Health Law

Published on: February 1, 2021

CMS Codifies Definition of “Reasonable and Necessary” in Medicare Coverage Determinations

On January 14, 2021, the Centers for Medicare & Medicaid Services (CMS) issued a final rule codifying a definition for “reasonable and necessary” coverage under Medicare Part A and Part B. CMS hopes codifying the meaning of “reasonable and necessary” will provide clarity and consistency to the current process of coverage determination for items and services under Part A and Part B. The final rule takes effect on March 15, 2021.

The definition of “reasonable and necessary” has three components: an item or service is required to be 1) safe and effective, 2) not experimental or investigational, and 3) appropriate for Medicare patients. Whether an item or service is appropriate for Medicare patients will be based on the duration and frequency deemed appropriate for the item or service and whether the item or service:

Is provided in accordance with accepted standards of medical practice

Published on: December 16, 2020

CMS Expands Telehealth Services and Flexibility for Non-Physician Providers

by Wachler & Associates, P.C.

On Tuesday, December 1, 2020, the Centers for Medicare & Medicaid Services (“CMS”) released the 2021 Physician Fee Schedule (PFS) final rule, confirming an expansion to telehealth coverage and the scope of non-physician providers. The use of telehealth services increased substantially during the COVID-19 public health emergency. Under the final rule, certain telehealth services will be covered when the COVID-19 public health emergency ends. In addition, the rule reduces administrative barriers to non-physician practitioners, allowing them to focus on providing quality healthcare and less on paperwork.

Prior to the COVID-19 pandemic, CMS estimates that 15,000 fee-for-service Medicare beneficiaries received a Medicare telemedicine visit each week. To address the increased need for healthcare services during the COVID-19 pandemic, CMS added 144 Medicare covered telehealth services. CMS estimates that between March and October 2020, 24.5 million beneficiaries and enrollees received a Medicare telemedicine service. Under the final rule, CMS added more than 60 telehealth services that will permanently be covered under Medicare. Although Medicare does not currently have legal authority to cover telehealth services for beneficiaries who are not located in rural areas, or permit telehealth services to be received in the home, these now permanently covered telehealth services will allow beneficiaries in rural areas, to continue to receive high quality health care and have more convenient access to care.

The final rule also seeks to reduce administrative obstacles for non-physician providers. This will increase efficiency, quality of care, and overall improve the healthcare experience for beneficiaries. The PFS final rule will make certain non-physician provider flexibilities that were established during the COVID-19 pandemic permanent so they may continue to provide care without additional Medicare restrictions. CMS finalized three main changes for non-physician practitioners:

Published on: December 14, 2020

HHS Proposes HIPAA Modifications to Better Serve Patients

by Wachler & Associates, P.C.

On December 10, 2020, the Office of Civil Rights (“OCR”) at the Department of Health and Human Services (“HHS”) announced a proposal to modify the Health Insurance Portability and Accountability Act (“HIPAA”) Privacy Rule. The overarching goal of the proposed rule is to get patients more engaged in their own healthcare, provide easier access to coordinated care, and reduce the burdensome regulations that have an impact on quality of care. HHS has recently rolled out a Regulatory Sprint to Coordinated Care, and the proposed modifications to the HIPAA rule support this measure.

The Regulatory Sprint facilitated a nationwide transformation to value-based care. The public had determined that there were far too many regulatory burdens to have sufficient coordinated care, which made it difficult for patients to have high quality value-based care. In response to this feedback, CMS proposed changes to the Anti-Kickback Statute, Civil Monetary Penalty rules, and the Physician Self-Referral Regulations. As such, the HIPAA rule was the next regulatory burden that needed to be addressed to further the Regulatory Sprint.

For a complete list of the proposed changes to the HIPAA rule, please see the HHS notice. Here are some highlights:

Published on: December 11, 2020

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

by Wachler & Associates, P.C.

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: December 9, 2020

CMS Finalizes 2021 OPPS Rule, Officially Phasing Out the Inpatient Only List

by Wachler & Associates, P.C.

