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A New Emphasis on MARPOL is a 2023 World Maritime Theme

Month: August 2022

A New Emphasis on MARPOL is a 2023 World Maritime Theme

Posted on by Christie Bowness

A New Emphasis on MARPOL is a 2023 World Maritime Theme:

An example of its environmental impact closer to home

Maritime shipping emissions account for about 3% of the global carbon dioxide output, roughly the same as aviation and, according to the World Economic Forum, if shipping was a country, it would be the sixth-largest polluting country in the world. In an attempt to combat this impact, the International Maritime Organization ("IMO"), a specialized agency of the United Nations, has set a goal to decarbonize the industry as soon as possible before the end of the century. This priority is exemplified by the IMO’s decision to make “MARPOL at 50 – Our Commitment Goes On” its 2023 World Maritime Theme.  Under MARPOL the IMO already has begun to adopt measures to reduce emissions of greenhouse gases from international shipping.  The 2023 theme can be expected to promote further discussion around the next phase of work to reduce the environmental impacts of shipping.

Although ship decarbonization targets are a relatively new maritime endeavor, the enforcement mechanisms to combat marine pollution are not new. To address marine pollution, nearly 50 years ago, an international conference was held in 1973, which resulted in the creation of the International Convention for the Prevention of Pollution from Ships, known as MARPOL. Later amended by the 1978 Protocol, the two treaties are collectively known today as MARPOL 73/78. The United States’ enactment of MARPOL is known as the Act for the Prevention of Pollution from Ships ("APPS").

The United States government has increasingly pursued maritime violations of MARPOL 73/78 and APPS. Depending on the circumstances, civil or criminal actions may be brought against individuals, as well as the corporate entities that own, manage, or operate the vessels that violate environmental requirements. The investigative and prosecutorial methodology is fairly predictable. A potential violation typically starts with an investigation by the United States Coast Guard into the circumstances of any alleged marine pollution. The Coast Guard may refer certain matters to the Environmental Protection Agency (EPA) for enforcement.  In the most serious cases involving knowing violations, the Coast Guard may refer the matter to Department of Justice for prosecution under the applicable statute.

MARPOL Enforcement in the Delaware Bay - United States v. Vastardis

A recent example of typical enforcement of MARPOL 73/78 and APPS by the Department of Justice is United States v. Vastardis, No. 20-2040, 2021 U.S. App. LEXIS 36034 (3d Cir. Dec. 7, 2021).  The Third Circuit Court of Appeals joined the Second and Fifth Circuits in holding that Coast Guard rules requiring vessels to “maintain an Oil Record Book” also require that records must be substantively accurate when the ship docks in the United States.

        MARPOL 73/78 and APPS

MARPOL 73/78 and APPS require oil tankers weighing 150 gross tons or more and ships weighing 400 gross tons or more 1) to implement technology that regulates the amount of oil that can be discharged overboard during the regular operation of a vessel; and 2) to be equipped with oil-water separators ("OWS"), oil-content meters ("OCM"), and an Oil Record Book. See United States v. Anrogar, 459 F.3d 430, 432 (3d Cir. 2006).  OWSs separate oil particles from the wastewater to be discharged overboard. OCMs sound an alarm if the oil content of ship’s overboard discharge contains more than 15 parts per million (“ppm”) of oil.  Oil Record Books must document all treated and untreated discharges of oil-contaminated wastewater.

Under Coast Guard rules adopted to enforce MARPOL and APPS, entries are required in the Oil Record Book whenever certain machinery operations, such as using an OWS, occur and the master or “other person having charge of a ship” is responsible for the maintenance of the log. See 33 C.F.R. § 151.25. A person who knowingly violates this rule commits a felony subject to criminal penalties under APPS.

APPS provides at 33 U.S.C. § 1902 that it applies “to a ship of United States registry or nationality, or one operated under the authority of the United States, wherever located.”  Foreign-flagged vessels are subject to APPS in the navigable waters of the United States, the exclusive economic zone of the United States, and the ports or terminals in the United States.

        Factual Background, Procedural History and Trial

Nikolaos Vastardis was convicted and sentenced for crimes that allegedly occurred while he was the Chief Engineer onboard a Liberian-registered tanker, the M/V Evridiki. Vastardis, as Chief Engineer, was responsible for the Oil Record Book.  When the M/V Evridiki entered port in the Delaware Bay, the Coast Guard performed an inspection, and found that the OWS had a hidden valve that allowed the OWS to give a reading of 0 ppm. When the hidden valve was open, the OWS gave a reading of 40 ppm or higher, well over the 15 ppm limitation.

