Articles Posted in WAPC News

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On April 7, 2022, the Centers for Medicare and Medicaid Services (CMS) issued a memorandum stating that several COVID-19 blanket waivers for certain healthcare services will be ending soon. Specifically, CMS will terminate blanket waivers of regulatory requirements that apply to skilled nursing facilities (SNFs), inpatient hospices, intermediate care facilities for individuals with intellectual disabilities (ICF/IIDs), and end stage renal disease (ESRD) facilities.

CMS has expressed concern “about how residents’ health and safety has been impacted by the regulations that have been waived, and the length of time for which they have been waived.” Findings from onsite surveys conducted at the facilities previously mentioned “have revealed significant concerns with resident care that are unrelated to infection control (e.g., abuse, weight-loss, depression, pressure ulcers, etc.).” In response to these findings, CMS is removing certain operational flexibilities which do not directly relate to infectious disease control. The termination of these blanket waivers will not have any effect on other applicable blanket waivers, such as those for hospitals and critical access hospitals (CAHs).

Terminations of blanket waivers will occur in two groups and become effective either 30 days or 60 days from publication of the memorandum. CMS instructs all affected healthcare providers to “take immediate steps so that they may return to compliance with the reinstated requirements” within these timeframes. The specific blanket waivers ending under both timeframes are as follows:

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Healthcare providers who missed a Provider Relief Fund (PRF) reporting deadline may get a second chance. In response to overwhelming industry outcry over its attempts to clawback PRF payments, the Department of Health and Human Services (HHS), through the Health Resources and Services Administration (HRSA), which currently administers the PRF, will being accepting applications from providers who missed a reporting deadline to file a late report. Requests to file a late report must be filed between April 11 and April 22 and must include an “extenuating circumstance” justifying the request.

The PRF is a $178 billion fund created by Congress through the CARES Act and administered 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. The first payments under the PRF, in April 2020, were unsolicited and were deposited directly into providers’ bank accounts without prior application or notification. While this infusion of cash was likely a welcome relief at the time, it came with strings attached. The two major requirements for a provider to keep the PRF payment were to only use the funds for specific COVID-related purposes and to file a report with HRSA justifying use of the funds.

The first of these reports were due on September 30, 2021, but that date was later extended into early December 2021. In March 2022, HRSA began sending letters to providers who had not filed reports indicating that they were now required to return the full amount of any PRF funds received within 30 days. After significant outcry from providers, representatives, and industry groups, HRSA has backtracked and will now accept requests to file late reports.

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On December 14, 2021, the Department of Health and Human Services (HHS), through the Health Resources and Services Administration (HRSA), announced the release of an approximately $9 billion distribution in Provider Relief Fund (PRF) Phase 4 payments to healthcare providers who have experienced lost revenues and expenses due to the COVID-19 pandemic. This distribution is part of a previously announced $25.5 billion funding for healthcare providers affected by the COVID-19 pandemic, which also included an allocation of $8.5 billion from the American Rescue Plan (ARP) for providers who provide services to rural Medicaid, Children’s Health Insurance Program (CHIP), or Medicare beneficiaries. According to HHS’ state-by-state breakdown of the Phase 4 payments, these new payments have been received by more than 69,000 providers in all 50 states, Washington D.C., and eight territories. The average payment under this new distribution is $58,000 for small providers, $289,000 for medium providers, and $1.7 million for large providers.

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 policy focus on 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, HRSA is distributing 25% of PRF Phase 4 funding as bonus payments for providers who serve these individuals. HRSA will price these bonus payments at the generally higher Medicare rates in an attempt to promote equity amongst providers serving low-income children, pregnant women, people with disabilities, and seniors. Similar to the ARP Rural payments announced in November 2021, HRSA is using Medicare reimbursement rates to calculate these Phase 4 payments in an effort to mitigate disparities due to varying Medicaid reimbursement rates.

HHS has also updated the Terms and Conditions for Phase 4 and ARP Rural payments to require that PRF payments are being properly used in response to the financial impact of COVID-19. Recipients who receive greater than $10,000 are required to notify HHS of any merger or acquisition activity with another healthcare provider. Providers who report a merger or acquisition may be more likely to be audited.

