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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.

With the aim of enabling providers to focus attention and resources on fighting the COVID1-19 pandemic, CMS announced over the weekend that it intends to alleviate some of Medicare participating providers' and suppliers' financial burden by expanding its Medicare accelerated and advance payment (AAP) program to a broader group of Medicare Part A providers and Part B suppliers for the duration of the public health emergency. Medicare accelerated and advance payments are typically employed for emergency funding for scenarios in which claims submissions or processing is disrupted; the announcement is at once historic and yet also wholly in scope with the scale of and disruption caused by the pandemic. The expedited payments have been employed usually during natural disasters such as tornadoes, flooding, and the like, and may also be used during a national emergency. Lawmakers are recognizing the scale and scope of what providers are facing (and will continue to face), so CMS is expanding the Medicare accelerated and advance payments program eligibility to all applicable Medicare providers and suppliers, throughout the US, during the public health emergency related to COVID-19. The payment amount will vary by applicable provider or supplier depending on what amount is requested; the payments are potentially substantial. The permitted payment amounts are based on applicants’ historical Medicare payment amount for the requested time period and as permitted by category. Most providers and suppliers may request up to 100% of their historical Medicare payment amount for a three-month period. Inpatient acute care hospitals, children’s hospitals, and certain cancer hospitals are able to request up to 100% of their historical Medicare payment amount for a six-month period. Critical access hospitals may request up to 125% of their historical Medicare payment amount for a six-month period. In addition, CMS has extended the repayment date to begin 120 days after the payment is issued; the timeline for repayment again varies by organization type but is not less than 210 days. Providers and suppliers interested in seeking these payments may request the appropriate specific amount using the Accelerated or Advance Payment Request form provided on your Medicare Administrative Contractor’s (MAC’s) website. For example, the MAC, WPS, has recently updated its AAP application form, available here, which can simply be e-mailed to WPS at the email address located at the bottom of the one-page application. In order to be able to qualify for this expansion, a few conditions apply, and are worth double-checking as to whether any of these are true of your organization. The requesting providers or suppliers: Must have billed Medicare for claims within 180 days immediately prior to the date of signature on the provider’s/supplier’s request form; Must not be in bankruptcy proceedings, nor be under active medical review or program integrity investigation; and Must not have any outstanding delinquent Medicare overpayments. If any of the above conditions apply, then your organization would not be eligible to apply under this COVID-specific expansion. This expansion of the AAP program takes effect immediately, and CMS aims to issue payments within seven days of a request. Details about reconciliation and recoupment, as well as instructions as to how to apply, may be found in the CMS fact sheet found here. If you have any questions about the announcement or the application process, please contact the author(s) or your regular Dorsey attorney or Dorsey Health Strategies consultant.

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.

On March 17, 2020, the Centers for Medicare and Medicaid Services (“CMS”) and the Department of Health and Human Services Office of the Inspector General (“OIG”) each issued policy statements which expand access to telehealth services for Medicare beneficiaries and permit physicians and other practitioners to reduce or waive beneficiary cost-sharing obligations for Medicare telehealth services during the COVID-19 public health emergency. Immediately following the enactment of the Coronavirus Preparedness and Response Supplemental Appropriations Act, available here, CMS issued a temporary expansion of the Medicare telehealth benefit beginning as of March 6, 2020 and effective until the public health emergency declared by the Secretary of the Department of Health and Human Services ends.  The CMS policy statement can be found here. A key element of this telehealth expansion is that payment will be made for office visits and other covered Medicare telehealth services furnished to beneficiaries located in any part of the U.S.  Moreover, the CMS waiver facilitates payment for telehealth services furnished while the beneficiary is located in their home or in any care setting.   Without this emergency expansion, current Medicare rules at Social Security Act § 1834(m) generally limit coverage for telehealth services to beneficiaries located in rural areas, and only when the beneficiary is within a hospital, clinic, or other medical facility at the time of the telehealth visit. Clinicians who may offer telehealth services to Medicare beneficiaries include physicians, nurse practitioners, physician assistants, clinical social workers, clinical psychologists, and registered dieticians.  CMS also states that to the extent Medicare reimbursement for a telehealth service requires a prior relationship between the clinician and beneficiary, CMS will use its enforcement discretion and not audit claims submitted during the public health emergency to determine if such a prior relationship existed. The CMS waiver explicitly permits clinicians to use telephones with audio and video capabilities to furnish Medicare telehealth services during the COVID-19 public health emergency.  Together with the new waiver of certain HIPAA privacy rules (addressed in our prior blog post found here), this now will permit clinicians to conduct visits with Medicare beneficiaries using common communications tools such as personal phones, devices and computers, and common technologies such as FaceTime or Skype. CMS issued a FAQ document on this temporary and emergency telehealth benefit expansion, which can be found here. In tandem with CMS’ expansion of the Medicare telehealth benefit, the OIG issued a policy statement to address the potential anti-kickback and beneficiary inducement issues that providers may face during this emergency.  OIG states that it will not sanction physicians or other practitioners for reducing or waiving cost-sharing obligations that a beneficiary may owe for telehealth services furnished during the COVID-19 public health emergency and furnished in accordance with the then-applicable Medicare rules (which would include the CMS telehealth benefit expansion during the emergency).  Normally, the routine reduction or waiver of Medicare beneficiary cost-sharing obligations would implicate the federal anti-kickback statute and the civil monetary penalty law prohibiting beneficiary inducement. Clinicians are not obligated to reduce or waive Medicare beneficiary coinsurance and deductible obligations, but may do so in accordance with the OIG policy statement without risk of anti-kickback or beneficiary inducement enforcement.  Moreover, the OIG states that it will not view providing future services that may occur as a result of any free telehealth services to, by itself, be evidence of beneficiary inducement. The OIG Policy Statement can be found here. These CMS and OIG issuances are intended to give providers added flexibility to combat the COVID-19 emergency.  Hospitals and other providers should consider how the temporary Medicare telehealth expansion and the flexibility in dealing with beneficiary cost-sharing can help them keep clinicians and beneficiaries safer, alleviate some of the burden on provider staff and space, and help reduce the spread of COVID-19. If you have any questions, please contact the author or any member of Dorsey’s healthcare transactions and regulations practice group.

