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CMS Clarifies Insurance Coverage for COVID-19 Testing, DOJ Finalizes Vertical Merger Guidance, and CMS Proposes New Value Based Purchasing Rule Banner Image

CMS Clarifies Insurance Coverage for COVID-19 Testing, DOJ Finalizes Vertical Merger Guidance, and CMS Proposes New Value Based Purchasing Rule

Month: July 2020

CMS Clarifies Insurance Coverage for COVID-19 Testing, DOJ Finalizes Vertical Merger Guidance, and CMS Proposes New Value Based Purchasing Rule

Posted on by rd_admin

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

CMS Releases Updated COVID-19 Coverage FAQs

CMS has released updated FAQs regarding COVID-19 coverage issues under the Families First Coronavirus Response Act (“FFCRA”) and the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”).  Under FFCRA, insurers are required to cover COVID‑19 tests without patient cost-sharing.  Among other things, the new guidance clarifies that the requirement for coverage does not extend to COVID-19 tests that are a part of workplace safety, such as employee “return to work” programs, or for any other purpose not primarily intended for individualized diagnosis or treatment of COVID‑19 or another health condition.

FTC and DOJ Guidance on Vertical Mergers

On June 30, 2020, the Federal Trade Commission (“FTC”) and the United States Department of Justice (“DOJ”)(collectively with FTC “antitrust agencies”) issued a final version of their January 10, 2020 Vertical Merger Guidelines, which outline how the federal antitrust agencies will evaluate the competitive impact of vertical mergers and whether those mergers comply with U.S. antitrust law.  Vertical mergers combine two or more companies that operate at different levels in the same supply chain.  Vertical mergers have become increasingly common in the healthcare industry where payors are purchasing providers at a rapid rate, or alternatively, where pharmaceutical companies are merging with payors.  As previously noted in our February 4, 2020 update, the DOJ has not drafted merge guidelines in approximately 36 years, which may indicate that vertical mergers will receive heightened scrutiny in the near future.

A total of 70 comments were submitted after issuance of the draft Vertical Merger Guidelines on January 10, 2020.  A major concern noted in the comments was the enumerated 20% market share threshold, above which the federal antitrust agencies would likely raise some concern about the potential vertical merger.  As a result, FTC and DOJ removed this 20% market threshold from the final guidelines and replaced it with a much more detailed set of "unilateral effects" that the DOJ and FTC will be looking at when assessing the competitive prospects of a vertical merger. These unilateral effects include, but are not limited to,  the potential of the merged firm to raise a rival’s costs of an upstream good or product and the potential of the merged firm to foreclose its rivals from procuring an upstream good or product.

CMS Proposes New Value Based Purchasing Rule for State Medicaid Programs

CMS released a proposed rule, 85 FR 37286, that would allow states to enter into value based purchasing (VBP) arrangements with Medicaid payers specifically to permit manufacturers to work directly with payers to purchase drugs through VBP arrangements, while continuing to preserve the intent and integrity of the Medicaid Drug Rebate Program (MDRP).  This proposed rule would also revise the regulations regarding authorized generic sales when manufacturers calculate the average manufacturer price (APM), pharmacy benefit manager (PBM) accumulator programs and their impact on AMP and best price, state and manufacturer reporting requirements to the MDRP, and implement new Medicaid Drug Utilization Review (DUR) programs designed to address the opioid crisis. Additionally, the proposed rule suggests various revisions to current regulations related to coordination of benefits and third-party liability in the special treatment of certain types of care and payment under Medicaid and the Children’s Health Insurance Program (CHIP). Among the changes is a requirement that states collect information on third party liability before making payments. Comments can be submitted until 5 p.m. on July 20, 2020.

Please visit Riker Danzig’s COVID-19 Resource Center to stay up to date on all related legal issues.

New York’s Fourth Department Holds Title Insurer Not Liable for Attorneys’ Fees in Action Brought by Insured Against Neighbor

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New York’s Appellate Division, Fourth Department, recently dismissed an action brought by an insured property owner against its title insurer, finding that the title insurer was not obligated to bring an action against the insured’s neighbor over a disputed portion of property, and therefore that the insurer was not obligated to pay the insured’s attorneys’ fees when the insured brought the action against the neighbor.  See Irma Straus Realty Corp. v. Old Republic Nat'l Title Ins. Co., 2020 WL 3160232 (N.Y. App. Div. June 12, 2020).  In the case, the defendant title insurer issued a title insurance policy to the plaintiff property owners.  Plaintiffs later learned that a neighboring property owner was using a portion of plaintiffs’ insured property.  Plaintiffs provided the neighbor with notice, but the neighbor claimed that it was the rightful owner of this disputed portion.  Plaintiffs then provided defendant with notice of this issue and, when defendant declined to bring an action, plaintiffs sued the neighbor for quiet title.  Plaintiffs subsequently brought this action against defendant alleging breach of contract and seeking an order that defendant pay plaintiffs’ attorneys’ fees and costs incurred in the action against the neighbor.  Defendant filed a motion to dismiss, and the trial court denied the motion.

On appeal, the Fourth Department reversed the trial court and granted defendant’s motion to dismiss.  Plaintiffs brought this action pursuant to Section 5(b) of the policy, which states that defendant “shall have the right . . . to institute and prosecute any action or proceeding or to do any other act that in its opinion may be necessary or desirable to establish the Title, as insured, or to prevent or reduce loss or damage to the Insured.”  However, the Fourth Department found that “Defendant’s ‘right’ to prosecute an action is not equivalent to an ‘obligation’” and that the policy “did not require defendant to prosecute the action against the [neighboring] property owner.”  Accordingly, the Court found that plaintiffs were not entitled to their attorneys’ fees in their action.

