On April 5, the Centers for Medicare & Medicaid Services (“CMS”) released the 2024 Medicare Advantage and Prescription Drug Benefit Programs Final Rule (“Final Rule”), which will be codified at 42 C.F.R. Parts 417, 422, 423, 455, and 460. The Final Rule adopts a host of reforms aimed at improving health care access, quality, and equity for Medicare beneficiaries that receive coverage through Part C (“Medicare Advantage” or “MA”) and prescription drug benefits through Part D. As discussed below, the Final Rule also has some notable omissions compared to what CMS previously proposed in December (“Proposed Rule,” published at 87 Fed. Reg. 79452 (2022)). The Final Rule is effective June 5, 2023. Continue Reading 2024 Final Rule: CMS Announces More Changes to Medicare Advantage but Declines to Reform the “60 Day Rule”
Recent FCA and AKS Litigation Highlights Use of Different Standards in Different Circuits
In an important decision limiting the reach of the Federal Anti-Kickback Statute (42 U.S.C. 1320a-7b(b)) (“AKS”) and its application to violations of the False Claims Act (31 U.S.C. 3729, et seq.) (“FCA”), the U.S. Court of Appeals for the Sixth Circuit (“Sixth Circuit”) recently contended that, “[w]hile the word remuneration may be broad, it customarily requires a payment or transfer of some kind,” and mandated “but-for” causation standard for determining whether claims paid by Federal health care programs were tainted by an AKS violation such that they violated the FCA. See U.S. ex rel. Martin et al. v. Hathaway, et al., Case No. 22-1463, at 11 (6th Cir.) (appeal from 1:19-cv-00915, ECF Doc. No. 108 (W.D. Mich.)) (emphasis added).
Continue Reading Recent FCA and AKS Litigation Highlights Use of Different Standards in Different Circuits
Medicare Advantage 2024 Rate Announcement – Further Impacts to Risk Adjustment
On Friday, March 31, 2023, the Centers for Medicare & Medicaid Services (CMS) released the Calendar Year (CY) 2024 Medicare Advantage (MA) Capitation Rates and Part C and Part D Payment Policies (Rate Announcement). This Rate Announcement follows CMS’s February 1 notice of planned changes to rates and the risk adjustment methodology, which provided an opportunity for the public to submit comments during a 30-day period (Advance Notice), as required by Section 1853(b)(2) of the Social Security Act (the Act). The Rate Announcement — providing for 60 days prior to the bid submission deadline of June 5, 2023 — provides notice of the annual capitation for MA for CY2024 related to the benchmark, risk adjustment, and other factors to be used in adjusting rates and responds to all substantive comments received from the Advance Notice.
We summarize the key factors and adjustments to the overall expected average rate increase of 3.32% (which is about $13.8 billion more than CY2023, and an increase from the 1.03% in the Advance Notice), and comments from CMS. We also highlight other key developments affecting MA rates, notably relating to the MA risk adjustment methodology (the 2024 Risk Model). Major changes identified in the Rate Announcement include updates to the risk adjustment model that uses International Classification of Diseases (ICD)-10 codes instead of the ICD-9 system, using data from 2018 diagnoses and 2019 expenditures, and the removal or reclassification of codes disproportionately coded in MA compared to Medicare Fee-For-Service (FFS) that CMS does not consider to accurately reflect increased costs to care for beneficiaries.
Continue Reading Medicare Advantage 2024 Rate Announcement – Further Impacts to Risk Adjustment
FTC’s One-Two Punch on Data Tracking and Health Privacy
On March 2, 2023, the Federal Trade Commission (FTC) announced that it had reached a $7.8 million settlement with mental health and online counseling platform, BetterHelp, Inc. (“BetterHelp”). The FTC alleged that BetterHelp shared consumers’ sensitive health data combined with other personal information (PI) with third party advertising platforms without first obtaining affirmative consent and allegedly contrary to certain privacy representations. The proposed order requires the company to pay $7.8 million in partial refunds to BetterHelp customers. This is the first time that the FTC has required a company to return money to its customers whose personal information was shared without consent. Going forward BetterHelp is not permitted to share sensitive health information and PI without obtaining affirmative consent from the patients and customers. BetterHelp is also required to overhaul its privacy program and request that any outside parties that received the consumers’ sensitive data delete such information.
