Riker Danzig Health Care Update August 23, 2016

Riker Danzig Health Care Update August 23, 2016
Riker Danzig Health Care Update August 23, 2016

New Jersey State: Selected Proposed Legislation  

  • A. 4003 – Introduced – Makes supplemental appropriations totaling $9,563,415 to DOH for grants of $7,765,325 to Newark Beth Israel Hospital and $1,798,090 to St. Francis Medical Center to implement improved health outcomes.
  • A. 4043 – Introduced – Requires all Medicaid managed care organizations to permit all pharmacies in State to dispense prescriptions for all covered medications.
  • A. 3998 – Introduced – also known as “Steven Schmincke’s Law,” this bill facilitates sober living home construction financing.
  • A. 3996 – Introduced – Transfer regulatory authority over managed care plans from DOBI to DOH.
  • A. 2332/S. 976 – Amended/Substituted – Requires Public Health Council to promulgate rules and regulations for use of quality control programs in bio-analytical and clinical laboratories.
  • S. 2420 – Introduced – Requires all prescriptions be transmitted electronically, subject to certain exceptions.
  • S. 2449 – Introduced – Requires hospitals and birthing centers to provide parents of newborns with information on health insurance coverage for newborn children.
  • S.R. 60 – Introduced – Urges State Board of Medical Examiners to adopt CDC guideline for prescribing opioids for chronic pain.

New Jersey State: Selected Proposed Regulation  

  • 48 N.J.R. 1350(a) – Proposed – This proposed rule would readopt with possible modification N.J.A.C. 10:161B, which governs the licensure of outpatient substance abuse treatment facilities.  The comment period runs until September 3, 2016.

Federal: Selected Proposed and Adopted Legislation

  • H.R. 1270 – Introduced – Amends the Internal Revenue Code of 1986 to repeal the amendments made by the Patient Protection and Affordable Care Act which disqualify expenses for over-the-counter drugs under health savings accounts and health flexible spending arrangements.
  • H.R. 5713 – Introduced – Provides for the extension of certain long-term care hospital Medicare payment rules, clarifies the application of the rules on the calculation of hospital length of stay to certain moratorium-expected long-term care hospitals.
  • H.R. 5694 – Introduced – Directs the Attorney General to establish guidelines for a model elder abuse registry and to provide grants to states for establishing and operating such a registry.
  • S. 3096 – Introduced – Establishes a pilot program promoting an alternative payment model for person-centered care for Medicare beneficiaries with advanced illnesses.
  • S. 3120 – Introduced – Applies the provisions of the Patient Protection and Affordable Care Act to Congressional members and members of the executive branch.
  • S. 3178 – Introduced – Amends Title XVIII of the Social Security Act to permit hospitals in all-urban states to be considered Medicare dependent hospitals.
  • S. 3211 – Introduced – Amends Title XVIII of the Social Security Act to establish a national Oncology Medical Home Demonstration Project under the Medicare program for the purpose of changing the Medicare payment for cancer care in order to enhance the quality of care and to improve cost efficiency.

Federal: Selected Proposed and Adopted Regulations

  • 81 FR 43048-01 – Adopted – This final rule revises the criteria in the Listing of Impairments that are used to evaluate disability claims involving neurological disorders in adults and children under Titles II and XVI of the Social Security Act.
  • 81 FR 46162-01 – Proposed – Addresses changes to the physician fee schedule and other Medicare Part B payment policies, such as changes to the Value Modifier. 
  • 81 FR 45604-01 – Proposed – This rule would revise the Medicare Hospital Outpatient Prospective Payment System (OPPS) and the Medicare Ambulatory Surgical Center (ASC) payment system for CY 2017.  In addition, this rule would update the requirements for the Hospital Outpatient Quality Reporting (OQR) Program and the ASC Quality Reporting (ASCQR) Program.  Further, the regulation puts forth CMS’s interpretation of §603 of the Bipartisan Budget Act of 2015, which CMS, based on the regulations, believes was intended to curb the alleged practice of hospital acquisition of physician practices that then result in receiving additional Medicare payment.
  • 81 FR 43790-01 – Proposed – This rule would revise the procedures that the Department of Health and Human Services would follow at the ALJ level for appeals of payment and coverage determinations for items and services furnished to Medicare beneficiaries.
  • 81 FR 43714-01 – Proposed – This rule would update the Home Health Prospective Payment System (HH PPS) payment rates, including the national, standardized 60-day episode payment rates, the national per-visit rates, and the non-routine medical supply conversion factor for home health episodes of care ending on or after January 1, 2017.
  • 81 FR 42802-01 – Proposed – This rule would update the End-Stage Renal Disease Prospective Payment System for calendar year 2017 as well as implement policies for coverage and payment for renal dialysis services furnished by an End-Stage Renal Disease facility to individuals with acute kidney injury.