In the final quarter of calendar year 2019, the Department of Health and Human Services Office of Inspector General ("OIG") released its Semiannual Report to Congress (the "Report").  The Report covers the six-month period from April 2019 through September 2019 and details for Congress the OIG’s activities during that time and how the office uses its resources. For the six-month period detailed throughout the Report, one thing is obvious: the OIG continued its aggressive approach in pursuing providers of all kinds for suspected fraud and abuse in HHS programs. The Report details how the OIG’s investigative work, in conjunction with other federal and state agencies, led to $2.74 billion in expected investigative recoveries, 388 criminal actions, 364 assessments of monetary penalties, and 1,347 exclusions of individuals and entities from Federal health care program. For comparison, for entirety of 2018, OIG reported expected recoveries of $2.91 billion, criminal actions against 764 individuals or entities, and exclusion of 2,712 entities from federal healthcare programs.   Thus, 2019 was a much more active year for the OIG.  Among other highlights included in the Report, the OIG reports an April 2019 investigation (known as Operation Brace Yourself) that dismantled a healthcare fraud scheme involving over $1.2 billion in losses.  In the alleged scheme, medical professionals working with fraudulent telemedicine companies received illegal kickbacks and bribes from medical equipment companies.  In exchange, the medical equipment companies obtained prescriptions for medically unnecessary orthotic braces and used them to fraudulently bill Medicare.  The operation led to charges against twenty-four defendants across seventeen federal districts. In the six-month period outlined in the Report, the OIG also netted the largest healthcare fraud scheme ever charged by federal authorities.  The fraud scheme involved a record $1.3 billion in claims.  According to the investigation, the leader of the scheme bribed physicians to admit patients into care facilities he owned, and then cycled the patients through facilities in his network.  In addition to billing Medicare and Medicaid for services and prescription drugs that were unnecessary or not provided, witnesses testified that the facilities were in poor condition and provided inadequate care—information that was concealed by bribing a state regulator for advance notice of surprise inspections.  The leader of the scheme was sentenced to twenty years in prison, and his accomplice was sentenced to over six years in prison. The Report also recounts the case of an inpatient rehabilitation company that settled allegations of submitting false patient diagnoses and admitting patients unnecessarily to bolster Medicare payments.  The company allegedly provided false diagnoses on patient assessments to keep its facilities eligible for a special Medicare status that pays a higher rate.  The company also allegedly admitted and billed for Medicare patients that did not need the care they were provided.  The company ended up paying $48 million to resolve the allegations. What this means for you: the OIG's aggressive pursuit of providers for fraud and abuse related to federal and state healthcare programs continues to ramp up, with OIG reporting a $5.4 billion in expected recoveries from FY 2019, which is a significant increase over 2018’s $2.91 billion.  It's critical that providers ensure their operations, including all of their agreements, are up to date with the most current requirements under the law. Hospitals and health systems need to ensure their providers are educated on the fraud and abuse laws and remain diligent in the upcoming year.  To paraphrase, according to Acting Inspector General Joanne M. Chiedi, 2020 will see the OIG continue its bold pursuit of those who attempt to cheat HHS programs or harm HHS beneficiaries and the agency will be resolute in catching and holding accountable perpetrators of fraud and identifying misspent funds.

The Centers for Medicare & Medicaid Services (“CMS”) recently posted two annual updates related to the physician self-referral law (“Stark Law” or “Stark”) on its Stark website: (1) CPI-U updates related to the nonmonetary compensation exception and medical staff incidental benefits exception; and (2) CPT/HCPCS codes used to identify certain categories of Stark designated health services (or “DHS”).  These updates are important for stakeholders to be aware of as they seek to ensure continued compliance with Stark Law requirements. CPI-U Updates As per usual, the CPI-U Updates page of the CMS Stark website, found here, was updated before the end of the year to reflect the new compensation limits (based on inflation) for the nonmonetary compensation exception (at 42 C.F.R. § 411.357(k)) and medical staff incidental benefits exception (at 42 C.F.R. § 411.357(m)).  For calendar year 2020, the non-monetary compensation limit is $423 (up from $416 for calendar year 2019) and medical staff incidental benefits must be less than $36 per occurrence (up from $35 in calendar year 2019). DHS Code List Updates As we explained in our blog post here, in the calendar year 2020 Medicare physician fee schedule final rule (“PFS”), CMS finalized changes to the advisory opinion process under the Stark Law, and also included the annual update to the list of CPT/HCPCS codes used to identify certain categories of DHS (the “Code List”).  As we also explained, the Stark Law regulations at 42 C.F.R. § 411.351 specify that the following four categories of DHS are defined by reference to the Code List: (1) clinical laboratory services; (2) physical therapy, occupational therapy, and outpatient speech-language pathology services; (3) radiology and certain other imaging services; and (4) radiation therapy services and supplies.  The Code List is updated annually to reflect changes in the most recent CPT and HCPCS Level II publications. Further, items and services that may qualify for either of two Stark Law exceptions—the exception for preventive screening tests, immunizations and vaccines at 42 C.F.R. § 411.355(h) and the exception for EPO and other dialysis-related drugs at 42 C.F.R. § 411.355(g)—are identified by reference to the Code List.  The Code List included the annual updates to the codes eligible for the preventive screening tests, immunizations and vaccines exception.  However, as in previous years, the Code List does not include any codes eligible for the EPO and other dialysis-related drugs exception (for reasons explained by CMS in the rule).  The PFS rule includes tables showing the additions and deletions to the Code List. As per usual, the complete Code List was posted before the end of the year to the CMS Stark website dedicated to the Code List, found here.  The new list is effective January 1, 2020.

