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After 28 hours of deliberation including a marathon Rules Committee meeting that saw more than 500 proposed Democratic amendments, the House of Representatives, early in the morning of May 22, passed the One Big Beautiful Bill Act (H.R. 1) (the Reconciliation bill).

The bill in its final form is certainly big, clocking in at over 1000 pages long and including a 42 page “manager’s amendment” with detailed editing instructions for changes that were needed to pass the bill both through the Rules Committee and through the full House. But is it beautiful? That, as the say, is in the eye of the beholder.Continue Reading Breaking down the Health Care Impacts of the One Big [Reconciliation] Bill

The Department of Health and Human Services Office of Inspector General (OIG) recently issued an advisory opinion related to a proposed arrangement offering discounts to dental providers. This favorable advisory opinion, issued on December 9, 2024, offers fresh guidance and reminders to dental professionals and dental services organizations (DSOs) about how to structure discount programs.

The request for the advisory opinion was submitted by a dental supplies distributor that owns a separate entity (the “Dental Division”) which provides supplies, equipment, and business support services to customers, including dentists, dental specialists, dental laboratories, and DSOs. The requestor currently maintains a customer loyalty program whereby customers earn points on purchases of Dental Division items and services. Customers are eligible for benefits that are established through various tiers, with benefits increasing in value as the customer purchases more items or services.Continue Reading OIG Issues Favorable Opinion on Dental Equipment Supplier’s Loyalty Program

This month, the Centers for Medicare & Medicaid Services (CMS) has begun an off-cycle revalidation process directed at all Medicare-participating skilled nursing facilities (SNFs). The process is designed to implement provisions of the Affordable Care Act (ACA) that require facilities to detail their ownership structures and key managerial personnel.

CMS is seeking information about ownership of SNFs by private equity firms and real estate investment trusts (REITs). In September, CMS revised Form 855A to require a SNF to report those types of ownership interests. The agency has also released a guidance document detailing the requirements and how a SNF should go about filling out the form.

CMS indicated that it would seek this off-cycle revalidation process as part of its effort to implement the disclosure requirements of Section 1124(c) of the Social Security Act (42 U.S.C. § 1320a-3(c)) in a Final Rule issued in November 2023 (88 Fed. Reg. 80,141).Continue Reading CMS Ramps up Process for Identifying Private-Equity Ownership of SNFs

The Centers for Medicare & Medicaid Services (CMS) has finally published the minimum staffing rule for Long Term Care facilities in the Federal Register, which starts the clock for compliance with some provisions of the rule.

But what does the rule actually do? And what do facilities have to do in order to come into…

Last week, on April 18, several federal agencies jointly launched a “one-stop shop” to facilitate reporting of allegedly anticompetitive behavior in the health care sector. While there has always been a complaint portal for the antitrust agencies, the Federal Trade Commission (FTC), the U.S. Department of Health and Human Services (HHS), and the Antitrust Division…

The Substance Abuse and Mental Health Services Administration (SAMHSA) has issued a final rule governing the use of medications for the treatment of opioid use disorder (OUD). In the rule, the first major update in 20 years, the agency made permanent some of the telehealth flexibilities that were put into place to respond to the COVID-19 pandemic and made a number of other changes similarly aimed at improving patient access to and reducing stigma of OUD treatment.

Additionally, with this rule, SAMHSA updated accreditation and certification requirements for opioid treatment programs (OTPs) as required by the Consolidated Appropriations Act, 2023 (CAA). The rule, which was printed in the Federal Register on February 2, 2024, takes effect April 2, 2024, and has a compliance date of October 2, 2024.Continue Reading SAMHSA Finalizes Major Update to Rules Governing Opioid Treatment Program Requirements

The Centers for Medicare & Medicaid Services (CMS) has published its final rule that requires nursing homes enrolled in Medicare and Medicaid to disclose additional ownership and management information to CMS and state Medicaid agencies. The rule finalizes CMS’s proposed rule from February, with just two differences, as we describe further below.

The rule implements Section 1124(c) of the Social Security Act, which was added by the Affordable Care Act to require the disclosure of additional information about ownership and oversight of nursing facilities. Medicare-enrolled skilled nursing facilities (SNFs) and Medicaid-enrolled nursing facilities (NFs) will soon be required to report many detailed aspects of their ownership and management structure, including both the executive leadership and any members of the facilities’ governing bodies.

CMS plans to gather the information in 2024, beginning when the revisions to the Form CMS-855A is completed, regardless of where a facility is on its current five-year revalidation schedule. The information will then be made publicly available within one year.