Vastardis was charged in a four-count indictment with violations including (1) knowingly causing the failure to maintain an accurate Oil Record Book (33 U.S.C. § 1908); (2) falsification of records under the Sarbanes-Oxley Act (18 U.S.C. § 1519); (3) obstruction of justice, in presenting false Oil Record Book entries and deceiving inspectors (18 U.S.C. § 1505); and (4) false statements in connection with a federal investigation (18 U.S.C. § 1001). Following a seven-day trial, a jury found Vastardis guilty on all counts and he was imposed a $7,500 fine, a $400 special assignment and three years’ probation. As a condition of the probation, Vastardis was barred from entering the United States.

        The Requirement to Maintain an Accurate Oil Record Book On Appeal

On appeal, Vastardis argued that the requirement to “maintain” an Oil Record Book only required a ship to physically possess an Oil Record Book, not that it be accurate. The Third Circuit disagreed, joining in the standard set forth by the Second and Fifth Circuit Courts of Appeal, finding that “[t]he recordkeeping provision would make little sense if, as Vastardis proposes, it required that ships only physically possess an Oil Record Book in any state of completeness or accuracy.” The Court affirmed the other charges as well, but vacated the condition that prohibited Vastardis from entering the United States, finding Vastardis’s career depends on travel in international waters and a condition of banishment impinges upon freedom of movement and could potentially interfere with the livelihood of a foreign national.

Conclusion

The IMO’s World Maritime Theme for 2023, “MARPOL at 50 – Our Commitment Goes On,” celebrates MARPOL’s legacy. The decision in United States v. Vastardis is only a recent example of its local impact. The 2023 emphasis on MARPOL forecasts new decarbonization initiatives and the potential adoption of further measures to enhance energy efficiency of ships. The shipping sector should prepare for new rules and initiatives in the United States arising from the emphasis on MARPOL.

For more information, please contact the author Holli Packer at HPacker@riker.com or any attorney in our Environmental Practice Group.

 

OIG Advisory Opinion on Specimen Collection and HIPAA Guidance

Posted on by Christie Bowness

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

OIG Issues Advisory Opinion on Payments for Laboratory Specimen Collection

The Department of Health and Human Services ("HHS") Office of Inspector General ("OIG") issued Advisory Opinion Number 22-09 which reaffirmed the OIG’s restrictions on arrangements involving payment for specimen collection fees. This Advisory Opinion assessed the regulatory implications under the federal Anti-Kickback Statute with respect to a proposed arrangement whereby the operator of a laboratory network (the "Requestor") sought to provide compensation to various hospitals (the "Contract Hospitals") for certain specimen collection services (the "Collection Services") in connection with tests provided by the Requestor (the "Proposed Arrangement").

Under the federal Anti-Kickback Statute, it is a criminal offense to knowingly and willfully offer, pay, solicit, or receive any remuneration to induce, or in return for, the referral of an individual to a person for the furnishing of, or arranging for the furnishing of, any item or service reimbursable under a federal healthcare program (such as Medicare, Medicaid, or TriCare). Per the OIG, the statute has been interpreted to cover any arrangement where one purpose of the remuneration is to induce referrals for items or services reimbursable by a federal healthcare program.

Under the Proposed Arrangement:

  • Requestor would enter into contracts with the Contract Hospital, pursuant to which Requestor would pay the Contract Hospitals on a per-patient-encounter basis to collect, process, and handle specimens that are then sent to Requestor’s clinical laboratories for testing;
  • The Requestor would compensate Contract Hospitals for the Collection Services performed by the Contract Hospitals in connection with individuals who present with orders for testing and who are not currently inpatients or registered outpatients of the Contract Hospitals;
  • The Requestor would not compensate Contract Hospitals if the Collection Services are performed in connection with individuals who are currently inpatients or registered outpatients of the Contract Hospitals;
  • When individuals present to a Contract Hospital with laboratory testing orders that do not specify which laboratory will conduct the testing, the Contract Hospital would have the opportunity to choose to which laboratory it would send the specimens; and
  • The per-patient encounter compensation rate would be consistent with fair market value for the Services in an arm’s-length transaction.

In this Advisory Opinion, the OIG opined that the Proposed Arrangement would implicate the federal Anti-Kickback Statute because "it would involve remuneration from a laboratory to a party that is in a position to make referrals to the laboratory for, or otherwise arrange for the laboratory to furnish, items and services that may be paid for in whole or in part by a Federal healthcare program." The OIG elaborated that "[s]pecifically, where an individual—who may be a Federal healthcare program beneficiary—presents to a Contract Hospital without a laboratory specified on the order for laboratory services, the Contract Hospital could refer specimens from that individual to Requestor for reimbursable testing."

