Compliance

Published on: March 22, 2022

HHS Withdraws No Surprises Act IDR Rule

The Department of Health and Human Services (HHS) has withdrawn its interim final rule requiring arbitrators in the independent dispute resolution (IDR) process under the No Surprises Act (NSA) to select the payment rate closest to the insurers’ median in-network rate (i.e., the Qualified Payment Amount or QPA, discussed further below). HHS’ move represents an official and significant victory for providers.

Under the No Surprises Act (NSA), if a provider and insurance company cannot resolve a disagreement over payment for out-of-network services through negotiation, the parties may proceed to a “baseball-style” arbitration. In this process, a third party chooses one appropriate payment from two suggestions offered by the provider and the insurer, taking into account certain considerations. In a July 2021 interim final rule, promulgated jointly by HHS, the Department of Labor (DOL), and the Treasury Department, the agencies adopted certain elements of the No Surprises Act, including the methodology for establishing the QPA. Essentially, the QPA is the medium rate the insurer would have paid for the service if provided by an in-network provider or facility. Under the September 2021 interim final rule, the agencies established a process in which the arbitrator must select the proposed payment amount closest to the QPA, unless certain conditions are met. In other words, the rule creates a rebuttable presumption that the amount closest to the QPA is the proper amount. Healthcare providers generally viewed this rebuttable presumption unfavorably because it allegedly conflicts with the NSA, which established specific circumstances for consideration in addition to the QPA.

Healthcare providers proceeded to challenge the rule and ultimately on February 23, 2022, a federal judge in Texas agreed with those providers in the case of Texas Medical Association v. US Department of Health and Human Services. The case held that the September 2021 interim final rule does in fact conflict with the plain language of the NSA and that the agencies improperly bypassed notice and comment rulemaking when promulgating the rule. HHS announced withdrawal of the interim final rule in light of the federal court’s decision. While the court held that the NSA requires the arbitrator to consider all of the specified factors when determining the reimbursement rate, without giving weigh to any one factor, HHS has not yet adopted this interpretation. HHS announced that it will be re-issuing guidance, but has not yet provided a specific date.

Published on: March 10, 2022

Referring Clinical Lab Services Under the “In Office Ancillary” Exception

by Wachler & Associates, P.C.

Physician referrals for clinical laboratory services are a common focus of federal regulatory and enforcement actions. Numerous statutes and their implementing regulations, including the Stark Law, Anti-Kickback Statute (AKS), and the Eliminating Kickbacks in Recovery Act (EKRA), may be implicated where a physician refers clinical lab services to an entity in which the physician has a financial interest. However, the “in-office ancillary” exception to the Stark Law provides an important exception.

The Physician Self-Referral Law, often referred to as 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. Financial relationships include both compensation and ownership or investment interests. Designated health services include clinical laboratory services, PT and OT, DME, some imaging services, and several other services. Some of the most common exceptions to the Stark Law include the in-office ancillary exception, fair market value compensation, and bona fide employment relationships. CMS has also recently implemented exceptions related to value-based arrangements.

“In Office Ancillary” services are an exception to the Stark Law. Generally, under the “in office ancillary” exception, the Stark Law does not apply to services that (1) are performed by the referring physician, another physician in the same group practice, or an individual supervised by the referring physicians or another physician in the same group practice; (2) are performed in the same building as the referring physician or their group practice offers services or in another centralized location; and (3) are billed by the performing physician, the supervising physician, their group practice, or a subsidiary that is wholly owned by the group practice.

Published on: February 21, 2022

Supplemental Medical Review Contractor (SMRC) Audits for Feb. 2022

by Wachler & Associates, P.C.

The Centers for Medicare & Medicaid Services (CMS) contracts with a Supplemental Medical Review Contractor (SMRC), which performs a variety of Medicare and Medicaid audit and medical review tasks. Noridian Healthcare Solutions, which is also a Medicare Administrative Contractor (MAC), was selected as the SMRC in 2018. The SMRC conducts nationwide medical reviews of Medicare Parts A and B, DMEPOS, and Medicaid claims for compliance with coverage, coding, payment, and billing requirements. The focus of the medical reviews may include areas identified by CMS data analysis, the Comprehensive Error Rate Testing (CERT) program, professional organizations, and federal oversight agencies. At the request of CMS, the SMRC may also carry out other special projects.

