C&M Health Law

C&M Health Law

Analysis, commentary, and the latest developments in health care law and policy

New Mental Health Parity Guidance on NQTL Disclosures May Signal Enforcement Priorities

Posted in Mental Health Parity
David Didier Johnson

The regulators for the Mental Health Parity and Addiction Equity Act (MHPAEA) have just issued guidance on health plan disclosures for non-quantitative treatment limitations (NQTLs).  This guidance consists of an FAQ and a proposed model form for plan members to request information so they can determine whether their plan’s NQTLs are at parity.

The regulations define NQTLs broadly as non-numerical/non-dollar limits on the duration or scope of plan benefits, such as medical necessity and prior authorization requirements.  Over the past two years, Federal and State regulators have increasingly centered enforcement on NQTLs.  But because the term NQTL is so broad, their examinations are often not well-focused, creating compliance challenges.

The new model form could help limit these wide-ranging regulatory forays.  The form asks the member to identify a claim that was denied and to indicate the specific NQTL the plan cited as the basis for the denial.  It then provides a list of NQTLs that appear to be those the regulators believe are most likely to affect benefits.  This list includes plan rules on medical necessity, experimental/investigational services, prior authorization, step therapy and fail first standards, drug formularies, access to in-network providers, and provider reimbursement rules.

One purpose of the form is to “encourage uniformity among State reviews of health insurers’ compliance with the NQTL standards.”   (FAQ at page 2).  This suggests regulators should focus enforcement efforts on the more significant NQTLs—the items listed on the model form—and not engage in open-ended investigations of other medical management tools.

The model form lists information that plans must provide in response.  The list includes: plan language on the NQTL and the medical/surgical and mental health benefits to which it applies; the factors and evidentiary standards used to develop the NQTL; the methods and analysis used to develop the NQTL; and “any evidence” to establish that the NQTL is applied no more stringently to mental health than medical/surgical benefits.  To clarify that plans are not expected to make a massive document dump in response to the form, it may be helpful for the regulators to create a response form which permits the necessary information to be provided in a summarized manner.

The regulators plan to finalize this form by mid-December, and ask for comments to be submitted by September 13, 2017.

Supreme Court: FEHBA Preempts State Subrogation Prohibitions

Posted in Federal Employee Health Benefits Program (FEHB)
Christine M. ClementsA. Xavier BakerJoseph Records

The U.S. Supreme Court unanimously decided, in Coventry Health Care of Missouri, Inc. v. Nevils, that the Federal Employees Health Benefits Act (FEHBA) preempts state laws that prohibit subrogation recovery by health insurance carriers.

FEHBA expressly preempts state law. Specifically, “[t]he terms of any contract under this chapter [5 U.S.C. § 8901, et seq.] which relate to nature, provision, or extent of coverage or benefits (including payments with respect to benefits)” preempt state health insurance laws and regulations. Contracts between the Office of Personnel Management (OPM) and a health insurance carrier under the Federal Employees Health Benefits Program (FEHBP) each include a provision requiring the carrier to subrogate and pursue reimbursement of FEHB claims and to condition benefits on the carrier’s rights to subrogation and reimbursement.

The plaintiff in this case, a former federal employee, was injured in an automobile accident and received medical treatment covered under his FEHBP plan. He then sued and recovered a settlement award based on the accident. His FEHBP carrier asserted a lien against his settlement award and recovered the costs of his medical treatment pursuant to its FEHBP contract. The plaintiff then sued the carrier, alleging that its recovery of the costs of his medical treatment was prohibited by Missouri state law.

The Court first discussed whether FEHBA’s preemption provision preempts state laws that would prohibit a carrier’s right to recover subrogation, and then discussed whether such preemption is prohibited by the Supremacy Clause.

According to the Court, the language of FEHBA’s preemption clause unambiguously covers the contractual subrogation provision. The decision briefly acknowledges the presumption against preemption of state law, which the Missouri Supreme Court decision on appeal had applied to find no preemption of state law. In addition, the Court points to regulations at 5 C.F.R. § 890.106 promulgated by OPM in 2015 that specifically call for the contract provisions requiring subrogation and reimbursement. But the Court declined to analyze the presumption or the regulations in depth, finding that the statutory language unambiguously requires preemption and is reinforced by FEHBA’s context and purpose. The decision distinguishes its decision from dicta in Empire HealthChoice Assurance, Inc. v. McVeigh, 547 U.S. 677 (2006), in which the Court saw two plausible readings of the FEHBA preemption clause. The Court noted that its decision in that case turned on jurisdiction, not on choice of law, and the case did not require the Court to evaluate different readings of the provision.