Furthermore, according to the OIG, the Proposed Arrangement would not satisfy the personal services and management contracts and outcomes-based payment arrangements safe harbor of the Anti-Kickback Statute because "the per-patient-encounter compensation methodology would take into account the volume or value of referrals or other business generated for which payment may be made in whole or in part under a Federal healthcare program."

Ultimately, based on the facts surrounding the Proposed Arrangement, because of the possibility that the per-patient-encounter fee would be used to induce or reward referrals to the Requestor and the corresponding risk of inappropriate steering to the Requestor, the OIG concluded that the Proposed Arrangement would pose more than a minimal risk of fraud and abuse under the federal Anti-Kickback Statute.

CMS Issues Guidance on Business Associates' HIPAA Requirements Compliance and on Virtual Credit Cards for EFT and ERA Transactions

Earlier this year, the National Standards Group ("NSG"), on behalf of HHS, issued two guidance documents providing guidance on (1) HIPAA Covered Entities’ responsibility for ensuring Business Associates’ compliance with the Health Insurance Portability and Accountability Act of 1996 ("HIPAA") regulations (GL-2022-03), as well as guidance on (2) health plans’ payment of healthcare claims using Virtual Credit Cards ("VCCs") and adopted HIPAA standards for healthcare Electronic Funds Transfers ("EFT") and Remittance Advice ("ERA") transactions. (GL-2022-04).

  1. GL-2022-03 clarifies covered entities’ obligation to ensure their business associates comply with HIPAA regulations (see 45 C.F.R. § 162.923(c)). Since NSG receives frequent complaints regarding business associates in connection with their relationship with covered entities, NSG makes clear that the HIPAA covered entity is responsible for the compliance of its business associates.
  2. GL-2022-04 provides guidance on the following three questions:
    • Do the adopted HIPAA EFT and ERA standards permit health plans to pay claims by VCCs?
    • If a healthcare provider requests that a health plan pay the provider’s claims using the adopted HIPAA EFT and ERA standards, must the health plan comply?
    • Can a health plan require a provider to agree to receive payment or reassociation services from a vendor of the health plan’s choosing as condition of receiving EFT or ERA using the adopted standards?

In sum, the NSG concluded as follows, respectively:

  • Yes, the adopted HIPAA EFT and ERA standards permit health plans to pay claims by VCC;
  • Yes, the health plan must comply under 45 C.F.R. § 162.925(a)(1) which dictates that if an entity requests that a health plan conduct a transaction as a standard transaction, the health plan must do so.
  • No, a health plan may not require that a provider agree to receive payment or reassociation services from its business associate (nor may the business associate otherwise require the provider to do so) as a condition of receiving healthcare payments using the adopted EFT and ERA standards.

CMS Suspends Prior Authorization for Certain DMEPOS and Skilled Nursing Home Update

Posted on by Christie Bowness

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

CMS Issues Final Rule for the Suspension of Prior Authorization Requirements for Specified Orthoses Prescribed and Furnished Urgently or Under Special Circumstances

On August 10, 2022 the Centers for Medicare & Medicaid Services (“CMS”) issued a final rule (87 FR 48609) which was effective, retroactively, April 13, 2022. This rule further modifies the December 30, 2015 final rule, (80 FR 81674) titled, “Medicare Program; Prior Authorization Process for Certain Durable Medical Equipment, Prosthetics, Orthotics, and Supplies,” (“DMEPOS”) which established an initial Master List (called the Master List of Items Frequently Subject to Unnecessary Utilization) of certain DMEPOS that the federal government determined were frequently subject to unnecessary utilization and additionally established a prior authorization process for these items.

The final rule serves to announce the suspension of prior authorization for specified orthoses items on the Required Prior Authorization List that require prior authorization as a condition of payment under certain circumstances when reported with certain modifiers. Specifically, CMS is suspending prior authorization requirements indefinitely, under these limited circumstances:

  • Claims for healthcare Common Procedure Coding System (“HCPCS”) codes L0648, L0650, L1832, L1833, and L1851 that are billed using modifier ST, indicating that the item was furnished urgently.
  • Claims for HCPCS codes L0648, L0650, L1833, and L1851 billed with modifiers KV, J5, or J4, by suppliers furnishing these items under a competitive bidding program exception (as described in 42 CFR 414.404(b)), to convey that the DMEPOS item is needed immediately either because it is being furnished by a physician or treating practitioner during an office visit where the physician or treating practitioner determines that the brace is needed immediately due to medical necessity or because it is being furnished by an occupational therapist or physical therapist who determines that the brace needs to be furnished as part of a therapy session(s).

