Wachler & Associates Health Law Blog

Published on: July 20, 2021

Deadlines Approaching to Report Cardiac Device Overpayments

Important deadlines for hospitals to report cardiac medical device-related overpayments are fast approaching. Based on an audit by the Office of Inspector General (OIG), the Centers for Medicare & Medicaid Services (CMS), required hospitals to investigate and report any overpayments from the last six years related to manufacturing credits for replaced cardiac medical device implants. CMS’s deadlines to file these reports begin in August 2021.

Generally, where the manufacturer of a cardiac medical device implant, such as a pacemaker or defibrillator, replaces a recalls or defective device that is still under warranty, it will provide a replacement to the hospital without charge or issue a full or credit to the hospital for the cost of the device. Where the service involves a Medicare beneficiary and a hospital receives a discount or credit that is 50% or more of the cost, Medicare regulations generally require the hospital to report the credit to Medicare and accept reduced payment.

In November 2020, OIG issued a report regarding a review it conducted of 6,558 Medicare claims dated between January 1, 2015 and June 30, 2017. In its review, OIG obtained data on reportable warranty credits from the top three cardiac device manufacturers and compared this data to Medicare billing records to see whether the hospital had reported the credit to Medicare. As a result of its review, OIG alleged that over 900 hospitals had not properly reported manufacturing credits for recalled or defective cardiac medical device implants. OIG alleged that these hospitals had received approximately $33 million in Medicare overpayments and recommended that CMS recover these overpayments.

Published on: July 15, 2021

CMS Proposes to Keep Some Medicare Telehealth Access in 2022 Physician Fee Schedule

by Wachler & Associates, P.C.

Many of the Medicare requirements surrounding telemedicine have been greatly relaxed or waived entirely during the COVID-19 public health emergency. Providers and patients wondered if these changes would end or if some might become permanent. In May 2021, Congress introduced H.R.3447, a bill to amend the Social Security Act to expand accessibility to certain telehealth services under the Medicare program, which was an encouraging sign that at least some of the telemedicine waivers may become permanent. Now, the Centers for Medicaid and Medicare Services (CMS) seeks to preserve telehealth access with the proposed 2022 Medicare Physician Fee Schedule (MPFS). If finalized, the rule would codify some of the recent flexibilities CMS has granted regarding telehealth use for the diagnosis, evaluation, and treatment of mental health disorders.

CMS plans to allow Medicare providers to continue offering certain telehealth services until the end of 2023 while the agency decides whether to add those services to the telehealth list permanently. CMS will permit all Medicare patients to access telehealth services from their homes, as called for in the Consolidated Appropriations Act Congress passed in December 2020. Additionally, the agency seeks to enable Medicare to pay for mental health visits via telehealth services provided through community health centers. CMS plans to allow providers to deliver audio-only behavioral and mental health services, including opioid addiction treatment. The proposed rule would also pay physicians for mental health visits, via interactive telecommunications technology, furnished to rural and vulnerable populations in rural health clinics and federal qualified health centers.

The rule also proposes notable changes to the Quality Payment Program (QPP), including the Merit-based Incentive Payment System (MIPS). Specifically, the agency seeks to make it more difficult for clinicians to earn bonuses under its QPP by raising the eligibility threshold. Furthermore, CMS unveiled its first seven MIPS Value Pathways, including: rheumatology; stroke care and prevention; heart disease; chronic disease management; emergency medicine; anesthesia; and lower-extremity joint repairs. CMS, as part of these initiatives, would evaluate clinicians using measures that are meaningful to their practices and their specialties or are relevant to public health priorities. The proposed fee schedule is open for public comment until September 13, 2021.

Published on: July 13, 2021

President Biden Signs Executive Order Impacting Healthcare Sector

by Wachler & Associates, P.C.

On Friday July 9, President Biden signed an executive order focused on promoting competition in the U.S. economy. The comprehensive executive order contained many provisions relating to the healthcare industry, including directives to the Department of Health and Human Services (HHS) to support price transparency rules issued by the Trump Administration and instructions to the Federal Trade Commission (FTC) to prioritize hospital consolidation in its enforcement efforts. Under the order, the Department of Justice (DOJ) and the FTC are encouraged to “vigorously” enforce antitrust laws, even on past mergers that previous administrations have not challenged. The order includes specific provisions that address competition among hospitals, health insurers, prescription drugmakers, and hearing aid manufacturers.

HHS is directed by the order to support existing hospital price transparency regulations issued by the Trump Administration, which require hospitals to disclose cash prices and rates negotiated with insurers, as well as finish implementing bipartisan federal legislation to address surprise hospital billing. This directive may be spurred by recent reports that hospital compliance with these regulations has been inconsistent. The order further directs the HHS to standardize plan options in the national health insurance marketplace so people can comparison shop more easily.