Challenges to the No Surprises Act Continue: The Latest includes a Challenge to a 600% Increase in Administrative Fees
On February 6, 2023, a judge for the United States District Court for the Eastern District of Texas (“Texas District Court”) ruled in favor of the Texas Medical Association (“TMA”) and against the United States Departments of Treasury, Labor, and Health and Human Services (the “Departments”) over a challenge to the continued special status given to the qualifying payment amount (“QPA”) in the arbitration process between out-of-network providers and payors under the No Surprises Act. In its lawsuit against the Departments, TMA specifically challenged the No Surprises Act requirement that Independent Dispute Resolution Entities (“IDREs”) initially consider the out-of-network rate closest to the qualifying payment amount (“QPA”), before, and otherwise limiting consideration of other non-QPA factors, when determining final amounts to be paid.
As discussed in a previous blog post, the QPA, which is generally the median rate paid for the service by the payor in the community, was established as the presumptive appropriate amount in a final interim rule issued by the Departments in September 2021 based on the Departments stated goal of lowering health care costs. (The QPA is generally lower than the out-of-network rates customarily paid for emergency treatment). As set forth in the interim rule, IDREs were permitted to consider non-QPA factors in their assessment of the final payment only when credible evidence demonstrated that the QPA was not the best value of the item or service under dispute. In its lawsuit against the Departments in February 2022, TMA asserted that the interim rule placed a “thumb on the scale” in favor of the QPA and, in turn, payors. The Texas District Court rejected the regulations, holding that the interim rule continued to impose an inappropriate “rebuttable presumption” in favor of the QPA in direct conflict with the No Surprises Act.
In response to the Texas District Court’s ruling, the Departments published Final Rules in August 2022, which vacated the QPA presumption. However, as noted in another previous blog post, under these Final Rules, the Departments continued to instruct IDREs to consider the QPA first as a presumptively “credible” factor, while permitting IDREs to also weigh the credibility of non-QPA factors. The Final Rules directed IDREs to evaluate non-QPA factors only secondarily and only if they were deemed credible, were related to either party’s offer and not already accounted for in the QPA.
The TMA remained dissatisfied, and brought a follow-up December 2022 lawsuit. TMA took issue with the unfair advantage granted to payors by requiring IDREs to first consider the QPA and limit the consideration of the other non-QPA factors. Again, the TMA won. The Texas District Court acknowledged that the Final Rules avoided an explicit presumption in favor of the QPA, but it nonetheless determined that the Final Rules artificially decreased the QPA’s weight by requiring IDREs to consider that factor principally. This sequencing arrangement, and the limitation of consideration of the other factors (by the requirement that they be deemed credible, related to the party’s offer in the arbitration, and not otherwise already accounted for in the determination of the QPA or other information provided), led the Texas District Court to hold, again, that the Final Rules improperly limited IDREs’ discretion, as established by Congress, in the No Surprises Act and unjustly favored commercial payors. The court reasoned that “[n]othing in the Act…instructs arbitrators to weigh any one factor or circumstance more heavily than the others … [and that a] statute’s ‘lack of text’ is sometimes ‘more telling’ than the text itself.” Accordingly, the Final Rules were found to be impermissible under the Administrative Procedures Act and were vacated.
This latest win for TMA has not prevented further litigation on the dispute resolution process. Most recently, on January 31, 2023, TMA launched another lawsuit against the Departments—this time challenging the $350 initiation fee imposed on parties to initiate the IDR process. This lawsuit claims that the nonrefundable initiation fee—expected to be paid by both parties—increased by 600 percent on December 23, 2022, less than two months after CMS stated that the administrative fee would remain $50 in 2023. TMA has argued that the dramatic increase will make the IDR process significantly more expensive for all IDR participants, especially for providers where the increased fee will likely be cost prohibitive. According to TMA, providers who bill small value claims, like radiology, will be particularly affected, because most claims billed are less than $350 and, thus, initiating the IDR process will likely be economically infeasible.
