Wachler & Associates Health Law Blog

Published on: May 1, 2023

What Happens When a COVID-19 Lab Shuts Down?

During the COVID-19 pandemic, demand for COVID-19 testing increased dramatically and many clinical laboratories either began operations or rapidly increased testing capacity to meet this demand. As the pandemic ends and the demand for COVID-19 testing fades, clinical labs are scaling back capacity for COVID-19 testing, pursuing other lines of business, or closing down entirely. These transitions may raise several regulatory issues for a clinical lab to consider. Note this is not a comprehensive list, but an overview of some common issues.

Did the lab bill Medicare, the HRSA Uninsured Program, or other federal healthcare programs? Federal authorities have indicated that claims for pandemic-related services or claims to pandemic-related programs will be a focus of fraud, waste, and abuse enforcement actions for years after the pandemic. The end of the pandemic or the end of widespread COVID-19 testing will likely not be the end of the need for regulatory compliance.

Was the lab in-network or out-of-network with payors? Commercial insurers have also increased scrutiny of claims for COVID-19 testing. During the public health emergency (PHE), commercial insurers were required by federal law to cover certain COVID-19 tests and insurers incurred significant costs providing such coverage. However, insurers have begun auditing labs and demanding significant repayments of claims for COVID-19 testing. A lab that is in-network with a payor will likely have rights and obligations in regard to such a dispute dictated by its participation agreement with the payor. However, many labs billed for COVID-19 testing while out-of-network, which may put the lab in a stronger position during a dispute because the payor likely does not have a contractual mechanism to collect an overpayment. Also, labs that stop billing a paying may want to consider formally ending their participation or enrollment with a payor. Especially in the case of Medicare, simply ceasing compliance with enrollment requirements can lead to an involuntary termination or revocation, which can have significant collateral consequences.

Published on: April 26, 2023

OIG Continues Scrutiny of Telehealth Services

by Wachler & Associates, P.C.

The Office of Inspector General (OIG) for the Department of Health and Human Services (HHS) recently released a toolkit regarding analysis of telehealth claims to assess program integrity risks. Use of telehealth services exploded during the pandemic, with Medicare beneficiaries in particular using 88 times more telehealth services in the first year of the pandemic than in the year prior. In the toolkit, OIG outlined its approach to analyzing telehealth claims, ostensibly in an effort to help Medicare Advantage plan sponsors, private health plans, State Medicaid Fraud Control Units, and other Federal health care agencies analyze telehealth claims data. Therefore, healthcare providers may see this type of analysis in other contexts or use this type of analysis for their own compliance purposes.

Specifically, OIG is performing data analysis on Medicare and Medicare Advantage claims for telehealth services and has identified seven measures that OIG believes may indicate fraud, waste, or abuse, as well as thresholds where OIG believes these measures signify “high risk.”

• Billing telehealth services at the highest, most expensive level for a high proportion of services, including E/M services. OIG considers providers to be high risk if they billed 100 percent of their telehealth services at the highest level.

Published on: April 17, 2023

Primer on Medicare Advantage Payments and Audits

by Wachler & Associates, P.C.

Under the Medicare Advantage (MA) program, the Centers for Medicare & Medicaid Services (CMS) makes monthly payments to Medicare Advantage Organizations (MAOs), typically private insurance companies, according to a system of risk adjustment that depends on the health status of each enrollee. Accordingly, MAOs are paid more for providing benefits to enrollees with more severe diagnoses associated with more intensive uses of healthcare resources than to healthier enrollees who would be expected to require fewer resources. To determine the health status of enrollees, CMS relies on MAOs to collect diagnosis codes from their providers and submit these codes to CMS. While the MA plans conduct audits of the claims submitted to them by providers, CMS conducts audits of MAOs because some diagnosis codes are at higher risk for being miscoded, and MA audits that allegedly identify any improper coding may result in overpayment demands from CMS.

