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Coronavirus – CMS Guidance Part Two

Month: March 2020

Coronavirus – CMS Guidance Part Two

Posted on by rd_admin

For more information about this blog post, please contact Khaled J. Klele, Ryan M. Magee, or Labinot Alexander Berlajolli.

This update is a follow-up to our previous update on COVID-19 and the steps that the federal government has taken to combat the virus.  Most critically, The Centers for Medicare & Medicaid Services ("CMS")  has significantly expanded telemedicine services to Medicare beneficiaries.  For example, CMS has waived the requirement that a physician must have a previous relationship with the patient before providing some services, such as telehealth visits.  The issue is that New Jersey has its own telemedicine statute and has not waived that requirement.  In fact, New Jersey just recently enacted telemedicine regulations that impose some onerous requirements before engaging in telemedicine.  Also significant is the Office of Civil Rights’ decision to exercise discretion and waive penalties for providing telemedicine services through FaceTime or Skype.

March 12:  CMS issued Frequently Asked Questions (“FAQs”) to aid state Medicaid and Children’s Health Insurance Program (CHIP) agencies in their response to COVID-19 outbreak. The FAQs cover a range of topics and issues that reflect questions and concerns raised by state Medicaid and CHIP agencies.  The information highlights the resources available to states, such as the Disaster Preparedness Toolkit developed by CMS specifically for state Medicaid and CHIP agencies, to address a variety of policy and program topics related to eligibility and enrollment, benefits and cost sharing, healthcare workforce, and telehealth.

March 13: CMS issued FAQs detailing existing federal rules governing health coverage provided through the individual and small group insurance markets that apply to the diagnosis and treatment of COVID-19.  The FAQs clarify which COVID-related services, including testing, isolation/quarantine, and vaccination, are generally currently covered as Essential Health Benefits in these markets.

March 13:  President Trump declares a National Emergency.

March 13:  As a result of the President’s declaration, CMS was able to take several aggressive actions:

  1. CMS has issued several blanket waivers to requirements under Medicare, Medicaid and the  CHIP program requirements, including temporarily allowing physicians licensed in other states to treat Medicaid and Medicare patients in states in which the physician is not licensed. This, however, does not apply to patients with insurance policies regulated at the state level, such as private insurance policies.  Other waivers cover Skilled Nursing Facilities, Critical Access Hospitals, Housing Acute Care Patients In Excluded Distinct Part Units, Durable Medical Equipment, Care for Excluded Inpatient Psychiatric Unit Patients in the Acute Care Unit of a Hospital, Care for Excluded Inpatient Rehabilitation Unit Patients in the Acute Care Unit of a Hospital, Supporting Care for Patients in Long-Term Care Acute Hospitals, Home Health Agencies, Provider Enrollments, and Medicare Appeals.
  2. The national emergency declaration also enables CMS to a wider range of flexibilities under section 1135 waivers. States can assess their needs and request these available flexibilities, which are outlined in the Medicaid and CHIP Disaster Response Toolkit.  CMS has already granted such a waiver to Florida, which included flexibilities that enable the state to waive prior authorization requirements to remove barriers to needed services, streamline provider enrollment processes to ensure access to care for beneficiaries, allow care to be provided in alternative settings in the event a facility is evacuated to an unlicensed facility, suspend certain nursing home screening requirements to provide necessary administrative relief, and extend deadlines for appeals and state fair hearing requests.
  3. CMS temporarily suspended non-emergency survey inspections.

March 13   CMS issued additional guidance directing nursing homes to significantly restrict visitors and nonessential personnel, as well as restrict communal activities inside nursing homes.

March 15: The Department of Health & Human Services ("HHS") issued guidance on waiving sanctions and penalties against covered hospitals that do not comply with certain provisions of the HIPAA Privacy Rule.

March 15:  On Sunday, the Coronavirus Task Force announced that it would release social distancing guidelines the following day.  Those guidelines provided detailed social distancing guidelines, including a limit on social gatherings to 10 people.  These guidelines are more strict than those issued by some states.

March 16:  The FDA issued a guidance document allowing states to approve tests developed in laboratories in their states to expedite testing of COVID-19.

