Articles Posted in COVID-19

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Shortly after the COVID-19 Public Health Emergency (PHE) began, Congress passed the Coronavirus Aid, Relief, and Economic Security (CARES) Act, which established the Provider Relief Fund (PRF). The goal of the PRF program was to provide financial support to healthcare providers across the nation in response to the unprecedented challenges presented by the PHE. Despite this noble goal, the federal agencies responsible for carrying out the PRF program have focused their efforts recently on clawing back PRF payments made to providers who the agencies assert did not strictly comply with the Program’s reporting requirements, among others. These PRF repayment demands seek to collect money distributed to providers that was intended to promote patient safety and preserve access to healthcare services. In many instances, providers relied on these funds to simply keep the lights on and stay in business. Now, the government’s demands for return of these monies again threatens the stability of many providers who received PRF funds, and providers are consistently left with little to no information as to why or how these repayment demands are being made in the first place.

Originally tasked with administering the $178 billion authorized under the PRF program, the Health Resources & Services Administration (HRSA), a subagency of the Department of Health and Human Services (HHS) distributed hundreds of thousands of PRF payments to providers of all types over the last several years. Notably, not all providers that received PRF funds needed to request those funds in order to receive payment, or affirmatively agreed to be bound by a set of associated terms and conditions. Recipients of the first batch of disbursements in Period 1 typically received the funds as an automatic deposit, with no notice or solicitation, and with no specific request for the funds required. If Period 1 recipients retained the PRF funds for 90 days or longer, then those providers were deemed to have accepted the PRF program’s terms and conditions, even if providers never read the terms or signed anything and despite the fact that HRSA would not publish the full details of the terms and conditions until months later. Providers who received PRF disbursements in Period 2 or later generally submitted a specific application to receive the funds, along with an attestation agreeing to comply with the terms and conditions.

Regardless of the Period in which a provider may have received funds, one of the most critical requirements attached to the receipt of PRF disbursements was the requirement to submit a report to HRSA on the use of the funds. As the terms and conditions would come to explain, failure to timely submit the necessary reporting would be considered grounds for recoupment of the funds. If a provider did not submit the report on time, HRSA should have notified the provider of its perceived non-compliance with the PRF terms and conditions, and allowed 60 days for the provider to submit the report or otherwise come back into compliance to justify retention of the funds.

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Telemedicine has become an increasingly important part of the healthcare delivery landscape. Since the early stages of the COVID-19 pandemic, the Centers for Medicare & Medicaid Services (“CMS”) have repeatedly issued regulatory flexibilities to allow Medicare to cover certain services provided in whole or in part by telemedicine. One of the most important of these regulatory flexibilities is the expansion of the definition of “direct supervision” to include direct supervision by telemedicine. CMS recently extended the effective period of this expansion through the end of 2025 and hinted at how it may handle direct supervision after that.

CMS has created three levels of supervision: personal, direct, and general supervision. Various services may require one of these levels of supervision in order to be covered by Medicare. Direct supervision is particularly important because it applies to several circumstances, including services provided and billed “incident to” a physician’s service. Click here for an explanation of “incident to” billing. Historically, direct supervision in the office setting has meant that the physician must be present in the office suite and immediately available to furnish assistance and direction throughout the performance of the procedure. It does not mean that the physician must be present in the room when the procedure is performed.

However, during the COVID-19 public health emergency (“PHE”), CMS expanded this definition of direct supervision to provide that the presence of the physician (or other practitioner) includes virtual presence through audio/video real-time communications technology. Audio-only communication is not included. This expansion was intended to be temporary and expires at the end of the PHE. However, it has proved so useful and integral to the delivery of services to Medicare beneficiaries that it has been repeatedly extended, including past the official end of the PHE.

