Wachler & Associates Health Law Blog

Published on: October 25, 2018

Anthem Settles Data Breach Suit at Record $16 Million

In 2015, Anthem, Inc. (“Anthem”) discovered that criminal hackers had breached its electronic database and gained access to over 79 million records, including the records of at least 12 million minors. The protected health information obtained by the hackers included, among other information, names, addresses, dates of birth, medical IDs, and Social Security numbers. The hackers were able to gain access to the information by using a “spear phishing” email technique. At least one employee received a phishing email and responded to it, allowing the hackers to gain remote access to the employee’s computer and at least 90 other systems, including Anthem’s data warehouse.

Although the massive data breach was first discovered in January 2015, the breach actually began on February 18, 2014 – meaning the breach went undetected for almost a whole year. “Unfortunately, Anthem failed to implement appropriate measures for detecting hackers who gained access to their system to harvest passwords and steal people’s private information,” said Office of Civil Rights (“OCR”) Director Roger Severino.

Anthem has agreed to pay $16 million to the Department of Health and Human Services’ (“HHS”) OCR and take corrective action to prevent potential violations of HIPAA rules in the future. While other breaches like this have occurred in the past, this was the largest health data breach in U.S. history, and the $16 million settlement is now the largest HIPAA settlement in history.

Published on: October 3, 2018

IRFs Under Review for “Reasonable and Necessary” Requirement

by Wachler & Associates, P.C.

The Centers for Medicare & Medicaid Services (“CMS”) recently announced a review of Inpatient Rehabilitation Facilities (“IRFs”) that will focus on the “reasonable and necessary” requirement that IRFs are required to meet. An IRF provides rehabilitation services to patients who have suffered an injury, illness, or surgery that has left them in need of intensive rehabilitation. Services provided by IRFs include physical therapy, occupational therapy, rehabilitative nursing, speech-language pathology, and the procurement of prosthetic and orthotic devices.

IRF services are considered “reasonable and necessary” if: (1) the patient requires therapeutic intervention in multiple therapy disciplines, (2) the patient actively participates in and benefits from the therapy program, (3) the patient is sufficiently stable at the onset of the program, (4) the patient is supervised by a physician, (5) the patient’s chart has the correct documentation within it, and (6) the patient requires an interdisciplinary team approach to care and the team has weekly meetings.

IRFs are not meant to be used as an alternative to a full course of treatment. Patients who are still completing their treatment in the hospital and cannot fully participate in intensive rehabilitation therapy will not have their IRF service determined to be reasonable or necessary. Furthermore, IRF is not appropriate for patients who have finished their hospital treatment and no longer need intensive rehabilitation.

Published on: September 28, 2018

PRRB Releases Significant Rule Changes Impacting the Appeals Process

by Wachler & Associates, P.C.

The Provider Reimbursement Review Board (“PRRB”) is an independent panel that a Part A provider can appeal to if it is not satisfied with any final determination. In order to appeal, the amount in controversy for a single hospital must be at least $10,000, and at least $50,000 for a group of hospitals. The PRRB’s decision is considered the final administrative remedy for providers. If a provider is dissatisfied with the PRRB decision, it can seek judicial review before a federal district court. Last month, the PRRB released 90 pages of updated rules without advanced notice, which providers and attorneys are expected to comply with in their appeals. These significant changes to the PRRB rules could be catastrophic for providers because they may waive their entire appeal if they fail to follow a new rule.

Hospitals tend to utilize the PRRB appeals process by challenging disproportionate-share hospital payment calculation, or by challenging the amount of Medicare bad-debt payment they receive. These are generally complex issues that require a significant amount of time to investigate and fully develop. Unfortunately, the parties will no longer be afforded the ability to develop their case as it proceeds through the appeals process. The new rules require a preliminary position paper (and the corresponding exhibits) to be filed with the PRRB at the beginning of the appeal process. This new requirement forces providers to have their argument in its most complete form at the beginning of the process because additional arguments and evidence cannot be added later, except for good cause. Additionally, if anything is missing in the initial submission of materials, the entire appeal will be dismissed.

