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Federal Court Halts Vaccine Mandate and Federal Regulatory Update

Month: November 2021

Federal Court Halts Vaccine Mandate and Federal Regulatory 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 Connor Breza.

Federal Court Halts Vaccine Mandate for healthcare Workers

A federal judge in the District Court for the Eastern District of Missouri granted an injunction yesterday that temporarily halted the implementation of the federal COVID-19 vaccine mandate for healthcare workers.  The Court found, among other things, that the Centers for Medicare and Medicaid Services (“CMS”) had no clear authority from Congress to enact the vaccine mandate for providers and that the mandate could lead to staffing shortages.  The Court’s injunction, however, only applies to the ten states that sued to halt the mandate: Alaska, Arkansas, Iowa, Kansas, Missouri, Nebraska, New Hampshire, North Dakota, South Dakota, and Wyoming.

The Court’s opinion can be found here.

Clarification On Financial Relationship

CMS issued its 2022 Physician Fee Schedule Final Rule on November 2, 2021 finalizing its regulations for the 2022 calendar year.  This final rule clarified certain points discussed in our September 22, 2021 blog post regarding the proposed rule.

Specifically, the final rule provided clarification to identify unbroken chains of financial relationships under § 411.354(c)(2) that constitute “indirect compensation arrangements” to “ensure that a longstanding prohibition on certain per unit of service-based compensation formulas for determining charges for the rental of office space and equipment remains within the ambit of the law.”  This final rule also added provisions to assist in identifying the individual unit to be analyzed under § 411.354(c)(2)(ii)(A)(2)(i) through (iv).  In addition, the final rule specifically addressed the “inadvertent omission” by CMS of the prohibition on per‑click payments for the lease of office space or equipment and the use of premises or equipment in indirect compensation arrangements, which CMS has flagged as being of serious risk for abuse.

The rule also finalized the proposed changes and clarifications to the Open Payments program set forth in the proposed rule.  Specifically, CMS finalized nine points with respect to the Open Payments program, which, in sum, are as follows:

  1. Adding a mandatory payment context field for records to teaching hospitals;
  2. Adding the option to recertify annually even when no records are being reported;
  3. Disallowing record deletions without a substantiated reason;
  4. Updating the definition of ownership and investment interest;
  5. Adding a definition for a physician-owned distributorship as a subset of applicable manufacturers and group purchasing organizations, for the purposes of Open Payments program reporting only;
  6. Requiring reporting entities to update their contact information;
  7. Disallowing publications delays for general payment records;
  8. Clarifying the exception for short-term loans applies for 90 total days in a calendar year, regardless of whether the 90 days were consecutive; and
  9. Removing the option to submit and attest to general payment records with an “Ownership” Nature of Payment category.

21st Century Cures Act Clarifications

On November 16, 2021, the Office of the National Coordinator for Health Information Technology (“ONC”) released a blog post containing clarification on certain provisions of the 21st Century Cures Act.  In its post, the ONC specified that “[w]hen it comes to the information blocking provision and its intersection with other laws, we suggest keeping in mind how other laws align and interact with three main concepts set forth in the information blocking regulations: 1) ‘required by law,’ 2) the definition of ‘interference,’ and 3) information blocking ‘exceptions.’”

The ONC explained that:

  1. The information blocking definition provided in the Cures Act did not include practices that were likely to interfere with, prevent, or materially discourage access, exchange, or use of electronic health information when the practice was “required by law.” The ONC explained that its regulatory definition of information blocking substantially mirrors the statute, and the ONC currently interprets “required by law” to include federal and state statutes, regulations, court orders, and binding administrative decisions or settlements, such as (at the federal level) those from the Federal Trade Commission or the Equal Employment Opportunity Commission.
  2. “Interference” in the form of delays that may be allowed, but that are not required by other laws, is not automatically exempted from implicating the information blocking definition.  As such, the ONC advised that practitioners should pay close attention to its practices with respect to delays in providing access to health information that were previously permitted under the law, but may now constitute information blocking.
  3. There are eight exceptions under 45 CFR 171.202 and 45 CFR 171.201, known as the “Privacy” and “Preventing Harm” Exceptions, respectively.  The ONC advised practitioners to review these exceptions in light of other laws that may place preconditions on the permissibility of sharing health information or otherwise constituting interference.

