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NEW FAQ on No Surprises Act and CMS Proposed Outpatient Payment Rule Banner Image

NEW FAQ on No Surprises Act and CMS Proposed Outpatient Payment Rule

Month: July 2022

NEW FAQ on No Surprises Act and CMS Proposed Outpatient Payment Rule

Posted on by Christie Bowness

For more information about this blog post, please contact Ryan L. O’Neill or Labinot Alexander Berlajolli.

CMS Releases FAQ for No Surprises Act

The Centers for Medicare and Medicaid Services (“CMS”) released a new Frequently Asked Questions (“FAQ”) worksheet covering the balance billing and notice and consent requirements for the federal No Surprises Act.

The No Surprises Act lays out the federal prohibition against certain non-participating providers and healthcare facilities balance billing patients outside of their applicable cost-sharing amounts for certain emergency and non-emergency healthcare services. The FAQ details the requirements for providers along with the rights of patients with a focus on the notice and consent criteria specified under the No Surprises Act.

Given the broad implications on both providers and patients alike under the No Surprises Act, CMS’s FAQ serves to clarify some, but not all, facets of the No Surprises Act and provides answers for some of the frequently asked questions that have arisen since its implementation.

CMS Issues 2023 Medicare Hospital Outpatient Prospective Payment System and Ambulatory Surgical Center Payment System Proposed Rule

CMS released the 2023 Hospital Outpatient Prospective Payment System and Ambulatory Surgical Center Payment System proposed rule, 87 FR 44502, on July 15, 2022. The proposed rule would increase Medicare outpatient payment rates by 2.7% for next year for ambulatory surgical centers (“ASC”) that meet applicable quality reporting requirements. According to CMS, this update is based on the projected hospital market basket percentage increase of 3.1%, reduced by 0.4 percentage point for the productivity adjustment.

The proposed rule also proposes updates and refines the requirements for the Hospital Outpatient Quality Reporting ("OQR") Program, the ASC Quality Reporting ("ASCQR") Program, and the Rural Emergency Hospital Quality Reporting ("REH") Program. Among other things, the proposed rule will also remove 10 services from the inpatient-only list, and add a lymph node biopsy or excision procedure to the ASC covered-procedure list.

CMS additionally proposes to add a new Medicare provider type called “Rural Emergency Hospitals” (“REH”) effective January 1, 2023. In the proposed rule, CMS is also proposing updates to the physician self-referral law for the new REH provider type which will include: (1) a new exception for ownership or investment interests in an REH; and (2) revisions to certain existing exceptions to make them applicable to compensation arrangements to which an REH is a party.

CMS issued a Fact Sheet for the proposed rule here.

Intent Matters in Opioid Cases and New CMS Payment Rules

Posted on by Christie Bowness

For more information about this blog post, please contact Ryan L. O’Neill or Labinot Alexander Berlajolli.

SCOTUS Rules Prescriber Intent Matters in Opioid Cases, Posing New Challenges for Prosecutors

The U.S. Supreme Court ruled on June 27, 2022 that prosecutors bringing charges under the Controlled Substances Act (“CSA”) must show that providers knew they lacked a legitimate medical purpose in order to prove when it comes to proving allegations of excessive prescribing of opioids and other addictive drugs. The ruling nominally involves CSA convictions of "pill mill" prescribers in the Tenth and Eleventh Circuits, but carries nationwide implications for criminal and civil cases related to sales and distribution of prescription narcotics for recreational use. The rulings held that the Department of Justice "must prove beyond a reasonable doubt that the defendant knew that he or she was acting in an unauthorized manner, or intended to do so," as opposed to referencing a “reasonable physician” standard, in order to secure a conviction for improper prescribing.

Whether providers challenge previous convictions based on this decision remains to be seen. The full text of the ruling may be found here.