On September 5, 2019, the Centers for Medicare & Medicaid Services (“CMS”) issued a final rule (“Final Rule”) effective November 4, 2019, which increases disclosure requirements for the provider and supplier enrollment and revalidation process. The Final Rule is aimed at increasing the information provided to CMS in enrollment and revalidation to identify fraud, waste, and abuse, and expanding CMS’s authority to deny, revoke, or delay a provider’s or supplier’s ability to participate in Medicare, Medicaid and CHIP based on a provider’s or supplier’s relationship with previously sanctioned entities.  The Final Rule revises several existing regulations and adds an onerous regulation titled “disclosure of affiliations,” at 42 C.F.R. § 424.519. This new disclosure requirement mandates that, at the time of reenrollment or revalidation, each provider and supplier must list all “disclosable events” for each “affiliation” within the past five (5) years, even if the provider/supplier is not affiliated with such person/entity at the time of enrollment or revalidation. This new requirement is greatly expanded from the previous disclosure requirement, where providers/suppliers were only required to disclose their own adverse actions. A provider or supplier must disclose its affiliations that have one of the following “disclosable events”: Currently has an uncollected debt to Medicare, Medicaid or CHIP; Has been or is subject to a payment suspension under a federal health care program; Has been or is excluded by the Office of the Inspector General from participation in Medicare, Medicaid, or CHIP; or Has had its Medicare, Medicaid, or CHIP enrollment denied, revoked, or terminated. 42 C.F.R. § 424.502. Note that on the last disclosable event, the Final Rule could be interpreted to require disclosure of any enrollment denial, including billing privileges and arguably denials of Change of Ownership or Change of Location requests. Moreover, CMS articulated a broad definition of “affiliations” which means, in relation to the provider/supplier, any individual or entity that holds: A five (5) percent or greater direct or indirect ownership interest; A general or limited partnership interest (regardless of the percentage); An interest in which an individual or entity exercises operational or managerial control over, or directly or indirectly conducts, the day-to-day operations of another organization regardless of an employment relationship; An officer or director position; or Any reassignment relationship (e.g., reassignment of billing rights). 42 C.F.R. § 424.502.   CMS may revoke privileges if a provider or supplier knew or reasonably should have known about an affiliate’s disclosable events. CMS declined to provide an objective standard to such a knowledge requirement, but provided that a provider/supplier must make a “sufficient effort” when evaluating whether an affiliate has a disclosable event that such provider/supplier must report.  Such an effort could  include the provider/supplier directly contacting the affiliate, and potentially mining historical data, not just publically available data. In the context of complex legal structures including publicly owned companies or private equity-backed providers, CMS’s definition of affiliation can quickly result in a time-consuming process of review.  The disclosure requirements in the Final Rule apply to all providers and suppliers, but only at time of initial enrollment and revalidation, which is a significant improvement from the proposed rule (which, if adopted, would have required disclosures for change of ownership and change of information filings). Once an affiliation is disclosed to CMS, CMS will require additional information about the affiliate, the relationship, and the disclosed adverse information, and will conduct an analysis of whether such affiliation presents an “undue risk” of fraud, waste, and abuse to the Medicare Program, such that the disclosing provider/supplier’s billing privileges should be denied or revoked. Recognizing that compliance with this Final Rule will be an arduous task for a large number of providers and suppliers, CMS adopted a “phased in” approach. First, CMS will require disclosure of affiliations only when specifically requested by CMS. CMS will then implement new CMS-855 forms (which will also go through a separate notice and comment period), and will issue subregulatory guidance on the new forms and disclosure requirements. Only then will providers and suppliers be required to comply with the disclosure requirements during initial enrollment and revalidation.  It is expected that the “phased-in” approach could extend over the course of the next few years, and in the second phase, may initially only require compliance by certain providers/suppliers. Even though the immediate impact of the disclosure requirements is limited, providers and suppliers should understand the extensive scope of the new requirement and understand what steps will need to be taken to review in detail their affiliations, both past and present, once the complete scope of the disclosure requirements are officially implemented.   If you have further questions about this Final Rule, please contact the authors or your regular Dorsey attorney.   The Final Rule on the new disclosure requirements can be found on the website of the Federal Register here.    

