On November 2, 2021, the Centers for Medicare & Medicaid Services (“CMS”) issued a final rule (“Final Rule”) that advances the shift from paying for Medicare home health services based on volume to a system that pays based on value. In addition to other matters, the Final Rule expands the HHVBP Model from 9 states to all 50.

The new rule stems from a decade of CMS Innovation Center experimenting with alternative home health payment models, all launched with the goal of incentivizing quality of care improvements for home health patients. The HHVBP Model was originally piloted in 9 states and resulted in reductions in acute hospitalizations and skilled nursing facility stays. Thus, CMS determined that expanding the model will further reduce Medicare spending and improve quality. Beginning on January 1, 2022, the HHVBP Model shall apply to all Medicare certified HHAs in the 50 States, Territories, and the District of Columbia. In this blog post, we highlight the key components of the expanded HHVBP Model.

Of note, CY 2022 will be a pre-implementation year with CMS providing HHAs with training and resources to prepare for success. CY 2023 will be the first performance year with payment adjustments occurring in CY 2025. Payment adjustments will be based on each HHA’s performance on a set of quality measures in a given performance year relative to other HHAs grouped in the same cohort.

Cohorts are identified based on the unique nature of the HHAs beneficiaries served in the year prior to the performance year with assignment based on either nationwide large-volume or nationwide small-volume of similar size and quality performance HHAs.  Adjustments will range from -5% to +5% of Medicare fee-for-service payments.

Specifically, payment adjustments are based on each HHA’s Total Performance Score (TPS) in a given performance year, which is comprised of performance on: (1) A set of measures reported via the Outcome and Assessment Information Set (OASIS), (2) completed Home Health Consumer Assessment of Healthcare Providers and Systems (HHCAHPS) surveys, and (3) claims-based measures (e.g., acute care or ER hospitalizations during the first 60 days of HHA use). Quality measures do not count: (i) for patients that were not responsive at the start of care or resumption of care, (ii) if the HHA has less than 20 eligible quality episodes and (iii) for any patients in Medicare Advantage or Medicaid.

The expanded Model will use benchmarks, achievement thresholds, and improvement thresholds based on CY 2019 data to assess achievement or improvement of HHA performance on applicable quality measures. Competing HHAs that demonstrate they can deliver higher quality of care in a given performance year when measured against a baseline year and relative to peers nationwide (as defined by larger- versus smaller-volume cohorts), will be eligible to have their HH PPS claims final payment amount adjusted higher than the amount that otherwise would be paid. Payment adjustments for a given year will be based on the TPS calculated for performance two years prior. All HHAs certified to participate in the Medicare program prior to January 1, 2022, will be required to participate and will be eligible to receive an annual TPS based on their CY 2023 performance.

Note that while the HHVBP Model does not apply to Medicaid or commercial patients, it does provide a path and format for use in these markets as most payors move toward paying for value instead of volume.

More information on the CMS HHVBP Model can be found at https://innovation.cms.gov/innovation-models/expanded-home-health-value-based-purchasing-model and as will be updated with further guidance in 2022.

Proskauer’s Health Care team can help you strategize and consider alternative payment and value-based payment arrangements for home care and other healthcare services.

In a November 12, 2021 revision of its prior draft guidelines for hospital co-location compliance with Medicare conditions of participation (COP) for hospitals (QSO-19-13), CMS has apparently softened its approach to co-location. The modified guidance is less prescriptive and appears more practical and supportive of co-location where appropriate. In July 2019, CNS issued draft QSO-19-13 that purported to ease its earlier flat prohibition on co-location that it had adopted through sub-regulatory guidance. Although the 2019 version of QSO-19-13 allowed the sharing of non-clinical spaces, CMS noted that “due to infection control, patient management, confidentiality, and other quality and safety concerns, the use of shared clinical space would be limited.” In the recent revision, CMS no longer includes the admonition against sharing clinical space and merely states, “when hospitals choose to co-locate, they should consider the risk of compliance through any shared space or shared services arrangements.” Further, the prior requirement that hospitals have “distinct” clinical space is replaced with an admonition that “hospitals have spaces of operation that meet the [COP],” considering, among others, the conditions regarding patient rights, infection prevention and control, governing body and the physical environment. The modified guidance seems to support co-location where each provider can separately establish that it meets the COP applicable to it, and as such is an important liberalization at a time when hospitals are desperate for operational efficiencies.

In an advisory opinion posted November 10, 2021 (AO 21-15), the Office of the Inspector General of the United States Department of Health and Human Services (OIG) appeared to soften a disturbing position that it had taken in 2012 regarding the employment safe harbor.