Amendment to OIG healthcare Fraud Self-Disclosure Protocol

On November 8, 2021, the Department of Health and Human Services (“HHS”) Office of Inspector General (“OIG”) amended its healthcare fraud self-disclosure protocol (“SDP”).  The specific changes of note are as follows:

  1. Increased the minimum amounts required to settle under the SDP to match new statutory minimum penalty amounts;
  2. Required SDP submissions to be made through HHS-OIG’s web site;
  3. Added references to OIG’s 2019 Grant and Contract Self-Disclosure Protocols;
  4. Clarified that CIA Reportable Events can be disclosed under the SDP;
  5. Clarified that DOJ sometimes settles SDP cases;
  6. Clarified that disclosers must include damages to each affected federal healthcare program and the sum of all damages; and
  7. Made technical changes to statistics, terminology, and background facts.

The OIG notes that the following items were left unchanged by the amendment:

  1. Timelines and content requirements;
  2. Methods for calculating damages; and
  3. Timely settlement with a lower multiplier and an exclusion release.

Healthcare organizations should be aware of these changes, as the SDP is an important tool for providers and organizations to voluntarily disclose any events of fraud before enforcement action is taken against them.

Biden Administration Attempts to Strengthen Current NEPA Environmental Review Process

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In 2020, the Trump Administration restricted the environmental review process for major federal actions required under the National Environmental Policy Act of 1969 (“NEPA”) to essentially consider only the goals of the applicant; this was the first time a substantial change had been made to this process in over 20 years. To reverse this reduction in environmental protection, on October 7, 2021, the Council on Environmental Quality (“CEQ”) published a rule proposal requiring that reviews under NEPA include a broad range of environmental concerns, including climate change and environmental justice, priorities of the Biden administration. The current proposal would require that agencies meaningfully consider environmental, economic and social impacts in their NEPA review, which is not compelled under the present regulations, and consider whether there are alternatives that would lessen the impacts of a project. This is significant given the passage of the Infrastructure Bill through which $1.2 trillion of federal funding will be directed towards building things such as roads, bridges and port facilities, most of which will require NEPA review.

NEPA ensures that federal agencies evaluate the environmental effects of proposed federal actions, including federal authorization, implementation or funding of projects, and prepare Environmental Impact Statements (“EIS”) that identify not only potential concerns but also possible alternatives.. The recent CEQ rule proposal is Phase I of an initiative to restore robustness to the EIS process and includes: 1) a requirement that the justification for the EIS be based on more than just the goals of the applicant; 2) removal of certain limitations on the process that may restrict an agency’s ability to meet its mission through the EIS process; and 3) a return to the previous definition of “effects,” which will broaden the impacts that are assessed in the EIS.

Revisions to the Purpose and Need Statement

The purpose and need statement of an EIS sets forth the rationale for the agency’s action. To that end, it identifies the impacts the agency will evaluate and the parameters the agency will consider to support reasonable alternatives that may cause less environmental harm. The 2020 revisions to the NEPA regulations required the agency to base the purpose and need statement on the goals of the applicant, which clearly limited the scope of the review and essentially ensured approval without changes.

The CEQ is proposing to base the purpose and need statement on a variety of factors, only one of which is the goal of the applicant. Under the change, the agency can consider, among other things, environmental impacts, local economic need, regulatory requirements and the public interest. This change allows agencies to evaluate issues such as climate change and environmental justice, and consider alternative actions that may have less impacts. For example, when building a federally funded road, the NEPA review may identify the need to relocate a portion of the road if it is located in an area subject to flooding or may cause a disproportionate effect on overburdened communities, even though the initial proposed location may provide the fastest or shortest route. To be consistent, the CEQ also is making a conforming change to the definition of “reasonable alternatives” to exclude the limitation that such alternatives should again simply meet the goals of the applicant. These revisions will increase the range of factors and alternatives contemplated with respect to a federal action, and ensure that the public interest is a key consideration in the process.

Flexibility in the Process

Additionally, the CEQ is proposing to provide agencies the discretion and flexibility to develop procedures beyond the CEQ regulatory requirements. The 2020 revisions include language that if there is a conflict between the CEQ regulations and the agency’s NEPA procedures, the agency is required to follow the CEQ regulations. As such, under the 2020 rule, agencies were directed to eliminate procedures that are inconsistent with the CEQ regulations, which reduced agency discretion. In its current proposal, the CEQ proposes to remove this limiting language to allow agencies to consider all aspects in the EIS that are consistent with the agency’s mission; for instance, an agency may require additional public meetings or more specific evaluations of air or water quality. This change would allow each agency to identify and address the various priorities important to it. Although this may lengthen the review process for federal projects, it ensures that important issues are considered prior to developing these projects, like redirecting truck routes to reduce air pollution, avoiding sensitive environmental receptors or obtaining appropriate community input.