The FDA is called upon to work with states and tribal programs to safely import cheaper prescription drugs from Canada, pursuant to the Medicare Modernization Act of 2003, in an attempt to lower prices for consumers. Provisions in the order similarly call on HHS to increase support for generic and biosimilar drugs and to create a plan within 45 days to address high drug prices and price gouging. The order asks the FTC to ban “pay for delay” and similar agreements by rule, under which brand-name drugmakers pay generic drugmakers to abstain from the market. Moreover, the executive order would also allow hearing aids to be sold over the counter and directs HHS to issue a rule on the matter within 120 days. Hospitals and other healthcare should understand the implications these directives may have as implementation of the executive order unfolds in the coming weeks and months.

Published on: July 8, 2021

HHS Site-Neutral Pay Rule to Remain in Effect

by Wachler & Associates, P.C.

The U.S. Supreme Court recently declined to hear an appeal challenging the Department of Health and Human Services’ (HHS) site-neutral payment policy, allowing the regulation to move forward. Hospitals originally sued to prevent the rule from taking effect, but were ultimately unsuccessful when the U.S. Court of Appeals for the District of Columbia ruled against them in favor of the rule’s legality.

The site-neutral pay rule, specifically Section 603 of the Bipartisan Budget Act of 2015, brings significant changes to Medicare hospital payment policy. The rule extends the concept of site-neutral payment policy by requiring that newly created off-campus hospital outpatient departments no longer be paid under the Outpatient Prospective Payment System (OPPS). Rather, such departments will be paid under an alternative, less remunerative payment system – the Medicare Physician Fee Schedule (MPFS). The goal of the rule is to reduce a perceived disparity in Medicare payments where hospital-affiliated clinics get paid more than physician offices for the same services.

Specifically, the rule amends Section 1833(t) of the Social Security Act, which governs Medicare payments for hospital outpatient department services, by adding a new clause that prospectively excludes from the definition of covered services most items and services furnished by an “off-campus outpatient department of a provider,” which the statute defines as a department of a provider that is not located on the provider’s campus or within a 250-yard radius from a remote location of a hospital. While CMS guidance on the rule is still unfolding, it has provided some insight into its interpretation of the 250-yard measurement. CMS explains that a hospital may measure 250 yards from “any point of the physical facility that serves as the site of services of the remote location to any point in the PBD.”

Published on: July 6, 2021

Responding to a Targeted Probe and Educate Review

by Wachler & Associates, P.C.

A healthcare practice or other provider or supplier receives a letter from their Medicare Administrative Contractor (MAC). The letter notifies the provider that they have been selected for a Targeted Probe and Educate (TPE) review. This initial letter, the Notice of Review, likely does not include any specific records requests but indicates that the MAC will request records at a later date. The letter may briefly describe the TPE process as including three rounds of claims review with education after each round. This letter will likely warn that, if a provider/supplier fails to improve the accuracy of its claims after three rounds, the MAC will refer the provider/supplier to CMS for additional action, such as prepayment review, extrapolation of overpayments, referral to a RAC, or other disciplinary action.

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.

After the Notice of Review, the MAC will send Additional Documentation Requests (ADR) for 20-40 claims. However, these ADRs may be indistinguishable from any other, with no indication of the added importance of being pursuant to a TPE audit. The ADRs will require a response within 45 days. After the provider submits the documentation, the MAC is required to provide direct one-on-one education to the provider. The MAC will then issue a letter that outlines its findings. If a high number of claims are denied, the MAC will proceed to a second round of review of 20-40 claims and education. If a high number of claims are denied again, the MAC will proceed to a third round.

Published on: June 30, 2021

A Primer on SMRC Audits

by Wachler & Associates, P.C.

The Centers for Medicare & Medicaid Services (CMS) contracts with a Supplemental Medical Review Contractor (SMRC) who provides support for a variety of tasks aimed at lowering improper payment rates and increasing efficiencies of the medical review functions of the Medicare and Medicaid programs. Noridian Healthcare Solutions was selected as the SMRC in 2018. The SMRC conducts nationwide medical reviews of Medicare Parts A and B, DMEPOS, and Medicaid claims to determine whether claims follow coverage, coding, payment, and billing requirements. The focus of the medical reviews may include areas identified by CMS data analysis, the Comprehensive Error Rate Testing (CERT) program, professional organizations, and federal oversight agencies. At the request of CMS, the SMRC may also carry out other special projects to protect the Medicare Trust Fund.

SMRC audits are referred to as projects and there are three categories of SMRC project reviews:

Healthcare Fraud Prevention Partnership (HFPP) Review: Based on fraud, waste, and abuse trends identified by the HFPP.

Published on: June 28, 2021

HHS Releases Comments to Proposed HIPAA Privacy Rule

by Wachler & Associates, P.C.