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The US Department of Justice (DOJ) recently filed its first criminal drug distribution prosecutions related to telemedicine prescribing through a digital health company.  The indictments accused Done Global, Inc., its founder and CEO, its clinical president, and several other persons associated with the company of participating in a scheme to distribute Adderall over the internet, conspire to commit health care fraud in connection with the submission of false and fraudulent claims for reimbursement for Adderall and other stimulants, and obstruct justice. This case is highly instructive for those seeking to structure both telemedicine arrangements and payment arrangements with healthcare providers.

Specifically, DOJ alleged that Done operated a business model wherein it charged monthly subscription fees to patients and facilitated telemedicine visits with prescribers for the treatment of ADHD, including prescribing Adderall. DOJ alleged that the business model limited the information available to prescribers, instructed Done prescribers to prescribe Adderall and other stimulants even if the patient did not qualify, mandated that initial encounters would be under 30 minutes, included an auto-refill function that allowed patients to automatically request a refill each month, did not compensate prescribers for follow-up visits or consults after the initial consults, and compensated prescribers solely based on the number of patients who received prescriptions. DOJ alleged that these practices led to false and fraudulent claims for medically unnecessary services being submitted to Medicare, Medicaid, and commercial insurers.

In addition to allegations regarding the business model, DOJ also alleged that the company had been made aware that material was posted on online social networks about how to use Done to obtain easy access to Adderall and other stimulants, but that Done allegedly sought to conceal this information and made fraudulent statements to the media regarding it. The indictments of the individual officers of the corporation are also consistent with federal law enforcement’s emphasis on holding individuals, rather than just the corporation, responsible for alleged healthcare fraud.

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In May 2024, the House of Representatives Energy and Commerce Subcommittee on Health advanced the Telehealth Modernization Act of 2024 (H.R. 7623) with the goal of extending several Medicare telehealth flexibilities through 2026. This most recent bill comes after nearly two dozen other bills proposed by the Subcommittee to strengthen access to healthcare. The bill primarily seeks to maintain Medicare’s hospital-at-home program through 2029 in order to provide continued resources for at-home care for patients requiring acute-level care. The bill also aims to remove the geographic originating site restrictions on telehealth visits through 2026. Unless this bill or similar legislation is passed, the programs will expire at the end of 2024.

Notably, the bill would also provide broader discretion to the Department of Health and Human Services (HHS) to expand the types of practitioners who may furnish reimbursable telehealth services. This would create the potential for any healthcare provider who bills the Medicare program to be eligible to provide telehealth services. Further, the bill would enable HHS to maintain an expanded list of reimbursable telehealth services, including after the existing telehealth flexibilities expire.

Additionally, the bill would specifically benefit patients located in rural areas by allowing greater resources to be allocated toward rural health clinics providing telehealth services. As the current bill reads, Federally Qualified Health Centers and Rural Health Clinics would permanently be able to provide telehealth services and receive reimbursements in those settings. Federally Qualified Health Centers and Rural Health Clinics create a critical safety-net of primary care providers for underserved populations. Permitting these types of providers to furnish telehealth services as distant sites would play a major role in expanding and maintain access to care in underserved and rural communities, and would further promote continuity of care in those communities.

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A recent report by the Department of Health and Human Services (HHS) Office of Inspector General (OIG) may signal even more scrutiny of healthcare providers who received funds from the Provider Relief Fund (PRF). As we have long predicted, while the PRF was intended as a financial lifeline for the country’s healthcare providers during the height of the COVID-19 pandemic, as the pandemic has cooled, it has become a minefield of compliance issues for healthcare providers and fertile ground for government auditors to demand repayments.

The PRF is a $178 billion fund created by Congress through the CARES Act to provide financial relief to healthcare providers during the COVID-19 pandemic. HHS subdivided the PRF into various general and targeted distributions and assigned the Health Resources and Services Administration (HRSA) to administer the PRF. These distributions were paid to providers in several waves between April 2020 and the present. While this infusion of cash was likely a welcome relief at the time, it came with strings attached. Some of these strings included restrictions on which providers were eligible to receive funds, restrictions on how providers could use the funds, and requirements to report on the use of the funds.