March 17:    CMS announced expanded Medicare telehealth coverage that will enable Medicare beneficiaries to receive a wider range of healthcare services from their doctors without having to travel to a hospital or doctor’s office, retroactive to March 6.   Previously, telehealth services were restricted under the Medicare program.  CMS’ recently issued guidance document and FAQs explain the recent expansion and the billing codes to use.  Under this Medicare waiver, CMS has broadened the services, to include the following three areas:

Medicare Telehealth Visits:  CMS will not conduct audits to determine whether patients had a prior established relationship with a particular practitioner.  These visits are considered the same as in-person visits and are paid at the same rate as regular, in-person visits.  CMS will also make payment for professional services furnished to beneficiaries in all areas of the country in all settings and CMS expanded the location to include the patient’s home.  In addition, the OIG is providing flexibility for healthcare providers to reduce or waive cost-sharing for telehealth visits paid by federal healthcare programs.

Virtual Check-Ins:  Medicare patients in their homes may have a brief communication service with practitioners via a number of communication technology modalities, such as a phone, for a 5-10 minute conversation.  The service is not limited to rural settings any longer. Medicare pays for these “virtual check-ins” for patients to communicate with their doctors and avoid unnecessary trips to the doctor’s office. These virtual check-ins are for patients with an established relationship with a physician where the communication is not related to a medical visit within the previous seven days and does not lead to a medical visit within the next 24 hours (or soonest appointment available). The practitioner’s response has expanded to include telephone, audio/video, secure text messaging, email, or use of a patient portal.

E-Visits:  This is for all locations, including the patient’s home, and in all areas and not just rural areas.  E-Visits involve evaluation and management services involving patients that have an established patient-provider relationship.

March 17:  The Office of Civil Rights has announced that it will exercise enforcement discretion and waive penalties for HIPAA violations against healthcare providers that serve patients in good faith through everyday communications technologies, such as FaceTime or Skype, during the COVID-19 nationwide public health emergency.

March 17:  CMS released Medicaid fee-for-service telehealth guidance to the states.

March 17:  CMS issued additional guidance to all Programs of All-Inclusive Care for the Elderly (PACE) Organizations (POs).  POs assist the elderly in the community instead of going to a nursing home or other care facility.  Considering that POs serve the most vulnerable population to COVID-19 PACE, CMS has issued this guidance on accepted policies and standard procedures with respect to infection control.

Healthcare Litigation Update

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For more information about this blog post, please contact Khaled J. Klele, Ryan M. Magee, or Labinot Alexander Berlajolli.

Fifth Circuit says Texas Hospital Cannot Challenge Medicare Payments Based on Wrong Information

The U.S. Court of Appeals for the Fifth Circuit recently ruled that Texas’ Hendrick Medical Center may not challenge Medicare payments calculated based on wrong information, when it failed to follow administrative rules for correcting the data before the federal agency set the payment rate.  The Court affirmed the district court’s grant of summary judgment to the Secretary in an action brought by Hendrick challenging Medicare payments it received for the 2015 federal fiscal year. The Court held that the district court did not err by dismissing Hendrick's appeal because the Board's determination that it did not have jurisdiction over Hendrick's appeal for failure to exhaust administrative remedies was correct. In this case, Hendrick received notice via the Federal Register but failed to request correction of its wage data by the published deadline in accordance with the established process under the statute. The Court noted that “these results may be harsh, but the deadline for administrative exhaustion was clearly set forth and properly noticed by CMS.” The case is Hendrick Medical Center v. Azar, case number 19-10334, in the U.S. Court of Appeals for the Fifth Circuit.  Again, this case is a reminder to exhaust your administrative remedies, especially when it comes to payor audits.  

Pennsylvania  Appellate Court Holds Physician Credentialing File is Not Protected by State Peer Review Privilege

Recently, a Pennsylvania state appellate court upheld an order compelling a hospital to produce the un-redacted contents of a physician’s credentialing file, which normally contains documents considered protected by state peer review privilege status and included multiple types of professional performance evaluations examining the quality and efficiency of services provided by the co-defendant physician that the hospital’s credentialing committee used in its credentialing and privileging process.  While the court agreed that the file documents meet the definition of peer review documents, it cited a 2018  Pennsylvania Supreme Court Decision, Reginelli v. Boggs, which held that the state peer review privilege only applies to documents of a review committee and not to documents of a review organization. The appellate court applied the holding in Reginelli to the credentialing file and held that because a credentialing committee is a review organization, its documents are not protected.  The court acknowledged that its holding would have a chilling effect on the candid sharing of information between healthcare providers, which serves an important peer review function as hospitals consider the qualifications of new applicants seeking clinical privilege. The case is Leadbitter v. Keystone Anesthesia v. Petraglia, case number 1414 WDA 2018.