State Litigation

  • Capital Health System, Inc. recently announced that it would drop its challenge to Horizon Healthcare Services, Inc.’s new tiered plan, OMNIA.  Capital Health System has stated, however, that their departure has nothing to do with what they view as the merits of the case, but rather circumstances that are unique to Capital Health.  For more information on the ongoing litigation, see, Capital Health Systems Inc., et al., v. Horizon Healthcare Services Inc., case number BER-C-369-15, in the Superior Court of New Jersey, County of Bergen.

Federal Litigation

  • The insurance company Highmark, Inc. recently filed a suit against the federal government seeking $223 million in unpaid obligations it says it is owed for participating in exchanges created by the ACA.  For more information on the case, see, First Priority Life Insurance Co. Inc. et al. v. U.S., case number 1:16-cv-00587, in the U.S. Court of Federal Claims.
  • Two lawsuits were recently filed by physicians against Coventry Health Care of Florida, Inc., claiming that the health insurer underpaid out-of-network health providers by millions of dollars for their services to the HMO’s members.   For more information on these cases, see, Hialeah Anesthesia Specialists et al. v. Coventry Health Care of Florida Inc., case number 2016-12264-CA-01, and Emergency Services of Zephyrhills PA et al. v. Coventry Health Care of Florida Inc., case number 2016-12265-CA-01, in the Circuit Court for the Eleventh Judicial Circuit of Florida.
  • UnitedHealthcare recently filed a lawsuit in Florida claiming that a dialysis clinic operator has cost the insurer millions of dollars by pushing consumers into private kidney treatments instead of recommending what Medicaid would cover.  Specifically, UnitedHealthcare claims that the provider pushed consumers to use private health insurance because it provided them with the greatest reimbursement rate (i.e. the facility could bill Medicare and Medicaid $300 for services it billed UnitedHealthcare $4,000 for).  For more information on the suit and the alleged scheme, see, UnitedHealthcare of Florida Inc. et al. v. American Renal Associates Holdings Inc. et al., case number 9:16-cv-81180, in the U.S. District Court for the Southern District of Florida.
  • Blue Shield of California recently has accused a public managed care organization of engaging in patient shifting to avoid paying for its most expensive patients.  Specifically, Blue Shield has alleged that the managed care organization has cost the insurer nearly $12 million dollars by moving their most expensive patients to private insurance and paying those patients’ premiums so that they can afford to stay on the private plans.  For more information on the suit, see, California Physicians’ Service v. Santa Barbara San Luis Obispo Regional Health Authority et al., case number CGC-16-552950, in the Superior Court of the State of California, County of San Francisco.  
  • A Colorado federal judge recently ruled to partly dismiss conspiracy allegations lodged against certain surgical centers by Aetna and UnitedHealthcare, stating that the Court did not agree that the centers committed fraud by waiving patient fees or violated antitrust laws by sending their bills to the insurers.  Specifically, as the reduction in patient fees was to approximate in-network rates, the Court found that the insurers were not deceived.  For more information on the suit, see, Kissing Camels Surgery Center LLC et al. v. Centura Health Corp. et al., case number 1:12-cv-03012, in the U.S. District Court for the District of Colorado.
  • Over 400 hospitals have recently entered confidential settlements over disputed calculations of Medicare reimbursement for uncompensated care closing out lawsuits that had been ongoing since 2010.  For more information on these claims, the lead case had been Alegent Health – Bergan Mercy Health System et al. v. Burwell, case number 1:10-cv-01354, in the U.S. District Court for the District of Columbia.
  • A New Jersey church-affiliated hospital has urged the Supreme Court to rule that employee retirement plans maintained by church-affiliated hospitals are exempt from ERISA.  This appeal comes in the wake of the Third Circuit’s December 2015 ruling that the exemption only applies to plans established by churches.  For more information on the case, see, Laurence Kaplan v. Saint Peter's Healthcare System, et al, case number 15-1172, in the U.S. Court of Appeals for the Third Circuit.
  • The DOJ recently announced that in conjunction with attorneys general from several states that they have filed lawsuits designed to block the Anthem-Cigna and Aetna-Humana mergers.  For more information on the cases, see, United States of America et al. Anthem Inc. et al., case number 1:16-cv-01493, and United States of America et al v. Aetna, Inc. et al., case number 1:16-cv-01494 both in the federal district court for the District of Columbia.
  • Recently, Anthem, Inc. had the remainder of claims it faced in a multidistrict litigation over their alleged use of distorted reimbursement rates for out-of-network services dismissed.  Specifically, the California federal judge decided that the remaining policyholders had failed to prove injuries and filed untimely suits.  For more information on the cases, see, In re WellPoint, Inc. Out-of-Network “UCR” Rates Litigation, case number 2:09-ml-02074, in the United States District Court for the Central District of California.
  • A Florida appeals court recently reversed a lower court’s order compelling arbitration of a medical malpractice claim against a Kindred Healthcare entity signed by a patient which was void because it was against public policy.  Specifically, the Court found that the arbitration agreement was void because the agreement incorporated some, but not all, of the provisions of Florida’s Medical Malpractice Act.  For more information on the suit, seeKlemish et al. v. Villacastin et al., case number 5D15-2574, in the Fifth District Court of Appeal of Florida.

