Legal Insights and Perspectives for the Healthcare Industry

In this LawFlash, our white collar litigation and government investigations team unpacks the fiscal year 2019 False Claims Act (FCA) recovery statistics recently announced by the US Department of Justice. At $2.6 billion in recoveries, 2019 marked the 10th consecutive year that healthcare industry recoveries exceeded $2 billion. To that end, the team addresses the largest recoveries involving healthcare and notes that “enforcement, mostly driven by qui tam filings, remains robust.”

Read the LawFlash >

The Medicare Payment Advisory Commission (MedPAC), which advises Congress on Medicare issues, recently finalized and approved a series of recommended updates on January 16 that include payment reductions for hospice and home health.

Hospice

MedPAC recommendation: Hold Medicare base payment rates for hospice steady with no increase, and wage-adjust and reduce the hospice aggregate cap by 20%.

MedPAC addressed its concerns that “hospice payment rates may be higher than needed to ensure appropriate access to care” and recommended no payment update for hospice in fiscal year 2021. With respect to the aggregate cap, MedPAC recommended a wage-adjusted cap to improve equity across providers because high-wage-index areas are more likely to exceed the cap than low-wage-index areas (e.g., a hospice in San Francisco will reach the aggregate cap more quickly than one in Topeka, Kansas). MedPAC further asserted that a 20% cap reduction will improve payment accuracy by focusing payment reductions on hospices with long stays and high margins, characterized by MedPAC in its December meeting as “disproportionately for-profit, freestanding, urban, small and newer entrants into the Medicare program.” If adopted, this would be the first major aggregate cap change in many years.

Home Health

MedPAC recommendation: Reduce the calendar year (CY) 2020 Medicare base payment rate for home health agencies by 7%.

While acknowledging major revisions to home health payments in 2020, including a new unit of payment (Patient-Driven Groupings Model (PDGM)), the removal of therapy as a payment factor, and a new case mix system, MedPAC officials cautioned in the December meeting that Medicare has a history of overpaying for home health “since the PPS was established.” To that end, MedPAC commissioners voted in January to recommend that Congress reduce the CY 2020 Medicare base payment rate for home health agencies by 7% for CY 2021. Noting “home health payment adequacy indicators are positive,” MedPAC officials concluded that their recommended reduction “should not affect the willingness of providers to serve beneficiaries.” However, the agency also recognized that it “may increase cost pressures for some providers.”

What’s Next?

The recommendations will be included in the MedPAC’s March 2020 report to Congress on Medicare payment policy. Mandated by law, these reports hold great sway with Congress and the Centers for Medicare and Medicaid Services (CMS). However, neither Congress nor CMS is required to follow the MedPAC recommendations.

In a recent analysis for Today’s General Counsel, healthcare industry partner Katie McDermott analyzes the US Court of Appeals for the Eleventh Circuit’s decision in United States v. AseraCare, Inc. and offers key takeaways for False Claims Act (FCA) practitioners from “this reasoned and scholarly opinion.” Cautioning that the healthcare industry should not misunderstand “the import of AseraCare and assume that hospice eligibility or medical necessity challenges for other health services cannot morph into big healthcare fraud investigations to audits,” Katie advises that the healthcare community “should heed the court’s caveats that documentation should support well-founded physician judgment and assure that its clinical practices can consistently meet this favorable standard.”

Read the full article starting on page 44 of Today’s General Counsel.

As discussed in an earlier blog post, US President Donald Trump signed the Further Consolidated Appropriations Act, 2020, into law on December 20, 2019, which includes bipartisan legislation intended to facilitate the development of generic and biosimilar products. The Creating and Restoring Equal Access to Equivalent Samples (CREATES) Act enhances access by generic manufacturers to brand-name drug samples for the development of generic versions.

Our colleagues at our As Prescribed blog provide additional details about the CREATES Act in a recent post, Congress to Pharma: Hand Over Those Samples.

Read the full blog post >>

The recently passed FY 2020 Appropriations Act increases funding for US healthcare agencies and programs over FY 2019 levels. The new law limits reauthorization of expiring healthcare extenders to five months, delays a scheduled reduction in Medicaid Disproportionate Share Hospital payments, enhances federal funding for healthcare research, and permanently repeals certain Affordable Care Act (ACA) taxes.

In this LawFlash, Morgan Lewis healthcare industry partner Susan Feigin Harris analyzes the December 18, 2019, decision by the US Court of Appeals for the Fifth Circuit in Texas v. Azar and concludes that it “portends potential chaos in health insurance coverage and puts the future of the entire Patient Protection and Affordable Care Act (ACA) in limbo.” Harris retraces the individual mandate’s road to the Fifth Circuit, unpacks the court’s “confusing” decision, and discusses the severability analysis “that the entire viability of the ACA now resides.” Noting that “[f]or now, the decision appears to have little day-to-day impact,” Harris expects that it “may be many months or even years before the issues remanded to the district court are resolved."

Read the LawFlash >>

Law clerk Ariel Seiersen contributed to this article.

Continuing to look for ways to reduce the Medicare administrative law judge (ALJ) appeals backlog, CMS has explored enhancing the role of Qualified Independent Contractors (QICs) to resolve disputed claims earlier in the appeals process. Its main pilot in this area is the Telephone and Reopening Process Demonstration (Demonstration), which affords certain providers the ability to present their case to a representative of the QIC and have a live discussion about the merits of the appeal. While initially limited to durable medical equipment claims, CMS expanded the Demonstration to home health and hospice claims within the Part A East QIC jurisdiction. Following the expansion, C2C Innovative Solutions—the Part A East QIC—began offering telephone discussions and reopenings to hospice and home health providers within Medicare Administrative Contractor (MAC) jurisdictions J6 and J15, covering Alaska, American Samoa, Arizona, California, Colorado, Delaware, District of Columbia, Guam, Hawaii, Idaho, Iowa, Kansas, Maryland, Michigan, Minnesota, Missouri, Montana, Nebraska, Nevada, New Jersey, New York, Northern Mariana Islands, North Dakota, Oregon, Pennsylvania, Puerto Rico, South Dakota, US Virgin Islands, Utah, Virginia, Washington, West Virginia, Wisconsin, and Wyoming. The Demonstration may provide home health and hospice companies with an effective new tool in the Medicare appeals process to help manage very long delays in the ALJ appeals process.

The Morgan Lewis Labor & Employment NOW video series provides analysis of the latest legal developments and compliance insight for employers. In this edition, Doug Hart discusses staffing-related trends that arise in collective bargaining in the healthcare industry. Doug offers guidance to hospitals and healthcare facilities to better understand unions’ bargaining positions and determine appropriate employer responses, focusing on in-house registries, float pools, ratios, contract language, and wage and hour concerns.

Watch the discussion at Labor & Employment NOW >>

Starting with an analysis of the hospital and health plan price transparency rules, Health Law Scan celebrated the month that brings us Thanksgiving with several interesting servings. Developments that gobbled up our attention included a recap of the Palliative Care and Hospice Education and Training Act approved by the US House of Representatives, a list of hot topics and trends in employee benefits to watch in 2020, and a federal court ruling that blocked the health insurance requirement for immigrant visa applicants from taking effect. In between servings of turkey and a questionable green bean casserole, we binged on the importance of navigating the federal rulemaking process, and digested highlights on industry innovation from the HLTH conference.