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Important deadlines for hospitals to report cardiac medical device-related overpayments are fast approaching. Based on an audit by the Office of Inspector General (OIG), the Centers for Medicare & Medicaid Services (CMS), required hospitals to investigate and report any overpayments from the last six years related to manufacturing credits for replaced cardiac medical device implants. CMS’s deadlines to file these reports begin in August 2021.

Generally, where the manufacturer of a cardiac medical device implant, such as a pacemaker or defibrillator, replaces a recalls or defective device that is still under warranty, it will provide a replacement to the hospital without charge or issue a full or credit to the hospital for the cost of the device. Where the service involves a Medicare beneficiary and a hospital receives a discount or credit that is 50% or more of the cost, Medicare regulations generally require the hospital to report the credit to Medicare and accept reduced payment.

In November 2020, OIG issued a report regarding a review it conducted of 6,558 Medicare claims dated between January 1, 2015 and June 30, 2017. In its review, OIG obtained data on reportable warranty credits from the top three cardiac device manufacturers and compared this data to Medicare billing records to see whether the hospital had reported the credit to Medicare. As a result of its review, OIG alleged that over 900 hospitals had not properly reported manufacturing credits for recalled or defective cardiac medical device implants. OIG alleged that these hospitals had received approximately $33 million in Medicare overpayments and recommended that CMS recover these overpayments.

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On Friday July 9, President Biden signed an executive order focused on promoting competition in the U.S. economy. The comprehensive executive order contained many provisions relating to the healthcare industry, including directives to the Department of Health and Human Services (HHS) to support price transparency rules issued by the Trump Administration and instructions to the Federal Trade Commission (FTC) to prioritize hospital consolidation in its enforcement efforts. Under the order, the Department of Justice (DOJ) and the FTC are encouraged to “vigorously” enforce antitrust laws, even on past mergers that previous administrations have not challenged. The order includes specific provisions that address competition among hospitals, health insurers, prescription drugmakers, and hearing aid manufacturers.

HHS is directed by the order to support existing hospital price transparency regulations issued by the Trump Administration, which require hospitals to disclose cash prices and rates negotiated with insurers, as well as finish implementing bipartisan federal legislation to address surprise hospital billing. This directive may be spurred by recent reports that hospital compliance with these regulations has been inconsistent. The order further directs the HHS to standardize plan options in the national health insurance marketplace so people can comparison shop more easily.

The FDA is called upon to work with states and tribal programs to safely import cheaper prescription drugs from Canada, pursuant to the Medicare Modernization Act of 2003, in an attempt to lower prices for consumers. Provisions in the order similarly call on HHS to increase support for generic and biosimilar drugs and to create a plan within 45 days to address high drug prices and price gouging. The order asks the FTC to ban “pay for delay” and similar agreements by rule, under which brand-name drugmakers pay generic drugmakers to abstain from the market. Moreover, the executive order would also allow hearing aids to be sold over the counter and directs HHS to issue a rule on the matter within 120 days. Hospitals and other healthcare should understand the implications these directives may have as implementation of the executive order unfolds in the coming weeks and months.

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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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A St. Louis, Missouri based chiropractor has become the first person charged under the new COVID-19 Consumer Protection Act, with the government alleging numerous civil violations and seeking civil monetary penalties. The allegations serve as a cautionary tale for healthcare providers marketing and selling goods and services relating to the COVID-19 pandemic.

The COVID-19 Consumer Protection Act was enacted in December 2020 and makes it unlawful, for the duration of the ongoing COVID-19 public health emergency, for any person, partnership, or corporation to engage in unfair or deceptive acts or practices in or affecting commerce that are associated with the treatment, cure, prevention, mitigation, or diagnosis of COVID-19. The Act is similar to Section 5(a) of the FTC Act, but adds increased penalties for violations relating to the COVID-19 pandemic. The Act authorizes injunctive relief and Civil Monetary Penalties of up to $42,792 per violation.