Of note in the final rule is that CMS declined to finalize a broad definition of “real estate investment trust” (also known an “REIT”) from its February proposed rule and instead has finalized a definition that it finds more consistent with current federal law and industry practice.Continue Reading CMS Finalizes Nursing Home Ownership Rule

On May 3, New York Governor Kathy Hochul signed into law provisions that will require health care entities to submit a notification to the state Department of Health (DOH) providing information about any material transaction involving that health care entity.

The law, passed as part of the state’s budget, was originally crafted to give the DOH authority to review and approve those transactions. Ultimately, following several iterations during the legislative process, that approval power was stripped out by the state general assembly and replaced with the current notice requirement.

The law will take effect on August 1, 2023 and states on its face that it will apply to all “material transactions” involving health care entities that close on or after that date. That said, the requirements for transactions that close between August 1 and August 31 are a somewhat open question, given the 30-day notice requirement in the law. The DOH is tasked by the law with creating regulations that may address this situation.Continue Reading New York Passes Health Care Transaction Notice Requirements

With only one day left before the final rule scaling back nondiscrimination regulations took effect, the U.S. District Court for the Eastern District of New York (EDNY) issued an order staying the repeal of certain parts of the former regulations. On June 19, 2020, the Department of Health and Human Services’ (HHS) Office for Civil Rights (OCR) and the Centers for Medicare & Medicaid Services (CMS) published a final rule scaling back nondiscrimination regulations first released in 2016 to implement Section 1557 of the Affordable Care Act (ACA). The 2016 regulations had imposed significant requirements on health care providers to ensure that all individuals were provided “meaningful access” to care. As part of the 2016 regulations, OCR banned discrimination “on the basis of sex,” which was defined broadly as “on the basis of pregnancy, false pregnancy, termination of pregnancy, or recovery therefrom, childbirth or related medical conditions, sex stereotyping, or gender identity.” The 2020 final rule revised the 2016 regulations significantly, however. In one of its most controversial changes, OCR removed the definition of “on the basis of sex” contending that “on the basis of sex” shall revert to the “plain meaning” of the term “sex” in Title IX of the Civil Rights Act – meaning not to encompass discrimination on the basis of sexual orientation or gender identity. OCR’s decision came on the heels of a Supreme Court ruling in Bostock v. Clayton County, Ga. four days prior which concluded that discrimination “on the basis of sex” encompasses claims based on gender identity and sexual orientation under Title VII of the Civil Rights Act. Accordingly, within the course of less than a week, the Supreme Court broadly interpreted the same term that OCR severely limited.

Shortly after OCR announced its reversal of the nondiscrimination requirement based on gender identity and sexual orientation, various interest groups began mounting legal challenges. With the order issued by EDNY on August 17, 2020, we are already seeing evidence of the legal battles likely to ensue over the definition of “on the basis of sex,” placing certain parts of OCR’s final rule in legal limbo.
Continue Reading Federal Court stays repeal of “On the Basis of Sex” definition in recent nondiscrimination final rule one day before regulations take effect

A final rule published by the Department of Health and Human Services’ (HHS) Office for Civil Rights (OCR) and the Centers for Medicare & Medicaid Services (CMS) significantly scales back nondiscrimination regulations first released in 2016. The final rule, which was published in the Federal Register on June 19, 2020, implements Section 1557 of the Affordable Care Act (ACA) and pares back numerous nondiscrimination regulations applicable to covered health care entities in an effort to reduce regulatory costs and eliminate duplicative legal obligations.

In doing so, the final rule drastically changes the interpretation of  Section 1557’s scope, waters down stringent requirements designed to promote universal access to covered programs and providers, and alters enforcement provisions. Despite these notable changes, certain core nondiscrimination provisions remain, such as communication and access standards for disabled and limited English proficiency (LEP) individuals. As a result, covered entities will need to understand how their obligations under the final rule change, what remains the same, and what to look out for moving forward when it becomes effective on August 18, 2020. Below are the new rule’s main takeaways.Continue Reading Office for Civil Rights issues final rule scaling back nondiscrimination requirements for health care covered entities as Supreme Court broadens discrimination protections

Shortly after President Trump declared a national emergency related to COVID-19, CMS issued blanket waivers under section 1135 of the Social Security Act that are intended to ensure there are sufficient health care items and services available to meet the increased need, as well as reduce related administrative burdens on health care providers.

