Category Archives: Hospital Medicaid Providers
New Hampshire hospitals have joined the American Civil Liberties Union (ACLU) in a lawsuit against the State of New Hampshire over the boarding of mental health patients in hospital emergency rooms.
In November 2018, the ACLU filed a class action lawsuit in NH federal court asking the court to order the cease of the practice of “psychiatric boarding,” in which mental health patients are held sometimes against their will and without due process in hospital emergency rooms throughout New Hampshire as they await admission to the state psychiatric hospital, often for weeks at a time. This is not only a New Hampshire problem. This is a problem in every state. The hospitals want the practice abolished because, in most cases of severe mental illness, the patient is unemployed and uninsured. There are not enough psychiatric beds to hold the amount of mentally ill consumers.
Many psychiatric patients rely on Medicaid, but due to the Institution for Mental Disease (IMD) exclusion, Medicaid does not cover the cost of care for patients 21 to 64 years of age (when Medicare kicks in) at inpatient psychiatric or addiction treatment facilities with a capacity greater than 16 beds. This rule makes it difficult for states to fund larger inpatient psychiatric hospitals, which further exacerbates the psychiatric boarding crisis.
The emergency rooms (ER) have become the safety net for mental health. The two most common diagnoses at an ER is alcohol abuse and suicidal tendencies. There has been a sharp increase in ER visits for the people suffering from mental health issues in the recent years. Are we as a population growing more depressed?
It is very frustrating to be in a hospital without the allowance to leave. But that is what psychiatric boarding is – patients present to an ER in crisis and because there is no bed for them at a psychiatric hospital, the patient is held at the hospital against their will until a bed opens up. No psychiatric care is rendered at the ER. It is just a waiting game, which is not fun for the people enduring it.
I recently encountered a glimpse into how it feels to be stuck at a hospital without the ability to leave. On a personal level, although not dealing with mental health but with hospitals in general, I recently broke my leg. I underwent surgery and received 6 screws and a plate in my leg. Around Christmas I became extremely ill from an infection in my leg. After I passed out at my home due to an allergic reaction to my medication which caused an epileptic seizure, my husband called EMS and I was transported to the hospital. Because it was the day after Christmas, the staff was light. I was transported to a hospital that had no orthopedic surgeon on call. (Akin to a mental health patient presenting at an ER – there are no psychiatric residents at most hospitals). Because no orthopedic surgeon was on call, I was transported to a larger hospital and underwent emergency surgery for the infection. I stayed at the hospital for 5 of the longest days of my life. Not because I still needed medical treatment, but because the orthopedic surgeon had taken off for vacation between Christmas and New Year’s. Without the orthopedic’s authorization that I could leave the hospital I was stuck there unless I left against medical advice. Finally, at what seemed to be at his leisurely time, the orthopedic surgeon came back to work the afternoon of January 1, 2019, and I was able to leave the hospital… but not without a few choice words from yours truly. I can tell you without any reservation that I was not a stellar patient those last couple days when I felt well enough to leave but there was no doctor present to allow it.
I imagine how I felt those last couple days in the hospital is how mentally ill patients feel while they are being held until a bed at a psychiatric unit opens up. It must be so frustrating. It certainly cannot be ameliorating any presenting mental health condition. In my case, I had no mental health issues but once I felt like I was being held against my will, mental health issues started to arise from my anger.
A shortage of psychiatric inpatient beds is a key contributing factor to overcrowded ERs across the nation. Between 1970 and 2006, state and county psychiatric inpatient facilities in the country cut capacity from about 400,000 beds to fewer than 50,000.
A study conducted by Wake Forest University found that ER stays for mental health issues are approximately 3.2 times longer stays than for physical reasons.
ER visits rose by nearly 15% between 2006 and 2014, according to the Healthcare Cost and Utilization Project. Over the same time period, ER visits associated with mental health and substance abuse shot up by nearly 44%.
Hopefully if the NH Hospital Association is successful in its lawsuit, other states will follow suit and file a lawsuit. I am not sure where the mentally ill will go if they do not remain at the ER. Perhaps this lawsuit and others that follow will force states to change the current Medicaid laws that do not allow mental health coverage for those over 21 years old. With the mental health and physical health Americans with Disabilities’ parity laws, I do not know why someone hasn’t challenged the constitutionality of the IMD exclusion.
Obtaining injunctions against the government is the best part of my job. I love it. I thrive on it. Whenever there is a reduction in Medicare/caid reimbursements rates, I secretly hope someone hires me to get an injunction to increase the reimbursement rates. But injunctions are expensive. So I am always happy whenever a provider obtains an injunction against the government, even if I were not hired to obtain it.
On December 27, 2018, Judge Rudolph Contreras, United States District Judge, ordered the Department of Health and Human Services (“HHS”) to increase the Medicare reimbursements rates for outpatient drugs under the 340B Drug Program. A permanent injunction!!!
In November 2017, HHS reduced the Medicare reimbursement rates for outpatient drugs acquired through the 340B Program from average sales price (“ASP”) plus 6% to ASP minus 22.5%. Medicare Program: Hospital Outpatient Prospective Payment and Ambulatory Surgical Center Payment Systems and Quality Reporting Programs, 82 Fed. Reg. 33,558, 33,634 (Jul. 20, 2017) (codified at 42 C.F.R. pt. 419).
HHS reduced Medicare reimbursements worth billions of dollars to private institutions. HHS has the authority to set Medicare reimbursement rates. But one should question a 30% reduction. Drug prices haven’t dropped.
Plaintiff – the American Hospital Association (AHA) – sued HHS when HHS cut outpatient pharmaceuticals by 30%. HHS contends that the rate adjustment was statutorily authorized and necessary to close the gap between the discounted rates at which Plaintiffs obtain the drugs at issue—through Medicare’s “340B Program”—and the higher rates at which Plaintiffs were previously reimbursed for those drugs under a different Medicare framework.