On December 2, 2020, The Centers for Medicare & Medicaid Services (CMS) released the 2021 Outpatient Prospective System (OPPS) Final Rule. The main goals of the rule are to (1) provide patients more choice in where they can receive affordable, quality health care, and (2) reduce their out-of-pocket costs. The new rule furthers CMS’s recent goal to expand patient choice by increasing the locations that accept Medicare payment for newly added services.

The rule finalizes the proposal to eliminate the Inpatient Only List (IPO),—giving beneficiaries more choice in where they can receive care. The IPO designated specific surgical procedures that necessitate inpatient care due to the nature of the procedure. Therefore, the procedures on the IPO were not covered by Medicare through the OPPS. By phasing out the list, these procedures will now be eligible for Medicare reimbursement in an inpatient setting as well as a hospital outpatient environment, if appropriate, based on the determination of the provider. The phase out of the IPO will occur over three years, beginning with 300 musculoskeletal services, and complete removal of the list by CY 2024. The rule also finalizes other provisions to offer beneficiaries additional choice in their healthcare options, including adding 11 procedures to the Ambulatory Service Center (ASC) Covered Procedures List (CPL).

Furthermore, the rule continues the current 340B purchased drugs payment policy. Under Section 340B of the Public Health Service Act, participating hospitals and other providers can purchase specific outpatient covered drugs directly from the manufacturer at a lower price. The 2018 OPPS Final Rule adopted a policy that Medicare will pay an adjusted Average Sales Price (ASP) less 22.5 percent for separately payable drugs purchased through the 340B program. According to CMS, keeping this current policy will be necessary to maintain stable payment during the COVID-19 public health emergency. Rural community hospitals, children’s hospitals, and Prospective Payment System (PPS) cancer hospitals will remain exempt from the 340B payment policy. These hospitals will continue to report a modifier for drugs acquired through the 340B program and be paid the ASP plus 6 percent.

Published on: December 4, 2020

Final Rule for Medicare Physician Fee Schedule

by Wachler & Associates, P.C.

On Tuesday, December 1, 2020, the Centers for Medicare & Medicaid Services (“CMS”) released the final rule for the 2021 Medicare physician fee schedule. As part of the updated physician fee schedule, CMS changed quality reporting requirements to the Medicare Shared Savings Program—specifically with regards to telehealth services. In the wake of the 2019 Novel Coronavirus (“COVID-19”) pandemic, telehealth has become a central form of providing healthcare. Telehealth will now be permanently allowed for Medicare recipients who receive evaluation and management (“E/M”) services at home. Telehealth will also be temporarily permitted for emergency and other visits—CMS hopes to make these permanently available one day as well.

In addition to the changes in telehealth, CMS is also giving Medicare Accountable Care Organizations (“ACOs”) an extended period of time to increase their quality performance standards from the 30^th percentile to the 40^th. In fact, they now have two more years to reach this goal because the initial goal of January 2021 was not feasible in the wake of COVID-19. Although this deadline has been extended by two years, ACOs must begin reporting quality measures through new MIPS platforms within the next year. Lastly, CMS has begun tapering the form of quality measurement from reporting 10 measures to the CMS Web Interface or reporting 3 measures under MIPS in 2021 to reporting just 6 quality measures under MIPS in 2022. ACOs are concerned with these changes being implemented during a pandemic, but CMS expects positive outcomes to result from the changes, nonetheless.

Most pertinently for physicians, is that CMS has lowered the fee schedule’s conversion factor by 10.2%. This means that instead of the conversion factor being $36.09, it is now $32.41. That change paired with many changes to E/M services and codes could lead to physicians seeing a change in their revenue. The changes in these E/M codes reflect the recent shift to prioritize value-based care. These updated E/M codes will now prioritize time spent evaluating and managing patient care, rather than quantity of interventions or procedures.

Published on: December 2, 2020

CMS Releases Finalized Stark and Anti-Kickback Rules

by Wachler & Associates, P.C.

