Category Archives: CMS

Medicare ACOs: Too Much Risk, Too Quickly?

As seen on RACMonitor.

More than a third of ACOs might leave if the proposed rule takes effect.

The comment period closed for the Centers for Medicare and Medicaid Services (CMS) Medicare Shared Savings Program (MSSP) proposed rule on Oct. 16. The MSSP has been a controversial program since its inception. The chief concern is that the financial “dis-incentives” will decrease the number of Accountable Care Organizations (ACOs). The proposed rule for MSSP intensifies the financial “dis-incentives,” causing even more concern about the number of ACOs.

What is the Medicare Shared Savings Program? It is a voluntary program that is supposed to encourage groups of doctors, hospitals, and other healthcare providers to come together as ACOs to give coordinated, high-quality care to their Medicare patients. Providers can choose among three distinctive tracks, depending on the amount of risk the providers want to bear. The purpose of the MSSP is to diversify risk – of both loss and gain – between the government and the ACOs. For example, Track 1 ACOs do not assume downside risk (shared losses) if they do not lower growth in Medicare expenditures.

CMS created the MSSP in hopes that doctors, hospitals, and other healthcare providers would want to participate, with the incentive of the chance to make more money, rather than remaining in the traditional Medicare relationship. The program turned out to be more successful than anticipated, with the majority of ACOs opting to become Track 1, or the least risky model (one-sided risk).

CMS’s new proposed rule, however, increases the risk placed on the ACOs. Needless to say, providers aren’t happy, and many ACOs in the program warn that they’ll drop out if CMS finalizes its proposal as is.

What are these proposed changes to the MSSP?

Restricting Track 1 Enrollment

ACOs currently have six years to shift to a risk-bearing model from a shared savings-only model (Track 1). The proposed rule would give existing ACOs one year and new ACOs two years to transfer to a risk-bearing model. This one change could cause mass exodus from the MSSP, as many providers are, by nature, risk-averse.

Morphing to Five-Year Agreement Periods

The proposed rule requires CMS and the ACOs to morph into using five-year agreement periods. I am on the fence regarding this change. It could strengthen ACOs’ incentives to reduce spending by breaking the link between ACOs’ performance in the first two years of each agreement period and their future benchmarks. However, this modification could worsen incentives during the first two years of each agreement period. I would love to hear your opinions.

Slashing Shared Savings Rates

The proposed rule purports to slash shared savings rates for upside-risk models from 50 percent to as low as 25 percent. Under the one-sided model years of the glide path, an ACO’s maximum shared savings rate would be 25 percent, based on quality performance, applicable to first-dollar shared savings after the ACO meets the minimum savings rate. The glide path concludes with a maximum 50 percent sharing rate, based on quality performance, and a maximum level of risk, which qualifies a provider as an Advanced APM for purposes of the Quality Payment Program.

Other proposed changes include the following:

  • A bifurcated system for high- and low-revenue ACOs, which functionally would penalize certain ACOs for the size of their patient populations and volume of services.
  • A differential system for experienced versus inexperienced ACOs, which would allow experienced ACOs to choose from a more robust menu of participation options.
  • Dis-incentives to lower spending: ACOs have had little incentive to lower spending because of the link between the spending reductions they achieve and subsequent benchmarks. One could argue that it is astonishing that the MSSP has produced any savings at all. CMS proposes that the MSSP needs to be re-vamped.
  • A modified and more rigorous application review process to screen for good standing among ACOs seeking to renew or re-enter MSSP after termination or expiration of their previous agreement. ACOs in two-sided models would be held accountable for partial-year losses if either the ACO or CMS terminates the agreement during a performance year.

Will there be too much risk too quickly placed on the ACOs? Stay tuned for whether this proposed rule becomes finalized.

The Courts Order Medicare to Stop Recouping Alleged Overpayments Without Due Process!

New case law supports due process for Medicare providers. As first seen on RACMonitor.

Due process is one of the cornerstones of our society. Due process is the universal guarantee and found in the Fifth Amendment to the United States Constitution, which provides “No person shall…be deprived of life, liberty, or property, without due process of law,” and is applied to all states by the 14th Amendment. From this basic principle flows many legal decisions determining both procedural and substantive rights.

