Wachler & Associates Health Law Blog

Published on: July 18, 2024

What Does the End of Chevron Deference Mean for Healthcare Law?

Much has been made of the recent end of Chevron deference and the impact it may have on the authority of federal regulations and the power of federal agencies. As the healthcare industry is heavily regulated by multiple federal agencies, administrations, and departments, it is natural to ask what impact the end of Chevron deference may have on healthcare providers and suppliers.

Chevron deference, named after the landmark 1984 Supreme Court case Chevron v. Natural Resources Defense Council, was a legal doctrine that generally required federal judges, where a statute was unclear, to defer to the interpretation of the applicable federal agency, even where the judge would have made a different decision on their own. In the recent case Loper Bright Enterprises v. Raimondo (“Loper”), the Supreme Court ended Chevron deference, finding that it was contrary to the mandate in the federal Administrative Procedures Act (“APA”) that judges exercise independent legal judgment. The Court also recognized that federal agencies have no special expertise in statutory interpretation, often change their interpretations, and are particularly unsuited for deference in matters involving the scope of the agency’s own power.

Because the decision in Loper is based on the APA, disputes handled under the APA are most directly affected. In these disputes, federal judges are no longer required to defer to the interpretation of the federal agency, but must exercise independent judgement. Disputes not handled under the APA – such as most of the disputes under Medicare, which are governed by the Social Security Act (“SSA”) – may be less directly affected. While Medicare disputes are technically not subject to the APA and therefore to Loper, portions of the APA are based on portions of the SSA and there is some support for the position that that same rules should apply to both. Therefore, Loper may be applicable in some Medicare disputes. It is important to note that this only applies to disputes before federal judges. The agency itself and its contractors are generally still bound by their own regulations during the often-lengthy Medicare administrative appeals process.

Published on: July 15, 2024

Claims Audits and Medical Documentation

by Wachler & Associates, P.C.

Physicians and other clinical providers expend tremendous amounts of time and effort accurately documenting the medical care that they provide to patients. Usually, the documentation is intended to be read and understood by another physician, either the physician who created the record or another treating physician. It may also be intended to be read by billers or coders who are familiar with the practice and the type of documentation at issue. But there is another, sometimes very consequential, audience that reviews medical records: reviewers at government agencies or contractors, or commercial insurance companies that audit claims submitted by the practice.

All payors periodically audit claims submitted to them by providers. Medicare and Medicaid generally use outside contractors to perform medical review of the documentation created by providers, but may perform some review in-house, Commercial insurance companies may use a mix of contracted and in-house medical review. Generally, the payor or their contractor will request that the provider submit the medical records or other documentation that supports claims submitted by the provider, review the documentation, and issue findings, usually accompanied by a demand that the provider repay some alleged overpayment based on a deficiency that the payor will claim to have identified in the medical documentation.

The medical records review itself is often performed by nurses, coders, or others that may have a very different level of education, training, and clinical experience than the physician who created the record. Even where the reviewers are ostensibly supervised by physicians, these supervisors often have very high caseloads and rarely have the practical ability to exercise more than cursory supervision of the reviewers. It is therefore relatively common for medical reviewers to misunderstand or misinterpret the documentation they review. Extensive use of abbreviations, specialized shorthand, or clinical jargon with little context are often ripe for this type of reviewer mistake. For example, does “PCA” in a progress note mean “posterior cortical atrophy syndrome” or “posterior cerebral artery stroke”? Does a nurse reviewer with no training or experience in vascular procedures know the difference between Rutherford 3 and Rutherford III? Documentation conventions or usages that would be easily understood by another specialized clinician may not be understood by a contracted nurse reviewer with little to no training or experience in a particular specialty. More often than not, a medical reviewer that does not understand documentation will lead to claim denials.

Published on: July 8, 2024

Major Indictment of Telemedicine Company

by Wachler & Associates, P.C.