Our comprehensive…

The Centers for Medicare & Medicaid Services (CMS) has officially cancelled a planned program to require certain hospitals to participate in Medicare episode payment models (EPMs) for acute myocardial infarction, coronary artery bypass graft, and surgical hip/femur fracture treatment procedures furnished in designated areas of the country, along with a Cardiac Rehabilitation (CR) Incentive Payment Model. These programs, which were slated to launch on January 1, 2018, were summarized in previous posts. In a press release, CMS states that not pursuing these models gives it “greater flexibility to design and test innovations that will improve quality and care coordination across the in-patient and post-acute care spectrum.”

In the same rulemaking, CMS also dramatically scaled back the ongoing Comprehensive Care for Joint Replacement (CJR) model. By way of background, this program provides a “bundled” payment to participant hospitals for an “episode of care” for lower extremity joint replacement (LEJR) surgery, covering all services provided during the inpatient admission through 90 days post-discharge (with certain exceptions).  The bundled payment is paid retrospectively through a reconciliation process; providers receive regular fee-for-service payments in the interim. The CJR model began April 1, 2016 and runs through 2020.

Most notably, the new rule gives certain hospitals participating in the CJR model a one-time option to choose whether to continue their participation in the model, effective February 1, 2018. This voluntary election option applies to hospitals in 33 of the 67 Metropolitan Statistical Areas (MSAs) selected in the original CJR final rule, along with low volume hospitals and rural hospitals in the remaining 34 mandatory participation MSAs.  CMS is designating a one-time participation opt-in period from January 1 – 31, 2018 during which eligible hospitals may opt to continue to participate in CJR.  Note, however, that CMS will automatically terminate CJR participation for hospitals in the designated 33 MSAs, along with low volume and rural hospitals, as of February 1, 2018, unless the hospital elects to continue participation in the CJR model.  CMS expects the number of hospitals required to participate in CJR to fall from approximately 700 to about 370, and an additional 60 to 80 hospitals to make a voluntary election to continue participation.  A list of all current CJR participant hospitals and their status (mandatory or voluntary) is available on the CJR webpage, as is the Voluntary Participation Election Letter Template.

CMS also adopted a number of refinements to CJR model policies, including the following:
Continue Reading CMS Scraps Cardiac/Hip Fracture Episode Payment Model, Downsizes CJR Program

Signals Trump Administration’s About-Face on Obama-Era Mandatory Innovation Models

The Centers for Medicare & Medicaid Services (CMS) has just released a proposed rule to cancel a significant — but still-pending — Obama Administration program that would require certain hospitals to participate in Medicare episode payment models (EPMs) for acute myocardial infarction (AMI), coronary artery bypass graft (CABG), and surgical hip/femur fracture treatment (SHFFT) procedures furnished in designated areas of the country. Perhaps more surprisingly, CMS also would dramatically scale back mandatory participation in the ongoing Comprehensive Care for Joint Replacement (CJR) program, with an option for participating hospitals in about half of the current CJR locations to shift to voluntary participation.

As previously reported, the EPM and CJR programs were part of the Obama Administration’s high-profile efforts to move the Medicare system away from fee-for-service (FFS) payments and towards alternative payment models (APMs) that reward quality of care rather than volume of services. Although early APMs (e.g., the Bundled Payment for Care Initiative) were voluntary, CMS eventually shifted attention to mandatory models in order to broaden participation. President Trump’s Secretary of Health and Human Services, Tom Price, M.D., has long been critical of mandatory Medicare payment innovation models and has been contemplating changes to these programs.  It is now clear that the Trump Administration is reversing course and pulling back from mandatory models.  In fact, CMS stated in an announcement that it “expects to increase opportunities for providers to participate in voluntary initiatives rather than large mandatory episode payment model efforts” in the future.

EPM/CR Models Slated for Cancellation

CMS published a final rule in early 2017 to establish a mandatory EPM program for AMI and CABG cases in 98 metropolitan statistical areas (MSA), along with a mandatory EPM program for SHFFT procedures in 67 MSAs covered by the CJR program. In short, CMS planned to provide a bundled payment to hospitals in selected geographic areas for individual episodes, covering all services provided during the inpatient admission through 90 days post-discharge.  In such cases, the hospital would be held accountable for spending during the episode of care.  The bundled payment to the hospital would be paid retrospectively through a reconciliation process (hospitals and other providers and suppliers would continue to submit claims and receive payment via the usual Medicare FFS payment systems).  A participant hospital would receive a “reconciliation payment” if its actual episode payments (combined Medicare Part A and B claims payments for services furnished to the beneficiary during the episode) were below the target price for the episode, and certain quality thresholds were met.  Beginning with the second performance year, affected hospitals would be required to repay Medicare for a portion of spending that exceeded the target price (with limits on upward and downward adjustment). The rule also included provisions intended to promote the use of cardiac rehabilitation services through a Cardiac Rehabilitation (CR) Incentive Payment Model.
Continue Reading CMS Proposes Cancellation of Medicare Cardiac/Hip Fracture Episode Payment Models, Scale-Back of Mandatory CJR Participation