Presently, in recognition of the most recent Texas District Court’s ruling, the Departments have notified IDREs that they should not issue any new payment determinations and recall any payment determinations issued after February 6, 2023 while the Departments evaluate and update IDR guidance. The Departments are expected to create new regulations to replace the vacated provisions, and the Texas District Court is yet to rule on the newly enacted $350 IDR process initiation fee.
The No Surprises Act is significantly impacting the health care industry. IDRE determinations remain remarkably slow (and unfortunately further delayed by the litigations) and cash flow is being materially affected. Nevertheless, it is critical to get the IDR process, which ultimately determines reimbursement, right. Having a fair process is thus necessary to the survival of some, and the relative prosperity of virtually all, providers.
Proskauer will continue to follow developments of the No Surprises Act, its implementing regulations, and the pending dispute resolution and fee processes.
 Non-QPA factors include the market share of the provider and payer, the provider’s level of training, the acuity of the patients treated, the teaching status of the hospital or treatment center, and good faith efforts to enter into a network agreement.
 The QPA represents the median contracted rates recognized by a payer for the same or similar items or services in the same geographic area. Notably, it is a number determined exclusively by payors.
 Texas Medical Association, et al. v. United States Department of Health and Human Services, et al., No. 6:22-CV-372-JDK, 2023 WL 1781801, at *11 (E.D. Tex. Feb. 6, 2023).
2024 New York Budget Proposes Wide-Ranging Transaction Approval Requirement That Targets Private Investment in Physician Practices and MSOs, and Permits DOH to Extract Concessions
On February 1, 2023, New York Governor Kathy Hochul announced the 2024 Executive Budget. As alluded to in the Governor’s State of the State address, and as described in an earlier Proskauer Health Care Law Brief article, the Governor is proposing to adopt a wide-ranging approval requirement for health care transactions that appears to target investor-backed physician practices.
The legislative proposals related to health care, as contained in the Governor’s budget, were introduced as Senate Bill 4007 and Assembly Bill A3007. The bills propose to amend the Public Health Law (“PHL”) to introduce a new Article 45-A, named “Review and Oversight of Material Transactions.” See 2023 New York Senate-Assembly Bill S4007, A3007, Part M § 5.
Continue Reading 2024 New York Budget Proposes Wide-Ranging Transaction Approval Requirement That Targets Private Investment in Physician Practices and MSOs, and Permits DOH to Extract Concessions
President Biden Announces the End of the COVID-19 Emergencies: The Health Care Industry Has Less Than Four Months to Prepare
After multiple extensions over the past three years, on Monday, January 30, 2023, President Biden announced that the COVID-19 national emergency and public health emergency (“PHE”) will officially end on May 11, 2023.
However, with less than four months until that date, providers must quickly review their operations and ensure their continued compliance with billing requirement changes that will result from the PHE’s expiration. As the Office of Management and Budget acknowledged in its Statement of Administration Policy when the announcement was made:
“An abrupt end to the emergency declarations would create wide-ranging chaos and uncertainty throughout the health care system—for states, for hospitals and doctors’ offices, and, most importantly, for tens of millions of Americans.”
Evident potential implications include:
- Traditional Medicare and Medicare Advantage beneficiaries may lose their ability to obtain free at-home COVID-19 testing and treatments and may have to begin paying certain cost-sharing amounts relating to these and other testing and treatments.
- Similar to Medicare and Medicaid, private health plans may begin requiring its members to pay certain cost-sharing amounts and requiring prior authorizations for COVID-19 testing, treatments, and related services.
- Providers may also lose the government-funded revenue streams that have been provided pursuant to various Congressional allocation actions since the beginning of the PHE.