For Medicare and Medicaid providers, however, due process, in the past, has been nonexistent. Imagine that you are accused of owing $5 million to the government. Perhaps it was a CPT® code error. You disagree. You believe that your documentation was proper and that you filed for reimbursement correctly. You appeal the decision that you owe $5 million. You continue conducting business as normal. Suddenly, you realize the government is recouping the $5 million now. Prior to any hearing before a judge. You haven’t been found guilty. What happened to innocent until proven guilty? What happened to due process?

For Medicare appeals there is a five-step appeal process. The law requires the government not to recoup during the first and second levels of appeal. But the first and second levels are jumping through hoops and are not normally successful. It is at the third level – the appeal to an impartial administrative judge – that the alleged recoupments are overturned.

After the second level, according to the black letter of the law, the government can begin recouping the alleged overpayment.

Sadly, in the past, the courts have held that it is proper for the government to recoup reimbursements after the second level. Even though, no hearing has been held before an impartial judge and you haven’t been found guilty of owing the money.

On Sept. 27, 2018, another U.S. District Court in South Carolina has agreed with courts in Texas by granting a provider’s request for a Temporary Restraining Order (TRO) to prevent the Centers for Medicare and Medicaid Services (CMS) from recouping monies until after Administrative Law Judge (ALJ) hearings have been held (Accident, Injury and Rehabilitation, PC, c/a No. 4:18-cv-02173, September 27, 2018).

A new trend in favor of providers seems to be arising. This is fantastic news for providers across the country!

Accident, Injury & Rehab, PC found that the ALJ stage of the appellate process is the most important for providers, as it provides the first opportunity for plaintiff to cross examine defendant’s witnesses and examine the evidence used to formulate the statistical sample. According to the American Hospital Association (AHA), 66 percent of Recovery Audit Contractor (RAC) denials are reversed by an ALJ (I actually believe the percentage is higher). The court found that plaintiff’s procedural due process rights were violated by premature recoupment. The court granted Accident, Injury & Rehab, PC’s preliminary injunction restraining and enjoining the government from withholding Medicare payments during the appeal process.

When the government starts recouping filing a preliminary injunction has been shown it to be the best course.

In the past, most preliminary injunctions asking the court to order the government to stop recoupments until a hearing was held was dismissed based on jurisdiction. In other words, the courts held that the courts did not have the authority to render an opinion as to recoupments prior to a hearing. Now, however, the trend is turning, and courts are starting to rule in favor of the provider, finding a violation of procedural due process based on a collateral claim exception.

There are four criteria in order to win a preliminary injunction. A party seeking a preliminary injunction must establish all for the following criteria: (1) that the party is likely to succeed on the merits; (2) that the party is likely to suffer irreparable harm in the absence of preliminary injunction; (3) that the balance of the equity tips in the party’s favor; and (4) that injunction is in the public interest.

There is an esoteric legal theory called exhaustion of administrative remedies. So jurisdiction is the question. There are exceptions to the judicial bar. The Supreme Court of United States articulated a collateral claim exception. The Supreme Court permitted a plaintiff to bring a procedural due process claim requesting an evidentiary area hearing before the termination of disability benefits. There are nonwaivable and waivable jurisdictional elements the nonwaivable requirement is that a claim must be presented to the administrative agency. The waivable requirement is that administrative remedies be exhausted.

The Collateral claim exception is when a party brings a claim in federal court when that “constitutional challenge is entirely collateral to its substantive claim of entitlement.”

The new trend in case law is that the courts are finding that the provider’s right to not undergo recoupment during the appeal process is a collateral issue as to the substantive issue of whether the provider owes the money. Therefore, the courts have found jurisdiction as to the collateral issue.

The proverbial ship has sailed. According to courts in Texas and now South Carolina, CMS cannot recoup monies prior to hearings before ALJs. Providers facing large recoupments should file TROs to prevent premature recoupments and to obtain due process.

Safety-Net Hospitals Penalized for Too Many Readmissions – Fair or Not Fair?

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:

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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.

 

CMS Sets Forth New Proposed Rule to Promote Program Efficiency, Transparency, and Burden Reduction

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.

