Last week, the Centers for Medicare & Medicaid Services (CMS) released data—for the first time—reporting on mergers, acquisitions, consolidations, and changes of ownership of Medicare enrolled hospitals and nursing homes over the past six years. This data, expected to be updated on a quarterly basis moving forward, has been lauded as an important step in improving transparency around nursing facility ownership and enhancing nursing home safety and quality of care. In conjunction with the release of CMS’ data, HHS’s Office of the Assistant Secretary for Planning and Evaluation (ASPE) released a related report analyzing the data and examining trends in changes of ownership over the past six years. In its report, ASPE also offers preliminary insights into how the data on ownership changes can support implementing policies bolstering competition in health care as well as ensuring program integrity in Medicare and Medicaid.

Continue Reading Changing Hands, Not Washing Them: CMS’ First Report on Nursing Home M&A Data

The final rule implementing “Contract Year 2023 Policy and Technical Changes to the Medicare Advantage and Medicare Prescription Drug Benefit Programs” is now available for review, and set for publication in the May 9, 2022 Federal Register.   The final rule adopts the proposed change that requires initial and service area expansion applicants to submit their proposed contracted networks during the application process.  The final rule delays this change from contract year 2023 to contract year 2024.

In making this change, CMS is basically reverting to its process prior to 2019, when it began allowing plans to attest to network adequacy for new contract or service area expansion applications, and relied on its triennial network review process to evaluate compliance with network adequacy standards for new and expanded contracts.

CMS expressed concern based on three years of experience that the attestation-only process could affect the integrity of the bidding process.  It specifically noted that a number of plans have requested to reduce the service area identified in their bid proposal once they realized that they did not have a sufficient network for one or more counties included in the service area.  The number identified as seeking such changes is small: since 2019, five organizations requested to make changes to the service area of a total of 10 plans after bid submission deadlines.  However, in CMS’ view, when a plan has to revise its bid to remove a county, it is likely that the initial bid submission was not complete, timely, or accurate.

CMS also noted that its post-application network adequacy reviews showed a pattern of organizations continuing to have inadequate networks even after their contract became operational.  CMS found a total of 19 plans that fell into this category.

The original issue that prompted the change in 2019 has not gone away, which is the potential challenge of applicants securing a full provider network almost a year in advance of the contract becoming operational.  The application is typically submitted in February – around 10 months prior to the contract year that begins on January 1.  CMS received many comments about the difficulty of obtaining final contracts in time for the application process, especially in underserved areas or those with relatively few providers.

CMS acknowledged the validity of plan comments, and did not fully explain why it decided to change the application process for all plans, rather than using its authority to take measures against the small number of plans that have demonstrated a problem with network adequacy compliance – such as disapproving a request for a new contract or service area expansion for a plan that seeks to change its service area after bid submission, or suspending enrollment until an operational plan comes into compliance with network adequacy standards.   Instead, CMS will provide two types of fairly limited flexibility for organizations to mitigate the impact of the change:

  1. CMS will allow a 10-percentage point credit towards the percentage of beneficiaries residing within published time and distance standards for the contracted network in the pending service area, at the time of application and for the duration of the application review.
  2. CMS will allow plans to use letters of intent (LOIs) in lieu of signed provider contracts, at the time of application and for the duration of the application review. The LOI must be signed by both the MA organization and the provider.  Applicants must notify CMS of their use of LOIs to meet network standards.

At the beginning of the contract year (that is, January 1), this flexibility would no longer apply, and plans would need to meet network adequacy standards for the entire service area with final, signed provider and facility contracts.

On April 6, 2022, BayCare Health System Inc. (BayCare) entered into a $20 million settlement under the False Claims Act with the U.S. Department of Justice (DOJ) to resolve allegations that it had made donations in order to improperly inflate the funding four of its hospitals received from the federal Medicaid program. According to the agreement, BayCare did not formally admit wrongdoing or liability; rather, BayCare settled in order to “avoid the delay, uncertainty, and expense of litigation.” Continue Reading Not-So-Charitable Donations: DOJ Achieves a $20 Million Settlement for a Backdoor Donation Scheme for Increased Medicaid Contributions

Now that the Tri-agencies have drawn back the curtains to reveal some of the inner workings of their developing Mental Health Parity and Addiction Equity Act (MHPAEA) comparative analysis enforcement efforts, the question is: What’s next? Continue Reading Mental Health Parity: What’s Next for Plans and Issuers?

