Legal Insights and Perspectives for the Healthcare Industry

In CMS’s continuing effort to take “a strategic approach to protecting taxpayer dollars and reducing regulation to put patients over paperwork,” Administrator Seema Verma recently highlighted changes to the Recovery Audit Program that are intended to make the program more provider friendly. Recovery Audit Contractors (RACs) review payments made to healthcare providers under Medicare Fee-for-Service plans. RACs have been controversial among providers due to concerns about their accuracy. In addition, although they are charged with identifying both overpayments and underpayments, unlike UPICs and MACs, RACs receive a percentage of the overpayments they recover, which historically has caused some disgruntled providers to characterize RACs as “bounty hunters” that are less concerned with program integrity than with their own bottom lines. Administrator Verma acknowledges that CMS has received many complaints in the past from providers that have found the audits to be time consuming and expensive.

In an opinion of significant importance to the administration of the Medicare program, the US Supreme Court issued a 7–1 decision requiring the Centers for Medicare & Medicaid Services (CMS) to follow notice and comment rulemaking when adopting a “statement of policy” that establishes or changes a “substantive legal standard.” The near unanimous Court[1] upheld the DC Circuit Court’s decision in Allina Health Services v. Price, 863 F.3d 937, 939 (DC Cir. 2017), which highlighted an important distinction between Medicare Act and Administrative Procedure Act (APA) rulemaking requirements.

The APA establishes a statutory exemption from notice and comment rulemaking procedures in the case of “interpretive rules, general statements of policy . . . or agency . . . practice.” 5 USC § 553(b)(A) (emphasis added). CMS relied on an assumption that this “interpretive rule exception” applied to the policy it adopted in order to include Medicare Part C patient days in the Medicare fraction of the payment formula used to calculate the qualification for, and amount of, the Medicare disproportionate share hospital (DSH) payment adjustment. The policy resulted in the reduction of Medicare DSH payments for hospitals until 2013, when the agency furnished notice and comment. Like the DC Circuit, the Supreme Court rejected the government’s argument that the Medicare Act rulemaking requirement in 42 USC § 1395hh(a)(2) implicitly incorporated a similar interpretive rule exception permitting such a policy.

Healthcare partners Al Shay and Howard Young and associate Jake Harper recently contributed to the Health Care Compliance Legal Issues Manual, a publication by the American Health Lawyers Association (AHLA).

The latest edition of AHLA’s Health Care Compliance Legal Issues Manual gives readers an up-to-date look at issues critical to healthcare compliance, including tips for conducting internal investigations; audit basics; overviews of the False Claims Act, Stark Law, and Anti-Kickback Statute; healthcare privacy; and more.

CMS finalized a rule last month that will significantly expand access to telehealth services for patients in Medicare Advantage plans. Implementing provisions of the Bipartisan Budget Act of 2018 (BiBA), the new rule will allow patients to (finally) receive healthcare services from the comfort of their homes. According to CMS Administrator Seema Verma, “With these new telehealth benefits, Medicare Advantage enrollees will be able to access the latest technology and have greater access to telehealth.”

We're excited to introduce Tele-Tuesdays, a new feature on Health Law Scan where we'll bring you the latest updates in the world of telehealth legal issues. From new regulations and legislation to enforcement actions and changes in the telehealth landscape, we'll cover it all.

Federally, telehealth continues to be a central feature of the government’s efforts to expand access and control soaring healthcare costs. Just last week, CMS finalized its rules implementing the Bipartisan Budget Act of 2018, which will increase flexibility for Medicare Advantage (MA) plans offering telehealth services irrespective of whether a patient is in a rural or urban area. Right now, MA plans are working feverishly to redesign their telehealth benefits in anticipation of plan year 2020. Providers interested in offering telehealth services should assess their current MA contracts and consider engaging with plans to make sure their telehealth services are covered. According to Kaiser Family Foundation, MA plans now cover 34% of Medicare beneficiaries, so this will be a momentous occasion in the expansion of telehealth coverage. And should the results of this expansion be as favorable as anticipated, expect future legislation that will expand telehealth to all Medicare beneficiaries, whether enrolled in MA plans or in Original Medicare.

The Centers for Medicare & Medicaid Services (CMS) published a proposed rule on March 4 to help patients more easily access their complete health information in interoperable forms across programs that CMS administers (the Interoperability Rule). In the rule’s preamble, CMS lays out a vision of an environment in which a patient’s health information can move seamlessly between health plans, providers, and post-acute care settings. CMS observes that while adoption of electronic health records (EHRs) by healthcare providers has been significant, progress on interoperability needs to be accelerated. The Interoperability Rule fact sheet is available here. While there are several new proposals and requests for information in the 71-page document, this post provides an overview of two of the Interoperability Rule’s proposals.

The healthcare industry awaits the US Supreme Court’s decision in Azar v. Allina Health Services with nervous anticipation. The high court stepped in to settle the dispute and the broader legal question developing among the circuit courts relating to the Centers for Medicare & Medicaid Services’ (CMS) authority to adopt so-called “interpretive rules” affecting significant Medicare program policies. CMS asserts that it possesses such authority under the Medicare Act based on an analogous exception in the more general Administrative Procedures Act (APA), which permits agencies to adopt interpretive rules, and CMS has used this presumed authority to sidestep the formalities of notice and comment rulemaking in certain Medicare policy changes. In the instant case, CMS was defending its ability to change, without notice and comment, its construction of the statutory phrase “entitled to Medicare Part A” in the Medicare disproportionate share (DSH) payment formula, a change that ultimately worked to dilute the amount of Medicare DSH payments for hundreds of hospitals. The US Court of Appeals for the DC Circuit rejected CMS’s argument.