In this case, the first under the Act, the government alleged that the chiropractor and his company violated the Act by making claims about the efficacy of their products that were not supported by scientific literature. Specifically, that the chiropractor sold various vitamin supplements and claimed that they prevented or treated COVID-19. The government also alleged that the chiropractor claimed the vitamin supplements were more effective that the available COVID-19 vaccines. The government alleged that the chiropractor made these claims in numerous videos posted on various social media and other websites and misrepresented the results of studies concerning the efficacy of the vitamin supplements in treating or preventing COVID-19. According to the allegations, these claims constituted violations of the Act because, even though there are studies showing correlation between vitamin deficiencies and elevated risk from the virus, there are no randomized clinical trials that establish the vitamin supplements caused positive health outcomes in connection with COVID-19.

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On April 15, 2021, the Department of Health and Human Services Office of Inspector General (OIG) issued a statement reminding providers that the COVID-19 vaccine must be provided at no cost to the public. OIG issued this message as a result of complaints from patients about charges from providers for receiving the COVID-19 vaccine. All supply of the COVID-19 vaccine in the United States has been purchased by the United States Government and is only to be used by providers through the Centers for Disease Control and Prevention’s (CDC) COVID-19 Vaccination Program. Because the vaccine is being supplied by the federal government, any provider participating in the CDC COVID-19 Vaccination Program must comply with the terms of the program and offer the vaccine to recipients for free.

Providers participating in the CDC COVID-19 Vaccination program must sign a CDC COVID-19 Vaccination Program Provider Agreement. Providers are responsible for compliance with the requirements in the agreement. Compliance with the program requires that providers administer the vaccine at no cost to the patient. All organizations and providers enrolled in the program:

  • Must administer the COVID-19 vaccine with no out-of-pocket charges to the patient
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On February 10, 2021, the United States Department of Justice filed the first criminal charges relating to a alleged violation of the terms the Provider Relief Fund (PRF). The allegations contained in the indictment illustrate some of the pitfalls of the PRF and the importance of compliance with its terms. It may also provide insight into coming enforcement actions.

The alleged defendant was a resident of southeastern Michigan who owned and operated a home health agency in Indiana. The home health agency closed in January 2020 and filed a notice of voluntary termination with Medicare in March 2020. However, despite the filing of this notice, when the first wave of payments under the PRF were automatically deposited into providers’ accounts in April, the defendant’s home health agency received approximately $38,000. The defendant then allegedly submitted an attestation to the terms and conditions of the PRF payment and allegedly distributed the funds to family members in a series of checks, all just under $10,000. The indictment charged the defendant with one count of Theft of Public Money, Property, or Records.

This indictment touches several possible areas of enforcement or audits of PRF payments, including eligibility criteria, attestations, and use of the funds. The first wave of payments under the PRF consisted of $30 billion that was automatically deposited in providers’ accounts in amounts based on a provider’s 2019 Medicare billing. Providers did not make requests or applications for this funding. However, simply because a provider received money did not mean they were entitled to keep it, a provider also had to meet the eligibility criteria, such as the requirement that it provided services after January 31, 2020.

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On March 15, 2021, the Centers for Medicare & Medicaid Services (CMS) announced it will increase the amount Medicare pays providers for administering the COVID-19 vaccine. For vaccines administered on or after March 15, 2021, the new national average payment rate for physicians, pharmacies, hospitals, and other providers who administer the vaccine of $40 per single-dose vaccine and $80 per two-dose vaccine. The exact payment rates will be based on the type of provider offering the vaccine and will be adjusted based on the location of the provider. For vaccines administered prior to March 15, 2021, Medicare rates will remain $28.39 per single-dose vaccine and $45.33 for both doses of a two-dose vaccine.