AHA asked the Court to vacate the HHS’ rate reduction, require HHS to apply previous reimbursement rates for the remainder of this year, and require HHS to pay Plaintiffs the difference between the reimbursements they have received this year under the new rates and the reimbursements they would have received under the previous rates.
HHS argued that AHA failed to exhaust its administrative remedies. See blog.
What is the 340B Drug Program?
In 1992, Congress established what is now commonly referred to as the “340B Program.” Veterans Health Care Act of 1992, Pub L. No. 102-585, § 602, 106 Stat. 4943, 4967–71. The 340B Program allows participating hospitals and other health care providers (“covered entities”) to purchase certain “covered outpatient drugs” from manufacturers at or below the drugs’ “maximum” or “ceiling” prices, which are dictated by a statutory formula and are typically significantly discounted from those drugs’ average manufacturer prices. See 42 U.S.C. § 256b(a)(1)–(2).3 Put more simply, this Program “imposes ceilings on prices drug manufacturers may charge for medications sold to specified health care facilities.” Astra USA, Inc. v. Santa Clara Cty., 563 U.S. 110, 113 (2011). It is intended to enable covered entities “to stretch scarce Federal resources as far as possible, reaching more eligible patients and providing more comprehensive services.” H.R. Rep. No. 102-384(II), at 12 (1992); see also Medicare Program: Hospital Outpatient Prospective Payment System and Ambulatory Surgical Center Payment Systems and Quality Reporting Programs (“2018 OPPS Rule”), 82 Fed. Reg. 52,356, 52,493 & 52,493 n.18 (Nov. 13, 2017) (codified at 42 C.F.R. pt. 419). Importantly, and as discussed in greater detail below, the 340B Program allows covered entities to purchase certain drugs at steeply discounted rates, and then seek reimbursement for those purchases under Medicare Part B at the rates established by OPPS.
HHS provided a detailed explanation of why it believed this rate reduction was necessary. First, HHS noted that several recent studies have confirmed the large “profit” margin created by the difference between the price that hospitals pay to acquire 340B drugs and the price at which Medicare reimburses those drugs. Second, HHS stated that because of this “profit” margin, HHS was “concerned that the current payment methodology may lead to unnecessary utilization and potential over-utilization of separately payable drugs.” It cited, as an example of this phenomenon, a 2015 Government Accountability Office Report finding that Medicare Part B drug spending was substantially higher at 340B hospitals than at non-340B hospitals. The data indicated that “on average, beneficiaries at 340B . . . hospitals were either prescribed more drugs or more expensive drugs than beneficiaries at the other non-340B hospitals in GAO’s analysis.” Id. at 33,633. Third, HHS expressed concern “about the rising prices of certain drugs and that Medicare beneficiaries, including low-income seniors, are responsible for paying 20 % of the Medicare payment rate for these drugs,” rather than the lower 340B rate paid by the covered hospitals.
The Court found that Plaintiff – AHA – did not need to exhaust its administrative remedies because there was no administrative remedy to exhaust. HHS had ruled that 340B drugs were to be recompensed at 30% lower rates. There is no appeal route for a rule made. There is no reconsideration review of a rule made. Therefore, the Court found that exhaustion of administrative remedies would be futile because no administrative remedies existed.
But the most important finding the Court made was that the 30% reduction in Medicare reimbursement rates for 340B drugs was arbitrary, capricious and outside the Secretary’s legal scope. The Court made the brash decision to determine the reimbursement rate for 340B drugs was arbitrary, but could not decide a remedy.
A remedy for an erroneous rule is to strike the rule and have the government repay the 340B drug reimbursements at the amount that should have been paid. But the Court does not order this. Instead the Court asks for each side to brief what remedy they think should be used. They have 30 days to brief their side.
According to the American Hospital Association, America has 4,840 general hospitals that aren’t run by the federal government: 2,849 are nonprofit, 1,035 are for-profit and 956 are owned by state or local governments.
What is the distinction between a for-profit and not-for-profit hospital… besides the obvious? The obvious difference is that one is “for-profit” and one is “not-for-profit” – but any reader of the English language would be able to tell you that. Unknown to some is that the not-for-profit status does not mean that the hospital will not make money; the status has nothing to do with a hospitals bottom line. Just ask any charity that brings in millions of dollars.
The most significant variation between non-profit and for-profit hospitals is tax status. Not-for-profit hospitals are exempt from state and local taxes. Some say that for-profit hospitals have to be more cost-effective because they have sales taxes and property taxes. I can understand that sentiment. Sales taxes and property taxes are nothing to sneeze at.
The organizational structure and culture also varies at for-profit hospitals rather than not-for-profit hospitals. For-profit hospitals have to answer to shareholders and/or investors. Those that are publicly traded may have a high attrition rate at the top executive level because when poor performance occurs heads tend to roll.
Bargaining power is another big difference between for-profit and non-profit. For-profit has it while non-profit, generally, do not. The imbalance of bargaining power comes into play when the government negotiates its managed care contracts. I also believe that bargaining power is a strong catalyst in the push for mergers. Being a minnow means that you have insect larvae and fish eggs to consume. Being a whale, however, allows you to feed on sea lion, squid, and other larger fish.
A report conducted by the Health Research Institute showed 255 healthcare merger and acquisition (M&A) deals in the second quarter of 2018. Just the second quarter! According to the report, deal volume is up 9.4% since last year.
The most active sub-sector in the second quarter of 2018 is long-term care, with 104 announced healthcare M&A deals representing almost 41% of deal volume.
