Legal Insights and Perspectives for the Healthcare Industry

A longstanding source of frustration among providers facing overpayment determinations is the inconsistent application of statistical sampling and extrapolation by Medicare contractors. This, coupled with the contractor’s unfettered discretion to determine when extrapolation will be used and what constitutes a sustained or high level of payment error, can result in enormous negative financial consequences for providers. In a recent update to the Medicare Program Integrity Manual, the Centers for Medicare and Medicaid Services sets out clarifying guidance and accountability mechanisms for Medicare contractors to follow when performing statistical sampling, including when extrapolation of overpayment determinations is permitted. It also affords providers with greater opportunities for confirming the appropriateness of the extrapolation methodology including compliance by Medicare contractors with the updated guidance. An exception for CMS and the Medicare contractors—that failure to follow one or more requirements contained in the guidance may not necessarily be viewed as affecting the validity of the extrapolation—raises questions over how CMS will enforce the updated guidance and the potential for success when challenging poorly performed extrapolations.

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In an opinion released on a Friday evening in mid-December, Judge Reed O’Connor of the US District Court for the Northern District of Texas reignited the simmering debate over the Affordable Care Act’s (ACA’s) ultimate survival when he ruled the entire law unconstitutional in Texas v. U.S. The case, filed by 20 Republican-led states in February 2018, alleges that Congress invalidated the ACA when it zeroed out the individual mandate penalty under the tax reform legislation in 2017. Law360 published an article on December 18, 2018, by Morgan Lewis partners Susan Feigin Harris and Howard Young and senior health policy analyst Kathleen Rubinstein that discusses the decision, its impact, and what to expect next.

US President Donald Trump signed the SUPPORT Act into law on October 24, 2018, in a culmination of a two-year bipartisan effort by lawmakers across multiple committees in both the House and Senate. Law360 published an article on October 25, 2018, by the Morgan Lewis healthcare team that takes a first look at the sweeping new opioid law.

In an article published by Managed Healthcare Executive, Morgan Lewis partners Joyce Cowan and Susan Feigin Harris, and associate Jacob Harper discuss three CMS regulatory actions that managed care organizations will want to watch. These include the final rule on short-term, limited duration health plans; expanded telehealth coverage under the Medicare program; and the CMS announcement that certain quality and patient safety indicators will no longer be reported by CMS to the Hospital Inpatient Quality Reporting Program. As the administration proceeds with its incremental dismantling of the Affordable Care Act, it is important that managed care organizations maintain a watchful eye on emerging CMS policy changes and their potential implications for the industry.

Read the Managed Healthcare Executive Article

The HHS OIG recently published a new Fraud Risk Indicator for False Claims Act (FCA) settlements on the risk spectrum for the first quarter of federal fiscal year 2019. Characterized as “an assessment of future risk posed by persons who have allegedly engaged in civil healthcare fraud,” the Fraud Risk Indicator purports to increase transparency by making public where an FCA defendant falls into one of five color-coded categories on a risk spectrum: Highest Risk – Exclusion (red), High Risk – Heighted Scrutiny (orange), Medium Risk – CIAs (yellow), Lower Risk – No Further Action (green); Low Risk – Self-Disclosure (blue).

Noting that the issue of paid prioritization is a “sticking point” for many telehealth providers, in this Hospital Industry Viewpoint, partner William Wilhelm and associate Jacob Harper address some of the questions raised by the FCC’s decision to repeal net neutrality regulations. Recognizing that the FCC’s actions could place more financial pressure on providers, especially those in rural areas, William and Jake discuss what telehealth providers can do now to address this new financial burden.

Read the full Hospital Industry Viewpoint.