Changes to the Definition of “Effects”

Finally, the CEQ is restoring “direct” and “indirect” effects and “cumulative impacts” to the definition of "effect” or “impacts” that an agency is required to consider in the EIS. These terms drive the EIS analysis because they delineate what an agency must consider with respect to each major federal action.

“Direct” effects are things that occur at the time of the project, “indirect” effects happen later in time or are farther removed in distance, and “cumulative impacts” result from the incremental impacts of the action. The 2020 revisions eliminate the need to consider these effects or impacts and narrows the scope of the NEPA analysis. The CEQ’s changes would ensure that the EIS considers foreseeable future impacts such as those from greenhouse gas emissions. Moreover, the inclusion of “cumulative impacts” would allow agencies to consider how incremental impacts of proposed actions could contribute to greater environmental concerns such as climate change, biodiversity loss and environmental justice, and provide important information regarding the need for alternatives. The CEQ’s revisions would require that an agency’s review considers not only the direct impacts of the project on the environment, such as sediment control or pollution issues, but also evaluates the possible long term effects including loss of habitat, increased concerns for overburdened communities and the reduction of areas that could address flooding.

The CEQ’s recent rule revisions would broaden the environmental review under NEPA and are critical to the Biden Administration’s goal of bringing all environmental concerns to the forefront of any environmental impact analysis. Although NEPA may not stop a project from occurring, it can result in alternatives or revisions that may be less impactful, which is a key component in appropriately addressing current, ever-growing, complex environmental concerns associated with major federal actions, including the many projects that will stem from the Infrastructure Bill.

For more information, please contact the author Laurie Sands or any attorney in our Environmental Practice Group.

Federal Regulations on Opioid Treatment Programs, Guidance on Co-Locating for Hospitals, and More Transparency Rules

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

CMS Releases Final Guidance on Hospital Co-Locating

Centers for Medicare and Medicaid Services (“CMS”) released final guidance clarifying hospital co-locating, which is when two Medicare certified hospitals or a Medicare certified hospital and another healthcare entity are located on the same campus or in the same building and share space, staff, or services. The guidance does not apply to critical access hospitals or private physician offices in leased or shared space agreements with hospitals. Per the guidance, common examples of co‑location include: (1) one hospital entirely located on another hospital’s campus or in the same building as another hospital; (2) part of one hospital’s inpatient services (e.g., at a remote location or satellite) is in another hospital’s building or on another hospital’s campus; and (3) the outpatient department of one hospital is located on the same campus of, or in the same building as, another hospital or a separately Medicare‑certified provider, such as an ambulatory surgery center. Co‑located hospitals must demonstrate independent compliance with Medicare Conditions of Participation.

Final Rule Freezes Payment Rate for Methadone

CMS has released an interim final rule with comment period (“IFC”), 86 FR 66031, that freezes the payment rate to Opioid Treatment Programs for methadone in CY 2022 at the CY 2021 rate, finding that decreasing the rate would not be appropriate given that substance use and overdoses have increased and been exacerbated by the COVID-19 pandemic. The IFC is effective January 1, 2022. Comments are due January 3, 2022.

New Federal Rule Requires Health Plans to Report Costs

The Biden administration has released IFCs, 86 FR 66662, implementing the No Surprises Act and transparency requirements of the Consolidated Appropriations Act. The regulations aim to further increase transparency by requiring group health plans and health insurance issuers offering group and individual health insurance coverage to report annually certain information about prescription drugs and healthcare spending to the Department of Health and Human Service, the Department of Labor, and the Department of Treasury (collectively, the “Departments”). For example, health plans and insurance issuers must submit the 50 most frequently dispensed brand prescription drugs, the 50 costliest drugs by total annual spending, and the 50 prescription drugs that have contributed to the greatest increase in plan expenditures from the previous year. The new reporting requirements will apply starting with data from 2020. However, the Departments will provide temporary and limited deferral of enforcement during the first year of applicability to give health plans and insurance issuers time to come into compliance. Therefore, the required information for 2020 and 2021 will be due December 27, 2022. Comments are due on January 24, 2022.

