Articles Posted in Health Law

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Due to the 2019 Novel Coronavirus (“COVID-19”) pandemic, many Michigan residents have found themselves without any health insurance coverage. On September 15, 2020, the Michigan Department of Insurance and Financial Services (“DIFS”) released a press statement informing Michigan residents that extended health insurance enrollment periods are available for qualified residents through the Health Insurance Marketplace.

Special Enrollment Periods (“SEPs”) allow individuals who missed the yearly open enrollment period but have experienced a specific life event to sign up for health insurance. Generally, individuals have 60 days before and 60 days after a qualifying life event to enroll in an insurance plan through the Health Insurance Marketplace. Life events that qualify individuals to enroll in an SEP include: household changes, such as marriage, divorce, or the birth of a child; changes in residence; and a loss of health insurance. Typically, if an individual misses an SEP enrollment window, he or she must wait until the next open enrollment period to apply.

Individuals who have lost healthcare coverage due to job loss during the COVID-19 pandemic may still be eligible for coverage through various healthcare outlets. Those who have lost health insurance as a result of job loss may become eligible for Medicaid if they live in a state with expanded Medicaid under the Affordable Care Act (“ACA”) and meet certain income limits. Michigan is one such state that has expanded Medicaid coverage under the ACA. Additionally, ACA Marketplace coverage is available to those who do not have employer sponsored health insurance and do not qualify for Medicaid. Furthermore, subsidies may be available to individuals with a family income between 100% and 400% of the poverty line. COBRA is another option for those who lost job-based health insurance. COBRA will allow employer-based coverage to continue after employment ends, however, this is often a costly option because the individual must pay the entire premium as well as an additional 2%.

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On September 13, 2020, President Trump issued an executive order targeting prescription drug process paid by Medicare under Part B and Part D. The order, titled “Executive Order on Lowering Drug Prices by Putting Americans First,” outlines a new policy that Medicare should not pay more for Part B or Part D prescription drugs than the “most-favored-nation price.”

The order defines the “most-favored-nation price” as the lowest price, after adjusting for volume and differences in GDP, for a drug that the manufacturer sells to an Organization for Economic Co-operation and Development (“OECD”) member country with a comparable GDP per capita. For reference, Norway, Austria, and the Netherlands are all OECD member countries with a GDP per capita comparable to the United States.

The order has no immediate effect on prescription drug prices. Change will only occur once regulations have been promulgated, and this process has not yet begun. However, the order directs the Department of Health and Human Services (“HHS”) to “immediately” implement a test payment model. The test model would apply the new policy to certain high-cost prescription drugs and biological products covered by Part B to determine whether paying the “most-favored-nation price” leads to better clinical outcomes and/or cost-saving. The order also directs HHS to develop and implement a similar test payment model for Part D prescription drugs but does not impose a timeline on HHS to do so.

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In March 2020, Congress passed the CARES Act to provide relief for Americans during the 2019 Novel Coronavirus (“COVID-19”) pandemic. Part of the CARES Act included an expansion of the Advanced and Accelerated Payments Programs. The Department of Health and Human Services (“HHS”) stated that this expansion would go on for no more than four months, and that the Centers for Medicare and Medicaid Services (“CMS”) would seek recoupment of these accelerated payments after 120-days from issuance of the accelerated payment has passed.

Despite the timeline given by HHS, many hospitals and other healthcare providers have reported that after the 120-day timeline given by HHS had passed, CMS had not yet begun recoupment. Speculation supports the idea that the 120-day deadline is still intact, but that hospitals still have not seen recoupment because of a 30-day turnaround time. However, CMS released guidance that indicated recoupment would be automatic and begin immediately after the 120-day period, heightening confusion among hospitals.

Hospitals and other healthcare providers have been lobbying Congress to forgive these loans, but Congress has yet to come to a resolution. It is possible that CMS is hesitant to begin recoupment while these negotiations are occurring, because if Congress ultimately decides to offer loan forgiveness after CMS has begun recoupment, then CMS would be responsible for repaying the withheld monies.

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On September 2, 2020, the Centers for Medicare & Medicaid Services (CMS) finalized fiscal year (FY) 2021 policies in the Inpatient Prospective Payment System (IPPS) for acute care and long-term care hospitals. The rule safeguards access to critical diagnostic technology and medical treatments through increasing technological innovation in the medical industry, easing industry competition, and updating hospital payment policies. IPPS is the Medicare payment system for acute care hospitals. Payments are issued per inpatient or per patient discharge.  Discharge cases are categorized into diagnosis related groups (DRGs) based on similar diagnoses and services provided during the inpatient process. CMS updates the IPPS regulations each year, which allows inpatient hospitals to address quality improvement efforts and maximize cost effectiveness. The updated IPPS final rule takes effect on October 1, 2020 with two very noteworthy changes.