The recent OIG investigation looked at PRF payments made to 150 providers during the PRF Phase 2 General Distributions. The Phase 2 General Distributions required providers to apply for payments and submit documentation. HRSA reviewed these applications and calculated the payment amount to make to provider, mostly based on the provider’s patient care revenue as documented in the application. OIG asserted that, for 17 of the 150 providers it reviewed, HRSA had miscalculated amounts due and had overpaid the providers. OIG recommended that HRSA demand these providers return these funds and that HRSA review all other Phase 2 General Distributions for similar errors HRSA may have made.

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The use of telemedicine for patient care exploded during the COVID-19 pandemic. While telemedicine services were generally a limited and niche practice prior to the pandemic, social distancing measures, lock-downs, and fear of spreading the disease combined with a desire for widespread testing for the disease created a tremendous need for the use of telemedicine for the delivery of many kinds of healthcare services.

Government programs, like Medicare and Medicaid, and commercial insurance carriers, which had all long restricted the use of telemedicine, scrambled to change their rules to allow telemedicine services in the face of this need. Many of these changes were made in a temporary manner, to expire at the end of the pandemic, with permanent changes to be determined later. Throughout the pandemic, telemedicine services proved to be safe, effective, and convenient. Therefore, healthcare providers and patients generally concurred that permanent changes to telemedicine policies should allow more widespread use.

The Michigan Medicaid program recently released an important update clarifying its permanent, post-pandemic policies regarding which providers are authorized to render services via telemedicine under the Michigan Medicaid program. First, as a general rule, a healthcare provider must be licensed or otherwise authorized to practice in the state where the patient is located. Usually, this will include a Medicaid patient in Michigan and a provider located outside of Michigan. In this situation, the provider must be licensed in Michigan in order for the services to be reimbursed under Michigan Medicaid. Although not a condition of Michigan Medicaid, the provider should also be mindful of the licensing requirements of the state in which they are located, which may require that the provider be licensed there as well. Under limited circumstances, Michigan Medicaid may also cover telemedicine services provided by providers who are licensed in another state to Michigan Medicaid patients if the patient is in the state where the provider is licensed. In either case, the provider must be enrolled in Michigan Medicaid and also have the ability to refer the patient to another provider of the same type or specialty who can see the patient in-person when necessary.

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In response to the unprecedented challenges created by the COVID-19 pandemic, the Coronavirus Aid, Relief, and Economic Security (CARES) Act established the Provider Relief Fund (PRF) as an effort to financially support the nation’s healthcare providers as they grappled with COVID-19. To achieve this goal, the Health Resources & Services Administration (HRSA) was tasked with administering the PRF program, and distributed hundreds of thousands of payments from the program’s $178 billion fund to healthcare providers of all types. However, even though providers may have used the PRF funds for permitted COVID-related purposes, many providers are increasingly being demanded to return the money, and being given little to no notice or information as to why.

In the early days of the COVID-19 pandemic, the first batch of disbursements under the PRF program were unsolicited and were deposited directly into providers’ bank accounts without prior application or notice. Providers had to quickly decide whether to return the funds, or to keep the money and agree to abide by the terms and conditions of the PRF program, despite not knowing at the time precisely what those terms were. Many providers that are being subjected to the current rash of repayment demands received PRF funds during the earliest distribution phases.

The repayment demands themselves and the processes available to dispute such demands present an entirely new set of complications and may often give the impression that a provider is being unfairly targeted for performing valuable healthcare services during a public health emergency. As the administrator of the PRF program, HRSA is supposed to initially notify providers of any alleged non-compliance with the PRF program terms and conditions. Usually, this is due to HRSA’s claim that a provider has not submitted the required reporting before the appropriate deadline or within the late reporting timeframe. Notably, providers are increasingly commenting that they are not receiving any notices regarding compliance with the PRF program or reporting requirements, or further, that they are later discovering such notices were sent to the wrong address.