Montana Court Affirms Summary Judgment for Title Company in Conveyance Dispute

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The United States District Court for the District of Montana recently upheld a Magistrate Judge’s recommendation for summary judgment for a title company, finding that coverage terminated when the insureds conveyed the property to their trust. See Green v. Chicago Title Ins. Co., 2021 WL 4476446 (D. Mont. Sept. 30, 2021). In this case, William Green and his wife Esther (“the Greens”) had purchased land in Montana in 1989 as joint tenants with right to survivorship, and purchased title insurance from defendant shortly thereafter. In 2012, the Greens created irrevocable trusts and quitclaimed their interests in the property to the trusts with William Green as trustee.  The Greens died in 2018 and the trusts conveyed their interests in the property to the plaintiffs (the Greens’ heirs), who subsequently found out that there was no legal access to the property. Plaintiffs filed a claim with the defendant title insurance company, who denied the claim, reasoning that plaintiffs did not qualify as insureds as defined by the insurance policy because the Greens were the listed insureds, and the trusts were not listed as the insureds nor successor insureds.  Plaintiffs brought this action and the parties cross-moved for summary judgment.  The Magistrate Judge agreed with the defendant, holding that the Greens relinquished any interest they had in the property at the time of the transfer, despite William Green assuming title to the Property as the trusts’ trustee, and that because “the conveyance of the property by the Greens to the trusts was a voluntary conveyance to a separate and distinct entity,” the coverage lapsed and plaintiffs did not inherit the property by operation of law, as required by the Policy.

The District Court judge adopted the Magistrate’s findings and recommendations.  In doing so, the Court rejected plaintiffs’ argument that coverage continued because William Green, as a named insured under the policy, assumed a trustee’s estate in the property.  Instead, it held that Montana law differentiates between a grantee’s interest in property and a trustee’s interest or estate, and that any and all property rights were transferred to the trusts as separate and distinct entities, with the Greens themselves reserving no interests or estates in the land.  Accordingly, coverage terminated when the Greens quitclaimed their interest in the property to the trusts, and the heirs were not entitled to coverage.

For a copy of the decision, please contact Michael O’Donnell at modonnell@riker.com, Desiree McDonald at dmcdonald@riker.com, or Kevin Hakansson at khakansson@riker.com.

New Jersey Legislative Update

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

Governor Murphy Conditionally Vetoes Three Bills

A5353: Under this bill, temporary nurse aides could become certified nurse aides if they successfully complete an eight-hour training course, work a minimum of 80 hours under the supervision of a licensed professional nurse, pass a background check, and successfully complete a State-approved nurse aide written examination, within 45 days after the end of the public health emergency declared in response to COVID-19, which means that temporary nurse aides would have had to comply with the requirements of the bill by July 2021.  Recognizing the pandemic’s continuing and present effects on employment, Governor Murphy conditionally vetoed the bill and recommended that the deadline to complete the eight-hour course and 80 hours of supervised work be extended until January 11, 2022.  Governor Murphy also recommended that temporary nurse aides pass a State‑approved clinical skills competency examination, in addition to the written examination required in the bill, by February 16, 2022.  Finally, Governor Murphy further recommended extending the background check deadline until June 4, 2022.

S3238:  This bill is aimed to establish the New Jersey “Easy Enrollment Health Insurance Program” (the “Easy Enrollment Program”), but it received a conditional veto by Governor Murphy.  Under the Easy Enrollment Program, individuals filing a State income tax return will be able to indicate that they are seeking healthcare coverage. Using this information, the Department of Banking and Insurance, in coordination with the Department of Human Services, would be able to verify an individual’s eligibility for the State Medicaid Program, NJ FamilyCare Program, and insurance affordability assistance on the State-based exchange and assist in enrolling the individual in insurance affordability assistance and “minimum essential coverage”, as required by the Affordable Care Act.  Though he expressed support for the bill, Governor Murphy conditionally vetoed it, stating that “the program designed under the bill presents numerous operational challenges that risk creating consumer confusion and unattainable expectations.”  As such, Governor Murphy requested changes be made including a longer implementation timeline, a clearer delineation of the work to be performed by each department, and the leveraging of existing systems and programs to increase efficiencies and ensure full compliance with federal law.

A4435: The Department of Children and Families (“DCF”) contracts with school districts and nonprofit organizations to provide prevention and support services for students through the School‑Linked Services Program (“Program”).  This bill would require DCF to prioritize school districts that propose to focus on providing “clinic health counseling services to students” when awarding grants under the Program.  While Governor Murphy supports the prioritization of youth mental health services, he conditionally vetoed the bill due to concerns that the bill overly restricts DCF’s discretion in awarding Program contracts.