AMA says Aetna, Optum Misused CPT Codes to Hide Administrative Charges

In a recent amicus brief filed by the AMA’s Litigation Center of the AMA and State Medical Societies in Peters v. Aetna, it urged the U.S. Court of Appeals for the Fourth District Court in Virginia to overturn a ruling that denied the companies’ liability in passing administrative charges through CPT codes.  The brief says the defendants in the case—Aetna Inc., Aetna Life Insurance Co. and OptumHealthcare Solutions Inc.—misused CPT codes to trick insureds into paying for administrative fees disguised as medical care. According to the AMA, the EOB and emails between the companies' employees showed Aetna used code 97039 to charge Ms. Peters an administrative fee when billing for a chiropractic visit. In calling on the court to overturn the decision, the AMA said the defendants did not legitimately choose a CPT Code as they are not a provider like a physician or hospital.  We will keep track of this case as it goes through the court system. 

Florida Appellate Court Holds FDIC’s State Court Case Was Barred by Statute of Limitations, Even Though FDIC Filed in Federal Court Before the Limitations Period Expired

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In a split decision, the District Court of Appeal of Florida recently held that the FDIC was barred from bringing a state court action due to the statute of limitations having expired, despite the fact that the FDIC initially timely filed in federal court, but the federal court dismissed the action at defendant’s urging due to the FDIC’s failure to abide by a venue provision.  See Fed. Deposit Ins. Corp. v. Nationwide Equities Corp., 2020 WL 912944 (Fla. Dist. Ct. App. Feb. 26, 2020).  The defendant loan originator entered into a contract with a bank that contained a forum-selection clause mandating that any action be filed in Miami-Dade County Circuit Court.  The bank later failed, and the FDIC took over.  Almost six years later—three days before the expiration of the limitations period for the FDIC to bring actions—the FDIC brought an action against defendant for breach of contract in the United States District Court for the Southern District of Florida.  Defendant filed a motion to dismiss based on the venue provision.  As part of its forum non conveniens argument, defendant stated that “[t]he FDIC [would] not be prejudiced or inconvenienced by filing this action in State Court because . . . it is the correct forum and the one chosen by the parties.”  The federal court agreed and dismissed the action without prejudice, stating that “[the] FDIC-R can reinstate its lawsuit in state court without undue inconvenience or prejudice.” After the FDIC refiled in state court, defendant moved to dismiss, arguing that the limitations period expired.  The trial court agreed and dismissed the action.  The FDIC then filed a reconsideration motion with the federal court, which the federal court denied, and then sought an appeal of the state court ruling.

On appeal, the Court affirmed.  The Court held that the FDIC was not entitled to equitable tolling or judicial estoppel because it was “neither blameless nor ignorant” and “the FDIC’s intentional flouting of its obligation to file in Miami-Dade was no mistake. The FDIC sat on its rights, and waited until three days before the expiration of the six year statute of limitations to file its action in a federal forum in contravention of the forum-selection clause.”  The Court further found that “the FDIC failed to apprise the federal court that the statute of limitations had expired. Had it done so, the federal court could have conditioned the dismissal upon Nationwide's agreement to waive its statute of limitations defense in state court.”  In dissent, one of the judges argued that judicial estoppel should bar defendant from making the statute of limitations argument:  “defendant cannot succeed in getting the plaintiff’s complaint dismissed based on the legal position that the plaintiff ‘can reinstate its suit in State Court without undue inconvenience or prejudice,’ and then, when the complaint is refiled in the State court, adopt the opposite legal position that the plaintiff cannot reinstate its suit in State court because the statute of limitations has expired.”

For a copy of the decision, please contact Michael O’Donnell at modonnell@riker.com or Anthony Lombardo at alombardo@riker.com.

Coronavirus – An Outline of CMS Guidance

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For more information about this blog post, please contact Khaled J. Klele, Ryan M. Magee, or Labinot Alexander Berlajolli.

In light of the impact of the Coronavirus (“COVID-19”), The Centers for Medicare & Medicaid Services ("CMS")  has provided numerous and diverse responses beyond the travel restrictions that have been imposed, including the issuing of a memo on February 6, 2020 to healthcare facilities to take critical steps to prepare for and address the virus, issuing guidance to a variety of providers on infection control throughout this period, obtaining commitments from insurance companies to waive co-payments and coinsurance obligations, creating new billing codes, and expanding telemedicine.  These steps are outlined below with links to CMS’ guidance.

