Dorsey Health Law

As the number of COVID-19 cases increases exponentially, healthcare providers in the United States are bracing for an unmanageable number of critically ill patients.  While it is impossible to predict to what extent the virus will overwhelm hospitals in the U.S., Italy foretells a realistic and grim scenario.  In early March, the Italian College of Anesthesia, Analgesia, Resuscitation and Intensive Care published guidelines educating Italian physicians on how to conduct “disaster medicine” triage—an approach that recognizes the potential need to base triage decisions on which patients are most likely to survive, and prioritizing treatment for those patients.  Traditional disaster medicine or “wartime” triage can result in the denial of medical care for patients with preexisting health conditions or patients above a certain age. The collective hope is that the COVID-19 pandemic never requires hospitals in the U.S. to adopt disaster medicine triage practices.  If it does, healthcare providers will be forced to make triage decisions they have never faced before, and certain patients will succumb to the virus after seeking—and being denied—complete medical care. By its nature, wartime triage (or some variant thereof) will also mean modified rules for a new world.  What may normally be considered medical malpractice will become acceptable under the exigent conditions of the pandemic.  The applicable standard of care, which necessarily turns on the unique circumstances of the situation at hand, will shift, and providers’ actions will be analyzed within the prism of an unprecedented state of emergency.  See, e.g., Estate ex rel. Campbell v. Calhoun Health Servs., 66 So. 3d 129 (Miss. 2011) (applicable standard of care may take into account mass casualty situation in the emergency room). Stated differently, providers will not be held to the standard of care applicable in a normal emergency room setting, but instead a unique disaster medicine standard that will grant far more latitude to physicians.  That standard, however, is not yet clear.  Physicians may reasonably disagree on what constitutes the best patient care in wartime or mass casualty triage situations.  The issue is extremely complex and there is no obvious “right” approach at this time. The unique features of COVID-19 itself may also impact potential medical malpractice claims.  There is no current cure for COVID-19, so while physicians can treat the symptoms, they cannot yet address the underlying cause.  As a result, it will be difficult for any potential plaintiff to establish definitively that admission to a hospital or access to a ventilator would have prevented the patient’s death.  Absent evidence that the patient’s death was primarily caused by a provider’s decision, rather than COVID-19 and/or other contributing factors, medical malpractice claims will fail. That said, extenuating circumstances do not always deter medical malpractice plaintiffs.  See, e.g., LaCoste v. Pendleton Methodist Hosp., LLC, 966 So. 2d 519 (La. 2007) (plaintiffs pursued medical malpractice claims against a New Orleans hospital for wrongful death arising from facility deficiencies related to Hurricane Katrina); Husband v. Tenet HealthSystems Mem. Med. Ctr., Inc., 16 So. 3d 1220 (La. Ct. App. 2009) (wrongful death class action against hospital and providers involved in care during Hurricane Katrina). Therefore, in order to protect physicians who may end up in uncharted waters, and to ensure the best patient care possible in difficult circumstances, healthcare providers may want to prepare for the possibility of wartime triage.  Some potential steps include: Establishing clear policies and guidelines that govern the implementation and application of disaster triage practices. These guidelines could be adaptations of mass casualty incident plans that are more specifically tailored to COVID-19.  The goal is to provide guidance appropriate to the facility and the circumstances so that providers do not need to make ad hoc decisions on their own.  Once established, hospitals may also need to reassess the guidelines as the situation develops. Ensuring that all providers are familiar with evolving guidelines and fully understand the decision-making criteria. Extensive training and simulations may not be feasible, but basic knowledge of the guidelines will help keep care consistent. Emphasizing the need for proper documentation of all care decisions. While maintaining medical records will not seem like a priority in the chaos and tumult of an overflowing emergency department, good documentation will be critical to providing quality care and important for the defense of any future medical malpractice claim. Remaining attuned to the publication of national guidelines and the adoption of local laws that may provide limited liability protections during crises. Existing triage guidelines may help hospitals establish their own framework for handling disaster triage decisions. At this moment, healthcare providers should be focused on patient care and their own health and well-being, not potential legal liability.  But specific planning for the potential need for disaster medicine triage can provide comfort, consistency and protection for patients and providers on the front line.