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  1. 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.

Hospice

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.

Hospitals

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.

  1. Proposals that reduce the frequency of activities and revise timelines

Home Health

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.

Emergency Preparedness

Instead of reviewing emergency preparedness plans annually, CMS proposes to revise these requirements, so that applicable providers and suppliers have increased flexibility with compliance.

  1. 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.

RAC Forecast: Increased RAC Audits with a High Likelihood of Recoupments

Data regarding the success of the Medicare RAC program does not lie, right? If the report shows success, then increase the RAC process!! And to anyone who reads the new report to Congress…a success the RAC process is!

The Centers for Medicare and Medicaid Services (CMS) recently published its 2016 results of the Medicare Recovery Audit Contractor (RAC) program. And CMS was not shy in reporting high rates of returns due to the RAC program. With results as amazing as the report touts, it is clear that the Medicare RACs are hoping that this new report on the hundreds of millions they’ve recovered for Medicare will cause the CMS to reverse course on its decision to limit the number of claims they can review. After reviewing the report to CMS, I will be shocked if Congress does not loosen the limitations placed on RACs in the last couple years. The report acts as marketing propaganda to Congress.

My forecast: increased RAC audits with a high likelihood of recoupments.

The RAC program is divided into 5 regions (currently):

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In 2016, the RAC regions were arranged a bit differently:

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The mission of the RAC program is to identify and correct overpayments made on claims for health care services provided to beneficiaries, to identify underpayments to providers, and to provide information that allows the CMS to implement corrective actions that will prevent future improper payments. As most of my readers are well aware, I have been critical of the RAC program in the past for being overzealous and hyper (overly) – technical, in an erroneous kind of way. See blog. And blog.

The Social Security Act (SSA), which allows for RAC programs, also requires that the CMS publish and submit a yearly “self-audit” on the RAC program. Even though we are almost in October 2018, the recent report released to Congress covers 2016 – apparently CMS’ data gathering lags a bit (lot). If I have to get my 2018 taxes to the IRS by April 15, 2019, shouldn’t CMS have a similar deadline? Instead of submitting information for 2016 when it’s almost 2019…

RACs are paid on a contingency fee basis, which incentivize the RACs to discover billing irregularities. The amount of the contingency fee is a percentage of the improper payment recovered from, or reimbursed to, providers. The RACs negotiate their contingency fees at the time of the contract award. The base contingency fees range from 10.4 – 14.4% for all claim types, except durable medical equipment (DME). The contingency fees for DME claims range from 15.4 – 18.9%. The RAC must return the contingency fee if an improper payment determination is overturned at any level of appeal although I am unaware whether the RAC has to return the interested gained on holding that amount as well, which cannot be a minute amount given that the Medicare appeal backlog causes Medicare appeals to last upwards of 5 – 9 years.

Beginning in 2017, the RAC contracts had an amendment not previously found in past contracts. Now the RACs are to wait 30-days before reporting the alleged overpayment to the Medicare Administrative Contractors (MACs). The thought process behind this revision to the RAC contracts is that the 30-day wait period allows the providers to informally discuss the findings with the RACs to determine the provider has additional records germane to the audit that could change the outcome of the audit. Theoretically, going forward, providers should receive notification of an alleged overpayment from the RACs rather than the MACs.

And the 2016 results are (drum roll, please):

RACs uncovered $404.46 million in overpayments and $69.46 million in underpayments in fiscal year 2016, for a total of $473.92 million in improper payments being corrected. This represents a 7.5% increase from program corrections in FY 2015, which were $440.69 million.

63% of overpayments identified in 2016 (more than $278 million) were from inpatient hospital claims, including coding validation reviews.

RACs received $39.12 million in contingency fees.

After factoring in contingency fees, administrative costs, and amounts overturned on appeal, the RAC program returned $214.09 million to the Medicare trust funds in 2016.

CMS has implemented several elements to verify RAC accuracy in identifying improper payments. The Recovery Audit Validation Contractor (RVC) establishes an annual accuracy score for each RAC. Supposedly, if we are to take the CMS report as accurate and unbiased, in FY 2016, each RAC had an overall accuracy score of 91% or higher for claims adjusted from August 2015 through July 2016. I am always amazed at the government’s ability to warp percentages. I had a client given a 1.2% accuracy rating during a prepayment review that would rival J.K. Rowling any day of the year. Robert Galbraith, as well.

