Compliance

Published on: December 11, 2020

FDA Asserts Authority Over At-Home Collection Kits for COVID-19 LDTs

Despite a determination by the Department of Health and Human Services (“HHS”) that laboratory developed tests (“LDTs”) do not require premarket approval, the Food and Drug Administration (“FDA”) has asserted that the at-home collection kit portion of a COVID-19 LDT does require FDA pre-market approval.

Testing by clinical laboratories is regulated by the FDA and by the Clinical Laboratory Improvement Amendments (“CLIA”), as administered by the Centers for Medicare & Medicaid Services (“CMS”). The FDA regulates medical devices, including in vitro diagnostic products (“IVDs”). The FDA considers LDTs to be IVDs that are intended for clinical use and are designed, manufactured, and used within a single laboratory. CLIA, on the other hand, regulates the laboratory itself and classifies LDTs as “high complexity tests,” with corresponding standards imposed on the laboratory. Importantly, regarding the LDT itself, CLIA requires only analytical validation, which can occur after testing has already begun. LDTs may also be subject to more stringent state and private sector oversight.

Historically, the FDA had exercised enforcement discretion and not regulated LTDs, but this began to change in recent decades. However, in August 2020, HHS directed that, absent rule and commenting and at least during the COVID-19 public health emergency, the FDA would not require premarket review and approval of LDTs. This allowed clinical laboratories to develop and begin using LDTs to test for COVID-19 without delaying for an FDA Emergency Use Authorization (“EUA”) or other approval. Some of these LDTs included at-home collection kits wherein the patient collected the sample at home, sometimes under the telemedicine supervision of a health care professional, and shipped it to the laboratory for testing.

Published on: November 30, 2020

HHS OIG Issues Fraud Alert for Physician Speaking Engagements

by Wachler & Associates, P.C.

On November 16, 2020, the Department of Health and Human Services (HHS) Office of Inspector General (OIG) released a special fraud alert targeting remuneration associated with speaking arrangements paid for by pharmaceutical and medical device companies. The alert addressed both honoraria paid to the speaking physician and benefits provided to attendees, such as meals or alcohol.

OIG has taken the position that the fees paid to speakers and the benefits provided to attendees may constitute unlawful “remuneration” under the Anti-Kickback Statute (AKS) meant to induce or reward referrals. Pursuant to the AKS, it is unlawful to knowingly and willfully solicit, receive, offer, or pay any remuneration to induce or reward, among other things, referrals for, or orders of, items or services reimbursable by a Federal health care program. According to OIG, pharmaceutical and medical device companies paid nearly $2 billion to physicians and health care professionals for speaker-related services in 2017, 2018, and 2019 combined.

OIG clarified that not every physician speaking arrangement violates the AKS and that it does not intend to discourage meaningful training or education. However, OIG outlined several factors that, in OIG’s view, increase the risk that an arrangement could violate the AKS. These factors include:

Published on: November 13, 2020

The Broadening of Provider Revocation Circumstances

by Wachler & Associates, P.C.

A Medicare license revocation can drastically affect a provider or practice; for example, more than 90% of primary care providers accept Medicare, and Medicare beneficiaries account for at least 50% of primary care physicians’ patient population. A revocation can jeopardize providers’ livelihood and lead to other consequences, including loss of hospital staff privileges, bars on reenrollment, and harm to a provider’s reputation within the medical community. Despite these penalties, as Medicare revocation rules evolved, CMS broadened the language permitting the agency to revoke a license, without much guidance or specificity, leaving providers with little information on the exact behavior they must avoid to prevent a revocation.

Since 2008, CMS has significantly expanded the instances in which a provider’s Medicare license can be revoked. In 2008, CMS added a new reason for revocation, 42 C.F.R. § 424.535(a)(10), which allows CMS to revoke a provider’s Medicare license if the provider does not document or does not provide CMS access to certain documentation. In 2014, CMS added a new section to 424.535(a)(8), section (a)(8)(ii).