The US Department of Justice (DOJ) recently filed its first criminal drug distribution prosecutions related to telemedicine prescribing through a digital health company. The indictments accused Done Global, Inc., its founder and CEO, its clinical president, and several other persons associated with the company of participating in a scheme to distribute Adderall over the internet, conspire to commit health care fraud in connection with the submission of false and fraudulent claims for reimbursement for Adderall and other stimulants, and obstruct justice. This case is highly instructive for those seeking to structure both telemedicine arrangements and payment arrangements with healthcare providers.

Specifically, DOJ alleged that Done operated a business model wherein it charged monthly subscription fees to patients and facilitated telemedicine visits with prescribers for the treatment of ADHD, including prescribing Adderall. DOJ alleged that the business model limited the information available to prescribers, instructed Done prescribers to prescribe Adderall and other stimulants even if the patient did not qualify, mandated that initial encounters would be under 30 minutes, included an auto-refill function that allowed patients to automatically request a refill each month, did not compensate prescribers for follow-up visits or consults after the initial consults, and compensated prescribers solely based on the number of patients who received prescriptions. DOJ alleged that these practices led to false and fraudulent claims for medically unnecessary services being submitted to Medicare, Medicaid, and commercial insurers.

In addition to allegations regarding the business model, DOJ also alleged that the company had been made aware that material was posted on online social networks about how to use Done to obtain easy access to Adderall and other stimulants, but that Done allegedly sought to conceal this information and made fraudulent statements to the media regarding it. The indictments of the individual officers of the corporation are also consistent with federal law enforcement’s emphasis on holding individuals, rather than just the corporation, responsible for alleged healthcare fraud.

Published on: July 2, 2024

Congress Seeks to Extend Telehealth Flexibilities and Expand Reimbursement

by Wachler & Associates, P.C.

In May 2024, the House of Representatives Energy and Commerce Subcommittee on Health advanced the Telehealth Modernization Act of 2024 (H.R. 7623) with the goal of extending several Medicare telehealth flexibilities through 2026. This most recent bill comes after nearly two dozen other bills proposed by the Subcommittee to strengthen access to healthcare. The bill primarily seeks to maintain Medicare’s hospital-at-home program through 2029 in order to provide continued resources for at-home care for patients requiring acute-level care. The bill also aims to remove the geographic originating site restrictions on telehealth visits through 2026. Unless this bill or similar legislation is passed, the programs will expire at the end of 2024.

Notably, the bill would also provide broader discretion to the Department of Health and Human Services (HHS) to expand the types of practitioners who may furnish reimbursable telehealth services. This would create the potential for any healthcare provider who bills the Medicare program to be eligible to provide telehealth services. Further, the bill would enable HHS to maintain an expanded list of reimbursable telehealth services, including after the existing telehealth flexibilities expire.

Additionally, the bill would specifically benefit patients located in rural areas by allowing greater resources to be allocated toward rural health clinics providing telehealth services. As the current bill reads, Federally Qualified Health Centers and Rural Health Clinics would permanently be able to provide telehealth services and receive reimbursements in those settings. Federally Qualified Health Centers and Rural Health Clinics create a critical safety-net of primary care providers for underserved populations. Permitting these types of providers to furnish telehealth services as distant sites would play a major role in expanding and maintain access to care in underserved and rural communities, and would further promote continuity of care in those communities.

Published on: June 11, 2024

Physician Practices and Private Equity

by Wachler & Associates, P.C.

Private equity (PE) and venture capital firms have been expending their involvement and acquisitions in the healthcare industry for years. Many physicians, physician practices, other healthcare provider types, or their employees who are approached by PE regarding an acquisition may have questions regarding the proposed deal or some of the issues that may arise.

In general, a PE firm will approach a physician practice or other provider type and propose some sort of arrangement. The PE firm may seek to buy a controlling interest in the practice, where state law allows non-physician ownership of a practice, or to set up a management services organization which contracts with and manages the practice. Either way, the PE firm acquires control over most or all of the operations of the practice. The PE firm may persuade the practice to enter the arrangement with promises that the PE firm will provide some form of management expertise, industry experience, or unique support structures that will make the practice more profitable or efficient.

