, whether the request can be granted without undue burden.”

The key takeaway here is that, similar to what is required under the Americans with Disabilities Act (when, for example, an employer is analyzing the application of a policy to a particular employee with a disability), employers should consider analyzing their duty to accommodate under Title VII based on the facts and circumstances of the particular case, as opposed to applying an (allegedly) inflexible rule without regard to the circumstances of the particular case. The other take-away here is that employers should consider basing this kind of employment decision on more than one reason – for example, a missed deadline plus a determination that granting the exemption would (or would not) be an undue burden (and why).

A copy of the EEOC’s lawsuit is found here and a copy of Mission Hospital’s answer is found here.

ARTICLE BY Norma W. Zeitler of Barnes & Thornburg LLP
© 2016 BARNES & THORNBURG LLP

Budget Deal Alters Reimbursement to Off-Campus Hospital-Owned Facilities

detailed illustration of a compass with medicare text, eps10 vectorOn November 2, 2015, President Obama signed into law H.R. 1314, the Bipartisan Budget Act of 2015 (the “Act”), which significantly changes Medicare reimbursement for off-campus hospital services. The Act, which Congress passed late last week, will alter Medicare reimbursement for new off-campus hospital-owned facilities that have heretofore been treated as “hospital-based.” Off-campus facilities for which a hospital was not billing as “hospital-based” as of the date of the enactment of the Act will not be treated as “hospital-based,” and the physician or other provider’s fee schedule rate, instead of the hospital outpatient rate, will apply.

Prior to the Act, covered out-patient department (“OPD”) services included services provided by facilities meeting the complex hospital-based rules, even if the facility was not physically-located on the campus of the hospital. Subject to the grandfather provision discussed below, the Act adds a specific exclusion to the definition of covered OPD services, making services furnished by an off-campus outpatient department of a hospital ineligible. The Act provides that a facility is “off-campus” if it is not within 250 yards of the hospital’s main buildings (including for this purpose, a “remote location of a hospital,” meaning a separate in-patient campus of the hospital, which is a helpful clarification in an otherwise problematic law). Facilities deemed “off-campus” are ineligible for Medicare reimbursement at the hospital outpatient rate.

The inclusion of a grandfather provision will mitigate some of the Act’s impact, as facilities currently treated as “hospital-based” will not be impacted by the change in law. Only facilities that are not billing as “hospital-based” as of the date of enactment will be ineligible for reimbursement at the hospital outpatient rate. It is unclear whether a conveyance of an off-campus grandfathered facility would eliminate the grandfathered status and the ability of the buyer to bill for the services as “hospital-based.” The Congressional Budget Office (“CBO”) forecasts that the government will reap significant cost savings from the lower rates that will apply; an October 28, 2015 analysis from the CBO projects that the change in reimbursement policy will provide $9.3 billion in relief by 2025.

Article By Edward S. Kornreich, Roger A. Cohen & Julia B Bienstock of Proskauer Rose LLP

© 2015 Proskauer Rose LLP.

Hospital Antitrust Skirmish Over Economist

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Antitrust law is designed to help the Davids of the world maintain a level playing field with the Goliaths. That objective was realized when Boise, Idaho-based hospital operator St. Alphonsus Health System, Inc. (“St. Al’s”) sued rival St. Luke’s Health System, Ltd. (“St. Luke’s”), to block St. Luke’s acquisition of the Saltzer Medical Group (“Saltzer”), one of Idaho’s largest and oldest independent medical groups.

St. Al’s argued that St. Luke’s acquisition of Saltzer would give St. Luke’s such a dominant market share of the adult primary care market in Nampa, Idaho that it could raise prices and block referrals to St. Al’s by having Saltzer steer patients to St. Luke’s. St. Al’s fears certainly seemed well-founded: Saltzer accounted for 43% of the adult primary care physicians, and about 90% of the pediatric physicians in the Nampa market. Since St. Luke’s accounted for about 24% of the primary care physicians in Nampa, the combined entity would have about 67% of the adult primary care physicians in Nampa.