The trend today is that for-profit hospitals are buying up smaller, for-profit hospitals and, any and all, not-for-profit hospitals. The upshot is that hospitals are growing larger, more massive, more “corporate-like,” and less community-based. Is this trend positive or negative? I will have to research whether the prices of services increase at hospitals that are for-profit rather than not-for-profit, but I have a gut feeling that they do. Not that prices are the only variable to determine whether the merger trend is positive or negative. From the hospital’s perspective, I would much rather be the whale, not the minnow. I would feel much more comfortable swimming around.
My opinion is that, as our health care system veers toward value-based reimbursement and this metamorphous places financial pressure on providers, health care providers are struggling for more efficient means of cost control. The logical solution is to merge and buy up the smaller fish until your entity is a whale. Whales have more bargaining power and more budget.
In 2017, 29 for-profit companies bought 18 for-profit hospitals and 11 not-for-profits, according to an analysis for Kaiser Health News.
10 hospital M&A transactions involved health care organizations with net revenues of $1 billion or more in 2017.
Here, in NC, Mission Health, a former, not-for-profit hospital in Asheville, announced in March 2018 that HCA Healthcare, the largest, for-profit, hospital chain would buy it for $1.5 billion. The NC Attorney General had to sign off on the deal since the deal involved a non-profit turning for-profit, and he did ultimately did sign off on it.
Regardless your opinion on the matter, merger mania has manifested. Providers need to determine whether they want to be a whale or a minnow.
Since 2012, Medicare has penalized hospitals for having too many patients end up back in their care within a month. Mind you, these re-admissions are not the hospitals’ fault. Many of the re-admissions are uninsured patients and who are without primary care. Without an alternative, they present back at the hospitals within 30 days. This penalty on hospitals is called the Hospital Readmissions Reduction Program (HRRP) and is not without controversy.
For example, if hospitals are not allowed to turn away patients for their lack of ability to pay, then penalizing the hospital for a readmission (who the hospital cannot turn away) seems fundamentally unfair. Imagine someone at the Center for Medicare and Medicaid Services (CMS) yelling at you: “You cannot turn away any patients by law! But if you accept a patient for readmission, then you will be penalized!!” The logic is incongruous. The hospital is found in a Catch-22. Damned if they do; damned if they don’t.
The Emergency Medical and Treatment Labor Act (EMTLA) passed by Congress in 1986 explicitly forbids the denial of care to indigent or uninsured patients based on a lack of ability to pay. It also prohibits “patient dumping” a practice in which a hospital orders unnecessary transfers while care is being administered and prohibits the suspension of care once it is initiated.
Even non-emergent care is generally required, depending on the hospital. Public hospitals may not deny patient care based on ability to pay (or lack thereof). Private hospitals may, in non-emergency situations, deny or discontinue care.
The most recent HRRP report, which concentrated on Connecticut hospitals, which will penalize CT hospitals for too many readmissions starting October 1, 2018, shows: 27 of the 29 hospitals evaluated — or 93% — will be penalized in the 2019 fiscal year (Oct. 1, 2018 – Oct. 1, 2019) that began Oct. 1, according to a Kaiser Health News analysis of CMS data. $566 million in total penalties will be required, depending on the severity of the violations.
Here is the formula used to determine penalties for readmission within 30 days to a hospital:
No hospital that was audited received the maximum penalty of 3%, but 9 CT hospitals will have their Medicare reimbursements reduced by 1% or more. They are: Waterbury Hospital at 2.19%, Bridgeport Hospital at 2.01%, Bristol Hospital at 1.91%, Manchester Memorial Hospital at 1.74%, Johnson Memorial Hospital in Stafford Springs at 1.71%, Midstate Medical Center in Meriden at 1.37%, St. Vincent’s Medical Center in Bridgeport at 1.21%, Griffin Hospital in Derby at 1.17%, and Yale New Haven Hospital at 1.03%.
There is controversy over the HRRP.
Observation status does not count.
Interestingly, what is not evaluated in the Hospital Readmission Reduction Program may be just as important, or more so, than what it is evaluated. -And what is not evaluated in the HRRP has morphed our health care system into a plethora of observation only admissions.
Patients who are admitted under observation status are excluded from the readmission measure. What, pray tell, do you think the result has been because of the observation status being excluded??
- More in-patient admissions?
- More observation status admissions?
- No change?
If you guessed more observation status admissions, then you would be correct.
Most hospitals have developed clinical decision units, which are typically short-stay observation areas designed to care for patients in less than 24-hours. The difference between inpatient and observation status is important because Medicare pays different rates according to each status. Patients admitted under observation status are considered outpatients, even though they may stay in the hospital for several days and receive treatment in a hospital bed. Medicare requires a three-day hospital inpatient stay minimum before it will cover the cost of rehabilitative care in a skilled nursing care center. However, observation stays, regardless of length, do not count toward Medicare’s requirement.
30-Day readmission period is arbitrary.
Why 30-days? If a patient is readmitted on the 30th day, the hospital is penalized. But if the patient is readmitted on Day 31, the hospital is not penalized. There just isn’t a lucid, common sense reason except that 30 is a nice, round number.
The HRRP disproportionately discriminates against hospitals that have high volume of uninsured.
HRRP does not adjust for socioeconomic status. This means that the HRRP may be penalizing hospitals, such as safety-net hospitals, that care for disadvantaged populations.
When other laws, unintentionally or intentionally, discriminate between socioeconomic status, often an association or group brings a class action lawsuit in federal court asking the judge to declare the law unconstitutional due to discrimination. Discrimination can be proven in court by how the law of supply or how the law is written.
Here, the 27 hospitals, which will be receiving penalties for fiscal year 2019, serve a high population of low income patients. The result of which hospitals are getting penalized is an indication of a discriminatory practice, even if it is unintentional.
