Wachler & Associates Health Law Blog

Published on: April 21, 2022

Consolidated Appropriations Act Extends Post-PHE Telehealth Coverage

On March 15, 2022, President Biden signed into law the Consolidated Appropriations Act, otherwise known as the “Omnibus Bill.” Included in the many provisions introduced by the Omnibus Bill is an extension of Medicare coverage of professional consultations, office visits, and office psychiatry services conducted via telemedicine for 151 days following the termination of the COVID-19 public health emergency (PHE).

As part of the government’s response to the COVID-19 pandemic in March 2020, administrative and legislative changes waived the traditional location and technology requirements necessary to qualify for Medicare coverage for the duration of the PHE. In addition to extending these waivers, the Omnibus Bill expands the types of practitioners eligible to provide telehealth services to patients. Prior to the PHE, Medicare covered telehealth services only if offered by physicians, physician assistants, nurse practitioners, clinical nurse specialists, nurse-midwives, clinical psychologists, clinical social workers, registered dieticians, or certified registered nurse anesthetics. The Omnibus Bill adds to the list of qualifying practitioners occupational therapists, physical therapists, speech-language pathologists, and audiologists. Other changes under the Bill include delaying in-person requirements for the provision of mental health services and extending coverage of telehealth services rendered by federally qualified health centers to provide telehealth services for the same 151-day post-PHE time period.

While these changes may be welcomed by many healthcare providers as supplying necessary resources for both telehealth patients and providers, it remains to be seen whether coverage flexibilities established during the PHE will become permanent moving forward. The Omnibus Bill requires the Medicare Payment Advisory Commission to provide Congress with a report by June 15, 2023 on the expansion of telehealth services as a result of the PHE. The Department of Health and Human Services (HHS) Office of Inspector General (OIG) is similarly required to provide Congress with a report by June 15, 2023 on program integrity risks associated with Medicare telehealth services. Additionally, HHS must post quarterly data, beginning on July 1, 2022, on Medicare claims for telemedicine services. Healthcare providers should be cognizant of these developments and take steps to ensure compliance is maintained as these and other legislative and regulatory changes unfold.

Published on: April 18, 2022

CMS Terminating Several COVID-19 Blanket Waivers

by Wachler & Associates, P.C.

On April 7, 2022, the Centers for Medicare and Medicaid Services (CMS) issued a memorandum stating that several COVID-19 blanket waivers for certain healthcare services will be ending soon. Specifically, CMS will terminate blanket waivers of regulatory requirements that apply to skilled nursing facilities (SNFs), inpatient hospices, intermediate care facilities for individuals with intellectual disabilities (ICF/IIDs), and end stage renal disease (ESRD) facilities.

CMS has expressed concern “about how residents’ health and safety has been impacted by the regulations that have been waived, and the length of time for which they have been waived.” Findings from onsite surveys conducted at the facilities previously mentioned “have revealed significant concerns with resident care that are unrelated to infection control (e.g., abuse, weight-loss, depression, pressure ulcers, etc.).” In response to these findings, CMS is removing certain operational flexibilities which do not directly relate to infectious disease control. The termination of these blanket waivers will not have any effect on other applicable blanket waivers, such as those for hospitals and critical access hospitals (CAHs).

Terminations of blanket waivers will occur in two groups and become effective either 30 days or 60 days from publication of the memorandum. CMS instructs all affected healthcare providers to “take immediate steps so that they may return to compliance with the reinstated requirements” within these timeframes. The specific blanket waivers ending under both timeframes are as follows:

Published on: April 14, 2022

Private Equity and Healthcare Investments

by Wachler & Associates, P.C.

As a result of the emergence of the COVID-19 pandemic in early 2020, private equity (PE) investment activity saw a significant decline in many industries throughout the remainder of 2020. However, PE investments in healthcare have been viewed by some as a form of safe haven as the U.S. economy began to revitalize in the second half of 2020. While total deal value decreased by 7% from 2019 to 2020, total deal count increased by 10% as more investors looked to add-on existing platforms rather than seeking out new, larger targets of interest. Healthcare providers should be aware of some potential considerations when entering into PE investments or engaging in merger and acquisition activity.