The Federal Trade Commission (FTC) and Idaho Attorney General (AG) launched their own investigations and ultimately joined St. Al’s lawsuit. Things didn’t go well initially for St. Al’s as the judge refused to preliminarily enjoin the acquisition, concluding that St. Al’s was unlikely to suffer irreparable harm before a trial could be held in the case. St. Luke’s proceeded to complete the transaction.

However, in January 2014, after a bench trial, the judge concluded that the deal would have anti-competitive effects in terms of raising health care costs due to the increased negotiating leverage of the combined entity. The judge directed St. Luke’s to unwind the transaction, and divest itself of Saltzer’s assets. St. Luke’s has appealed to the Ninth Circuit. At oral argument, St. Luke’s contended that the trial court had failed to adequately consider the deal’s benefits.

Along the way, the trial court had an opportunity to decide a motion by the FTC and Idaho AG to exclude the testimony of St. Luke’s economist, Dr. Alain Enthoven, concerning the quality-related benefits of the acquisition. Saint Alphonsus Med. Ctr. – Nampa, Inc. v. St. Luke’s Health Sys., Ltd., No. 1:12-CV-00560-BLW, 2013 WL 5637743 (D. Idaho Oct. 15, 2013). A major thrust of the objection was that Dr. Enthoven had not read any of St. Luke’s physician service agreements (“PSA’s”), and therefore could not credibly testify as to “whether the acquisition creates the requisite integration to achieve the purportedly greatest benefits of integrated patient care.”

The Court denied the motion. After reviewing the facts shared in the decision, the argument seems like a stretch and we feel the Court reached the right result. As the Court observed, despite not having read the PSA’s, Dr. Enthoven interviewed six top executives from St. Luke’s and Saltzer, and reviewed thirty depositions. The Court believed this effort enabled Dr. Enthoven to testify credibly concerning the quality-enhancing benefits of moving away from the fee-for-service model of compensation and toward the quality-based model of compensation.

The judge also rejected the FTC’s contention that Dr. Enthoven was unqualified to testify regarding how the use of health information technology, such as electronic medical records, promotes higher quality care in light of Dr. Enthoven’s admission at his deposition that he was not a “healthcare IT expert.” Observing that Dr. Enthoven was testifying as an economist, not a programmer, the judge ruled that Dr. Enthoven was qualified to explain how various healthcare IT tools promoted higher  quality care even if he didn’t understand the mechanics of how those tools worked. This conclusion also seems correct, and not really a close call at all.

Do you agree with our conclusion that the Court made the right call in denying the motion to exclude Dr. Enthoven’s expert testimony?

ARTICLE BY

Joshua Fruchter, Esq.
OF
IMS ExpertServices

Federal Trade Commission (FTC) Wins Appeal: ProMedica Merger with St. Luke’s Not Allowed

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On April 22, 2014, the U.S. Court of Appeals for the Sixth Circuit (Sixth Circuit) upheld the Federal Trade Commission’s (FTC) finding that the merger between Ohio-basedProMedica Health System, Inc. (ProMedica) and St. Luke’s Hospital (St. Luke’s), an independent community hospital that operates in the one of the same counties as ProMedica, would adversely affect competition in violation of federal antitrust law. Prior to the merger, ProMedica and St. Luke’s comprised two of the four hospital systems in Lucas County, Ohio. After the two systems merged, ProMedica held more than 50% of the applicable market share.

Accordingly, in 2011 the FTC ordered ProMedica to divest itself of St. Luke’s. ProMedica appealed the FTC’s order to the Sixth Circuit. In a unanimous opinion, the Sixth Circuit denied ProMedica’s petition to overturn the FTC order, citing concerns about anti-competitive behavior and the ability of ProMedica to unduly influence reimbursement rates with healthcare insurance companies.

The full 22-page court opinion may be accessed here.

Article By:

Patrick J. Cannon
Of: 
von Briesen & Roper, S.C.