Prior authorization will continue for these orthoses items (HCPCS L0648, L0650, L1832, L1833, and L1851) when furnished under circumstances not covered in this final rule, as well as all other items on the Required Prior Authorization List, available here.

CMS Issues Fiscal Year 2023 Skilled Nursing Facility Prospective Payment System Final Rule

On August 3, 2022, CMS issued a final rule that updates Medicare payment policies and rates for skilled nursing facilities under the Skilled Nursing Facility Prospective Payment System ("SNF PPS") for fiscal year ("FY") 2023 which includes updates for the SNF Quality Reporting Program ("QRP") and the SNF Value-Based Purchasing ("VBP") Program for FY 2023 and future years. Among other things, the final rule reflects the following updates:

  • A 5.1% payment rate increase stemming from a 3.9% market basket increase, a 1.5 percentage point market basket forecast error adjustment, and a 0.3 percentage point reduction for productivity.
  • Recalibration of the Patient-Driven Payment Model ("PDPM") parity adjustment factor of 4.6% with a two-year phase-in period that would reduce SNF spending by 2.3%, or approximately $780 million, in FY 2023 and 2.3% in FY 2024.
  • Finalizing a permanent 5% cap on annual wage index decreases to smooth year-to-year changes in providers’ wage index payments.

Additionally, the final rule included a new quality measure for the FY 2024 SNF Quality Reporting Program ("QRP") that tracks influenza vaccination coverage among healthcare professionals in SNFs. CMS has issued a Fact Sheet summarizing the final rule.

New Jersey Legislature Approves Bill S2422 Aa (1R)

The New Jersey legislature approved a new bill updating the New Jersey Life and Health Insurance Guaranty Association Act on August 12, 2022. The bill expands the assessment base that is to cover the insolvencies of long-term care insurers and requires that all life and health insurers assist in covering these insolvencies. Additionally, this bill sets the cap at $500,000 on health insurance benefits issued by the guaranty association in cases of insurer impairment or insolvency and is proposed for adjustment based upon changes in the healthcare costs component of the consumer price index from January 1, 2022, to the date on which the member insurer, as defined in the bill, becomes an insolvent insurer.

Federal Legislation Addressing Burnout and Other Federal Updates

Posted on by Christie Bowness

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

Federal Mental Protection Legislation for healthcare Providers Becomes Law

Federal legislation to improve mental and behavioral health among healthcare providers in the wake of the COVID-19 pandemic was recently signed into law. Public Health Law No. 117-105, also known as the Dr. Lorna Breen healthcare Provider Protection Act, establishes grants and requires other activities to improve mental and behavioral health among healthcare providers. Such grants will be made available for hospitals, medical professional associations and other healthcare entities.

Specifically, under the law, the United States Department of Health & Human Services ("HHS") must award grants for training health professional students, residents and other healthcare professionals to reduce and prevent suicide, burnout, mental health conditions and substance use disorders. The law further establishes a national education and awareness initiative regarding healthcare worker mental health, and studies on mental and behavioral health and burnout among healthcare workers.

The Dr. Lorna Breen healthcare Provider Protection Act is the latest in recent federal efforts to address healthcare worker mental health and burnout in the wake of the COVID-19 pandemic. The full text of the Dr. Lorna Breen healthcare Provider Protection Act can be read here.

HHS Repeals Final Rules Regarding Guidance, Enforcement, and Adjudication Procedures

In a recent final rule, 87 FR 44002, HHS announced that it would repeal regulations issued under two prior final rules: “Department of Health and Human Services Good Guidance Practices” (85 FR 78770); issued 12/7/2020) and “Department of Health and Human Services Transparency and Fairness in Civil Administrative Enforcement Actions” (86 FR 3010); issued 1/14/2021). The final rules had previously been codified as regulations, collectively, at 45 C.F.R. Part 1.

 

Both former final rules had been issued, and codified, pursuant to Executive Orders (E.O. 13891 and E.O. 13892). Both Executive Orders were subsequently repealed by the Biden Administration via E.O. 13992. The repeal of the HHS final rules removes multiple standards and requirements which heightened the administrative burdens of HHS when issuing guidance or pursuing civil enforcement actions.