On June 24, 2021, the Office for Civil Rights (OCR) at the U.S. Department of Health and Human Services (HHS) published comments that it received during the public comment period for the proposed modifications to the Health Insurance Portability and Accountability Act of 1996 (HIPAA) Privacy Rule. OCR first announced the proposed rule-making in December 2020. While the proposal was not technically subject to the “regulatory freeze” by the Biden administration, it was effectively delayed because OCR extended the public comment period through May 2021.

The proposed changes to HIPAA are part of the larger transition to a value-based health care system in which providers are compensated based on patient health outcomes. The modifications propose to address standards that may impede the transition to a value-based health care system and other unnecessary burdens by increasing individuals’ rights to access their health information, enhancing information sharing for care coordination and case management, improving family and caregiver involvement for individuals experiencing health emergencies, reducing the administrative burden on HIPAA-covered providers, and facilitating the disclosure of certain health information during emergencies such as the opioid crisis and COVID-19 pandemic.

Some of the major changes to the Privacy Rule include:

Published on: June 23, 2021

Sale of Goods in Physician Offices

by Wachler & Associates, P.C.

The sale of goods in physicians’ offices can afford patients greater accessibility to healthcare products while simultaneously enhancing quality of care. However, these transactions may pose ethical dilemmas for physicians along with the potential to negatively affect the physician-patient relationship. Physicians should be aware of these potential pitfalls. Specifically, both the sale of health-related and non-health-related goods by physicians may present a financial conflict of interest Such sales may also carry a risk of patient exploitation by placing undue pressure on patients. Local statutes, regulations, and board of medicine rules may further affect the practice.

The American Medical Association, (AMA) has cautioned that, in general, physicians should not sell non-health-related products from their offices. However, the AMA has expressed approval that physicians may sell low-cost non-health-related goods from their offices for the benefit of community organizations, provided that: (1) the goods are low-cost, (2) the physician takes no share in profit from their sale, (3) such sales are not a regular part of the physician’s business, (4) sales are conducted in a dignified manner, and (5) sales are conducted in such a way as to assure that patients are not pressured into making purchases. The most common examples are seasonable fundraisers for community organizations such as the local chapter of the Girl Scouts.

Although the details may vary from state to state, physicians may generally sell health-related goods from their offices. In response to the risk of patient exploitation, the physician may be required to limit sales to products that serve the immediate and pressing needs of their patients. In other words, physicians should only sell health-related products that align with their practice area. For example, it may be appropriate for a patient treated for a broken leg to purchase crutches from that same physician’s office where the patient was treated. Physicians who choose to sell health-related products from their offices should not sell any health-related products whose claim of benefit lacks scientific validity.

Published on: June 21, 2021

What’s the Difference Between “In Office Ancillary” and “Incident To”?

by Wachler & Associates, P.C.

Two similar and inter-related, but sometimes misunderstood, terms in healthcare law are “in office ancillary” and “incident to.” While both may apply to the same circumstances, they are distinct concepts and should be understood separately.

“In Office Ancillary” services are an exception to the Physician Self-Referral Law, often referred to as the Stark Law. 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. 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, or their group practice.

On the other hand, “incident to” is a billing term. Services and supplies billed “incident to” a physician’s professional services are furnished by auxiliary personnel as an integral, although incidental, part of the physician’s personal professional services. Generally, services and supplies commonly furnished in physicians’ offices are covered under the “incident to” provisions. However, to bill services provided by auxiliary personal as “incident to” the physician’s services, among other requirements, the physician must directly supervise the auxiliary personnel. That is, the physician must be present in the same office suite and immediately available to provide assistance and direction while the auxiliary personnel is performing services.

Published on: June 15, 2021

HHS Reveals New PRF Reporting Requirements

by Wachler & Associates, P.C.

On June 11, 2021, the Department of Health and Human Services (HHS) released long-awaited updates on the reporting requirements for entities that received payments from the Provider Relief Fund (PRF). HHS also pushed back the deadline for some recipients of PRF payments to use the funds. The PRF is a $175 billion fund created by Congress through the CARES Act and administered by HHS to provide financial relief to healthcare providers during the COVID-19 pandemic. HHS has subdivided the PRF into various general and targeted distributions.

Initially, the PRF reporting portal had been scheduled to open on January 15, 2021, with the first reports initially being due on February 15, 2021. However, HHS has repeatedly pushed these dates back. For the last several months, provides have been able to register and log into the reporting portal, but have been unable to file reports. Moreover, PRF recipients had previously been told that all PRF payments must be used by June 30, 2021. As June 30, 2021 approached, and no new reporting guidance or timeline had been released, providers and industry groups began to call for HHS to push back the deadline by which PRF funds must be used.

The new reporting guidance pushed this date back for some, but not all, recipients. The deadline to use the funds, as well as the reporting deadline, is now dependent on when the recipient received the payment.