In the calendar year 2020 Medicare physician fee schedule final rule (“PFS”), which was published in the Federal Register on November 15, 2019 (available here), CMS finalized changes to the advisory opinion process under the federal physician self-referral law (“Stark Law” or “Stark”).  CMS also published its annual update to CPT/HCPCS codes used to identify certain categories of Stark designated health services (or “DHS”).  These regulatory changes and annual code update both go into effect on January 1, 2020. Finalized Changes to Stark Advisory Opinion Regulations Under the CMS advisory opinion process, the regulations for which are found at 42 C.F.R. §§ 411.370–389, parties can seek an advisory opinion from CMS as to whether a referral for DHS (other than clinical laboratory services) is prohibited under the Stark Law.  CMS determines in the opinion whether an arrangement constitutes a “financial relationship” that would implicate the Stark Law’s referral prohibition and whether the arrangement or the referred service qualifies for a Stark Law exception.  CMS issued a Request for Information (“RFI”) in June 2018 as part of the “Regulatory Sprint to Coordinated Care” about ways CMS could modify the Stark Law regulations in order to reduce barriers to patient care coordination and value-based arrangements and to reduce the regulatory burden of complying with the Stark Law generally, which we wrote about here.  CMS did not specifically solicit comments regarding the Stark advisory opinion process in the RFI, but CMS received a number of comments about ways that the Stark advisory opinion process could be improved.  CMS explains in preamble to the PFS that it “undertook a fresh review” of the advisory opinion process in light of the comments it received to “identify limitations and restrictions that may be unnecessarily serving as an obstacle to a more robust advisory opinion process.” CMS also recently issued sweeping proposed Stark Law regulatory changes as part of the Regulatory Sprint to Coordinated Care on topics related to the RFI, which we wrote about in a white paper available here.  While the changes to the advisory opinion regulations do not directly relate to the shift to a value-based health care delivery system, CMS acknowledges in preamble to the PFS that “a faster and more robust advisory opinion process facilitates the shift to value-based care arrangements by providing more guidance for parties trying to understand how the physician self-referral law applies in an evolving and innovative marketplace. This will help to reduce provider burden by providing insight into what does and does not comply with the law, which encourages innovation.” Since the initial advisory opinion regulations were issued in 1998, CMS has only issued 16 advisory opinions, which are available here.  (CMS also issued 15 advisory opinions from 2004-2005 during the 18-month moratorium on physician ownership and investment interests in specialty hospitals that was in effect at that time, which are available here.)  In contrast, the Department of Health and Human Services (“HHS”) Office of Inspector General (“OIG”), which has a separate advisory opinion process for the federal anti-kickback statute (“AKS”) and certain other laws, issued 14 advisory opinions in calendar year 2018 alone (available here).  In preamble to the PFS, CMS recognizes the importance of an accessible advisory opinion process and acknowledges that the current advisory opinion process has not been widely used.  An accessible advisory opinion process is particularly important in the context of the Stark Law, since it is a strict liability statute, and there is a great need for certainty because, as CMS acknowledges, “parties that act in good faith may nonetheless face significant financial exposure if they misunderstand or misapply the law’s exceptions.” We anticipate that the changes to the advisory opinion process may indeed help to make the process more meaningful and accessible to entities that are seeking to understand if their arrangement complies with the Stark Law, particularly due to CMS’s broadening of how advisory opinions can be relied upon (as described below).  If you are interested in submitting an advisory opinion request, or for advice on whether and how you can rely on a published advisory opinion in assessing an arrangement for compliance with the Stark Law, please contact the authors or your regular Dorsey attorney. The most notable changes to the advisory opinion regulations in the PFS are the following: Reliance on an Advisory Opinion: Under existing Stark regulations, only the individual or entity that requested the advisory opinion may rely on the opinion. In the PFS, CMS finalizes revisions to regulations to specify the following: An advisory opinion is binding on the Secretary of HHS, and a favorable advisory opinion means that sanctions will not be imposed under the Stark Law with respect to individuals/entities that are parties to the arrangement upon which the opinion was issued (as well as the individuals/entities that requested the opinion). The Secretary of HHS will not pursue sanctions under the Stark Law “against any party to an arrangement that CMS determines is indistinguishable in all its material aspects from an arrangement with respect to which CMS issued a favorable advisory opinion.” Parties can submit an advisory opinion request to determine whether CMS would view their arrangement as “indistinguishable in all material aspects” from another arrangement that has received a favorable opinion, which will be issued by CMS on an expedited basis (as explained below). Individuals/entities can rely on advisory opinions “as non-binding guidance that illustrates the application of the physician self-referral law and regulations to the specific facts and circumstances described in the advisory opinion.” CMS acknowledges that stakeholders already use advisory opinions to inform their decision-making, and this change is intended to make clear that “such reliance is permissible and reasonable.” Timeline for Issuing an Advisory Opinion: Under existing regulations, CMS currently has a 90-day timeframe to issue an advisory opinion. CMS finalizes its proposed changes to the regulatory text to shorten this to 60 “working days” (where “working day” excludes weekends and holidays) after the request has been formally accepted.  CMS maintains the discretion it has in existing regulations to extend this time period when a request involves “complex legal issues of first impression or highly complicated fact patterns” and to suspend the time period in certain circumstances. CMS finalizes revisions to regulations to provide for expedited review of advisory opinion requests that relate to whether an arrangement is “indistinguishable in all material aspects” from an arrangement that was the subject of a favorable advisory opinion. The expedited review period will be 30 working days. Fees for the Cost of Advisory Opinions: CMS finalizes revisions to regulations to revise the fee structure for advisory opinions. Specifically, the $250 initial fee is removed and a $220 hourly rate is implemented. In the PFS, CMS also finalizes its proposed changes to the advisory opinion regulations in the following areas (among others): Matters Subject to Advisory Opinions: CMS finalizes revisions to regulations to allow CMS to consider advisory opinion requests that “relate to” existing or planned arrangements, rather than requests that “involve” them, which is intended to capture the scope of appropriate advisory opinion requests. CMS explains that it remains its position that advisory opinion requests cannot be regarding only “hypothetical facts or general questions of interpretation,” but must be about a specific referral, physician, financial relationship and facts/circumstances. CMS does acknowledge, however, that there is some confusion over what is a planned arrangement versus a hypothetical arrangement, so is removing this language from the advisory opinion regulations.  It also revised the regulatory text to reflect its view that a request for an advisory opinion would not be accepted if the claim could not be billed to Medicare for some reason unrelated to the Stark Law. CMS finalizes revisions to regulations to allow CMS more flexibility related to advisory opinion requests that involve conduct that is “substantially similar to conduct that is under investigation or is the subject of a law enforcement proceeding.” Certification Requirement: CMS finalizes revisions to regulations to allow for any authorized officer of the corporation to sign the certification statement, in addition to the Chief Executive Officer. Rescission: CMS finalizes revisions to regulations related to when CMS may rescind an advisory opinion, which is when CMS determines that there is good cause to do so. “Good cause” exists when “(i) there is a material change in the law that affects the conclusions reached in an opinion; or (ii) a party that has received a negative advisory opinion seeks reconsideration based on new facts or law.”  CMS declines to adopt a minimum wind-down period in regulatory text for arrangements that are the subject of a rescinded advisory opinion, and states that it will work with parties affected by a rescinded opinion to determine a reasonable wind down period.  CMS also finalizes regulatory changes to provide for an advance notice to the requestor and the public of a rescinded opinion. 2020 DHS Code List and CPI-U Updates The PFS also includes the annual update to the list of CPT/HCPCS codes used to identify certain categories of DHS (the “Code List”).  As we explained in prior posts (such as this one), the Stark Law regulations at 42 C.F.R. § 411.351 specify that the following four categories of DHS are defined by reference to the Code List: (1) clinical laboratory services; (2) physical therapy, occupational therapy, and outpatient speech-language pathology services; (3) radiology and certain other imaging services; and (4) radiation therapy services and supplies.  The Code List is updated annually to reflect changes in the most recent CPT and HCPCS Level II publications. Further, items and services that may qualify for either of two Stark Law exceptions—the exception for preventive screening tests, immunizations and vaccines at 42 C.F.R. § 411.355(h) and the exception for EPO and other dialysis-related drugs at 42 C.F.R. § 411.355(g)—are identified by reference to the Code List.  The Code List included the annual updates to the codes eligible for the preventive screening tests, immunizations and vaccines exception.  However, as in previous years, the Code List does not include any codes eligible for the EPO and other dialysis-related drugs exception (for reasons explained by CMS in the rule).  The PFS rule includes tables showing the additions and deletions to the Code List.  We expect that, as per usual, the complete list will be posted before the end of the year to the CMS Stark website dedicated to the Code List, found here. We also expect that the CPI-U Updates page of the CMS Stark website, found here, will be updated before the end of the year to reflect the new compensation limits for the nonmonetary compensation exception (at 42 C.F.R. § 411.357(k)) and medical staff incidental benefits exception (at 42 C.F.R. § 411.357(m)), which are both updated annually for inflation.

