Payers, Providers, and Patients – Oh My! Is Crowell & Moring’s biweekly health care podcast, discussing legal and regulatory issues that affect health care entities’ in-house counsel, executives, and investors. In this “deep dive” episode, hosts Payal Nanavati and Joe Records talk to Barbara Ryland about benefits under Medicare Part C.

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On October 3, President Trump signed an Executive Order on Protecting and Improving Medicare for Our Nation’s Seniors (EO), directing the Department of Health and Human Services (HHS) to develop various proposals to “protect and improve the Medicare” program as an alternative to the Medicare for All Act.

The EO aims to:

• Expand Medicare Advantage (MA),
• Encourage innovative plan designs, and
• Reduce regulatory burdens on providers

These policies, if implemented, could have a major impact on Medicare Advantage, Medicare generally, and the health care entities that provide various services and products to the people enrolled in these plans.

Medicare Advantage Policies

An increasing number of seniors eligible for Medicare are enrolling in MA plans operated by private insurers. The Administration already has expanded services offered under MA plans to cover additional supplemental benefits that basic Medicare does not, including, inter alia, limited dental, hearing, and vision coverage; gym memberships; transportation to medical appointments; and home-delivered meals (for more information on recent changes to supplemental benefits, click here).

The EO requires HHS to propose regulation within one year to provide seniors with more choices including by: (i) reducing barriers that limit adoption of Medicare medical savings accounts; and (ii) creating a payment model that adjusts MA supplemental benefits to allow seniors to more directly share in cost savings that MA plans generate, including monetary rebates creating incentives to seek high value care.

HHS also has one year to propose regulation to adjust network adequacy requirements for MA Plans to take into account the competitiveness of a state’s market, including whether those states have certificate of need laws, and consider in network adequacy enhanced access through telehealth services and other technologies.

In addition to premium concerns in MA, HHS must develop a report within 180 days identifying approaches to modify Medicare fee for service (FFS) payments to more closely reflect prices paid in MA and the commercial market. HHS must study: (i) shared savings and competitive bidding; (ii) use of MA-negotiated rates to set FFS Medicare rates; and (iii) novel approaches to information development and sharing that may enable markets to lower cost and improve quality for FFS Medicare beneficiaries.

Encouraging Innovation

The EO also requires HHS to propose regulatory changes to bring innovative products, including medical devices and telehealth services, to the market faster. HHS must devise a way to streamline approval by the FDA and CMS’s coverage and coding processes. The EO directs HHS to adopt regulations and guidance to clarify the application of coverage standards, including the evidentiary standards CMS uses in applying its reasonable-and-necessary standard, the standards for deciding appeals of coverage decisions, and the prioritization and timeline for each National Coverage Determination process in light of changes made to local coverage determination processes.

The EO also aims to encourage innovation by asking HHS to modify the Value-Based Insurance Design (VBID) payment model to remove any disincentives for MA plans to cover items and services that make use of new technologies that are not covered by FFS Medicare. CMS currently is using this model to test various MA service delivery and/or payment approaches.

Quality and Cost Data

The EO directs HHS to propose regulations within one year to provide seniors with more quality care and cost data to provide opportunities to make more informed choices. In addition, HHS is directed to disseminate Medicare claims data to health providers regarding practice patterns that may pose undue risks to patients or about outlier practice patterns. This may subject providers to additional data collection and reporting.

Fraud and Abuse

The EO also generally calls for HHS to propose changes in the Medicare program to reduce fraud, waste, and abuse; reduce burdens on providers and eliminate inefficiencies; propose other improvements to Medicare enrollment processes; and remove barriers to private contracts that allow Medicare beneficiaries to obtain the care of their choice and facilitate the development of market-driven prices.

What’s Next?

It remains to be seen how these policies will be enacted by HHS, but it will be important to watch for these regulations in the next year as they are developed given their broad impact. The EO calls on HHS to make changes in a number of areas requiring many proposed regulations to be developed within the year. Given the continued focus on healthcare heading into an election year, these proposals may generate significant interest and commentary from stakeholders and politicians alike.

As of October 3, 2019, the Office of Management and Budget completed its review of the proposed rules for “modernizing and clarifying” the Physician Self-Referral Regulations and revising the safe harbors under the Anti-Kickback Statute and rules regarding the Beneficiary Inducement Civil Monetary Penalties Law.