The issue is the breadth of the employment safe harbor, which is also specifically included in the Federal Anti-Kickback Statute (AKS) as a statutory exception.  In Advisory Opinion 12-06 (AO 12-06), the OIG confronted referring physicians attempting to profit from anesthesiology services.  Without going into the details of that complicated opinion, AO 12-06 evaluated a situation where a new entity was created (owned by the referring physicians’ professional entity) that would employ or contract with anesthesiologists to provide services at the ASC.  The OIG noted that, “neither the employment safe harbor nor the personal services and management contracts safe harbor would protect the remuneration” reflected in the distribution of profit generated by the employees to the owners of the practice.  This statement effectively meant that the OIG had largely eviscerated the employment and personal services safe harbors because those safe harbors would only apply where the referring employer or contractor did not potentially profit from the employment or contract.  But this is almost never the intent, and in fact, failure to profit might itself raise FMV and commercial reasonableness issues.  It is also difficult to imagine that Congress, in adding the statutory exception to the AKS, meant it only to apply where the referring employer did not anticipate a profit.

In its recently-published AO 21-15, the OIG cleared the air a bit.  It blessed the employment of a CRNA to provide anesthesia services to a pain management practice, while aware that the practice would likely profit off its referrals to the CRNA as a result of the CRNA’s assignment of its billing rights.  The OIG first noted that it continues to maintain that the employment safe harbor does not protect the distribution of profits to referring shareholders related to the employment.  However, the OIG noted that bona fide employment in which a professional reassigns billing rights in exchange for compensation is “a commonplace practice in the health care industry, explicitly authorized by … the Medicare program.”  Since at issue was a “straightforward employment agreement” where the employer “assumes certain duties that may be typical of an employer and where … the CRNA is a bona fide employee,” the OIG deemed the employment to present a low risk of abuse and approved the relationship.

While it is disappointing that the OIG continues to argue that the employment exception does not protect a standard and accepted component of health care employment, it appears that the OIG is aware of the problems its position creates.  Its new position accepts bona fide employment despite the profit to be generated for the CRNA’s employer based on the CRNA’s referrals.

Earlier this month, the Centers for Medicare and Medicaid Services (CMS) released its final rules for the 2022 Medicare Physician Fee Schedule (PFS Final Rule) and 2022 Medicare Hospital Outpatient Prospective Payment System and Ambulatory Surgical Center Payment System (OPPS Final Rule).  Both rules take effect January 1, 2022.  This post is the first in a series covering the myriad Medicare-related changes set forth in those rules.  We turn first to an area addressed extensively in the PFS Final Rule—the amendments to the Physician Self-Referral Law (Stark Law) regulations.

Those amendments correct inadvertent omissions in a previous CMS rulemaking and clarify the reach of the prohibition related to “indirect compensation arrangements.”  As the tale unfolded, within a matter of months of publishing its Modernizing and Clarifying the Physician Self-Referral Regulations Final Rule (MCR Final Rule), which went into effect January 19, 2021, and which made significant changes to the Stark Law, CMS identified certain crucial omissions related to the regulatory calculus for analyzing indirect compensation arrangements, and sought to correct those oversights through its 2022 Medicare Physician Fee Schedule Proposed Rule (PFS Proposed Rule).  85 Fed. Reg. 77492 (Dec. 2, 2020); 86 Fed. Reg. 39104 (July 23, 2021).  After a short notice-and-comment period, on November 2, 2021, CMS announced that it had taken care of the issues through the PFS Final Rule, which is scheduled to be published in the Federal Register on November 19, 2021.

As explained in more detail below, the import of the PFS Final Rule for physicians, their immediate family members, and entities furnishing designated health services (DHS) is that, while indirect compensation arrangements still must satisfy the requirements of an applicable exception to avoid the Stark Law’s referral and billing prohibitions, the number of indirect compensation arrangements subject to those prohibitions, currently enforceable under the law set forth in the MCR Final Rule, is now reduced.  More specifically, CMS’s corrections to that rule ultimately reduce the number of arrangements that satisfy the definition of “indirect compensation arrangement” and, thus, decrease the number of arrangements that fall within the prohibitions’ purview.  To CMS’s credit, the changes appear to be consistent with its long-standing policy of ensuring program integrity against the risk of program or patient abuse.  To better understand the significance of CMS’s clarifications, we provide a chronological-based history of the amendments to the definition of “indirect compensation arrangement.”

Continue Reading CMS Corrects Inadvertent Omissions in Recent Stark Law Regulatory Amendments, Clarifies Reach of the Prohibition Related to Indirect Compensation Arrangements

This post reviews Part II of the federal No Surprises Act regulations.  In previous publications, we have commented upon the No Surprises Act, and Part I of the regulations.

The “Requirements Related to Surprise Billing; Part II” (the “Part II Rule”), published on October 7, 2021, is the second interim final rule (IFR) implementing the No Surprises Act, following a prior No Surprises Act IFR (the “Part I Rule”) published on July 13, 2021.  Both of these regulations are generally set to take effect on January 1, 2022.

In this post, we outline how the Part II Rule addresses: (A) the independent dispute resolution (IDR) and open negotiation processes for health plans and other payers (“Plans”), (B) patient-provider dispute resolution processes for uninsured individuals, and (C) the expansion of the federal external review provisions of the Affordable Care Act to cover disputes regarding the application of the No Surprises Act.