CMS Proposes CY 2023 Home Health Prospective Payment System Rate Update and Home Infusion Therapy Services Requirements

The Centers for Medicare and Medicaid Services (“CMS”) issued the calendar year ("CY") 2023 Home Health Prospective Payment System ("HH PPS") Rate Update proposed rule, 87 FR 37600, which would update Medicare payment policies and rates for home health agencies ("HHAs"). This rule includes proposals and routine updates to the Medicare HH PPS and the home infusion therapy services’ payment rates for CY 2023, in accordance with existing statutory and regulatory requirements. In addition, CMS is proposing to apply a permanent prospective payment adjustment to the home health 30-day period payment rate to account for any increases or decreases in aggregate expenditures, as a result of the difference between assumed behavior changes and actual behavior changes, due to the implementation of the Patient-Driven Groupings Model ("PDGM") and 30-day unit of payment.

CMS issued a fact sheet on the proposed rule, which may be accessed here. Comments are due on August 16, 2022.

CMS Proposes FY 2023 Hospital Inpatient Prospective Payment System and Long-Term Care Hospital Prospective Payment System Updates

CMS recently issued the fiscal year ("FY") 2023 Medicare Hospital Inpatient Prospective Payment System ("IPPS") and Long‑Term Care Hospital ("LTCH") Prospective Payment System ("PPS") proposed rule, 87 FR 28108. The proposed rule would update Medicare fee-for-service payment rates and policies for inpatient hospitals and LTCHs for FY 2023. The proposed policies in the IPPS and LTCH PPS rule also build on key priorities to better measure healthcare quality disparities and to improve the safety and quality of maternity care.

CMS issued a fact sheet on the proposed rule, which may be accessed here. Several interest groups, including the American Hospital Association, commented on aspects of the FY 2023 IPPS update in light of current inflation concerns during the comment period due to CMS’ proposal to cut rates.

Federal Regulatory Update and HIPAA Guidance on Audio-Only Telehealth

Posted on by Richelle Delavan

For more information about this blog post, please contact Ryan L. O’Neill or Labinot Alexander Berlajolli.

CMS Issues Calendar Year (CY) 2023 Medicare Physician Fee Schedule Proposed Rule

CMS issued a Proposed Rule scheduled to be published July 29, 2022 detailing proposed policy changes for Medicare payments under the Physician Fee Schedule (PFS), and other Medicare Part B issues. The aim of the Proposed Rule is to significantly expand access to behavioral health services, Accountable Care Organizations (“ACOs”), cancer screening, and dental care, particularly in rural and underserved areas.

The proposed CY 2023 PFS conversion factor is $33.08, which amounts to a decrease of $1.53 from the CY 2022 PFS conversion factor of $34.61. Among other things related to the above mentioned areas covered by the Proposed Rule, CMS is proposing the following changes:

  • To allow licensed professional counselors, marriage and family therapists, and other types of behavioral health practitioners to provide behavioral health services under general supervision, as opposed to direct supervision
  • To pay for clinical psychologists and licensed clinical social workers to provide integrated behavioral health services as part of a patient’s primary care team
  • To bundle certain chronic pain management and treatment services into new monthly payments in order to improve patient access to team-based comprehensive chronic pain treatment
  • To cover opioid treatment and recovery services from mobile units, such as vans, to increase access for people who are homeless or live in rural areasCMS released a Press Release and a Fact Sheet in connection with the Proposed Rule.

CMS Announces Launch of Enhancing Oncology Model

In connection with President Biden’s Cancer Moonshot Initiative, the Centers for Medicare & Medicaid Services (“CMS”) has announced the launch of its Enhancing Oncology Model (“EOM”). The EOM will run for five years from July 2023 to June 2028.

Per the Fact Sheet for the EOM issued by CMS, the health equity strategy for EOM will include, among other things, the following:

  • Requiring oncology practices to screen for health-related social needs
  • Introducing data reports on expenditure and utilization patterns of their patient population to help healthcare professionals identify and address health disparities
  • Offering an additional payment for the provision of “Enhanced Services” to patients who are dually eligible for Medicare and Medicaid

An overarching goal of CMS for the EOM is for “participants to be incentivized to consider the whole patient and engage with them proactively, during and between appointments,” using many of the lessons learned from the previous Oncology Care Model that was tested between July 1, 2016 and June 30, 2022.

