Dorsey Health Law

ERISA litigators know that a war has been raging between “out-of-network” medical providers, on one hand, and the entities that insure and administer group health plans, on the other (collectively, “Insurers”). For years, out-of-network providers have been suing plans and Insurers claiming they were “underpaid” for their medical services, often to the tune of millions of dollars. Hundreds of these cases have cropped up around the country in recent years. COVID-19 has now opened up a new front in this war, and the first skirmishes have already started. On April 10, 2020, Columbus Specialty Hospital (“Columbus”) filed a complaint in New Jersey state court seeking $36 million from various New Jersey insurance companies (the “Defendant-Insurers”) for payment of treatment it provided during the “COVID-19 crisis.” See Columbus Specialty Hosp. v. Amerigroup Corp., et al., No. ESX-L-002635-20 (N.J. Sup. Ct. April 10, 2020). According to Columbus, it provides “long term acute care” to “immunocompromised seniors”—the “prime targets for COVID-19 infection.” Columbus claims the Defendant-Insurers grossly underpaid it “for the live-saving treatment” it provided to those “vulnerable patients.” Columbus’s lawsuit is similar in some ways to the out-of-network provider cases that have cropped up around the country—but it adds a few new twists. The Common Elements Columbus’s lawsuit shares common features with the out-of-network provider lawsuits that came before it. Like the providers in those cases, Columbus does not directly sue for benefits under the terms of the health plans at issue. Instead, it asserts various contractual and quasi-contractual claims, alleging (among other things) that the Defendant-Insurers promised to pay Columbus its “usual and customary rates” for the services in question. This is a common tactic by out-of-network providers because their “usual” rates are much higher than the rates called for in the plan documents. In another relatively common move, Columbus asserts claims under state “prompt pay” statutes, which regulate the length of time in which an Insurer must pay providers for submitted claims. The New Elements While Columbus’s lawsuit shares a common structure with other out-of-network provider cases, it introduces new elements and could set new trends in this area of litigation. First, Columbus tries to bolster its claims by highlighting the emotional aspects of the “national and state emergency” related to COVID-19. According to Columbus, the Defendant-Insurers’ failure to pay does not simply affect its bottom line; it means members of the “greatest generation” are not receiving “the live-saving care” they deserve. Columbus also accuses the Defendant-Insurers of putting health care workers at risk by preventing Columbus from purchasing personal protection equipment. By tying its claims to the COVID-19 crisis, Columbus is hoping to tilt the scales of equities in its favor—a potentially effective move, especially for claims tried before a jury. Expect other medical providers to follow suit and tie their claims to the COVID-19 crisis. Second, Columbus’s lawsuit indicates that out-of-network providers may be shifting tactics for how they attempt to bind Insurers to “contractual” promises to pay the providers’ rates. As mentioned above, these out-of-network provider lawsuits often turn on whether the Insurer and provider formed a “contract” through communications about reimbursement rates. Traditionally, providers have alleged that such a contract or promise arose from phone calls with an Insurer’s billing department, during which the Insurer allegedly confirmed a patient’s coverage and reimbursement rates. Here, by contrast, Columbus claims it actually faxed formal contracts to the Defendant-Insurers, which they accepted by their conduct. This tactic is plainly an attempt to avoid the contractual formation and ERISA preemption defenses that defendants usually assert in these cases. Expect other out-of-network providers to employ similar tactics in their efforts to bind Insurers to commitments outside the four corners of the relevant health plan document. Third, Columbus’s lawsuit illustrates the astonishing size of provider bills for COVID-19 treatments and the limited time that Insurers have to process those claims. Columbus alleges, for example, that it billed $8.9 million for one patient for services related to COVID-19. While that sum is just an allegation, it is nonetheless a staggering number. And Columbus invokes New Jersey’s “prompt pay” statutes to insist that the Defendants-Insurers should have processed its multi-million dollar bills at breakneck speeds. This combination of large bills and pressure to pay those bills quickly puts enormous pressure on Insurers’ billing departments. This flurry of large bills also opens the door to fraud and abuse by unscrupulous providers. Insurers will have to find a way to manage this risk, while still ensuring that proper bills are paid in a timely fashion. But inevitably, Insurers will discover overpayment after the fact, which may trigger recoupment actions by Insures and the group health plans, which they administer. Should you seek additional information about these types of claims, feel free to contact us.

On Mach 27, 2020, President Trump signed the CARES Act, providing in part for $100 billion in relief funds to eligible health care providers and suppliers affected by COVID-19.  The funding is intended to support healthcare-related expenses, including lost revenue, attributable to the pandemic. Many providers and suppliers received notice on Friday, April 10 that they are recipients of relief funds.  HHS emphasized that these are not loans and will not need to be repaid by recipients.  Below is a summary of the guidance issued by HHS in connection with the initial $30 billion infusion and a brief description of the terms and conditions to which recipients must adhere. Eligibility All facilities and providers that received Medicare fee-for-service (“FFS”) reimbursements in 2019 are eligible to receive these funds.  As noted above, the payments are intended to provide relief to providers in areas impacted by COVID-19 and those providers and suppliers who have been impacted financially by the crisis as a result of healthy patients delaying care and the cancellation of elective procedures.  As a condition of receiving these funds, providers and suppliers must agree not to seek out-of-pocket payments from a patient treated for COVID-19 that are greater than what the patient would have otherwise been required to pay if the care had been provided by an in-network provider. The relief payments will be made according to taxpayer identification numbers (“TIN”) in accordance with the following: Large Organizations and Health Systems: Large Organizations will receive relief payments for each of their billing TINs that bill Medicare. Each organization should look to the part of their organization that bills Medicare to identify details on Medicare payments for 2019 or to identify the accounts where they should expect relief payments. Employed Physicians: Employed physicians should not expect to receive an individual payment directly. The employer organization will receive the relief payment as the billing organization. Physicians in a Group Practice: Individual physicians and other clinicians in a group practice are unlikely to receive individual payments directly, as the group practice will receive the relief fund payment as the billing organization. Solo Practitioners: Solo practitioners who bill Medicare will receive a payment under the TIN used to bill Medicare. Determining Distributions HHS indicated that these payments will be based on the provider’s or supplier’s share of total Medicare FFS reimbursements in 2019.  HHS estimates that total FFS payments in 2019 were approximately $484 billion. Providers and suppliers can estimate their payment by dividing their 2019 Medicare FFS (not including Medicare Advantage) payments they received by $484,000,000,000, and multiply that ratio by $30,000,000,000. Providers and suppliers can obtain their 2019 Medicare FFS billings from their organization's revenue management system. Example: A community hospital that billed Medicare FFS $121 million in 2019 would divide that amount by the total Medicare FFS payments (i.e. $484B) and multiply that by the total amount available (i.e. $30B). ($121,000,000/$484,000,000,000 x $30,000,000,000 = $7,500,000) How Will I Receive These Funds? HHS has partnered with UnitedHealth Group (“UHG”) in an effort to provide rapid payment of these funds.  Eligible recipients will be paid via their ACH account information on file with UHG or on file with the Centers for Medicare and Medicaid Services (“CMS”).  The payments are automatic so recipients do not need to take further action to receive them.  Recipients that receive payments electronically should look for a payment via Optum Bank with “HHSPAYMENT” as the payment description.  Recipients who normally receive a paper check for reimbursement from CMS can expect to receive a check in the next few weeks.  Within 30 days of receiving this payment, recipients must sign an attestation confirming receipt of these funds and agree to the terms and conditions of payment.  The portal for signing the attestation will be open the week of April 13, 2020. Terms and Conditions Within 30 days of receiving payment, recipients must attest to receiving the funds and agree to the Terms and Conditions posted by HHS. Below is a brief summary of those terms and conditions. The recipient must certify the following: that it billed Medicare in 2019; currently provides diagnoses, testing, or care for individuals with possible or actual cases of COVID-19; is not currently terminated from participation in Medicare; is not currently excluded from participation in Medicare, Medicaid, and other Federal health care programs; and does not currently have Medicare billing privileges revoked. The payment may only be used to prevent, prepare for, and respond to coronavirus, and shall reimburse the recipient only for health care related expenses or lost revenues that are attributable to coronavirus. Payment may not be used to reimburse expenses or losses that have been reimbursed from other sources or that other sources are obligated to reimburse. The recipient must provide reports to HHS as the Secretary determines at a later date. Not later than 10 days after the end of each calendar quarter, any recipient that is an entity receiving more than $150,000 total in funds under any of the stimulus packages making appropriations for the coronavirus response and related activities shall submit to the Secretary and the Pandemic Response Accountability Committee a report containing the following information: the total amount of funds received from HHS under one of the foregoing enumerated Acts; the amount of funds received that were expended or obligated for reach project or activity; and a detailed list of all projects or activities for which large covered funds were expended or obligated. Recipients are required to maintain appropriate records and cost documentation as required by 45 CFR § 75.302 and 45 CFR § 75.361 through 75.365, and other information required by future program instructions to substantiate the reimbursement of costs under this award. Entities who have received federal awards in the past may already be familiar with these regulations.  These regulations set forth financial management and standards for federal awards, including maintaining accurate and complete documentation and having written policies and procedures detailing the accounting systems in place to perform the following: The ability to report revenue and expenditures separately by federal program; Identification in its chart of accounts of all federal awards received and expended under which federal program; and The process of maintaining records pertaining to the source and application of receipts and disbursements, federal awards, authorizations, obligations, unobligated balances, assets, expenditures, and income and interest, which must be supported by source documentation. For all care for a possible or actual case of COVID-19, the recipient must certify that it will not seek to collect from the patient out-of-pocket expenses in an amount greater than what the patient would have otherwise been required to pay if the care had been provided by an in-network provider. The Terms and Conditions include a number of statutory provisions that also apply to recipients.  More relief funds will be made available in the coming weeks.  HHS indicated that the next round of funding from the remaining $70 billion would be targeted to providers and suppliers in areas particularly impacted by the COVID-19 outbreak, rural providers, providers of services with lower shares of Medicare reimbursement or those who predominantly serve the Medicaid population, and providers requesting reimbursement for the treatment of uninsured patients. If you have any questions about the CARES Act, please contact the authors or your regular Dorsey & Whitney LLP attorney.  Dorsey is closely monitoring the rapidly evolving legal landscape related to the COVID-19 pandemic.