SMRC audits are referred to as projects and there are three categories of SMRC project reviews:

Healthcare Fraud Prevention Partnership (HFPP) Review: Based on fraud, waste, and abuse trends identified by the HFPP.

Published on: February 14, 2022

EKRA Continues to Cause Confusion for Clinical Labs

by Wachler & Associates, P.C.

The Eliminating Kickbacks in Recovery Act (“EKRA”) is an incredibly broad and incredibly vague criminal statute that continues to create compliance issues for clinical laboratories. Many arrangements between clinical laboratories and other entities that were previously compliant, or which are currently authorized under other federal statutes, may be unlawful under EKRA.

Congress enacted EKRA in 2018 and, throughout its drafting, it was intended to address patient brokering and kickback schemes in addiction treatment and recovery. For example, EKRA was targeted at individuals who received kickbacks for steering patients into sober living and recovery homes. However, shortly before EKRA was passed and with little consideration of the implications, the words “or laboratory” were inserted into the draft such that EKRA now likely applies to all referrals to clinical laboratories, regardless of payor and regardless of whether the testing relates to addiction treatment or recovery.

EKRA broadly prohibits paying, offering, receiving, or soliciting any remuneration in return for referrals to recovery homes, clinical treatment facilities, or laboratories. Further, EKRA is a criminal statute, the penalties for violation of which, up to 10 years in prison and fines up to $200,000, cannot be taken lightly. Like two other major federal healthcare fraud, waste, and abuse laws, the Anti-Kickback Statute and the Physician Self-Referral Law (commonly known as the Stark Law), EKRA contains a few exceptions. However, they are far fewer in number and often narrower than their counterparts in the older statutes.

Published on: February 10, 2022

Healthcare Companies Paid 90% of all False Claims Act Settlements in 2021

by Wachler & Associates, P.C.

Healthcare companies were once again the leading source of the Department of Justice’s (DOJ) False Claims Act (FCA) settlements and judgments last year. According to a DOJ news release, healthcare companies paid almost 90% of fraud settlement proceeds under the FCA in 2021. The Justice Department obtained more than $5.6 billion in total settlements and judgments under the FCA in the fiscal year ending September 30, 2021, which is the second largest annual total in the FCA’s history. Over $5 billion of that number relates to matters involving the healthcare industry, including hospitals, pharmacies, laboratories, drug and medical device manufacturers, managed care providers, hospice organizations, and physicians.

The largest settlements under the FCA were those reached with prescription drugmakers for their role in the opioid epidemic. A significant number of settlements also related to the Medicare Advantage Program, which pays a capitated amount to private health insurers for each patient enrolled in their plan according to a risk calculation. Other settlements involved claims of illegal kickbacks, claims of providing unnecessary medical services, and lawsuits filed under the FCA’s whistleblower provisions.

The DOJ’s healthcare fraud enforcement is more vigorous compared to other industries, in part due to the unique nature of the business of healthcare. The Department’s enforcement efforts attempt to restore funds to federal programs such as Medicare, Medicaid, and TRICARE, as well as prevent further losses by deterring others from engaging in fraudulent behavior. In many cases, the Department may be motivated to protect patients from medically unnecessary or potentially harmful actions. Providers should be aware that overpayment allegations are common, especially given the substantial effect that widespread healthcare fraud can have on individuals and entities throughout the US. The regulatory and business risks in healthcare are unlike other fields, in large part due to the web of complex and often vague regulatory and statutory restrictions, such as Stark law, the Anti-Kickback Statute (AKS), the Eliminating Kickbacks in Recovery Act (EKRA), and the Corporate Practice of Medicine doctrine (CPOM), among others. Healthcare providers should remain proactive in ensuring operations comply with the many different standards of practice governed by federal and state laws and regulations.

Published on: February 7, 2022

HHS to Audit More Providers That Received COVID-19 Relief Funds

by Wachler & Associates, P.C.