These regulations were the subject of two Requests for Information (RFIs) issued by the Centers for Medicare & Medicaid (CMS) and the HHS Office of the Inspector General (OIG) in the summer of 2018. Collectively, the agencies received over 700 comments in response to the RFIs, which are part of HHS’s broad Regulatory Sprint to Coordinated Care. Based on the questions posed in the RFIs, CMS and OIG have explored how much flexibility they can give to healthcare entities to allow for coordinated, value based care while still protecting federal programs and beneficiaries.

We expect that these highly anticipated proposed rules will be published within the week. Stay tuned for our analysis of these rules and whether they achieve the agencies’ promise of facilitating more flexibility and innovation in the health care industry.

Last week, Tennessee proposed to the Centers of Medicare and Medicaid Services (“CMS”) the first of its kind Medicaid block grant program, which would constitute a fundamental restructuring of the Tennessee Medicaid program. The proposal is intended to implement Tennessee House Bill 1280, enacted in May of 2019, which directed the governor to request CMS to approve the block grant through a Section 1115 waiver amendment.

Tennessee currently operates its Medicaid program (“TennCare”) through a Section 1115 waiver approved by CMS. Under the proposed amendment, the state would receive a block grant in an amount calculated using the federal government’s projections for the state’s Medicaid program costs, calculated as if the state were not currently participating under a 1115 demonstration waiver. In years in which the state spends less than the block grant, the state and the federal government would evenly share in the resulting savings.

As part of the proposal, Tennessee has asked for significant exemptions from federal Medicaid managed care laws. Among other things, the state has asked for flexibility to spend block grant funds on items and services not otherwise covered under Medicaid; to adopt a commercial-style closed formulary; to make changes to its benefit packages without CMS approval; to vary benefit packages for members based on medical factors or other considerations; and to be relieved from compliance with Part 438 of Title 42 of the Code of Federal Regulations, including provisions requiring federal approval for pursuit of healthcare delivery system reform initiatives, managed care contracts, and actuarially certified capitation rates paid to managed care contractors. The state believes that the proposal would “appropriately recognize[] the state’s efforts to contain costs and improve program quality, while providing a meaningful incentive to continue building on those efforts to make TennCare a stronger and more effective program.” Continue Reading Tennessee Proposes First of Its Kind Block Grant Program for Medicaid

On August 26, North Carolina passed a law allowing small businesses to band together to offer group health insurance through association health plans (“AHPs”). The Small Business Health Care Act, passed without the governor’s signature, authorizes the formation of large group health plans for association members, including small businesses and sole proprietors. However, these plans can be implemented only if they do not violate federal law, and the federal regulations authorizing this form of AHPs were struck down at the U.S. District Court for the District of Columbia earlier this year. While this decision is currently on appeal at the D.C. Circuit, North Carolina has included in its legislation a back-up plan that the state can pursue expansion of AHPs in case the federal regulations remain struck down.

The U.S. Department of Labor issued regulations last June expanding the situations under which AHPs could be formed. These regulations were created in response to a push by the Trump administration to provide greater choice in health care coverage. Proponents of the regulations believed that the expansion of AHPs could make coverage more affordable and accessible for small business employees and sole proprietors. The regulations, however, were met with significant criticism on the grounds that AHPs would undermine the Patient Protection and Affordable Care Act (“ACA”), create instability in the ACA marketplaces, and lead to gaps in patient protection and coverage. This March, as noted in a prior C&M alert, the U.S. District Court for the District of Columbia struck down these regulations.

Continue Reading North Carolina Enacts Association Health Plan Law

In a long-awaited opinion, on September 9, 2019, the U.S. Court of Appeals for the Eleventh Circuit in United States v. Aseracare, Inc., et al, unanimously vacated AseraCare’s False Claims Act (FCA) victory and remanded the case for further proceedings.[1] While this might seem a victory only for the Government at first blush, the opinion contains key takeaways for defendants that will likely reach far beyond just this case.

Importantly, even though the Eleventh Circuit vacated the district court’s grant of summary judgment to AseraCare, it affirmed the district court’s conclusion that a clinical judgment of terminal illness warranting hospice benefits under Medicare cannot be deemed false, for purposes of the FCA, when there is only a reasonable disagreement between medical experts as to the accuracy of that conclusion, with no other evidence to prove the falsity of the assessment. The Eleventh Circuit also concluded, however, that the Government should have been allowed to rely on the entire record, not just the trial record, to prove otherwise. The Government was precluded from doing so, the Court found, due to an earlier decision by the district court to bifurcate proceedings into two phases: one on falsity, and the other on the remaining elements of the FCA.