February 6:  CMS issued a memo to help the nation’s healthcare facilities take critical steps to prepare for COVID-19.  healthcare providers, especially facilities, should read this memo and the links contained within the memo. The links contain updated infection prevention and control guidance specific to COVID-19, updated personal protective equipment recommendations, guidance for clinicians caring for patients with COVID-19, and for public health officials on the evaluation and testing of patients under investigation for the virus.

February 6:   CMS gave CLIA-certified laboratories information about how they can test for COVID-19.

February 13:  CMS issued a new HCPCS code for providers and laboratories to test patients for COVID-19 using CDC-developed test.

February 29:  The FDA issued a new, streamlined policy for certain laboratories to develop their own validated COVID-19 diagnostic test.

March 4:  CMS offered important guidance to help State Survey Agencies and Accrediting Organizations prioritize their inspections of healthcare facilities, and direct healthcare providers nationwide to ensure that they are implementing longstanding infection control procedures.  This was followed by a memo based on frequently asked questions to further qualify the guidance.

March 4:  Since March 4, CMS has issued additional guidance for infection control and prevention of COVID-19 in various settings such as Patient Triage, Placement and Hospital Discharge, Nursing Homes, Hospice Agencies, Hospital Emergency Rooms, Dialysis Facilities, Home Health Agencies, and guidance for use of certain industrial respirators by healthcare personnel.

March 5:  CMS issued a second HCPCS code for certain COVID-19 laboratory tests, in addition to three fact sheets about coverage and benefits for medical services related to COVID-19 for CMS programs.  The second HCPCS code allows laboratories to bill for non-CDC laboratory tests of COVID-19 that the FDA allowed laboratories to develop on February 29.  CMS claims processing systems will be able to accept these codes starting on April 1, 2020 for dates of service on or after February 4, 2020.

March 6:  The Trump Administration executed an emergency funding bill, which included $500 million in waivers for Medicare telehealth restrictions.  The bill includes $8.3 billion in funding, with $7.76 billion going to federal, state and local agencies. 

March 6:  CMS issued frequently asked questions and answers for healthcare providers regarding Medicare payment for laboratory tests and other services related to COVID-19, including the expansion of telehealth services so providers can remotely treat patients with COVID-19.

March 9:  CMS announced that many leading insurance companies and their industry associations announced that they will be treating COVID-19 diagnostic tests as covered benefits and will be waiving cost sharing that would otherwise apply to the test. In addition, CMS published a memo to Medicare Advantage and Part D health and prescription drug plans informing them of the flexibilities they have to provide healthcare coverage to Medicare beneficiaries for COVID-19 testing, treatments, and prevention. These flexibilities include, among others, waiving cost-sharing and removing prior authorization requirements for Medicare Advantage and Part D health and prescription plans.

March 10:   A memo was issued clarifying the types of facemasks and respirators healthcare workers may use in situations involving COVID-19 and other respiratory infections based on additional guidance from the CDC and FDA. 

Nevada Federal Court Holds Exclusion 3(d) of Title Insurance Policy Bars Coverage for HOA Lien

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The United States District Court for the District of Nevada recently held that an insured lender was not covered under a title insurance policy for an HOA lien because the lien was recorded after the policy date, regardless of when the HOA recorded its Declarations of Covenants, Conditions and Restrictions.  See HSBC Bank USA, N.A. as Tr. for Registered Holders of Nomura Home Equity Loan, Inc., Asset-Backed Certificates, Series 2006-HE2 v. Fid. Nat’l Title Ins. Co., 2020 WL 886940 (D. Nev. Feb. 20, 2020).  The borrower purchased a property in 2005 and signed a deed of trust on the property.  The deed of trust was eventually assigned to plaintiff.  In connection with the purchase and the deed of trust, defendant issued a title insurance policy.  In 2008, the HOA recorded a lien on the property for delinquent assessments, and the property reverted back to the HOA through a non-judicial foreclosure sale in 2013.  The HOA later sold the property to a third party.  Plaintiff then filed a claim with defendant based on the fact that the third party was claiming an interest in the property superior to plaintiff’s deed of trust, but defendant denied the claim.  Plaintiff filed this action, and defendant filed a motion to dismiss.