Another extremely important change is that providers may now simultaneously file appeals with the PRRB and then withdraw them if they believe their claims can be resolved with the Medicare Administrative Contractor (“MAC”). If a resolution is not reached, providers can reinstate their appeals with the PRRB. Furthermore, if a provider appeals the same issue arising from different Notice of Program Reimbursements (“NPRs”) in the same year, it must be brought in the same appeal.

Published on: August 31, 2018

Interstate Licensure for Providers Using Telemedicine

by Wachler & Associates, P.C.

In order to deliver telemedicine services, providers must have a license issued to them by the state in which the patient receiving the telemedicine resides. Thus, providers offering telemedicine may have to get licensed in multiple states depending on where their patients live. Obtaining multiple licenses to practice interstate telemedicine is timely and costly, which may deter providers from using telemedicine; this is an issue for rural and underserved areas who rely on telemedicine for access to healthcare.

The TELE-MED Act of 2015 was intended to reduce licensing barriers for interstate telemedicine by making Medicare coverage and reimbursement available for interstate telemedicine services. However, the Act failed to get congressional approval when it was introduced three years ago. Its purpose was to amend title XVIII of the Social Security Act so that Medicare participating providers could provide interstate telemedicine services to Medicare beneficiaries without having to get licensed in multiple states. This would have significantly aided Medicare beneficiaries who need telemedicine from providers out of state.

Though the TELE-MED Act did not pass, the Interstate Medical Licensure Compact (IMLC) may still reduce the burden for providers wanting to use interstate telemedicine. Acknowledging the burden of applying to for a license in other states, especially when providers have patients across multiple states, the IMLC has created an expedited pathway for interstate licensure. The IMLC formed a Commission made up of two representatives from each adopting state, and the Commission reviews the applicants and determines whether they should be issued a license or not. The IMLC is an agreement with 24 states, 1 territory, and the 31 Medical and Osteopathic Boards in those states and territory. IMLC is streamlining the licensing process, but it is still expensive and does not solve the problem that physicians using telemedicine must be licensed wherever their patients are located.

Published on: August 24, 2018

CMS Allows Step Therapy Under Medicare Advantage Plans

by Wachler & Associates, P.C.

The Centers for Medicare and Medicaid Services (“CMS”) recently announced that, starting next year, Medicare Advantage (“MA”) plans will be allowed to require step therapy on Part B drugs and other physician-administered drugs. Step therapy requires patients to take generic medication as their initial treatment, and only when that treatment is proven to be ineffective, they may step up to more expensive drugs. The point of step therapy is to incentivize drug makers to have the cheapest generic drugs, which will save Medicare money. Step therapy has already been implemented with Medicare Part D drugs, which are drugs from pharmacies, and has proven to be relatively effective in getting drug manufacturers to lower drug prices.

Previously, MA plans were not allowed to implement step therapy for Part B drugs because the Obama administration interpreted federal regulations such that MA plans could not be more restrictive than Medicare, and MA plans could not impose barriers to Part B services that were not in place for Medicare. Although the step therapy policy may pose significant benefits for MA plans, there are concerns about how it will impact patient care.

Requiring healthcare providers to prescribe generic medication to their patients first takes away the providers’ medical decision-making abilities and can slow down the healing process for the patients taking the drugs. The majority of individuals taking Part B drugs are those with chronic or serious ailments. Common Part B drugs include: chemotherapy, autoimmune drugs, oral drugs for kidney disease, and vaccines. Providers are concerned that some patients may have to undergo treatment with less effective generic drugs before being able to be treated with effective non-generic drugs. However, some individuals believe that the FDA would not approve a generic if it were less effective than the non-generic. Regardless, this is where trouble could arise – some patients do not have enough time to wait out multiple therapies and must have the most effective therapies first, such as patients with cancer or rheumatoid arthritis. There will likely be more medical emergencies if patients are administered non-effective generic drug and their condition needs immediate improvement from the medication to avoid harm.