On Monday, April 6th the Centers for Medicare and Medicaid Services (“CMS”) adopted an interim final rule to change a wide range of Medicare payment policies during the COVID-19 public health emergency so that Medicare providers and suppliers have flexibility to furnish services to beneficiaries using remote communications technology. As healthcare providers implement infection prevention and control procedures throughout their operations, CMS recognizes that immediately and temporarily increasing the availability of services using telecommunications technology is necessary and appropriate to maintain Medicare beneficiary access to medically necessary services without jeopardizing their health or the health of the healthcare workers furnishing those services. The interim final rule with comment period is applicable to services provided beginning March 1, 2020, and will be effective for the period of the COVID-19 public health emergency. The rule addresses a variety of Medicare payment policies (including coverage, supervision, and “home bound” requirements) applicable to physicians and other clinicians, hospitals, home health agencies, hospice agencies, independent laboratories, ambulance service providers, rural health clinics, federally qualified health centers, inpatient rehabilitation facilities, and Medicare Part C and D health plans. The following summarizes the Medicare payment policy changes. 1. Place of Service Coding for Medicare Telehealth Services Medicare pays for a discrete set of services under Social Security Act § 1834(m) that are reported using codes that describe ‘‘face-to-face’’ services but are furnished using audio/video, real-time communication technology, instead of in-person. Clinicians bill for these Medicare telehealth services using a unique place of service code “02,” which identifies them as Medicare telehealth services. CMS pays the physician or practitioner for Medicate telehealth services at the lower Medicare Physician Fee Schedule “facility rate” because facility expenses (e.g., staff, supplies, and equipment) associated with the services are generally incurred by the site where the patient is located, and not by the remotely-located practitioner. On an interim basis CMS will pay for Medicare telehealth services at the rate that ordinarily would be paid under the Medicare physician fee schedule if the services were furnished in-person. Physicians and other practitioners billing for Medicare telehealth services should report the place of Service code that would have been reported had the service been furnished in person instead of place of service code “02.” Because Medicare identifies claims for telehealth services through the place of service code “02,” CMS has finalized use on an interim basis of CPT telehealth modifier 95, which applies to claim lines that describe services furnished via telehealth. 2. Additions to Medicare Telehealth Services As noted above, Medicare pays for a defined set of Medicare telehealth services. For telehealth services with dates of service beginning March 1, 2020 through the end of the declared COVID-19 public health emergency (including any renewals), CMS is adding the following services to the list of covered Medicare telehealth services. Together with CMS’ waivers the originating site requirements applicable to Medicare telehealth services and the OIG’s policy statement addressing waiver of beneficiary copayments for telehealth services, this expansion in covered telehealth services can facilitate the meaningful and quick expansion in deployment of telehealth services. A. Emergency Department Visits  99281 99282 99283 99284 99285 B. Initial and Subsequent Observation, and Observation Discharge Day Management 99217 99218 99219 99220 99224 99225 99226 99234 99235 99236 C. Initial Hospital Care and Hospital Discharge Day Management 99221 99222 99223 99238 99239 D. Initial Nursing Facility Visits and Nursing Facility Discharge Day Management 99304 99305 99306 99315 99316 E. Critical Care Services 99291 99292 F. Domiciliary, Rest Home, or Custodial Care Services 99327 99328 99334 99335 99336 99337 G. Home Visits 99341 99342 99343 99344 99345 99347 99348 99349 99350 H. Inpatient Neonatal and Pediatric Critical Care 99468 99469 99471 99472 99473 99475 99476 I. Initial and Continuing Intensive Care Services 99477 99478 99479 99480 J. Care Planning for Patients With Cognitive Impairment 99483 K. Group Psychotherapy 90853 (Group psychotherapy (other than of a multiple-family group)) L. End-Stage Renal Disease (ESRD) Services 90952 90953 90959 90962 M. Psychological and Neuropsychological Testing 96130 96131 96132 96133 96136 96137 96138 96139 N. Therapy Services: For these services, CMS states that because Social Security Act § 1834(m) does not provide for payment for these services as Medicare telehealth services when furnished by physical therapists, occupational therapists, or speech language pathologists. 97161 97162 97163 97164 97165 97166 97167 97168 97110 97112 97116 97535 97750 97755 97760 97761 92521 92522 92523 92524 92507 O. Radiation Treatment Management Services 77427 77427 3. Frequency Limitations on Subsequent Care Services in Inpatient and Nursing Facility Settings, and Critical Care Consultations CMS is removing the frequency restrictions for each of the following codes for subsequent inpatient visits and subsequent nursing facility visits furnished via Medicare telehealth for the duration of the PHE for the COVID–19 pandemic. A. Subsequent Inpatient Visits 99231 99232 99233 B. Subsequent Nursing Facility Visits 99307 99308 99309 99310 C. Critical Care Consultation Services G0508 G0509 4. Required ‘‘Hands-On’’ Visits for ESRD Monthly Capitation Payments Current Medicare rules state that for End Stage Renal Disease (“ESRD”) related services that are on the Medicare telehealth list, a required clinical examination of the vascular access site must be furnished face-to-face ‘‘hands on’’ (without the use of an interactive telecommunications system) by a physician, clinical nurse specialist (CNS), nurse practitioner (NP), or physician assistant (PA). CMS is permitting on an interim basis the required clinical examination to be furnished as a Medicare telehealth service during the COVID–19 pandemic. In addition, Medicare rules typically require that a beneficiary receive a face-to-face visit, without the use of telehealth, at least monthly in the case of the initial 3 months of home dialysis and at least once every 3 consecutive months after the initial 3. CMS states that they will exercise enforcement discretion on an interim basis to relax enforcement in connection with the requirements under Social Security Act § 1881(b)(3)(B) that certain visits be furnished without the use of telehealth. Specifically, CMS will not conduct review to consider whether those visits were conducted face-to-face, without the use of telehealth. This applies to the following codes: 90951 90952 90953 90954 90955 90957 90958 90959 90960 90961 90962 90963 90964 90965 90966 90967 90968 90969 90970 5. Communication Technology-Based Services Certain services are performed using remote communications technology and are paid for by the Medicare program, but are not considered Medicare telehealth services because these services are by their nature performed using communications technology and are not ordinarily performed in person. These services include certain remote patient monitoring services (e.g., CPT codes 99453, 99454, 99457, and 99458, virtual check-in services). CMS payment rules for these services have limited their use to established patients only, and advance beneficiary consent has been required. The interim final rule states that all of these services can be furnished to both new and established patients. CMS also states that beneficiary consent to receive these services can be obtained annually, can be obtained at the time that a service is furnished, and may be documented by auxiliary staff under general supervision. To mitigate exposure risks, CMS is also broadening the types of clinicians that can perform remote evaluation of patient images and virtual check-ins (HCPCS codes G2010 and G2012) to include licensed clinical social workers, clinical psychologists, physical therapists, occupational therapists, and speech-language pathologists. 6. Direct Supervision Many services paid under the Medicare physician fee schedules, such as services performed incident to a physician’s professional service (see 42 C.F.R. § 410.26), must be provided under the direct supervision of the billing physician or nonphysician practitioner, meaning that the physician or nonphysician practitioner must be present in the office suite and immediately available to furnish assistance and direction throughout the performance of the procedure. CMS is temporarily modifying the definition of direct supervision at 42 C.F.R. § 410.32(b)(3)(ii) to state that direct supervision includes virtual presence through audio/video real-time communications technology. Similarly, the definitions of direct supervision applicable to hospital outpatient services at 42 C.F.R. § 410.28(e)(1) and hospital rehabilitation and intensive cardiac rehabilitation services described at 42 C.F.R. §§ 410.47 and 410.49 are modified in the same manner to permit physician supervision of these hospital services via virtual presence through audio/video real-time communications technology when use of such technology is indicated to reduce exposure risks for the beneficiary or health care provider. Additionally, the minimum default level of physician supervision for the initiation of outpatient non-surgical extended duration therapeutic services will now be changed from direct supervision to general supervision. 7. Definition of Homebound for Purposes of Home Health Benefits The interim final rule addresses whether beneficiaries instructed to remain in their homes or are under ‘‘self-quarantine’’ are considered ‘‘confined to the home’’ or ‘‘homebound’’ for purposes of the Medicare home health benefit. CMS states that the current definition of ‘‘confined to the home’’ (that is, ‘‘homebound’’) would apply to patients: (a) Where a physician has determined that it is medically contraindicated for a beneficiary to leave the home because he or she has a confirmed or suspected diagnosis of COVID–19; or (b) where a physician determines that it is medically contraindicated for a beneficiary to leave the home because the patient has a condition that may make the patient more susceptible to contracting COVID–19. Beneficiaries must meet all other eligibility requirements to receive Medicare home health services. The beneficiary must be under the care of a physician; receiving services under a plan of care established and periodically reviewed by a physician; be in need of skilled nursing care on an intermittent basis or physical therapy or speech-language pathology; or have a continuing need for occupational therapy. 8. Home Health Benefits and Remote Technology CMS is also amending home health plan of care requirements at 42 C.F.R. § 409.43(a) to allow the integration of technology and remote communication into the home health plan of care, so long the use of technology is related to the skilled services being furnished by the nurse/therapist/therapy assistant to optimize the services furnished during the home visit, and that the use of technology is included on the home health plan of care along with a description of how the use of such technology will help to achieve the goals outlined on the plan of care without substituting for an in person visit as ordered on the plan of care. On an interim basis home health agencies can report the costs of telecommunications technology as allowable administrative and general costs on their cost reports. 9. Telecommunications and Hospice For hospices, regulations at 42 C.F.R. § 418.204 are modified to state that when a patient is receiving routine home care, hospices may provide services via a telecommunications system if it is feasible and appropriate to do so to ensure that Medicare patients can continue receiving reasonable and necessary services for the palliation and management of a patients’ terminal illness and related conditions without jeopardizing the patients’ health or the health of those who are providing such services. The use of such technology must be included on the plan of care. The inclusion of technology on the plan of care must continue to meet the requirements at 42 C.F.R. § 418.56, and must be tied to the patient-specific needs as identified in the comprehensive assessment and the measurable outcomes that the hospice anticipates will occur as a result of implementing the plan of care. Telecommunication technology can also be used by a hospice physicians or nurse practitioner for a face-to-face visit used solely for the purpose of recertifying a patient for hospice services. Telecommunications technology for this purposes means multimedia communications equipment that includes, at a minimum, audio and video equipment permitting two-way, real-time interactive communication between the patient and distant site hospice physician or nurse practitioner. Hospices can also report hospices can report the costs of telecommunications technology used to furnish services under the routine home care level of care during the public health emergency as ‘‘other patient care services’’ on their cost report. 10. Inpatient Rehabilitation Facilities In order to be considered medically necessary, inpatient rehabilitation facility services must be expected to require medical supervision involving a rehabilitation physician conducting face-to-face visits with the patient at least 3 days per week throughout the patient’s stay. CMS is modifying these rules to permit such visits to be conducted using remote telecommunication technology. In addition, CMS is temporarily eliminating the requirement that at the time of admission a patient’s medical record at the facility must contain a postadmission physician evaluation. 11. Rural Health Clinics (RHCs) and Federally Qualified Health Centers (FQHCs) For RHCs and FQHCs, CMS is expanding the services that can be included in the payment for HCPCS code G0071, and is updating the payment rate for this code to include the national non-facility payment rates for three new codes (CPT Codes 99421, 99422, and 99423) to reflect the addition of these services. In addition, to address the impact of the COVID–19 pandemic on underserved rural and urban communities, CMS is implementing changes to the requirements for visiting nursing services furnished in the home by RHCs and FQHCs. For the duration of the public health emergency, any area typically served by the RHC, and any area that is included in the FQHCs service area plan, is determined to have a shortage of home health agencies, and there is no need for the RHC or FQHC to request a determination that there is a shortage of home health agencies in the area in order for visiting nurse services to be covered by Medicare. 12. Clinical Laboratory Fee Schedule and Merit-based Incentive Payment System Updates In order to expand the testing available to Medicare beneficiaries who need it, payments will now be provided to independent laboratories for specimen collection for COVID-19 testing under certain circumstances. A travel allowance will also be provided for a lab technician to collect a specimen for testing from non-hospital inpatients or homebound patients. Clinician participation in a COVID-19 clinical trial utilizing a drug or biological product to treat a patient with a COVID-19 infection will now be credited as an improvement activity for the Merit-based Incentive Payment System (MIPS) 2020 performance period. Additionally, the MIPS automatic extreme and uncontrollable circumstances policy will be applied to MIPS eligible clinicians for the 2019 MPS performance period as data submission for 2019 will be impacted. 13. Opioid Treatment Programs Audio-only telephone calls will be permitted for the therapy and counseling portions of the weekly bundle of services furnished by Opioid Treatment Programs if the beneficiaries do not have access to two-way audio/video communications technology. 14. Teaching Physicians, Residents and Moonlighting Regulations The teaching physician regulations are amended to allow the teaching physician to provide supervision either with physical presence or be present through interactive telecommunications technology during the key portion of residents’ service. Residents may also provide services from quarantine, such as reading the results of tests and other imaging studies under the supervision of the teaching physician by interactive telecommunications technology. This change does not apply in the case of surgical, high risk, interventional, or other complex procedures, services performed through an endoscope, and anesthesia services. CMS clarified that Medicare may make payment under the PFS for teaching physician services, including under the primary care exception, when a resident furnishes telehealth services to beneficiaries under direct supervision of the teaching physician which is provided by interactive telecommunications technology. CMS is also permitting the hospital that is paying the resident’s salary and fringe benefits for the time that the resident is at home or in the home of a patient that is already a patient of the physician or hospital, but performing patient care duties within the scope of the approved residency program, to claim that resident for indirect medical education and direct graduate medical education purposes. During the emergency, “moonlighting,” or services of residents that are not related to their approved GME programs and are performed in the inpatient setting of a hospital in which they have their training program, are separately billable physicians’ services for which payment can be made. 15. Psychiatric Hospitals CMS has deleted several references to 42 C.F.R. § 482.12(c) in 42 C.F.R. § 492.61(d) to clarify that the latter’s provisions apply to all patients, not only Medicare beneficiaries. 16. Innovation Center Models CMS is now permitting certain beneficiaries to obtain the set of Medicare Diabetes Prevention Program (MDPP) services more than once per lifetime, increase the number of virtual make-up sessions, and allow certain MDPP suppliers to deliver virtual MDPP sessions on a temporary basis. CMS is also implementing a 3-month extension to the Comprehensive Care for Joint Replacement model performance year 5 and amending the CJR extreme and uncontrollable circumstances policy to be applicable to episodes impacted by the COVID-19 pandemic. 17. Remote Physiologic Monitoring Remote physiologic monitoring services can temporarily be furnished to new patients, as well as to established patients. Further, consent to receive RPM services can be obtained once annually, including at the time services are furnished, during the duration of the COVID-19 public health emergency. RPM codes can also be used for physiologic monitoring of patients with acute and/or chronic conditions. 18. Evaluation and Management (E/M) Services CMS is finalizing, on an interim basis, separate payment for CPT codes 98966-98968 and CPT codes 00441-99443. For these codes, work RVUs as recommended by certain AMA Committees are finalized: 0.25 for CPT code 98966 0.50 for CPT code 98967 0.75 for CPT code 98968 0.25 for CPT code 99441 0.50 for CPT code 99442 0.75 for CPT code 99443. Additionally, CMS is finalizing the recommended direct PE inputs which consist of 3 minutes of post-service RN/LPN/MTA clinical labor for each time code. CMS will also not conduct reviews to consider whether those services were furnished to established patients, and the services may be furnished to new patients as well. To facilitate billing of CPT codes 98966-98968, CMS is designating these codes as “sometimes therapy” services that would require the private practice occupational therapist, physical therapist, and speech-language pathologist to include the corresponding GO, GP, or GN therapy modifier on those claims. CMS is also permitting the office/outpatient E/M level selection for office/outpatient services when furnished via telehealth to be based on MDM or time, with time defined as all of the time associated with the E/M on the day of the encounter. Any requirements regarding documentation of history and/or physical exam in the medical record are removed for office/outpatient services via telehealth, though E/M visits should continue to be documented as necessary to ensure quality and continuity of care. 19. National Coverage Determination and Local Coverage Determination Requirements Certain National Coverage Determinations and Local Coverage Determinations of covered items or services will not apply during the COVID-19 Pandemic, including: face-to-face and in person requirements; clinical indications for certain respiratory, home anticoagulation management and infusion pump policies; and requirements for consultations or services furnished by or with the supervision of a particular medical practitioner or specialist. 20. Part C and Part D Quality Star Ratings CMS is modifying the calculation of the 2021 and 2022 Medicare Part C and D Star Ratings in several ways to address the expected disruption to data collection. The interim final rule: A. replaces the 2021 Star Ratings measures calculated based on HEDIS and Medicare CAHPS data collections with earlier values from the 2020 Star Ratings (which are not affected by the public health threats posed by COVID-19); B. establishes how CMS will calculate or assign Star Ratings for 2021 in the event that CMS’ functions become focused on only continued performance of essential agency functions and CMS and/or its contractors do not have the ability to calculate the 2021 Star Ratings; C. modifies the current rules for the 2021 Star Ratings to replace any measure that has a data quality issue for all plans due to the COVID-19 outbreak with the measure-level Star Ratings and scores form the 2020 Star Ratings; D. in the event that CMS is unable to complete HOS data collection in 2020 (for the 2022 Star Ratings), replaces the measures calculated based on HOS data collections with earlier values that are not affected by the public health threats posed by COVID-19 for the 2022 Star Ratings; E. removes guardrails for the 2022 Star Ratings; and F. expands the existing hold harmless provision for the Part C and D Improvement measures to include all contracts for the 2022 Star Ratings. 21. Ordering Medicaid Home Health Services In addition to physicians, licensed practitioners such as NPs and PAs may order Medicaid home health services during the existence of the PHE for the COVID-19 pandemic. These services include part-time or intermittent nursing, home health aide services, medical supplies, equipment, and appliances, and may include therapeutic services. This change applies to who can order home health services covered under 42 C.F.R. § 440.70(b)(1)–(4). It does not expand the benefit categories where these items can be covered. 22. Origin and Destination Requirements Under the Ambulance Fee Schedule The list of destinations for covered ambulance transportation is expanded to include all destinations, from any point of origin, that are equipped to treat the condition of the patient consistent with EMS protocols established by state and/or local laws where the services will be furnished. 23. Inpatient Hospital Services Furnished Under Arrangements Outside the Hospital The “under arrangements” policy is changed to allow hospitals broader flexibilities to furnish inpatient services, including routine services, outside the hospital. For services provided for discharges for patients admitted to the hospital during the PHE for COVID-19 beginning March 1, 2020, if routine services are provided under arrangements outside the hospital to its inpatients, these services are considered as being provided by the hospital. 24. Advance Payments to Suppliers Furnishing Items and Services under Part B Under Medicare Part B, the definition of advance payments to suppliers furnishing items and services will change from a payment made by the carrier to a payment made by the contractor, and payments under emergency exceptions will be permitted. CMS is also increasing the advance payment limit from 80 percent of the anticipated payment to 100 percent.