Today, the Centers for Medicare & Medicaid Services (CMS) and the Department of Health and Human Services (HHS) Office of Inspector General (OIG) each released their long-anticipated proposed rules to revise the federal self-referral law (or “Stark Law”) regulations, the safe harbors under the federal anti-kickback statute (AKS), and the civil monetary penalty law (CMP) for beneficiary inducements.  The proposed rules are part of HHS’s “Regulatory Sprint to Coordinated Care,” which seeks to remove regulatory obstacles to care coordination and a value-based healthcare delivery system. The HHS press release regarding the proposed rules is available here,  and includes links to each of the CMS and OIG proposed rules.  For our prior posts on the Regulatory Sprint to Coordinated Care, see here and here. Relatedly, the Substance Abuse and Mental Health Services Administration (SAMHSA) published proposed rules to revise privacy rules for substance use disorder records on August 26, and CMS published proposed rules to revise the Stark Law advisory opinion regulations on August 14 (as part of the Medicare Physician Fee Schedule proposed rule). We are reviewing the proposed rules and will post an in-depth analysis shortly.

Medicare reimbursement for remote patient monitoring has taken a number of steps forward throughout this year. New and proposed rules from the Centers for Medicare and Medicaid Services both expand the billing options available to health care providers and also build in additional flexibility in the provision of remote patient monitoring in order to further the health industry’s push to value-based care. Remote patient monitoring (“RPM”) is a form of digital health in which medical data from individual patients is collected in one location and electronically transmitted to health care providers in a different location for assessment and recommendations. RPM differs from other digital health services in that there is not necessarily a live, or “real-time”, interaction between the patient and their health care provider. Instead, RPM is used by health care providers to monitor various aspects of their patient’s vital signs, including: weight, blood pressure, blood sugar, heart rate, and oxygen levels. RPM is not only a useful tool for health care providers to use during a patient’s hospitalization, but it is also useful in reducing the number of hospitalizations altogether. For example, RPM can be used to allow older or disabled individuals to live at home longer and avoid having to move into skilled nursing facilities, since their vitals can be monitored without having to see a health care provider in person. Until this year, Medicare reimbursement for RPM services was difficult to come by. While Medicare previously offered reimbursement for RPM services billed under CPT code 99091, the code did not take current technology and staffing models into account (likely because the language from the code dates back roughly 16 years). In order to address this issue and further incentivize health care providers to use RPM, the Centers for Medicare and Medicaid Services (“CMS”) finalized three new RPM billing codes that were effective January 1, 2019 (“Final Rule”). The new codes are titled, “Chronic Care Remote Physiologic Monitoring” and included the following descriptions: CPT code 99453: “Remote monitoring of physiologic parameter(s) (e.g., weight, blood pressure, pulse oximetry, respiratory flow rate), initial; set-up and patient education on use of equipment.” CPT code 99454: “Remote monitoring of physiologic parameter(s) (e.g., weight, blood pressure, pulse oximetry, respiratory flow rate), initial; device(s) supply with daily recording(s) or programmed alert(s) transmission, each 30 days.” CPT code 99457: “Remote physiologic monitoring treatment management services, 20 minutes or more of clinical staff/physician/other qualified healthcare professional time in a calendar month requiring interactive communication with the patient/caregiver during the month.” Finalization of these new codes did not come without fair criticism and disparate interpretations of the level of required supervision. In creating the codes, CMS stated that RPM could not be delivered “incident to” a practitioner’s professional services. Therefore, RPM services could not be reimbursed if the services were furnished by auxiliary personnel (individuals acting under the supervision of a physician). Following backlash of this conclusion, CMS issued a technical correction to the Final Rule on March 14, 2019, that allows “incident to” billing of RPM services by auxiliary personnel if they are under direct supervision. This was overall a win for RPM reimbursement; however, through separate codes (CPT 99487, 99489, and 99490), CMS allows reimbursement for Chronic Care Management under general supervision. The difference being that general supervision does not require a physician to be in the same building at the same time as the auxiliary personnel delivering the services. This contradictory treatment resulted in commentators arguing that CMS’s approach hinders, rather than increases, a patient’s access to digital health services by limiting where a physician may be located during the supervision of such services. CMS seems to be addressing this concern in the proposed 2020 Physician Fee Schedule that was published August 14, 2019 (“Proposed Rule”). The Proposed Rule would allow “incident to” RPM services to be reimbursed under general supervision rather than limiting reimbursement to direct supervision. By way of example, this means RPM could be reimbursed when the auxiliary personnel use RPM with patients who are in a hospital while the auxiliary personnel are supervised via other telemedicine modalities by a physician at their home. This change would greatly improve a patient’s access to RPM by enabling physicians to bill for such services delivered in a more flexible manner. In addition to this change, the Proposed Rule revises CPT code 99457 and adds yet another code to allow for additional reimbursement for each 20-minute interval that RPM services are provided.  This is in contrast to the Final Rule’s version of CPT code 99457, which allowed only one reimbursement for RPM services delivered for 20 minutes or more. CMS is accepting comments on the Proposed Rule until September 27, 2019. If you would like to submit comments or have any questions, one of the authors or your regular Dorsey attorney would be happy to assist you.    