Published on: August 15, 2018

CMS Proposes Significant Changes to E/M Coding

by Wachler & Associates, P.C.

The Centers for Medicare & Medicaid Services (“CMS”) recently released a proposal that would alter the Medicare Physician Fee Schedule (“MPFS”) and significantly change evaluation and management (“E/M”) code payment rates. Payment rates for services furnished by physicians and other non-physicians are published in the MPFS, and E/M visits account for about 40% of allowed MPFS charges. CMS’ goal with this new proposal is to make documentation less time-consuming and allow providers to spend more time with their patients. However, the proposal, which would lower reimbursement rates, has not been well-received by all providers.

Currently, E/M codes range from levels 1-5; 1 being a relatively simple service performed by a non-physician, and 5 being the most complex service performed by a physician. CMS is proposing to collapse levels 2-5 for new and established patients, creating one flat rate for levels 2-5. By having a single payment rate, CMS is expecting patient care to improve.

Normally, when documenting for the higher-level codes, physicians use boilerplate language in order to meet billing requirements. There have been concerns that this boilerplate language can be harmful to patients because the clinically important information gets lost within it. Thus, by eliminating the need for nuanced language to distinguish each level, CMS hopes that patients will have more face time with their provider. Furthermore, when patients access their charts, they will be able to clearly understand what the issue is.

Published on: August 13, 2018

CMS Final Rule Ends the “25% Rule”

by Wachler & Associates, P.C.

The Centers for Medicare and Medicaid Services (“CMS”) recently released a final rule that is meant to empower patients and reduce administrative burdens by advancing the MyHealthData and the CMS Patients Over Paperwork initiatives. Payment policies and reimbursement rates are updated under the “Medicare Hospital Inpatient Prospective Payment System (“IPPS”) and Long-Term Acute Care Hospital (“LTCH”) Prospective Payment System Final Rule,” which will modernize Medicare by aiding in the shift from a fee-for-service to value-based payment system. The final rule also creates greater transparency surrounding hospital prices, increases accessibility to Electronic Health Records (“EHR”), and allows providers to spend less time on paperwork and more time with patients.

The final rule reveals that CMS has finally decided to put an end to a special payment adjustment policy, known as the 25% rule. The 25% rule was introduced in 2004, but its implementation had been postponed for years due to concerns about reimbursement. The 25% rule would have reduced LTCH Medicare reimbursement if more than a quarter of the LTCH hospital had patients from a single acute-care hospital. The National Association of Long-Term Hospitals estimated that the reduced rate would have caused LTCHs to receive 50% to 60% less in reimbursement.

The rule was originally crafted by CMS because LTCHs often failed to follow payment criteria that defined qualifications for prospective payment system rates. This issue was addressed in the Bipartisan Budget Act of 2013 with the site-neutral payment policy. AHA Executive Vice President, Thomas Nickels said in a letter to CMS, “given the scale of LTCH cuts under site-neutral payment, implementing the 25% rule… would unjustifiably exacerbate the instability and strain on the field, which would threaten access for the high-acuity, long-stay patients that require LTCH-level care.” Furthermore, alternative payment models are now in place, which incentivize hospitals to follow the payment criteria.

Published on: August 10, 2018

OMHA Issues Updates to Its Case Processing Manual

by Wachler & Associates, P.C.

The Office of Medicare Hearings and Appeals (“OMHA”) announced its updates to its OMHA Case Processing Manual (“OCPM”) last week. The OCPM was originally released in 2015 to regulate and codify procedures for adjudicative functions by using statutes, regulations, and OMHA directives as the guideline. The OCPM is revised as needed in order to keep up with changes to the Medicare appeals process. The OCPM seeks to provide clear guidance and instruction to appellants, adjudicators, and OMHA staff.

