Nursing homes face increased scrutiny by attorneys general during COVID-19

Pennsylvania Attorney General Josh Shapiro announced on May 12, 2020, that his office is investigating several nursing homes in the Commonwealth for neglect of patients and residents: “We will hold nursing facilities and caretakers criminally accountable if they fail to properly provide care to our loved ones … we will not tolerate those who mistreat our seniors and break the law.” Shapiro has also launched a public portal for citizens to email reports of neglect in nursing home communities. As is the case in many states, nursing home patients make up the majority of the deaths associated with COVID-19 in Pennsylvania. Just over 2,611 nursing home residents and staff have died from COVID-19 in Pennsylvania, comprising nearly 70 percent of the 3,800 total deaths reported in the Commonwealth as of the date of the press release.

Attorney General Shapiro is not alone in his effort to take a closer look at nursing home facilities and caregivers, even while lobbying groups for health care providers and nursing homes push for broad immunity from coronavirus-related lawsuits. In late April, New York Attorney General Letitia James released a statement saying that her office’s Medicaid Fraud Control Unit continues to investigate allegations of abuse and neglect in nursing homes. James’ office similarly launched a nursing home abuse hotline for residents, families, and members of the public to report alleged complaints at the facilities. Specifically, Attorney General James is investigating a Queens adult care facility that allegedly failed to protect residents from COVID-19 and misled families about its spread. Residents of that same facility are now suing in federal court over similar allegations. State attorneys general are increasingly active on this issue and will be pursuing nursing homes and long-term care facilities through various angles including Medicaid fraud, consumer protection, and false advertising.

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CMS issues nursing home reopening recommendations for state and local officials

With portions of the country beginning to reopen, on May 18, 2020, the Centers for Medicare & Medicaid Services (CMS) issued its recommendations to state and local officials for best practices regarding the reopening of nursing homes. Because nursing homes have been severely impacted by COVID-19, CMS issued a memorandum to state officials regarding the “level of mitigation needed to prevent the transmission of COVID-19 in nursing homes.”

The recommendations cover a phased approach for three main topics:

  • Criteria for relaxing nursing home restrictions and mitigating the risk of resurgence of COVID-19 cases;
  • Visitation and services; and
  • Restoration of survey activities.

Because COVID-19 is affecting communities differently, CMS recognizes that each state and locality will need to individually evaluate how to implement the recommendations.  CMS encourages state and local officials to work with their state survey agencies to determine how to implement the phased reopening of nursing homes – whether to require all facilities to go through each phase simultaneously; to group certain regions together as they go through the phases; or to allow individual facilities to move through the phases as they meet the criteria.

Some factors to inform the decisions about relaxing nursing home restrictions include, but are not limited to:

  • The case status in the community (whether cases are increasing or declining);
  • Whether the nursing home has access to adequate testing for residents and staff (and laboratory processing of tests);
  • Whether the nursing home has adequate protocols for screening all persons who enter the facility and for addressing residents or staff who refuse testing; and
  • Whether the nursing home has adequate control measures – masks, social distancing, and handwashing/sanitizing – along with access to Personal Protective Equipment for staff.

Similar to the federal government’s guidance to state leaders for reopening the economy, CMS’s guidelines for nursing home are not binding on the states.  They are, however, prepared with a focus toward keeping residents of nursing homes and their caregivers safe from any further outbreaks of the COVID-19 virus.

CMS releases additional COVID-19 blanket waivers for health care providers

On May 11, 2020, the Centers for Medicare & Medicaid Services (CMS) released a new suite of blanket waivers for hospitals and other health care providers in response to the COVID-19 public health emergency.[1] The blanket waivers have a retroactive effective date of March 1, which extends through the end of the public health emergency declaration and, in CMS’s view, “provide the flexibilities needed to take care of patients during the COVID-19 public health emergency.” The new blanket waivers relate to the following: Continue Reading

CARES Act Relief Funds: HHS updates General Distribution Fund FAQs and extends attestation deadline from 30 days to 45 days

On May 6, 2020, the U.S. Department of Health and Human Services (HHS) issued additional guidance, by way of updated FAQs, for providers receiving relief from the $50 billion general allocation of the Public Health and Social Services Emergency Fund (known as the Provider Relief Fund) that was appropriated in the Coronavirus Aid, Relief, and Economic Security (CARES) Act. And on May 7, HHS announced a 15-day extension for Provider Relief Fund recipients to attest to payments received and accept the Terms and Conditions governing the use of those funds. This extension comes just days prior to the initial deadline that many providers were facing for submitting attestations.