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Nearly 4 years after the beginning of the COVID-19 pandemic, healthcare providers continue to see payor audits and demands for repayment for services provided during the pandemic, primarily COVID-19 testing and vaccinations. While these services were an essential public function during the pandemic, constantly changing and often unclear rules and regulations governing the coverage of these services have created fertile ground for payors to allege after-the-fact that provider were not entitled to payment.

The issues asserted by payors tend to be systemic; that is, related to the process used by the provider rather than issues related to any unique characteristics of any specific claim. Therefore, these allegations often lead to demands that the provider pay back a significant portion of reimbursements for their COVID-19 services, often in the hundreds of thousands or millions of dollars.

COVID-19 audits tend to focus on a few common issues. Payors may audit providers based on the requirement for an “individualized clinical assessment,” including whether the ordering provider was authorized, whether the order for testing was within the scope of state law, whether the assessment was conducted by telemedicine or by a questionnaire, whether the ordering provider used a standing order, and what rules apply where a state does not or did not require an order for COVID-19 testing. The use of standing orders has become a particular point of contention, especially in cases where the practitioner who issued the standing order did not personally examine patients, was located offsite, or was under contract with and receiving reimbursement from the entity billing for the services.

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The Food and Drug Administration (FDA) and the Centers for Medicare and Medicaid Services (CMS) recently released a joint statement suggesting that the FDA is about to end its decades-long policy of declining to regulate lab-developed tests (LDTs). The statement casts the policy as outdated and suggests that the FDA is about to impose regulation to treat LDTs with the same approach as all other laboratory tests.

Testing by clinical laboratories is regulated by both the FDA and by the Clinical Laboratory Improvement Amendments (CLIA), as administered by 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 generally 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 and accelerated during the COVID-19 pandemic. The pandemic caused an explosion in the need for quick, accurate, and cost-effective means to detect the virus that causes COVID-19. Many clinical labs responded by developing LDTs to detect COVID-19. As LDTs, labs were quickly able to innovate and begin bringing tests for COVID-19 to market. FDA responded by muddying the waters and adding regulatory burden. Initially, the Department of Health and Human Services (HHS), then under the Trump administration, released guidance that, during the public health emergency (PHE), LDTs for COVID-19 would not require pre-market approval. FDA then, in seeming contradiction of HHS, determined that the at-home collection kit of a COVID-19 LDT was distinct from the test itself and subject to FDA regulation. Later in the pandemic, HHS, now under the Biden administration, changed policy again and allowed the FDA to regulate all COVID-19 LDTs.

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The Department of Health and Human Services (HHS) Office of Inspector General (OIG) announced several new changes in its Work Plan update for October 2023. The OIG Work Plan forecasts the projects that OIG plans to implement over the foreseeable future. These projects usually include OIG audits and evaluations. Below are the highlights from the Work Plan update of which providers and suppliers should take notice.

First, OIG will perform an audit of the Morehouse School of Medicine’s National Infrastructure for Mitigating the Impact of COVID-19 (NIMIC) initiative. The NIMIC initiative is a 3-year, $40 million cooperative agreement between HHS’s Office of Minority Health and the Morehouse School of Medicine to fight COVID-19 in racial and ethnic minority, rural, and socially vulnerable communities. The Morehouse School of Medicine is leading the initiative to coordinate a strategic network to deliver COVID-19 related information to communicates hit hardest by the pandemic.

Second, OIG will audit the accuracy of the Child Care and Development Fund (CCDF) attendance records at Minnesota child care centers. The CCDF is the primary federal funding source devoted to subsidizing the child care expenditures of low-income families. OIG has stated that it identified issues with the completeness and accuracy of child care attendance records and with related billings for child care services. Minnesota, as well as possibly additional states, have been selected by OIG for a review to determine whether the state(s) complied with federal and state requirements related to attendance records and whether payments for services at child care centers were allowable.

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