Compliance

Published on: October 22, 2021

HHS Restores Rulemaking Authority to FDA

The Department of Health and Human Services (HHS) recently issued a notice restoring the rulemaking authority of the Food and Drug Administration (FDA). Under the Trump Administration, HHS had issued a memorandum, in September 2020, which required that all rules promulgated from the department’s agencies and offices would need to be signed by the secretary. The new notice specifically “revoked the September 15 Memorandum as it applied to FDA and reinstates any delegations to FDA rescinded by the September 15 Memorandum.” HHS’s recent notice delegating rulemaking authority to the FDA includes the authority to issue regulations pursuant to the Federal Food, Drug, and Cosmetic Act (FD&C Act), applicable portions of the Public Health Service Act (PHS Act), and other authorities governing functions of the FDA.

According to an HHS press release at the time, the goal of the September 2020 memorandum was to minimize “litigation risk for the department’s public health actions” and prevent potential abuse of authority. Some HHS rules have been challenged in court under claims that officials who signed the rules did not have the proper rulemaking authority. Rules must undergo a formal clearance process prior to being published. That process includes review by the agency writing the rule, HHS, press staff, the Office of the General Counsel (OGC), and the Office of Management and Budget. Other offices and departments may be involved in the rulemaking process if they are relevant to the subject matter of the proposed rule.

While some applauded the September 2020 memorandum for reigning in the FDA’s authority during the COVID-19 pandemic, when the agency’s burdensome regulations prevented much-needed products, especially COVID-19 testing devices, from reaching patients, others expressed concern over its possible negative effects. Former FDA Commissioner Scott Gottlieb at the time described the move as a “major distraction” that creates “an implication, or at least a specter” that the FDA’s independence is being “eroded or influenced.” After the new notice was issued, Gottlieb applauded the move in a tweet, saying that the “decision by current HHS will restore an essential element of FDA’s independent judgment and allow the agency to act faster.”

Published on: October 19, 2021

State Relaxes Licensing Requirements to Address Healthcare Worker Shortage

by Wachler & Associates, P.C.

In response to the mounting nationwide shortage of healthcare workers, one state will allow certain healthcare workers to practice solely on out-of-state licenses. This move may signal similar actions by other states and could have wide-ranging implications for the delivery of healthcare services.

During the height of the COVID-19 pandemic, many states waived requirements that healthcare providers, including in some cases physicians and nurses, be licensed in a particular state to provide services in that state. Often, states allowed a provider licensed and in good standing in any state to providers services to patients within the state based on the provider’s out-of-state licenses. This regulatory flexibility allowed more efficient delivery of care during the pandemic. The greatest efficiency was likely added to the delivery of telemedicine. Quite simply, there is often no technical or practice-related reason why a provider seeing patients via telemedicine must be licensed in the same state as their patient. By waiving regulatory obstacles, providers could practice across state lines by telemedicine and help deliver care to where it was needed most.

However, most of these regulatory flexibilities were only temporary and have since ended, meaning that physicians and providers again must often be licensed in a state to provide services to patients within that state. However, while these flexibilities have largely ended, the shortage of physicians and other healthcare workers, which pre-dates the pandemic, have only grown more acute during the pandemic. In response to these shortages, Nebraska will allow some healthcare workers, including PT, OT, and SLP therapists, to practice in Nebraska without a Nebraska license if the provider is licensed in another state. This move is currently only temporary and does not extend to physicians or nurses.

Published on: October 13, 2021

OCR Settles Twentieth HIPAA Right of Access Initiative Investigation

by Wachler & Associates, P.C.

On September 10, 2021, the Office for Civil Rights (OCR) at the U.S. Department of Health and Human Services (HHS) announced the resolution of its twentieth investigation under its HIPAA Right of Access Initiative. In early 2019, OCR stated that they would create an initiative to enforce patients’ right of access to their own health information in a timely and reasonable manner. This concept is not novel to OCR as it has already been outlined as a stated goal of HIPAA within the Privacy Rule. This aspect of HIPAA has been enforced at various times in the past, however it has never been enforced with any regularity until the OCR initiative was established. To date, OCR has remained dedicated to ensuring that every patient is afforded access to their health information that HIPAA has long stated such patients deserve.