CY 2023 Medicare Advantage and Part D Final Rule (CMS-4192-F) Takes Effect

CMS’s CY 2023 Medicare Advantage and Part D Final Rule (87 FR 27704) went into effect on June 28, 2022 revising the Medicare Advantage (“MA”) and Part D regulation related to marketing and communications and the criteria used to review applications for new or expanded MA and Part D plans, including changes to the following areas:

  • Compliance with MA provider network adequacy requirements
  • Quality ratings for MA and Part D plans
  • Medical loss ratio reporting
  • Special requirements during disasters or public emergencies
  • How MA organizations calculate attainment of the maximum out-of-pocket (“MOOP”) limit for Parts A and B services
  • The use of pharmacy price concessions to reduce beneficiary out-of-pocket costs for prescription drugs under Part D

CMS has issued a Fact Sheet detailing each aspect of the Rule.

HHS Issues Guidance on HIPAA and Audio-Only Telehealth

On June 13, the Department of Health and Human Services issued guidance governing how healthcare providers and health plans can use remote communication technologies to provide audio-only telehealth services under certain circumstances. The guidance permits covered entities to use remote communication technologies for audio-only telehealth when doing so in compliance with the HIPAA Privacy, Security and Breach Notification Rules.

The HIPAA Privacy Rule requires that covered entities apply reasonable safeguards to protect the privacy of protected health information (PHI) from impermissible uses or disclosures, including when providing telehealth services. The HIPAA Security Rule applies to electronic protected health information (ePHI), which is PHI transmitted by, or maintained in, electronic media. In the context of audio-only telehealth services, the HIPAA Security Rule applies to current electronic technologies, such as VoIP and mobile devices with cellular or internet access, but does not apply to standard telephone lines.

Additionally, under the guidance, a covered entity communicating with patients via telephone is not required to enter into a business associate agreement with a telecommunication service provider. A business associate agreement is required only when the vendor is acting as a business associate to the covered entity, such as by assuming a role in creating, receiving, or maintaining PHI on behalf of the covered entity.

New Hospice Payment Rule, Health Security Guidance, and HHS Payment Rule Upheld

Posted on by Christie Bowness

For more information about this blog post, please contact Ryan L. O’Neill or Labinot Alexander Berlajolli.

CMS Proposes Updated Hospice Payment Rules for 2023

The Centers for Medicare & Medicaid Services (“CMS”) has released its annual proposed payment update for hospices for the upcoming fiscal year. Under 87 FR 19442, CMS would raise hospice payments by 2.7 percent, or $580 million, in fiscal year 2023. CMS has further proposed capping annual hospice wage index adjustments to broadly check against payments decreasing more than 5 percent year-over-year. Additionally, CMS sought comments from hospices on their health equity initiatives and a structural composite measure concept to inform future measure developments.  CMS issued a fact sheet on the proposed rule.

HHS Publishes Best Practices Guidance for Health System Cybersecurity

The United States Department of Health and Human Services (“HHS”) Health Sector Cybersecurity Coordination Center recently published guidance to help healthcare organizations improve their overall strength, protocols and prevention abilities for cyberattacks. The HHS guidance outlines the best practices for healthcare organizations to protect against cyberthreats, consisting of six key recommendations:

  1. Conduct regular security posture assessments.
  2. Frequently monitor networks and software for vulnerabilities.
  3. Identify which departments own what risk and assign management to those certain responsibilities.
  4. Monitor any gaps in security controls.
  5. Have an incident response plan and a discovery recovery plan.
  6. Create security metrics.

Adherence to best practice guidance can help healthcare systems minimize cybersecurity threats and offset scrutiny in the event of a successful breach.

Supreme Court Upholds HHS Calculation for Medicare Payment to Hospitals Serving Low-Income Patients

On June 24, 2022, the Supreme Court upheld HHS’ approach to calculating certain Medicare payments to hospitals that serve a large number of low-income patients. At issue was a rule finalized in 2005 that changed how HHS calculates disproportionate share hospital (“DSH”) adjustments, which are additional payments made to hospitals serving large numbers of low-income patients in order to offset losses. The 2005 rule changed HHS’ formula for calculating the additional payments. Petitioners seeking to have the 2005 rule vacated argued it resulted in under-counting of low-income patients and less payments to hospitals serving large low-income populations.