The Court granted the motion to dismiss.  Exclusion 3(d) of the policy bars coverage for any “loss or damage, costs, attorneys' fees or expenses which arise by reason of . . . [d]efects, liens, encumbrances, adverse claims or other matters . . . attaching or created subsequent to Date of Policy.”  In this case, the HOA recorded its lien in 2008, three years after the date of the policy.  Accordingly, plaintiff could not be covered for this lien under the policy.  In making this decision, the Court rejected plaintiff’s argument that the HOA’s 2002 recording of the Declarations of Covenants, Conditions and Restrictions, which allowed it to later record the lien, meant that the lien was of record before the policy date.

For a copy of the decision, please contact Michael O’Donnell at modonnell@riker.com or Anthony Lombardo at alombardo@riker.com.

Attention NJ Developers: NJDEP Adopts Amendments to Stormwater Management Rules Requiring the Use of Green Infrastructure

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Last year, the New Jersey Department of Environmental Protection (“NJDEP”) proposed significant changes to the State’s Stormwater Management Rules,  N.J.A.C. 7:8 et seq. (the “SWMR” or “Rules”) that set forth standards and requirements for the management of stormwater runoff associated with major developments.   On March 2, 2020, the amendments to the SWMR were adopted with only minor, non-substantive revisions to the original proposal.  Most significantly, the amendments require major developments to utilize green infrastructure to meet the groundwater recharge and stormwater runoff quantity and quality standards.  In addition, the amendments revised the definition of a “major development” in a manner that considerably expands the reach of the Rules.  Developers should take note of these changes as they are fairly burdensome, and thus, likely to increase costs for new developments and construction projects.  Notably, however, the SWMR amendments do not become operative until March 2, 2021 (one year from adoption).

While our April 9, 2019 blog article, Storm(y) Waters on the Horizon: Changes to Regulation of Stormwater in New Jersey, highlighted a few of the proposed revisions to the SWMR, below is a summary of several of the key changes that have since been adopted:

  • Green Infrastructure – The NJDEP replaced the requirement to incorporate nonstructural stormwater management strategies to the “maximum extent practicable” with a more specific requirement to use green infrastructure to meet the applicable stormwater management standards.  “Green infrastructure” is defined as a stormwater management measure that manages stormwater close to its source either by:
    1. Treating stormwater through infiltration into subsoil or by filtration through vegetation or soil; or
    2. Storing stormwater runoff for reuse. 

Developers will need to use non-structural measures like bio-swales, green roofs, rain gardens and pervious paving to address stormwater runoff.

  • Definition of Major Development – The definition was revised to mean an individual development as well as multiple developments that individually or collectively result in:
    1. The disturbance of one or more acres of land since February 2, 2004;
    2. The creation of one-quarter acre or more of “regulated impervious surface” since February 2, 2004;
    3. The creation of one-quarter acre or more of “regulated motor vehicle surface” after March 2, 2021; or
    4. A combination of 2 and 3 above that totals an area of one-quarter acre or more.

Major development includes all developments that are part of a common plan of development or sale (for example, phased residential or commercial development) that collectively or individually meet any one or more of the items above.  This change certainly broadens the scope of projects that will trigger compliance with the SWMR and it includes a look-back to 2004.

  • Total Suspended Solids (“TSS”) Removal Requirement – The amendments change the TSS removal requirements.  Specifically, the TSS removal requirements now apply to runoff from motor vehicle surfaces, but do not apply to impervious surfaces not traveled by motor vehicles, like sidewalks, hardscape plazas, and rooftops.  While this adjustment to the SWMR relieves developers of complying with the TSS removal requirements for certain impervious surfaces, it may expand the requirement to areas like gravel roadways that were not captured by the requirements in the past.

As noted above, the amendments to the SWMR were adopted with only minor cleanup/clarification revisions to the original proposal.  The only change of particular note relates to the obligation to obtain approval of a variance in the event that green infrastructure will not be used to satisfy the applicable stormwater management standards.  Since certain types of Manufactured Treatment Devices (“MTDs”) meet the definition of “green infrastructure,” the NJDEP clarified that a variance for use of an MTD is only required if the MTD does not meet the definition of “green infrastructure.”

According to the NJDEP, the amendments to the SWMR will more effectively reduce stormwater volume, reduce erosion, encourage stormwater infiltration and groundwater recharge, and minimize the discharge of stormwater-related pollutants into the environment.  While environmental groups have criticized the amendments as not doing enough to address environmental issues related to stormwater runoff, these changes impose significant new burdens on developers.  Now that these changes to the SWMR have been adopted, developers and property owners should carefully consider how these changes may affect their existing or planned projects.