Under an (a)(8) revocation, CMS can revoke a provider’s enrollment in Medicare if the provider commits certain abuses related to billing. Prior to 2014, under the original rule, an (a)(8) revocation was limited to specific circumstances in which the provider submitted claims for services that could not have been provided to the individual on a the date of those services. These circumstances could include, the beneficiary is deceased, the physician or beneficiary is not in the location where the service were provided, or when the necessary equipment for the service were not in the location where the services occurred.

Published on: October 26, 2020

HHS Expands PRF Payment Use for “Lost Revenue” and Phase 3 Eligibility

by Wachler & Associates, P.C.

On October 22, 2020, the Department of Health and Human Services (“HHS”) announced changes to the allowable uses of a Provider Relief Fund (“PRF”) payment and also expanded the categories of providers eligible to receive a payment in the Phase 3 General Distribution. The PRF is a $175 billion fund created by Congress in the CARES Act and administered by HHS to provide financial relief to healthcare providers during the COVID-19 pandemic.

Acceptance of a PRF payment is conditioned on the acceptance by the provider of certain restrictions on how the payment may be used and the filing of reports in which the provider demonstrates compliance with these restrictions. One such restriction is that the funds may be used for “lost revenue attributable to the coronavirus.” When HHS first released the reporting requirements for PRF payments, it indicates that such lost revenues would be demonstrated by a negative change in year-over-year net patient care revenue from 2019 to 2020. Many saw this as placing an arbitrary cap on the amount of financial relief that struggling providers could receive from the PRF. In response to feedback, HHS has amended this requirement. Regarding use of the PRF payment to cover lost revenue attributable to coronavirus, HHS now requires that, “after reimbursing healthcare related expenses attributable to coronavirus that were unreimbursed by other sources, providers may use remaining PRF funds to cover any lost revenue, measured as a negative change in year-over-year actual revenue from patient care related sources.” (emphasis added).

HHS also announced expansion of the categories of providers who are eligible to apply for payments as part of the Phase 3 General Distribution of the PRF. The PRF previously included $30 billion Phase 1 and $20 billion Phase 2 General Distributions to eligible providers, primarily those that bill Medicare or Medicaid. The $20 billion Phase 3 General Distribution, announced October 1, 2020, was intended to provide financial relief to for providers who were either excluded from the initial two phases, or who were eligible under the first two phases but require additional funding to cover ongoing financial losses accrued during the pandemic. On October 22, 2020, HHS announced it was expanding Phase 3 eligibility to include the following providers, regardless of whether they accept Medicare or Medicaid:

Published on: October 21, 2020

Medicare to Cut Payment for COVID-19 Testing That Takes More Than Two Days

by Wachler & Associates, P.C.

Beginning January 21, 2021, only COVID-19 diagnostic tests that are completed within two days will be paid at the current rate by Medicare. Since the outbreak of the COVID-19 pandemic, diagnostic testing has been an important part of strategies to combat the virus. In an early push to expand COVID-19 diagnostic testing capacity, on April 15, 2020, the Centers for Medicare & Medicaid Services (“CMS”) announced that Medicare would increase the payment to laboratories for high-throughput COVID-19 diagnostic tests from approximately $51 to $100 per test.

However, on October 15, 2020, CMS announced a change to this policy. Beginning January 1, 2021, COVID-19 diagnostic tests run on high-throughput technology will be paid at a base rate of $75 per test. A $25 per test add-on payment will then be paid to laboratories for a high throughput COVID-19 diagnostic test if the laboratory: (1) completes the test in two calendar days or less, and (2) completed the majority of all the previous months’ high-throughput COVID-19 diagnostic tests in two calendar days or less. The second requirement includes all of a laboratory’s high-throughput COVID-19 diagnostic tests in the precious month, not just those that are billed to Medicare. Thus, only tests that meet both these requirements will continue to be paid at $100 per test, while others will be paid at $75 per test. CMS indicates that this change is intended to support faster testing and also reflect the resource costs laboratories face to complete testing in a timely fashion.