However, most, though not all, PE firms adhere to a business model that prioritizes short-term profitability over other concerns. This model may conflict with the priorities of physicians who also prioritize quality of patient care, sustainment of professional and business relationships, and the long-term viability of a practice. In practice, PE firms often attempt to cut costs by decreasing administrative or clinical support staff, increasing physician workload, renegotiating contractual agreements with the practice’s vendors and employed physicians, or shifting the practice’s business model toward more profitable services and cutting less profitable patient services. While some of these measures may very well increase the efficiency of a practice, physicians should be aware that their priorities may not align with the priorities of the PE firm seeking to take over the practice. Physicians should carefully evaluate the terms and operative models of any such transaction with a PE firm or PE-back entity.

Published on: May 14, 2024

OIG to Scrutinize Peripheral Vascular Procedures

by Wachler & Associates, P.C.

The Department of Health and Human Services (HHS) Office of Inspector General (OIG) recently announced that it intends to increase scrutiny of fee-for-service peripheral vascular procedures billed to the Medicare program. Although OIG did not describe the specific actions in intends to take, it appears likely that OIG will conduct data analysis of Medicare claims for vascular services, especially atherectomies and angioplasties; conduct audits of specific providers, likely those with high utilization of vascular services or those with prior audit denials or accusations of improper billing; and also review the program integrity measures that CMS and its contractors have taken to address fraud, waste, and abuse in these procedures.

In explaining the motivation for its review, OIG noted that the use of peripheral vascular procedures in the Medicare population has increased over the past decade. In 2022, Medicare paid more than $600 million for atherectomies and angioplasties with and without a stent in peripheral arteries. These minimally invasive surgeries aim to improve blood flow when arteries narrow or become blocked because of peripheral arterial disease but are recommended only after patients have tried medical and exercise therapy, and have lifestyle-limiting symptoms. OIG also asserted that CMS and whistleblower fraud investigations have identified these surgeries as vulnerable to improper payments.

Our firm has significant experience in representing physician groups and other providers in the defense of Medicare audits of vascular procedures. We have seen many instances in which Medicare contractors have misunderstood clinical terminology or other documentation elements relating to vascular procedures and have inappropriately denied claims or even alleged that the provider has committed fraud based only on the contractor’s own mistaken interpretation of the provider’s medical records. Providers who are audited by the Unified Program Integrity Contractors (UPICs), such as CoventBridge Group, should be particularly vigilant in reviewing any findings or claim denials issued by the UPICs. Such denials are generally appealable through the Medicare claims appeal process and may be partially or fully overturned on appeal. Even where a provider prevails on appeal, a contractor’s spurious fraud allegations can have significant detrimental impacts, including delays in payment, Medicare payment suspensions, and further audits from both Medicare and other payors.

Published on: April 30, 2024

HHS Final Rule Introduces HIPAA Compliance Changes for Reproductive Healthcare Information

by Wachler & Associates, P.C.

On April 26, 2024, the Department of Health and Human Services (HHS) published a Final Rule introducing compliance changes for reproductive healthcare information under the Health Insurance Portability and Accountability Act (HIPAA) Privacy Rule. Titled “HIPAA Privacy Rule to Support Reproductive Health Care Privacy,” the Final Rule prohibits disclosure of protected health information (PHI) related to lawful reproductive healthcare under certain circumstances. HIPAA-covered entities will also be required to update their Notices of Privacy Practices (NPPs), obtain attestations in connection with certain requests for reproductive healthcare information, and update their HIPAA policies and training.

The Final Rule prohibits uses or disclosure of PHI to investigate or impose liability on individuals, healthcare providers, or others who seek, obtain, provide, or facilitate reproductive healthcare that is lawful under the circumstances under which it is provided, or to identify persons for such activities. Notably, the Final Rule includes a presumption, with certain exceptions, that the reproductive healthcare provided by a person other than the covered entity receiving the request was lawful. Covered entities are required to obtain a signed attestation from certain requestors that they do not seek PHI for these prohibited purposes. This requirement applies when PHI is requested for health oversight activities, judicial and administrative proceedings, law enforcement purposes, and disclosure to coroners and medical examiners. The HHS Office for Civil Rights (OCR) has stated that it intends to publish model attestation language. Additionally, covered entities are required to modify their NPPs to support reproductive healthcare privacy.