To address the backlog of Medicare appeals, CMS offered a settlement process that paid hospitals 68% of what they claimed they were owed for short-term inpatient stays. – I am not confident that this money was accounted for in the overall results of the RAC program in the recent report.

135,492 claims were appealed by healthcare providers. But the RAC report to Congress notes: “appealed claims may be counted multiple times if the claim had appeal decisions rendered at multiple levels during 2016.” Undeniably, if this number is close to accurate, there was a significant down swing of appeals by providers in 2016. (I wonder whether the hospital settlement numbers were included).

Of the total appealed claims, 56,724, or 41.9%, were overturned with decisions in the provider’s favor. (Fact check, please!). In my experience as a Medicare and Medicaid regulatory compliance litigator, the success rate for Medicare and Medicaid alleged overpayments is remarkably higher (but maybe my clients just hired a better attorney (wink, wink!).

With results this good, who needs more RAC auditing? We do!! If the report shows success, then increase the RAC process!! 

Medicare and Medicaid Regulations Suspended During Natural Disasters

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.

Medicare and Medicaid in the News: An Overview

With so much news about Medicare and Medicaid, I decided to do a general update of Medicare and Medicaid in the news. To the best of my ability, I am trying not to put my own “spin” on the stories, but just relay what is happening. Besides, Hurricane Florence is coming, and we have to hunker down. FYI: There is no more water at Costco.

Here is an overview of current “hot topics” for Medicare and Medicaid:

Affordable Care Act

On September 5, 2018, attorneys argued in TX district court whether the Affordable Care Act should be repealed. The Republican attorneys, who want the ACA repealed will argue that the elimination of the tax penalty for failure to have health insurance rendered the entire law unconstitutional because the Supreme Court upheld the ACA in 2012 by saying its requirement to carry insurance was a legitimate use of Congress’ taxing power. We await the Court’s decision.

Patient Dumping

In Maine, two hospitals illegally turned away emergency room patients in mental health crises and sometimes had them arrested for trespassing. The hospitals are Central Maine Medical Center and St. Mary’s Regional Medical Center, and they have promised to address and change these policies. It is likely that the hospitals will be facing penalties. Generally, turning away a patient from an ER is over $100,000 per violation.

Kickbacks

Six San Francisco Bay Area medical professionals have been indicted for an alleged kickback scheme in which three paid and three received kickbacks for healthcare referrals in home health.

Medicaid Work Requirements

In June, Arkansas became the first state to implement a work requirement into its Medicaid program. The guinea pig subjects for the work requirement were Medicaid expansion recipients aged 30-49, without children under the age of 18 in the home, did not have a disability, and who did not meet other exemption criteria. On a monthly basis, recipients must work, volunteer, go to school, search for work, or attend health education classes for a combined total of 80 hours and report the hours to the Arkansas Department of Human Services (DHS) through an online portal. Recipients who do not report hours any three months out of the year lose Medicaid health coverage until the following calendar year. September 5th was the reporting deadline for the third month of the policy, making today the first time that recipients can lose Medicaid coverage as a result of the work requirement. There are 5,426 people who missed the first two reporting deadlines, which is over half of the group of 30-49 year olds subject to the policy beginning in June. If these enrollees do not do not log August hours or an exemption into the portal by September 5th, they will lose Medicaid coverage until January 2019.

Accountable Care Organizations

According to a report in late August, accountable care organizations (ACOs) that requires physicians to take on substantial financial risk saved Medicare just over $100 million in the model’s first year, the CMS said in a report released Monday.

Lower Medicare Drug Costs

Back in May, the Trump administration published a “blueprint” for lowering drug costs. Advocacy groups are pushing back, saying that his plan will decrease access to drugs.