Developing Mobile-Friendly Software for SNAP Benefits Becomes Law

S3941:  Governor Murphy signed this bill into law, which directs the New Jersey Department of Human Services to develop “mobile-friendly” software for SNAP recipients and appropriates $2 million from the General Fund to the Department of Human Services to fund the development and maintenance of the mobile-friendly software required under the new law.  The law requires that such mobile-friendly software must include certain functionality such as: (1) view the user’s SNAP case status and the current benefits the user receives; (2) request an electronic benefit transfer card or a replacement card; (3) upload and submit required documents for continued participation in SNAP and track the current processing status of those documents; (4) receive notices and updates regarding important deadlines or actions; (5) read and print notices and letters; (6) update contact information; (7) request to have a letter mailed to the user listing the amount of benefits the user receives; (8)  view local contact information for the County Board of Social Services for the county in which the user resides; and (9) access any other functionalities as determined by the department

New Jersey Adopts Legislation Requiring the Removal of Discriminatory Restrictive Covenants in Deeds and Association Documents

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On November 8, 2021, New Jersey Governor Phil Murphy signed legislation, A-5390/SB-2861, that requires the removal of discriminatory language restricting the ownership or use of real property as prohibited by the Law Against Discrimination from all deeds recorded on or after January 1, 2022, and further requires homeowners’ or condominium associations to immediately review their governing documents and remove such language. Although these covenants already are illegal and unenforceable, the bill aims to remove them entirely. The bill takes effect immediately.

The bill also requires a county clerk or a register of deeds and mortgages to refuse to accept any deed submitted for recordation that references the specific portion of any such restrictive covenant. Moreover, an attorney or title company preparing or submitting a deed for recordation must ensure that the specific portion of such a restrictive covenant is not specifically referenced in the deed prior to the deed being submitted for recordation, although the deed may include general provisions that the deed “is subject to any and all covenants of record[.]”  Any deed that is recorded in the land records on or after January 1, 2022 that mistakenly contains such a restrictive covenant, however, shall nevertheless constitute a valid transfer of real property.

With regard to deeds recorded with such restrictive covenants, the bill provides a property owner the opportunity to release such a restrictive covenant by recording a “Certificate of Release of Certain Prohibited Covenants” with the county clerk, or register of deeds and mortgages, as appropriate, in the county wherein the real property is located. The real property owner may record such a certificate prior to recordation of a deed conveying real property to a purchaser, or when a real property owner discovers that such a prohibited covenant exists and chooses to affirmatively release it.

Lastly, the bill requires that, within 90 days of its enactment, every governing board of a homeowners’ or property owners’ association, cooperative corporation, condominium association, or planned community must review the association’s governing documents to determine whether those documents contain any restriction, covenant, or condition that prohibits or limits the conveyance, encumbrance, rental, occupancy, or use of real property as prohibited by the Law Against Discrimination, particularly N.J.S.A. 10:5-4 and 10:5-12.  If an association finds such an unlawful restriction, covenant, or condition in any of those documents, it must amend the document to remove the restriction, covenant, or condition. Removal of such a restriction, covenant, or condition does not require approval of the members of the association, notwithstanding any provision of the governing documents to the contrary.  Further, if a board later receives a written request from a member of its association to remove from those documents language that the member believes to be an unlawful restriction, the board must immediately undertake a review of the documents and complete the review within 30 days of the request. If the board determines that the member is correct, the board must amend the document or documents to remove the restriction, covenant, or condition within 30 days of its determination. The bill, however, does not provide a private cause of action by or against an association, a board, a member, or the public for acting, or not acting, to remove or not remove an unlawful restriction, covenant, or condition.

For a copy of A-5390/SB-2861, please contact Michael O’Donnell at modonnell@riker.com, Desiree McDonald at dmcdonald@riker.com, or Kevin Hakansson at khakansson@riker.com.

Three New CMS Rules That Providers Should Know

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

On November 2, 2021, the Centers for Medicare & Medicaid Services (“CMS”) released three final payment rules updating the annual payment rate for physicians, outpatient services, and home health services, among other significant policy changes. Each rule will have a significant impact on these three segments of the healthcare system and providers should be aware of how these changes will affect their practice and their payment rates and methodologies.

Of significant concern, CMS cut reimbursement rates to physicians, despite physicians having played, and continuing to play, a crucial role in the fight against COVID-19. Just as significant, not only did CMS finalize its proposal to halt the elimination of the inpatient-only list, but it crawled back and eliminated 258 services that it had previously included on the ambulatory surgery center payable list. Additionally, all CMS-certified Home Health Agencies will be required to participate in the Home Health Value Based Purchasing payment model.

We noted in our past Healthcare Update that not much, if anything, has been done since President Biden’s Executive Order in July 2021 addressing consolidation in the United States, but these rules from CMS will certainly fuel what the Executive Order was intended to scale back.

Physician Fee Schedule Final Rule

CMS issued its 2022 Physician Fee Schedule Final Rule, which addresses changes to the Medicare Physician Fee Schedule (“PFS”), Medicare Part B payment policies and relative value of services, and Medicare Shared Savings Program requirements, and implements certain provisions of the Consolidated Appropriations Act of 2021 (“CAA”).