Take note that the NJDEP plans to make additional revisions to the SWMR that will go beyond the recently adopted amendments.  We plan to apprise our readers of these changes as more information becomes available.

For more information, please contact the author Jaan M. Haus at jhaus@riker.com or any attorney in our Environmental Practice Group.

Indiana Supreme Court Holds Statute of Limitations for Foreclosure Should Not Be Shortened Under “Rule of Reasonableness”

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The Indiana Supreme Court recently reversed prior appellate decisions and held that there is no “rule of reasonableness” imposed on actions regarding closed installment contracts, such as promissory notes and mortgages, and that the limitations period is six years and begins running either at a missed payment, acceleration, or the note’s maturity date.  See Blair v. EMC Mortg., LLC, 2020 WL 762592 (Ind. Feb. 17, 2020).  Defendants executed a note and mortgage in 1992.  They defaulted in 1995, and the note matured on January 1, 2008.  Plaintiff brought this action in 2012, and defendants argued that it was untimely.  The trial court found that plaintiff was entitled to foreclose, but that it was barred from seeking any payments or interest that accrued before 2006 due to the six-year statute of limitations.  On appeal, the Court of Appeals reversed and found plaintiff waited “an unreasonable amount of time” after the 1995 default to bring this action, and therefore was completely barred from bringing it.

On appeal, the Supreme Court reversed.  The Court found that there are two statutes of limitation for bringing an action on a note and mortgage, and that they “recognize three events triggering the accrual of a cause of action for payment upon a promissory note containing an optional acceleration clause.”  The resulting limitations periods are: (i) six years from a missed payment to bring an action on the missed payment; (ii) six years from when the lender exercises its option to accelerate the debt to bring an action on the full amount; and (iii) six years from the maturity date to bring an action on the full amount.  In doing so, the Court rejected the finding of Court of Appeals, as well as a number of other Court of Appeals cases, in which the courts imposed a “reasonableness limitation” on bringing an action when the creditor declines to accelerate the debt.  The Court found that those decisions failed to distinguish between actions arising out of credit card debts—in which there is no maturity date and in which a reasonableness limitation may apply—and actions arising out of promissory notes and mortgages with a fixed maturity date.  The Court held that there is no need for a rule of reasonableness for the latter category and, therefore, that this action was timely.  Finally, the Court noted that the lender could have been entitled to the full amount due (and not just the amounts accrued in the six years before it commenced the action), but that the lender did not appeal that portion of the trial court’s decision.

For a copy of the decision, please contact Michael O’Donnell at modonnell@riker.com or Anthony Lombardo at alombardo@riker.com.

Beware of the Telemedicine Trap

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For more information about this blog post, please contact Khaled J. Klele, Ryan M. Magee, or Labinot Alexander Berlajolli.

When New Jersey enacted the Telemedicine Act, N.J.S.A. 45:1-62 et al. (the “Act”), many physicians celebrated.  Although telemedicine is a good thing for the healthcare industry, it is not the free-for-all that many physicians believe.  For example, the Act requires that the physician be licensed in the state in which the patient is located.  Many telemedicine statutes implemented by other states are similar to the Act.  As a result, a physician licensed in New Jersey cannot engage in telemedicine with patients in other states unless the physician is also licensed in those states.  In addition, the Act requires the physician to provide the patient with certain information, including his or her professional credentials, before engaging in telemedicine and, therefore, it is important to have a proper consent form.

Importantly, the Act requires the physician to establish a provider-patient relationship before prescribing medication to the patient based solely on answers to an online questionnaire, and the Act specifies how to establish that relationship.  The Act also imposes additional restrictions in prescribing Schedule II Controlled Substances.  Under the Act, a physician may not issue a prescription for a Schedule II Controlled Substance until after an initial in-person examination of the patient, and then the physician must have in-person visits every three months for the duration of the time the patient is being prescribed the Substances. 

Thus, beware of telemedicine companies who want to hire you to prescribe medications and/or durable medical equipment for patients who live outside of the state of your practice and with whom you have little to no interaction. Two recent cases warrant your attention and hesitation.  

Just recently, two owners of telemedicine companies, Advantage Choice Care LLC and Tele Medcare LLC, were charged in a $56 million alleged scheme.  These companies had offices in Bayonne, New Jersey, Boca Raton, Florida, and Richmond Hill, Georgia. 