Balance Billing

Balance billing is when a patient presents at an emergency room and needs emergency medical services before the patient is able to determine whether the surgeon at the hospital is “in-network” with his insurance…most likely, because the patient is unconscious and no one has time to check for insurance networks. More and more states are passing laws to protect consumers from balance billing. An example of balance billing was Drew Calver, whose health plan paid $56,000 for his 4-day emergency stay at St. David’s Medical Center. Once he was discharged, he received a bill from the hospital for $109,000. The Employee Retirement Income Security Act (ERISA) regulates company plans that practice this. The hospital eventually reduced the bill to $332.

Patient Abandonment

During a fire, staff at two Santa Rosa, California-based nursing homes “abandoned their residents, many of them unable to walk and suffering from memory problems, according to a legal complaint filed by the California Department of Social Services.” The Department of Social Services accused the staff members of being unprepared for the emergency fire.

Makes you wonder what could possibly happen in the fast-approaching hurricane. At least with a hurricane, we have days advance notice. Granted there is no more water in the stores or gasoline at the pumps, but Amazon Prime, one-day service still works…for now.

Hasty and Careless Termination Decisions Can Put Medicare/caid Providers Out of Business

When action happens in the Medicare/caid world, it happens quickly. Sometimes you do not receive adequate notice to coordinate continuity of care for your consumers or patients. For example, on August 3, 2018, the Center for Medicare and Medicaid Services announced that at midnight on August 18, 2018, it would be terminating the contract between CMS and ESEC, LLC, an Oklahoma-based surgery center.

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CMS provided ESEC 15 days notice of complete termination of Medicare and Medicaid reimbursements. Now I do not know the details of ESEC’s financial reliance on Medicare or Medicaid, but, these days, few providers are solely third-party pay or cash-only. I can only assume that ESEC is scrambling to initiate a lawsuit to remain afloat and open for business. Or ESEC is praying for a “rescind” by correcting whatever issues it purportedly had. Personally, I would not count on a possible rescind. I would be proactively seeking legal intervention.

Here are some examples of recent terminations and the notice received by the providers:

  • Baylor St. Luke’s Medical Center’s heart transplant program lost federal funding August 17, 2018. The hospital will no longer be able to bill Medicare and Medicaid for heart transplants.
  • Effective August 9, 2018, Brookwood Baptist Medical Center’s Medicare contract was terminated. The notice was published July 25, 2018.
  • As of August 12, 2018, The Grandview Nursing & Rehabilitation Facility’s Medicare contract was terminated. Notice of the termination was published August 1, 2018.
  • As of September 1, 2018, Compassus-Kansas City, a hospice company, will lose its Medicare contract. Notice was provided August 17, 2018.
  • On August 3, 2018, CMS announced that it was terminating Deligent Health Services Inc.’s Medicare and Medicaid contact, effective December 5, 2017. (That is quite a retroactive timeframe).

Can Careless Judy put a healthcare provider out of business?

This happens all the time. Sure, ESEC probably had knowledge that CMS was investigating it. However, CMS has the authority to issue these public notices of termination without holding a hearing to determine whether CMS’ actions are accurate. What if Careless Judy in Program Integrity made a human error and ESEC actually does meet the standards of care. But you see, Careless Judy accidentally used the minimum standards of care from 2008 instead of 2018. It’s an honest mistake. She had no malice against ESEC. But, my point is – where is the mechanism that prevents a surgical ambulatory center from going out of business – just because Careless Judy made a mistake?

To look into whether any legal mechanism exists to prevent Careless Judy from putting the ambulatory center out of business, I turn to the legal rules.

42 CFR 488.456 governs terminations of provider agreements. Subsection (a) state that termination “ends – (1) Payment to the facility; and (2) Any alternative remedy.”

Subsection (b) states that CMS or the State may terminate the contract with the provider if the provider “Is not in substantial compliance with the requirements of participation, regardless whether immediate jeopardy is present.” On the bright side, if no immediate jeopardy exists then CMS or the State must give 15 days notice. If there is found to be immediate jeopardy, the provider get 2 days. But who determines what is “substantial compliance?” Careless Judy?