On March 30, 2020, the Centers for Medicare & Medicaid Services (“CMS”) published a compilation of COVID-19 Emergency Declaration Blanket Waivers for Health Care Providers (each, a “Blanket Waiver”). Section 1135 of the Social Security Act gives CMS the authority to issue waivers that ease requirements for providers affected by an emergency if: (1) the President makes an emergency declaration under the Robert T. Stafford Disaster Relief and Emergency Assistance Act, 42 U.S.C. 5121-5207 (the “Stafford Act”); and (2) the Secretary of the Department of Health and Human Services declares a Public Health Emergency (“PHE”), both of which have now occurred in light of COVID-19. CMS is permitted to issue both blanket waivers and provider/supplier requested waivers on a case-by-case basis. Blanket waivers apply to all applicable providers and suppliers, while individual waivers apply only to the requesting provider or supplier. A provider or supplier need not request a provider/supplier-specific waiver of a requirement if CMS has issued a blanket waiver addressing the same requirement. It is important to note that 1135 waivers apply solely to federal requirements and do not apply to state licensure or other requirements. Any applicable state requirements (e.g., licensure) must also be addressed with the relevant state agency. Another important note of caution is that these 1135 waivers often include specific details and requirements. It is critical for health care providers to review the waivers carefully before taking action under them. To that end, providers should visit the CMS Coronavirus Waivers & Flexibilities website, here, to locate the specific guidance and requirements from CMS about the type of program waiver(s) being sought. CMS has provided numerous Frequently Asked Questions (“FAQ”) documents and provider-specific fact sheets that detail the details about and limits of the available waivers and flexibilities for each type of provider (hospital, skilled nursing facility, physicians, laboratories, home health providers, etc.). Additionally, this website contains links to all of the waivers provided in each state. The following is a summary of the Blanket Waivers CMS has made available to providers and suppliers on March 30, 2020. These Blanket Waivers are retroactively effective back to March 1, 2020 and will continue through the end of the emergency declaration. I. Hospital Waivers The Blanket Waivers include significant regulatory relief for hospitals. The following is a summary of the hospital-specific Blanket Waivers, and here is a CMS Fact Sheet that was published for hospitals to further explain these specific Blanket Waivers: a. Temporary Expansion Sites (a.k.a. Hospitals Without Walls) Under this Blanket Waiver, hospitals are permitted to offer health care services in locations that are not currently part of the hospital. Previously, hospitals would have been required to meet Life Safety Code and other regulatory provisions and obtain approvals to provide services in a new location. This waiver will help hospitals set up temporary expansion sites to offer inpatient services (e.g., nursing, room and board) in locations such as shell space in a hospital, parking structures, dormitories and the like – as long as the hospital exercises control and oversees the services provided at the location, and as long as the location is approved by the state (to ensure safety and comfort for patients and staff). CMS is also allowing currently enrolled ambulatory surgery centers (“ASCs”) to temporarily enroll as hospitals by calling the COVID-19 Provider Enrollment Hotline to complete and sign an attestation form in order to enroll and provide services during the PHE as a hospital. CMS also encourages other entities (e.g., freestanding emergency departments which are not currently allowed to enroll in Medicare) to call the COVID-19 Provider Enrollment Hotline to complete and sign an attestation form in order to enroll and provide services during the PHE. Further, CMS is allowing hospitals to change their provider-based locations to address patient needs, as well as allowing additional flexibilities related to inpatient services furnished under arrangements. Moreover, hospitals are permitted to screen patients at locations off of a provider’s campus, in order to avoid the spread of COVID-19. Further, for surge facilities in off campus departments, CMS is waiving the requirements to have policies and procedures for evaluating emergencies so these facilities do not need to focus time on drafting policies and procedures but rather can focus on patient care needs. b. Relaxed Paperwork, Policies, Cost Reporting, Filing Deadlines and Enrollment Requirements For hospitals that are impacted by a widespread outbreak of COVID-19, the timeframes for providing patients a copy of their medical records are waived, as are the requirements related to visitation and seclusion. Additionally, CMS is granting a 30-day post-discharge requirement to complete medical records, CMS is waiving medical records department staffing requirements, and also waiving specific requirements for the form and content of the medical record and the medical record completion requirements. Further, verbal orders can be authenticated more than 48 hours after the fact (although read-back verification is still required). CMS is also waiving requirements to provide information about advanced directives to patients. Further, To ensure that hospitals and critical access hospitals focus on patient care and ensuring patients are discharged in an appropriate setting, as opposed to focusing on the paperwork and other regulatory obligations, CMS is waiving the detailed regulatory paperwork and other requirements related to discharge planning. For example, CMS recognizes that during the PHE, hospitals may not be able to use specific quality metrics and other data, or a comprehensive list of nursing homes in the area, to select a nursing home or home health agency. However, hospitals are still required to work with families to ensure that the discharge meets patients’ care needs. Further, CMS is waiving the entire condition of participation related to utilization review plans and committees, nursing care plans, having available a current therapeutic diet manual, developing and implementing emergency preparedness policies and procedures and communication plans, as well as waiving the detailed provisions governing a hospital’s quality assessment and performance improvement program (although hospitals must still have such a program in place). CMS has established a toll-free hotline for all providers as well as significant flexibilities in provider enrollment. See here for additional information from CMS on provider enrollment relief, as well as our previous blog post on this topic, available here. Further, CMS is waiving the signature and proof of delivery requirements for Part B drugs and durable medical equipment (although the delivery and the fact that a signature could not be obtained due to COVID-19 should be documented in the record). Additionally, CMS is delaying the cost-report filing deadlines until June and July, and CMS is extending the data submission deadlines for hospitals on the reporting of occupational mix of employees until August 3, 2020. Further, Medicare Administrative Contractors (“MACs”), Qualified Independent Contractors (“QICs”), and Independent Review Entities (“IREs”) are allowed to grant extensions to providers on appeals and are permitted to offer other flexibilities on filings and deadlines. c. Critical Access Hospitals (“CAHs”) Without Walls CAHs are now permitted to exceed their 25 bed limit and the 96 hour length of stay limit. CMS is also permitting CAHs to treat patients in urban areas (they typically must be located in a rural area) as needed in order to establish surge locations. Further, CMS is waiving the restrictions on CAHs’ ability to establish off campus provider based locations, and to establish the normally restricted co-location arrangements with other providers. CMS is waiving the minimum personnel qualification requirements at CAHs for clinical nurse specialists, nurse practitioners and physician assistants, and CMS is deferring to the state for the requirements of staff licensure, certification or registration, which will allow more flexibility to CAHs in states where federal requirements are more stringent. d. Distinct Part Units CMS is also now allowing hospitals to house acute care patients in excluded distinct part units (as long as the unit’s beds are appropriate for acute inpatients). Hospitals are permitted to bill for the care provided in the distinct part unit under the Inpatient Prospective Payment System. Providers should annotate in the medical record to explain that the care was provided in the distinct part unit due to capacity issues related to the PHE. Hospitals are also now permitted to provide care in acute care beds and units for patients who would normally be treated in distinct part psychiatric units or distinct part rehabilitation units, as long as the acute beds and units are appropriate for such patients. Hospitals should continue to bill under the Inpatient Psychiatric or Inpatient Rehabilitation Prospective Payment System for those patients, and annotate in the medical record to explain that the care was provided in the acute care unit due to capacity issues or other exigent circumstances related to the PHE. e. Telemedicine CMS is waiving telemedicine restrictions on hospitals and CAHs to make it easier for these providers to provide telemedicine for their patients through agreements with off-site hospitals, in order to improve access to specialty care. f. Workforce CMS is waiving the sterile compounding requirements to allow the re-use of face masks. CMS is also waiving the 2-year reappointment period for medical staff re-credentialing, the requirement that patients in a hospital be under the care of a physician (to allow other practitioners like physician assistants and APRNs to be used to the fullest extent possible), and CMS is waiving the requirement for CRNAs to work under the supervision of a physician. Further, CMS has stated that Hospitals do not have to designate in writing the personnel qualified to perform specific respiratory care procedures or the amount of supervision required for personnel to carry out those procedures. II. Long-Term Care, Skilled Nursing Facilities, and Nursing Facility Waivers The Blanket Waivers provide a number of flexibilities related to nursing services. See here for the CMS fact sheet published specifically for long term care facilities. CMS is waiving the 3-day prior hospitalization requirement for coverage of a skilled nursing facility (“SNF”) stay, waiving the timeframe requirements for certain data submission for SNFs and long-term care (“LTC”) facilities, and allowing nursing homes to suspend pre-admission screening and annual resident review assessments. Certain physical environment requirements are now waived, allowing for expanded use of non-SNF buildings or non-resident rooms in a LTC facility for patients in certain emergency circumstances. To promote social distancing: requirements that residents participate in-person in resident groups are waived; requirements related to room-sharing and moving a resident’s room are waived for the purpose of grouping or separating residents with respiratory illness symptoms and/or residents with a confirmed COVID-19 diagnosis from residents without these symptoms or diagnosis; and physicians and non-physician practitioners may conduct visits through telehealth options when previously the visits were required to be in-person. CMS is also partially waiving training and certification requirements required for nurse aids employed for longer than four months at a facility in order to assist with potential staffing shortages. CMS has waived certain resident transfer and discharge requirements in particular circumstances, though advance notification and receiving facility agreements are generally still required, and related care planning requirements are also waived in certain circumstances. Additionally, CMS is delaying the cost-report filing deadlines until June and July, and CMS is extending the data submission deadlines for hospitals on the reporting of occupational mix of employees until August 3, 2020. Further, Medicare Administrative Contractors (“MACs”), Qualified Independent Contractors (“QICs”), and Independent Review Entities (“IREs”) are allowed to grant extensions to providers on appeals and are permitted to offer other flexibilities on filings and deadlines. III. Home Health, Hospice, ESRD, and DMEPOS Waivers CMS has provided FAQ documents on these waivers for home health, here; for hospice, here; for ESRD Facilities, here; and for DME Suppliers, here. Under the Blanket Waivers, CMS provided extensions for home health, hospice, and ESRD providers to complete certain assessment required for Medicare reimbursement. CMS also waived certain home health, hospice and ESRD in-person assessment, visit, and supervision requirements to reduce the need for ordinary course check-ins and to allow for greater use of telehealth. In addition, hospices are relieved of the requirement to provide non-core hospice services, such as physical therapy, occupational therapy, and speech-language pathology. In providing additional flexibility in timing and in-person visits, CMS’s goal is to support containment efforts for at-risk populations and to free up professional resources to focus on treatment of those infected with coronavirus and to focus on operations related to the pandemic. In addition, CMS is waiving certain routine audits, maintenance, and certification requirements for ESRD Facilities and ESRD Facility staff. Again, CMS is attempting to free up resources and provide flexibility to support providers’ focus on pandemic-related efforts. CMS authorized the establishment of Special Purpose Renal Dialysis Facilities (“SPRDF”) to mitigate transmission among the at-risk population. Such facilities do not require a federal survey to be completed before providing services. CMS is allowing physicians that are appropriately credentialed at a certified dialysis facility to provide care at a “designated isolation location” such as a SPRDF without separate credentialing. Dialysis services may now also be provided in nursing homes and SNFs, so long as the services and necessary equipment and supplies are provided by personnel of the resident’s usual Medicare-certified dialysis facility. In an effort to expedite supply of and reimbursement for DMEPOS, CMS is waiving the replacement requirements (such as the face-to-face requirement, a new physician’s order, and new medical necessity documentation) for DMEPOS that are lost, destroyed, irreparably damaged, or otherwise rendered unusable. DMEPOS suppliers must still provide a narrative description about why the equipment must be replaced. IV. Practitioner Licensure, Provider Enrollment, Appeals, and Medicaid/CHIP Waivers CMS has provided a specific fact sheet describing the waivers and flexibilities available for physicians and other clinicians, available here. The Blanket Waivers are intended to ease the burden on the health system in order to allow providers to focus on patient care. To that end, CMS is temporarily waiving the Medicare reimbursement requirements that out-of-state practitioners be licensed in the state in which they are providing services when they are licensed in another state when the following four conditions are met: The practitioner must be enrolled in Medicare; The practitioner must have a valid license to practice in the state which relates to his or her Medicare enrollment; The services must be furnished, whether in-person or remote via telehealth, in a state in which the emergency is occurring in order to contribute to relief efforts in his or her professional capacity; and The practitioner must not be excluded in any state that is part of the PHE. Please note that the foregoing Medicare reimbursement waiver for licensure does not waive state or local licensure requirements. As a result, providers must review the state licensure requirements in each jurisdiction prior to delivering telehealth to patients in that location. Please see the blog post we published on this topic of telehealth opportunities here. Additionally, CMS has taken a number of steps to ease the provider enrollment requirements. See here for additional information from CMS on provider enrollment relief, as well as our previous blog post on this topic, available here. CMS has set up a hotline for physicians and non-physician practitioners to enroll and receive temporary Medicare billing privileges. Additionally, CMS has taken the following steps to facilitate the enrollment of providers in the wake of the COVID-19 outbreak, including: Waiver of certain screening requirements, including application fees, background checks, and site visits; Postponement of revalidation actions; Allowing licensed providers to render services outside their state of enrollment;  Expediting pending or new applications;  Easing telehealth restrictions; and Allowing physicians and non-physician practitioners to terminate opt-out status early and enroll in Medicare. Regarding appeals, the new waivers grant broad powers to MACs, QICs, and IREs to relax the requirements of federal regulations regarding the appeals process in FFS, and Parts C and D. MACs, QIEs, and IREs are instructed to allow extensions to file an appeal and to permit the waiver of requests for timeliness requirements for additional information to adjudicate appeals. MACs, QICs, and IREs are now allowed to process an appeal even with incomplete Appointment of Representation forms as outlined in federal regulations. Additionally, MACs, QICs, and IREs can now process appeals that do not meet the required elements of those same federal regulations. MACs, QICs, and IREs are given broad flexibility with respect to other parts of the appeals process so long as good cause requirements are satisfied. Finally, regarding Medicaid and CHIP, the new waivers permit states to request approval that certain statutes and implementing regulations be waived under section 1135. To request such an approval, states may submit an 1135 waiver request directly to their Center for Medicaid and CHIP Services (CMCS) state lead or Jackie Glaze, Acting Director, Medicaid and CHIP Operations Group, Center for Medicaid and CHIP Services at CMS by e-mail (Jackie.Glaze@cms.hhs.gov) or by letter. CMS sets forth a number of examples of the kinds of requests that states can make under this waiver, including: Waiver of prior authorization requirements for FFS programs; Waiver of out-of-state requirements for providers to provide care to another state’s Medicaid enrollees impacted by COVID-19; Temporary suspension of provider enrollment and revalidation requirements to increase access to care; Temporary waiver of state licensure requirements; Temporary suspension of requirements for pre-admission and annual screening requirements for nursing home residents. CMS encourages states to assess their needs and take advantage of these waivers. To assist states with the waiver request process and provide additional guidance, CMS released the Medicaid and CHIP Disaster Response Toolkit, which can be found here. Further, the CMS Coronavirus Waivers & Flexibilities website, here, contains a link to each state’s request for waivers and the responses from CMS. V. Stark Waivers On the same date, CMS also issued much-anticipated Blanket Waivers of sanctions under the federal physician self-referral law, or “Stark Law,” for “COVID-19 Purposes.” These Blanket Waivers are set forth here. Please see our separate post, available here, with detailed information about these Stark Law Blanket Waivers. * * * If you have questions about the new CMS waivers, please contact the authors or your regular Dorsey & Whitney LLP attorney. Dorsey is closely monitoring the rapidly evolving legal landscape related to the COVID-19 pandemic. You can access Dorsey’s health law blog related to health law updates, available here. You can also access Dorsey’s coronavirus resource center, which contains a wide variety of legal resources related to the coronavirus outbreak, available here.