The first important change to the final rule is the switch to a market-based method for weight data collection for calculating Medicare Severity Diagnosis Related Groups (MS-DRGs). Currently, payments for cases under IPPS are calculated by multiplying a hospital’s standardized cost per case, adjusted by geographic location, by the relative weight for the MS-DRG assigned to the case. This cost-based methodology mainly uses hospital charges based on claims and hospital report data. However, recently CMS has acted to reduce Medicare’s use of hospital charge data, due to the thought that gross rates are an inaccurate representation of market costs. In the final rule, MS-DRG weights will instead be based on median payer specific negotiated charges for Medicare Advantage (MA) organizations, collected through Medicare cost reports. This new methodology will be fully implemented by FY 2024. CMS predicts that since hospitals are already obligated to publicly report payer-specific negotiated charges, that calculating and reporting the MA negotiated charge by MS-DRG will be less taxing on hospitals compared to the current method of weight data collection.

The second important change to the final rule is that it encourages the development of medical technology through the creation of several new alternative pathways and payment groups. Under this rule, 13 new technologies that applied for new FY 2021 add-on payments were approved. CMS will continue new technology add-on payments for a portion of the technologies that currently receive the add on payment. Thus, 24 technologies in total will be eligible to receive add-on payments for FY 2021. In addition, this payment expansion includes a new MS-DRG for Chimeric Antigen Receptor (CAR) T-cell Therapy, which will allow for more predictable compensation as well as accurate and efficient billing for hospitals paid through the IPPS when offering these immunotherapy procedures.

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On September 1, 2020, the Department of Health and Human Services (“HHS”) announced that Assisted Living Facilities (“ALFs”) are now eligible to apply for payments under the Provider Relief Fund (“PRF”). ALFs have until September 13, 2020 to begin the application process.

The PRF is a multi-billion-dollar fund created by Congress through the CARES Act to provide financial relief to healthcare providers during the COVID-19 pandemic. The PRF is administered by HHS and the Health Resource Services Administration (“HRSA”). HHS has subdivided the PRF into various allocations and distributions. Expanded eligibility for ALFs falls under the Phase 2 General Distribution, which is meant to cover providers who did not receive payments under the initial Phase 1 General Distribution.

Some ALFs who bill Medicare or Medicaid were eligible for payments under prior PRF distributions. ALFs who do not bill Medicare or Medicaid are now eligible to apply for a payment if: 1) they filed a federal tax return for fiscal years 2017, 2018, or 2019 (or are exempt from filing a return), 2) provided patient care after January 31, 2020, 3) have not permanently ceased providing patient care,  4) are not otherwise excluded from federal health care programs, and 5) agrees to the terms and conditions of the payment.

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One of the questions surrounding loans under the Paycheck Protection Program (“PPP”) was whether forgiveness of these loans would be offset against expenses and used to decrease future Medicare reimbursement. PPP loans were created under the CARES Act and are administered by the Small Business Administration (“SBA”). They were intended to help employers keep employees on the payroll during the economic crisis caused by the COVID-19 pandemic. These loans are eligible for forgiveness if the recipient uses them for their intended purpose and complies with the specified terms and conditions.

It was not initially clear what, if any, effect PPP loan forgiveness would have on Medicare reimbursement. However, a Medicare Administrative Contractor (“MAC”) caused concern when it informed some providers, primarily rural hospitals, that any PPP loans that were forgiven would be offset against their expenses. This measure, therefore, would decrease Medicare reimbursement in order to prevent duplicative payments from the federal government. CMS indicated shortly thereafter that this communication from the MAC was inaccurate and that further guidance would be forthcoming.

CMS recently issued guidance and clarified that PPP loan forgiveness would not be offset against expenses. The only circumstance under which CMS has indicated a PPP loan would be offset is if the loan amounts are attributable to specific claims, such as payments for the uninsured. The guidance goes on to remind providers that PPP and other SBA loans must be used for eligible expenses. Therefore, it is likely that any recipient of a PPP loan who uses it for eligible expenses and this is eligible for loan forgiveness would not be subject to offset.

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On August 31, 2020, the Centers for Medicare and Medicaid Services (“CMS”) released an announcement regarding their newest proposed rule, the Medicare Coverage of Innovative Technology (“MCIT”). Department of Health and Human Services (“HHS”) Secretary Alex Azar assured that the proposed rule “would give Medicare beneficiaries faster access to the latest lifesaving technologies . . . by delivering Medicare reimbursement at the same time as FDA approval.”

Currently, it takes an excessive amount of time after FDA approval of a medical technology before Medicare covers the technology. This significant lag presents serious detriments to seniors who are denied access to lifesaving technologies because Medicare has failed to cover the technology in a timely manner. Under the MCIT proposed rule, when the FDA deems a technology a “breakthrough technology,” Medicare will provide simultaneous coverage with no waiting period. A breakthrough technology must be a technology which provides more accurate testing or treatment for life-threatening diseases or it must offer a treatment option for which no other approved treatment currently exists.