The Department of Health and Human Services (HHS) recently announced additional audits of certain healthcare providers that received funding from the Provider Relief Fund (PRF). These audits will focus on whether hospitals that received PRF payments have complied with the surprise billing provisions of the PRF terms and conditions. HHS has long promised “significant enforcement” related to the PRF, a promise which is beginning to take effect.

The PRF was created by Congress through the CARES Act and was designed to provide financial relief to healthcare providers during the COVID-19 pandemic. Acceptance of a PRF payment is conditioned on, among other things, the provider agreeing to use the funds only for healthcare related expenses and lost revenue attributable to coronavirus, and to file reports demonstrating compliance with the conditions of the payment.

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.

Published on: February 3, 2022

More Than One Medicare Audit? Better Check for Overlap.

by Wachler & Associates, P.C.

A phenomenon in Medicare audits that is gaining increased visibility is Medicare contractors “double-dipping” from providers by using overlapping audits. Once viewed as isolated aberrations, it is becoming increasingly common for Medicare contractors to audit and deny the same claims twice in different audits. This practice generally leads to overpayment demands for the same claims, meaning contractors are demanding that providers and suppliers repay the same claims twice. Though profoundly unfair and very likely unlawful, providers may face difficulty challenging such an overlap in the complex and lengthy Medicare appeals process.

The Centers for Medicare & Medicaid Services (CMS) authorizes several types of contractors to conduct audits, such as Medicare Administrative Contractors (MACs), Recovery Audit Contractors (RACs), Unified Program Integrity Contractors (UPICs), and the Supplemental Medical Review Contractor (SRMC). Some contractors are paid a percentage of the amounts they collect from the providers they audit, incentivizing them to over-deny claims and over-collect payments. In some instances, one contractor may not communicate with another, leading both to target the same claims. Alternatively, a contractor may fail to communicate internally or document its own audits properly, leading the same contractor to deny and attempt to collect on the same claims multiple times. As the number of Medicare audits has exploded over the last several years, such missteps have become increasingly common.

Any Medicare provider or supplier who has received more than one Medicare audit or overpayment demand should verify whether any of the claims overlap. Overlaps are found most often in statistically extrapolated audits, although they can occur in any type of audit. Where an overlap is found, a provider may raise the issue in the five levels of the Medicare claims appeal process: Redetermination by the MAC, Reconsideration by a Qualified Independent Contractor (QIC), review by an Administrative Law Judge (ALJ) employed by Department of Health and Human Services (HHS), review by the Medicare Appeals Council, also within HHS, and review by a judge in a federal court.

Published on: February 1, 2022

OIG Opinion Underlines AKS Concerns About Healthcare Joint Ventures

by Wachler & Associates, P.C.

Late last year, the Department of Health and Human Services (HHS) Office of Inspector General (OIG) issued a significant Advisory Opinion regarding a proposed joint venture (JV) between a therapy services provider and an owner of various long-term care (LTC) facilities. OIG concluded that it viewed the Proposed Arrangement as presenting a significant risk of fraud and abuse and potentially designed to permit the therapy services provider to pay the LTC owner a share of the profits derived from referrals for therapy services made by the LTC owner’s facilities. The opinion reiterates OIG’s longstanding concern that joint ventures formed between healthcare providers or suppliers and referral sources can present risk under the Anti-Kickback Statute (AKS).

Under the Proposed Arrangement, a therapy services provider would form a JV with an owner of LTC facilities where the JV would provide therapy services to the LTC facilities. The JV would contract out the bulk of operations (all clinical and non-clinical employees, space, and equipment) to the therapy services provider in exchange for a fair market value fee. The LTC owner would hold a 40% interest in the JV and the therapy services provider would hold the remaining 60% interest. The LTC owner’s investment in the JV would be based, at least in part, on the JV’s expected business from the LTC owner’s facilities. The LTC owner’s facilities were not required to contract with the JV or otherwise make or direct referrals to the JV, although the therapy services provider certified that it expected the LTC owner’s facilities to do so, and during the initial phases of the JV all of the JV’s revenues would be generated by services provided to the LTC owner’s facilities.