In a move that is certain to impact physicians, CMS reduced the conversion factor for the provider reimbursement calculation from the 2021 rate of $34.89 to $33.5983 for 2022. Similarly, the National Average Anesthesia Conversion Factor will be reduced to $20.9343.  The conversion factor is the multiplier that Medicare applies to relative value units (“RVUs”) to calculate reimbursement for services and procedures payable under Medicare’s fee-for-service system. As a result, this reduction of $1.2917 will have a significant impact when used as a multiplier across the board. Voicing a growing sense of concern with this change, the President of the American Medical Association, Gerald Harmon, M.D., issued a November 2nd statement warning that the final rule “is a reminder of the financial peril facing physician practices at the end of the year.”

In addition, effective January 1, 2022, the payment rates for the administration of the influenza, pneumococcal, and hepatitis B virus vaccines will increase from $16.94 per dose to $30.00 per dose. CMS will also continue with the current payment rate of $40 per dose for the administration of the COVID-19 vaccines until the end of the calendar year in which the COVID-19 public health emergency ends, at which point the payment rate for COVID‑19 vaccine administration will be modified to align with the payment rate for the administration of other Part B preventive vaccines.

For the first time, the PFS contains a set of CPT codes for remote therapeutic monitoring (“RTM”).  These new RTM codes are largely modeled after existing codes for remote physiological monitoring (“RPM”).  In recent years, CMS finalized seven codes in the RPM family that now include services similar to the new RTM codes. While there are notable similarities between the two sets of code descriptors, there are two primary differences. One difference is that primary billers of RTM codes are projected to be nurses and physical therapists. Stakeholders have suggested that the new RTM coding was created to allow practitioners who cannot bill RPM codes to furnish and bill for services that look similar to those of RPM. RPM services are considered to be Evaluation and Management (“E/M”) services, and physical therapists, for example, are practitioners who cannot bill E/M services.  The RTM codes, instead, are general medicine codes. The second difference is that virtually any information that a medical device can collect, such as medical adherence, can be collected and billed under the new RTM rules. That is not the case under the existing RPM codes.

Finally, given the substantial increase in the use of telehealth services since the start of the pandemic, as part of the PFS, CMS is set to redefine “interactive telecommunications system” to permit use of audio‑only technology for mental health telehealth services provided to beneficiaries in their home, as long as there has been an in-person visit within the six months of any telehealth counter that is documented in the patient’s medical record. Pursuant to a waiver, audio-only telemental health services have been reimbursed during the public health emergency for COVID-19. Given the generalized shortage of mental health professionals, and the existence of populations with limited access to broadband due to socioeconomic and geographic challenges, there exists a concern that sudden discontinuation of audio‑only communication technology when the public health emergency expires could negatively impact access to care. CMS will be requiring a modifier to be used with the claim to indicate that the service was provided via audio-only communication technology to monitor the costs associated with this policy.

CMS issued a fact sheet for the 2022 Physician Fee Schedule.

Outpatient Prospective Payment and ASC Final Payment Rule

CMS issued, 86 FR 63458, the Outpatient Prospective Payment System and Ambulatory Surgery Center Payment final rule, which aims to revise the Medicare hospital outpatient prospective payment system (“OPPS”) and the Medicare ambulatory surgery center (“ASC”) payment system for the incoming 2022 calendar year. The provisions of the final rule are effective January 1, 2022.

Of significant concern to ASCs, CMS not only finalized its proposal to halt the elimination of the inpatient-only list (“IPO”) list, but it added back 298 services to the IPO list that were previously removed. Concurrently, CMS then removed 258 services from the ASC payable list. The only exceptions are 22630 (lumbar spine fusion), 23472 (reconstruct shoulder joint), 27702 (reconstruct ankle joint) and their corresponding anesthesia codes.

The payment rates under the OPPS by an Outpatient Department (“OPD”) fee schedule will increase by a factor of 2.0 percent beginning January 1, 2022. However, hospitals that fail to meet the Hospital Outpatient Quality Reporting Program requirements will face a reduction to the OPD fee, which would result in a proposed reduced conversion factor for 2022 of $82.810 for hospitals.

CMS is also increasing the penalties for non-compliance with respect to hospital price transparency requirements, based on the number of hospital beds.  The civil monetary penalties (“CMPs”) imposed under the rule are as follows: (a) for a non‑compliant hospital with a number of beds equal to or less than 30, the maximum daily dollar CMP amount would be $300; (b) for a non‑compliant hospital with a number of beds between 31 and 550, the maximum daily dollar CMP amount would be the number of beds times $10; and (c) for a non‑compliant hospital with a number of beds greater than 550, the maximum daily dollar CMP amount would be $5,500.