Since MAOs receive additional payments when they cover patients with more severe health conditions, this structure presents a potential for fraud and abuse whereby some MAOs may use additional diagnoses to attain high-risk scores, while not necessary reflecting these diagnoses in any documentation. In fact, MA plans have come under scrutiny recently after a Freedom of Information Act (FOIA) lawsuit revealed millions of dollars in overcharges by certain MAOs, specifically health insurers that issue MA plans. A common allegation involves “chart reviews” wherein MA plans find additional diagnosis that are supported by the medical records but were not previously reported or coded. Federal authorities tend to take issue with such diagnoses where they lead to higher cost for the Medicare program but not additional service being provided to the beneficiary. Healthcare providers have historically also encountered significant issues with MA programs. Payment, audits of providers, and claim adjudication are usually governed by contracts that are not necessarily the same amongst MA plans, and which most likely differ from the rules and regulations applicable to traditional Medicare. This is, where providers are audited by MA plans, the audits tend to resemble the commercial insurance audits, rather than traditional Medicare audits.

To provide oversight of the MA program, CMS performs audits of MA plans through the Risk Adjustment Data Validation (RADV) program. RADV audits are designed to identify improper risk adjustment payments made to MAOs in situations where medical diagnoses submitted for payment allegedly were not supported in the beneficiary’s medical record, ensuring that MAOs do not game the system and claim more money than they should. Each year, CMS selects several MA plans for RADV audits to ensure that medical record documentation supports diagnoses submitted for risk adjustment. The RADV audit process generally requires MAOs and their providers to submit a sample of medical records to validate risk adjustment data, in addition to other requirements. In a recently issued final rule, CMS stated that it will only extrapolate audit findings beginning with the plan year 2018 RADV audit, and will not extrapolate audit findings prior to 2018. As MA plans are becoming increasingly popular amongst Medicare beneficiaries while at the same time drawing more scrutiny from government regulators, providers should make efforts to ensure compliance with MA program requirements, as well as be prepared to appeal any denials.

Published on: April 5, 2023

MDHHS Launching Electronic Visit Verification System

by Wachler & Associates, P.C.

The Michigan Department of Health and Human Services (MDHHS) recently announced that it will implement an Electronic Visit Verification (EVV) system to validate in-home visits for Medicaid recipients. MDHHS plans to begin the transition to the EVV system in early 2024.

Michigan’s transition to an EVV system was precipitated by the 21^st Century Cures Act, which requires states to implement an EVV system for all Medicaid personal care services and home health services that require in-home visits by a provider.

MDHHS awarded a five-year contract to IT firm HHAeXchange to build out and manage an EVV system that MDHHS will provide free of charge. However, MDHHS will be using an “Open Vendor Model,” which allows providers and managed care organizations to use either the state-provided EVV system, or their own EEV system software that directly integrates with the state’s system. To comply with the Act, The EEV system will collect information about the services provided, including the type of service provided, the provider who provided the service, the name of the patient who received the service, the start and end times of the service provided, the date when the service was provided, and the location where the services were provided.

Published on: April 3, 2023

CMS Proposes New Nursing Facility Disclosure Requirements

by Wachler & Associates, P.C.

The Centers for Medicare & Medicaid Services (CMS) recently issued a proposed rule that would require disclosure of private equity (PE) or real estate investment trusts (REITs) ownership, managerial, and other disclosable information for Medicare skilled nursing facilities (SNFs). The proposed rule also includes recommendations for comparable requirements for Medicaid nursing facilities (NFs) at the state level. If finalized, the proposed rule would likely increase the complexity of transactions involving PE or REIT ownership of SNFs and increase the reporting burden of PE or REITs with existing ownership interest in these facilities.