Continue Reading The Devil may be in the Details of the Part II No Surprises Act IFR

In the last few years, we have seen an uptick in behavioral health groups focused on psychedelic treatments.  There are now at least five (5) psychedelic-assisted therapy platforms traded on NASDAQ with numerous others listed on the Toronto Stock Exchange and elsewhere.[1]  Ketamine treatments, in particular, have garnered considerable attention from patients, providers and investors.   Treatment models range from more traditional psychotherapy and infusion services similar to those offered by Columbia University[2] to telemedicine-enabled psychotherapy coupled with mail-delivered tablets of ketamine under the Mindbloom model.[3]  However, despite the growth in adoption, Ketamine remains a controlled substance and ketamine behavioral health remains an industry with material regulatory risks.

We have set forth certain key considerations for various stakeholders involved with ketamine behavioral health. Continue Reading Key Legal Considerations Relating to Ketamine Behavioral Health Platforms

Although the COVID-19 pandemic is still active worldwide, health care industry leaders and regulators have already begun to think about how to implement post-pandemic changes to health care delivery based on lessons learned during the global emergency of the past year and a half. We have reported on some such post-pandemic changes to the health care industry in previous blog posts. For instance, some temporary solutions to challenges presented by COVID-19 are being made permanent due to their proven efficiency or effectiveness. The expansion of telehealth is a primary example of this. We have seen the Centers for Medicare and Medicaid Services (“CMS”), as well as state governors and legislators, expand and extend certain regulatory waivers that were initially designed as temporary solutions to allow for greater access to patient care during the pandemic, but that are becoming permanent fixtures due to their usefulness in innovative patient care delivery generally.

Other post-pandemic changes to the health care delivery landscape will be borne out of sheer necessity rather than innovation. Continue Reading Lessons from the COVID-19 Pandemic: Planning for Disaster Preparedness and Emergency Management in Hospitals

As discussed in a prior blog post, in May of this year, the Department of Justice (DOJ), through its Fraud Section and in conjunction with the Center for Program Integrity, Centers for Medicare & Medicaid Services (CPI/CMS), began prosecuting defendants who were alleged to have perpetrated a variety of COVID-19-related scams on federal healthcare programs.  On September 17, 2021, the DOJ’s Health Care Fraud Unit, in coordination with its Health Care Fraud and Appalachian Regional Prescription Opioid Strike Force, the Department of Health and Human Services Office of Inspector General (HHS-OIG), the Federal Bureau of Investigation (FBI) and the Drug Enforcement Agency (DEA), announced a new wave of enforcement actions against 138 individuals, including 42 licensed medical professionals, alleged to have participated in health care schemes that resulted in $1.4 billion in alleged losses.

Continue Reading DOJ’s National Rapid Response Task Force Strikes Again: New Wave of Enforcement Actions Target Fraudulent Schemes

Over the past few weeks, we have covered recent updates to the False Claims Act (“FCA”), first discussing the recent recension of the “Brand Memo” and the resulting restoration of the Department of Justice’s willingness to use sub-regulatory guidance to bring FCA enforcement actions. In our second post, we outlined S.B. 2428’s proposal to shift the burden of proving materiality to defendants, provide for discovery reimbursement, address deference standards in motions to dismiss brought by the government in qui tam complaints, and extend whistleblower anti-retaliation protections. In this final post of our three-part series, we close out our discussion of the FCA with a review of a recent Seventh Circuit decision endorsing the use of an “objective reasonableness” defense in litigation brought under the FCA. We also highlight other recent court activity affecting enforcement of the FCA. Continue Reading False Claims Act Spotlight (3 of 3): Changing Landscape of the FCA in the Courts

This is the second installment in our series of posts covering recent developments in False Claims Act (“FCA”) doctrine and practice, with the first post discussing the rescission of the “Brand Memo” and restoring the role of sub-regulatory guidance in FCA enforcement actions. A third post, to come later this week, will address recent federal court cases construing the FCA.

In July 2021, Senator Chuck Grassley led a bipartisan group of senators in introducing S.B. 2428, the “False Claims Amendments Act of 2021,” which aims to address legal developments in FCA doctrine that, according to the bill’s sponsors, made it “more difficult for plaintiffs and whistleblowers to succeed in lawsuits against government contractors engaged in fraud.” S.B. 2428 proposes amendments to the FCA in four key areas more fully described below:

  • to shift the burden to defendants to disprove plaintiffs’ showing of materiality of alleged FCA misconduct;
  • to provide a means by which the government can seek reimbursement for costs incurred for responding to burdensome discovery requests;
  • to resolve a Circuit Court split regarding the appropriate standard of review for evaluating government’s (c)(2)(A) motions to dismiss qui tam complaints; and
  • to extend the FCA’s anti-retaliation whistleblower protections.

Continue Reading False Claims Act Spotlight (2 of 3): Recent Proposed Amendments to the FCA Fall Short of Cohesive and Substantive Change