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Health Law & Policy Matters

Health Care Attorneys | Mintz Levin Law Firm

After New York, Florida Curbs Surprise Bills for Emergency and Out-of-Network Services

Posted in Clinical Laboratories, Hospitals & Health Systems, Payors & PBMs, Physicians, Reimbursement

It is generally understood that if a managed care member utilizes the services of a non-participating provider, the member could incur significant out of pocket expenses.  However, there are instances where a member may unknowingly receive services from an out-of-network provider, such as a radiologist or anesthesiologist, while receiving emergency or non-emergency care at an in-network hospital.  The “surprise” or “balance bill” that results from these services – i.e., the invoice from the non-participating provider for the difference between his billed charges and the amount the insurer actually paid – can be devastating.  It was recently reported that 23 states have or are working toward legislation that eliminates or curtails the effects of surprise billing.  New York passed comprehensive legislation last year, and now Florida will have a similar law when HB 221 goes into effect on July 1, 2016.

Emergency Services

Currently, Florida law prohibits balance billing for emergency services but only for members of a health maintenance organization (HMO).   HB 221 will extend this prohibition to members of preferred provider organizations (PPOs) and exclusive provider organizations (EPOs) by requiring the PPOs and EPOs to cover emergency services without prior authorization and without regard for whether the provider is in- or out-of-network. Like the HMO members, the PPO and EPO members will remain responsible only for their cost sharing obligation, such as copayments or deductibles.

Non-emergency Services

The new law will protect consumers from surprise bills for non-emergency covered services received in a network facility if the insured “does not have the ability and opportunity to choose a participating provider at the facility who is available to treat the insured.”  The term “facility” means a hospital, ambulatory surgery center, mobile surgical center, and urgent care center.  Thus, a patient who undergoes a procedure in an office-based setting and is then unknowingly treated by a non-participating provider would not be protected from a surprise bill. Continue Reading

CMS Increases Oversight of Medicaid Managed Care Contracts

Posted in Health Care Reform, Payors & PBMs

As noted in a post published yesterday, CMS issued the final rule regarding Medicaid managed care earlier this week.  With this rule, CMS is taking a much more active role in overseeing states’ Medicaid managed care contracts.  CMS will now require states to submit managed care contracts and rates for review.  Given that 80% of Medicaid enrollees are served through managed care delivery systems, this action is significant.

This regulation impacts state Medicaid managed care contracts in three major areas.

  • Actuarial Soundness.  State must now demonstrate that payments to Medicaid managed care are actuarially sound.  Before, CMS let states determine their own methods to certify actuarial soundness, but that was clearly lacking.  A 2010 GAO report found that CMS inconsistently reviewed state Medicaid plans’ rate setting and had not even reviewed rates for Medicaid programs in Nebraska and Tennessee.  With the new regulation, CMS will now require more stringent documentation and transparency in rate certification.
  • Medical Loss Ratio.  The new regulations create a medical loss ratio (MLR) for Medicaid managed care plans.  Previously, there was no MLR federal policy for Medicaid.  The final rule aligns Medicaid with commercial Qualified Health Plans and Medicare Advantage Plans, which have been operating under an enforceable 85% MLR since they were created through the Affordable Care Act, and this change will require additional tracking and accountability on state Medicaid spending.
  • Network Adequacy Standards.  CMS will now require states to establish network adequacy standards that mirror those in commercial Qualified Health Plans, to ensure that Medicaid beneficiaries also have access to important services.  Now, states must set time and distance standards for specific providers in Medicaid managed care plans.  Further, these plans will now be required to provide provider directory updates.

For many years, Medicaid advocates complained that CMS was far too laissez faire in their review of state Medicaid managed care contracts.  With this regulation, CMS is taking an active role to ensure that state Medicaid managed care plans meet the standards set for commercial Qualified Health Plans.  As states look to managed care plans to address rising Medicaid costs (e.g., Iowa), these new regulations will be critical to the negotiations between CMS and the states.


The IMD Exclusion: Changes Now and Changes to Come

Posted in Payors & PBMs, Reimbursement

On Monday, CMS finalized their long-awaited Medicaid managed care regulation.  Deep in the regulation was a change to allow Medicaid reimbursement for facilities that had previously been excluded from receiving payments.  Known as the Institution for Mental Disease (IMD) Exclusion, this change has a significant impact on mental health and substance abuse treatment now and in the future.