The timing of this proposed rule, according to CMS, is purposefully aligned with the Biden Administration’s recent initiative to improve the safety, quality, and accountability of nursing homes. The proposed rule also complements other recent CMS efforts intended to strengthen provider enrollment rules to “stop fraud before it happens” and stop playing “pay and chase” with individuals and organizations that the agency views as posing an undue risk of fraud, waste, or abuse to the Medicare and Medicaid programs. CMS stated that this proposed rule is necessary to obtain important data about the owners and operators of Medicare SNFs and Medicaid NFs, enabling CMS and states to better monitor the ownership and management of these providers. Given allegations of quality issues and differences in outcomes of these facilities with certain types of owners, CMS views this as an especially critical consideration.

If finalized, the proposed rule would require disclosure of the following information for all Medicare SNFs and Medicaid NFs:

Published on: March 27, 2023

CMS Issues Initial Guidance Regarding the Medicare Drug Price Negotiation Program

by Wachler & Associates, P.C.

As part of the Inflation Reduction Act (IRA) of 2022, the Centers for Medicare & Medicaid Services (CMS) is required to establish the Medicare Drug Price Negotiation Program (Negotiation Program) to negotiate maximum fair prices (MFPs) for certain high expenditure, single source drugs and biologicals. In accordance with the IRA’s requirements, CMS recently issued an initial guidance memorandum for implementation of the Negotiation Program for initial price applicability year 2026, as well as solicitation of comments.

The initial guidance memorandum describes how CMS intends to implement the Negotiation Program for initial price applicability year 2026 (January 1, 2026 to December 31, 2026), and specifies the requirements that will be applicable to manufacturers of Medicare Part D drugs that are selected for negotiation and the procedures that may be applicable to manufacturers of Medicare Part D drugs, Medicare Part D plans (both Prescription Drug Plans (PDPs) and Medicare Advantage Drug Plans (MA-PDs)), and providers and suppliers (including retail pharmacies) that furnish Medicare Part D drugs.

Additionally, the IRA creates several new sections under the Social Security Act (Act) to administer and govern the Negotiation Program. Specifically, in accordance with the IRA and the newly created provisions under the Act, CMS’ initial guidance provides that with respect to each initial price applicability year, CMS shall:

Published on: March 20, 2023

CMS Updates the Self-Referral Disclosure Protocol

by Wachler & Associates, P.C.

The Centers for Medicare & Medicaid Services (CMS) recently announced updates to the voluntary self-referral disclosure protocol (SRDP), including revisions to streamline SRDP submissions. The SRDP process allows providers and suppliers to report certain violations under the Physician Self-Referral Law, commonly known as the Stark Law, by submitting information to CMS about actual or potential Stark Law violations. The decision to utilize the SRDP and the complete process of an SRDP disclosure are both complex and warrant careful and detailed consideration by a healthcare provider and their counsel.

The revised SRDP process introduces three key changes designed to reduce burdens of filing on self-disclosing providers by permitting such providers to:

Use a single Group Practice Information Form to report noncompliance with the Stark Law’s group practice definition, rather than completing separate forms for each individual physician in a group that had a prohibited referral due to such noncompliance;

Published on: March 15, 2023

CMS Proposes HIPAA Administrative Simplification Rule

by Wachler & Associates, P.C.

The U.S. Department of Health and Human Services’ (HHS) Centers for Medicare & Medicaid Services (CMS) recently issued a proposed rule to implement requirements of the Administrative Simplification provisions of the Health Insurance Portability and Accountability Act of 1996 (HIPAA). Specifically, this proposed rule would adopt standards for “healthcare attachments” transactions, which would support both healthcare claims and prior authorization transactions, and a standard for electronic signatures to be used in conjunction with healthcare attachments transactions. CMS has stated that it believes the proposed rule would result in significant cost savings and a reduction in administrative paperwork, allowing healthcare providers to allocate more time on direct patient care.

The HIPAA Administrative Simplification rule is designed to ensure consistent electronic communication across healthcare systems and promote efficient transfer of administrative data between health plans, healthcare providers, and clearinghouses. This regulation requires HIPAA-covered entities to adopt standards for transactions involving the electronic exchange of healthcare data and specifies standards to be used in all HIPAA-covered transactions.