CMS issued a fact sheet for the 2022 OPPS and ASC payment system.

Home Health Prospective Payment System Final Rule

The Home Health Prospective Payment System final rule for Calendar Year 2022, 86 FR 62240, carries out the annual update to the payment rates for home health agencies (“HHAs”) for 2022 and recalibrates the case-mix weights for determining payment under the HHA Patient‑Driven Groupings Model (“PDGM”) payment system.

Under this final rule, the payment rate for HHAs that submit the required quality data for CY 2022 will be increased by 2.6 percent. For HHAs that do not submit the required quality data for CY 2022, the home health payment update is only 0.6 percent (2.6 percent minus 2 percentage point penalty).

Additionally, this rule finalizes the proposed changes to transparency, oversight, and enforcement requirements for hospice programs. These changes will require the use of multidisciplinary survey teams, prohibit surveyor conflicts of interest, and expand CMS‑based surveyor training to accrediting organizations. The rule also finalizes the proposed provisions for a hospice program complaint hotline and creates the authority for imposing enforcement remedies for non‑compliant hospice programs, including the development and implementation of a range of remedies, as well as procedures for appealing determinations regarding these remedies.

Another significant provision is the rule’s finalization of CMS’s plans to expand the Home Health Value Based Purchasing (“HHVBP”) Model to all Medicare-certified HHAs across the United States, beginning January 1, 2022. Note, however, that 2022 will be designated as a pre-implementation year, and the first performance year will be 2023, with 2025 as the first payment year. All HHAs certified to participate in the Medicare program prior to January 1, 2022, would be required to participate and eligible to receive an annual Total Performance Score based on their CY 2023 performance.

CMS issued a fact sheet for the HHA payment system.

Florida District Court Finds for Mortgage Provider in RESPA Claim

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The United States District Court for the Middle District of Florida, Tampa Division, recently found for a mortgage provider in a dispute over whether the mortgage provider properly applied a customer’s mortgage payments. See Munoz v. CitiMortgage, Inc., 2021 WL 4133748 (M.D. Fla. 2021). Sheila and Raymond Munoz (“Plaintiffs”) executed a note and mortgage on their property in 2006, and CitiMortgage (“Citi”) serviced the mortgage from 2008 to 2019, at which time Cenlar began servicing the mortgage. In 2010, Plaintiffs modified their loan under the Home Affordable Modification Program, and in 2017, began arguing that Citi misapplied payments. Plaintiffs also began making partial payments in June 2018. Plaintiffs sent a letter to Citi on May 7, 2019, making thirteen requests for information and alleged five notices of error, and Citi acknowledged receipt of the letter on May 15, 2019. Citi replied, providing Plaintiffs with information in response to the requests for information and a reply to each notice of error, which included requests for more information from Plaintiffs, and provided Plaintiffs with contact information at Citi. Plaintiffs alleged that their letter was a Qualified Written Request (“QWR”) under Section 2605(e) of the Real Estate Settlement Procedures Act (“RESPA”), and that Citi provided an untimely and inadequate response to their QWR, which caused them actual and statutory damages. Plaintiffs filed an amended complaint, and both parties moved for summary judgment.

The court found for Citi. First, the court rejected Citi’s contention that the May 2019 letter was not a QWR as defined by RESPA, as it identified Plaintiffs as the borrowers, disclosed their account number, and the notices of error included in the letter clearly stated a reason that Plaintiffs believed their account was in error. The court found further that the letter related to servicing of the loan, as required by RESPA, as it asked for information about the mortgage, informed Citi of alleged errors related to the mortgage, and asked for information about their payments. However, the court found that Citi provided an adequate response to the letter. The court found that Citi was one day late in acknowledging receipt of the letter, but that Plaintiffs were unable to show any harm caused by this delay. The court further found that Citi replied to the letter within 30 days, in compliance with RESPA. As to the adequacy of Citi’s responses, the court found that Citi’s responses to the request for information, which provided an explanation as to why it would not turn over requested information when it explained that the information was “confidential, proprietary, or privileged” was adequate. As to the notices of error, Plaintiffs had taken issue with Citi’s responses that there either was no error, or that Citi required additional information from Plaintiffs to investigate further. The court disagreed with Plaintiffs, finding that Plaintiffs’ contention that Citi failed to conduct a reasonable investigation – premised solely on Plaintiff’s disagreement with the findings – was meritless, and that servicers may request clarifying information when a QWR fails to sufficiently identify the alleged error. In addition to finding that Citi’s responses were adequate, the court found that Plaintiffs had not pled adequate facts to support any of the four categories of actual damages that they claimed to have suffered. As such, the court granted summary judgment for Citi.