In affirming the district court’s holding regarding clinical judgment, the Eleventh Circuit remarked that it appears to be the “first circuit court to consider the precise question at issue here,”[2] and is an extraordinary move that provides hospice facilities, hospitals, and providers more generally with a degree of assurance that a reasonable disagreement between clinicians in a courtroom, without other evidence of objective falsehood, does not create a jury question and cannot serve as the basis for an action under the FCA: “While there is no question that clinical judgments must be tethered to a patient’s valid medical records, it is equally clear that the law is designed to give physicians meaningful latitude to make informed judgments without fear that those judgments will be second-guessed after the fact by laymen in a liability proceeding.”[3]

Continue Reading 11th Circuit Issues Long-Awaited Opinion in AseraCare Affirming that Mere Differences in Reasonable Clinical Judgement Cannot Be False Under the FCA and Remanding for New Trial and Consideration of Full Record

In the latest episode of Payers, Providers, and Patients – Oh My!, Shelley Rosenberg talks with Joe Records and Payal Nanavati about how health care defendants can use ERISA preemption as a way to remove litigation to federal court.

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On Monday, the Office for Civil Rights (“OCR”) at the U.S. Department of Health & Human Services (“HHS”) announced an enforcement action against Bayfront Health St. Petersburg (“Bayfront”) for allegedly failing to provide a mother timely access to her unborn child’s prenatal medical records. The enforcement action is noteworthy in that it marks OCR’s first enforcement action under its Right of Access Initiative, announced earlier this year to focus more on enforcing patients’ rights to access their medical records without being overcharged.

After receiving a complaint in August 2018, OCR conducted an investigation indicating that Bayfront, a trauma and tertiary care center based in St. Petersburg, Florida, failed to provide the mother timely access to her unborn child’s fetal heart monitor records in accordance with the Health Insurance Portability and Accountability Act (“HIPAA”). HIPAA generally requires health care providers such as Bayfront to provide patients with access to their medical records, as well as those of their minor children, within 30 days of a request. HIPAA also prohibits charging more than a reasonable cost-based fee for such access.

Bayfront agreed to pay $85,000 to OCR to settle the potential HIPAA violation while not admitting to any wrongdoing. Bayfront also agreed to a corrective action plan including training, updating policies and procedures, and OCR monitoring.

This enforcement action signals a continued push from HHS to hold the health care industry accountable for giving individuals access to their health information. Earlier this year, the Office of the National Coordinator for Health Information Technology released proposed regulations on interoperability and information blocking and CMS released proposed regulations on interoperability also aimed at promoting patient access to their health information. In light of this enforcement action and regulatory activity, we recommend that covered entities carefully review their policies and procedures regarding individuals’ access to health information.

HHS’s Substance Abuse and Mental Health Services Administration (“SAMHSA”) proposed updated rules to clarify the scope of perceived barriers to sharing information regarding treatment for substance use disorders (SUDs) among providers, with research entities, and for law enforcement purposes. The proposed changes to the 42 C.F.R. Part 2 (“Part 2”) regulations appear in two Notices of Proposed Rulemaking (“NPRMs”), which are also summarized in a Fact Sheet. These proposals are part of HHS’s Regulatory Sprint to Coordinated Care, an agency-wide effort to remove regulatory obstacles to care coordination and information-sharing. HHS is anticipated to release proposed rules on HIPAA, the Physician Self-Referral Law and Anti-Kickback Statute by the end of 2019 as part of this effort as well.

The proposed Part 2 updates could have significant impacts on how health care providers, researchers, and health technology companies protect and share SUD information with each other, so interested parties should submit comments on the NPRMs before the deadlines, and prepare to submit comments in response to HHS’s other Regulatory Sprint to Coordinated Care efforts in the coming months.

Background

Continue Reading New Proposed Rules on Confidentiality of Substance Use Disorder Data Would Address Care Coordination and Law Enforcement Challenges

In the latest episode of Payers, Providers, and Patients – Oh My!, Troy Barsky and Alice Hall-Partyka talk with Joe Records and Payal Nanavati about how recent litigation challenging the constitutionality of the Affordable Care Act may impact providers and payers. The discussion focuses on the authority for innovative health care models and important fraud and abuse provisions that were enacted in the ACA.

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