After finding that FEHBA’s preemption clause covered the contractual provision requiring subrogation and reimbursement, the Court turned to the constitutional question of whether the Supremacy Clause allows preemption based on the terms of federal contracts. The Court held that preemption is constitutional because it is FEHBA—not the contract—that preempts state law. The decision dismisses the counterargument that FEHBA’s preemption provision (uniquely among preemption clauses) calls for the “terms of any contract” to supersede and preempt state law whereas the Supremacy Clause provides that only federal laws can preempt state laws. The Court characterized this argument as elevating “semantics over substance” because the language manifests the same Congressional intent to preempt.

By holding that FEHBA preempts state law, and that such preemption is constitutionally permissible, this decision ends a series of disputes between private litigants and FEHBP carriers over whether state subrogation prohibitions applied to health benefits covered under the FEHBP. Soon after its decision in Nevils, the Court denied certiorari for two other cases dealing with FEHBA preemption of state subrogation prohibitions, Bell v. Blue Cross and Blue Shield of Oklahoma, and Kobold v. Aetna Life Insurance Co.

New OCR Settlement Targets Safety Net Provider on Security Rule Deficiencies

Posted in Health IT, HIPAA & Privacy
Daniel VinishMaida Oringher LernerStephanie WillisKate M. Growley

On Wednesday, the U.S. Department of Health and Human Services, Office for Civil Rights announced a $400,000 settlement with Metro Community Provider Network arising from MCPN’s alleged failure to implement adequate security management processes to safeguard electronic protected health information in accordance with the Health Insurance Portability and Accountability Act Security Rule. This settlement followed an investigation that OCR undertook in response to a breach report that MCPN filed on January 27, 2012. While OCR found that MCPN took necessary corrective action in response to the reported breach, OCR determined that MCPN had never conducted a security risk analysis to assess the potential threats to its ePHI environment and concluded that MCPN did not have appropriate risk management policies in place at the time of the breach. OCR further found that the security risk analyses that MCPN ultimately did undertake following the breach were insufficient to satisfy the requirements of HIPAA’s Security Rule. Violations of the Security Rule have been a consistent focus of the OCR within the past year. The OCR’s willingness to go after a federally qualified health center, a safety net health care provider, in this settlement further underscores the importance of conducting robust security risk analyses to identify, assess, and address potential threats and vulnerabilities to a covered entity or business associate’s ePHI environments.

California Supreme Court Prohibits Waiver of Public Injunctive Relief in Arbitration Agreements

Posted in Litigation
Peter RoanHarsh P. ParikhJesse C. Martin

A recent California Supreme Court decision has significant implications for any agreement attempting to waive a substantive statutory remedy in California. In McGill v. Citibank, the Court held that an arbitration provision that provides for a waiver of the right to seek public injunctive relief is contrary to California public policy and unenforceable.  The Court also held that California law prohibiting such waivers is not preempted by the Federal Arbitration Act (FAA).  Crowell & Moring’s Product Liability & Torts and Litigation Groups provided a thorough analysis of the McGill decision in an alert posted on April 10, 2017.

Overview

Plaintiff Sharon McGill filed a class action against Citibank under California consumer protection laws, including the Unfair Competition Law (UCL), Consumers Legal Remedies Act (CLRA) and false advertising law.  Among other remedies, McGill sought public injunctive relief that would prohibit Citibank from continuing to engage in its allegedly illegal and deceptive practices.  Citibank petitioned to compel McGill to arbitrate her claims on an individual basis, pursuant to the terms and conditions of their agreement.

The trial court ordered McGill to arbitrate all claims other than those for injunctive relief.  The Court of Appeal reversed, concluding that the FAA preempted California’s Broughton-Cruz rule,[1] which prohibits agreements to arbitrate claims for public injunctive relief under the UCL, CLRA, or the false advertising law.

The Supreme Court of California held that the Broughton-Cruz rule was not applicable.  Rather, the panel’s decision centered on the application of the California Civil Code § 3513, which states that “a law established for a public reason cannot be contravened by a private agreement.”   The Court held that McGill’s statutory right to seek certain injunctive relief cannot be waived through an arbitration provision.