For a copy of the decision, please contact Michael O’Donnell at modonnell@riker.com, Desiree McDonald at dmcdonald@riker.com, or Kevin Hakansson at khakansson@riker.com.

FTC Attempts to Tighten Leash on Mergers

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

Our August 5, 2021 healthcare Update focused on President Biden’s Executive Order that addressed consolidation in the United States and touched on the healthcare industry. Not much has been done since the President executed that Executive Order in July 2021.  Recently, however, on October 25, 2021, the Federal Trade Commission (“FTC”) released a statement announcing the rescission of the 1995 Policy Statement on Prior Approval and Notice Provision (the “1995 Statement”). The rescission of the 1995 Statement acts to restore the FTC’s practice of requiring companies that previously pursued an anticompetitive merger to get prior approval for any future transaction “affecting each relevant market for which a violation was alleged” for at least ten years. The prior approval provision is aimed at deterring parties from pursuing facially anticompetitive deals, which serves to preserve FTC resources by decreasing the amount of litigation over anticompetitive mergers. Whether the rescission of the 1995 Statement will have a meaningful impact remains to be seen.

California Court Finds for Defendant Bank in Adverse Possession Dispute

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The California Court of Appeals, Fifth Appellate Division, recently found for defendant Citibank, N.A. (“Citibank”) in a dispute over the ownership of property in an unincorporated area of southern California. See Bailey v. Citibank, N.A., 66 Cal. App. 5th 335 (2021). Plaintiffs Charles and Kimberley Bailey took possession of property in Frazier Park, California (the “Property”) in 2013, and claimed to be rightful owners based on their alleged adverse possession thereof for a five-year period. Before that period was completed, though, Citibank became successor in interest of a deed of trust which had been recorded in 2005, and foreclosed and acquired title to the property under the trustee’s deed in 2018. When plaintiffs subsequently filed their complaint to quiet title, Citibank was named as the primary defendant. Citibank, however, failed to answer or otherwise respond to the complaint, and its default was entered. The trial court subsequently conducted an evidentiary hearing on plaintiffs’ quiet title claim and concluded that title to the property was vested in plaintiffs, not Citibank. Citibank did not appear at the evidentiary hearing. Following the hearing, the trial court entered a judgment quieting title in plaintiffs’ favor. Thereafter, Citibank moved to set aside both the default and the judgment under the mandatory provisions of Code of Civil Procedure section 473, based on Citibank’s attorney’s affidavit of fault. The trial court granted Citibank’s motion, and the default and the judgment quieting title were set aside. Plaintiffs appealed from that order on the ground that no basis existed for potential relief under section 473 since Citibank’s attorney was not retained to handle this case until after the default was entered. In response to plaintiffs’ appeal, Citibank filed a protective cross-appeal, arguing that even if relief under section 473 was unavailable, the judgment quieting title in plaintiffs’ favor was erroneous as a matter of law and should be reversed.

The court initially disagreed with Citibank, finding that the trial court’s application of section 473 was improper, as it should have only applied if the default was the fault of an attorney. In this case, Citibank had not even assigned an attorney at the time of default, and thus it could not have been the fault of the attorney. However, the court found that the trial court misapplied the doctrine of adverse possession, and thus Citibank always had claim to the Property throughout the dispute. First, the court found that under the doctrine, plaintiffs’ possession of the Property was not adverse or hostile to Citibank’s rights until Citibank took fee title under the trustee’s deed in 2018, just before the complaint was filed, and far short of the five year period required for possession to be adverse. Next, the court found that plaintiffs were attempting to claim title greater than that which was claimed on the 2005 deed of trust, and that even if plaintiffs were to be granted title, it would be subject to the 2005 deed of trust. Third, with Citibank only gaining possessory interest in the property in 2018, the court rejected plaintiffs’ argument that Citibank had possessory interest previously, finding that the 2005 deed of trust merely gave the lender a right to sue or defend litigation, and did not convey a possessory interest against which adverse possession could be asserted. Finally, the court determined that public policy reasons asserted by plaintiffs for promoting adverse possession did not apply, as Citibank’s lesser ownership stake in the property until 2018 meant that it was not the sort of absent owner that the theory of adverse possession protected against.

For a copy of the decision, please contact Michael O’Donnell at modonnell@riker.com, Desiree McDonald at dmcdonald@riker.com, or Kevin Hakansson at khakansson@riker.com.

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