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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.
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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:

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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.

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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.

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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.

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Effective June 8, 2021, Medicare will pay an additional $35 per dose for administering the COVID-19 vaccine in the home for certain Medicare patients that have difficulties leaving their homes or are hard-to-reach. This $35 dollar payment is in addition to the standard payment for vaccine administration, which varies based on location but is approximately $40 per dose. The additional payment also applies to each dose of a two-dose vaccine if both doses are administered in the home. To be eligible for the at-home additional payment, both the location and the beneficiaries must be certain criteria.

Private residences, temporary lodging, apartments, most units in an assisted living facility (ALF) or group home, and the homes of Medicare beneficiaries have been made provider-based to a hospital during the COVID-19 public health emergency generally qualify as location eligible for the at-home additional payment. However, hospitals, skilled nursing facilities (SNFs), some ALFs, and the communal spaces of apartment buildings or group homes do not qualify for the at-home additional payment.

In addition, to an eligible location, the Medicare beneficiaries must also meet certain criteria. Specifically:

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During the COVID-19 pandemic, many of the Medicare requirements surrounding telemedicine have been greatly relaxed or waived entirely. These temporary waivers, including allowing Medicare coverage of certain audio-only services, have been welcome changes for many providers and patients. With the end of the pandemic in sight, many are wondering if these changes will end or if some of the temporary waivers will become permanent.

The COVID-19 telemedicine waivers were authorized under Section 1135 of the Social Security Act, which allows the Secretary of Health and Human Services to temporarily waive or modify certain Medicare requirements for the duration of a declared public health emergency. The telemedicine waivers include: allowing telehealth services to be provided nationwide, rather than only in certain locations; allowing beneficiaries to receive, and providers to furnish, telehealth services from any setting, including beneficiaries’ and providers’ homes; allowing additional types of providers, such as physical and occupational therapists, to furnish telehealth services; temporarily adding over 146 new telehealth services; and allowing certain services to be furnished using audio-only technology such as telephones, instead of interactive systems involving video technology. As the authority to issue waivers is based on the declaration of a public health emergency, these waivers will end when the declared public health emergency ends.

Likely in response to calls from both providers and patients to make the telemedicine waivers permanent, Congress recently introduced H.R.3447, a bill to amend the Social Security Act to expand accessibility to certain telehealth services under the Medicare program. While the bill in the early stages of the legislative process and will likely be subject to much debate and many changes, it is an encouraging sign that at least some of the telemedicine waivers may become permanent.

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On May 28, 2021, the Equal Employment Opportunity Commission (EEOC) released guidance indicating that employers could, under certain circumstances, offer incentives to employees to receive the COVID-19 vaccine and offer the vaccine to employees’ family members. The EEOC largely confined its analysis to the Americans with Disabilities Act (ADA) and the Genetic Information Nondiscrimination Act (GINA). However, employers who are also healthcare providers must also consider whether these benefits to employees or their family members implicate prohibitions on payment for referrals.

The Physician Self-Referral Law (also known as the Stark Law), the Anti-Kickback Statutes (AKS), and the Eliminating Kickbacks in Recovery Act (EKRA) all prohibit various forms of payment for referrals. 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. The AKS is a criminal statute that prohibits the knowing and willful payment of “remuneration” to induce or reward patient referrals or the generation of business involving any item or service payable by federal health care programs. EKRA provides criminal penalties for paying, receiving, or soliciting any remuneration in return for referrals to recovery homes, clinical treatment facilities, or clinical laboratories. All three and can carry stiff penalties, sometimes criminal penalties.

Healthcare employers who provide incentives to receive the COVID-19 vaccine to employees with the ability to make referrals to the employer or that offer benefits to such employees’ family members should account for these statutes. Depending on how the incentive is structured, it may fit into the bona fide employment exception to the Stark Law or one of the other exceptions or safe harbors in these rules. It is also important to note that, due to federal funding, the vaccine itself it available free-of-charge, but that administration of the vaccine and the convenience thereof may still represent things of value, as well as the value of any incentives, in cash or otherwise.

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The Corporate Practice of Medicine refers to the practice of medicine by a corporate entity, rather than an individual practitioner. That is, the corporate entity employs physicians. Many states prohibit the corporate practice of medicine or otherwise regulate what types of entities may employ physicians. The rationale is often a desire that medical decision-making remain with the physician and should not be influenced by a non-physician employer. These regulations are the reasons that physician “employment” is often organized into physician groups or profession corporations.

Each state treats the corporate practice of medicine differently, but there are three general approaches. First, some states fully prohibit the corporate practice of medicine. These states do not allow physicians to be employed by non-physicians and only allow physicians to form professional corporations, professional associations, or professional limited liability companies (PLLCs) that are owned exclusively by physicians. For example, Michigan generally requires that all shareholders in a professional corporation or PLLC that engages in the practice of medicine must be licensed physicians. Some states may allow other types of licensed health professionals to own a professional entity that employs physicians.

Second, some states have no restrictions on the corporate practice of medicine or otherwise allow physicians to be employed by entities controlled by non-physicians.

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Recently, the Centers for Medicare & Medicaid Services (CMS) announced another delay of the implementation of the new rule for Medicare Coverage of Innovative Technology (MCIT) and discussed several concerns it had with the new rule, raising doubts that CMS would ever implement the new rule without significant changes.

The new rule, as currently written, provides for four years of national Medicare coverage of innovative medical devices starting on the date of FDA market authorization or a manufacturer chosen date within two years thereafter. The rule was initially published by CMS on January 14, 2021 and was set to take effect in March 2021. However, shortly after the transition to the Biden Administration, CMS delayed the effective date until May 2021 as part of its general freeze of new regulations pending review. On May 14, 2021, CMS announced it would further delay the implementation of the new rule until December 15, 2021.

In the May 2021 announcement of the delay, CMS expressed its concerns with the new rule. Specially, CMS expressed concern that the rule establishes a four-year commitment to Medicare coverage for all breakthrough devices that have a benefit category without a specific requirement that the device demonstrates a health benefit in the Medicare population or that the benefits outweigh harms. CMS expressed a desire for more evidence of benefits to Medicare beneficiaries prior to Medicare coverage of a device.

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