OIG concluded that the Proposed Arrangement would not satisfy any AKS safe harbors, including the small entity investment safe harbor, because the Arrangement likely violates the investor test, the revenue test, and the investment offer test. Moreover, OIG referred to its landmark 2003 Special Advisory Bulletin on Contractual Joint Ventures, which includes a detailed list of characteristics that OIG considers suspect when present under a contractual JV. Since the JV described in the Proposed Arrangement included several of these previously outlined suspect characteristics, OIG further determined that the proposed JV presents significant risk of fraud and abuse. This Advisory Opinion serves as a useful reminder of the regulatory framework applicable to joint ventures between healthcare providers and entities in a position to refer or generate business for the joint venture. Providers considering joint ventures should ensure that they are structured to comply with AKS and OIG guidance.

Published on: January 20, 2022

New Guidance on Insurance Coverage of OTC COVID-19 Tests

by Wachler & Associates, P.C.

On January 10, 2022, the Departments of Labor (DOL), Health and Human Services (HHS), and the Treasury (DOT) (collectively, the Departments) jointly issued FAQs regarding the implementation of required insurance coverage for at-home COVID-19 tests under the Families First Coronavirus Response Act (FFCRA). Pursuant to the new guidance, insurance plans and issuers must provide coverage over the counter (OTC) COVID-19 tests without cost-sharing requirements, prior authorization, individualized clinical assessment, or other medical management requirements with respect tests purchased on or after January 15, 2022 and during the public health emergency. This new requirement is in addition to the existing requirement that insurers cover COVID-19 testing where there is an individualized clinical assessment by an authorized provider.

With respect to OTC COVID-19 tests obtained without a healthcare provider’s involvement, plans and issuers must provide coverage for the cost of the test at no expense to the participant, beneficiary, or enrollee, unless the conditions of a safe harbor discussed below are met. While plans or issuers are encouraged to reimburse sellers of OTC tests directly, they are not required to do so. Some plans or issuers may require beneficiaries to provide upfront payment and then submit a claim for reimbursement after the fact.

If a plan or issuer provides direct coverage of OTC COVID-19 tests, it generally may not limit coverage to only tests provided through preferred pharmacies or other retailers. However, under a safe harbor, the Departments have indicated they will not take enforcement action related to OTC test coverage against a plan or issuer that provides coverage for such tests by arranging for direct coverage through both its primary pharmacy network and a direct-to-consumer shipping program, and otherwise limits reimbursement for OTC tests from non-preferred pharmacies or other retailers to no less than the actual price, or $12 per test, whichever is lower. Under this safe harbor, plans and issuer may not impose any prior authorization or other medical management requirements on beneficiaries and may not require any upfront out of pocket payments by beneficiaries. Additionally, under this safe harbor, the direct-to-consumer shipping program may be provided through one or more in-network provider(s) or another entity designated by the plan or issuer.

Published on: January 18, 2022

OIG Updates Work Plan for January 2022

by Wachler & Associates, P.C.

The Department of Health and Human Services (HHS) Office of Inspector General (OIG) included several new items in its work plan update in January 2021. The OIG work plan outlines the projects that OIG plans to implement over the foreseeable future. Such projects typically include OIG audits and evaluations. Below are the highlights from the work plan update that providers and suppliers should take notice of.

First, OIG will perform a nationwide audit to determine whether hospitals that received Provider Relief Fund (PRF) payments and attested to the associated terms and conditions complied with the balance billing requirement for COVID – 19 inpatients. Under the PRF terms and conditions, hospitals are eligible for PRF distribution payments if they attest to specific requirements, including a requirement that providers, such as hospitals, must not pursue the collection of out-of-pocket payments from presumptive or actual COVID – 19 patients in excess of what the patients otherwise would have been required to pay if the care had been provided by in-network providers. OIG plans to assess how bills were calculated for out-of-network patients admitted for COVID-19 treatment, review supporting documentation for compliance, and assess procedural controls and monitoring to ensure compliance with the balance billing requirement.

Second, OIG will perform a nationwide review of Medicare beneficiary hospice eligibility. OIG indicated that a number of recent compliance audits have identified findings related to beneficiary eligibility. In its review, OIG plans to focus on those hospice beneficiaries that haven’t had an inpatient hospital stay or an emergency room visit in certain periods prior to their start of hospice care.