On March 22, 2020, the Centers for Medicare & Medicaid Services (CMS) announced in a press release that it is granting exceptions from reporting requirements and extensions for upcoming data submission and measure reporting deadlines for Medicare quality reporting programs.  The exceptions and extensions are intended to reduce data collection and reporting burdens for entities that are responding to COVID-19 so that they can continue to focus on caring for patients.  CMS states that this is “unprecedented relief for the clinicians, providers, and facilities participating in Medicare quality reporting programs including the 1.2 million clinicians in the Quality Payment Program and on the front lines of America’s fight against the 2019 Novel Coronavirus (COVID-19).” The CMS programs impacted by this “extreme and uncontrollable circumstances” policy exceptions and extensions include, among others, the Quality Payment Program–Merit-based Incentive Payment System (MIPS), Medicare Shared Savings Program Accountable Care Organizations (ACOs), and various hospital quality reporting programs (e.g., Hospital-Acquired Condition Reduction Program).  CMS provided a table in the press release indicating how both 2019 and 2020 data submissions are impacted. For programs that have data submission deadlines in April and May 2020, this submission will be optional.  In addition, no data reflecting services provided from January 1 through June 30, 2020 will be used in CMS’s calculations for value-based purchasing programs and Medicare quality reporting.  CMS stated as follows: “CMS recognizes that quality measure data collection and reporting for services furnished during this time period may not be reflective of their true level of performance on measures such as cost, readmissions and patient experience during this time of emergency and seeks to hold organizations harmless for not submitting data during this period.” For other Dorsey publications on Medicare’s Quality Payment Program, see here and here.