- Certain telehealth flexibilities may no longer be available, including relaxation of certain data privacy and security requirements under, e.g., the Health Insurance Portability and Accountability Act of 1996 (aka HIPAA), unless such flexibilities are allowed to continue.
- Providers may lose their ability to prescribe controlled substances via telehealth means and may be required, once again, only to provide prescriptions for such controlled substances pursuant to an in-person medical evaluation of the patient, unless such flexibilities are allowed to continue.
- Physicians may lose protection for certain self-referrals under the blanket Stark Law waivers in effect during the PHE that were meant to ensure access to care for Medicare beneficiaries and Medicaid enrollees.
Notwithstanding these potential implications, the Centers for Medicare & Medicaid Services (“CMS”), to their credit, had already informed the health care industry about certain telehealth measures it had decided to continue to ensure access to care:
- Medicare coverage for temporary telehealth services added during the PHE will continue through December 31, 2023.
- Telehealth services provided in office settings will continue to be paid at the non-facility rate (e., higher payment) through December 31, 2023.
- Clinical staff of hospital outpatient departments (including Critical Access Hospitals) may continue providing remote behavioral health services to patients in their own homes.
- CMS added new billing codes for home health telecommunications technology for home health agency services to begin reporting on July 1, 2023, on a mandatory basis.
Lastly, State Medicaid and CHIP agencies will be required to begin, at any point between April and June, 2023, a 12-month unwinding period, which is a congressional requirement for States to return to normal eligibility and enrollment operations.
Since the beginning of the PHE, Proskauer has been advising its clients about the statutory, regulatory, and policy changes relating to the PHE and how to navigate their nuances and complexities. Proskauer will remain up-to-date on such changes, as the official end of the PHE become ever more imminent.
The Future of Health Care Reform is Top of Governor Hochul’s State of the State Address
On January 10, New York’s Governor, Kathy Hochul, delivered the 2023 “State of the State” address. The address featured a number of health care reform initiatives—a strong indication that New York will prioritize health care issues and spending in the year ahead. Below is a summary of Governor Hochul’s big-ticket health care agenda items.
First, Governor Hochul outlined how New York plans to utilize its historic $20 billion, multi-year health care spending bill to build upon New York’s health care system in the following ways:
- Establishing a “Commission on the Future of Health Care” to help guide New York’s strategic response to ongoing innovations in how New Yorkers pay for and deliver medical care given the shift to and adoption of digital, outpatient and in-the-home services;
- Establishing a new capital grant fund for health care technology;
- Reforming traveling nurse agency staffing practices to reduce health care spending and require staffing agencies to register and report operational data;
- Expanding health care providers’ “scope of practice” by joining the Interstate Licensure Compact and the Nurse Licensure Compact; and
- Streamlining approval processes for health care projects in New York, including the Certificate of Need process and steps to ensure that private sector health care transactions are financially sustainable and support quality and access to care objectives.
Second, Governor Hochul committed to improving access to, and the quality of, mental and behavioral health care. To achieve these goals, Governor Hochul proposed:
- Expanding insurance coverage for mental health services by prohibiting insurance companies from denying access to medically necessary, high-need, acute, and crisis mental health services, and by adopting appointment availability and geographic accessibility standards for behavioral health services;
- Expanding mental health services for school-aged children whose need for and access to mental health services were especially affected by pandemic-related school closures;
- Increasing operational capacity for inpatient psychiatric treatment by 1,000 beds, including by requiring Article 28 community hospitals to make use of all of their existing beds and invest $27.5 million to support increased inpatient psych rates;
- Improving mental health care coordination and planning by creating a system of accountability—from admission through discharge and post-acute care, including Critical Time Intervention Care Coordination Teams;
- Dramatically expanding outpatient services with 12 new psychiatric emergency care sites and 40 new treatment teams, mobilized to reach the most at-risk New Yorkers and expanded certified community behavioral health clinics to provide walk-in integrated behavioral health care; and
- Ensuring payment parity for behavioral health services rendered in-person or via telehealth.