This follows indictments in the largest insurance fraud scheme ever investigated by the DOJ–worth $1.2 billion–that involved two telemedicine companies, Video Doctor USA and Telemed Health Group. The CEO recently pled guilty to the charges.  

The story is the same in each case.  Besides paying and receiving kickbacks from suppliers, the telemedicine companies hired physicians to write prescriptions based on answers to online questionnaires from patients with whom the physicians had limited contact or no contact at all, a practice which raised the attention of regulators.

As a result, before working for a telemedicine company that requires you to prescribe medication or durable medical equipment to patients located across state lines, you must comply with the Act as well as the telemedicine laws in place where the patient is located.  You must also establish, among other things, a provider-patient relationship besides just reviewing answers to an online questionnaire.

Federal Regulatory and Litigation Update

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For more information about this blog post, please contact Khaled J. Klele, Ryan M. Magee, or Labinot Alexander Berlajolli.

Medicare Program: Comprehensive Care for Joint Replacement Model Three-Year Extension and Changes to Episode Definition and Pricing

85 FR 10516:  On February 24, 2020, CMS proposed a rule intended to revise certain aspects of the Comprehensive Care for Joint Replacement (CJR) model, which was CMS’s first mandatory bundled payment initiative, which began on April 1, 2016 and is set to expire on December 31, 2020.   Specifically, the proposed rule now incorporates the episode of care definition, the target price calculation, the reconciliation process, the beneficiary notice requirements and the appeals process.  For proposed performance years 6 through 8, the proposed rule also eliminates the 50 percent cap on gainsharing payments, distribution payments, and downstream distribution payments for certain recipients.

Additionally, the proposed rule would allow time to test the proposed changes by extending the length of the CJR model for an additional three years, through December 31, 2023, for certain participant hospitals.  As part of its public comment period, the proposed rule solicits input as to how to best conceptualize and design a future bundled payment model focused on lower extremity joint replacement (LEJR) procedures performed in the ambulatory surgical center (ASC) setting.  Comments are due by April 24, 2024.

Medicare Program:  Update to the Required Prior Authorization List of Durable Medical Equipment, Prosthetics, Orthotics, and Supply Items That Require Prior Authorization as a Condition of Payment

85 FR 7666:   This proposal continues the current list for prior authorization requirements for Durable Medical Equipment.  It also adds six more codes to this list.  The Rule becomes effective on May 20, 2020.  The six additional codes are:

L5856  Addition to lower extremity prosthesis, endoskeletal knee-shin system, microprocessor control feature, swing and stance phase, includes electronic sensor(s), any type.

L5857  Addition to lower extremity prosthesis, endoskeletal knee-shin system, microprocessor control feature, swing phase only, includes electronic sensor(s), any type.

L5858  Addition to lower extremity prosthesis, endoskeletal knee-shin system, microprocessor control feature, stance phase only, includes electronic sensor(s), any type.

L5973  Endoskeletal ankle foot system, microprocessor controlled feature, dorsiflexion and/or plantar flexion control, includes power source.

L5980  All lower extremity prostheses, flex foot system.

L5987  All lower extremity prosthesis, shank foot system with vertical loading pylon.

Medicaid Program: Preadmission Screening and Resident Review

85 FR 9990:  CMS introduced this proposed rule, which would modernize the requirements for Preadmission Screening and Resident Review (PASRR).  The proposed rule aims to overhaul outdated provisions of the Preadmission Screening and Annual Resident review by incorporating statutory changes, reflecting updates to diagnostic criteria for mental illness and intellectual disability, reducing duplicative requirements and other administrative burdens on State PASRR programs, and making the process more streamlined and person-centered.  The proposed rule is subject to public comment until April 20, 2020. 

Data Privacy and Price Transparency Top the List of ONC Advisory Group Priorities

On February 19, 2020, the Health Information Technology Advisory Committee (HITAC) finalized a list of 31 issues it intends to address over the next two years.  The 31 issues relate to three priority areas mandated by the Century Cures Act:  (1) interoperability, (2) privacy and security, and (3) patient access to information.  HITAC’s priorities are aptly timed, as the trio are often interrelated and, at times, subject to controversy.  For example, an HHS proposed rule establishing Application Programming Interfaces (APIs) to improve access and sharing of patient data,  discussed below, has met vocal opposition from many health systems that believe the proposed rule compromises interoperability and patient access for privacy and security.