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U.S. Department of Education releases higher education grants under CARES Act, but also invokes False Claims Act

Academic medical centers and other health care entities operating within institutes of higher education need to be aware of the compliance risks surrounding the recent release of higher education grants under the CARES Act. On April 21, 2020, the U.S. Department of Education (Department of Education) announced the release of $6.2 billion in connection with the Higher Education Emergency Relief Fund, part of nearly $31 billion in grant funding to the education sector appropriated in the Coronavirus Aid, Relief, and Economic Security (CARES) Act. The newly released funds will go to institutions of higher education to cover so-called “recipient institutional costs” associated with the significant changes to the delivery of instruction due to the COVID-19 outbreak. In an April 21 press release, Education Secretary Betsy DeVos commented that “the additional funds made available today can be used to expand remote learning programs, build IT capacity, and train faculty and staff to operate in a remote learning environment so that at any moment institutions can pivot quickly.” This release of funds comes just weeks after the Department of Education’s April 9 announcement releasing over $6 billion in funds to colleges and universities to provide direct emergency cash grants to college students whose lives and educations have been disrupted by the coronavirus outbreak.

Similar to how health-care providers must agree to the Terms and Conditions provided by the U.S. Department of Health and Human Services as a condition of receiving CARES Act funds (covered in our prior Client Alert) institutions of higher education are required to sign a Certification and Agreement from the Department of Education to gain access to CARES Act funds. Among other things, the Certification and Agreement includes mandatory reporting requirements, stipulates that the costs to which the funds are directed must have been first incurred on or after March 13, 2020 (the date President Trump declared a national emergency), and contains an acknowledgment that a recipient’s “failure to comply with this Certification and Agreement, its terms and conditions, and/or all relevant provisions and requirements of the CARES Act or any other applicable law may result in Recipient’s liability under the False Claims Act, 31 U.S.C. § 3729” (FCA), among other laws and regulations.

While the CARES Act provides vital funding for institutions of higher education and their students who are forced to manage disruptions caused by the COVID-19 pandemic, it is crucial that these institutions fully understand and are prepared to meet the various conditions and requirements associated with receiving those funds. Access to CARES Act funds comes with significant compliance and reporting obligations and institutions will be expected to demonstrate that funds were used only for the intended purposes, and the failure to comply with these requirements may result in significant liability under the FCA as well as under other statutes and regulations. In fact, given the Department of Education’s deliberate reference to FCA liability in the Certification and Agreement, it is highly likely that federal enforcement agencies will be devoting substantial resources to auditing and monitoring when it comes to the disbursement and expenditure of CARES Act funds, and institutions of higher education should assume that their handling of these funds will receive ongoing scrutiny.

We have prepared a general overview of the CARES Act provisions, including the education provisions, in a prior Client Alert and we have specifically covered the fraud and abuse implications associated with the receipt and expenditure of CARES Act funds in prior Client Alerts located here and here. The Department of Education has also released a detailed set of FAQs to assist institutions of higher education in applying for and using these funds.

Please contact us, or the Reed Smith lawyer with whom you frequently work, to ensure compliance with applicable laws in applying for and utilizing funds under federal programs to avoid enforcement in the future.

HHS Delays Compliance for Sweeping Interoperability and Information Blocking Rules

Following more than a month of silence from the U.S. Department of Health and Human Services (HHS) on the publication of its widely anticipated companion interoperability and information blocking final rules to the Federal Register, HHS’s Office of the National Coordinator for Health Information Technology (ONC) and the Centers for Medicare & Medicaid Services (CMS), in conjunction with the Office of the Inspector General (OIG), issued a joint statement announcing a policy of enforcement discretion to allow compliance flexibilities regarding the implementation of the final rules in response to the COVID-19 public health emergency.  The agencies indicated that they would continue to monitor the developing public health emergency to determine if further action is necessary.