On November 20, 2020, the Centers for Medicare & Medicaid Services (CMS) released the final rules amending the Stark Law and Anti-Kickback Statutes (AKS). Efforts to clarify these outdated laws began in 2018, with the goal to reduce regulatory obstacles for care coordination, following a general move toward value-based care. The Stark Law and AKS were initially created for a fee-for-service healthcare system, where there are financial incentives to provide more services to patients. However, the current U.S. healthcare system is shifting towards rewarding providers for keeping patients healthy and providing quality care, focusing on the value a payment has to a patient rather than the amount of services billed. The final rules offer increased flexibility to providers, reduce administrative burdens, and emphasize the interests of the patient.

The Physician Self-Referral Law, or the Stark Law, was initially enacted to prohibit physicians from making referrals to entities in which the physician has a financial relationship. The ambiguous language in the Stark Law created uncertainty as to whether certain relationships might violate the law and discouraged potential innovative relationships. As such, the final rule creates exceptions to the self-referral prohibitions for specific value-based payment arrangements among various providers and suppliers, and offers new guidance for providers with a financial relationship governed by the Stark Law. Under the rule, a value-based arrangement is one that provides at least one value-based activity to a patient between the value-based enterprise and at least one of its participants, or the participants in the same value-based enterprise. A value-based activity can mean the provision of a service, an action, or refraining from taking an action, so long as the activity is reasonably curated to achieve a value-based purpose. The exceptions apply to all patients, not just Medicare beneficiaries. The final rule creates three new exceptions to the Stark Law:

Value-based arrangements for participants in a value-based enterprise that is financially responsible for, and assumes the entire prospective financial risk, for the cost of all related patient care items and services for every patient;

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 23, 2020

New Michigan COVID-19 Liability Laws

by Wachler & Associates, P.C.

On October 22, 2020, Michigan Governor Gretchen Whitmer signed legislation reducing the liability of businesses and governmental agencies as it relates to COVID-19 exposure. There were three Acts passed that dealt with responding to COVID-19 risks and liabilities, all three of which retroactively apply beginning March 1, 2020.

Public Act 236 of 2020, or rather, “COVID-19 Response and Reopening Liability Assurance Act,” protects persons and entities from liability as long as they have complied with all federal, state, and local laws, as well as any regulations, executive orders, or agency orders. The protection is against any “COVID-19” claim, which is “a tort claim . . . for damages, losses, indemnification, contribution, or other relief arising out of, based on, or in any way related to exposure or potential exposure to COVID-19.” The Act grants employers the ability to claim immunity from COVID-19 claims where there was an isolated deviation from strict compliance with COVID-19 laws that was unrelated to the plaintiff’s claims. The Act is does not create a private cause of action.

Public Act 237 of 2020 is specific to employees and amends the Michigan Occupational Safety and Health Act. Much like Public Act 236, this Act grants liability protection to employers for employee exposure to COVID-19 so long as the employer followed all relevant rules and regulations.

Published on: November 20, 2020

Release of CMS 2020 Improper Payment Report

by Wachler & Associates, P.C.

On November 16, 2020, the Centers for Medicare & Medicaid Services (CMS) released its 2020 Estimated Improper Payment Rates. Under the 2019 Payment Integrity Act, CMS is required to review Medicare Fee-For-Service (FFS), Medicare Part C, Medicare Part D, Medicaid, and the Children’s Health Insurance Program (CHIP) and estimate the amount of improper payments made under each program.

The reported improper payment data for CMS FY 2020 represents claims submitted July 1, 2018 through June 30, 2019. Due the COVID-19 pandemic, CMS temporarily halted all data requests to providers and state agencies regarding incorrect payments from March to August 2020. To compile the report, CMS adjusted calculation methods for reporting improper payment rates for the 2020 Agency Financial Report (AFR), using data already available at the time of the COVID-19 pandemic or data voluntarily provided. The calculated rates still meet national precision requirements.

The FY 2020 improper payment rate for Medicare FFS, which includes Part A and Part B, was estimated to be 6.27% or $25.74 billion. This represents a notable decrease from FY 2019, for which the improper payment rate was estimated as 7.25%, or $28.91 billion. The result of this decrease is likely due to reductions in the improper payment estimates for home health and skilled nursing facilities, which saw a $5.90 billion and $1 billion decrease, respectively. These decreases are likely due to several policy clarifications by CMS.