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In a recent advisory opinion, the Department of Health and Human Services (HHS) Office of the Inspector General (OIG) opined that employment of an anesthesia provider may be low risk under the Federal Anti-Kickback Statute (AKS) under certain circumstances. This opinion, Advisory Opinion 21-15, may represent a softening of OIG’s position on anesthesia providers.

OIG’s position on anesthesia providers is largely found in a 2012 advisory opinion, Advisory Opinion 12-06, concerning two proposals by an anesthesia provider (Requestor) for structuring its relationship with several ambulatory surgery centers (ASCs). Under the first proposal, the Requestor would remain the ASCs’ sole provider of anesthesia services but would also pay the ASCs a per-patient fee, exclusive of federal healthcare beneficiaries, in exchange for management services (e.g., pre-operative nursing assessments, procuring office space, and transferring billing documentation). OIG rejected this proposal, finding that the carve-out for federal healthcare beneficiaries would not save the per-patient management fee from constituting improper remuneration under AKS. Specifically, by collecting both a management fee from the Requestor and a facility fee from payors, OIG concluded that the ASCs would be receiving double payments for the same services and therefore would be unduly influenced to keep the Requestor as their exclusive provider of anesthesia services to all patients.

Under the second proposal, the ASCs’ physician-owners would form wholly owned subsidiaries for the purpose of providing anesthesia services to ASC patients. The subsidiaries would bill for and furnish all anesthesia-related services (e.g., recruiting personnel and assisting in structuring employment or independent contractor relationships with anesthesia personnel, ordering supplies, quality assurance, and providing logistics). The subsidiaries would pay the Requestor a negotiated rate for its services and retain any profits, presumably for distribution to the non-anesthesiologist physician-owners. OIG rejected this proposal as well, concluding that no AKS safe harbor would protect the distribution of profits from the subsidiaries to their physician-owners because such profits would be a function of the Requestor’s anesthesia services revenue resulting from the physician-owners’ referrals. In particular, OIG found the ASC safe harbor inapplicable because it protects only returns on investments in Medicare-certified ASCs, or entities operated exclusively for the purpose of providing “surgical” services, and anesthesia services are nonsurgical in nature. Additionally, while noting that payments by the subsidiaries to the Requestor, employees, or independent contractors could be protected under the personal services, employee, and/or management contract safe harbors, OIG nevertheless indicated that none of these safe harbors would protect the distributions of profits from the subsidiaries to their physician-owners, since a likely purpose of such distributions would be to generate referrals for anesthesia services.

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This is the second installment in a two-part series regarding the No Surprises Act, which establishes new requirements that will apply to certain healthcare providers and facilities, and providers of air ambulance services. These requirements generally apply to items and services provided to individuals enrolled in group health plans, group or individual health insurance coverage, and Federal Employees Health Benefit plans. Please see our previous post for more information on these requirements.

Below is an overview of the remaining provider and facility requirements that will become effective on January 1, 2022:

  • No balance billing for air ambulance services by non-participating air ambulance providers: Providers of air ambulance services will generally be prohibited from billing or holding liable beneficiaries, enrollees, or participants in group health plans or group or individual health insurance coverage who received covered air ambulance services from a non-participating air ambulance provider for a payment amount greater than the in-network cost-sharing requirement for such services.
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Effective January 1, 2022 under the No Surprises Act, healthcare providers, facilities, and providers of air ambulance services will be subject to new requirements that generally apply to items and services provided to individuals enrolled in group health plans, group or individual health insurance coverage, and Federal Employees Health Benefit plans. The good faith estimate requirement and the requirements related to the patient-provider dispute resolution process also generally apply to the uninsured. These requirements generally do not apply to beneficiaries or enrollees in federal programs such as Medicare, Medicaid, Indian Health Services, Veterans Affairs Health Care, or TRICARE.

Below is an overview of some of the provider and facility requirements that will become effective on January 1, 2022. Stay tuned next week for further information.

