Articles Posted in COVID-19

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The Department of Justice (DOJ) recently announced a plea agreement regarding an alleged $73 million scheme to defraud Medicare that illustrates some of the pitfalls of compliance with the Anti-Kickback Statute (AKS). DOJ alleged that the owners of a clinical laboratory, Panda Conservation Group, LLC, and a telemedicine company, 1523 Holdings LLC, conspired to pay kickbacks in exchange for work arranging telemedicine providers to order genetic testing at Panda’s laboratories. While the parties had an agreement for IT and consultation services, DOJ alleged that this contract was a “sham” to hide the kickback payments and that the telemedicine company abused temporary, pandemic-responsive amendments to telehealth restrictions to refer beneficiaries to the laboratory for expensive and medically unnecessary cancer and cardiovascular genetic testing.

The Anti-Kickback Statute (42 U.S.C. § prohibits a person from knowingly offering, paying, soliciting, or receiving anything of value to induce or reward referrals for services covered by a Federal Healthcare Program. A Federal Healthcare Program is any program that provides health benefits, whether directly or through insurance, which is funded by the United States Government or any State health care program. A violation of the Anti-Kickback statute is a criminal offence and can carry severe penalties, including fines, prison sentences, and potential exclusion from participation in Federal Healthcare Programs in the future.

Since some referrals are necessary to optimize patient care, the Statute provides exceptions called “safe harbors” that permit certain arrangements that follow specific requirements. In the event an arrangement does not meet a safe harbor requirement, the arrangement will be considered on a case-by-case basis. Special care must be taken structure arrangements to comply with the AKS and its safe harbors.

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On September 10, 2021, the U.S. Department of Health and Human Services (HHS) announced that it would make $25.5 billion in new funding available for healthcare providers affected by the COVID-19 pandemic. This funding includes allocations of $8.5 billion in funding from the American Rescue Plan (ARP) for providers who provide services to rural Medicaid, Children’s Health Insurance Program (CHIP), or Medicare patients, as well as an additional $17 billion in Provider Relief Fund (PRF) Phase 4 funding for a broad range of providers who can document expenses and lost revenue associated with the COVID-19 pandemic.

PRF Phase 4 payments are based on providers’ lost revenue and expenditures between July 1, 2020 and March 31, 2021, in conformity with the requirements of the Coronavirus Response and Relief Supplemental Appropriations Act of 2020 (CRRSAA). PRF Phase 4 is intended to reimburse smaller providers for their lost revenues and pandemic-related expenses at a higher rate compared to larger providers. This characteristic stems from the Biden Administration’s ongoing commitment to social equity, as smaller providers tend to operate on thinner margins and often serve vulnerable or isolated communities when compared to larger providers. Because Medicaid, CHIP, and Medicare patients tend to be lower income and have greater and more complex medical needs, PRF Phase 4 will also include bonus payments for providers who serve these individuals. HRSA will price these bonus payments at the generally higher Medicare rates to ensure equity amongst providers serving low-income children, pregnant women, people with disabilities, and seniors. In parallel, HRSA will make ARP payments to providers based on the amount of Medicaid, CHIP, and/or Medicare services they provide to patients who live in rural areas as defined by the HHS Federal Office of Rural Health Policy. For both programs, HRSA will use existing Medicaid, CHIP, and Medicare claims data to calculate payments.

In order to streamline the application process, providers will apply for both the PRF and ARP programs in a single application. To help ensure that provider relief funds are used for patient care, PRF recipients will be required to notify the HHS Secretary of any merger with, or acquisition of, another healthcare provider during the period in which they can use the payments. Providers who report a merger or acquisition may be more likely to be audited to confirm their funds were used for pandemic-related expenses. The application portal will open on September 29, 2021. Moreover, HHS is also releasing detailed information about the methodology utilized to calculate PRF Phase 3 payments in order to promote transparency in the PRF program. Providers who believe their PRF Phase 3 payment was not calculated correctly according to this methodology will now have an opportunity to request a reconsideration. Specific details on the PRF Phase 3 reconsideration process have yet to be announced.

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Demonstrating its commitment to audit Provider Relief Fund (PRF) recipients, the Department of Health and Human Services (HHS) has hired several outside contractors to provide audit or program integrity services relating to the PRF. The PRF is a $175 billion fund created by Congress through the CARES Act and administered by HHS (and its sub-agency the Health Resources and Services Administration or HRSA) to provide financial relief to healthcare providers during the COVID-19 pandemic. HHS has subdivided the PRF into various general and targeted distributions. These distributions were paid to providers in several waves between April 2020 and the present.

Publicly available contracts provide a glimpse into HHS’s actions regarding the PRF. Over the last year, HHS has contracted with KPMG to provide “program integrity support,” Kearney & Company to provide “PRF Audit support services,” and Creative Solutions Consulting to provide “audit and financial review services.” Combined, HHS has committed approximately $5.5 million to these contracts. Reports indicate HHS has hired PricewaterhouseCoopers and Grant Thornton, as well.