A significant amount of deal activity materialized as a response to the numerous forced shutdowns caused by the pandemic. According to one survey conducted by the Alliance of M&A Advisors, while PE deals in other sectors experienced varying degrees of depressed activity levels through the Summer of 2020, healthcare transactions had the highest successful close rate of any industry (approximately 32%). Reported deal activity returned to 97% of pre-COVID levels by December 2020. Entering 2021, the PE transactions market remained very active, in large part due to PE firms being able to obtain cheap debt financing due to low interest rates. The transition to a new presidential administration and anticipated tax increases also caused many providers to contemplate exits ahead of potential increases in capital gains rates. Some areas worth noting that have garnered particularly strong preference amongst PE investors are behavioral and mental health, home health, and health technology services. While primary care has historically seen less PE activity than other healthcare segments, this seems to be changing as value-based care and capitated payment models become more popular.

Regarding business concerns relative to PE activity, there are many issues that are unique to the healthcare industry and providers should make sure that they have a clear understanding of how deals with PE investors may implicate these considerations. At the most basic level, states with corporate practice of medicine laws may restrict what types of entities or individuals may own or control a medical practice. Also, complex corporate structures and those that involve cross-ownership or ownership of multiple types of providers may implicate federal or state fraud and abuse laws, such as the Stark Law, Anti-Kickback Statute, and EKRA. As a practical consideration, long-time healthcare providers entering ventures with PE entities should ensure they understand how control of operations and the flow of revenues are allocated in the resulting structure. Moreover, the Executive Order issued by President Biden in July 2021 directs law enforcement to “focus in particular on … healthcare markets (which includes prescription drugs, hospital consolidation, and insurance), and the tech sector.” This may well result in heightened scrutiny of PE transaction in the healthcare industry and may also lengthen the timeline for closing deals in order to ensure compliance.

Published on: April 8, 2022

HHS to Allow Late PRF Reporting

by Wachler & Associates, P.C.

Healthcare providers who missed a Provider Relief Fund (PRF) reporting deadline may get a second chance. In response to overwhelming industry outcry over its attempts to clawback PRF payments, the Department of Health and Human Services (HHS), through the Health Resources and Services Administration (HRSA), which currently administers the PRF, will being accepting applications from providers who missed a reporting deadline to file a late report. Requests to file a late report must be filed between April 11 and April 22 and must include an “extenuating circumstance” justifying the request.

The PRF is a $178 billion fund created by Congress through the CARES Act and administered 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. The first payments under the PRF, in April 2020, were unsolicited and were deposited directly into providers’ bank accounts without prior application or notification. While this infusion of cash was likely a welcome relief at the time, it came with strings attached. The two major requirements for a provider to keep the PRF payment were to only use the funds for specific COVID-related purposes and to file a report with HRSA justifying use of the funds.

The first of these reports were due on September 30, 2021, but that date was later extended into early December 2021. In March 2022, HRSA began sending letters to providers who had not filed reports indicating that they were now required to return the full amount of any PRF funds received within 30 days. After significant outcry from providers, representatives, and industry groups, HRSA has backtracked and will now accept requests to file late reports.

Published on: March 22, 2022

HHS Withdraws No Surprises Act IDR Rule

by Wachler & Associates, P.C.

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 16, 2022

HHS OIG Discusses 2022 Enforcement Priorities and Role in FCA Resolutions

by Wachler & Associates, P.C.

During the Federal Bar Association’s annual Qui Tam Conference on February 23, 2022, Gregory E. Demske, Chief Counsel to the Inspector General for the Department of Health and Human Services’ (HHS) Office of Inspector General (OIG), discussed OIG’s role in False Claims Act (FCA) enforcement, as well as enforcement priorities for 2022.

Demske’s remarks provide insight into the role OIG plays in deciding which FCA matters to pursue and the enforcement tools that OIG utilizes in FCA matters, with a focus on the Office’s exclusion authority. In any given year, OIG adds approximately 1,000 to 4,000 people to the List of Excluded Individuals/Entities (LEIE), and many of these exclusions are imposed as the result of convictions or lost licenses. Under OIG’s formal protocol for prioritizing cases for exclusion, the Office’s Fraud Risk Indicator provides guidance regarding how OIG assesses the future risk that the party poses to Federal healthcare programs. On the low end of the spectrum, typically involving self-disclosure cases, OIG generally resolves such cases quickly by providing release from potential exclusion without any further requirements. For cases on the high end of the spectrum, where OIG determines that the party presents a high risk of fraud, OIG may pursue its administrative remedies and exclude the party from participation in Federal healthcare programs. Demske concluded by explaining that in most FCA matters today, OIG will elect not to pursue its own administrative remedies, but rather provide a release from potential exclusion and participate in the monetary settlement process with DOJ.