The Upshot from Knicole:
These hospitals should challenge the HRRP legally. Reimbursements for services render constitute a property right. Usurping this property right without due process may be a violation of our Constitution. For $566 million…there should be a fair fight.
On September 20, 2018, CMS released a new proposed rule in an effort to reduce the regulatory burden on health care providers. Now we have all heard CMS’ attempts to increase transparency and decrease burden on and for providers. But, usually, it ends up being all talk and no walk. So, I decided to investigate exactly how CMS new proposal purports to make a difference.
The proposals fall under three categories: (1) Proposals that simplify and streamline processes; (2) proposals that reduce the frequency of activities and revise timelines; and (3) proposals that are obsolete, duplicative, or that contain unnecessary requirements.
CMS projects savings of nearly $5.2 billion and a reduction of 53 million hours through 2021. That results in saving 6,000 years of burden hours over the next three years.
- Proposals that simplify and streamline processes
Ambulatory surgery centers (ASCs)
ASCs and hospitals have long competed for business. This competition has, at times, led to hospitals providing outpatient surgical services refusing to sign written transfer agreements or to grant admitting privileges to physicians performing surgery in an ACS. CMS’ proposed rule is aimed at making is easier for ACSs to receive and admit patients. Currently, as a condition for coverage an ASC must – (i) Have a written transfer agreement with a hospital that meets the requirements of paragraph (b)(2) of this section; or (ii) Ensure that all physicians performing surgery in the ASC have admitting privileges at a hospital that meets the requirements of paragraph (b)(2) of this section. CMS proposes to remove the above-mentioned requirements.
Furthermore, now, for every patient admitted and/or pre-surgically assessed at an ACS, the ACS must ensure that each patient has a comprehensive medical history and physical assessment not more than 30-days before the date of the scheduled surgery, that, upon admission, each patient undergoes a pre-surgical assessment competed by a physician, and that each patient’s medical history and physical assessment be placed in the patient’s medical record prior to the surgical procedure. Instead, CMS proposes to defer to each individual ASC’s policy and operating physician’s clinical judgment. CMS will still require the documentation of any pre-existing condition and that the documentation including any allergies, medical history, and physical examination be placed in the patient’s file pre-surgery. But, without question, these two proposed rules will lighten the burden on ACSs and its relationships with hospitals.
Expect a heavy dose of comments to be from hospitals. I think that CMS’ thought process behind this is that it costs substantially less to perform surgeries in an ASC rather than a hospital. But I question whether CMS has studied outcome results – I have no empirical evidence; I only question.
The federal regulations presently require that hospice staff include an individual with specialty knowledge of hospice medications. The proposed rule eliminates this requirement. I believe that this proposal arose from complaints of high payroll. This proposed change could cut payrolls significantly because salaries can be reduced without specialty knowledge.
In addition, the proposed rule replaces the requirement that hospices provide a copy of medication policies and procedures to patients, families and caregivers with a requirement that hospices provide information regarding the use, storage, and disposal of controlled drugs to the patient or patient representative, and family. This information would be provided in a more user-friendly manner, as determined by each hospice.
CMS’ new proposed rule allows a hospital that is part of a hospital system consisting of multiple separately certified hospitals to elect to have a unified and integrated Quality Assessment and Performance Improvement (QAPI) program for all of its member hospital. The system governing body will be responsible and accountable for ensuring that each of its separately certified hospitals meets all of the requirements of this section.
There is fine print that you will need to review: Each separately certified hospital within the system would have to demonstrate that: the unified and integrated QAPI program was established in a manner that takes into account each member hospital’s unique circumstances and any significant differences in patient populations and services offered in each hospital; and the unified and integrated QAPI program would establish and implement policies and procedures to ensure that the needs and concerns of each of its separately certified hospitals, regardless of practice or location, were given due consideration, and that the unified and integrated QAPI program would have mechanisms in place to ensure that issues localized to particular hospitals were duly considered and addressed.
Again, I believe that this proposed change is all about saving money.
- Proposals that reduce the frequency of activities and revise timelines
We propose to remove the requirement that Home Health Agencies (HHAs) provide a copy of the clinical record to a patient, upon request, by the next home visit. We propose to retain the requirement that the copy of the clinical record must be provided, upon request, within 4 business days.
Sometimes a patient’s record is voluminous. With the new age of EHR, hard copies are not so easily accessible.
Critical Access Hospitals
CMS’ proposed rule will change the requirement at § 485.635(a)(4) to reflect the current medical practice where providers are expected to update their policies and procedures as needed in response to regulatory changes, changes in the standard of care, or nationally recognized guidelines. The current rule requires a CAH’s professional personnel to review its policies at least annually and the CAH to review as necessary. The proposal is to reduce burden and provide flexibility by requiring the CAH’s, professional personnel, at a minimum, to conduct a biennial review of its policies and procedures instead of an annual review.
Instead of reviewing emergency preparedness plans annually, CMS proposes to revise these requirements, so that applicable providers and suppliers have increased flexibility with compliance.
- Proposals that are obsolete, duplicative, or that contain unnecessary requirements
Hospitals and CAH Swing-Bed Requirements
CMS’ proposed rule removes the cross reference in the regulations for hospital swing-bed providers and for CAH swing-bed providers. The cross-reference gives a resident the right to choose to, or refuse to, perform services for the facility if they so choose. If the resident works, the facility must document it in the resident’s plan of care, noting whether the services are voluntary or paid, and, if paid, providing wages for the work being performed, at prevailing rates.
The new proposal also removes requirement that facilities with more than 120 beds to employ a social worker on full-time basis and in obtaining routine and 24-hour emergency dental care.
The comment period for this proposed rule ends on November 19, 2018. You can go to the Federal Register to make a formal comment.
Comments may be submitted electronically through the e-Regulation website https://www.cms.gov/Regulations-and-Guidance/Regulations-and-Policies/eRulemaking/index.html?redirect=/eRulemaking.
My blog (below) was published on RACMonitor.
CMS provides Medicare waivers for providers dealing with natural disasters.
I live in North Carolina, and as most of you have seen on the news, we just underwent a natural disaster. Its name is Hurricane Florence. Our Governor has declared a state of emergency, and this declaration is extremely important to healthcare providers that accept Medicare and Medicaid and are located within the state of emergency. Once a state of emergency is implemented, the 1135 Waiver is activated for Medicare and Medicaid providers, and it remains activated for the duration of the state of emergency. The 1135 Waiver allows for exceptions to normal regulatory compliance regulations during a disaster. It is important to note that, during the disaster, a state of emergency must be officially “declared” in order to activate the 1135 Waiver.
About a year ago, the Centers for Medicare & Medicaid Services (CMS) finalized the 1135 Waiver to establish consistent emergency preparedness requirements for healthcare providers participating in Medicare and Medicaid, to increase patient safety during emergencies, and to establish a more coordinated response to natural and manmade disasters. The final rule requires certain participating providers and suppliers to plan for disasters and coordinate with federal, state, tribal, regional, and local emergency preparedness systems to ensure that facilities are adequately prepared to meet the needs of their patients during disasters and emergency situations.
The final rule states that Medicare and Medicaid participating providers and suppliers must do the following prior to a natural disaster capable of being foreseen:
- Conduct a risk assessment and develop an emergency plan using an all-hazards approach, focusing on capacities and capabilities that are critical to preparedness for a full spectrum of emergencies or disasters specific to the location of a provider or supplier;
- Develop and implement policies and procedures, based on the plan and risk assessment;
- Develop and maintain a communication plan that complies with both federal and state law, and ensures that patient care will be well-coordinated within the facility, across healthcare providers, and with state and local public health departments and emergency systems; and
- Develop and maintain training and testing programs, including initial and annual trainings, and conduct drills and exercises or participate in an actual incident that tests the plan.
Obviously, the minutiae of this final rule deviates depending on the type of provider. The waivers and modifications apply only to providers located in the declared “emergency area” (as defined in section 1135(g)(1) of the Social Security Act, or SSA) in which the Secretary of the U.S. Department of Health and Human Services (HHS) has declared a public health emergency, and only to the extent that the provider in question has been affected by the disaster or is treating evacuees.
Some examples of exceptions available for providers during a disaster situation under the 1135 Waiver are as follows:
- CMS may allow Critical Access Hospitals (CAHs) to exceed the 25-bed limit in order to accept evacuees.
- CMS can temporarily suspend a pending termination action or denial of payment sanction so as to enable a nursing home to accept evacuees.
- Normally, CAHs are expected to transfer out patients who require longer admissions to hospitals that are better equipped to provide complex services to those more acutely ill. The average length of stay is limited to 96 hours. However, during a natural disaster, the CAH may be granted a 1135 Waiver to the 96-hour limit.
- Certification for a special purpose dialysis facility can be immediate.
- Relocated transplant candidates who need to list at a different center can transfer their accumulated waiting time without losing any allocation priority.
- For home health services, normally, the patient must be confined to his or her home. During a state of emergency, the place of residence may include a temporary alternative site, such as a family member’s home, a shelter, a community, facility, a church, or a hotel. A hospital, SNF, or nursing facility would not be considered a temporary residence.
In rare circumstances, the 1135 Waiver flexibilities may be extended to areas beyond the declared emergency area. A limitation of the 1135 Waiver is that, during a state of emergency, an Inpatient Prospective Payment System- (IPPS)-excluded psychiatric or rehabilitation unit cannot be used for acute patients. A hospital can submit a request for relief under 1135 Waiver authority, and CMS will determine a course of action on a case-by-case basis. A hospital could also apply for certification of portions of its facility to act as a nursing facility. Hospitals with fewer than 100 beds, located in a non-urbanized area, may apply for swing bed status and receive payment for skilled nursing facility services.
If a provider’s building is devastated during a state of emergency, the 1135 Waiver allows the provider to maintain its Medicare and Medicaid contract, despite a change of location – under certain circumstances and on a case-by-case basis. Factors CMS will consider are as follows: (1) whether the provider remains in the same state with the same licensure requirements; (2) whether the provider remains the same type pf provider after relocation; (3) whether the provider maintains at least 75 percent of the same medical staff, nursing staff, and other employees, and whether they are contracted; (4) whether the provider retains the same governing body or person(s) legally responsible for the provider after the relocation; (5) whether the provider maintains essentially the same medical staff bylaws, policies, and procedures, as applicable; (6) whether at least 75 percent of the services offered by the provider during the last year at the original location continue to be offered at the new location; (7) the distance the provider moves from the original site; and (8) whether the provider continues to serve at least 75 percent of the original community at its new location.
The 1135 Waiver does not cover state-run services. For example, the 1135 Waiver does not apply to assisted living facilities. The federal government does not regulate assisted living facilities. Instead, assisted living is a state service under the Medicaid program. The same is true for clinical laboratory improvement amendment (CLIA) certification and all Medicaid provider rules. The 1135 Waiver also does not allow for the 60 percent rule to be suspended. The 60 percent Rule is a Medicare facility criterion that requires each Inpatient Rehabilitation Facility (IRF) to discharge at least 60 percent of its patients with one of 13 qualifying conditions.