HITAC also categorized its list of priorities into immediate opportunities versus long-term goals.  Among its immediate opportunities are third party access to data, price transparency, hearings on emergent technologies in patient matching, assessing patient portals and patient-facing mobile apps, and recommending strategies for improved patient safety while handling health records. 

HITAC’s long-term goals, characterized as goals to be pursued in three or more years, include recommending steps to improve interoperability with behavioral health and long-term care providers and reviewing the federal government’s role in setting guidelines about interoperability at the state level.

60 Health Systems Sign Joint Letter Opposing HHS Proposed Rule Intended to Improve Access to Patient Records

We previously reported on a proposed rule that would advance interoperability by making it easier to share medical records data with patients and apps.  Approximately 60 health systems have signed a joint letter urging hospitals and clinics to oppose the proposed rule.  Among other things, the proposed rule focuses on establishing Application Programming Interfaces (APIs) for interoperability purposes, such as improving patient access to their own health information and easing the transmission of patient data between facilities.  The 60 health systems, led by Epic, claim the new provisions will comprise patient privacy and may result in app makers having access to patient data without consent.  Those in favor of the rule, however, say the proposed rule will facilitate long overdue changes to the ways hospitals share patient records with other medical offices or hospitals.

Federal Litigation Involving the HITECH Act

Ciox Health, LLC v. Azar, et al.:   In 2013, HHS issued a rule limiting the amount a party can charge a patient for accessing the patient’s own records.  Fees had to be based on calculating the labor cost it takes to fulfill a record request or by charging a flat fee capped at $6.50 per request.  In 2015, HHS extended the limitation to when a patient requests to send their health data to a third party.  HHS did so without following the rule making procedure in the Administrative Procedure Act.  The Federal District Court for the District of Columbia nullified HHS’s rule. The judge also vacated an HHS rule from 2013 under the HITECH Act.  That Act said that patients can request that organizations send a copy of their electronic health record to a third party, but the regulation issued said that the provider also had to send paper records. The judge held that this language regarding paper records could not be added to the regulation since it goes beyond statutory requirements set by Congress.

Texas Federal Court Holds Insured’s Claim for Mechanic’s Lien Barred by Exclusions 3(a) and (d)

Posted on by rd_admin

The United States District Court for the Northern District of Texas recently held that an insured’s claim regarding a mechanic’s lien was excluded from coverage under the title insurance policy under Exclusions 3(a) and 3(d).  See Hall CA-NV, LLC v. Old Republic Nat'l Title Ins. Co., 2020 WL 869722 (N.D. Tex. Feb. 20, 2020).  In the case, the insured lender agreed to loan money to the owner of a hotel for renovation purposes.  Although the contractor began work before the lender issued the loan, it agreed to subordinate any potential mechanic’s liens to the lender’s deeds of trust.  The defendant title insurance company then issued loan policies to the lender.  After the renovation costs exceeded the loan commitment, the lender declared the owner in default and stopped making loan advances.  The contractor then stopped work, recorded a lien and sought to foreclose.  Eventually, a bankruptcy court found that the subordination agreement between the lender and the contractor was not enforceable in Nevada and awarded the mechanic’s lien priority.  Although the title insurer defended the claim, it refused to indemnify the insured lender for the loss caused by the mechanic’s lien’s priority.  The lender then brought this action for breach of the insurance policy, among other claims. The parties cross-moved for summary judgment.

The Court granted the insurer’s motion and denied the lender’s.  The Court first found that any construction work that was completed but unpaid as of the policy date could constitute a title defect under the policy.  Nonetheless, the Court found that, even if such defects existed, they would be barred under Exclusions 3(a) and 3(d).  First, Exclusion 3(a) bars any losses “created, suffered, assumed, or agreed to by the Insured."  The Court held that Exclusion 3(a) excludes any claims for unpaid, post-policy work because the lender effectively caused them by cutting off the funding.  In this case, the Court found that all of the unpaid work at issue occurred after the policy and was barred.  In doing so, it rejected the lender’s argument that the renovation project began pre-policy and therefore was not subject to this exclusion:  “this argument conflates the statutory framework for lien prioritization with title insurance coverage.”  Likewise, Exclusion 3(d) bars claims for defects “attaching or created subsequent to Date of Policy.”  Under the same analysis, the Court found that the liens for post-policy work were barred under Exclusion 3(d).

For a copy of the decision, please contact Michael O’Donnell at modonnell@riker.com or Anthony Lombardo at alombardo@riker.com.

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