The full text of 87 FR 44002 can be accessed here. HHS has not yet released a fact sheet summarizing this final rule.

CMS Announces New Quality Measure Targets for State Medicaid Home and Community-Based Services

The Centers for Medicare & Medicaid Service ("CMS") recently released a set of new Home and Community-Based Services ("HCBS") quality measures through a guidance letter issued directly to each State Medicaid Director (SMD# 22-003). Millions of Americans rely on Medicaid for HCBS, though coverage varies state by state. Accordingly, the HCBS Quality Measure is designed, at a national level, to provide insight into the quality of state Medicaid programs, enable states to measure and improve outcomes for Medicaid HCBS beneficiaries relying on long-term Medicaid services, and improve health equity.

The measures seek to address HCBS quality and outcomes in the following key priority areas:

  1. Access and awareness of eligible Medicaid beneficiaries to available HCBS resources.
  2. Opportunities for rebalancing of Medicaid spending and use of services and supports delivered in home and community-based settings relative to institutional settings.
  3. Community integration, which is focused on ensuring the self-determination, independence, empowerment, and full inclusion of eligible Medicaid beneficiaries.

CMS has stated that it will release additional technical details on each measure in future guidance. The CMS guidance letter outlining the new HCBS quality measure targets can be read here.

HHS Final Rule Regarding Notice of Benefit and Payment Parameters for 2023 Take Effect

An HHS final rule (87 FR 27208) regarding federal qualified health plans ("QHPs") recently went into effect, implementing new CMS standards and requirements for QHP issuers and related entities. The final rule seeks to strengthen the coverage options offered by QHPs listed on federal and state marketplaces that are hosted on the federal platform while also streamlining QHP review and comparison by consumers.

Under the final rule, QHP issuers face a host of new and updated standards. QHP issuers are now required to offer standardized plan options at every product network type, at every metal level (bronze, silver, gold, etc.), and throughout every service area in which they offer non-standardized options in plan year ("PY") 2023 and beyond. Additionally, CMS will conduct network adequacy reviews in all states with a Federally-Facilitated Marketplace ("FFM"), evaluating QHPs for compliance with quantitative network adequacy standards based on time and distance standards. Additionally, CMS has finalized multiple requirements designed to advance health equity in QHPS, including updating nondiscrimination policies affecting health plan designs and scaling back special enrollment period ("SEP") verification.

The full text of the final rule is available here. A fact sheet regarding the final rule may be read here.

Will NJ’s Latest Approved Statute Throw Cold Water on Healthcare Transactions?

Posted on by Richelle Delavan

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

On August 18, 2022, Governor Murphy signed Senate Bill No.315 (S-315) into law, establishing broad employment protections for workers in the healthcare sector when there is a change in control of a healthcare entity employer. When S-315 takes effect on November 16, 2022, a change in control of the applicable entity will have to occur with a written agreement that preserves the wages, benefits, and employment status of eligible employees. Under the law, a “change in control” is broadly defined as any transaction that will alter substantially all of the assets used in a healthcare entity's operations, the controlling interest in the healthcare entity, or the identity of the healthcare entity employer.

Terms Defined Under S-315

Healthcare entities covered by S-315 are currently limited to healthcare facilities licensed pursuant to N.J.S.A. § 26:2H-1 et seq., regardless of size, and staffing registries or home care services agencies as defined under N.J.S.A. § 45:11-23. In larger facilities where component departments may qualify, only those specific departments are subject to S-315. A “former healthcare entity employer” is any employer of eligible employees who owns, controls, or operates a healthcare entity where the eligible employees are employed right before the change in control of the entity. A “successor healthcare entity employer” is the entity taking ownership, control, or operation of a healthcare entity with eligible employees.

Eligible employees are defined as any person employed at an affected healthcare entity during the ninety (90) day period immediately preceding a change in control of a healthcare entity, or who retains recall rights under an agreement with the former healthcare entity employer.  Managerial employees do not qualify as “eligible employees.”  In addition, any person who was discharged with cause during the 90-day period preceding the change in control do not qualify as “eligible employees.”

Requirements Under S-315

Former healthcare Entity Employers

Not less than thirty (30) days prior to a change in control taking effect, the former healthcare entity employers must:

  1. Provide a list of eligible employees to the successor healthcare entity employer, and any collective bargaining representative the employees may have, containing the following information of each employee: name, address, date of hire, phone number, wage rate, and employment classification;
  2. Inform all eligible employees of their rights provided by this section; and
  3. Post a notice, in a conspicuous location or locations accessible to all employees, setting forth the rights provided by the statute.

Successor healthcare Entity Employers

  1. Offer employment during a transitional period of not less than four months following the change in control to each eligible employee, with no reduction of wages or paid time off, and no reduction of the total value of benefits, including healthcare, retirement, and education benefits, provided that:
    • The offer must be in writing and remain open for at least 10 business days from the date of the offer;
    • During the transition period, all available employment positions must be offered to eligible employees who had previously held the positions until the available employment positions are filled or until no more eligible employees are available; and
    • If, at the time of the change in control and throughout the transition period, the total number of employment positions is less than the total number of eligible employees, the choice of employees to be employed shall be based on seniority and experience.
  1. Refrain from discharging any eligible employee during the transitional period without cause, except that a successor employer may lay off eligible employees if the employer reduces the total number of employees, including at the time of the change in control. The choice of employees to be retained during a layoff must be based on seniority and experience, and the laid off employees must be offered any positions they had previously held that are subsequently restored during the transitional period.
  2. Perform a written performance evaluation at the end of the transitional period for each retained eligible employee, and offer the employee continued employment if an employee's performance during that period was satisfactory.
  3. Retain the employment offers and written performance evaluations, and provide to the employee or representative of the employee upon request, made pursuant to this subsection, for not less than three years from the date of the offer or evaluation, with each record including the name, address, date of hire, phone number, wage rate, and employment classification of the employee.

Penalties and Sanctions

Violations of S-315 will generally be subject to the same sanctions and remedies provided under N.J.S.A. § 34:11-4.1 et seq.  However, under S-315, failure to pay an employee wages, paid time off, or the value of benefits, as required under the law, will be regarded as a failure to pay the full amount of wages. Additionally, the discharge of an employee, or failure to offer employment or retain in employment an employee under S-315 will be regarded as retaliation against the employee. Finally, in civil actions brought by the employee, the court shall have authority to order injunctive or other permanent equitable relief, including, but not limited to, immediate reinstatement of any employee discharged or not retained in violation of this section.

Collective Bargaining

With the exception of actions specifically prohibited under S-315, no action taken in compliance with a collective bargaining agreement entered into by an exclusive representative of employees of a healthcare entity subject to a change in control section shall be considered a violation of S-315. Similarly, no new duty imposed under S-315 shall be construed as limiting, delaying, or preventing the recognition of a collective bargaining representative of the employees by a successor healthcare entity employer, or collective bargaining between the successor healthcare entity employer and the collective bargaining representative.

 

Second Circuit Rules on Copay Assistance Programs and CMS Announces Maternity Care Action Plan

Posted on by Christie Bowness

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

CMS Announces Maternity Care Action Plan, Approves Expanded Medicaid and CHIP Coverage

The Centers for Medicare & Medicaid Services ("CMS") recently announced its Maternity Care Action Plan to support the implementation of the Biden-Harris Administration’s Blueprint for Addressing the Maternal Health Crisis. The action plan is designed to implement a holistic and coordinated approach across CMS to improve health outcomes and reduce inequities for people during pregnancy, childbirth, and the postpartum period.

Additionally, CMS further approved new actions in Hawaii, Maryland, Ohio, Connecticut, Kansas, and Massachusetts to extend Medicaid and Children’s Health Insurance Program ("CHIP") coverage for 12 months after pregnancy. At present, the following twenty-one states, and Washington, D.C., have extended postpartum Medicaid and CHIP coverage from 60 days to a full 12 months after pregnancy: California, Connecticut, Florida, Hawaii, Illinois, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, New Jersey, New Mexico, Ohio, Oregon, South Carolina, Tennessee, Virginia, and Washington.

These efforts build on CMS’ 2023 Inpatient and Long-term Care Hospital Prospective Payment System proposed rule, 87 FR 28108, which was released this year. Under this proposed rule, CMS has announced measures to build on key priorities to better measure healthcare quality disparities and to improve the safety and quality of maternity care.

A fact sheet on the CMS Maternity Care Action Plan can be accessed here. A fact sheet on the maternity health proposals under proposed rule 87 FR 28108 can be accessed here.

Second Circuit Rules on Copay Assistance Program

A three-judge panel for the Second Circuit recently upheld a finding by the United States Department of Health and Human Services ("HHS") Office of the Inspector General ("OIG") that a planned copay assistance program for Medicare beneficiaries would violate the Anti-Kickback Statute ("AKS"). The Second Circuit’s ruling involves Pfizer’s new drug, Tafamidis, a treatment for a rare, progressive heart condition known as transthyretin amyloid cardiomyopathy.

Medicare beneficiaries stand to pay $13,000 out of pocket for one year of Tafamidis. Pfizer proposed a Direct Copay Assistance Program to assist with these costs. On June 27, 2019, Pfizer sought an OIG advisory opinion regarding the legality of its proposed program. However, on September 18, 2020, the OIG issued OIG Advisory Opinion No. 20-05, which concluded that Pfizer’s program was problematic under the AKS.

Pfizer challenged the OIG’s interpretation in the United States District Court for the Southern District of New York ("SDNY"). The SDNY granted summary judgment in favor of the OIG. Pfizer subsequently appealed to the Second Circuit, but the Second Circuit held that Pfizer’s proposed program fell “squarely within the AKS’s prohibitions.”

The full text of the ruling may be found here. This ruling is the latest in a series of governmental lawsuits challenging the legality of copay subsidy programs which have arisen in the past several years, including Actelion Pharmaceuticals, Astellas Pharma and Amgen, and Gilead Sciences.

New Jersey Legislative Update, Including the Modification of Out-of-Network Statute

Posted on by Christie Bowness

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

New Jersey Modifies Arbitration Process in Out-of-Network Statute

S1777, which passed both the Senate and Assembly, and approved by the Governor on July 29, 2022, amends the “Out-of-network Consumer Protection, Transparency, Cost Containment and Accountability Act” to revise certain aspects of the arbitration processes established in that Act.

The statute extends the amount of time that the insurance carrier and healthcare provider have to negotiate a settlement in the event of an inadvertent use of out-of-network services from 30 to 60 days, and extends the deadline for the insurance carrier, provider, or covered person to initiate binding arbitration in the event of a failure to reach a settlement from within 30 days of the final offer to within 60 days of the final offer. Finally, the bill requires an arbitrator to include detailed written findings with each decision. The detailed written findings are to be an analysis of the decision including, but not be limited to, information concerning any databases, previous awards, or other documentation or arguments that contributed to the arbitrator’s decision.

New Jersey Establishes Minimum Medicaid Reimbursement Rates for Brain Injuries 3110/S2049

New Jersey approved A3110/S2049, which establishes minimum Medicaid reimbursement rates for brain injury services. Specifically, the bill requires that the Medicaid per diem or encounter reimbursement rates for eligible brain injury services, when such services are provided by an approved brain injury services provider to a Medicaid beneficiary requiring treatment for a brain injury, are to be, at minimum, as follows:

  1. The reimbursement rate for Community Residential Services – Low Supervision provided to a Medicaid beneficiary eligible for brain injury services, currently at $140 a day, is to be equal to the reimbursement rate for Individuals Supports Services - Tier B provided to a Medicaid beneficiary eligible for services provided by the Division of Developmental Disabilities in the Department of Human Services (DHS), currently at $169.92 per day;
  2. The reimbursement rate for Community Residential Services – Moderate Supervision provided to a Medicaid beneficiary eligible for brain injury services, currently at $190 a day, is to be equal to the reimbursement rate for Individuals Supports Services - Tier C provided to a Medicaid beneficiary eligible for services provided by the Division of Developmental Disabilities in the DHS, currently at $283.20 a day; and
  3. The reimbursement rate for Community Residential Services – High Supervision provided to a Medicaid beneficiary eligible for brain injury services, currently at $220 a day, is to be equal to the average of the reimbursement rates for Individuals Supports Services – Tiers D and E provided to a Medicaid beneficiary eligible for services provided by the Division of Developmental Disabilities in the DHS, currently at $453.12 a day.

The bill will take effect 30 days after the date of enactment and will apply to services provided on or after the effective date of the bill and to any Medicaid managed care contract executed or renewed on or after the effective date of the bill.

CMS Issues Final Rules for Hospices, Inpatient Psychiatric Facilities and Inpatient Rehabilitation Facilities for Fiscal Year 2023

Posted on by Christie Bowness

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

CMS issued three final rules covering its annual updates for hospices, inpatient psychiatric facilities ("IPF") and inpatient rehabilitation facilities ("IRF") for fiscal year 2023. Below are highlights from each update:

Hospice Payment Updates 

Under the final rule for hospices, 87 FR 45659, the fiscal year (“FY”) 2023 hospice payment update percentage is 3.8% (an estimated increase of $825 million in payments from FY 2022). The hospice payment update includes a statutory aggregate cap of $32,486.92 that limits the overall payment per patient that is made to a hospice annually, which reflects an increase of 3.8% from 2022. The final rule provides an update on the development of a patient assessment instrument, titled Hospice Outcomes and Patient Evaluation ("HOPE").  This final rule also provides an update on testing conducted for the Consumer Assessment of healthcare Providers and Systems (“CAHPS”) Hospice Survey, which is used to collect data on experiences of hospice care from primary caregivers of hospice patients.