The Final Rule continues to allow covered healthcare providers to use or disclose PHI for purposes otherwise permitted under the Privacy Rule where the request for the use or disclosure of PHI is not made to investigate or impose liability on any person for the mere act of seeking, obtaining, providing, or facilitating reproductive healthcare. The Final Rule will become effective on June 25, 2024, with a compliance date of December 23, 2024, except for certain requirements pertaining to Notices of Privacy Practices. Covered entities must comply with the NPP provisions of the Final Rule by February 16, 2026.

Published on: April 15, 2024

MDHHS Awards New Medicaid Health Plan Contracts

by Wachler & Associates, P.C.

Earlier this month, the Michigan Department of Health and Human Services (MDHHS) awarded Comprehensive Health Care Program contracts for Michigan’s Medicaid health plans. Health plans administered under Michigan Medicaid provide access to healthcare services to nearly 2 million Michigan residents. In this recent award of health plan contracts, nine health plans submitted proposals. The awarded Medicaid contracts are expected to go into effect in October 2024 and carry terms of five years, with three, one-year optional extensions.

The Medicaid health plan contracts were awarded based on Michigan’s 10 Prosperity Regions as follows:

Region 1 – Upper Peninsula Prosperity Alliance: Upper Peninsula Health Plan, LLC.

Published on: April 11, 2024

Senators Request Audit of CMS Internal Oversight Processes

by Wachler & Associates, P.C.

On March 12, 2024, several senators wrote a letter to the Government Accountability Office (GAO) Comptroller General, requesting an investigation into the policies and procedures CMS has in place to prevent Medicare fraud, waste, and abuse. The senators noted that in 2022, GAO estimated there were $47 billion in improper Medicare payments with $1.7 billion being reclaimed, representing a 2.8% recovery rate.

The senators’ letter was likely prompted by a recent investigation from the National Association of Accountable Care Organizations (NAACOS), which uncovered an alleged fraudulent urinary catheter scheme. NAACOS discovered that ten medical device companies went from billing 15 patients for catheters to over 500,000 patients for catheters within a period of two years. This alleged scheme has been estimated to cost CMS over $2 billion and has garnered significant media attention. Of particular concern to the senators is the fact that NAACOS publicly commented on this issue prior to any announcements from CMS.

The senators noted that this alleged scheme highlights “critical vulnerabilities” within CMS’ fraud, waste, and abuse policies. To this point, they requested that the fraud prevention measures of the Medicare Fraud Strike Force, a team with representatives from the Department of Health and Human Services (HHS), Office of Inspector General (OIG), and Federal Bureau of Investigation (FBI), should be investigated by GAO in order to identify weaknesses and areas for improvement.

Published on: April 9, 2024

Providers Continue to be Subject to Wound Care Audits

by Wachler & Associates, P.C.

As we noted previously, Medicare providers of wound care services continue to be the target of audits by Medicare contractors. Wound care services typically involve the application of allografts, skin substitutes, and related products to promote healing and support recovery. Due to the generally high reimbursement rates and need for frequent reapplication of these types of products, the Medicare program views such products as a high risk for improper payments or alleged fraud. Providers who utilize these products for wound care services or who are subjected to audit should understand the contours of an audit and be aware of their rights in responding to an audit.

The Medicare Unified Program Integrity Contractors (UPICs), such as the CoventBridge Group or Qlarant, typically perform these audits. UPICs are charged with the primary goal of investigating instances of suspected fraud, waste, and abuse in Medicare or Medicaid claims. Historically, UPICs are quick to allege that a provider has committed fraud and deny claims for any supposed non-compliance with coverage or documentation requirements, regardless of how minor the perceived deficiency. Providers should be cognizant that a UPIC’s allegation of fraud or non-compliance may bring about significant adverse consequences, especially when such allegations are not disputed. These allegations may be addressed by a timely and well-developed appeal of claims denied by the UPIC.

Wound care services involving skin substitutes and similar products subject to audit are generally denied for reasons such as the following: