The Department of Health and Human Services Office of the Inspector General (OIG) has issued an Advisory Opinion (Opinion) in connection with a hospital’s gainsharing arrangement (Arrangement) with a designated group of neurosurgeons who perform spinal fusion surgeries at the hospital. According to the Opinion, the OIG would not impose sanctions because the Arrangement, when viewed in its entirety, is not designed or likely to induce the neurosurgeons to (i) reduce or limit medically necessary services to their Medicare or Medicaid patients, or (ii) increase referrals to the hospital. This Opinion is the latest in a line of earlier advisory opinions to “bless” gainsharing arrangements that meet certain criteria for minimizing the risk of fraud and abuse. Continue Reading OIG Reaffirms Permissibility of Certain Gainsharing Arrangements
Nili Yolin is a Member in the firm’s New York office. Nili focuses her practice on complex transactions, regulatory compliance, and graduate medical education matters. She has extensive experience in health care transactional matters such as hospital joint ventures, mergers, acquisitions, and affiliations. She also assists proprietary and tax-exempt hospital systems with medical staff matters, organizational documents, and negotiating agreements with third-party vendors.
A series of recoupment letters from the New York State Medicaid Fraud Control Unit (MFCU) to healthcare providers who have management or billing company arrangements based on a percentage of collections has prompted the Medical Society of the State of New York (MSSNY) to warn its members that such arrangements are fraudulent under Medicaid law. The warning, posted on its blog on February 10, 2017, also urged members to review their billing arrangements to make sure the compensation is based either on time or a fixed, flat fee.
In a redacted MFCU recoupment letter linked to the post, MFCU states that as a result of an audit and investigation, it has determined that the percentage based contract violates state and federal Medicaid regulations, including Section 360.7.5(c), which permits Medicaid providers to contract with billing agents if the compensation paid to the agent is “reasonably related to the cost of the services” and “unrelated, directly or indirectly, to the dollar amounts billed and collected.” The audit period was five years, and MFCU sought to collect the overpayment amount plus an additional nine percent (9%) interest. Continue Reading New York Medical Society Warns Providers to Avoid Percentage-Based Fees
Last month the California legislature passed AB-72, which amends the Health & Safety Code to address reimbursement for out of network (OON) providers who provide services at in-network facilities, such as hospitals and laboratories. In so doing, California joins several other states, including New York, Connecticut and Florida, which offer consumers protections against surprise OON bills, as well as a process for providers and insurers to resolve payment disputes for OON care. If signed into law as expected, the legislation will apply to plans issued, amended or renewed on or after July 1, 2017.
Out of Network Coverage
The legislation provides that if an insured receives services covered by his/her health plan by an OON provider at an in-network facility, the insured is only obligated to pay the OON provider the cost sharing amount that he/she would otherwise be obligated to pay had the same covered service been provided by an in-network provider.
The OON provider is prohibited from billing or collecting any amount beyond the insured’s cost sharing obligation, unless the insured has a plan that includes an OON benefit and the insured consents in writing to receive services from the OON provider at least 24 hours in advance of the episode of care. At the time consent is provided, the OON provider must give the insured a written estimate of his/her total out-of-pocket cost of care. Continue Reading California Joins New York and Florida, Passes Out-Of-Network Legislation
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.
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.
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 After New York, Florida Curbs Surprise Bills for Emergency and Out-of-Network Services
Just as the Centers for Medicare & Medicaid Services (CMS) began holding federal health care plans accountable for their provider network transparency obligations, the New Jersey legislature stalled in its bid to pass a law that would require hospitals and physicians to disclose whether they are in or out-of-network with a patient’s insurance plan before providing treatment. Both laws are intended to curb the exorbitant – and often surprising – costs associated with procedures provided by out-of-network providers.
Under a new rule that went into effect on January 1, 2016, CMS can fine Medicare Advantage (MA) plans up to $25,000 per day per beneficiary, and qualified health plans (QHPs) on the federal exchange up to $100 per day per beneficiary, for inaccuracies in their provider directories. In addition to accurately listing participating providers, which the QHPs and MA plans are required to verify and update quarterly and monthly, respectively, the plans must also identify which providers are accepting new patients, the provider’s location, contact information, medical group, specialty and any institutional affiliations. CMS notified QHPs and MA plans of the new rule in separate February 2015 letters.