Are You Insured? What Property Owners Need to Know Before Allowing Environmental Work

Posted on by Christie Bowness

Property owners that allow access to their property for environmental work often seek to be included as “additional insureds” on insurance policies held by those doing the work.  For example, this routinely occurs when a prospective buyer conducts due diligence on a seller’s property, or when a previous owner or other responsible party is required to return to the property to remediate contamination. Typically, sale contracts and access agreements require the purchaser or the remediating party to ensure that its consultants and contractors/subcontractors name the property owner as an additional insured on their insurance policies, which in the event of an incident, would give the property owner the ability to make a claim under the policy for damages if those accessing the property do not make the property owner whole.  Blanket additional insured language that is common in many general liability, auto and contractor’s liability insurance policies includes as an additional insured any entity that is required to be named an additional insured by written contract.  But if the property owner and the named insured (i.e., the consultant and/or contractor/subcontractor) do not have a direct written agreement between them that requires the owner to be included as an additional insured, this arrangement may not be enough. Buyers and sellers in these situations must carefully review additional insured policy language and consider their contractual arrangements with environmental consultants and contractors/subcontractors to ensure that they actually obtain additional insured status.

The Need for Privity of Contract

Courts in New York, Illinois, and Louisiana have denied coverage in instances where owners and contractors/subcontractors lacked privity of contract and instead relied on multiple agreements, such as between the owner and general contractor and then between the general contractor and subcontractor, to establish the owner’s additional insured status. In Gilbane Bldg. Co./TDX Constr. Corp. v. St. Paul Fire & Mar. Ins. Co., 31 N.Y.3d 131 (2018), New York’s highest court held that although the general contractor agreed with the owner to require all subcontractors to list the owner as an additional insured, the lack of a written contract between the owner and subcontractor precluded coverage for the owner.

In each case where coverage has been denied, courts have emphasized that the particular wording of the insurer’s additional insured endorsement makes all the difference when determining whether privity of contract is required. For example, in Westfield Ins. Co. v. FCL Builders, Inc., 407 Ill. App.3d 730 (2011), the Supreme Court of Illinois concluded that because the policy at issue used the phrase “such person or organization” as opposed to “any person or organization,” privity of contract between the general contractor and subcontractor was required.

There are cases decided in Maine, Connecticut, and Texas where courts have not required contractual privity in like situations. But even in these cases, the outcomes have turned on subtle and unpredictable interpretations of the policies’ endorsements. This can be seen in Pro Con, Inc. v. Interstate Fire & Cas. Co., 794 F.Supp.2d 242 (D. Me. 2011), where the United States District Court for the District of Maine distinguished the endorsement at issue from one analyzed by a Louisiana court merely because the Maine endorsement did not include the phrase “with you” or “with each other” after the phrase “agreed in writing in a contract or agreement.” The Maine case demonstrates that the privity of contract requirement is not a jurisdictional rule-of-law issue, but rather a case-by-case, policy-by-policy one.

Because courts unpredictably require privity of contract on a case-by-case basis, an owner would be wise to enter into direct written agreements with every consultant and/or contractor/subcontractor requiring the property owner be named as an additional insured. Although it may seem redundant, establishing privity of contract directly with the policyholder is the best method to obtain coverage.

Certificates of Insurance Not Enough

Lastly, many property owners have wrongly assumed that receiving a certificate of insurance is enough to prove their coverage. However, courts in many jurisdictions have disregarded such certificates, finding them extrinsic to the interpretation of the policy endorsement’s requirements and therefore not sufficient evidence that a party is an additional insured.  See Gilbane, 31 N.Y.3d at 1137 (2018); see also Pro Con, 794 F.Supp.2d at 253 (D. Me. 2011). Therefore, property owners should not rely solely on certificates of insurance and should seek to obtain a specific endorsement to the policies held by those accessing their property to ensure that owner obtains coverage as an additional insured.

Best Practices for Confirming Insurance Requirements

In light of the foregoing, property owners should consider the following when confirming insurance requirements:

  • Entering into a direct written agreement with each entity providing insurance to the property owner, including all consultants and contractors/subcontractors;
  • Requesting and reviewing relevant policy endorsements, rather than relying on certificates of insurance; and
  • Carefully reviewing the insurance information and endorsements with your professional advisors.

The author of this post, Michael Antzoulis, is a law student at Seton Hall University School of Law who is participating in Riker Danzig’s annual summer associate program.  For more information about this topic, please contact any member of the firm’s Environmental Group.