In conclusion, when the governor of your state declares a state of emergency, the 1135 Waiver is activated for healthcare providers. The 1135 Waiver provides exceptions and exclusions to the normal regulatory requirements. It is important for healthcare providers to know and understand how the 1135 Waiver affects their particular types of services prior to a natural disaster ever occurring.
There is a federal regulation that is putting health care providers out of business. It is my legal opinion that the regulation violates the U.S. Constitution. Yet, the regulation still exists and continues to put health care providers out of business.
Because so far, no one has litigated the validity of the regulation, and I believe it could be legally wiped from existence with the right legal arguments.
How is this important?
Currently, the state and federal government are legally authorized to immediately suspend your Medicare or Medicaid reimbursements upon a credible allegation of fraud. This immense authority has put many a provider out of business. Could you survive without any Medicare or Medicaid reimbursements?
The federal regulation to which I allude is 42 CFR 455.23. It is a federal regulation, and it applies to every single health care provider, despite the service type allowed by Medicare or Medicaid. Home care agencies are just as susceptible to an accusation of health care fraud as a hospital. Durable medical equipment agencies are as susceptible as dentists. Yet the standard for a “credible allegation of fraud” is low. The standard for which the government can implement an immediate withhold of Medicaid/care reimbursements is lower than for an accused murderer to be arrested. At least when you are accused of murder, you have the right to an attorney. When you are accused to health care fraud on the civil level, you do not receive the right to an attorney. You must pay 100% out of pocket, unless your insurance happens to cover the expense for attorneys. But, even if your insurance does cover legal fees, you can believe that you will be appointed a general litigator with little to no knowledge of Medicare or Medicaid regulatory compliance litigation.
42 USC 455.23 states that:
“The State Medicaid agency must suspend all Medicaid payments to a provider after the agency determines there is a credible allegation of fraud for which an investigation is pending under the Medicaid program against an individual or entity unless the agency has good cause to not suspend payments or to suspend payment only in part.
(2) The State Medicaid agency may suspend payments without first notifying the provider of its intention to suspend such payments.
(3) A provider may request, and must be granted, administrative review where State law so requires.”
In the very first sentence, which I highlighted in red, is the word “must.” Prior to the Affordable Care Act, this text read “may.” From my years of experience, every single state in America has used this revision from “may” to “must” for governmental advantage over providers. When asked for good cause, the state and or federal government protest that they have no authority to make a decision that good cause exists to suspend any reimbursement freeze during an investigation. But this protest is a pile of hooey.
In reality, if anyone could afford to litigate the constitutionality of the regulation, I believe that the regulation would be stricken an unconstitutional.
Here is one reason why: Due Process
The Fifth and Fourteenth Amendments to the Bill of Rights provide us our due process rights. Here is the 5th Amendment:
“No person shall be held to answer for a capital, or otherwise infamous crime, unless on a presentment or indictment of a Grand Jury, except in cases arising in the land or naval forces, or in the Militia, when in actual service in time of War or public danger; nor shall any person be subject for the same offense to be twice put in jeopardy of life or limb; nor shall be compelled in any criminal case to be a witness against himself, nor be deprived of life, liberty, or property, without due process of law; nor shall private property be taken for public use, without just compensation.”
There have been a long and rich history of interpretation of the due process clause. The Supreme Court has interpreted the due process clauses to provide four protections: (1) procedural due process (in civil and criminal proceedings), (2) substantive due process, (3) a prohibition against vague laws, and (4) as the vehicle for the incorporation of the Bill of Rights.
42 CFR 455.23 violates procedural due process.
Procedural due process requires that a person be allowed notice and an opportunity to be heard before a government official takes a person’s life, liberty, or property.
Yet, 42 CFR 455.23 allows the government to immediately withhold reimbursements for services rendered based on an allegation without due process and taking a provider’s property; i.e., money owed for services rendered. Isn’t this exactly what procedural due process was created to prevent???? Where is the fundamental fairness?
42 CFR 455.23 violates substantive due process.
The Court usually looks first to see if there is a fundamental right, by examining if the right can be found deeply rooted in American history and traditions.
Fundamental rights include the right to vote, right for protection from pirates on the high seas (seriously – you have that right), and the right to constitutional remedies. Courts have held that our right to property is a fundamental right, but to my knowledge, not in the context of Medicare/caid reimbursements owed; however, I see a strong argument.
If the court establishes that the right being violated is a fundamental right, it applies strict scrutiny. This test inquires into whether there is a compelling state interest being furthered by the violation of the right, and whether the law in question is narrowly tailored to address the state interest.
Where the right is not a fundamental right, the court applies a rational basis test: if the violation of the right can be rationally related to a legitimate government purpose, then the law is held valid.
Taking away property of a Medicare/caid provider without due process violates substantive due process. The great thing about writing your own blog is that no one can argue with you. Playing Devil’s advocate, I would anticipate that the government would argue that a suspension or withhold of reimbursements is not a “taking” because the withhold or suspension is temporary and the government has a compelling reason to deter health care fraud. To which, I would say, yes, catching health care fraud is important – I am in no way advocating for fraud. But important also is the right to be innocent until proven guilty, and in civil cases, our deeply-rooted belief in the presumption of innocence is upheld by the action at issue not taking place until a hearing is held.
For example, if I sue my neighbor and declare that he is encroaching on my property, the property line is not moved until a decision is in my favor.
Another example, if I sue my business partner for breach of contract because she embezzled $1 million from me, I do not get the $1 million from her until it is decided that she actually took $1 million from me.
So to should be – if a provider is accused of fraud, property legally owned by said provider cannot just be taken away. That is a violation of substantive due process.
42 CFR 455.23 violates the prohibition against vague laws
A law is void for vagueness if an average citizen cannot understand it. The vagueness doctrine is my favorite. According to census data, there are 209.3 million people in the US who are over 24-years. Of those over 24-years-old, 66.9 million have a college degree. 68% do not.