In the waning days of the Obama Administration, the Centers for Medicare & Medicaid Services (CMS) has unveiled a lengthy and complex final rule to establish mandatory Medicare bundled payment programs for acute myocardial infarction (AMI), coronary artery bypass graft (CABG), and surgical hip/femur fracture treatment (SHFFT) procedures furnished in designated geographic areas.  The rule also includes provisions to promote the use of cardiac rehabilitation services, refine current Comprehensive Care for Joint Replacement Model (CJR) rules, and integrate bundled payment programs into the new physician Quality Payment Program. The 1,606-page advance version of the rule was released on December 20, 2016; the official version is scheduled to be published January 3, 2017.

Note that President-elect Donald Trump’s designee for Secretary of Health and Human Services, Rep. Tom Price, M.D., has been highly critical of the proposed version of the rule published in August 2016, and has called on the CMS Center for Medicare and Medicaid Innovation (CMMI) to “stop experimenting with Americans’ health, and cease all current and future planned mandatory initiatives within the CMMI.” It is therefore uncertain whether all provisions of the final rule will actually be implemented as CMS currently envisions.  Nevertheless, impacted providers need to be prepared for potentially significant changes.

Mandatory Episode Payment Models for Cardiac Care, Hip/Femur Fractures

The final rule establishes new “episode payment models” (EPMs) that seek to “advance CMS’ goal of improving the efficiency and quality of care for Medicare beneficiaries and encourage hospitals, physicians, and post-acute care providers to work together to improve the coordination of care from the initial hospitalization through recovery.” CMS estimates that the EPMs will save $159 million during the duration of the program (July 1, 2017 through December 31, 2021).

CMS will “test” the EPMs beginning July 1, 2017 and ending December 31, 2021. CMS has selected 98 metropolitan statistical areas (MSAs) for the CABG and AMI EPMs, and will implement the SHFFT model in the same 67 MSAs where the CJR program is already underway. Acute care hospitals in these areas will participate in the models if they are paid under the Inpatient Prospective Payment System (IPPS) and are not concurrently participating in Models 2, 3, or 4 of the Innovation Center’s Bundled Payment for Care Improvement (BPCI) initiative for AMI, CABG, or SHFFT episodes. CMS estimates that approximately 1,120 hospitals will participate in the AMI and CABG models, and 860 hospitals will participate in the SHFFT model.

Under the final rule, an AMI, CABG, or SHFFT model episode will begin with an inpatient admission to an “anchor hospital” for the following specified Medicare Severity-Diagnosis Related Groups (MS-DRG):
Continue Reading CMS Issues Final Mandatory Episode Payment Models for Cardiac and Orthopedic Cases, Plus New Cardiac Rehabilitation Incentive Payment Model and CJR Program Refinements

Observers are digesting what the Trump Administration will mean for the health care and life sciences industry.  Forecasting is more challenging for this incoming Administration than most given the relatively sparse policy details released during the campaign and the lack of a government service record to examine for clues.  Today President-elect Trump’s transition team released a one-page statement on health care policy, but many questions remain.  Nevertheless, we offer below our initial observations and issues to watch in the months to come.