These changes in Medicare payment rates are based on new information regarding the costs of vaccine administration for different types of providers and more resources needed to safely administer the vaccine. The goal of CMS is to increase the number of providers offering the vaccine and further emphasize that no beneficiary, whether a beneficiary with private insurance, Medicare, or Medicaid, should pay cost-sharing to receive the COVID-19 vaccine. The new payment rate is effective for COVID-19 vaccines given on or after March 15, 2021.

In order to receive COVID-19 vaccines at no cost from the federal government, providers cannot charge patients for administration of the vaccine. Providers that receive federally purchased vaccines during the public health emergency must contractually agree to administer COVID-19 vaccines to patients regardless of their ability to pay; Providers are therefore prohibited from charging a patient any amount for administration of the vaccine, including a copay, coinsurance, or deductible, including seeking reimbursement from patients, such as balance billing. CMS provides payment information for various programs, to ensure consistent coverage across payers, such as:

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On March 11, 2021, President Biden signed  the $1.9 trillion American Rescue Plan, a legislative package to help fund vaccinations, provide immediate relief to families during the COVID-19 pandemic, increase COVID-19 testing and identify new and emerging strains of COVID-19.  The final bill includes several sources of funding for COVID-19 response and other healthcare programs:

Development of a national vaccination program

  • The bill includes $20 billion for a nationwide vaccination program, in partnership with state and local authorities. The vaccination program will include the creation of community vaccination centers as well as mobile vaccination units. Under the plan, the Biden Administration will work with Congress to expand the Federal Medicaid Assistance Percentage (FMAP) to 100%, to ensure all Medicaid enrollees will be vaccinated.
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On December 16, 2020, the Department of Health and Human Services (“HHS”) announced that it would begin Phase 3 of general distributions under the Provider Relief Fund (“PRF”) and that Phase 3 would be larger than initially planned. The PRF is a $175 billion fund created Congress through the CARES Act and administered by HHS to provide financial relief to healthcare providers during the COVID-19 pandemic. The PRF is administered by HHS through the Health Resource Services Administration (“HRSA”). HHS has subdivided the PRF into various general and targeted distributions.

Earlier in 2020, HHS had made two general distributions under the PRF. The Phase 1 general distribution consisted of $50 billion in financial payments, released in two successive tranches of $30 billion and $20 billion, to healthcare providers based to providers who billed Medicare. The Phase 2 general distribution consisted of an additional $18 billion in financial payments to providers that billed Medicaid, dentists, assisted living facilities, and providers that were not eligible under the terms of Phase 1 due to a change in ownership.

On October 1, 2020, HHS announced the Phase 3 general distribution. The Phase 3 general distribution was initially planned to consist of $20 billion on financial payments to providers who were either excluded from the initial two phases, or who were eligible under the first two phases but required additional funding to cover ongoing financial losses accrued during the pandemic. The following providers are eligible for Phase 3 General Distribution funding: (1) Providers who have previously received, rejected, or accepted a General Distribution PRF payment; (2) behavioral health providers, including those that have previously received funding; and (3) healthcare providers that began practicing January 1, 2020 through March 31, 2020. All providers who receive payments must attest to receiving the payment and accept the associated Terms and Conditions.

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Wachler & Associates is pleased to announce the appointment of two of our attorneys to leadership roles within the American Bar Association’s Health Law Section.

Amy K. Fehn will serve as Vice Chair of three ABA Health Law Sections, including the Health Law and Policy Coordinating Committee, the ABA Health eSource Editorial Board, and the ABA Health Law Section Publication Committee. Ms. Fehn has represented healthcare organizations for 15 years, focusing on HIPAA, Stark Law and the Anti-Kickback Statute, and other regulatory compliance matters. She also serves on the ABA’s Accountable Care Organization (ACO) task force.

Reesa N. Handelsman received her first ABA Health Law Section leadership appointment. Ms. Handelsman will serve as Vice Chair of the Business & Transactions Interest Group. Ms. Handelsman has significant experience counseling healthcare entities in a variety matters, including Stark law and Anti-Kickback Statute compliance, hospital and physician contracting, and all types of healthcare transactions.

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