OIG Proposed Rule

OIG issued an unpublished proposed rule amending the civil monetary penalty (CMP) regulations to include new CMP authorities for violations of ONC’s information blocking final rule.  OIG is seeking comment on when information blocking enforcement should begin, but has proposed to delay enforcement until 60 days after publication of the OIG’s final rule.  At a minimum, enforcement would not begin sooner than the compliance date for the ONC final rule established in 45 CFR § 171.101(b), which is November 2, 2020.

CMS Final Rule

CMS announced that the agency is extending the implementation timeline by an additional six months for certain components of its interoperability rule, including, for example, the admission, discharge, and transfer notification Conditions of Participation (CoPs).  In the unpublished version of CMS’ final rule, the agency initially stated these CoPs would be effective six months after the publication of the final rule.  Now, they will be effective one year after the final rule is published in the Federal Register – a date that is still to be determined.  CMS will implement and enforce other policies contained in the final rule on schedule.

ONC Final Rule

Earlier this week, ONC reissued the unpublished version of its final rule, which is now set for publication on May 1, 2020, with an effective date of June 30, 2020.  While the publication date triggers multiple compliance dates for various components of the interoperability and information blocking provisions (set at 60 days, 6 months, and 24 months following publication), the agency is changing that timeline for certain requirements in light of the COVID-19 crisis.  ONC has published new enforcement discretion dates and timeframes on its website.  We have summarized some key changes to the ONC final rule compliance timeline below.

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Sweeping “CARES Act” Legislation Will Have Wide Impact on Health Care, Life Sciences Companies

The recently passed “Coronavirus Aid, Relief, and Economic Security Act” (CARES Act) is sweeping legislation that will have widespread impact on companies in the health care and life sciences space. In addition to expanding coverage of COVID-19 testing and preventive services, the Act includes provisions to address health care workforce needs, eases restrictions surrounding telehealth services during the crisis period, updates the FDA’s over-the-counter drug review process, and authorizes $100 billion for eligible health care providers, among many other things.

Our health care team has drafted a white paper that provides in-depth analysis of major policy and funding provisions in the Act that affect health care and life sciences companies. The white paper, available here, was written by Scot T. HasselmanRobert J. HillCarol Colborn LoepereKevin M. MadaganPaul W. PittsJames F. SegrovesNicole J. Aiken-ShabanJulia Krebs-MarkrichDebra A. McCurdyJohn D. KendziorJamie KnauerArielle R. LusardiRahul NarulaSonia T. NguyenSung W. Park, and Ryan M. Pate.

In addition, Reed Smith has published a CARES Act Overview, which covers all portions of the Act, and is compiling additional thought leadership at our CARES Act Resource Center.

HHS expands access to telehealth services in response to COVID-19

As discussed in our client alert, recent legal developments have greatly expanded funding for and access to telehealth services during the COVID-19 crisis.

Among the changes instituted by HHS are expanded Medicare coverage and payment for services, reduced or waived cost-sharing obligations for physicians, and loosening of the HIPAA enforcement policies for covered entities (which can now use any non-public facing platform, e.g. Skype, to deliver telehealth services).

In addition, CMS released new guidance to help state Medicaid agencies better understand how to cover and pay for telehealth services, as well as waived a number of billing rules to allow providers to be reimbursed for services provided. This was accompanied by commercial payors opting to lessen or waive out of pocket costs for COVID-19-related telehealth services.

While these are significant changes impacting the delivery of telehealth services, it’s likely that there will be additional legislative and regulatory changes as the COVID-19 pandemic evolves.

CMS Offers Guidance to Health Care Providers on Limiting Elective Surgeries, Other Nonessential Procedures During Coronavirus Outbreak

In a recent guidance, the Centers for Medicare & Medicaid Services (CMS) encouraged health care providers (HCPs) to limit elective surgeries and nonessential procedures during the 2019 novel coronavirus (COVID-19) outbreak.