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

New COVID-19 Guidance, MIPS Hardship Applications Are Now Open, and CMS’ 2021 Home Health Prospective Payment Update

Posted on by rd_admin

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

Guidance on Contacting Patients For Plasma Donations During COVID-19

The United States Department of Health and Human Services, Office of Civil Rights (“OCR”) issued guidance regarding a healthcare provider’s ability to utilize a patient’s protected health information (“PHI”) to contact patients and encourage them to donate blood or plasma to help other patients suffering from COVID-19.  The OCR’s guidance notes that although this type of activity is permitted under the Health Insurance Portability and Accountability Act (“HIPAA”) as a “population-based activity under the definition of healthcare operations,” the OCR notes that the healthcare providers should attempt to disclose as little PHI as possible.  Finally, the OCR notes that whereas identifying a particular donation center may constitute marketing under HIPAA, and thus require the patient’s consent, so long as the healthcare provider does not receive a direct or indirect payment from any third-party in the communication with the patient, an exception would apply and patient consent is not necessary.

2020 MIPS: Hardship Exception Available Due to COVID-19

The Centers for Medicare & Medicaid Services (“CMS”) has announced that, for the 2020 performance year, clinicians, groups, and virtual groups are allowed to submit an Extreme and Uncontrollable Circumstances application requesting reweighting of one or more Merit‑based Incentive Payment System performance categories due to COVID-19.  Applications may be submitted by logging into your HCQIS Access Roles and Profile (“HARP”) account.

CMS Provides Facility Reopening Recommendations for Facilities Seeking to Provide Non-COVID-19 Services

CMS recently released its Phase II list of recommendations for facilities seeking to reopen to provide non-emergent, non-COVID-19 healthcare. These non-binding recommendations provide an update to CMS’ previously listed Phase I recommendation that were released April 19, 2020. Applicable to facilities in areas in Phase II of CMS’ reopening categories, the recommendations list multiple considerations each facility should individually evaluate when preparing to reopen. The recommendations describe factors in multiple categories, including facility considerations, testing capabilities, PPE availability, workforce availability, and sanitation protocols. In addition to the reopening recommendations, CMS continues to advise providers to utilize telehealth services to the maximum extent possible when telehealth services are available and appropriate. The recommendations also encourage facilities to prioritize services that, if deferred, would result in patient harm and to prioritize at-risk populations who would benefit most from such services.

CMS’  2021 Home Health Prospective Payment System Rate Update

CMS released its proposed Home Health Prospective Payment System rule for 2021.  Under the proposed rule, net home health payments would increase by 2.6 percent, or $540 million, in 2021.  The proposed rule also seeks to make permanent several changes to telehealth first introduced during the COVID-19 pandemic.  But those changes are not without restrictions.  While healthcare providers can continue to provide telehealth services even after the pandemic, those services cannot substitute for a home visit ordered as part of the plan of care and cannot be considered a home visit for purposes of patient eligibility or payment.

The proposed rule also makes changes to the OASIS testing requirements for new home health agencies.  Under the rule, new home health agencies must successfully transmit test data to the Quality Improvement & Evaluation System or CMS OASIS contractor as part of the initial process to become a Medicare-participating home health emergency.

Finally, the proposed rule reiterates the home infusion therapy supplier policies for coverage and payment finalized in the CY 2019 and 2020 Home Health and Prospective Payment System rules, while including regulation text changes to exclude home infusion therapy from the definition of home health services beginning in 2021.

Comments are due by August 31, 2020.

Please visit Riker Danzig’s COVID-19 Resource Center to stay up to date on all related legal issues.

New York Court Dismisses Foreclosure and Denies Motion to Amend to Add Fraudulent Conveyance Claim, Holding Both Are Untimely

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The New York Supreme Court, Kings County, recently dismissed a foreclosure action and the lender’s motion to amend to add a claim of fraudulent conveyance, finding they were untimely.  See Deutsche Bank Nat’l Trust Co. v. Point Holding Alpha, LLC, Index No. 511835/2018 (N.Y. Sup. Ct. May 22, 2020).  In 2005, the individual homeowner signed a note and mortgage.  In August 2006, the plaintiff lender commenced a foreclosure action against the individual homeowner.  In January 2007, the individual transferred the property to the defendant LLC, and the deed was recorded in March 2007.   In 2008, the individual filed for bankruptcy and listed the property on Schedule A of his petition.  In 2013, the lender and the individual dismissed the foreclosure action without prejudice, but in 2018, plaintiff commenced this action against the defendant LLC.  Defendant filed a motion to dismiss, arguing that plaintiff accelerated the debt in 2006 and never affirmatively revoked it, which meant that the six-year limitations period had run.  Plaintiff cross-moved to amend the complaint to claim that the 2007 transfer of the property to the LLC was fraudulent.

The Court granted defendant’s motion, denied plaintiff’s cross-motion, and dismissed the action.  The statute of limitations for a fraudulent conveyance based on actual fraud in New York is six years, or two years from the time the fraud was discovered or could have been discovered with reasonable diligence.  Here, the Court found that the property was transferred in 2007 and the deed was recorded that same year.  Likewise, the 2008 bankruptcy filing listed the conveyance and the consideration.  “Plainly, plaintiff knew or should have known of the alleged fraud many years before it commenced this action. Plaintiff’s assertion that it was unaware of the possible fraud until July 2018 is belied by the record, unconvincing, and without merit.”  Accordingly, the Court found that plaintiff’s fraud claim was untimely and denied the motion to amend.  Although the Court did not articulate its findings on whether the foreclosure was also time barred, it dismissed the foreclosure action, indicating that it found that plaintiff never revoked the acceleration of the debt and that the foreclosure also was untimely.

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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