Implications for Health Care Plans

The Supreme Court’s opinion has several implications for health plans that use binding arbitration to resolve disputes with enrollees. The Court’s opinion only carves out from the requirement of binding arbitration only those claims that seek injunctive relief on behalf of the general public and does not impact the arbitrability of claims seeking other forms of relief  including other remedies under the UCL, CLRA, and the false advertising law.  For instance, the decision does not preclude parties from agreeing to arbitrate claims that seek compensatory, monetary and punitive damages, or claims that seek injunctive relief in form of restitution.  But, the McGill opinion stands for the proposition that waivers of the right to seek public injunctive relief in any contract are void under California Civil Code § 3513, including those waivers in health plan contracts with enrollees.

 

 


[1] The Broughton-Cruz rule, named after two decisions in the California Supreme Court – Broughton v. Cigna Healthplans, 21 Cal. 4th 1066 (1999) and Cruz v. Pacificare Health Systems, Inc., 30 Cal. 4th 1157 (2003).

Highlights from the 2018 Rate Announcement and Call Letter for Medicare Advantage and Medicare Part D

Posted in Medicare
Christine M. Clements

The April 3, 2017 release of the 2018 Rate Announcement and Call Letter brought some welcome news for Medicare Advantage organizations and Part D sponsors (collectively, sponsors) and could signal improved transparency by the Centers for Medicare & Medicaid Services (CMS) in its regulation of sponsors. House Ways and Means Committee Chairman Kevin Brady (R-TX) and Health Subcommittee Chairman Pat Tiberi (R-OH) issued a joint statement in response to the CMS Rate Announcement:

We are encouraged the Trump Administration took steps to roll back some of the Obama Administration’s flawed payment policies that would have negatively impacted nearly 18 million seniors. We are also pleased that HHS Secretary Price recognized the importance of protecting access to Medicare Advantage, including for patients suffering from kidney disease—a bipartisan priority on our Committee. We look forward to working with the new Administration on policies that promote innovation and competition, improve the quality and coordination of care, and deliver our seniors flexibility and choice in Medicare.

MA Employer Group Waiver Plans (EGWPs).  With CMS’s waiver last year of the bid submission requirement for MA EGWPs, payment rates for these plans have been administratively set based on a blend of EGWP bids and individual market plan bids.  CMS solicited comments in the 2018 Advance Notice on whether it should use only individual market plan bids from 2017 to calculate the bid-to-benchmark ratios for the 2018 MA EGWP payment rates, or whether it should continue to use the bid-to-benchmark ratios applied in calculating the 2017 MA EGWP payment rates. CMS decided to pause the transition to 100% individual market plan bids with the result that 2018 MA EGWP payment rates will continue to reflect a blend of individual market plan bids from 2016 and EGWP bids from 2016, with individual market plan bids weighted by 50% and EGWP bids weighted by 50%. Continue Reading

Upcoming Webinar: Looking Back & Looking Beyond – The First 100 Days in Health Care Policy

Posted in Events, Exchanges, Fraud, Waste & Abuse, Health Care Reform & ACA, Medicaid, Medicare
Crowell & Moring Events

First 100 Days LogoOn Tuesday, April 18, 2017, our Health Care Group will hold a webinar on the health care policy and transition challenges still at play as the Trump Administration nears the end of its 100 days in power.  During the webinar, participants will hear important insights and predictions on what a Trump-led Executive Branch will mean for health care industry stakeholders from:

  • Partner Xavier Baker, whose practice focuses on the regulatory and compliance aspects of commercial insurers’ participation in Medicare Advantage, Medicaid managed care, and the health insurance exchanges;
  • Counsel Gary Baldwin, the former deputy director of Plan and Provider Relations at the California Department of Managed Health Care (DMHC), with expertise in state insurance regulatory issues for commercial plans;
  • Partner Laura Cordova, the former assistant chief in the Fraud Section of the Criminal Division at the U.S. Department of Justice, who focuses primarily on counseling health care companies and executives in criminal, civil and administrative enforcement actions, which may still increase under a Trump administration; and
  • Counsel Stephanie Willis, who counsels health care entities in licensure and regulatory matters related to participation in health care reform incentive programs such as the Medicare Shared Savings Program and Meaningful Use.