The Centers for Medicare and Medicaid Services (CMS) has issued a final rule to require every hospital licensed in the United State to make public a robust set of standard charges for every item or service that the hospital bills.  In addition, CMS and other agencies have issued a proposed rule to require group health plans and health insurance issuers to: (1) disclose in-network negotiated rates and out-of-network allowed amounts for every health care item or service; and (2) offer a real-time tool to provide a plan enrollee with an estimate of cost-sharing and out-of-pocket expenses associated with plan covered items and services. The hospital price disclosure rule is effective January 1, 2021.  Hospitals and hospital trade associations have stated that they will bring a legal challenge against the final rule as exceeding CMS’ legal authority. The rule will require every licensed hospital to provide two separate sets of standard charge lists: (1) a list of standard charges for at least 300 “shoppable” hospitals services that a consumer can schedule in advance; and (2) a comprehensive list of standard charges for all items and services for which the hospital establishes a charge.  Both lists must be updated at least annually and placed on a publicly-accessible website.  Only hospitals are regulated under the final rule; ambulatory surgery centers or other clinics or facilities that may provide items and services that are also performed in hospitals are not required to report pricing. For the comprehensive charge list the hospital must report seven data elements for each item or service: (1) description; (2) code used to bill the item or service; (3) hospital’s gross charge; (4) negotiated rate with every third party payer (linked by name to the third party payer and plan); (5) highest charge the hospital has negotiated with any third party payer; (6) lowest charge the hospital has negotiated with any third party payer; and (7) charge applicable to an individual who pays cash.  The “shoppable” charge list must include similar data elements, with the addition of the hospital location(s) at which the “shoppable” service is provided.   The resulting report will be an exceedingly dense data set of hundreds of thousands of line items for a typical hospital. The biggest change the final rule would effect is that payment rates that a hospital negotiates with third party payers would no longer be confidential or proprietary, and would in fact be public information under the final rule. CMS made clear that a hospital must report data on all items or services the hospital provides and charges, including the professional services of its employed physicians or other clinicians.  This appears to apply only to the hospital itself (presumably identified by NPIs associated with the hospital) and not to separate corporate entities, formed for the purpose of operating physician group, that do not operate the hospital but may be owned by the same entity (or corporate affiliate) that operates the hospital. The health plan proposed rule would require every group health plan or health insurance issuers to make available on a website a negotiated rate file that lists: (1) the name and Employer Identification Number (EIN) or Health Insurance Oversight System (HIOS) identifier for each plan option or coverage offered; (2) codes and plan language description for each item or service; and (3) negotiated rate for each item or service furnished by every in-network provider (linked by National Provider Identifier (NPI) to each in-network provider) along with the last date of contract term for that rate.  A separate file that lists out-of-network allowed amounts for each items or service furnished by out-of-network providers must also be posted.  These lists must be updated monthly under the proposed rule. In addition, health plans must offer a tool to allow plan enrollees to obtain real-time information about cost-sharing information with regard to specific items or services. Unless halted by courts, hospitals will need to begin the considerable work of compiling and formatting the data files required under the final rule.  And, although it is unclear how the hospital pricing data will be analyzed and used (and by whom), hospitals should analyze their own pricing data and begin anticipating and preparing for the questions and critiques that will arise.

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.

The U.S. Department of Health and Human Services Center for Medicare and Medicaid Innovation (“CMS Innovation Center”) issued a press release on February 14, 2019, announcing the Emergency Triage, Treat, and Transport Model (the “ET3”). The ET3 is a five-year payment model that will test two new Medicare ambulance supplier and provider payments for: Treatment “on-the-scene” or through telehealth; and Emergency transport to alternative destinations such as a primary care office or urgent care clinic. Currently, Medicare only authorizes payment for emergency ambulance services when they transport patients to hospitals, critical access hospitals, skilled nursing facilities, and dialysis centers. As such, ambulance suppliers and providers often bring Medicare beneficiaries to a hospital emergency department, even if there is a more convenient and appropriate setting available. There are many instances where treatment could be provided either on-the-scene or at a lower-acuity destination, but those options are not payable under Medicare and thus largely ignored. Both new payment options offer the opportunity for ambulance suppliers and providers to deliver care to Medicare beneficiaries in ways not typically considered in the past. Ambulance suppliers and providers can expand their partnerships beyond hospitals to include primary care doctors’ offices, urgent care clinics, or any number of other lower-acuity destinations. Additionally, ambulance suppliers and providers can partner with qualified health care practitioners to provide telehealth services in order to increase their participation in the growing digital health industry. The goal is to help reduce unnecessary emergency department visits and improve the efficiency and quality of care. The ET3 summary provides three means by which the ET3 will “reduce expenditures and preserve or enhance quality of care": Providing person-centered care, such that beneficiaries receive the appropriate level of care delivered safely at the right time and place while having greater control of their health care through the availability of more options; Encouraging appropriate utilization of services to meet health care needs effectively; and Increasing efficiency in the EMS system to more readily respond to, and focus on, high-acuity cases, such as heart attacks and strokes. As stated in the press release, ET3 is another step in the larger effort towards a value-based health care system that aims to deliver the right care, from the right provider, at the right price. The CMS Innovation Center anticipates that payments made through the ET3 will begin January 1, 2020, and end December 31, 2024. Moving forward, the CMS Innovation Center will begin accepting applications from Medicare-enrolled ambulance suppliers and providers in summer 2019. Once participants are selected to test the ET3, the CMS Innovation Center will begin contracting with local governments or other entities that operate 911 dispatches in locations where participating ambulance suppliers and providers serve. These contracts will help develop medical triage lines that will screen 911 callers before ambulance launch. If you would like to explore these opportunities further, please contact anyone in Dorsey’s Healthcare practice or your regular Dorsey attorney.

The Office of Inspector General of the Department of Health and Human Services (“OIG”) released a proposed rule to eliminate safe harbor protection under the anti-kickback statute for drug price reductions that pharmaceutical manufacturers pay to Medicare and Medicaid plan sponsors and their pharmacy benefit managers (“PBMs”). The OIG proposed replacing the current safe harbor protection for drug price discounts and rebates with a new safe harbor to protect only those drug price reductions that are set in advance and are applied fully to the price of the product charged to the Medicare or Medicaid beneficiary at the point of sale. In addition, the OIG proposed a new safe harbor to protect compensation from pharmaceutical manufacturers to PBMs for services provided to the manufacturer, but only if those payments are fixed, fair market value payments not tied to volume or value, and the PBM discloses such payments to its health plan customers. The OIG’s proposals could have a significant impact on the drug discount and rebate arrangements that are commonly in place between manufacturers and Medicare Part D plans/Medicaid managed care organizations (and PBMs acting on behalf of these plans). The OIG’s proposals would also impact Medicare and Medicaid beneficiaries who would be entitled to receive any such discounts directly at the point of sale. The proposed rule release can be found here and is expected to be published in the Federal Register on February 6. The proposed effective date of the new rules is January 1, 2020, with an earlier effective date of 60 days after the final rule is published, for the new point of sale safe harbor.           I.        Discount Safe Harbor – Changes to Focus on Point-of-Sale Reductions in Drug Prices   The federal anti-kickback statute (Social Security Act § 1128B(b)) makes it a criminal offense for anyone knowingly and willfully to pay, solicit, or receive anything of value to induce referrals of items or services that are reimbursable under any federal health care program. Violation of the statute is a felony, and can carry civil fines, imprisonment, exclusion from federal health care programs, and be the basis for liability under the False Claims Act. An existing safe harbor protects from anti-kickback statute liability discounts and rebates on drug prices that pharmaceutical manufacturers pay to health plans or their PBMs. The OIG’s proposal would revise the discount safe harbor to exclude from protection any reduction in price or other compensation in any form paid from a pharmaceutical manufacturer to a Medicare Part D or Medicaid managed care organization or their PBM in connection with the sale or purchase of a prescription drug. The proposal reflects OIG’s concern that the current manner in which drug price discounts and rebates are structured does not result in lower drug costs to federal programs and federal program beneficiaries, and in fact may be a cause of rising drug costs, and may be contrary to the purposes of the anti-kickback statute. In its place, the OIG proposes to add a new safe harbor focused narrowly on point-of-sale reductions in prescription drug prices. That safe harbor would protect reductions in the price charged by a manufacturer for drug products that are payable by a Medicare Part D or Medicaid managed care organization or their PBM, but only if that price reduction meets three conditions (the “Point of Sale Safe Harbor”): First, the reduced price must be set in advance. OIG intends this to mean that the terms of the price reduction are fixed and disclosed in writing to the plan sponsor by the time of the initial purchase. Second, the sale may not involve a rebate unless the full value of the price reduction is provided to the dispensing pharmacy through chargebacks. This means that when a pharmacy dispenses a drug to a beneficiary, the total payment to the pharmacy (including the beneficiary co-payment, payment from the health plan, and any chargeback payment from the manufacturer) must be no less than the drug price agreed between the manufacturer and the health plan sponsor or their PBM. Lastly, the reduction in price must be completely applied to the price charged to the beneficiary at the time of sale. This means that the drug price to which the beneficiary’s cost-sharing obligations apply at the point of sale must be the same price (taking into account all discounts) that the manufacturer charges to the plan sponsor or their PBM. The OIG also noted that the discount safe harbor would continue to not apply if a manufacturer offered a price reduction to payors other than Medicare and Medicaid payors (i.e., situations in which parties “carve out” referrals of federal health care program beneficiaries or business from otherwise “questionable” financial arrangements). The OIG is especially concerned with these “carve out” arrangements if the offer of a discount on products would serve as an inducement for the purchase of products that are reimbursable by federal healthcare programs (e.g., offering a discount to a private health plan that is conditioned, even implicitly, on a product’s favorable formulary placement in the health payor’s Part D plans).            II.        New PBM Service Fee Safe Harbor   In addition, the OIG proposed a new safe harbor to protect compensation from pharmaceutical manufacturers to PBMs for services rendered to the manufacturers that relate to PBMs’ arrangements to provide PBM services to health plans (the “PBM Service Fee Safe Harbor”). The OIG did propose three specific conditions that must be met in order for compensation to be protected under the PBM Services Fee Safe Harbor. The first proposed condition of the safe harbor would require the PBM and the pharmaceutical manufacturer to have a written agreement that covers all of the services the PBM provides to the manufacturer in connection with the PBM’s arrangements with health plans for the term of the agreement, and specifies each of the services to be provided by the PBM and the compensation for such services. Notably, the OIG declined to propose a specific definition for PBM services but did provide a list of examples of services that it generally considers to be PBM services, including: contracting with a network of pharmacies; establishing payment levels for network pharmacies; negotiating rebate arrangements; developing and managing formularies, preferred drug lists, and prior authorization programs; performing drug utilization review; and operating disease management programs. The second proposed condition requires that compensation paid to the PBM must: (i) be consistent with fair market value in an arm’s-length transaction; (ii) be a fixed payment, not based on a percentage of sales; and (iii) not be determined in a manner that takes into account the volume or value of any referrals or business otherwise generated between the parties, or between the manufacturer and the PBM’s health plans, for which payment may be made in whole or in part under Medicare, Medicaid, or other Federal health care programs. Finally, the Department proposes that the PBM disclose in writing to each health plan with which it contracts at least annually, and to the Secretary upon request, the services it rendered to each pharmaceutical manufacturer that are related to the PBM’s arrangements with that health plan and the associated costs for such services. Other than the proposed revisions to the discount safe harbor, and the new PBM Service Fee Safe Harbor, the OIG did not propose to modify any other existing safe harbors which PBMs may use to protect payments from manufacturers. The OIG specifically noted the possibility that certain types of remuneration that manufacturers might pay to PBMs could continue to be protected under another existing safe harbor. For example, PBMs could presumably continue to rely on the Group Purchasing Organization (GPO) safe harbor to protect certain administrative fees paid by drug manufacturers to PBMs for GPO services, even if those fees are based on the total prescription volumes of health plans on behalf of which the PBM contracts with the manufacturers.          III.        Conclusion   The OIG proposal reflects a clear intent to substantially alter many of the current drug discount and services compensation practices among pharmaceutical manufacturers and Part D/Medicaid MCO payers and their PBMs. The proposal also reflects the OIG’s skepticism that current drug discount and compensation practices among manufacturers and PBMs are sufficiently transparent to health plans to ensure that all appropriate cost reductions and value is passed through to health plans and reflected in lower health plans costs and lower premiums for beneficiaries. The proposal to exclude drug price reductions to Part D and Medicaid MCO health plan sponsors and PBMs is proposed to be effective on January 1, 2020. The OIG is also proposing that the new Point-of-Sale Safe Harbor will take effect in a shorter time frame of sixty (60) days after the rule is finalized. Comments to the proposed rule may be submitted 60 days after publication in the Federal Register. There are a number of steps that parties to the type of arrangements covered by the proposed rule should take, including reviewing their current discount and rebate agreements to determine whether there will need to be amendments to these contracts in order to comply with the proposed rule, if it is finalized. Parties will also need to evaluate what compliance measures are needed in order to operationalize the changes in these arrangements to ensure compliance with the new safe harbor requirements. Finally, in light of the attention OIG is giving to these type of arrangements, now would be an opportune time to review arrangements for compliance with the current safe harbor restrictions, such as the carve out restriction described above. If you have further questions about this proposed rule, please contact the authors or any other health care transaction and regulatory attorneys at Dorsey & Whitney.