In OCR’s latest settlement, a hospital and medical center located in Omaha, Nebraska agreed to take corrective actions and pay $80,000 to settle a potential violation of the HIPAA Privacy Rule. The alleged violation stems from a May 2020 complaint filed by a parent alleging that the hospital had failed to provide her with timely access to her minor daughter’s medical records. The hospital provided some records, but did not provide all of the requested records to the parent’s multiple follow-up requests. OCR alleged that the hospital failed to provide timely access to the requested medical records and thus potentially violated the HIPAA right of access standard. That standard generally requires a covered entity to take action on an access request within 30 days of receipt (or within 60 days if an extension is applicable). As a result of OCR’s investigation, the parent did in fact receive all of the requested records.

Healthcare providers often afford heightened focus to preventing unauthorized access or sharing of health information, which sometimes means that less focus is given to providing quick and affordable health records to patients. In light of OCR’s initiative and dedication to enforce patients’ right of access under the Privacy Rule, healthcare providers should take care to be knowledgeable about this aspect of their operations.

Published on: October 11, 2021

OCR Issues Guidance on HIPAA, COVID-19 Vaccinations, and the Workplace

by Wachler & Associates, P.C.

On September 30, 2021, the Department of Health and Human Services’ (HHS) Office for Civil Rights (OCR) issued guidance to help consumers, businesses, and healthcare entities understand when the Health Insurance Portability and Accountability Act of 1996 (HIPAA) Privacy Rule applies to disclosures and requests for information about an individual’s COVID-19 vaccination status. As a preliminary note, the guidance reminds readers that the HIPAA Privacy Rule does not apply to employers or employment records. The Privacy Rule only applies to HIPAA covered entities, which include health plans, healthcare clearinghouses, and healthcare providers that conduct standard electronic transactions and, in some cases, to their business associates.

The guidance initially answers a highly popular and controversial question in light of the COVID-19 pandemic. According to the OCR guidance, the HIPAA Privacy Rule does not prohibit businesses or individuals from asking whether their customers or clients have received a COVID-19 vaccine. Because individuals or entities such as businesses are not covered entities, the Privacy Rule generally does not apply to them. The Privacy Rule does not regulate the ability of covered entities and business associates to request information from patients or visitors. Rather, the Privacy Rule regulates how and when covered entities and business associates are permitted to use and disclose protected health information (PHI), for example COVID-19 vaccination status, that covered entities and business associates create, receive, maintain, or transmit. In the opposite direction, the Privacy Rule does not prevent customers or clients of a business from disclosing whether they have been vaccinated. The Privacy Rule does not apply to individuals’ disclosures about their own PHI.

The guidance proceeds to inform readers that employers are not prohibited under the Privacy Rule from requiring employees to disclose whether they have received a COVID-19 vaccine to the employer, clients, or other parties. Generally, the Privacy Rule does not regulate what information can be requested from employees as part of the terms and conditions of employment that an employer may impose on its employees. However, other federal or state laws address terms and conditions of employment. Federal anti-discrimination laws generally do not prevent an employer from choosing to require that all employees physically entering the workplace be vaccinated against COVID-19 and provide documentation or other confirmation that they have met this requirement. Under the Americans with Disabilities Act (ADA), documentation or other confirmation of vaccination must be kept confidential and stored separately from the employee’s personnel files. Similarly, the Privacy Rule does not prohibit a covered entity or business associate from requiring its employees to disclose to their employers or other parties whether employees have received a COVID-19 vaccine. The Privacy Rule also generally does not apply to employment records, including employment records held by covered entities and business associates acting in their capacity as employers.

Published on: September 28, 2021

Allegations Show Pitfalls of AKS Compliance

by Wachler & Associates, P.C.

The Department of Justice (DOJ) recently announced a plea agreement regarding an alleged $73 million scheme to defraud Medicare that illustrates some of the pitfalls of compliance with the Anti-Kickback Statute (AKS). DOJ alleged that the owners of a clinical laboratory, Panda Conservation Group, LLC, and a telemedicine company, 1523 Holdings LLC, conspired to pay kickbacks in exchange for work arranging telemedicine providers to order genetic testing at Panda’s laboratories. While the parties had an agreement for IT and consultation services, DOJ alleged that this contract was a “sham” to hide the kickback payments and that the telemedicine company abused temporary, pandemic-responsive amendments to telehealth restrictions to refer beneficiaries to the laboratory for expensive and medically unnecessary cancer and cardiovascular genetic testing.