Register for the webinar here.

CMS Delays Implementation of Episode Payment Models (EPMs)

Posted in Medicare
Troy A. BarskyJoseph Records

In an Interim Final Rule with Comment Period (IFC) published on March 21, 2017, CMS provided that implementation of the EPMs for cardiac and orthopedic care improvement, the cardiac rehabilitation incentive payment model, and the changes to the Comprehensive Care for Joint Replacement (CJR) model would be delayed from July 1, 2017 to October 1, 2017.

The final rules being delayed were published on January 3, 2017 by the outgoing administration. The EPM rules call for mandatory participation by hospitals within certain geographical areas—a feature that drew criticism from current Secretary of Health and Human Services Secretary Tom Price, among others.

Further changes or additional delays to the EPMs may be forthcoming. The IFC indicates that the implementation “delay is necessary to allow time for additional review, to ensure that the agency has adequate time to undertake notice and comment rulemaking to modify the policy if modifications are warranted, and to ensure that in such a case participants have a clear understanding of the governing rules . . . .” The delay may be designed to afford time for the development and promulgation of substantive changes to the models.

The IFC also specifically requests “comment on a longer delay of the applicability (model start) date, including to January 1, 2018 . . . .” CMS notes that the delay from July 1 to October 1 would leave performance year 2017 uncommonly short at only three months. This express invitation for comments suggests that CMS is at least open to—and likely is already considering—the possibility of further delay.

Comments on the delay are due to CMS by April 19, 2017.

Bringing Innovative Technology to Healthcare…What about HIPAA?

Posted in Health IT, HIPAA & Privacy
Jodi G. Daniel

If you are a technology company developing products for the health market, you have probably heard about and maybe even been “warned” about HIPAA (the Health Insurance Portability and Accountability Act). If you are asking, “How can I avoid complying with HIPAA?” you might be asking the wrong question. Health care is almost 20 percent of the U.S. economy and craving the kind of innovation that technology companies can bring. Leaders in the health care space, like those at AcademyHealth, are pushing for changes to the health system to achieve better care, smarter spending, and healthier people. And they can’t do it without your help.

Compliance with HIPAA opens up new business opportunities, and, in an age of data breaches and privacy concerns, it can set you apart as a company that cares about protecting the information you have about your customers and the patients/clients of those you work with.

Recently, AcademyHealth facilitated a Health Data Innovator Privacy and Security Workshop supported by the California Health Care Foundation. As a featured speaker at the workshop, I’ve pulled out some of the key insights around when and how HIPAA might apply to those working in digital health.

Does HIPAA Apply to My Work?

Maybe.  HIPAA does not apply to all health data.  It depends on who collects or maintains the data and the relationships with HIPAA covered entities or business associates.

Generally, HIPAA applies to health data collected or maintained by those in the traditional health care space, including health plans and most health care providers (such as doctors, hospitals, pharmacies, and labs) and those doing business on behalf of these entities (such as a billing company or a cloud storage provider (CSP)).  However, if the same data is held by the consumer or by a product or company that has a relationship only with the consumer, then it is not covered by HIPAA, although other federal laws may apply. Typically, technology companies will be business associates working with clients that are covered health care providers or health plans. Continue Reading

Waiting for the Supremes: High Court’s Decision in Gloucester County to Determine Validity of ACA Section 1557 Gender Identity and Transgender Services Rules

Posted in Exchanges, Health Care Reform & ACA
David Didier Johnson

Two district courts[1] have recently stayed cases alleging that sex discrimination under ACA Section 1557 includes discrimination on the basis of gender identity and denial of coverage for gender transition, pending the Supreme Court’s decision in G.G. v. Gloucester County School Board.[2]  The Supreme Court accepted certiorari in Gloucester in October 2016 to determine the validity of recent Department of Education Title IX guidance regarding gender identity.  Briefing is currently under way.  The district courts stayed the Section 1557 cases, reasoning that the Supreme Court’s decision would likely determine the validity of the Department of Health & Human Services’ Section 1557 regulations on gender identity as well.