Healthcare attachments are documents that provide additional information to aid in the healthcare payment decision-making process. This information typically includes patient or case-related information, patient test results, and medical records. The proposed rule would mandate a standard format for the transmission of healthcare attachments between HIPAA-regulated entities to support electronic healthcare claims and prior authorization transactions, which currently lack an efficient and uniform method of sending attachments.

Published on: March 13, 2023

HHS Addresses End of Public Health Emergency and PHE Waivers

by Wachler & Associates, P.C.

The U.S. Department of Health and Human Services (HHS) has announced the coming end of the COVID-19 Public Health Emergency (PHE) and has provided guidance on the phase-out of PHE 1135 Waivers. HHS announced that the PHE will expire on May 11, 2023, which will trigger the planned transition and phase-out of PHE 1135 Waivers.

During the COVID-19 PHE, HHS and its constituent agencies, such as the Centers for Medicare & Medicaid Services (CMS), waived many regulatory requirements to create additional flexibility for providers to help ensure that beneficiaries’ needs for healthcare items and services continued to be met during the pandemic. Under the 1135 Waivers, a provider’s noncompliance with certain requirements would generally not result in sanctions so long as the goods or services were provided in good faith and absent of fraud and abuse. As the pandemic winds down and the PHE ends, HHS has provided guidance on the phasing out of the 1135 Waivers and has provided insight on which items and services will and will not be affected moving forward.

According to HHS, the federal government will stop providing free COVID-19 vaccines and treatments, primarily because Congress has not authorized additional funds to purchase more vaccines and treatments. Instead, these items will be transitioned to traditional health insurance carriers. HHS has indicated that this transition will be accomplished in a “thoughtful, well-coordinated manner” and that carriers would cover COVID-19 vaccines and treatments without co-pays, but HHS has not released details or addressed how this transition will impact providers. COVID-19 testing will similarly be affected. While Congress required insurance carriers to cover certain COVID-19 tests during the PHE, when the PHE ends, this requirement will also end and coverage for COVID-19 testing will be determined solely by the individual carrier’s coverage policies.

Published on: March 6, 2023

New Rural Emergency Hospital Provider Type Offers Potential Solution for Struggling Rural Hospitals

by Wachler & Associates, P.C.

Under the Consolidated Appropriations Act (CAA), a new Medicare provider type, the rural emergency hospital (REH), has been created with the goal of preserving access to outpatient hospital services in rural communities. Rural providers already face numerous financial and operational challenges, and the high number of recent closures of rural hospitals has only compounded the health disparities in rural communities. The introduction of this new provider type offers a targeted solution for small rural providers that cannot continue to operate a full-service hospital.

Under the new classification, an REH is a Medicare-enrolled provider that must furnish emergency department services and observation care. REHs may also provide other outpatient services, but may not provide inpatient services, except for certain skilled nursing facility services. Currently, for outpatient services, an REH’s annual per patient average length of stay cannot exceed 24 hours. Additionally, REHs benefit from two basic payment policies: a monthly facility payment of $272,866 per month in 2023 and payment at 105% of the Outpatient Prospective Payment System (OPPS) rate for services that qualify as REH services.

To enroll as an REH, eligible providers must submit a Form CMS-855A change of information application, rather than an initial enrollment application. This process avoids the gap in payment that typically accompanies initial enrollment and helps ease the burden that would otherwise fall on prospective REHs. The provider must also submit an action plan for initiating REH services, including a transition plan that lists the services the provider will retain, modify, add, and discontinue. The action plan must also include a description of the services the REH elects to provide, in addition to the required emergency department services and observation care, and a description of how it will use the facility payment. An eligible provider may only become an REH by converting from a critical access hospital (CAH) or rural hospital. Only providers that were a CAH or rural hospital with 50 beds or less on the enactment date of the CAA (December 27, 2020) are eligible to convert to an REH.