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Legal Insights and Perspectives for the Healthcare Industry

Imagine you are the primary caretaker for your 94-year-old terminally ill mother who lives in your home while under hospice care during the coronavirus (COVID-19) pandemic.

Overwhelmed, exhausted, and drained—or even exposed to COVID-19—you discuss caregiver break with the hospice social worker who suggests “respite stay” for your mother but says Medicare only covers respite services up to five days, and only when care is furnished in an inpatient facility, like a nursing home. You don’t want that option given your mother’s heightened risk of contracting COVID-19 in a facility.

CMS posted an expanded set, dated April 29, of Medicare regulatory flexibility measures for hospice organizations related to the coronavirus (COVID-19) pandemic, supplementing the previous COVID hospice flexibilities guidance from March 29.

Hospice officials identified both best practices and challenges that hospice employees face when disposing of controlled substances in a patient’s home.

The US Government Accountability Office (GAO) released a report on April 14 detailing the challenges associated with the disposal of controlled substances in home hospice settings. As part of the October 2018 Substance Use-Disorder Prevention that Promotes Opioid Recovery and Treatment for Patients and Communities Act (SUPPORT Act), the GAO was tasked with conducting a review of controlled substance disposal in the home hospice setting. The GAO conducted a very limited review based on discussions with seven hospices and 11 state hospice association officials.

The Centers for Medicare & Medicaid Services (CMS) issued a statement on March 9 related to actions the agency is taking to protect the health and safety of patients and providers. CMS urges providers to stay abreast of CDC guidance on the 2019 Novel Coronavirus (COVID-19). As of March 9, CMS has issued COVID-19-specific guidance for hospice providers and nursing homes. Both guidance documents are linked in the CMS press release. Morgan Lewis will continue to monitor CMS statements related to COVID-19, including any regulatory relief for providers, as those statements are made available.

In the Care Alternatives False Claims Act (FCA) appeal, a panel of the US Court of Appeals for the Third Circuit on March 4 reversed the summary judgment granted to hospice provider Care Alternatives at the district court, disagreeing with AseraCare precedent out of the US Court of Appeals for the Eleventh Circuit, and holding that clinical disagreement alone may comprise legal falsity and is sufficient to create a triable issue of fact for the jury.

In an action especially significant to hospice providers but also other healthcare providers regarding the determinations of medical necessity for Medicare billing purposes, the US Department of Justice (DOJ) and AseraCare have just agreed, following a mediation, to settle for $1 million the long-running False Claims Act qui tam litigation matter in which the United States had previously sought $200 million in liability.

In its press release, Aseracare said the settlement involves a single payment and will not require a corporate integrity agreement with the HHS Office of Inspector General.

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.

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 US House of Representatives unanimously voted to approve HR 647, the Palliative Care and Hospice Education and Training Act (PCHETA), on October 28. This legislation would amend the Public Health Service Act to increase the number of permanent faculty in palliative care at accredited medical, nursing, and social work schools and other programs (including physician assistant education programs); promote education and research in palliative care and hospice; and support the development of faculty careers in academic palliative medicine. PCHETA now moves to the Senate where a similar measure, S 2080, has been referred to the Committee on Health, Education, Labor, and Pensions. However, given the fast approaching deadlines for Congress to fund the government and reauthorize expiring programs, this legislation may not receive attention in the near term. We will continue to monitor the bill’s progress and keep you apprised of any new developments.