Any casual reader of healthcare news in recent years has taken note of the upheaval and financial uncertainty facing healthcare providers. Take for example a recent Bloomberg story detailing the closure of Hahnemann University Hospital in Philadelphia – “Philadelphia Hospital Collapse Highlights Healthcare ‘Anarchy’”. Anarchy or not, closures, consolidations, and financial restructuring are all too common for healthcare providers across the care continuum. To get a better sense of how financial restructuring is impacting healthcare providers and what options a provider facing a restructuring may have, Kristen Barlow, a Dorsey Health Strategies consultant, recently spoke to Annette Jarvis, a Partner with Dorsey’s Finance & Restructuring Group. Annette is a national expert in insolvency and one of the nation’s leading bankruptcy and restructuring lawyers. Kristen: Annette, are there particular segments of the healthcare industry that you think are especially vulnerable to financial restructuring – and if so, why? Annette: While all healthcare providers face financial challenges, some providers face particular challenges. For example, hospitals in rural areas have lower profit margins and may serve more uninsured patients than their urban counterparts. These rural hospitals are more at risk for closure – the Government Accountability Office recently reported that in the five years through 2017, 64 rural hospitals closed compared to 49 hospitals located in urban areas. Another segment of the healthcare industry particularly vulnerable to financial restructuring is post-acute and long-term care providers. Recent years have seen the bankruptcies of a number of large skilled nursing facility providers and many long-term acute care hospitals. Expensive overhead, reductions in Medicare reimbursement rates, and pressure to invest in care quality improvements all help create an environment that puts post-acute and long-term care providers at particular risk for financial restructuring. Annette: Kristen, from your perspective, how have you seen providers change and adapt their strategic plans to respond to these financial pressures? Kristen: Annette, providers are absolutely trying to change and adapt their strategic plans to succeed in a more financially constrained environment. One strategic response providers may pursue is to find financial security through increased scale. The rise of M&A activity for healthcare providers is well documented – a recent Commonwealth Fund report found that the vast majority of provider markets (~90%) are either highly concentrated or super concentrated. Providers may find that consolidation permits them to gain negotiating leverage with insurers and realize efficiencies through economies of scale – all considerations that make consolidation an attractive strategy in the face of a financially worrisome outlook. Kristen: Annette, consolidation is just one strategic response providers may have to financial pressures – what other strategies have you seen providers pursue? Annette: Other strategies I have seen implemented include the reduction of services in rural hospitals or the roll up of certain services into larger hospital systems.  This can occur through distressed acquisitions in or out of receiverships or bankruptcies or through less traditional combinations allowing sharing of services and patient care. Kristen: Annette, how would you advise a company that may be worried about their financial outlook to think about their options? Annette: Providers may want to remember that hospitals and other facilities are, by their nature, capital intensive. Often, by deferring capital investments (and unless their loan documents have covenants that are tripped by early substandard performance), the company can put off facing financial problems by deferring capital investments until a cash crisis hits.  Then the options for saving the business are more limited.  Facing financial problems early and getting professional help are essential for restructuring. Kristen: Annette, are there common mistakes that companies facing a financial restructuring should avoid? Annette: Facing financial problems early means providers must often come to terms with a scary and uncertain future. The most common mistake I see is avoiding facing problems, including changes that are necessary for long term financial viability, as soon as they arise. Early intervention is important for maximizing all potential solutions. By working with counsel and financial advisors experienced in restructuring, the company may be able to take care of a number of problematic issues outside of bankruptcy. The company will quite frankly be better off for approaching financial issues early with a proactive mindset and the appropriate legal and financial advice.   If you would like additional information on how Dorsey can assist healthcare organizations facing financial restructuring, please contact the authors directly at jarvis.annette@dorsey.com or barlow.kristen@dorsey.com or your regular attorney at Dorsey & Whitney.  