Federal funding for states to provide mental health and substance abuse treatment through IMDs for non-elderly adults has been forbidden since the founding of the Medicaid program.  An IMD is defined as a hospital nursing facility or other institution greater than 16 beds that is engaged in providing diagnosis, treatment or care of persons with mental diseases.

CMS proposes at page 220 of the regulation “…to permit FFP for a full monthly capitation payment on behalf of an enrollee aged 21 to 64 who is a patient in an IMD for part of that month to cases in which: (1) the enrollee elects such services in an IMD as an alternative to otherwise covered settings for such services; (2) the IMD is a hospital providing psychiatric or substance use disorder (SUD) inpatient care or a sub-acute facility providing psychiatric or SUD crisis residential services; and (3) the stay in the IMD is for no more than 15 days in that month.”  If a facility that would be considered an IMD under the statute is providing psychiatric or substance abuse care to an adult ages 21 to 64 for a Medicaid-covered individual in a managed care plan, the facility can treat that patient for 15 days and be paid by the state Medicaid program with the state receiving the federal matching payment for the service. Continue Reading

FDA Extends Comment Period on Third-Party Medical Device Servicing

Posted in Food and Drug Administration (FDA), Pharma & Medical Devices

As an update to my post on Friday, April 22, FDA has extended the deadline for comments on third-party servicing of medical devices. According to FDA’s notice of extension, comments are now due by June 3, 2016.

Comments may be submitted electronically through Regulations.gov or in writing. If your company has not already participated, it’s time to start crafting comments that tell FDA why this issue is critical to all medical device manufacturers. And make sure to submit by June 3!

Justices Grapple with Limits of False Claims Act Liability in Implied Certification Cases

Posted in Enforcement, Fraud & Abuse, Health Care Fraud Enforcement, State & Federal Audits, Investigations & Litigation, Uncategorized

Last week the Supreme Court heard oral argument in a False Claims Act (“FCA”) case in which the Court is considering the validity of the so-called implied false certification theory. This theory attaches FCA liability when a person submits a claim for payment notwithstanding a violation of an underlying law or regulation, but without a factually false claim form. Because of the massive volume of Medicare and Medicaid regulations that a provider could potentially violate, the case is significant. More than two dozen stakeholders weighed in with amici briefs.  Here we discuss some of the important questions raised in the oral argument. Continue Reading

FDA Still Seeking Manufacturer Views on Medical Device ISO Regulation

Posted in Food and Drug Administration (FDA), Pharma & Medical Devices

On March 4, 2016, the FDA issued notice in the Federal Register that it had opened a docket to accept comments on the agency’s proposed plan to address the refurbishing, remarketing, rebuilding, remanufacturing, and servicing of medical devices by entities other than the officially listed manufacturer. Although the deadline is drawing near (comments are due by May 3), only 36 comments have been submitted and almost none from manufacturers.  This is surprising, given (1) the number of medical devices on the market that are critical to patient health, (2) the variety of independent servicing organizations (ISOs) and original equipment manufacturers (OEMs), which may or may not have appropriate quality standards or employ technicians with appropriate credentials, and (3) the enormous reporting and quality system responsibilities FDA imposes on manufacturers.  All medical device manufacturers whose products could be serviced by ISOs once on the market should be weighing in on this issue to ensure FDA understands the risks associated with third-party servicing and the potential burdens new regulations could place on manufacturers. Continue Reading

Massachusetts Establishes Road-Map for New ACO Program

Posted in Accountable Care Organizations, Health Care Reform, Payors & PBMs, Physicians

Massachusetts Secretary of Health and Human Services, Marylou Sudders, held a public meeting earlier this week to receive feedback on the proposal of the Executive Office of Health and Human Services (EOHHS) to overhaul the Massachusetts Medicaid program, known as MassHealth.  Overall, the feedback received at the meeting was positive and signaled a consensus that the proposed reforms are on the right path, though greater detail is needed.

What does reform look like?