Also during his remarks, Demske discussed OIG’s enforcement priorities moving forward in 2022. Those priorities are as follows:

Published on: March 14, 2022

FDA Outlines Termination Plan for COVID-19 EUAs and Enforcement Policies for Medical Devices and PPE

by Wachler & Associates, P.C.

On February 22, 2022, the US Food and Drug Administration (FDA) hosted a webinar detailing its current transition plans for medical devices marketed pursuant to either Emergency Use Authorization (EUA) or Enforcement Policies during the COVID-19 public health emergency (PHE). The primary purposes of the webinar were to help prepare manufacturers and other stakeholders for the upcoming transition back to normal operations, provide examples illustrating the transition policies, and outline the 180-day transition period timeline. Providers that may be affected are encouraged to be proactive and take steps to understand FDA’s proposed plan and become prepared to handle the upcoming transition.

The FDA’s transition plans and policies are laid out in two recent draft guidance documents, Transition Plan for Medical Devices Issued EUAs During the COVID-10 PHE (EUA Transition Plan) and Transition Plan for Medical Devices That Fall Within Enforcement Policies Issued During the COVID-19 PHE (Enforcement Policy Transition Plan), which are to be implemented with a focus on four key principles:

an orderly, transparent transition with consistent FDA-manufacturer interactions,

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: March 8, 2022

HHS Delays SUNSET Rule …Again

by Wachler & Associates, P.C.

The Department of Health and Human Services (HHS) has again delayed implementation of a rule that would cause it to review many of its regulations and would eliminate regulations that HHS fails to review. The rule had the potential to remove many non-statutory restrictions that HHS has placed on the healthcare industry. This delay likely presages the ultimate repeal of the rule.

The SUNSET Rule, which was finalized in the closing days of the Trump Administration, requires HHS to assess its current rules. First, HHS would determine whether a rule has a significant economic impact on a large number of small entities. If it does, then HHS would consider the complaints against the rule, the original asserted need for the rule, the complexity of the rule, and whether the rule is duplicative of or in conflict with any other rules. HHS would ultimately determine whether the rule is still needed, should be reworked, or should be withdrawn. Any rule that is not reviewed by HHS every ten years would expire. Any rule that was more than ten years old at the time the SUNSET Rule came into effect would expire unless it was reviewed within five years.

Under the Biden Administration, HHS first delayed the implementation of the SUNSET. Then, in late 2021, HHS proposed to repeal the SUNSET Rule in its entirety. HHS’ rational for the proposed repeal was that it did not have sufficient resources to review all of its regulations within the required timeframes and this would cause some regulations to expire before HHS could complete reviews. While this position may indicate that HHS has engaged in excessive rule-making, HHS’ most recent proposal evinces a likely intent to repeal the SUNSET Rule in its entirety. In March 2022, HHS again delayed the implementation of the SUNSET Rule, including that it was still considering public comments to its proposal to repeal the Rule.

Published on: February 24, 2022

A Primer on Appealing Medicare Audits

by Wachler & Associates, P.C.

When a Medicare contractor denies a claim, whether as part of a pre-pay, post-pay, Targeted Probe and Educate, statistically extrapolated, or other type of review or audit, the provider generally has a right to a lengthy appeal process. The process is complex and often relies on strictly enforced deadlines and requirements. In some circumstances claims can take years to fully progress through the appeals process. However, some limited cases may be eligible for settlement.

There are several entities that perform Medicare audits. The federal agency that oversees Medicare, the Centers for Medicare & Medicaid Services (CMS), performs few audits itself, but outsources these duties to a series of independent contractors, such as Medicare Administrative Contractors (MACs), Unified Program Integrity Contractors (UPICs), and the Supplemental Medical Review Contractor (SRMC). The vast majority of audits are performed by these contractors, although they will often use CMS’s name or logo in their correspondence and may answer phone calls by saying that they are “with Medicare.”

A healthcare provider’s options in responding to a Medicare audit are available from the very beginning. Sometimes providers receive Additional Document Requests (ADRs) from the contractor demanding information or documentation on a claim or claims. These requests should be reviewed carefully; however, they often contain boilerplate or generic language and it may be difficult to determine which specific documentation the contractor is requesting. Once the contractor reviews any additional documentation and other information that the provider supplies, the contractor will issue its audit findings and determine whether to deny certain claims. Other times, the contractor will audit claims data or other information and issue audit findings without requesting additional information from the provider.