Although HHS’s retention of contractors is nothing new, these agreements signal to providers that HHS is not taking PRF reporting lightly. Providers who received and retained payments through the PRF are required to file reports justifying their use of the funds and documenting their compliance with the terms and conditions of the payments. Providers must report information on healthcare-related expenses attributable to coronavirus, lost revenue attributable to coronavirus, other pandemic assistance received, and administrative data. Providers who received more than $500,000 in aggregate payments are required to report some data elements in greater detail, including specific information regarding operations, personnel, supplies, equipment, facilities, and several other categories. Thus, some providers will be required to report significant amounts of financial information in considerable detail.

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According to data from the Pharmacy Audit Assistance Service (PAAS) National, the Covid-19 Public Health Emergency (PHE) has negatively affected pharmacies navigating audits by Pharmacy Benefit Managers (PBM). PBMs are companies who are primarily responsible for developing and maintaining drug formularies, contracting with pharmacies, negotiating discounts and rebates with drug manufacturers, and processing and paying prescription drug claims. PBMs manage prescription drug benefits on behalf of health insurers, Medicare Part D drug plans, large employers, and other payers. PBMs routinely conduct audits on member pharmacies in order to monitor pharmacies’ performance and identify alleged improper payments made to the pharmacies. However, PBMs have been criticized for overstepping those audit functions by utilizing audits as a source of revenue for themselves at the expense of independent pharmacies and patients.

In response to the PHE, many state insurance agencies and PBMs themselves suspended in-person audits in 2020 and shifted to virtual audits. The virtual nature of a PBM audit means pharmacies are responsible for a greater workload because they must complete tasks that would normally be completed by a PBM during a field audit. For example, pharmacies must locate, organize, and deliver hundreds of pages of documents and records in compliance with PBMs’ standards, while managing the day-to-day pharmacy operations. Although virtual PBM audits allows benefit managers to review more pharmacy claims than during traditional in-person audits, it also allows them to potentially deny more claims than before.

According to PAAS National, even though the number of pharmacy audits in 2020 declined nearly 14% year over year, the overall number of prescriptions reviewed increased by 40%. PAAS data also shows that the average audit in 2020 cost pharmacies $23,978, which is 35% more than the annual average over the previous five years. This data further implies that pharmacies are shouldering more of the administrative burden of responding to audits in addition to the task of pursuing a subsequent appeal where the PBM denies claims during an audit.

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The first reporting deadline for the Provider Relief Fund (PRF) is less than two months away, the first batch of reports are due September 30, 2021. The PRF is a $175 billion fund created by Congress through the CARES Act and administered by the Department of Health and Human Services (HHS) to provide financial relief to healthcare providers during the COVID-19 pandemic. HHS has subdivided the PRF into various general and targeted distributions. These distributions were paid to providers in several waves between April 2020 and the present.

In June 2021, HHS released long-awaited updates on the reporting requirements for entities that received payments from the PRF. These reporting requirements divided the payment based on when the provider received the payment and then set deadlines for reporting based on when the provider received the payment. Providers who received payments between April 10, 2020 and June 30, 2020, the first to receive payments, are required to file their reports by September 30, 2021. This time period includes most of the payments made under the Phase 1 General Distribution, some of the payments made under the Phase 2 General Distribution, and some payments made under the Target Distributions.  The reporting portal opened on July 1, 2021 and is currently available to these recipients.

Providers who received and retained payments through the PRF are required to file reports justifying their use of the funds. Providers must report information on healthcare-related expenses attributable to coronavirus, lost revenue attributable to coronavirus, other pandemic assistance received, and administrative data. Providers who received more than $500,000 in aggregate payments are required to report some data elements in greater detail, including specific information regarding operations, personnel, supplies, equipment, facilities, and several other categories. Some providers will be required to report significant amounts of financial information in significant detail, which may require time to compile or calculate. Further, HHS continues to update the guidance surrounding PRF reporting. Providers should be aware of the potential complexity of PRF reporting as the deadlines begin to approach.

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The opportunity for expanded use of telehealth services spurred by the COVID-19 pandemic provided many individuals with greater access to healthcare services and allowed providers to furnish patient care in safe environments. However, this expansion has led to potential abuse concerns, prompting the Department of Health and Human Services (HHS) Office of Inspector General (OIG) to issue a statement announcing that OIG is conducting seven different audits, evaluations, and inspections of telehealth services under the Medicare and Medicaid programs.

Because OIG is investigating providers specific to telemedicine, these audits will review remote patient monitoring, virtual check-ins, and e-visits. An OIG report issued in April 2018 concluded that 31% of the sample claims reviewed did not meet the Medicare conditions for payment for telehealth services. That report was prior to the broad expansion of telemedicine from the COVID -19 pandemic. Providers who have billed for telehealth services during the public health emergency (PHE) should be prepared to undergo audits of those claims.

Current OIG telemedicine audit projects include:

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On June 11, 2021, the Department of Health and Human Services (HHS) released long-awaited updates on the reporting requirements for entities that received payments from the Provider Relief Fund (PRF). HHS also pushed back the deadline for some recipients of PRF payments to use the funds. The PRF is a $175 billion fund created by Congress through the CARES Act and administered by HHS to provide financial relief to healthcare providers during the COVID-19 pandemic. HHS has subdivided the PRF into various general and targeted distributions.