In the event of an audit, CMS indicates that a laboratory that received the $25 per test add-on would be required to produce documentation of timeliness based on their performance in the month preceding the date of the test. These increased documentation requirements could effectively begin as early as December 2020. Because the new payment rates become effective January 1, 2021 but take into account tests completed in the previous month, laboratories will likely have to complete the majority of their tests run in December 2020 in two days or less to qualify for the add-on payment in January 2021.

Published on: October 19, 2020

MACs Resuming Post-Payment Review

by Wachler & Associates, P.C.

Medicare Administrative Contractor (“MAC”) CGS announced that beginning in October 2020, it would conduct post-payment reviews of hospice general inpatient (GIP) claims. Specifically, the reviews will be conducted if the claims were for 7 or more days of service, utilized revenue code 0656, and were submitted before March 1, 2020. These claims are particularly being targeted by CGS because GIP claims encompass a level of care intended for short term interventions, wherein symptoms can be controlled within 48 to 72 hours from the GIP setting. As such, if the claims were for 7 days or longer, CGS will flag the claim for review.

Common reasons for a denial following a hospice post payment review include: (1) Documentation does not indicate the patient had a terminal prognosis of 6 months or less; (2) Basic patient information is missing from the Notice of Election; (3) The physician narrative statement is not a true clinical narrative; (4) Failure to meet Face-to-Face requirements; and (5) The documentation did not support that the GIP level of care was reasonable or necessary.

An uptick in post-payment reviews leading to full-blown audits is to be expected for all provider types. As of August 3, the Centers for Medicare & Medicaid Services (“CMS”) announced that its suspension of Medicare claim audits would be lifted. Due to the 2019 Novel Coronavirus (“COVID-19”), CMS had suspended most audits on March 30, specifically pre- and post-payment reviews conducted by MACs. As such, providers should be vigilant about following their compliance plans. Not only are Medicare audits resuming, but private payors have also resumed audits. Specifically, laboratories are expected to see a large amount of private payor audits surrounding COVID-19 testing.

Published on: October 16, 2020

White House will not Delay Hospital Price Transparency Requirements

by Wachler & Associates, P.C.

Recently, the White House announced it will not postpone implementation of the hospital price transparency rule, set to take effect on January 1, 2021. Based on President Trump’s Executive Order on Improving Price and Quality Transparency in Healthcare, issued on June 24, 2019, CMS released the “Ambulatory Surgical Center (ASC) Price Transparency Requirements for Hospitals to Make Standard Charges Public Final Rule.” The rule allows patients to access hospital pricing information easily so that they have an idea of potential charges prior to receiving a bill and thus can shop for lower cost services.

Under the rule, hospitals are required to publish negotiated rates, gross charges, and discounted cash prices in a public, online format. The data must be free, in an easily accessible format, include a description of each item or service, and be updated yearly. Furthermore, hospitals must create a minimum of 300 “shoppable” healthcare services and display them in a consumer-friendly manner. Shoppable services are services that are often offered by multiple providers, so patients can research ahead of time and compare these services among various providers and make informed decisions on quality and cost. The goal is that as consumers have more price transparency and are more able to shop for their healthcare services, competition among hospitals and insurance providers will potentially increase and reduce healthcare costs as a result.

Hospitals oppose the transparency rule, claiming that it violates hospitals’ First Amendment rights and that CMS does not have the power to require hospitals to disclose their negotiated prices. Hospitals also claim the rule will increase administrative work, requiring more compliance costs. Although the American Hospital Association filed suit over the rule, a federal judge upheld it in June, concluding that CMS can mandate that hospitals reveal their negotiated prices. The AHA appealed the decision and oral arguments are scheduled for October 15.

Published on: October 14, 2020

Hospitals Must Report COVID Data by December 9 or Risk Medicare/Medicaid Termination

by Wachler & Associates, P.C.

On October 6, 2020, the Centers for Medicare & Medicaid Services (CMS) released guidance giving hospitals until December 9, 2020 to comply with COVID-19 reporting requirements or risk termination from the Medicare and Medicaid Programs. CMS also released reporting requirements for influenza data, which are currently optional but which CMS plans to make mandatory in the coming weeks.