ACA Section 1557 and Title IX rules on sex discrimination

Section 1557 (42 U.S.C. § 18116) prohibits entities that receive federal funds for health activities or programs from discriminating on the grounds prohibited by Title IX.  Title IX generally prohibits discrimination on the basis of sex by recipients of federal education assistance.[3]  Title IX, however, permits federal fund recipients to set up “separate living facilities for the different sexes.”[4]  DOE and HHS regulations for Title IX, originally issued by the Department of Health, Education and Welfare, define sex in binary terms – “one sex” versus “the other sex”  —  and permit recipients to set up comparable but separate housing and “toilet, locker room, and shower facilities on the basis of sex.”[5]

The federal agency shift on sex discrimination:  from biological sex to gender identity

In the years prior to the enactment of the ACA, courts reached opposite conclusions as to whether Title IX and comparable sex discrimination laws, such as Title VII, prohibit discrimination based on gender identity.[6]  With the enactment of the ACA and Section 1557, suits began to be brought against health plans and providers which claimed that refusal to treat or cover services for transgender persons based on their gender identity constituted sex discrimination.  In one early Section 1557 decision from 2015, Rumble v. Fairview Health Services, a district court held that Section 1557 does provide a cause of action for discrimination based on gender identity.[7] Continue Reading

OIG Issues Advisory Opinion Rejecting the Labeling of Test Tubes at No Cost

Posted in Fraud, Waste & Abuse, Medicare
Troy A. BarskyRoma Sharma

On November 28, 2016, the U.S. Department of Health and Human Services Office of the Inspector General (OIG) issued an unfavorable advisory opinion (No. 16-12) that addresses the permissibility, under the federal Anti-Kickback Statute (AKS), of a laboratory’s proposal to label test tubes and collect specimen containers at no cost to, and for the benefit of, dialysis facilities. The OIG found that the arrangement may violate the AKS, potentially subjecting the laboratory to civil monetary penalties and exclusion from Medicare.

The laboratory in question provides testing services to dialysis patients pursuant to service contracts with dialysis facilities. Testing services provided by the laboratory are reimbursed by Medicare. Under the proposed arrangement, the laboratory would provide some of the dialysis facilities with free labeling services; the laboratory would label test tubes and specimen collection containers that would later be used by those dialysis facilities when sending specimens to the laboratory for testing. These labeling services would be provided to the dialysis facilities at no cost.

The OIG analyzed the applicability of the personal services and management contracts AKS safe harbor and found that the safe harbor would not apply. The safe harbor requires that the compensation paid for services be consistent with fair market value in an arms-length transaction. In the proposed arrangement, however, the dialysis facilities would not pay any compensation to the laboratory for the labeling services despite the value of those services to the dialysis facilities. As a result, the OIG determined that the proposed arrangement is inconsistent with fair market value, rendering the safe harbor inapplicable.

Under a factual analysis, the OIG found that the laboratory’s provision of services to dialysis facilities at no cost would be a tangible benefit to the dialysis facilities. The advisory opinion states that from such arrangements, an inference arises that the service is offered to induce the referral of business. In addition, an inference arises that the free labeling services would be intended to influence the dialysis facilities’ selection of a laboratory – an inference supported by the representation by the laboratory that the labeling services would be offered when necessary to retain or obtain business from dialysis facilities.

Interestingly, the same laboratory sought an advisory opinion of a factually identical arrangement in 2008 (No. 08-06) at a time when Medicare employed a composite rate reimbursement system for laboratory testing services. At that time, the OIG issued an unfavorable advisory opinion of the arrangement. Medicare now employs a bundled payment system in which all laboratory tests related to end-stage renal disease (ESRD) are reimbursed as part of the ESRD prospective payment system bundle (ESRD PPS). Reviewing the arrangement under the ESRD PPS, the 2016 advisory opinion found that OIG’s previous analysis of the arrangement applies, particularly since physicians are currently able to order separate laboratory tests unrelated to a patient’s ESRD. Due to this fact, the labeling services may constitute prohibited remuneration intended to induce or reward referrals for services reimbursed by Medicare. The arrangement viewed under both the composite rate reimbursement system and the ESRD PPS raise AKS concerns.

The AKS risk may be lessened in circumstances where laboratories bill for fewer separately reimbursable tests; however, the offering of such free services remains a concern. This advisory opinion highlights challenges laboratories may face in providing free services to entities with which they contract. As payment models shift toward bundled payments and value-based care, it remains important for providers to consider fraud and abuse risks that may arise.