CMS released a Fact Sheet for the hospice payment update here. The final rule can be found here.

Inpatient Psychiatric Facilities

Under this final rule, 87 FR 46846, the total estimated payments to inpatient psychiatric facilities are estimated to increase by 2.5% or $90 million in FY 2023 compared to 2022. The final rule applies a 5% cap on decreases in the IPF PPS wage index for FY 2023 and subsequent years, in a budget-neutral manner such that IPF’s wage index for FY 2023 and subsequent years will not be less than 95% of its final wage index calculated in the prior FY.

CMS released a Fact Sheet for the IPF rule here. The final rule published in the Federal Register can be found here.

Inpatient Rehabilitation Facilities 

This final rule, 7 FR 47038, updates the Inpatient Rehabilitation Facilities Prospective Payment System (“IRF PPS”) payment rates by 3.9%. CMS estimates that overall IRF payments for FY 2023 will increase by 3.2% (or $275 million) relative to payments in FY 2022. It also finalizes a permanent 5% cap on annual wage index decreases to smooth year-to-year changes in providers’ wage index payments.

CMS released a Fact Sheet for the IRF rule here. The final rule published in the Federal Register can be found here.

OIG Fraud Alert on Telemedicine Arrangements and Federal Litigation Update

Posted on by Christie Bowness

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

OIG Issues Special Fraud Alert Regarding Telehealth Arrangements

The United States Department of Health & Human Services ("HHS"), Office of the Inspector General ("OIG"), issued a Special Fraud Alert urging practitioners to exercise caution when entering into arrangements with telemedicine companies. The Special Fraud Alert is the result of "dozens of investigations" conducted by the OIG into fraud schemes involving companies that purport to provide telehealth, telemedicine, or telemarketing services. Practitioners working for telehealth companies involved in such schemes may find themselves facing civil and criminal charges for violating numerous federal laws, including the Anti-Kickback Statute and False Claims Act, as well as state laws and regulations.

The OIG report has created a list of behaviors that should alert practitioners to potential fraud:

  1. The telemedicine company or an associated telemarketing service identifies the patients for whom the practitioner orders or prescribes medical items.
  2. The practitioner does not have enough contact or information about the patient to assess whether these items are medically necessary.
  3. The telemedicine company pays the practitioner based on the volume of items prescribed to patients.
  4. The telemedicine company provides services only to patients who are beneficiaries of federal healthcare programs.
  5. The telemedicine company says they provide items and services to only nonfederal patients; however, they bill federal healthcare programs.
  6. The telemedicine company only provides one type of healthcare product or service. This behavior can restrict practitioners' treatment options.

The full text of the OIG Special Fraud Alert may be accessed here.

Clinical Laboratories Secure Industry-Wide Win as DC Circuit Strikes Down Contentious 2016 HHS Final Rule on Lab Payments

A two-judge panel for the DC Circuit Court ruled on July 15, 2022 that a contentious 2016 HHS Final Rule (81 Fed. Reg. 41,036) to the Protecting Access to Medicare Act of 2014 (Pub. L. No. 113-93, 128 Stat. 1040; "PAMA") was arbitrary and capricious, striking down the rule which had led to an industry-wide reduction in Medicare payments to clinical laboratories. The 2016 rule narrowed the definition of the term "applicable laboratory" under PAMA to exclude hospital laboratories that provide outreach services.

According to the American Clinical Laboratory Association ("ACLA"), the exclusion unlawfully caused data from virtually all hospital labs, which receive private sector payments that are often up to four times larger than private sector payments to independent labs, to be disregarded, leading to massive reductions in Medicare reimbursements.

The Court concurred with the ACLA, finding that "[t]he agency, without adequate explanation, exempted a sizable portion of the laboratories covered by the statute from data reporting requirements." Although HHS argued that the 2016 rule was rendered moot by a subsequent 2018 final rule, the Court found that "[t]he record evidence in this case reflects that the agency has only 'temporarily altered its questionable behavior.'" The effect of this ruling thus invalidates the 2016 rule, preventing HHS from reinstating it in the future.

The full text of the ruling may be found here.

 

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