The COVID-19 reporting requirements were initially published in guidance by the Department of Health and Human Services (HHS) on July 29, 2020 and were incorporated into a Final Rule on September 2, 2020. Hospitals are required to report, on a daily basis, several data elements relating to their COVID-19 response. These data points include inpatient bed and ICU bed capacity and occupancy, total number of ventilator and total number of ventilators in use, total suspected or confirmed positive COVID-19 patients, numbers of COVID-19 patients receiving certain treatments, emergency department overflow, and the previous day’s COVID-19 deaths. CMS indicates this information is used to coordinate the federal response to the virus.

Beginning October 7, 2020, hospitals that are not in compliance with the reporting requirements or that are not reporting currently began receiving notifications from CMS. These letters gave hospitals three weeks to bring their reporting into compliance. Hospitals that do not come into compliance will continue to receive a series of enforcement letters. On December 9, 2020, hospitals that have been out of compliance with the reporting requirements for 14 weeks (beginning September 2, 2020, the release of the Final Rule) will be sent by CMS a letter terminating them from the Medicare and Medicaid programs. The termination will be effective within 30 days of the date of the notification of termination. Any terminated hospital will have the right to appeal, the ability come into compliance to avoid termination, and the opportunity to avail themselves of a 30-day reasonable assurance period under 42 CFR § 489.57. CMS indicates that the 14-week compliance window only applies to current enforcement. Future enforcement actions related to these reporting requirements will be subject to a shorter process.

Published on: October 7, 2020

Common Pitfalls in Home Health Audits

by Wachler & Associates, P.C.

Payment for the Medicare home health benefit depends on a series of complex criteria that must be supported by documentation in the medical record, including a face-to-face encounter, homebound status, and need for skilled services. The requirements for home health documentation change frequently and give rise to some of the common pitfalls in home health audits.

First, the face-to-face encounter requirement requires that a qualified provider, usually the certifying physician, have an encounter with the beneficiary within a certain timeframe, for reasons related to the reason that the beneficiary requires home health, and properly document the beneficiary’s need for home health. Until 2015, the qualified provider was required to include a “brief narrative” supporting the need for home health. This requirement has since been dropped in favor of a more holistic review of the medical record, and the signature and organizational requirements have changed as well in recent years.

Second, the documentation must support that the beneficiary is homebound. Homebound status turns on a complex test. To qualify for homebound status, the beneficiary must: (1) because of illness or injury, need the aid of supportive devices, special transportation, or another person in order to leave their residence or have a condition such that leaving home is medically contraindicated; and (2) exhibit a normal inability to leave home and leaving home must require a considerable and taxing effort. Over time, CMS has adjusted language to tighten these requirements. Certain infrequent absences from the home, such as for religious services or doctor’s appointments, will not disqualify a beneficiary.

Published on: October 5, 2020

Final Update on AAP Recoupment Delay

by Wachler & Associates, P.C.

On Wednesday, September 30, 2020, the Senate passed the bipartisan government funding bill that will relax Medicare loan repayments in the wake of the 2019 Novel Coronavirus (“COVID-19”) pandemic. The House passed this bill the week prior to the Senate vote, and the President signed the bill into law the very same day that the Senate approved the bill.

Providers who initially received a loan through the CARES Act Advanced and Accelerated Payment Program (“AAP”) will now have one year from when the loan was issued before recoupment will begin. This gives providers much more time to repay these loans, as opposed to the initial 120-day recoupment period that was previously intact. Furthermore, the extension speaks to the AAP’s intent—AAP loans were meant to keep Medicare-reimbursed providers financially stable during the nationwide pandemic, which is still ongoing.

In addition to the recoupment period being extended, the recoupment rate will also be lowered. Initially, it would have been 100% recoupment until the loan was repaid. Moving forward, after the one year passes and recoupment begins, the Centers for Medicare and Medicaid Services (“CMS”) will recoup 25% for the first 11 months and then 50% for the following 6 months. Lastly, the interest rate on the AAP loans has been lowered from 9.6% to 4%.