Although here is a quick anecdote: Not so sure that a college degree is indicative of intelligence. A recent poll of law students at Columbia University showed that over 60% of the students, who were polled, could not name what rights are protected by the 1st Amendment. Once they responded “speech,” many forgot the others. In case you need a refresher for the off-chance that you are asked this question in an impromptu interview, see here.
My point is – who is to determine what the average person may or may not understand?
Back to why 42 CFR 455.23 violates the vagueness doctrine…
Remember the language of the regulations: “The State Medicaid agency must suspend all Medicaid payments to a provider after the agency determines there is a credible allegation of fraud…”
“Credible allegation of fraud” is defined as an allegation, which has been verified by the State, from any source, including but not limited to the following:
- Fraud hotline complaints.
- Claims data mining.
- Patterns identified through provider audits, civil false claims cases, and law enforcement investigations. Allegations are considered to be credible when they have indicia of reliability and the State Medicaid agency has reviewed all allegations, facts, and evidence carefully and acts judiciously on a case-by-case basis.”
With a bit of research, I was able to find a written podcast published by CMS. It appears to be a Q and A between two workers at CMS discussing whether they should suspend a home health care agency’s reimbursements, similar to a playbook. I assume that it was an internal workshop to educate the CMS employees considering that the beginning of the screenplay begins with a “canned narrator” saying “This is a Medicaid program integrity podcast.”
The weird thing is that when you pull up the website – here – you get a glimpse of the podcast, but, at least on my computer, the image disappears in seconds and does not allow you to read it. I encourage you to determine whether this happens you as well.
While the podcast shimmered for a few seconds, I hit print and was able to read the disappearing podcast. As you can see, it is a staged conversation between “Patrick” and “Jim” regarding suspicion of a home health agency falsifying certificates of medical necessity.
On page 3, “Jim” says, “Remember the provider has the right to know why we are taking such serious action.”
But if your Medicare/caid reimbursements were suddenly suspended and you were told the suspension was based upon “credible allegations of fraud,” wouldn’t you find that reasoning vague?
42 CFR 455.23 violates the right to apply the Bill of Rights to me, as a citizen
This esoteric doctrine only means that the Bill of Rights apply to State governments. [Why do lawyers make everything so hard to understand?]
The 340B drug program is a topic that needs daily updates. It seems that something is happening constantly. Like a prime time soap opera or The Bachelor, the 340B program is all the talk at the water cooler. From lawsuits to legislation to executive orders – there is no way of knowing the outcome, so we all wait with bated breath to watch who will hold the final rose.
On Tuesday, July 17, 2018, the metaphoric guillotine fell on the American Hospital Association (AHA) and on hospitals across the country. The Court of Appeals (COA) dismissed AHA’s lawsuit.
On November 1, 2017, the US Department of Health and Human Services released a Final Rule implementing a payment reduction for most covered outpatient drugs billed to Medicare by 340B-participating hospitals from the current Average Sales Price (ASP) plus 6% rate to ASP minus 22.5%, which represents a payment cut of almost 30%.
Effective January 1, 2018, the 30% slash in reimbursement rates became reality, but only for locations physically connected to participating hospitals. CMS is expected to broaden the 30% reduction to all 340B-participating entities in the near future.
What is the 340B drug program? The easiest explanation for the 340B program is that government insurance, Medicare and Medicaid, do not want to pay full price for medicine. In an effort to reduce costs of drugs for the government payors, the government requires that all drug companies enter into a rebate agreement with the Secretary of the Department of Health and Human Services (HHS) as a precondition for coverage of their drugs by Medicaid and Medicare Part B. If a drug manufacturer wants its drug to be prescribed to Medicare and Medicaid patients, then it must pay rebates.
The American Hospital Association (“AHA”) filed for an injunction last year requesting that the US District Court enjoin CMS from implementing the 340B payment reduction. On the merits, AHA argues that the HHS’s near-30% rate reduction constitutes an improper exercise of its statutory rate-setting authority.
The US District Court did not reach an opinion on the merits; it dismissed the case, issued December 29, 2017, based on lack of subject matter jurisdiction. The District Court found that: Whenever a provider challenges HHS, there is only one potential source of subject matter jurisdiction—42 U.S.C. § 405(g). The Medicare Act places strict limits on the jurisdiction of federal courts to decide ‘any claims arising under’ the Act.
The Supreme Court has defined two elements that a plaintiff must establish in order to satisfy § 405(g). First, there is a non-waivable, jurisdictional requirement that a claim for benefits shall have been “presented” to the Secretary. Without presentment, there is no jurisdiction.
The second element is a waivable requirement to exhaust administrative remedies. I call this legal doctrine the Monopoly requirement. Do not pass go. Go directly to jail. Do not collect $200. Unlike the first element, however, a plaintiff may be excused from this obligation when, for example, exhaustion would be futile. Together, § 405(g)’s two elements serve the practical purpose of preventing premature interference with agency processes, so that the agency may function efficiently and so that it may have an opportunity to correct its own errors, to afford the parties and the courts the benefit of its experience and expertise, and to compile a record which is adequate for judicial review. However, there are ways around these obsolete legal doctrines in order to hold a state agency liable for adverse decisions.
Following the Dec. 29, 2017, order by the District Court, which dismissed the lawsuit on jurisdictional grounds, the plaintiffs (AHA) appealed to the U.S. Court of Appeals (COA), which promptly granted AHA’s request for an expedited appeal schedule.