On April 22, 2019, the Centers for Medicare and Medicaid Services (CMS) announced two sweeping new payment innovation models under the Primary Cares Initiatives. The models will seek to incentivize primary care and other providers to take on greater responsibility and risk for the lives of covered beneficiaries. Both new models are scheduled to be effective for a first performance year of 2020. Read on for key details of the models, projected impact on the Medicare patient population, and our key takeaways for providers. Primary Care First Model provides simplified payments with performance-based adjustments The first model is Primary Care First (PCF), and include two options: PCF – General. Participating practices will assume financial risk for aligned beneficiaries and, in exchange, the practices will have reduced administrative burdens and will be eligible for performance-based payments or downside risk. PCF - High Needs Populations. Participating practices will assume financial responsibility for high-need, seriously ill beneficiaries who lack a primary care provider or effective care coordination, and, in exchange, the practices will have higher payment amounts as well as eligibility for performance-based payments or downside risk. PCF – General will provide payment to practices through a simplified payment structure that will provide a population-based payment along with a flat primary care visit fee and a performance-based adjustment providing an upside of up to 50% of revenue as well as a small downside (10% of revenue) incentive to reduce costs and improve quality. The performance-based adjustment will be assessed and paid on a quarterly basis. PCF – High Needs Population will set higher payment amounts to reflect the high-need, high-risk nature of the population as well as a yet-to-be-specified increase or decrease in payment based on quality measures. PCF is open to a range of eligible applicants, including primary care practitioners certified in internal medicine, general medicine, geriatric medicine, family medicine, and hospice and palliative care medicine. Applications for both PCF options will open soon- in Spring 2019, and the model will launch in 26 regions in the U.S. beginning in 2020 and will continue for five years. Direct Contracting Model permits providers to take on greater shared savings/shared losses up to full risk The second model is Direct Contracting (DC), and includes three options: DC – Professional. Providers will bear risk for 50% of shared savings/shared losses on the total cost of care (all Part A and B services) for aligned beneficiaries. Participants will receive Primary Care Capitation, a capitated, risk-adjusted monthly payment for enhanced primary care services equal to seven percent of the total cost of care for enhanced primary care services. DC – Global. Participating entities will bear risk for 100% of shared savings/shared losses on the total cost of care (all Part A and B services) for aligned beneficiaries. Participants may receive Primary Care Capitation as described above or may choose to receive Total Care Capitation, a capitated, risk-adjusted monthly payment for all services provided by participants and preferred providers with whom the participant has an agreement. DC – Geographic. Participating entities will bear risk for 100% of shared savings/shared losses on the total cost of care (all Part A and B services) for aligned beneficiaries in a target region. Participants will be selected as part of a competitive application process and commit to providing CMS a specified discount amount off of the total cost of care for the defined target region. This option will offer a Total Care Capitation payment as well, where CMS will continue to pay claims for services furnished by providers outside of the participants, including outside the target regions. Alternatively, participants can assume full financial risk while having CMS continue to make fee-for-service claims payments to all providers in the target region. The DC model is open to a broad range of entities, including health plans, health care technology companies, ACOs, and others operating under a common governance structure. The DC model will start in January 2020 with an initial alignment year for organizations that want to align beneficiaries to meet the minimum beneficiary requirements. Performance periods will begin in 2021 and continue for five years. CMS has issued a request for information (RFI seeking public comment on the DC-Geographic model, but nonetheless plans to launch the model in 2021. CMS anticipates shifting a quarter of beneficiaries out of fee-for-service (FFS) under the new models CMS anticipates that together, PCF and DC will: Shift over 25% of all Medicare FFS beneficiaries out of FFS and into value-based care arrangements; Offer new participation and payment options and opportunities for 25% of primary care practitioners and other providers; and Create new coordinated care opportunities for a large portion of the 11-12 million dual eligible beneficiaries in the U.S., specifically those in Medicaid managed care and Medicare FFS. Key Takeaways As we wait for additional details from CMS about the structure and payment mechanisms under both PCF and DC models, the following are a few key takeaways to keep in mind: CMS is committed to voluntary risk-based payment models. After experimenting with mandatory risk-based payment under the Comprehensive Care for Joint Replacement (CJR) bundled payment model and the proposed, but ultimately cancelled, Episode Payment Models (EPMs) for cardiac and orthopedic bundles, CMS has moved away (for now) from mandatory risk for providers. However, it appears that voluntary risk-based programs are here to stay. As these voluntary payment models are introduced, participants have opportunities to receive substantial gains (the full risk models of