Increased Focus on PBMs and Federal Litigation Update

Posted on by Christie Bowness

For more information about this blog post, please contact Labinot Alexander Berlajolli.

The FTC Signals Increased Enforcement Against Prescription Drug Rebate Programs

The Federal Trade Commission (“FTC”) issued an enforcement policy statement on June 16, 2022 announcing that it will increase enforcement against any illegal bribes and rebate schemes that block patients’ access to competing lower-cost drugs. These rebates are sometimes used so that certain drugs are placed on formularies to ensure those drugs are covered by insurance. Some of the rebates and fees cited by the FTC are conditioned on the volume of sales of certain high list price prescription medicines such as insulin in particular.

The FTC raised concerns that high rebates and fees to pharmacy benefit managers (“PBMs”) and other intermediaries act to incentivize higher prices for affected drugs while also discouraging coverage of other lower cost products. Specifically, the FTC has expressed concern that rebates are driving up the price of insulin since the list price of insulin has increased by over 300 percent over the past twenty years.

In its enforcement policy statement, the FTC asserts that it “intends to closely scrutinize the impact of rebates and fees on patients and payers to determine whether any of these provisions have been violated.”

Bipartisan Bill to Increase PBM Transparency

The bipartisan Pharmacy Benefit Manager Transparency Act of 2022 was introduced in the United States Senate on May 24, 2022. This law would allow the FTC to further regulate PBMs and increase drug pricing transparency. The law would regulate certain disfavored methods such as spread pricing and payment clawbacks.

If passed, this legislation would allow the FTC and state attorneys general to impose civil penalties on PBMs for any violations plus an additional penalty of up to $1 million. This law would also require PBMs to file an annual report with the FTC on how they charge payers and pharmacies for prescription drugs.

The proposed law also includes certain affirmative defenses for PBMs including that the conduct was non-pretextual and reasonably necessary to: (1) prevent a violation of or comply with federal or state law; (2) protect patient safety; or (3) protect patient access.

U.S. Supreme Court Rejects UnitedHealthcare CMS Overpayment Rule Appeal

On June 21, 2022 the U.S. Supreme Court denied UnitedHealthcare’s petition for a writ of certiorari seeking review of a U.S. Court of Appeals for the District of Columbia Circuit reversal of a 2018 decision that vacated Medicare's overpayment rule. The rule in question requires insurers to refund payment to the Centers for Medicare & Medicaid Services (“CMS”) within 60 days if the insurer learns a diagnosis lacks medical record support.

UnitedHealthcare’s primary argument was that the overpayment rule was subject to “actuarial equivalence.” The D.C. Circuit Court ruled that actuarial equivalence does not apply to the overpayment rule, and found that there was no legal basis for UnitedHealthcare’s claim. Specifically, the D.C. Circuit Court held that “[e]ven if actuarial equivalence applied as UnitedHealth suggests, it would be UnitedHealth's burden to show the systematically skewed inaccuracies on which its theory depends, which it has not done.”

The center of the dispute involved audits conducted by the Department of Health & Human Services (“HHS”), which determined that more than 40% of the risk scores in each of two UnitedHealthcare plans were inaccurate as a result of unsupported diagnoses. HHS has estimated that the impact on payments for those two contracts is greater than $500 million.

U.S. Supreme Court Reverses 340B Program Cuts in Favor of Hospital Groups

On June 15, 2022 the U.S. Supreme Court reversed the decision of the D.C. Circuit Court in favor of a group of hospitals challenging HHS’ $1.6 billion cut to the 340B program under the Medicare Outpatient Prospective Payment System. The 340B Program is a drug price control program that allows certain qualifying providers serving uninsured and low-income patients to purchase outpatient drugs from manufacturers at discounted prices.

The D.C. Circuit Court had previously held that HHS had the authority to make these cuts but the unanimous decision of the U.S. Supreme Court held that HHS may not vary the reimbursement rate for 340B hospitals absent a survey of hospitals’ acquisition costs. As such, the Supreme Court held that, “HHS's 2018 and 2019 reimbursement rates for 340B hospitals were therefore contrary to the statute and unlawful.”

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