In their brief, AHA contends that the District Court erred in dismissing their action as premature and that their continued actual damages following the Jan. 1 payment reduction’s effective date weighs heavily in favor of preliminary injunctive relief. More specifically, AHA argues that 30% reduction is causing irreparable injury to the plaintiffs “by jeopardizing essential programs and services provided to their communities and the vulnerable, poor and other underserved populations, such as oncology, dialysis, and immediate stroke treatment services.”
By contrast, the government’s brief rests primarily on jurisdictional arguments, specifically that: (1) the Medicare Act precludes judicial review of rate-setting activities by HHS; and (2) the District Court was correct that no jurisdiction exists.
Oral arguments in this appeal were May 4, 2018.
AHA posted in its newsletter that the COA seemed most interested in whether Medicare law precludes judicial review of CMS’ rule implementing the cuts. AHA says it hopes a ruling will be reached in the case sometime this summer.
In a completely different case, the DC District Court is contemplating a request to toll the time to file a Section 340B appeal.
AHA v. Azar, a case about RAC audits and the Medicare appeal backlog. During a March 22, 2018, hearing, the COA asked AHA to submit specific proposals that AHA wishes the COA to impose and why current procedures are insufficient. It was filed June 22, 2018.
In it proposal, AHA pointed out that HHS is needlessly causing hospitals to file thousands of protective appeals by refusing to toll the time for hospitals to file appeals arising out of the reduction in reimbursement that certain 340B hospitals. In order to avoid potential arguments from the government that 340B hospitals that do not administratively appeal the legality of a reduced rate will be time barred from seeking recovery if the court holds that the reduction in payments is unlawful, AHA proposed that the Secretary agree to toll the deadline for such appeals until resolution of the 340B litigation—an arrangement that would preserve the 340B hospitals’ right to full reimbursement in the event the 340B litigation is not successful. HHS has refused to toll the time, meaning that Section 340B hospitals will have to protect their interests in the interim by filing thousands upon thousands of additional claim appeals, which will add thousands upon thousands of more appeals to the current ALJ-level backlog.
In a unanimous decision, three judges from the COA sided with HHS and ruled the hospitals’ suit was filed prematurely because hospitals had not formally filed claims with HHS because they were not yet experiencing cuts.
Basically, what the judges are saying is that you cannot ask for relief before the adverse action occurs. Even though the hospitals knew the 30% rate reduction would be implemented January 1, 2018, they had to wait until the pain was felt before they could ask for relief.
The lawsuit was not dismissed based on the doctrine of exhaustion of administrative remedies. The Decision noted that in some cases plaintiffs might be justified in seeking judicial review before they have exhausted their administrative remedies, but that wouldn’t be the solution here.
Hindsight is always 20-20. I read the 11 page decision. But I believe that AHA failed in two ways that may have changed the outcome: (1) Nowhere in the decision does it appear that the attorneys for AHA argued that the subject matter jurisdiction issue was collateral to the merits; and (2) The lawsuit was filed pre-January 1, 2018, but AHA could have amended its complaint after January 1, 2018, to show injury and argue that its comments were rejected (final decision) by the rule being implemented.
But, hey, we will never know.
CMS unveils new rural healthcare strategy via telehealth.
The Centers for Medicare & Medicaid Services (CMS) wants to reduce hospital readmissions and unnecessary ER visits with its newly unveiled Rural Health Strategy.
Currently, there are significant barriers to accessing telehealth. While physicians and providers have to answer to their respective healthcare boards within the states in which they are licensed, if you provide telemedicine, you are held accountable and ordered to follow the federal rules and regulations (of which there are many!) – and the rules and regulations of every state in which you provide services. For example, say Dr. Hyde resides in New York and provides medication management via telehealth. Patient Jekyll resides in New Jersey. Dr. Hyde must comply with all rules and regulations of the federal government, New York, and New Jersey.
Currently, 48 state medical boards, plus those of Washington, D.C., Puerto Rico, and the Virgin Islands, require that physicians engaging in telemedicine be licensed in the state in which a patient resides. Fifteen state boards issue a special purpose license, telemedicine license or certificate, or license to practice medicine across state lines to allow for the practice of telemedicine. There are 18 States that only allow Medicaid recipients to receive telemedicine services. One state requires only private insurance companies to reimburse for services provided through telemedicine. Twenty-eight states, plus D.C., require both private insurance companies and Medicaid to cover telemedicine services to the same extent as face-to-face consultations.
As you can see, telehealth can leave hospitals and providers wondering whether they took a left at Albuquerque.
Getting paid for telemedicine has been an issue for many hospitals and medical providers – not only in rural areas, but in all areas. However, according to CMS, rural hospitals and providers feel the pain more acutely. We certainly hope that the progress CMS initially achieves with rural providers and telehealth will percolate into cities and across the nation.
The absolute top barrier to providing and getting reimbursed for telehealth is the cross-state licensure issue, and according to CMS’s Rural Health Strategy, the agency is seeking to reduce the administrative and financial burdens.
Through interviews with providers and hospitals across the country and many informal forums, CMS has pinpointed eight methods to increase the use of telehealth:
- Improving reimbursement
- Adapting and improving quality measures and reporting
- Improving access to services and providers
- Improving service delivery and payment models
- Engaging consumers
- Recruiting, training, and retaining the workforce
- Leveraging partnerships/resources
- Improving affordability and accessibility of insurance options
What this new Rural Health Strategy tells me, as a healthcare attorney and avid “keeper of the watchtower” germane to all things Medicare and Medicaid, is that the current barriers to telehealth may come tumbling down. Obviously, CMS does not have the legal authority to change the Code of Federal Regulations, which now requires that telehealth physicians be licensed in the state in which a patient resides, but CMS has enough clout, when it comes to Medicare and Medicaid, to make Congress listen.
My crystal ball prediction? Easier and more telehealth is in everyone’s future.
*My blog was published on RACMonitor on June 7, 2018.