State regulation of provider directories is not new – more than half the states have such guidelines, including New Jersey. Indeed, New Jersey has one of the more stringent provider directory rules. For example, regulations require insurance carriers to update their electronic directories within 20 days after receiving confirmation from a provider that the existing information is inaccurate, and they must affirmatively confirm the participation of any provider who has not submitted a claim for more than 12 months. In enacting these rules, the New Jersey Department of Banking and Insurance stated it was “essential for consumers to have reliable and current information regarding the healthcare providers participating in a particular network at any given time … and [to] establish enforceable standards for network directories in order for directories to be more reliable and less likely to mislead consumers contemplating joining a network-based health benefits plan or when they attempt to obtain in-network healthcare services and supplies.” Continue Reading CMS Takes Action Against Network Transparency While New Jersey Legislation Hits a Snag
A Federal Judge found that the Department of Health and Human Services (DHHS) failed to comply with the Administrative Procedure Act (APA) when it cut hospital inpatient payments by 0.2% as part of its “two-midnight” rule. According to the DHHS Secretary, the pay cut was intended to offset the estimated $220 million it would cost to shift patients from outpatient to inpatient status under the rule, which allows Medicare to pay inpatient rates only if a patient stays in the hospital for two midnights.
One of the most frequently asked questions posed to healthcare lawyers is whether State X has a prohibition on the corporate practice of medicine, nursing or other profession, and if so, whether the prohibition is enforced. As demonstrated by last month’s well-publicized settlement between Aspen Dental Management, Inc. (ADMI) and the New York State Attorney General’s Office (AG), the answer to that question in New York is a resounding “yes.”
Although most states with corporate practice and fee-splitting prohibitions focus on medicine, some, like New York, have broad prohibitions that encompass virtually all of the licensed professions, including nursing, clinical social work, and dentistry. While there are professionals who may run afoul of the corporate practice prohibition because they inadvertently render services through a business corporation rather than a professional corporation, more significant risks arise when third party vendors are hired to manage a professional’s back-office matters, and the line between ownership and management becomes blurred. In the case of ADMI, the AG believed that line was crossed. Continue Reading The Corporate Practice Prohibition in New York: What We Can Learn From the ADMI Settlement
Last week, new bi-partisan legislation was introduced to increase the number of graduate medical education (GME) slots over the next five years at teaching hospitals and academic medical centers. If passed, the Resident Physician Shortage Reduction Act of 2015 (S. 1148/H.R. 2124) will create 3,000 additional full time equivalent (FTE) residency slots each year from 2017 through 2021, for a total of 15,000 new residency slots. Half of the 3,000 slots must be used for a “shortage specialty residency program,” as defined by the Health Resources and Services Administration (HRSA), until the National Health Care Workforce issues a new report on specialty shortages in 2018.
The purpose of the legislation is to guard against the precipitous shortfall of primary care physicians that at least one study is predicting will occur by 2025 – another says 2035 – if there is no increase in residency training slots. The shortfall is said to be due primarily to changing demographics and the expansion of health care insurance as a result of federal health care reform. Continue Reading Proposed GME Legislation Looks to Increase Residency Slots
New York’s Emergency Medical Services and Surprise Bills law went into effect yesterday, which means consumers who receive out of network (OON) emergency services will no longer have to pay more than their usual in-network obligations, regardless of the network status of the treating physician, and any disputed portions of the bill must be settled by the physician and the health plan.
Consumers will be protected from surprise bills, and not be responsible for more than their in-network copayment, coinsurance or deductible, if they sign an assignment of benefits form to permit their provider to seek payment from the consumer’s health plan and send the form to the plan with a copy of the bill that they believe constitutes a surprise bill. Once the health plan pays the provider an amount that it determines is reasonable, the provider can dispute that amount through the independent dispute resolution (IDR) process. The IDR entity will make a determination within 30 days of receipt of the dispute.
The law not only protects consumers against large bills from OON physicians for services rendered in an emergency room, but also from bills received from OON providers in cases where a patient has been referred to the OON provider by a participating physician without the required consent. In regulations issued by the Department of Financial Services (DFS) on December 31, 2014 and adopted yesterday (http://dfs.ny.gov/insurance/r_prop/rp200t.pdf), DFS made several key clarifications, including defining the term “health care provider” to include home health agencies and clinical laboratories. DFS also clarified that a surprise bill that results from a referral without the required patient consent includes instances in which a “participating physician sends a specimen taken from the patient in the participating physician’s office to a non-participating laboratory or pathologist.” The consent necessary to avoid a surprise bill is “explicit written consent of the insured acknowledging that the participating physician is referring the insured to a non-participating referred health care provider and that the referral may result in costs not covered by the health care plan.”
Last week, in anticipation of the law’s enactment, DFS issued guidance to (i) insured and uninsured consumers in order to assist them in understanding when they have received a surprise bill and how to protect against responsibility for such bill, and (ii) providers so that they understand not only the meaning of “surprise bill” but their notice and hold harmless responsibilities, and when and how to proceed with the IDR process.
While there are other important aspects of the law that patients, providers and plans should be aware of, including disclosure obligations relating to plan and hospital affiliations and pricing (summarized in more detail in our prior blog post), the cornerstone of the law is protecting consumers from the financial devastation that can come from receiving a bill for out of network services. Time will tell whether all of the other players in the healthcare space view the law as the equitable solution it is intended to be.