On December 21, 2018, CMS announced a final rule, subsequently published in the December 31 issue of the federal register, significantly overhauling the Medicare Shared Savings Program (“MSSP”). Among the important changes in the final rule is a redesign of MSSP’s participation options. Under MSSP, providers of services and suppliers participating in an Accountable Care Organization (“ACO”) continue to receive traditional fee-for-service payments under Medicare Parts A and B but may be eligible to receive shared savings payments if they meet specified quality and savings requirements. Originally launched in 2012, MSSP has grown such that CMS estimates more than a quarter of Medicare FFS beneficiaries now receive care from providers participating in a Medicare ACO. Prior to the redesign, MSSP included three tracks. Track 1 was “one-sided,” meaning ACOs received a share of savings they achieved for Medicare (i.e., spending less than a benchmark), but they were not required to pay back a share of any losses (i.e., spending exceeding the benchmark). Tracks 2 and 3, on the other hand, were “two-sided,” meaning ACOs were eligible to receive a share of savings but also had to pay back a share of any losses. In exchange for accepting risk of loss, ACOs in Tracks 2 and 3 were eligible to receive a larger portion of savings than ACOs in Track 1. ACOs were only permitted to participate in Track 1 for a maximum of six years (two, three-year agreement periods) before switching to a two-sided model. Given that 2019 marks the seventh year of the MSSP program, MSSP entrants from the initial program year in 2012 faced mandatory transition to Track 2 in 2019 if they wanted to remain in the program, with other early adopters facing the same fate in coming years. However, in reviews of the program, CMS found that the vast majority of ACOs were still participating under Track 1, and many Track 1 ACOs were reluctant and/or unprepared to move to a two-sided model under Track 2. Meanwhile, CMS found ACOs in one-sided models actually increased Medicare spending relative to their benchmarks, while ACOs participating in two-sided models generated significant savings for Medicare. As an initial step to address some of these issues, CMS created a temporary “Track 1+” model, which began in 2018, which incorporated into the Track 1 model a more limited downside risk payment design as compared to Track 2. The MSSP redesign in many ways builds on the experience of introducing the Track 1+ model, which CMS found to be an effective way to encourage ACOs to progress more rapidly to performance-based risk.  Under the redesign, CMS has replaced the Track 1, Track 2, Track 3, and Track 1+ models with two tracks, a BASIC track and an ENHANCED track. The ENHANCED track is based on the existing Track 3. The BASIC track, on the other hand, replaces the rest of the existing tracks with a model aimed at aiding ACOs in transitioning to more significant downside risk, providing them with “pathways to success.” Under the BASIC track, ACOs begin under a one-sided model and incrementally phase-in higher levels of risk that, at their highest point, would qualify as an Advanced Alternative Payment Model under the Quality Payment Program (for background on QPP see some of our earlier posts, here and here).  The BASIC track provides a one-sided model available for the first two years for most eligible ACOs (some ACOs that previously participated in Track 1 are restricted to a single year, while some low revenue ACOs are allowed up to three years).  Following that, ACOs can take on progressively higher risk in third through fifth years (the MSSP redesign also replaces existing three-year agreement periods with minimum five-year agreement periods). In order to allow time to transition to the new BASIC or ENHANCED tracks, CMS finalized an agreement period start date of July 1, 2019 rather than January 1, 2019. Pursuant to an earlier rule, in anticipation of changes, ACOs with agreement periods that would have ended December 31, 2018 were able to opt for a six-month extension period. In addition, in this final rule, CMS provides for ACOs in a three-year agreement period not expiring in 2018 the ability to voluntarily terminate existing participation agreements and enter a new agreement period starting July 1, 2019 under one of the new tracks (prior to this change, ACOs would have faced a “sit out” period after termination). For ACOs entering into agreements with a July 1, 2019 start date, there will be an initial, six-month performance year through December 31, 2019, with five additional performance years to follow. The Notice of Intent to Apply for the ACO agreement period with a July 1, 2019 start date is available through January 18, 2019. As of this blog posting, CMS has yet to finalize the rest of the application timeline for the July 1, 2019 start date. Information on the timeline is available here. There are many other pieces to the final rule. Some highlights include: Updates to repayment mechanisms for two-sided model ACOs; Revisions to MSSP’s benchmarking methodology; Integrity-focused changes, including modifying review criteria for ACOs, providing additional termination options for CMS in ACO participation agreements, and revising consequences for agreement termination; A number of changes aimed at promoting innovation through regulatory flexibility, including annual choice of beneficiary-assignment methodology for ACOs, expanding the use of telehealth in ACOs, and expanding SNF 3-day rule waiver eligibility; and Changes aimed at promoting beneficiary engagement, including allowing certain beneficiary incentive programs and strengthening beneficiary notification requirements (CMS is developing template notices for ACOs and ACO participants to use). CMS also sought input on allowing a beneficiary “opt-in” methodology for assignment, or possibly using a hybrid claims-based and opt-in approach, but it continues to consider comments on this issue and did not finalize an opt-in based methodology in this rule. A CMS fact sheet including additional information on the highlights noted above can be found here. Overall, in its comments regarding the final rule, CMS expressed confidence that two-sided ACO models remain a viable, and promising, option for achieving savings in Medicare while also promoting greater quality in care. Through its final rule, CMS aimed to provide ACOs and ACO participants with new “pathways to success” in realizing these goals of the MSSP.  Only time will tell if ACOs are able to successfully navigate these new pathways. In any event, the overhaul will begin affecting MSSP ACOs as early as July of 2019.

Many regulatory and legislative calls for modernizing the federal physician self-referral law (or “Stark Law”) in light of the move to value-based payment under Medicare have been made in recent months.  Most recently, a hearing on “Modernizing the Stark Law to Ensure the Successful Transition from Volume to Value in the Medicare Program” took place on July 17th with the House Ways and Means Subcommittee on Health.  At the hearing, the Department of Health and Human Services (HHS), legislators and providers emphasized that the Stark Law has slowed the move to value-based payment under Medicare and that reforms to the Stark Law are needed. Further, the Centers for Medicare & Medicaid Services (CMS) published a Request for Information (RFI) on June 25th regarding reducing the regulatory burdens of the Stark Law, with a particular focus on soliciting comments on how the Stark Law may impede care coordination initiatives.  The RFI describes how transforming the healthcare system into one that pays for value is a key priority of HHS, and that HHS launched a “Regulatory Sprint to Coordinated Care” to accelerate this transformation.  One of CMS’s goals in this Regulatory Sprint is to address “unnecessary obstacles to coordinated care, real or perceived, caused by the [Stark Law].”  In a press release related to the RFI, CMS Administrator Seema Verma is quoted as follows: “We are looking for information and bold ideas on how to change the existing regulations to reduce provider burden and put patients in the driver’s seat. . . . Dealing with the burden of the physician self-referral law is one of our top priorities as we move towards a health care system that pays for value rather than volume.” In the RFI, CMS requests public input on 20 different areas.  These areas include, among others, the structure of existing or potential alternative payment models and other novel financial arrangements, what additional exceptions to the Stark Law are needed for these arrangements, the utility of certain existing exceptions to the Stark Law, and creating new defined terms and revising certain existing defined terms.  CMS also requests comments on areas beyond care coordination initiatives, such as requests for input on defining “commercial reasonableness” in the context of Stark Law exceptions, qualifying as a “group practice,” other areas of Stark Law regulations that need clarification, and compliance costs for regulated entities. The hearing and RFI continue the recent trend of regulatory and legislative initiatives aimed at modernizing the Stark Law in light of the move to value-based payment under Medicare.  As we explained in our prior post, a bill that addresses this very topic, titled the “Medicare Care Coordination Improvement Act of 2017,” was introduced in both the U.S. House of Representatives (H.R. 4206) and Senate (S. 2051) in November 2017.  The bill is still under consideration in both the House and the Senate.  (Please see our prior post for a detailed explanation of the bill.)  As we also explained in this prior post, in January 2018, CMS Administrator Verma identified Stark Law reform as a top policy priority and reported that an inter-agency group was being formed to review the law. Next, as the RFI describes, the President’s fiscal year 2019 budget, which was released in February 2018, included a legislative proposal to create a new Stark Law exception for arrangements arising from alternative payment model participation. Given these recent developments, Stark Law legislative and regulatory reforms are likely to occur in the near future.  The RFI is a great opportunity for stakeholders to be involved in these reforms.  CMS is accepting comments on the RFI through August 24, 2018.  If you would like to submit comments, one of the authors or your regular Dorsey attorney would be happy to assist you.

Last month, the Centers for Medicare and Medicaid Services (“CMS”) announced new flexibility in what Medicare Advantage plans may cover as “supplemental health care benefits.” The announcement was part of CMS’ release of Calendar Year 2019 Medicare Advantage and Part D Rate Announcement and Call Letter. The Medicare Managed Care Manual (Chapter 4, Section 30.1) defines supplemental benefits as (1) not covered by original Medicare, (2) primarily health related, and (3) incurring a non-zero direct medical cost. Primarily health related items or services previously have been described as having a primary purpose to “prevent, cure or diminish an illness or injury” and primary purposes of comfort, cosmetic, or daily maintenance have been specifically excluded. CMS’ new interpretation of “primarily health related” expressly allows daily maintenance and other items. The agency’s justification to expand its interpretation was that items and services that can diminish the impact of injuries or health conditions have been shown to reduce emergency care and overall utilization of health care services. The one example provided in the call letter was fall prevention devices, e.g., support bars in bathrooms and showers. Primarily health related items or services must now have a primary purpose to “diagnose, prevent, or treat an illness or injury, compensate for physical impairments, act to ameliorate the functional/psychological impact of injuries or health conditions, or reduce avoidable emergency and healthcare utilization.” Items or services “must be reasonably and rationally encompassed” by at least one of these purposes. In addition, CMS stated that the benefits need to directly focus on an enrollee’s healthcare needs, be medically appropriate, and be “recommended” by a provider as part of a care plan if not supplied by that provider. Importantly, a physician order is not necessary for an item or service to be “recommended.” Keeping with federal beneficiary inducement prohibitions, plans may not offer supplementary benefits that are solely inducements to enroll. Clearly, this new interpretation of “primarily health related” creates a much broader allowance for items or services than only those that prevent, cure or diminish illness or injury under the old definition. Services that compensate for physical impairments might include transportation, cooking, or cleaning. Services that reduce healthcare utilization might include more intensive home-based support to keep Medicare Advantage enrollees in their homes and out of nursing facilities. Many groups stand to benefit from the increased flexibility for supplemental benefits, most obviously being plan sponsors, who can take a more comprehensive approach to healthcare to drive down utilization. Ride-hailing services, such as Uber and Lyft, may be enlisted to provide transportation to medical appointments, while grocery delivery services like Instacart could keep beneficiaries stocked with healthy foods selected for individual dietary needs. Finally, beneficiaries themselves will enjoy assistance with daily tasks that impact their health and allow them to age-in-place, at home. What remains unknown is whether CMS will eventually roll out similar benefits to traditional Medicare, which covers approximately two-thirds of all Medicare enrollees. Traditional Medicare still does not cover directly health related supplemental benefits such as dental care and eyeglasses that Medicare Advantage has been covering for years under the more restrictive definition of supplemental benefits.