DC – Global and DC-Geographic, for example) if they have the appetite to bear the concurrent substantial downside risk. CMS’s pace indicates more reform likely to come. The Primary Cares Initiative announcement comes on the heels of the Pathways to Success model, an overhaul of the ACO program which was finalized in December 2018, and the BPCI Advanced bundled payment program, which launched in October 2018. In short, CMS is evaluating its existing models, creating new models, and the pace of change is faster than it has been since the slate of mandatory bundled payment programs were announced in 2016 through 2017. Going forward, the industry should expect this pace of new and revised payment models to continue, not lessen. In fact, Adam Boehler, the director of Centers for Medicare and Medicaid Innovation (CMMI), the part of Medicare that develops and administers payment reform programs, gave a speech in early April 2019 that raised the prospect of a new bundled payment program focused on post-acute care providers, which would be a first of its kind and one that those in the post-acute industry are anxiously awaiting. Physicians are increasingly the “owners” of the transition to value. For many, there’s long been a debate about who should “own” the transition away from fee-for-service toward value-based care. While CMS certainly has targeted acute-care providers for this ownership under ACOs and bundled payment models, physicians have of course been a crucial participant in those programs. Notably, the Primary Care Initiatives place the physician front and center of owning responsibility for the cost and quality of their patients’ care – an acknowledgement from CMS that primary care providers and close patient interaction are linchpins for sustained success in transitioning toward better outcomes for the health of a population. The focus on chronic and serious illness highlights a persistent problem for Medicare in controlling spending. As the population ages, success in controlling spending overall may ultimately come down to targeted efforts to better support and manage the chronically and seriously ill patient populations. While just 17% of Medicare patients live with six or more chronic conditions, they account for half of all spending on Medicare beneficiaries with chronic disease. Moreover, a full quarter of all Medicare spending is spent on Medicare beneficiaries in their last year of life. Including hospice and palliative care physicians in the PCF model, and having an entire model option dedicated to the seriously ill patient population, are clear signs from Medicare that they want to focus on programs and models that may move the dial on this patient population whose health care is notoriously difficult to manage. To learn more about this model, or to discuss how it may impact your organization, please contact the authors directly at barlow.kristen@dorsey.com or smith.alissa@dorsey.com or your regular attorney at Dorsey &Whitney.

Today, the Centers for Medicare and Medicaid Services (“CMS”) released additional tips regarding submitting Open Payments data.[1] A quick refresher: Submitting data through CMS’s application, Open Payments, is the means to fulfill the Sunshine Act, a federal regulatory requirement that applicable manufacturers, group purchasing organizations (“GPOs”), and health care providers disclose: a) certain transfers of value given to physicians and teaching hospitals, as well as b) any ownership or investment interest physicians, or their immediate family members, may have in their company. As previous Open Payments reporting entities know all too well, submitting data in the Open Payments system requires careful attention to detail, and can often be a time-consuming, painstaking process. CMS’s notice included a new document, “Open Payments Submissions Suggestions,” highlighting, among other things, two key issues for reporting entities to be aware of heading into this year’s submission period: Accuracy is important. While users may submit data in the appropriate field and format, if the content of the submission contains errors – even minor errors such as stray punctuation – the content of the submission will not be valid. Takeaway for reporting entities: Carefully reviewing and validating submissions, and ensuring enough time during the process to do so, is key to a smooth and stress-free Open Payments submission process. Note that even extra spaces at the tail end of a field will cause your submission to error out – one must scrutinize that closely. Submit early in the reporting period. While reporting entities have until March 31, 2019 to report data, CMS reminded users that the system becomes busy towards the end of the reporting period – we have, in fact, seen the system hang as the submission deadline nears. Should reporting entities uncover problems, they may find themselves scrambling to meet the reporting deadline. Takeaway for reporting entities: Allotting enough time to review and validate data well in advance of the March 31, 2019 deadline ensures that any uncovered issues can be addressed without becoming major obstacles to meeting the reporting deadline. We recommend that you complete your data formatting and input no later than six weeks prior to the deadline (roughly mid-Feb.) to allow time for initial submission, clean-up of errors, and correction of those errors for final submission. We hope this notice was helpful, and we are happy to answer further questions.  Dorsey Health Strategies has extensive experience in preparing and submitting Open Payments submissions on behalf of our clients, and we’d be pleased to help your organization with this year’s submission. If you’d like to learn more about how we can support you, please contact us at 612.492.6418. [1] Note that the Open Payments submission window is fast approaching, opening on February 1, 2019.