On March 22, 2018, the Centers for Medicare and Medicaid Services (CMS) announced a notice of proposed rulemaking (NPRM) that would, if finalized, exempt states with high rates of Medicaid beneficiaries in managed care plans from monitoring and reporting requirements related to Medicaid service access set forth in 42 C.F.R. §§ 447.203 and 447.204. The regulations currently require states to analyze and document the impact of Medicaid fee-for-service (FFS) payment amounts on beneficiary access to covered health care services in access monitoring review plans (AMRPs) submitted to CMS.

States’ AMRPs must, using a data-driven process, address the impact of Medicaid FFS payments on beneficiaries’ access to the following categories of Medicaid services: primary care services, physician specialist services, behavioral health services, pre- and post-natal obstetric services, and home health. The state must update and submit the AMRP related to these service categories to CMS at least every three years. If a state reduces Medicaid FFS rates for services outside of these categories, the state must include those additional services in the AMRP and publicly monitor the rate reductions for three years.

Since the adoption of these requirements, several states have complained that the scheme imposes an undue administrative burden and that it is not an efficient use of limited state program resources. In response, the proposed rule’s changes to the regulations would allow the following:

  • An exemption from most access monitoring requirements for states with an overall Medicaid managed care penetration rate of 85% or greater (currently, 17 States).
  • An exemption from the specific access analysis for reductions to provider payments below the “nominal payment rate change” of 4% in overall service category spending during a state fiscal year (and 6% over two consecutive years).
  • A state to submit an assurance that its baseline data “indicates current access is consistent with requirements of the Social Security Act,” rather than be required to predict the effects of proposed Medicaid FFS rate reductions or restructurings on access to care.

This NPRM aligns with the Trump Administration’s push to “cut the red tape” and to generally reduce states’ administrative burdens under federal programs. The proposed changes are also consistent with CMS’s other efforts to enable states to focus on patient outcomes rather than processes in administering their Medicaid programs, as quantified in the agency’s estimates that the proposed changes will eliminate 561 administrative hours and save a total of $1.66 million for the affected states.

Comments on the proposed rule are due to CMS no later than May 22, 2018.

On December 31, 2016, in Franciscan Alliance v. Burwell, Case No. 7:16-cv-00108-O, the District Court for the Northern District of Texas  issued a nationwide injunction finding that portions of the U.S. Department of Health & Human Services, Office for Civil Right’s (OCR) Final Rule for ACA Section 1557 violated the Administrative Procedures Act and cannot be enforced. The case was brought by eight States, three private healthcare providers and the Christian Medical & Dental Society.

U.S. District Court Judge Reed O’Connor found that OCR’s interpretation of Section 1557 to prohibit discrimination against transgender persons wrongly construed both Title IX and Section 1557. He found that these statutes only prohibit discrimination on the basis of biological sex. He also found that OCR’s Final Rule failed to properly incorporate the exceptions for religious institutions and for abortion services found in Title IX – which he said that Section 1557’s language was intended to incorporate. See 20 USC § 1681(a)(3); § 1688.

Continue Reading District Court Issues Nationwide Injunction on ACA 1557 Regulations on Gender Identity and Abortion

The Office of the Inspector General of the Department of Health and Human Services (OIG) last week replaced a 20-year old policy statement, and issued guidance on the criteria the agency will use to evaluate whether to exclude certain individuals and entities from billing or “participation in” Federal health programs under its permissive exclusion authority. The new guidelines supersede and replace the OIG’s December 24, 1997 policy statement and set forth “non-binding” criteria that the OIG may consider in exercising this authority under circumstances involving fraud, kickbacks and other prohibited conduct. The newly-memorialized policy is yet another effort by the agency to encourage healthcare providers to implement robust compliance mechanisms that can timely identify and voluntarily self-disclose to the government any unlawful conduct.

Under Sections 1128(b)(1)-(b)(15) of the Social Security Act (the “Act”), the Secretary, by delegation to the OIG, has discretion to exclude individuals and entities based on a number of grounds. This so-called “permissive exclusion” authority grants significant discretion to the OIG.  The new policy provides guidelines for permissive exclusions that are based on Section 1128(b)(7) of the Act, which permits the OIG to exclude persons from participation in any Federal health care program if the OIG determines that the individual or the entity has engages in fraud, kickbacks and other prohibited activities.

Continue Reading OIG Updates Policy on Permissive Exclusions Based On Fraud and Kickbacks

Featured Industry: Health Care
Spotlight on Best Practices, Litigation, Antitrust, and Tax for Health Care Companies

Crowell & Moring LLP is pleased to release its “2016 Litigation & Regulatory Forecasts: What Corporate Counsel Need to Know for the Coming Year.” The reports examine the trends and developments that will impact health care companies and other corporations in the coming year—from the last year of the Obama administration to how corporate litigation strategy is transforming from the inside out. This year will bring remarkable change for companies, as market disruptions and the speed of innovation transform industries like never before, and the litigation and regulatory environments in which they operate are keeping pace.

Continue Reading Crowell & Moring’s 2016 Litigation & Regulatory Forecasts: What Corporate Counsel Need to Know for the Coming Year

On November 2, President Obama signed the Bipartisan Budget Act of 2015. As an offset for near-term increases in federal spending, the new law extends by one year – to 2025 – two-percent sequestration reductions in federal spending for mandatory federal programs including Medicare.  The end result is that Medicare Advantage Organizations (MAOs) can expect their capitated payments from Centers for Medicare and Medicaid Services (“CMS”) to continue to be reduced, and Medicare fee-for-service providers can also expect to have sequestration reductions on their CMS reimbursements until at least 2025.

First established by the Balanced Budget and Emergency Deficit Control Act of 1985 (BBEDCA), “sequestration” is a process of automatic, largely across-the-board reductions enacted to constrain federal spending. Sequestration in its current form began on March 1, 2013, when President Obama, pursuant to the Budget Control Act of 2011, ordered cuts to federal spending effective April 1, 2013, after Congress and the President failed to reach a budget compromise.

Under the Budget Control Act of 2011, the size of reductions to the Medicare program is limited to two-percent. As required by President Obama’s sequestration executive order, on March 8, 2013, CMS notified providers that a “2 percent reduction in Medicare payment[s]” would apply to “Medicare FFS claims with dates-of-service or dates-of-discharge on or after April 1, 2013.” In other words, due to sequestration, as of April 1, 2013, CMS reduced the amount it pays to providers for fee-for-service Medicare claims by two-percent.

Continue Reading Sequestration Extended to 2025 in Federal Budget Deal

The California Department of Insurance (CDI) has issued emergency regulations governing health insurer provider networks that became effective January 30, 2015.  The new regulations, which do not modify existing standards for plans licensed under California’s Knox-Keene Act, impose several requirements on health insurers, including standards for network adequacy, timely access to care, provider directories and network adequacy reports.

Please read the full alert here.

Earlier this week, the Supreme Court heard arguments in a case that could determine whether federal regulators may revise established interpretations of rules without first complying with the notice-and-comment rulemaking process required by the Administrative Procedure Act. Although the specific case before the Court (Perez v. MBA) involves a Department of Labor rule, a decision in this case could have a much broader impact on other agencies’ ability to change existing interpretations of rules in regulated industries including, for example, health care and energy. For additional information about the case and analysis of its impact, see the article authored by Crowell & Moring attorneys here.