Last week, proposing the first major reform of MassHealth in about twenty years, EOHHS announced the details of its vision for the new MassHealth Accountable Care Organization (ACO) Program and its plans to request a Medicaid Waiver amendment to implement the program.  EOHHS cited unsustainable cost growth in the MassHealth plan as the driver for its proposed restructuring and explained that it has an “urgent window of opportunity” to renegotiate its Medicare 1115 Waiver to support this initiative.

The goal is to transform MassHealth from a fee-for-service (FFS), “siloed” care delivery to a program based on integrated ACO models. EOHHS defines ACOs as “provider-led organizations that coordinate care, have an enhanced role for primary care, and are rewarded for value – better cost and outcomes – not volume.”  The plan would continue to rely on Medicaid Managed Care Organizations (MCOs) to pay claims and work with ACO providers to improve care delivery. Continue Reading

OCR Releases New HIPAA Audit Protocol and Other Audit-Related Materials

Posted in Hospitals & Health Systems, Payors & PBMs, Pharmacies, Physicians, Privacy & Security/HIPAA/HITECH, State & Federal Audits, Investigations & Litigation

Earlier this month the Department of Health and Human Services Office for Civil Rights (OCR) released a revamped audit protocol that now addresses the requirements of the 2013 Omnibus Final Rule. OCR will be using the audit protocol for its impending Phase 2 audits of covered entities and business associates, which are set to begin next month.

The protocol covers the following subject areas:

  • Privacy Rule requirements for (1) notice of privacy practices for PHI, (2) rights to request privacy protection for PHI, (3) access of individuals to PHI, (4) administrative requirements, (5) uses and disclosures of PHI, (6) amendment of PHI, and (7) accounting of disclosures.
  • Security Rule requirements for administrative, physical, and technical safeguards.
  • Breach Notification Rule requirements.

Continue Reading

Hospitals Settle DOJ Suit Alleging Illegal Division of Marketing Territories

Posted in Antitrust, Enforcement, Hospitals & Health Systems, Mergers, Acquisitions & Other Transactions

Two West Virginia hospital systems settled a lawsuit filed yesterday by the Department of Justice (“DOJ” or “Department”) alleging that they agreed to allocate territories for marketing health care services in violation of Section 1 of the Sherman Act.  The DOJ alleged that Charleston Area Medical Center (“CAMC”) and St. Mary’s Medical Center (“St. Mary’s”) agreed not to advertise in each other’s geographic territories, which the Department said deprived customers of useful information about competing health care providers.  U.S. v. CAMC, Case No. 2:16-cv-03664 (S.D. W.VA. Apr. 14, 2016).

Certain types of agreements between competitors (e.g., market allocation, price fixing) are strictly prohibited under Section 1 of the Sherman Act.  These types of agreements are considered per se illegal and are presumed as harmful because they deprive consumers of the benefits of competition and provide no offsetting benefit to consumers.  This case is a reminder that the antitrust authorities can, and do, challenge market allocation arrangements and other naked restraints of trade that violate Section 1 of the Sherman Act. Continue Reading

Mintz Levin’s Health Care Enforcement Defense Group Publishes New Qui Tam Update

Posted in Enforcement, Fraud & Abuse, Health Care Fraud Enforcement, Hospitals & Health Systems, Payors & PBMs, Pharma & Medical Devices, Pharmacies, State & Federal Audits, Investigations & Litigation

Yesterday, Mintz Levin’s Health Care Enforcement Defense Group published its most recent Health Care Qui Tam Update.  This Update covers 42 health care-related False Claims Act qui tam cases that have been unsealed since the last Health Care Qui Tam Update.

Highlights of this Update include:

  • A substantial majority of the unsealed cases have been under seal for periods well in excess of the required statutory period, demonstrating that extension of the seal in qui tam actions continues to be routine.
    • Of the 44 complaints filed in these 42 cases, 75% were filed before 2015, with one unsealed complaint dating back to November 2008 and two others dating back to 2010 and 2011, respectively.
    • Of the remaining complaints, five were filed in 2012, fourteen in 2013, eleven in 2014 and eleven in 2015.
  •  The cases identified were filed in federal district courts in 15 states and the District of Columbia.
  • The federal government declined to intervene in 25 of the 42 cases.

To read the entire Update, click here.