For years, CMS has informally applied restrictions for hospitals which share space, equipment, staff or services in the same physical location (i.e., “co-locate”) with other hospitals or health care entities.  Although these sub-regulatory interpretations by CMS were not formal guidance, the penalties were so severe that many hospitals unwound the co-location or shared services arrangements they had in place with physician groups or other health care providers.  The American Hospital Association and others have urged CMS to develop and publish its co-location policy in order to provide clarity for hospitals- in particular out of concern for increasing access to care and improving care coordination in rural parts of the country. On May 3, 2019, CMS finally issued draft guidance to State Survey Agency Directors to use when evaluating hospital co-location arrangements.  CMS is seeking comments from stakeholders on the draft guidance by no later than July 2, 2019. In the draft guidance, CMS emphasizes that co-location of public areas and pathways is permitted as long as each entity demonstrates separate, independent compliance with the Medicare Conditions of Participation.  For a hospital, this means that the hospital must have distinct spaces (including clinical spaces) and maintain control over those spaces at all times.  The parties to the co-location arrangement can share public lobbies, waiting rooms, reception areas, restrooms, staff lounges, elevators, main entrances to a building, and main corridors through non-clinical spaces.  CMS has, however, outlined restrictions regarding the sharing of physical space, contractual arrangements with entities that are co-located with a hospital, the sharing of staffing and staff contracts, and the provision of emergency services in spaces that are co-located with hospitals. We are monitoring the developments of this draft guidance closely and will provide updates as they are published from CMS. If you have any questions about how the draft co-location guidance could impact your organization, please contact the author or your regular Dorsey & Whitney attorney.  

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.

Last week, the Centers for Medicare and Medicaid Services (“CMS”) announced increased flexibility for Medicare Advantage health insurance plans to offer supplemental benefits (those benefits not covered under Medicare Parts A or B). Beginning in 2020, Medicare Advantage plans may offer chronically ill enrollees supplemental benefits that are not necessarily health-related but are reasonably expected to improve or maintain health or overall function. These changes are incorporated into the 2020 Medicare Advantage and Part D Rate Announcement and Final Call Letter. New Explanation of Previously Expanded Health-Related Supplemental Benefits Last year, CMS expanded what Medicare Advantage plans may cover as supplemental health care benefits. We previously addressed the expansion of health-related supplemental benefits here. The move redefined “primarily health related” supplemental benefits to include items or services with 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.” A supplemental benefit is not primarily health related if it is solely or primarily used for cosmetic, comfort, or general use purposes. This week, while responding to requests for clarification, CMS provided the following examples of supplemental benefits that would qualify as primarily health related: Compression garments as part of an over-the-counter benefit Cooking classes as part of a nutritional/dietary or health education benefit Fall prevention kits as part of home & bathroom safety devices Implantable hearing aids, such as middle ear implants as part of a hearing benefit CMS noted that such primarily health related supplemental benefits should be entered and briefly described in the plan benefit package. New Supplemental Benefits for the Chronically Ill The Bipartisan Budget Act of 2018 introduced new categories of supplemental benefits for the chronically ill. Special supplemental benefits for the chronically ill (“SSBCI”) include benefits that are not primarily health related and may be offered non-uniformly[1] to eligible enrollees. According to the new law, a chronically ill person: (1) has one or more comorbid and medically complex chronic conditions that is life threatening or significantly limits the overall health or function of the enrollee, (2) has a high risk of hospitalization or other adverse health outcomes, and (3) requires intensive care coordination.[2] For 2020, CMS will consider any enrollee with a condition identified as a chronic condition in section 20.1.2 of Chapter 16b of the Medicare Managed Care Manual to meet the statutory criterion (1) above, which would include approximately 73 percent of the Medicare Advantage population. Medicare Advantage plans must document their determinations that enrollees meet all three criterion above before providing SSBCI. In addition to being limited to chronically ill enrollees, SSBCI must “have a reasonable expectation of improving or maintaining the health or overall function of the enrollee as it relates to the chronic condition or illness.” CMS explained that SSBCI could be provided to enrollees with degenerative conditions whose health worsen over time, even though this may apparently contradict the requirement that SSBCI improve or maintain the health or function of individuals. The SSBCI need only improve or maintain the health or overall function of an enrollee while the enrollee is using said supplemental benefit. Permissible examples of SSBCI include: Meals furnished to the enrollee beyond a limited basis Transportation for non-medical needs such as grocery shopping Pest control Indoor air quality equipment and carpet shampooing to reduce irritants that may trigger asthma attacks Benefits to address social needs Capital or structural improvements, e.g., permanent ramps, and widening hallways or doorways Medicare Advantage plans must still incur a non-zero direct medical cost for supplemental benefits. CMS stated that, for SSBCI, such incurred cost should be a non-administrative cost even if it is not necessarily paid to a medical provider. For example, a plan may contract with a community-based organization such as a meal delivery service. For any questions about this increased flexibility, please your contact the authors or your regular attorney at Dorsey & Whitney.   [1] CMS is waiving uniformity requirements with respect to SSBCI, as authorized by Section 1852(a)(3)(D)(ii) of the Social Security Act. [2] Section 1852(a)(3)(D)(ii) of the Social Security Act.