In the News

  • Starting on July 1, 2016 and running until June 30, 2021, 200 physician groups and 17 payers across the country began participating in a new CMS initiative, the Oncology Care Model (OCM).  Under OCM, the participants have entered into payment arrangements that include financial and performance accountability for episodes of care surrounding chemotherapy administration to cancer patients.  The names of those practices and payers participating in the OCM can be found at http://innovation.cms.gov/initiatives/Oncology-Care/.
  • The U.S. Department of Justice recently confirmed that False Claims Act penalties have increased as of August 1, 2016 and apply to violations after November 2, 2015.  Going forward, the minimum per-claim penalties will jump to $10,781 from $5,500, and maximum per-claim penalties will rise to $21,563 from $11,000.
  • The FTC recently decided to drop its challenge to a proposed West Virginia hospital merger after the State passed a law that exempts health institutions monitored by the State health care agency from federal antitrust scrutiny if the state signs off on a combination or arrangement.
  • Recently, another co-op insurer was forced to wind down business after it was told that it owed the federal government $13.4 million under an Affordable Care Act risk management program.  HealthyCT, a Connecticut based co-op, becomes the latest co-op to go under, further dwindling the remaining viable co-op plans in existence.
  • Oregon’s Health Co-Op , as of August 1, 2016 will no longer be in business by virtue of a $900,000 bill from the Affordable Care Act risk management program.  The risk adjustment program was meant to encourage insurers to keep premiums low as they adjusted to the new marketplace by transferring money from insurers with relatively healthy customers, and thus lower costs, to insurers with sicker customers.  Oregon’s Health Co-Op becomes yet another plan forced to fold after the federal government did not pay the insurer enough to offset the losses they incurred on behalf of patients.
  • Land of Lincoln Mutual Health Insurance Co., another ACA co-op, has announced that it will have to close its doors following a $31.8 million bill given to them by the federal government under the ACA’s Risk Adjustment Program. 
  • A New Jersey State lawmaker has recently proposed a plan that would provide health care coverage for all within the state as a single-payer program.  Specifically, the Assemblyman announced that he would propose a plan that would make the state government, not private insurers, act as a “single payer” that negotiates and covers the cost of care, allegedly cutting expenses for patients and freeing them from traditional insurance network restrictions.  This plan, while authorized under the ACA, would be the first of its kind.
  • In a recent statement, Humana announced that it likely will be pulling out of all but twelve (12) state marketplaces created under the Affordable Care Act, citing the financial troubles of the individual markets as the reason for its departure.  Similarly, Aetna has also announced recently an intention to pull out of most state marketplaces created under the Affordable Care Act for similar financial reasons.

The list above does not include every proposed or adopted legislation, litigation or guidance document that may impact the health care industry.  Instead, it includes only a select few chosen by the authors, and any information in this Update is not intended to provide legal advice.  If you are concerned that a proposed or adopted legislation, litigation or guidance document may impact your practice, then you should seek legal advice. Nothing in this Update should be relied upon as legal advice in any particular matter. © 2016 Riker Danzig Scherer Hyland & Perretti LLP.

If you have any questions about the issues discussed in this Update, please contact the following Riker Danzig attorneys:

Glenn A. Clark, Partner

Khaled John Klele. Partner

Stephen M. Turner, Associate