The Anti-Kickback Statute (42 U.S.C. § prohibits a person from knowingly offering, paying, soliciting, or receiving anything of value to induce or reward referrals for services covered by a Federal Healthcare Program. A Federal Healthcare Program is any program that provides health benefits, whether directly or through insurance, which is funded by the United States Government or any State health care program. A violation of the Anti-Kickback statute is a criminal offence and can carry severe penalties, including fines, prison sentences, and potential exclusion from participation in Federal Healthcare Programs in the future.

Since some referrals are necessary to optimize patient care, the Statute provides exceptions called “safe harbors” that permit certain arrangements that follow specific requirements. In the event an arrangement does not meet a safe harbor requirement, the arrangement will be considered on a case-by-case basis. Special care must be taken structure arrangements to comply with the AKS and its safe harbors.

Published on: September 10, 2021

CMS Proposes to Expand Its Authority to Revoke Medicare Billing Privileges

by Wachler & Associates, P.C.

As part of the 2022 Medicare Physician Fee Schedule Proposed Rule, the Centers for Medicare & Medicaid Services (CMS) has proposed to significantly expand its authority to deny or revoke a provider’s or supplier’s Medicare billing privileges.

First, CMS proposed to modify the conditions that it considers when determining whether to revoke a provider for an “abuse of billing privileges.” CMS currently has the authority to revoke a provider’s or supplier’s enrollment for an “abuse of billing privileges,” defined as a pattern or practice of submitting claims that do not meet Medicare requirements. CMS has previously asserted that as few as three non-compliance claims can constitute such a pattern, However, in the current proposal, CMS expressed concern that the existing factors it uses to make such a determination may prevent it from acting against providers or suppliers who enroll in Medicare and engage in short-term periods of high-volume, non-compliant billing. CMS proposed to revise one factor, the percentage of submitted claims that were denied, to instead focus on the percentage of claim denials out of claim submissions during a limited period, such as a single month. CMS also proposed to remove three factors the agency deems largely irrelevant to determining the existence of a pattern or practice of improper billing. Specifically, the agency proposed to remove factors that focus on the reason for the claim denial, the length of time over which the pattern has continued, and the length of time a provider or supplier has been enrolled in Medicare. CMS proposed one new factor that considers the type of improper billing along with any aggravating or mitigating conditions in each case.

CMS also proposed to expand its authority to deny or revoke a provider’s or supplier’s enrollment if any healthcare, administrative, or management services personnel furnishing services payable by any federal health care program is excluded by the OIG, such as a billing specialist, accountant, or human resources specialist. CMS asserted that this proposal would align its authority with a 2013 OIG Special Advisory Bulletin prohibiting a provider or supplier from employing excluded individuals to furnish management or administrative services payable by any federal health care program.

Published on: September 7, 2021

Implications if Medicare Expands to Cover Dental Services

by Wachler & Associates, P.C.

Significant changes could be coming to dentistry if dental benefits are added to Medicare. A proposal, currently before Congress as part of a large budget bill, would do just that. If this proposal becomes law and Medicare begins to cover dental benefits, it would likely have major implications on the practice of dentistry, both administratively and financially.

While some Medicare Part C (Medicare Advantage) plans cover dental benefits, original Medicare, which is administered in a very different manner, does not. While Medicare Part C plans are administered by private insurers, original Medicare is administered by a myriad of federal contractors that are overseen by the Centers for Medicare & Medicaid Services (CMS). For dental providers accustomed to dealing with private insurers and Part C plans, interacting with Medicare may present new challenges. An experienced healthcare attorney can be key to navigating the regulatory and business challenges of Medicare compliance.

First, dental practices would likely come under the purview of the Medicare contractors. These contractors handle Medicare enrollments, claims processing, data analysis, audit and claims review, program integrity, and a myriad of other functions. Some decisions regarding Medicare-enrolled providers are made by contractors and some by CMS, although it is not always clear. Most decisions, including enrollment decisions and claims denials, are subject to a multi-level appeal process. Dental practices familiar with the business motivations of private insurers may be surprised by the sometimes-uncompromising nature of decisions made by CMS and its contractors. For example, unlike an overpayment demand by a private insurer, a Medicare overpayment demand can rarely be negotiated.

Published on: September 1, 2021

HHS Expands Its Capability to Audit the Provider Relief Fund

by Wachler & Associates, P.C.

Demonstrating its commitment to audit Provider Relief Fund (PRF) recipients, the Department of Health and Human Services (HHS) has hired several outside contractors to provide audit or program integrity services relating to the PRF. The PRF is a $175 billion fund created by Congress through the CARES Act and administered by HHS (and its sub-agency the Health Resources and Services Administration or HRSA) 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.