  • Potential Sea Change. Uncertainty is, as some like to say, the “obvious comment” that characterizes the whole prospective Trump Administration.  Other than an intended “repeal and replacement” of the Affordable Care Act (ACA), President-elect Trump has provided relatively few details on a proposed health care agenda.  Until these policies are fleshed-out, expect an environment where some business decisions and investments may be delayed, with a resulting impact on merger and acquisition activity. That said, other transactions may become more likely, as the threat of new restrictions under a Clinton administration are removed, along with the prospect of potential regulatory relief under a Republican-controlled federal government.
  • Affordable Care Act Repeal and Replacement.  Trump has repeatedly indicated his desire to repeal and replace the ACA, including a vow to summon Congress into a special session for this task.  If the law is repealed, however, what would take its place, and how would Congress address the roughly 20 million Americans currently covered in some way under the ACA (and the potential rise in uncompensated care costs that also would result)?  Despite the call for repeal, certain parts of the law are popular. For instance, President-elect Trump noted on the campaign trail that he was in support of the ACA’s prohibition against the use of pre-existing health conditions to deny coverage (or as a basis for premium-setting).  Other proposals offered by Trump as candidate include allowing for the sale of health insurance across state lines as long as plans comply with state requirements, various tax benefits, and more transparency in health care pricing.  In today’s policy statement, President-elect Trump added support for high-risk pools, which he characterizes as “a proven approach to ensuring access to health insurance coverage for individuals who have significant medical expenses and who have not maintained continuous coverage.”  Congressional Republicans have offered a number of alternatives that are likely to be a springboard for reform, most notably the “Better Way” plan proposed by House Speaker Paul Ryan.  In fact, according to the Speaker’s office, “in the 114th Congress alone, House Republicans have introduced more than 400 individual bills that would improve our nation’s health care system” – demonstrating that Congress is not reticent about legislating on health care issues.  The new Senate’s Republican majority will not have the 60 votes required to override a potential Democratic filibuster of legislation to fully repeal the law. While Congress could use budget reconciliation authority (which requires only 50 votes in the Senate) to make significant changes, the drawn-out pace of the budget process may not satisfy those who want quick action in this area.  Regardless of the legislative vehicle, after years of calling for Obamacare repeal while President Obama was in office, the Republican Congress will be under tremendous pressure to act quickly – even if it is a “down-payment” on reform — now that Republicans will control the presidency and the Congress.

Continue Reading Looking Ahead to a Trump Administration: Health Care and Life Sciences Industry Perspectives

By October 16, 2016, all health programs and activities receiving federal financial assistance from the Department of Health and Human Services (HHS), those administered by HHS, and Health Insurance Marketplaces (Covered Entities), must be in compliance with the final pieces of the final rule issued by the Office for Civil Rights (OCR) issued May 18…

On September 28, 2016, the Centers for Medicare & Medicaid Services (CMS) released a highly-anticipated final rule to strengthen requirements that long-term care (LTC) facilities must meet to participate in the Medicare and Medicaid programs.  The sweeping rule – more than 700 pages – is intended to improve the safety, quality, and effectiveness of care delivered to facility residents.  According to CMS, the final rule reflects nearly 10,000 public comments on the July 16, 2015 proposed rule.  CMS adopted numerous changes from the proposed rule, including various revisions to staffing and training requirements, care planning rules, infection prevention, and control program provisions.
Continue Reading CMS Finalizes Major Changes to Medicare/Medicaid Requirements for Long-Term Care Facilities

The Centers for Medicare & Medicaid Services (CMS) has announced proposals for three new “episode payment models” that, like the Comprehensive Care for Joint Replacement (CJR) model, would mandate provider participation in selected geographic areas. The episodes included in these payment models would address care for heart attacks, coronary artery bypass graft, and surgical hip/femur fracture treatment (excluding lower-extremity joint replacement). The performance period for these proposed episode payment models would begin July 1, 2017, giving hospitals and other providers a very short amount of time to prepare for these new payment methods. Comments are due October 3, 2016. Reed Smith is available to assist clients with preparation of comments or questions related to the proposed rule.
Continue Reading CMS Proposes Three New “Episode Payment Models” for Cardiac Care, Hip/Femur Fracture Cases, Plus Changes to CJR Model

On July 25, 2016, CMS announced ambitious, multi-pronged plans to expand mandatory Medicare coordinated care/bundled payment programs, promote the use of cardiac rehabilitation services, refine current Comprehensive Care for Joint Replacement Model (CJR) rules, and integrate bundled payment programs into the upcoming Medicare physician quality/payment framework. The proposed “Advancing Care Coordination through Episode Payment Model” rule is part of the Administration’s efforts to move the Medicare system away from fee-for-service (FFS) payments and towards alternative payment models that reward quality of care rather than volume of services.
Continue Reading CMS Unveils New Mandatory Medicare Bundled Payment Models for Cardiac & Hip Fracture Cases, Plus Proposed Refinements to CJR Program

On February 9, 2016, the Obama Administration released its proposed fiscal year (FY) 2017 budget, which contains significant Medicare and Medicaid reimbursement and program integrity legislative proposals – including $419 billion in Medicare savings over 10 years. These proposed policy changes would require action by Congress, and Republican Congressional leaders have already voiced general…