Initially, the PRF reporting portal had been scheduled to open on January 15, 2021, with the first reports initially being due on February 15, 2021. However, HHS has repeatedly pushed these dates back. For the last several months, provides have been able to register and log into the reporting portal, but have been unable to file reports. Moreover, PRF recipients had previously been told that all PRF payments must be used by June 30, 2021. As June 30, 2021 approached, and no new reporting guidance or timeline had been released, providers and industry groups began to call for HHS to push back the deadline by which PRF funds must be used.

The new reporting guidance pushed this date back for some, but not all, recipients. The deadline to use the funds, as well as the reporting deadline, is now dependent on when the recipient received the payment.

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Effective June 8, 2021, Medicare will pay an additional $35 per dose for administering the COVID-19 vaccine in the home for certain Medicare patients that have difficulties leaving their homes or are hard-to-reach. This $35 dollar payment is in addition to the standard payment for vaccine administration, which varies based on location but is approximately $40 per dose. The additional payment also applies to each dose of a two-dose vaccine if both doses are administered in the home. To be eligible for the at-home additional payment, both the location and the beneficiaries must be certain criteria.

Private residences, temporary lodging, apartments, most units in an assisted living facility (ALF) or group home, and the homes of Medicare beneficiaries have been made provider-based to a hospital during the COVID-19 public health emergency generally qualify as location eligible for the at-home additional payment. However, hospitals, skilled nursing facilities (SNFs), some ALFs, and the communal spaces of apartment buildings or group homes do not qualify for the at-home additional payment.

In addition, to an eligible location, the Medicare beneficiaries must also meet certain criteria. Specifically:

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During the COVID-19 pandemic, many of the Medicare requirements surrounding telemedicine have been greatly relaxed or waived entirely. These temporary waivers, including allowing Medicare coverage of certain audio-only services, have been welcome changes for many providers and patients. With the end of the pandemic in sight, many are wondering if these changes will end or if some of the temporary waivers will become permanent.

The COVID-19 telemedicine waivers were authorized under Section 1135 of the Social Security Act, which allows the Secretary of Health and Human Services to temporarily waive or modify certain Medicare requirements for the duration of a declared public health emergency. The telemedicine waivers include: allowing telehealth services to be provided nationwide, rather than only in certain locations; allowing beneficiaries to receive, and providers to furnish, telehealth services from any setting, including beneficiaries’ and providers’ homes; allowing additional types of providers, such as physical and occupational therapists, to furnish telehealth services; temporarily adding over 146 new telehealth services; and allowing certain services to be furnished using audio-only technology such as telephones, instead of interactive systems involving video technology. As the authority to issue waivers is based on the declaration of a public health emergency, these waivers will end when the declared public health emergency ends.

Likely in response to calls from both providers and patients to make the telemedicine waivers permanent, Congress recently introduced H.R.3447, a bill to amend the Social Security Act to expand accessibility to certain telehealth services under the Medicare program. While the bill in the early stages of the legislative process and will likely be subject to much debate and many changes, it is an encouraging sign that at least some of the telemedicine waivers may become permanent.

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On May 28, 2021, the Equal Employment Opportunity Commission (EEOC) released guidance indicating that employers could, under certain circumstances, offer incentives to employees to receive the COVID-19 vaccine and offer the vaccine to employees’ family members. The EEOC largely confined its analysis to the Americans with Disabilities Act (ADA) and the Genetic Information Nondiscrimination Act (GINA). However, employers who are also healthcare providers must also consider whether these benefits to employees or their family members implicate prohibitions on payment for referrals.

The Physician Self-Referral Law (also known as the Stark Law), the Anti-Kickback Statutes (AKS), and the Eliminating Kickbacks in Recovery Act (EKRA) all prohibit various forms of payment for referrals. The Stark Law prohibits “physicians” (generally including MDs, DOs, dentists, optometrists, and chiropractors) from referring patients to receive “designated health services” payable by Medicare or Medicaid from entities with which the physician or an immediate family member has a financial relationship, unless an exception applies. The AKS is a criminal statute that prohibits the knowing and willful payment of “remuneration” to induce or reward patient referrals or the generation of business involving any item or service payable by federal health care programs. EKRA provides criminal penalties for paying, receiving, or soliciting any remuneration in return for referrals to recovery homes, clinical treatment facilities, or clinical laboratories. All three and can carry stiff penalties, sometimes criminal penalties.

Healthcare employers who provide incentives to receive the COVID-19 vaccine to employees with the ability to make referrals to the employer or that offer benefits to such employees’ family members should account for these statutes. Depending on how the incentive is structured, it may fit into the bona fide employment exception to the Stark Law or one of the other exceptions or safe harbors in these rules. It is also important to note that, due to federal funding, the vaccine itself it available free-of-charge, but that administration of the vaccine and the convenience thereof may still represent things of value, as well as the value of any incentives, in cash or otherwise.

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