  • No balance billing for out-of-network emergency services: Non-participating providers and emergency facilities will generally be forbidden from billing or holding liable beneficiaries, enrollees, or participants in group health plans or group or individual health insurance coverage who receive emergency services at a hospital or an independent freestanding emergency department for a payment amount greater than the in-network cost-sharing requirement for such services. There are exceptions for certain post-stabilization services if the notice and consent requirements are satisfied. However, the exception is not available for services furnished as a result of unforeseen, urgent medical needs that arise at the time an item or service is furnished, regardless of whether the notice and consent criteria are satisfied and regardless of whether they are emergency or non-emergency services.
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On November 5, 2021, the Centers for Medicare and Medicaid Services (CMS) released an interim final rule with comment period to require COVID-19 vaccination for staff of certain healthcare providers. The rule applies only to certain providers, but is expansive in scope where it is applicable. Under the rule, affected staff must receive their first vaccine dose by December 6, 2021 and be fully vaccinated by January 4, 2022.

The CMS vaccine requirement does not apply to all Medicare-enrolled providers and suppliers. CMS issued the mandate under its authority to set Conditions of Participation for certain providers. Therefore, only these specific, Medicare-certified provider types are directly subject to the requirement:

  • Ambulatory Surgical Centers (ASCs)
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In a recent court filing, the Department of Health and Human Services (HHS) reported that it has cleared approximately 79% of the Medicare appeals backlog. HHS is currently under court order to clear a backlog of hundreds of thousands of Medicare claims appeals pending before the Office of Medicare Hearings and Appeals (OMHA).

Generally, a Medicare claim denial or overpayment demand may be appealed through five successive levels of appeals. First, Redetermination by a Medicare Administrative Contractor (MAC), often the same MAC that denied the claims initially. Second, Reconsideration by a Qualified Independent Contractor (QIC). Third, appeal to an Administrative Law Judge (ALJ) employed by the Office of Medicare Hearings and Appeals (OMHA), a subdivision of HHS, where the provider may be entitled to a hearing. Fourth, review by the Medicare Appeals Counsel, also within HHS. Fifth and finally, appeal to a federal district court.

The entire appeals process can take years and create difficulties for healthcare providers or suppliers. The least efficient part of the process has long been the wait, sometimes for three to five years, for an available ALJ to hear the appeal, at which point in the appeals process the only review of a contractor’s decisions has been by other contractors. This left providers in the difficult position of having significant overpayment demands based on incorrect decisions by contractors but having to wait years for independent review of their cases. This long wait also violated the regulations that govern the appeals process, which generally entitle a provider to an ALJ hearing within 90 days of the provider’s request for a hearing. At the height of the backlog, over 400,000 cases were pending at OMHA.

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The Department of Health and Human Services (HHS) recently announced the annual expansion of the Settlement Conference Facilitation (SCF) program. SCF is an alternate dispute resolution mechanism used to resolve Medicare claims appeals. However, because SCF is meant to help reduce the appeal backlog, only appeals filed before a certain date are eligible.  With the latest expansion, appeals involving requests for Administrative Law Judge (ALJ) hearing or Medicare Appeal Council review filed on or before June 30, 2021 are now eligible for SCF.

Generally, a Medicare claim denial or overpayment demand may be appealed through five successive levels of appeals. First, Redetermination by a Medicare Administrative Contractor (MAC), often the same MAC that denied the claims initially. Second, Reconsideration by a Qualified Independent Contractor (QIC). Third, appeal to an Administrative Law Judge (ALJ) employed by the Office of Medicare Hearings and Appeals (OMHA), a subdivision of HHS, where the provider may be entitled to a hearing. Fourth, review by the Medicare Appeals Counsel, also within HHS. Fifth and finally, appeal to a federal district court.

The entire appeals process can take years and create difficulties for healthcare providers or suppliers. The least efficient part of the process has long been the wait for an available ALJ to hear the appeal, which can take three to five years, at which point the only prior review of a contractor’s decisions has been done by other contractors. This has left providers in the difficult position of having significant overpayment demands based on incorrect decisions by contractors but having to wait years for independent review of their cases. In response to this, HHS is now under court order to reduce this backlog of cases.

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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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