The Centers for Medicare & Medicaid Services (CMS) is “actively working” on updates to regulations under the federal physician self-referral law (or “Stark Law”), according to CMS Administrator Seema Verma during a March 4, 2019 speech. Verma stated that the updated regulations will be issued later this year, and “will represent the most significant changes to the Stark law since its inception.” Verma explained in her remarks that the Stark Law, when enacted in 1989, made sense in a fee-for-service context, but as health care transitions to a value-based system where providers take on risk and payment is for outcomes rather than individual services, “we don’t have nearly as much need to interfere with who’s getting paid for what service.” According to Verma, CMS hopes that Stark Law regulatory changes “will help spur better care coordination and help support our work to remove barriers to innovation while continuing to provide appropriate safeguards for our programs.” Verma stated that the updated regulations will include “clarifying the regulatory definitions of volume or value, commercial reasonableness and fair market value; addressing issues such as lack of signature, incorrect dates or other areas of technical noncompliance; and updating the regulation to address a world in which there are cybersecurity and electronic health records requirements.” These Stark Law regulatory reforms are part of the “Regulatory Sprint to Coordinated Care” launched by the Department of Health and Human Services (HHS). Under this initiative, various HHS agencies have issued requests for information (RFIs) to solicit feedback from stakeholders on removing regulatory obstacles to care coordination. CMS published an RFI on June 25, 2018 soliciting comments regarding Stark Law reforms (as we described in our post here), which received 392 comments before the close of the comment period. We anticipate that CMS will summarize and respond to many of the comments that it received in preamble to the proposed Stark Law regulations to be issued later this year, as well as incorporate suggestions from stakeholders in the proposed regulations themselves. Also as part of the Regulatory Sprint, the HHS Office of Inspector General (OIG) published an RFI on August 27, 2018 soliciting comments on reforms to the anti-kickback statute and beneficiary inducements civil monetary penalty (as we described in our post here), which received 359 comments before the close of the comment period. Additionally, the HHS Office for Civil Rights (OCR) published an RFI on December 14, 2018 soliciting comments on reforms to the Health Insurance Portability and Accountability Act (HIPAA) privacy and security regulations, on which the comment period closed last month. The fourth and final area of focus of the Regulatory Sprint (according to an HHS press release) is 42 CFR Part 2, which relates to the confidentiality of substance use disorder patient records. An RFI under the Regulatory Sprint for this regulation has not been published by the Substance Abuse and Mental Health Services Administration (SAMHSA, which is the agency that administers this regulation). We will provide information about regulatory reform developments under these other areas of the Regulatory Sprint as they become available.

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 20, 2018, CMS announced the first part of its two-part advance notice to implement changes to the Medicare Advantage (“MA”) risk adjustment methodology for 2020 (the “Advance Notice”), which can be found here. A key element of the CMS proposal in the Advance Notice is to incorporate into the risk adjustment methodology the number of conditions an individual beneficiary may have, making an adjustment as the number increases. This proposal is intended to meet a risk adjustment requirement added by the 21st Century Cures Act (42 U.S.C. 1395w-23(a)(1)(I)(i)(I)). As a matter of background, in order to mitigate against the risk of only the healthiest Medicare beneficiaries being targeted to participate in the MA program, federal payments to MA plans are adjusted to reflect how sick their members are. The sicker a member is, the higher the payment to the member’s MA plan is supposed to be. Under the current risk adjustment model, the member’s level of sickness or “risk score” is determined in large part by identifying certain health conditions the member has that are included in the model, i.e., “payment conditions.” The proposed risk adjustment model in the Advance Notice would make a further adjustment as the number of payment conditions the member has increases, up to a maximum of 10 conditions. In addition, what constitutes payment conditions in the proposed model would expand to include categories for mental health, substance use disorder, and chronic kidney disease. As an alternative to the proposed model described above, the Advance Notice presents another payment condition count for public comment. This alternative model supplements the proposed model mentioned above by adding categories for pressure ulcers and dementia as payment conditions. CMS intends to phase-in implementation of one version of these new risk adjustment models beginning with 2020 payments, which payments are proposed to be a 50/50 blend of the current model and the new model. The 21st Century Cures Act requires full implementation of the new risk adjustment model by 2022. The Advance Notice also includes a proposal to phase-in a change how CMS calculates an MA member’s risk score. For 2020, CMS proposes that half of the risk score be calculated using diagnoses from encounter data (i.e., treatment information from a clinician), Risk Adjustment Processing System (“RAPS”) inpatient diagnoses, and fee-for-service (“FFS”) diagnoses, and that half of the risk score will be calculated with diagnoses from RAPS and FFS diagnoses. This proposal would result in increased importance of encounter data to establish a member’s risk score. The second part of CMS’s Advance Notice regarding MA capitation rates and final payment policies for 2020 has not yet been released. Comments on the risk adjustment methodology modifications proposed in the first part are due February 19, 2019 and can be submitted here. CMS will publish the final 2020 MA rate announcement on or before April 1, 2019.

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.