42 CFR 489.53 lists the reasons on which CMS may rely to terminate a provider. Although, please note, that the regulations use the word “may” and not “must.” So we have some additional guidance as to when a provider’s contract may be terminated, but it still seems subjective. Here are the reasons:

  1. The provider is not complying with the provisions of title XVIII and the applicable regulations of this chapter or with the provisions of the agreement.
  2. The provider or supplier places restrictions on the persons it will accept for treatment and it fails either to exempt Medicare beneficiaries from those restrictions or to apply them to Medicare beneficiaries the same as to all other persons seeking care.
  3. It no longer meets the appropriate conditions of participation or requirements (for SNFs and NFs) set forth elsewhere in this chapter. In the case of an RNHCI no longer meets the conditions for coverage, conditions of participation and requirements set forth elsewhere in this chapter.
  4. It fails to furnish information that CMS finds necessary for a determination as to whether payments are or were due under Medicare and the amounts due.
  5. It refuses to permit examination of its fiscal or other records by, or on behalf of CMS, as necessary for verification of information furnished as a basis for payment under Medicare.
  6. It failed to furnish information on business transactions as required in § 420.205 of this chapter.
  7. It failed at the time the agreement was entered into or renewed to disclose information on convicted individuals as required in § 420.204 of this chapter.
  8. It failed to furnish ownership information as required in § 420.206 of this chapter.
  9. It failed to comply with civil rights requirements set forth in 45 CFR parts 80, 84, and 90.
  10. In the case of a hospital or a critical access hospital as defined in section 1861(mm)(1) of the Act that has reason to believe it may have received an individual transferred by another hospital in violation of § 489.24(d), the hospital failed to report the incident to CMS or the State survey agency.
  11. In the case of a hospital requested to furnish inpatient services to CHAMPUS or CHAMPVA beneficiaries or to veterans, it failed to comply with § 489.25 or § 489.26, respectively.
  12. It failed to furnish the notice of discharge rights as required by § 489.27.
  13. The provider or supplier refuses to permit copying of any records or other information by, or on behalf of, CMS, as necessary to determine or verify compliance with participation requirements.
  14. The hospital knowingly and willfully fails to accept, on a repeated basis, an amount that approximates the Medicare rate established under the inpatient hospital prospective payment system, minus any enrollee deductibles or copayments, as payment in full from a fee-for-service FEHB plan for inpatient hospital services provided to a retired Federal enrollee of a fee-for-service FEHB plan, age 65 or older, who does not have Medicare Part A benefits.
  15. It had its enrollment in the Medicare program revoked in accordance to § 424.535 of this chapter.
  16. It has failed to pay a revisit user fee when and if assessed.
  17. In the case of an HHA, it failed to correct any deficiencies within the required time frame.
  18. The provider or supplier fails to grant immediate access upon a reasonable request to a state survey agency or other authorized entity for the purpose of determining, in accordance with § 488.3, whether the provider or supplier meets the applicable requirements, conditions of participation, conditions for coverage, or conditions for certification.

As you can see from the above list of possible termination reasons, many of which are subjective, it could be easy for Careless Judy to terminate a Medicare contract erroneously, based on inaccurate facts, or without proper investigation.

The same is true for Medicaid; your contract can be terminated on the federal or state level. The difference is that at the state level, Careless Judy is a state employee, not a federal.

42 CFR 498.5 governs appeal rights for providers contract terminations. Subsection (b) states that “Any provider dissatisfied with an initial determination to terminate its provider agreement is entitled to a hearing before an ALJ.”

42 CFR 498.20 states that an initial determination by CMS (like a contract termination) is binding unless it is reconsidered per 42 CFR 498.24.

A Stay of the termination should suspend the termination until the provider can obtain a hearing by an impartial tribunal until the appeal has been completed. The appeal process and supposed automatic Stay of the termination is the only protection for the provider from Careless Judy. Or filing an expensive injunction.

A Federal Regulation Violates the U.S. Constitution and Ruins Careers; Yet It Sits…Vaguely

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.

Why?

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.”

2018-08-07 -- pic of cms 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?]

Breaking Down the Barriers to Telehealth: CMS’s Latest Rural Health Strategy

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:

  1. Improving reimbursement
  2. Adapting and improving quality measures and reporting
  3. Improving access to services and providers
  4. Improving service delivery and payment models
  5. Engaging consumers
  6. Recruiting, training, and retaining the workforce
  7. Leveraging partnerships/resources
  8. 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.