Third, Governor Hochul’s administration plans to “strengthen the foundation” of New York’s health care system by:
- Expanding Medicaid coverage for preventive health services and Medicaid’s buy-in program for New Yorkers with disabilities;
- Protecting New Yorkers from burdensome medical debt and costs by preventing creditors’ attachment of homes and wages to secure medical debt, amending the Consumer Credit Fairness Act to cover medical debt, investing in medical debt literacy, and requiring hospitals to use a standard financial assistance application form;
- Improving primary care by expanding access and increasing Medicaid reimbursement rates;
- Ensuring access to high quality long-term care, including by investing in care teams to provide care for low-income adults in their home;
- Revitalizing emergency medical services and medical transportation, including allowing EMTs to treat people out in the community; and
- Supporting the ongoing collaboration between the Office of Addiction Services and Supports and the Department of Health in addressing the State’s substance abuse epidemic.
Finally, Governor Hochul emphasized the need for emergency preparedness. In the address, she explained how New York will prepare for future emergencies by:
- Modernizing New York’s health reporting systems to be more secure in how it stores and transmits health data, and more efficient and effective in how it uses it;
- Rebuilding the Wadsworth Laboratories to advance cutting edge research on biomedical and environmental issues critical to protecting the health of New Yorkers; and
- Strengthening New York’s public health emergency readiness capacity in light of lessons learned during the COVID-19 pandemic.
The full State of the State book can be found here. Many of these proposals will be included in the Governor’s proposed budget, which is expected to be released around February 1, with final budget passage after Legislative review and negotiation around April 1.
Understanding the State’s health care policy and investment objectives is critical for health care businesses and stakeholders as they plan for and develop business goals for the year. The Firm’s Health Care team can assist with evaluating and implementing strategies to account for the forthcoming changes.
Another Unique Integrity Agreement Signals a Trend towards HHS-OIG’s Comfort with a Belt and Suspenders
In recent years, there have been only a handful of corporate integrity agreements (“CIAs”) and integrity agreements (“IAs”) that have included a “conditional exclusion release” of the Office of the Inspector General for the United States Department of Health and Human Services’ (“HHS-OIG”) permissive exclusion authority under 42 U.S.C. § 1320a-7(b)(7) (“Permissive Exclusion Authority”). Inclusion of a conditional exclusion release is atypical, as HHS-OIG’s historical practice has been to provide an outright release of its Permissive Exclusion Authority in exchange for a CIA or IA. It appears, based on an IA executed last month and the other recent CIAs and IAs, that a trend may be emerging.
Specifically, in December 2022, HHS-OIG entered into an IA with a Georgia-based physician, Aarti D. Pandya, M.D., and his practice, Aarti D. Pandya, M.D. P.C. (collectively, “Dr. Pandya”). In atypical fashion, however, HHS-OIG required the IA to be for five years (as opposed to three years) and held Dr. Pandya to a conditional exclusion release contingent upon Dr. Pandya’s satisfactory completion of the IA (as opposed to outright providing a release of its Permissive Exclusion Authority). This IA signals to the industry that HHS-OIG is not bound by precedent and that, perhaps, a belt and suspenders approach to resolving conduct allegedly violating the False Claims Act (“FCA”) may be emerging as HHS-OIG’s new norm.
Continue Reading Another Unique Integrity Agreement Signals a Trend towards HHS-OIG’s Comfort with a Belt and Suspenders
The Saga of the No Surprises Act Continues to be … Surprising
We previously noted that the regulations implementing the No Surprises Act (“NSA”) appeared to be inconsistent with the NSA because they seemed to establish the qualifying payment amount (“QPA”) as the appropriate payment amount to be used in arbitrations by certified IDR entities (viz. the regulation-established independent dispute resolution (“IDR”) process) between plans and providers, and that the United States District Court for the Eastern District of Texas (“Texas District Court”) vacated portions of the NSA regulations relating to the QPA for purposes of the IDR process. The Federal government recently responded to the Texas District Court—by removing such portions of the NSA regulations.
Continue Reading The Saga of the No Surprises Act Continues to be … Surprising