A new addition to each chapter in the OCPM is a “Chapter Overview” section that summarizes the content of the chapter. The OCPM used to be organized by four separate divisions, each addressing a different topic. The divisions were Part A/B Claim Determinations, Part C Organization Determinations, Part D Organization Determinations, and SSA Determinations. The updated OCPM is no longer organized by divisions, but instead is made up of twenty consecutive chapters. The purpose of eliminating the divisions was to improve the organization of the manual so that it is more user-friendly. The new or revised chapters are: 1, 5, 6, 7, 19, and 20.

The new chapters, 1 and 20, became effective on May 25, 2018. Prior to revision, Chapter 1 was titled “Manual Overview, Definition, and Governance,” which is also the title of the new Chapter 1. Unlike the previous version of the chapter, the updated Chapter 1 sets forth guidance on how to navigate the new organization of the manual. There are still similarities between the two versions; the general purpose of the manual, how to cite the manual, and acronyms used within the manual. However, the content regarding the organization of the manual has been completely redone.

Published on: July 27, 2018

Potential Stark Law and Anti-Kickback Statute Reforms to Support Coordinated Care

by Wachler & Associates, P.C.

During a hearing on July 17, 2018, Department of Health and Human Services (HHS) Deputy Secretary Eric Hargan announced that HHS is interested in reforming the Stark law and the Anti-Kickback Statute (AKS). As value-based care is becoming more prominent in the healthcare system, coordinated care between providers is a necessity; but the Stark law and AKS are considered an impediment to coordinated care. Hargan contends that since the Stark law was created in a fee-for-service context, it “may unduly limit ways that physicians and healthcare providers can coordinate patient care [in a value-based system].”

HHS’s push for reform comes out of the “Regulatory Sprint to Coordinated Care,” which is an initiative launched by CMS that seeks to remove barriers to coordinated care while still upholding laws and rules that keep patients safe. According to Hargan, HHS is working on creating administrative rules to address these barriers.

Aside from the regulatory hurdles that the Stark law imposes on coordinated care, HHS is also concerned about the strict liability aspect of the Stark law. Strict liability imposes civil liability with monetary penalties onto the provider, regardless of the intent underlying the Stark law violation arises from an accident. HHS believes that strict liability turns providers away from entering into coordinated care arrangements, because the complexity of the Stark law may cause providers to violate it unintentionally and become liable. A suggested change from HHS is to define “noncompliance” in a clearer manner, which would allow providers to feel more at ease with participating in coordinated care.

Published on: July 24, 2018

Azar Proposes Significant Changes to 340B Drug Discount Program

by Wachler & Associates, P.C.

The 340B drug discount program was originally created to provide affordable and comprehensive drug services to indigent patients. Manufacturers agree to provide prescription drugs to covered entities at significantly reduced prices, who can then offer the discounted prescription drugs to eligible patients. Covered entities include: HRSA-supported health centers, Ryan White clinics, State AIDS Drug Assistance programs, Medicare/Medicaid Disproportionate Share Hospitals, Children’s Hospitals, and other safety net providers.

The Department of Health and Human Service (HHS) Secretary Alex Azar is concerned about the 340B program; he suggests that there has been abuse of the program by covered entities. Azar stated that “[t]he current nature of 340B is such that it is quite possible for the program’s benefits to be diverted to unintended purposes, unrelated to supporting care for low-income patients.” In fact, many 340B hospitals are able to receive drug discounts for all of their patients, even though there are only a small amount of uninsured and underserved patients at the hospital. A report by the OIG found that a majority of 340B entities do not even offer the reduced prices to uninsured patients, allowing them to profit off the program.

In a meeting with lawmakers, Azar proposed to cut the discount to 20% of the list price, which is significantly lower than the typical 40-60% discount. This effort by HHS coincides with the Trump administration’s goal to lower prescription drug prices.