On Wednesday, November 28, 2018, the U.S. Department of Health and Human Services (“HHS”) released a draft document titled, Strategy on Reducing Regulatory and Administrative Burden Relating to the Use of Health IT and EHRs.  The report was developed by the Centers for Medicare and Medicaid Services (“CMS”) and the HHS Office of the National Coordinator for Health Information Technology (“ONC”).  HHS was required under the 21st Century Cures Act—signed into law in December 2016—to develop goals, strategies, and recommendations to reduce electronic health record (“EHR”) burdens that impact the delivery of health care services.  HHS solicited input for the strategy in listening sessions, written responses, and other stakeholder contact.  Now that the draft strategy is released, HHS is soliciting additional feedback on their website for sixty days, until January 28, 2019.  To provide written comments and review the strategy, visit the strategy webpage here. The report identifies three goals: Reduce the effort and time required to record health information in EHRs for clinicians; Reduce the effort and time required to meet regulatory reporting requirements for clinicians, hospitals, and healthcare organizations; and Improve the functionality and intuitiveness (ease of use) of EHRs. Potentially more enlightening are the strategies and recommendations, which offer a guide to what actions CMS may take in future rulemaking and guidance.  The report recommends that the regulatory burden around patient encounter documentation should continue to be reduced.  HHS notes that office and outpatient evaluation and management visit documentation has already been updated and streamlined in the 2019 Physician Fee Schedule final rule and that CMS removed some documentation requirements for admission orders to inpatient rehabilitation facilities.  Other recommendations that may directly reduce or alter the regulatory burden on providers include the following: Waive documentation requirements for alternative payment models Automate ordering and prior authorization procedures by adopting standardized templates, data elements, and real-time standards-based electronic transactions Support pilots for standardized electronic ordering Simplify scoring for the Promoting Interoperability performance category (of the Quality Payment Program and Promoting Interoperability Programs, formerly EHR Incentive Programs for hospitals and clinicians) Incentivize innovative uses of health IT and interoperability Continue providing states with Medicaid funding for health IT systems and to promote interoperability among Medicaid providers Adopt additional data standards for better access, integration, and analysis across different systems Explore less burdensome electronic quality measurements Improve interoperability between EHRs and state prescription drug monitoring programs Increase the use of electronic prescribing of controlled substances, with better access to medication history Harmonize EHR data reporting requirements across federal programs to reduce reporting burden Provide additional guidance on HIPAA privacy and other federal confidentiality requirements regarding substance use disorder health information (to facilitate electronic health information exchange) When health IT and EHR incentive programs, such as the Medicare EHR Incentive Program (commonly known as “meaningful use,” and now part of the Merit-Based Incentive Payment System (“MIPS”)), were first rolled out, much of the focus was on switching providers to electronic systems to enable better care and patient access.  For example, in ONC’s Federal Health IT Strategic Plan 2015 – 2020, goals include: improving health care quality and value, supporting individual access, privacy, and autonomy, honoring personal health preferences, and building a culture of EHR use.  The 2015 – 2020 strategic plan makes minimal reference to improving clinical workflows or enabling efficiencies for providers.  As health IT and EHRs have matured in the past few years, it is increasingly clear that individual clinicians and health care organizations have become more burdened through the implementation of electronic systems, not less.  The new Strategy on Reducing Regulatory and Administrative Burden Relating to the Use of Health IT and EHRs discusses the issues faced and potential solutions to be implemented by CMS and other federal programs.  The final version of the strategy will be published in late 2019 after ONC reviews and analyzes the comments made through January 28, 2019.

On Friday, November 2, 2018, the Centers for Medicare and Medicaid Services (“CMS”) issued its calendar year 2019 Medicare Hospital Outpatient Prospective Payment System (“OPPS”) and Ambulatory Surgical Center Payment System final rule. Despite significant resistance and concerns from hospitals, CMS finalized its proposed site-neutral payment policy for clinic visit services provided at off-campus provider-based departments (“PBDs”), including PBDs that were excepted under the Bipartisan Budget Act of 2015. Currently, clinic visit services receive a higher payment when provided at PBDs. Under the new site-neutral payments rule, PBD clinic visit services will be paid at the same rate as clinic visit services provided in standalone physician offices, even when the PBD is excepted. The site-neutral payments will be phased in over two calendar years, 2019 and 2020. The services that will be affected are described by HCPCS code G0463: hospital outpatient clinic visit for assessment and management of a patient. These services are the most common services paid for under OPPS, and in calendar year 2017 represented about one-third of all OPPS claims. In 2017, PBDs received $184 for a new patient clinic visit, compared to $109 reimbursement in a physician office setting. For established patients, the same service is $158 compared to $74, respectively. Under the new site-neutral payments rule, the OPPS reimbursement for the clinic visit service will be cut by 30 percent in calendar year 2019 and 60 percent in 2020 and onward. CMS justified the change as a cost cutting measure, citing Medicare Payment Advisory Commission (“MedPAC”) reports that have long called for site-neutral payments to combat the shift of services from lower-cost physician offices to higher-cost PBDs. CMS’ concern—based on OPPS payment growth and the MedPAC report—is that “payment incentives, rather than patient acuity or medical necessity, are affecting site-of-service decision-making.” In sum, CMS believes increasing OPPS payments are a result of services shifted to PBDs to pursue higher reimbursement (not care-centered factors), and therefore switching to site-neutral payments will not affect patient care and outcomes. Affected hospitals and providers have vigorously disagreed with CMS’ reasoning for site-neutral payments, believing patients, especially those in rural and disadvantaged communities, will suffer. Opponents of site-neutral payments noted many reasons why costs are higher at PBDs than independent physician offices: patients are typically poorer and have more chronic health problems, hospitals have higher overhead, and more regulatory compliance is required. In addition, in responses to the CMS proposed rule in July, many commenters disputed CMS’ statutory authority to enact site-neutral payments. CMS disagreed, stating in the final rule, that it had broad authority to develop a method for controlling unnecessary increases in the volume of covered outpatient department services. The American Hospital Association has already released a statement that it, along with the Association of American Medical Colleges and others, intend to challenge the site-neutral payment provisions in court. Beyond finalizing site-neutral payments, the 1,100 page final rule included other important developments. Notably, in response to comments on the proposed rule and upon further consideration by CMS, the proposal to limit service expansion for excepted, off-campus PBDs was not adopted. The proposal would have limited new items and services excepted off-campus PBDs could provide to clinical groups of services that were in place by a set date. Many commenters opposed the service limitation plan and found it irrational that services would not be allowed to change along with community and provider demand and evolution. CMS stated it may still pursue future rulemaking limiting service expansions. Additionally, CMS finalized its proposal to reduce 340B drug reimbursements for 340B drugs dispensed at off-campus PBDs. A copy of the final rule is available here, which will be officially published in the Federal Register on November 21, 2018.