All eyes are on the federal government as top officials have recently signaled upcoming actions which could impact the prices of prescription drugs. In the past two weeks, leaders from both the FDA and HHS have made statements signaling that the agencies are focused on reducing prescription drug prices. In remarks at the Food and Drug Law Institute conference held on May 3, 2018, U.S. Food and Drug Administration Chief Scott Gottlieb suggested that by reexamining the current safe harbor under the anti-kickback statute for drug rebates, list prices for drugs would be closer to negotiated prices and competition may increase. Mr. Gottlieb stated that, while “[t]here’s a range of reasons why drug prices are too high” one reason “that’s driving higher and higher list prices, is the system of rebates between payers and manufacturers. And so what if we took on this system directly, by having the federal government reexamine the current safe harbor for drug rebates under the Anti-Kickback Statute?” (The transcript of Mr. Gottlieb’s remarks can be found here). Mr. Gottlieb appears to be siding with critics of drug rebates who have argued that the practice leads to higher prices for patients because the rebates do not make their way down to patients, and instead, patients pay list prices for the drugs as they meet their out-of-pocket obligations. Mr. Gottlieb also mentioned some additional upcoming actions to reduce drug prices, including a Biosimilars Action Plan that is similar to the FDA’s Drug Competition Act Plan (DCAP); additional policies under DCAP to promote generic competition; a comprehensive framework for the regulation of gene therapy; and prioritizing the review of low competition products for generic product applications. Additionally, Mr. Gottlieb alluded to changes that may be introduced by Secretary of Health and Human Services, Alex Azar, including policies that “will dismantle many of the provisions that shield parts of the drug industry from more vigorous competition” and “a series of changes to the pricing mechanism in [Medicare] Part D.” Days later, on May 9, Alex Azar told members of the American Hospital Association that “HHS is focused on solving a number of the problems that plague drug markets. These include the high list prices set by manufacturers; seniors and government programs overpaying for drugs due to the lack of the latest negotiating tools; rising out-of-pocket costs for consumers; and foreign governments free-riding off of American investments in innovation.” Mr. Azar’s full speech can be watched here. President Trump is schedule to deliver a speech on Friday, May 11, 2018 addressing the steps that the administration plans to take to address drug pricing in the United States. Mr. Azar noted that President Trump wants to go “much, much further” in addressing drug prices than the proposals initially set forth in the President’s 2019 Budget. We will continue to closely monitor these activities which may have a significant impact on all involved in the prescription drug market.

Overview On February 9, President Trump signed the Bipartisan Budget Act of 2018 (“BBA”) into law. The BBA funds the federal government through March 23 and included a bipartisan agreement to increase annual spending authority for a two-year period. In addition, the legislation contains significant policy changes impacting Medicare, Medicaid and other federal health agencies. These changes include revisions to the federal physician self-referral law (commonly referred to as the “Stark Law”), expansion of coverage for telehealth services, funding extensions of several critical Medicare programs, and changes to the Medicare Shared Savings Program. A summary of some of these key health care policy changes is included below. Revisions to the Stark Law The BBA revised the Stark Law to codify certain regulatory changes that went into effect on January 1, 2016 and corresponding clarifications via preamble by the Centers for Medicare & Medicaid Services (“CMS”) in the 2016 Medicare Physician Fee Schedule Final Rule (the “2016 Final Rule”). Specifically, the BBA revised the Stark Law to indicate the following: The writing requirement of various Stark Law compensation exceptions can be satisfied “. . . by a collection of documents, including contemporaneous documents evidencing the course of conduct between the parties involved.” Previously, CMS had only indicated in preamble text in the 2016 Final Rule that a collection of documents could be relied upon to meet the writing requirement. This was not set forth in regulatory text, however. Now that this language is in the Stark Law itself, stakeholders can take greater comfort in relying on a collection of documents to meet the writing requirement. The signature requirement of various Stark compensation exceptions is met if the parties obtain the required signatures “not later than 90 consecutive calendar days immediately following the date on which the compensation arrangement became noncompliant” and the arrangement otherwise complies with all applicable criteria. This statutory language now aligns with regulatory language in 42 C.F.R. § 411.353(g) regarding temporary noncompliance with signature requirements. That regulatory language was revised in the 2016 Final Rule to provide organizations with greater flexibility and to eliminate the prior rule that included a confusing, and often unhelpful, distinction between inadvertent noncompliance not inadvertent noncompliance. The Stark Law itself, however, has not previously referenced any provisions with respect to temporary noncompliance with the signature requirements. A holdover lease or personal service arrangement can indefinitely meet the requirements of the Stark exceptions for rental of office space, rental of equipment and personal service arrangements, respectively. However, the immediately preceding arrangement must have expired after a term of at least one year, the arrangement must have met all requirements of the applicable exception when it expired, the holdover arrangement must be on the same terms and conditions as the immediately preceding arrangement, and the holdover arrangement must continue to satisfy the conditions of the applicable exception. This statutory language now aligns with regulatory language regarding holdovers in the rental of office space, rental of equipment and personal service arrangements exceptions in 42 C.F.R. § 411.357. That regulatory language was revised in the 2016 Final Rule which previously only permitted holdovers for up to six months. The Stark Law itself, however, has not previously referenced any provisions with respect to holdover arrangements. These Stark-related provisions of the BBA used the language from Section 301 of H.R.3178, titled the “Medicare Part B Improvement Act of 2017,” which we summarized in our blog post here. This bill, which includes many other non-Stark Law-related provisions, is still pending in the Senate. We note that, while the changes to the Stark Law under the BBA were fairly inconsequential, broader Stark Law reform initiatives, including in response to the move to value-based payments under Medicare, are also currently underway. See our blog post here for further details. Increase in Civil and Criminal Penalties for Violations of Fraud and Abuse Laws The BBA significantly increased civil and criminal penalties for federal health care program fraud and abuse. Specifically, existing maximum penalties under the Civil Monetary Penalties Law (“CMPL”) for improperly filed claims (under 42 U.S.C. § 1320a–7a(a)) increased to $20,000 (from $10,000), to $30,000 (from $15,000), and to $100,000 (from $50,000). Maximum penalties under the CMPL for payments to induce reduction or limitation of services (under 42 U.S.C. § 1320a–7a(b)) increased to $5,000 where they were previously $2,000 and $10,000 where they were previously $5,000. Additionally, criminal penalties for acts involving federal health care programs under 42 U.S.C. § 1320a–7b, including but not limited to the Anti-Kickback Statute, were increased to $100,000 (from $25,000), to $20,000 (from $10,000), and to $4,000 (from $2,000). Finally, maximum sentences for felonies involving federal health care program fraud and abuse under 42 U.S.C. § 1320a–7b, including but not limited to the Anti-Kickback Statute, were increased to ten years where they were previously five years. The effective date of these increased penalties is February 9, 2018 (the date of enactment of the BBA). We note that, in 2016, penalties under the CMPL and for criminal acts involving federal health care programs were adjusted for inflation in accordance with the Bipartisan Budget Act of 2015 (see 81 Fed. Reg. 61538 et seq. (Sept. 6, 2016)), and are adjusted on an annual basis under 45 C.F.R. § 102.3 (but have not yet been updated for 2018). So, the previous statutory maximum penalties had already been increased from the amounts set forth in the statute, and now have been increased even further. It is not clear how inflation adjustments will be applied in 2018 to the new statutory penalty maximums under these laws. Medicare Telehealth Expansion The BBA also included potentially far-reaching expansions to Medicare coverage for telehealth services. Telehealth Services for Stroke Patients Current Medicare coverage for telehealth services is limited to certain care locations that are either: (A) outside of any Metropolitan Statistical Area and designated as a rural health professional shortage area; or (B) participating in a Federal telemedicine demonstration project. The BBA eliminates this originating site requirement beginning January 1, 2019 for services to diagnose, treat, or evaluate symptoms of an acute stroke. The Medicare beneficiary receiving diagnosis, treatment, or evaluation of an acute stroke may be located at any hospital or critical access hospital, mobile stroke unit, or any other type of care site that CMS designates. Home Dialysis Assessments Similarly, beginning January 1, 2019 Medicare beneficiaries with End Stage Renal Disease (“ESRD”) may choose to receive monthly ESRD-related clinical assessments via telehealth. A face-to-face clinical assessment will be required monthly during the initial 3 months of home dialysis, and thereafter only once every 3 consecutive months. The statute also states that the provision of telehealth technologies to a Medicare beneficiary receiving home dialysis will not be considered remuneration under the beneficiary inducement statute, so long as the telehealth technologies are not offered as part of any advertisement or solicitation, are provided for purposes of furnishing telehealth services related to the beneficiary’s ESRD, and meet any other requirements CMS may adopt by regulation. The condition-based expansions in telehealth coverage for ESRD and stroke patients beyond rural health professional shortage areas signals an important recognition that service delivery via telehealth is both effective and increasingly common. Telehealth Services Provided Under Medicare Advantage Plans Beginning in plan year 2020, a Medicare Advantage Plan (“MA Plan”) may provide additional telehealth benefits to its enrollees. The telehealth benefits must be a service type available under Medicare Part B, and must be services that the MA Plan identifies as clinically appropriate to furnish using electronic information and telecommunications technology when a clinician is not at the same locations as the plan enrollee. CMS will adopt regulations regarding physician and practitioner requirements, coordination of benefits rules, and other requirements. If the MA Plan wishes to offer the service via telehealth, the MA Plan must offer the same benefit in-person and allow the enrollee to determine whether or not to receive the benefit via telehealth. The MA Plan’s bid to CMS must attribute the telehealth benefit cost to amounts attributable to the provision of benefits under the original Medicare fee-for-service program. Telehealth Services to ACO Beneficiaries Lastly, the BBA allows increased Medicare coverage for telehealth services provided to Medicare fee-for-service beneficiaries assigned to an Accountable Care Organization (“ACO”) participating in certain Medicare shared savings programs. After January 1, 2020, the existing Medicare telehealth geographic limitations will not apply when a physician or practitioner participating in an ACO provides telehealth services covered under Medicare to a Medicare beneficiary assigned to the ACO. The beneficiary’s home can be an originating site for the telehealth services, but the beneficiary’s home need not be located in a rural health professional shortage area. This expansion in telehealth coverage applies only to ACOs participating in a two-sided ACO model (in which the ACO shares in both savings and losses), or an ACO tested and expanded pursuant to authority granted to the Center for Medicare and Medicaid Innovation. No facility fee will be paid; only the professional service is paid pursuant to this telehealth expansion. And coverage does not extend to services appropriate only for hospital inpatients. Other ACO Changes The BBA includes a provision allowing ACOs to elect to have beneficiaries assigned to the ACO prospectively rather than having Medicare beneficiaries attributed to ACOs retroactively using encounter data based upon visits for primary care services. A beneficiary may also choose to align with an ACO in which his or her main primary care provider participates. The beneficiary can continue to receive services from any provider participating in Medicare even if he or she elects to align with a specific ACO. The BBA also establishes a new voluntary ACO beneficiary incentive program that allows certain two-sided risk ACOs to offer beneficiaries a payment of up to $20 per service for receiving select primary care services. ACOs that want to offer payment to beneficiaries will have to apply for approval to participate in the incentive program with Health and Human Services. Outpatient Therapy Payments The BBA repeals annual payment caps for outpatient hospital therapy services (including physical therapy, speech-language pathology services, and occupational therapy) effective January 1, 2018. Funding Extensions The BBA includes a number of funding extensions for critical health care programs, including: Extension of CHIP funding for four more years (Fiscal Year 2024 through Fiscal Year 2027); Five-year extension of the Medicare low-volume hospital payments through September 30, 2022; Five-year extension of the Medicare-dependent hospital (MDH) program through September 30, 2022. Two-year extension of funding for quality measure endorsement, input, selection, and reporting requirements. Five-year extension with reforms of the home health rural add-on until October 1, 2022.