This new method of simultaneous coverage would last for a trial period of four years. It seems that CMS believes that the four-year limit will incentivize manufacturers to rapidly develop lifesaving technologies and breakthrough devices. Additionally, it would force manufacturers to develop evidence to show how these devices do, in fact, help Medicare beneficiaries. The four-year time limit would also streamline local coverage determinations across the country, such that all Medicare Administrative Contractors would allow reimbursement for these technologies. If these four years result in positive benefits for Medicare beneficiaries, CMS may consider extending the rule. Though this rule is primarily forward-looking, the MCIT proposed rule would also have Medicare covering breakthrough technologies developed in 2019 and 2020.

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The Department of Health and Human Services (“HHS”) is setting up a new reporting system through which recipients of payments under the Provider Relief Fund (“PRF”) will be required to submit reports on their use of the payments. The reporting system is set to become available for reporting on October 1, 2020. Despite the reporting system opening in less than 30 days, providers are still waiting to learn what specific information they will be required to report.

On July 20, 2020, HHS amended the reporting requirements for PRF payment recipients. Pursuant to this amendment, any recipient of more than $10,000 in aggregate payments from the PRF will be required to file a single report regarding all expenditures of PRF payments in calendar year 2020. This report will be due February 15, 2021. A second report regarding any expenditures of PRF payments in calendar year 2021 will be due on July 31, 2021. At the time, HHS indicated that additional details regarding data elements that recipients would be required to report would be released by August 17, 2020.

However, HHS has since indicated that instead it will release reporting instructions and a data collection template on an unspecified date after August 17, 2020. HHS has also indicated it will release these instructions “well in advance” of the reporting system being made available. The system is set to become available on October 1, 2020, although HHS now characterizes this as a “targeted” date to make the reporting system available. HHS recommends providers simply continue to check their website for more updates regarding the reporting system.

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During the COVID-19 crisis, many audits by private payors had been paused, but as of the last week, it seems that private payors have resumed auditing. Specifically, Wachler & Associates is aware of private payers initiating audits of laboratories. The laboratories being audited are seemingly ones doing COVID-19 GenX tests, but all laboratories doing any type of COVID-19 test should still be on notice of potential audits coming.

In addition to requesting information regarding the COVID-19 tests, the private payors have also requested a large volume of other materials in these audits. These other materials have included: Copies of CLIA certificates, CMS-116 Applications, lists of testing equipment, invoices, lists of reference labs, shipment logs, credentials for all laboratory staff, lists of daily test volume performed onsite and sent out, hours of operation, specimen processing policies, proficiency test reports, patient service center permits, and emergency use authorizations. These materials being requested go above and beyond what would normally be requested in an audit prior to the COVID-19 crisis.

Laboratories, specifically ones that have performed COVID-19 testing, should begin to review their own records for the above-listed materials in the event an audit occurs. For over 30 years, Wachler & Associates has represented healthcare providers and suppliers nationwide in a variety of health law matters, and our attorneys can assist providers and suppliers in understanding new developments in audits. Please contact Wachler & Associates if your facility has recently gotten notice of an audit, or if your facility would like to implement a compliance plan. If you or your healthcare entity has any questions pertaining to healthcare compliance, please contact an experienced healthcare attorney at 248-544-0888 or

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Despite the ongoing public health emergency from the 2019 Novel Coronavirus (“COVID-19” or “COVID”), the Centers for Medicare & Medicaid Services (“CMS”) were encouraged by the Center for Program Integrity (“CPI”) to resume conducting Recovery Audit Contractor (“RAC”) and Medicare Administrative Contractor (“MAC”) audits. Some of the audits that are of high priority are post-payment reviews of COVID claims submitted prior to March 1, 2020. CMS has not yet stated when they will be auditing claims submitted after March 1, 2020 and throughout the current public health emergency, but experts expect these audits to begin in the coming months.

In fact, the CMS “Coronavirus Disease 2019 Provider Burden Relief FAQ” states that even if the public health emergency continues, it will lift the suspension of audits beginning on August 3, 2020 (though most providers will not see requests for review until at least a month after that). The audits will be done pursuant to existing statutory and regulatory provisions, but any waiver or flexibility allowed for any date of service which is under review will be considered in the audit.

In addition to those audits, CMS has also announced a new requirement to obtain reimbursement for COVID patients. Beginning on September 1, 2020, in order to receive the 20% Medicare reimbursement add-on payment for a COVID patient, the provider must document a positive COVID test in the patient’s chart. This new guidance applies only to Inpatient Prospective Payment Systems (“IPPS”), Long-Term Care Hospitals (“LCTHs”), and Inpatient Rehabilitation Facilities (“IRFs”). The guidance states that CMS will continue to automatically apply the 20% add-on payment for COVID-19 claims and will enforce the requirement through post-payment audits. The 20% add-on payment will be recouped if no positive COVID test is found in the patient’s chart.

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