C&M Health Law

C&M Health Law

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

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.

HHS Proposes New Regulations Aimed At Stabilizing the Individual Market

Posted in Exchanges, Health Care Reform & ACA
Christine M. ClementsA. Xavier BakerHarsh P. Parikh

The Centers for Medicare & Medicaid Services (CMS) issued a proposed rule  to stabilize the individual and small group markets to entice issuers to continue participation in the exchanges in 2018 despite continued uncertainty surrounding repeal and replacement proposals for the Affordable Care Act (ACA). The proposed rule, published today, would make the following changes to the individual and small group markets:

  • Open Enrollment: The proposed rule would shorten the Open Enrollment period from November 1, 2017 – January 31, 2018 to November 1, 2017 – December 15, 2017. This would align open enrollment for exchanges with both the employer market (including the Federal Employees Health Benefits Program) and Medicare Advantage open enrollment periods. CMS hopes that the modifications in enrollment period will mitigate adverse selection by requiring individuals to enroll in plans before the benefit year begins and pay premiums day 1 of the benefit year rather than allowing individuals who learn they will need services in late December and January to enroll at that time.
  • Special Enrollment Period: In response to perceived abuses of special enrollment periods (SEPs)—which allow individuals to enroll outside of the open enrollment period when there is a special circumstance (e.g., new family member)—the proposed rule would require verification of an individual’s SEP eligibility 100% of the time beginning in June 2017. Currently, eligibility for an SEP is verified only 50% of the time. Under pre-enrollment verification for new customers, consumers would submit their information and select a plan but their enrollment would be “pended” until completion of the verification. Consumers would have 30 days to submit information to verify their eligibility. The start date of the coverage would be (as it is today) the date of plan selection, but it wouldn’t be effective until the “pend” had been lifted following verification. The rule is limited to pre-enrollment verification of eligibility to individuals newly enroll through SEPs in marketplaces using the HealthCare.gov platform. The proposed rule would also limit certain individuals’ ability to switch to different levels of coverage during an SEP. The SEP provisions of the proposed rule may offer the most significant relief of all the proposed changes. Continue Reading

ACA Repeal and Replace Update: President Trump’s Executive Order Directs Executive Branch to Minimize the Economic Burden of the ACA

Posted in Exchanges, Health Care Reform & ACA, Medicaid, Tax
Harsh P. Parikh

On January 20, 2017, hours after being sworn in as the 45th president of the United States, President Donald Trump issued Executive Order 13765 that aims to “minimize the unwarranted economic and regulatory burdens” of the Affordable Care Act (ACA) while its repeal is “pending.” 

The one-page Executive Order declares that it is the policy of the Trump Administration to seek a “prompt repeal” of the ACA and directs that the executive branch “take all actions consistent with law to minimize the unwarranted economic and regulatory burdens” of the ACA.  The Executive Order also mandates that all federal agencies, including the Department of Health and Human Services (HHS), “shall exercise all authority and discretion available to them to waive, defer, grant exemptions from, or delay the implementation of” any provision of the ACA that imposes a financial or regulatory burden on any stakeholder including patients, physicians, hospitals and other providers, as well as insurers, medical device manufacturers, and pharmaceutical companies.  Federal agencies are also required to “exercise all authority and discretion available to them to provide greater flexibility to States.”  The Executive Order further instructs agencies “to create a more free and open healthcare market” consistent with ACA replacement proposals to permit the sale of health insurance products across state lines. 

By signing the Executive Order, President Trump signals that his Administration will prioritize changes to federal health care policy in order to lessen the economic impact of the ACA.  The Executive Order could be a signal for HHS to expand hardship waivers to permit individuals to avoid the ACA’s tax penalties for individuals who fail to maintain coverage.  HHS also may provide greater flexibility to states for the administration of Medicaid programs, including by more readily granting waivers under section 1115 of the Social Security Act, 42 U.S.C. § 1315.

The practical impact of the Executive Order remains unclear and is limited to agency discretion for now.  The Executive Order does not diminish the authority of federal agencies established by the ACA and requires agencies to implement the Order’s mandates in a manner consistent with current law.  Thus, HHS and other agencies must continue to comply with the requirements of prior legislation while exercising their discretion to minimize the financial burdens of the ACA.  In addition, the Executive Order does not provide a mechanism for private parties to enforce the Trump Administration’s new policy and states that it “is not intended to, and does not, create any right or benefit, substantive or procedural, enforceable at law or in equity by any party against” the federal government.  The Executive Order appears to give lawmakers the ability to proceed more deliberately and the spotlight will now be on Congress to agree on a plan to repeal and replace the ACA. 

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

Posted in Administrative Law
David Didier Johnson

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

CMS Publishes Interim Final Rule to Address Third-Party Payment of Insurance Premiums by Medicare-certified Dialysis Providers

Posted in Exchanges, Fraud, Waste & Abuse, Health Care Reform & ACA, Medicaid, Medicare
A. Xavier BakerTroy A. Barsky

On December 14, 2016, CMS issued an interim final rule with comment period to amend Medicare’s dialysis facility conditions for coverage to require certain disclosures to patients and health insurance issuers to address widespread concerns over inappropriate steerage of dialysis patients to individual market plans. After issuing an RFI about “inappropriate steering of people eligible for Medicare or Medicaid into Marketplace plans” by third parties in August 2016, CMS decided to focus on dialysis providers given the “overwhelming majority of comments [received in response to the RFI] focused on patients with [end-stage renal disease (ESRD)]” and “the high costs and absolute necessity of transplantation or dialysis” for people with ESRD.

CMS explained that reimbursement rates for dialysis and other ESRD treatment are “tens or even hundreds of thousands of dollars more per patient when patients enroll in individual market coverage rather than public coverage.” As such, providers have strong incentives to steer patients to private coverage and pay a few thousand dollars in premiums on their behalf. But doing so places patients at substantial health and financial risk. As CMS noted, third-party payment of premiums to enroll a patient in individual market coverage may interfere with transplant readiness, expose the patient to substantial financial harm for services beyond dialysis, and may result in mid-year coverage disruption.

To address these concerns, the interim final rule requires Medicare-certified dialysis facilities to disclose the array of costs and coverage options available to a patient, including the availability of Medicaid, Medicare ESRD coverage, and individual market plans, and to ensure that health insurance issuers are aware of and willing to accept a third-party’s payment of premiums on behalf of the patient. As summarized by the CMS Fact Sheet, providers must:

  • Make up-front disclosures to patients regarding their health insurance coverage options, including information about available individual market plans, Medicaid or Children’s Health Insurance Program (CHIP) coverage, and available options and costs of Medicare ESRD coverage.
  • Provide a summary of short- and long-term cost estimates of various health coverage options for patients and information on enrollment periods for those health coverage options.
  • Inform issuers of the individual market plans for which they make payments of premiums for individual market plans.
  • Receive assurance from the issuer that it will accept these payment of premiums for individual market plans for the duration of the plan year, or else not make such payments.

The interim final rule does not preclude providers from making charitable donations that support access to health care. CMS also noted that it remains concerned about third-party payment of premiums for persons who are eligible for public coverage, such as Medicaid or Medicare, and is considering whether to issue a blanket prohibition on third-party payment of premiums for such persons. CMS has solicited comments on this and alternative approaches, such as whether to allow third-party payments upon a showing that it was in the individual patient’s best interest. The comment period for the interim final rule closes on January 11, 2017 and the rule is effective on January 13, 2017.