Perhaps lost amid the healthcare news coverage of competing proposals regarding “Medicare for All” and the repeal of Obamacare, the Centers for Medicare & Medicaid Services (“CMS”) last month announced the expansion of its Targeted Probe and Educate (“TPE”) claims review program to the entire country by the end of the year. CMS’s announcement can be found here.   The expansion of the TPE program is welcomed by the provider community, many members of which view this as an opportunity for proactive education and corrective action with CMS, as opposed to the punitive approach taken under other Medicare programs that evaluate claims retrospectively and put the provider at risk of fines and other penalties if a mistake is discovered.  During the recent pilot phase of the TPE program in four Medicare Administrative Contractor (“MAC”) jurisdictions, CMS found decreases both in the number of claim errors after providers/suppliers received education and in the number of appealed claims decisions, which demonstrate that the program works to increase claims accuracy.   MACs, on behalf of CMS, review clinical documentation related to claims to prevent improper Medicare payments. Historically, when conducting an audit, MACs have reviewed all providers/suppliers billing a particular service. However, the approach under TPE will be different in that it will focus on only a subset of providers/suppliers. Specifically, MACs focus on those providers/suppliers identified through data analysis as having (a) the highest claim error rates or (b) billing practices that differ greatly from their peers with respect to those items/services (i) that pose the greatest financial risk to Medicare and/or (ii) that have a high national error rate.   Another difference from prior audit programs is that providers/suppliers identified for the TPE program have a more manageable, limited number of claims (e.g., 20-40) reviewed, compared to the burdensome number of claims that have been audited in other Medicare programs.  Following the claims review, CMS will provide individual education to address any errors found. This review and education process continues for up to three rounds. A helpful CMS flowchart outlining this process can be found here.   Providers/suppliers that demonstrate sufficient improvement may be excused from the TPE process following any round. On the other hand, providers/suppliers with persistent high error rates after three rounds of the TPE process may face consequences such as prepay review, extrapolation, RAC audits, or other actions.  

The Centers for Medicare & Medicaid Services (CMS) released its 2018 Medicare Physician Fee Schedule proposed rule on July 13, 2017. The proposed rule, among other things, proposes to cut Medicare payments for services provided at non-excepted, off-campus provider-based departments from 50% to 25% of the Outpatient Prospective Payment System (OPPS) rate for the 2018 calendar year.   Currently, non-excepted, off-campus provider-based departments are paid for certain items and services under the Medicare Physician Fee Schedule at a payment rate equal to 50% of the OPPS payment rate for the applicable item or service.  The current payment rate has only been in place since January.  CMS said in the proposed rule that it viewed the 2017 rates as “transitional policy,” but few people in the industry were likely expecting to see such a significant decrease in payment so soon.  CMS openly admits, however, that it is working with a limited set of payment data since it does not have claims data from calendar year 2017 and that additional analysis is needed.  CMS said it welcomes stakeholder input with regard to its initial analysis and the proposal to pay for the applicable services at 25% of the OPPS.  In fact, CMS specifically requested comment on whether it should adopt a different payment rate, such as 40% of the OPPS, that would represent a middle ground between the current rates and the proposed rate. If finalized, the payment cut would further disincentive hospitals from opening or operating new (i.e., non-excepted) off-campus provider-based locations.   Some of the key additional changes proposed by CMS in the 1,000+ page proposed rule include:   Medicare Telehealth Services.  CMS is proposing to add several codes to the list of covered telehealth services, including: HCPCS code G0296 (visit to determine low dose computed tomography (LDCT) eligibility); CPT code 90785 (Interactive Complexity); CPT codes 96160 and 96161 (Health Risk Assessment); HCPCS code G0506 (Care Planning for Chronic Care Management); and CPT codes 90839 and 90840 (Psychotherapy for Crisis). Retroactive PQRS and Value Modifier Adjustments.  CMS is also proposing to reduce or eliminate certain financial penalties for performance in 2016 under the Physician Quality Reporting System (PQRS) and the Value Modifier program.  Under PQRS, for example, CMS says it wants to retroactively reduce the number of metrics that physicians had to report on in PQRS from nine to six measures.  For the Value Modifier, CMS proposes to reduce the automatic downward adjustment for not meeting minimum quality reporting requirements from negative four percent to negative two percent for groups of ten or more clinicians and from negative two percent to negative one percent for physician and non-physician solo practitioners and groups of two to nine clinicians. Evaluation and Management Comment Solicitation.  CMS is seeking comment from stakeholders on specific changes it should undertake to “update the guidelines, to reduce the associated burden, and to better align” Evaluation and Management coding and documentation with the current practice of medicine.   The advanced copy of the Proposed Rule is available here.  The official version of the Proposed Rule is scheduled for publication in the Federal Register on July 21, 2017.  Comments on the Proposed Rule are due by September 11, 2017.

The Centers for Medicare & Medicaid Services (CMS) released an advanced copy of its latest proposed rule revising the Quality Payment Program created by the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA). The proposed rule, among other things, would further streamline reporting requirements and ease administrative burdens for small and rural providers. By way of background, MACRA created the Quality Payment Program which reforms how Medicare Part B pays more than 600,000 clinicians across the country.  Under the Quality Payment Program, eligible clinicians, including physicians, physician assistants, nurse practitioners, clinical nurse specialists and certified nurse anesthetists, can participate in the Quality Payment Program through one of two tracks: the Merit-Based Incentive Payment System (MIPS) or Advanced Alternative Payment Models (Advanced APMs).  We are currently in the middle of the first performance year, which began on January 1, 2017.  How clinicians perform in the first year will impact Part B payments beginning on January 1, 2019. Given the complexity of the transition, and the significant impact the new payment rules have on Part B clinicians, CMS has continued to seek public input about how it should implement and revise the program going forward.  The proposed rule is the latest example of CMS’ efforts to respond to public input, particularly from small physician practices and rural providers. Some of the key changes proposed by CMS in the 1,000+ page proposed rule include: Increasing low-volume threshold.  For the current performance year, clinicians and groups are subject to MIPS if they billed more than $30,000 to Medicare Part B and provided care for more than 100 Part B-enrolled Medicare beneficiaries.  Clinicians or groups that do not exceed these thresholds are excluded from MIPS participation.  CMS has proposed to increase the low volume threshold to less than or equal to $90,000 in Medicare Part B allowed charges or less than or equal to 200 Medicare Part B patients.   CMS estimates that approximately 134,000 clinicians currently subject to MIPS will be excluded from MIPS in the 2018 performance year based on the proposed new additional increase in the low-volume threshold. Continuing to allow the use of 2014 Edition CEHRT (Certified Electronic Health Record Technology).  CMS is proposing to allow MIPS eligible clinicians to continue to use EHR technology certified to the 2014 Edition for the 2018 performance year. Creation of virtual groups.  In the current performance year (Year One), clinicians may only participate in MIPS as an individual or as a group under a common Tax Identification Number.  CMS is proposing to allow clinicians to participate in MIPS in virtual groups in future performance years.  Virtual groups would be composed of solo practitioners and groups of 10 or fewer eligible clinicians who come together “virtually” with at least 1 other such solo practitioner or small group in order to participate in MIPS. Adding more flexibility for clinicians in small practices.  CMS proposes to add a new hardship exception under the MIPS Advancing Care Information performance category for clinicians in small practices.  Additionally, for these small practice clinicians, CMS is proposing to add bonus points to their final MIPS score, and continue to award 3 points for measures in the quality performance category that do not meet data completeness requirements. The advanced copy of the Proposed Rule is available here.  The official version of the Proposed Rule is scheduled for publication in the Federal Register on June 30, 2017.  Comments on the Proposed Rule are due by August 21, 2017.  We will continue to provide updates as more information about changes to MACRA are released.

According to an article posted today on the BioCentury website, the Trump administration is drafting an executive order that will take on the high costs of pharmaceuticals by instructing “executive agencies to use value-based contracts for drug purchases, and to pursue trade policies that enhance the intellectual property rights of American pharmaceutical companies.” This is in line with a statement made by Health and Human Service Secretary, Tom Price, who told senators on June 8, 2017 that taking on the high price of prescription drugs in the United States is still “an absolute priority” to the administration. This report comes just two days after the first of three hearings held by the Senate Health, Education, Labor and Pensions Committee. The bi-partisan hearing was categorized by the Committee chair as a fact-gathering hearing on the issues of prescription drug pricing and the prescription drug supply-chain in the United States.  Those involved in the hearing acknowledged that prescription drug spending has become the fastest growing share of health spending[1] and that changes to current system may be warranted. The June 13, 2017 hearing included discussions on a wide-range of topics such as: the historical increases in drug prices; an overview of the current prescription drug supply chain players; discussion of widely-used industry such as “list price”, “net price”, “drug rebates and discounts” and “average wholesale price”; the effect of research and development costs for new drugs; current biosimilar approval regulations; and patient protections for drug manufacturers. Senators at the hearing asked witnesses for recommendations of legislation that would address drug spending trends and reduce drug cost burdens on consumers and government entities. Some ideas presented at the hearing included the use of outcomes-based contracts; faster approval of second-and-third branded drugs in a therapeutic class; policy development to limit “reverse payment” settlements; policies that limit manufacturers of brand name drugs from blocking generic developers’ access to sample products required for bioequivalence testing; reforms to the 340B drug discount program; revisions to Medicare catastrophic drug spending rules; and policies addresses PBM and PDP rebates. The full committee hearing can be watched at: https://www.help.senate.gov/hearings/the-cost-of-prescription-drugs-how-the-drug-delivery-system-affects-what-patients-pay The second committee hearing on this topic is expected to take place next month. [1] The Centers for Medicare & Medicaid Services projects that prescription drug spending growth will continue to outpace overall health care cost increases over the next decade. Source: Centers for Medicare & Medicaid Services, “National Health Expenditure Projections 2016-2025,” Available at: https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData/Downloads/proj2016.pdf

On February 17, 2017 the Office of the Inspector General (OIG) posted a Drug Pricing and Reimbursement Web portfolio on its website that, according to the OIG announcement, “pulls together the HHS OIG’s body of work since 2010 as well as other relevant items that relate to drug pricing and reimbursement in HHS programs.” The portfolio showcases the OIG’s work in the drug pricing and reimbursement realm as drug pricing continues to be a political hot topic. Overall, the portfolio includes OIG’s reports; implemented and unimplemented recommendations; summaries of civil monetary penalties and assessments against individuals and entities for prohibited conduct related to reporting requirements required under the Medicaid Drug Rebate Program; and OIG’s advisory statements and bulletins on a variety of drug pricing and reimbursement topics. The portfolio should be monitored by plan sponsors, pharmaceutical companies, pharmacy benefit managers, and pharmacies, and others involved in drug distribution as a convenient location to find information published by the OIG that will impact their business. For example, the portfolio outlines future OIG report topics and their expected publication dates, such as the expected 2017 report on the quality of sponsor data used in calculating coverage gap discounts. Additionally, those in the industry can monitor and review OIG recommendations to HHS that, while unimplemented, can shed light on potential future enforcement areas.

The Centers for Medicare & Medicaid Services (CMS) released its 2017 Hospital Outpatient Prospective Payment System (OPPS) and Ambulatory Surgical Center Payment System Final Rule (Final Rule) on Tuesday. The Final Rule implements section 603 of the Bipartisan Budget Act of 2015 relating to payment for items and services furnished by certain off-campus provider-based departments of a provider. Section 603 of the Act amended the Social Security Act by providing that items and services furnished at off-campus departments of a hospital will not be reimbursed under the OPPS if items and services furnished at that off-campus department were not billed as outpatient hospital services prior to November 2, 2015.  CMS uses the term “nonexcepted” when referring to a location or items or services that are subject to the new payment limitations.  The Final Rule appears to largely adopt the regulations included in its proposed rule published in July, with only some modification. In addition, CMS also released an interim final rule (Interim Final Rule) in the same publication establishing the Medicare Physician Fee Schedule as the “applicable payment system” for the majority of the nonexcepted items and services furnished by nonexcepted off-campus provider-based departments. The Interim Final Rule establishes new site-of-service payment rates under the Medicare Physician Fee Schedule to pay nonexcepted off-campus provider-based departments for the furnishing of nonexcepted items and services.  These nonexcepted items and services must be reported on the institutional claim form and identified with a newly established claims processing modifier. CMS is soliciting comments on certain aspects of both the Final Rule and the Interim Final Rule. Comments are due by December 31, 2016.  The advanced copy of the Final Rule is available here.  The official version of the Final Rule is scheduled for publication in the Federal Register on November 14, 2016. Look for a more detailed analysis of the Final Rule and Interim Final Rule from Dorsey and Whitney.