On April 4, 2022, in Pharmaceutical Care Management Association (PCMA) v. Mulready, Case No. CIV-19-977-J (W.D. Okla. 2022), the U.S. District Court for the Western District of Oklahoma ruled on PCMA’s claim that Oklahoma’s Patient’s Right to Pharmacy Choice Act (Act), Okla. Stat. tit. 36, § 6958, et seq., was preempted under ERISA and Medicare Part D. Continue Reading State PBM Regulation: The Struggle Continues – Oklahoma District Court Latest to Rule on ERISA, Part D Preemption

CMS Administrator Chiquita Brooks-LaSure and CMS Innovation Center Director Elizabeth Fowler continue to forge ahead with the Biden-Harris Administration’s plans to evaluate and streamline the alternative payment models being tested at the Innovation Center. The most recent example, announced late last month, includes the redesign and renaming of the controversial Global and Professional Direct Contracting (GPDC) model that aims to introduce value-based payment arrangements in traditional Medicare. The newly announced model, renamed the Accountable Care Organization Realizing Equity, Access, and Community Health (ACO REACH) Model, aligns with CMS’s restated goals for the Innovation Center—as outlined in its October 2021 “strategic refresh” white paper—to drive accountable care, advance health equity, support care innovations, improve access by addressing affordability, and partner to achieve system transformation. Continue Reading CMS Innovation Center Redesigns Direct Contracting Entity Model, Launches ACO REACH

The Russia-Ukraine conflict is increasing the risk of ransomware attacks and other cyber threats for U.S. companies, and those in the health care industry may be targeted. In a recent analyst note from the Department of Health & Human Services (“HHS”), HHS describes the cyber capabilities of Russia, one of the world’s major cyberpowers, and analyzes two malware variants most likely to impact the U.S. health care and public health sector. Continue Reading Increased Cyber Risk for Health Care Organizations Due to the Russia-Ukraine Conflict

The Departments of Labor, Health and Human Services (“HHS”), and the Treasury (the “Tri-agencies”) released their 2022 annual report to Congress on the Mental Health Parity and Addiction Equity Act (“MHPAEA”) on Tuesday, January 25. The Employee Benefits Security Administration (“EBSA”) released an FY 2021 MHPAEA Enforcement Fact Sheet alongside the annual report. Together, the Tri-agencies’ report and EBSA fact sheet provide additional, important information for group health plans and health insurance issuers looking to comply with the 2021 Consolidated Appropriations Act’s (“CAA”) non-quantitative treatment limitation (“NQTL”) comparative analysis requirements. But plans and issuers need additional agency guidance. Continue Reading 2022 MHPAEA Annual Report Illuminates Tri-agency Review and Enforcement Priorities in a Post-Consolidated Appropriations Act World

On January 18, 2022, the U.S. Department of Health and Human Services (HHS) Office of the National Coordinator for Health Information Technology (ONC) and the entity chosen as a contracting partner, The Sequoia Project, Inc., published the long-awaited Trusted Exchange Framework and Common Agreement (TEFCA) for health information exchange. In simple terms, TEFCA is a framework that health information networks (HINs) may enter into to share health data with other HINs, individuals, and entities. The stated goal of TEFCA is to develop uniform policies and technical requirements to scale health information exchange nationwide and ensure that HINs, health care providers, health plans, individuals, and other stakeholders can access real-time, interoperable health information. Continue Reading ONC Releases a Framework for Nationwide Health Information Exchange

On January 31, 2022, the U.S. Food & Drug Administration (FDA) published a notice in the Federal Register announcing the availability of a final guidance for industry and FDA staff entitled “Principles of Premarket Pathways for Combination Products”. The final guidance is available on the FDA’s website. It provides FDA’s current thinking on principles for premarket review of combination products. It finalizes previously available draft guidance, dated February 6, 2019, which altogether are part of FDA’s efforts to implement section 3038 of the 21st Century Cures Act expressly addressing combination products. The final guidance is nonbinding. Continue Reading FDA Finalizes Guidance on Combination Products