Publicly available contracts provide a glimpse into HHS’s actions regarding the PRF. Over the last year, HHS has contracted with KPMG to provide “program integrity support,” Kearney & Company to provide “PRF Audit support services,” and Creative Solutions Consulting to provide “audit and financial review services.” Combined, HHS has committed approximately $5.5 million to these contracts. Reports indicate HHS has hired PricewaterhouseCoopers and Grant Thornton, as well.

Although HHS’s retention of contractors is nothing new, these agreements signal to providers that HHS is not taking PRF reporting lightly. Providers who received and retained payments through the PRF are required to file reports justifying their use of the funds and documenting their compliance with the terms and conditions of the payments. 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. Thus, some providers will be required to report significant amounts of financial information in considerable detail.

Published on: August 24, 2021

Audits Growing More Burdensome on Pharmacies

by Wachler & Associates, P.C.

According to data from the Pharmacy Audit Assistance Service (PAAS) National, the Covid-19 Public Health Emergency (PHE) has negatively affected pharmacies navigating audits by Pharmacy Benefit Managers (PBM). PBMs are companies who are primarily responsible for developing and maintaining drug formularies, contracting with pharmacies, negotiating discounts and rebates with drug manufacturers, and processing and paying prescription drug claims. PBMs manage prescription drug benefits on behalf of health insurers, Medicare Part D drug plans, large employers, and other payers. PBMs routinely conduct audits on member pharmacies in order to monitor pharmacies’ performance and identify alleged improper payments made to the pharmacies. However, PBMs have been criticized for overstepping those audit functions by utilizing audits as a source of revenue for themselves at the expense of independent pharmacies and patients.

In response to the PHE, many state insurance agencies and PBMs themselves suspended in-person audits in 2020 and shifted to virtual audits. The virtual nature of a PBM audit means pharmacies are responsible for a greater workload because they must complete tasks that would normally be completed by a PBM during a field audit. For example, pharmacies must locate, organize, and deliver hundreds of pages of documents and records in compliance with PBMs’ standards, while managing the day-to-day pharmacy operations. Although virtual PBM audits allows benefit managers to review more pharmacy claims than during traditional in-person audits, it also allows them to potentially deny more claims than before.

According to PAAS National, even though the number of pharmacy audits in 2020 declined nearly 14% year over year, the overall number of prescriptions reviewed increased by 40%. PAAS data also shows that the average audit in 2020 cost pharmacies $23,978, which is 35% more than the annual average over the previous five years. This data further implies that pharmacies are shouldering more of the administrative burden of responding to audits in addition to the task of pursuing a subsequent appeal where the PBM denies claims during an audit.

Published on: August 19, 2021

CMS Relaunches TPE Audit Program After Public Health Emergency Pause

by Wachler & Associates, P.C.

The August 12, 2021 issue of the Medical Learning Network (MLN) Connects newsletter indicates that CMS is planning to resume the Targeted Probe and Educate (TPE) audit program. CMS temporarily suspended pre-payment reviews under the TPE program in response to the Covid-19 public health emergency (PHE) in March 2020. While CMS authorized Medicare Administrative Contractors (MACs) to resume post-payment audits in August 2020, TPE pre-payment reviews generally remained suspended.

The MLN Newsletter does not offer specific information as to when CMS will officially resume TPE audits. The Newsletter also does not indicate whether CMS will focus on new TPE audits or whether the agency intends to resume existing TPE reviews that were suspended at the beginning of the PHE. In a June 2021 Q&A by Palmetto GBA, one of the MACs, Palmetto stated that they “do not have an expected date for TPE to return.” Other MACs have yet to update their websites to reflect CMS’s announcement. However, it appears CMS has given the MACs the go-ahead to resume paused TPE reviews and initiate new reviews.

A TPE review consists of up to three rounds of claims review, with education to the provider after each round. A provider or supplier navigating a TPE review should take care to comply with the program’s requirements and timelines and should be aware of the potential consequences of a review. A TPE review can take months or years to resolve and can have devastating impacts on a provider’s business, up to and including revocation of Medicare billing privileges and placement on the CMS Preclusion List. Closely monitoring the process of the TPE review can be critical to a successful resolution. For more information about TPE reviews, please see our previous blog on Responding to a Targeted Probe and Educate Review.