CMS offered a number of recommendations to help HCPs decide how to best serve patients requiring emergent or urgent attention. In addition to clinical evaluation, CMS asked HCPs to consider factors like current and projected COVID-19 cases in their area; current and projected supply of personal protective equipment; availability of staff, ventilators, and hospital beds; the patient’s health and age, and risk of contracting COVID-19 during recovery; and the urgency of the procedure.

For further analysis on this guidance, please see our client alert, “CMS urges providers to conserve resources by limiting elective surgeries, and nonessential medical, surgical, and dental procedures.

MedPAC recommends Medicare payment updates for 2021 – but all rate bets are off in light of COVID-19

The Medicare Payment Advisory Commission (MedPAC) released its 2021 Medicare provider rate update recommendations on March 13, 2020 – the same day President Trump declared a national emergency due to COVID-19.  MedPAC’s recommendations were based on an assessment of various Medicare “payment adequacy indicators” that are unlikely to reflect the state of the health care industry in 2021, given the tremendous strain COVID-19 is placing on hospitals, nursing homes, clinicians, and other provider types nationwide.  Furthermore, as part of the pending stimulus legislation packages, Congress is likely to legislate 2021 Medicare payment updates and/or other funding policies that recognize the unique costs the health system has incurred during the COVID-19 crisis.  Nevertheless, we highlight below key MedPAC recommendations that may help guide the Congressional Medicare policy debate once the public health situation normalizes.

  • Inpatient and outpatient hospital services: MedPAC recommends that Congress update acute care hospital base rates by 2%.  Additional payment would be available through a proposed hospital value incentive program that would replace current hospital quality programs (which is expected to raise aggregate Medicare payments by 3.3% compared to the 2.8% update projected under current law).
  • Physicians: MedPAC recommends no change to Medicare physician fee schedule rates in 2021.  Current law provides no conversion factor update for 2021, although performance-based adjustments may be made under the Quality Payment Program.  Note that the Centers for Medicare & Medicaid Services (CMS) announced on March 22, 2020 that it is granting various exceptions and extensions related to Medicare quality reporting requirements as part of its COVID-19 response.
  • Post-acute care providers: MedPAC reiterated its prior recommendation that Congress implement a unified PPS for post-acute care (PAC) providers, including skilled nursing facilities (SNFs), home health agencies (HHAs), inpatient rehabilitation facilities (IRFs), and long-term care hospitals (LTCHs).  In the meantime, MedPAC recommends the following payment updates for 2021: 
    • A 7% reduction in base payment rates for HHAs.
    • A 5% reduction in base payment rates for IRFs.
    • Elimination of the SNF rate update.
    • A 2% increase in base payment rates for LTCHs.
  • Hospices: MedPAC recommends no update to hospice rates in 2021.  Furthermore, MedPAC calls for wage adjusting the hospice aggregate cap and reducing it by 20%.  The report includes a discussion of preliminary results of MedPAC’s Congressionally mandated review of the expansion of the hospital PAC transfer policy to hospice.
  • Ambulatory surgical centers (ASCs): MedPAC recommends no ASC update for 2021.  MedPAC also recommends that CMS require ASCs to submit cost data.
  • Outpatient dialysis services. MedPAC recommends that Congress update the Medicare end-stage renal disease prospective payment system base rate by the amount determined under current law (projected to be 2.0%).

MedPAC also assesses the status of Medicare Advantage and the Medicare prescription drug benefit.  Finally, MedPAC includes Congressionally mandated reports on health care provider consolidation and the potential impact of the 340B Drug Pricing Program on drug spending.

HHS waives requirements for health care providers under section 1135 in response to COVID-19

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 client alert on this topic discusses:

  • the 11 categories of blanket waivers issued by CMS – which significantly impact skilled nursing facilities, acute care hospitals, DMEPOS suppliers, long-term care acute care hospitals, and home health agencies;
  • the process for seeking case-by-case section 1135 waivers;
  • HIPAA waivers; and
  • changes to reimbursement requirements for telehealth services.

CMS Rolls Out New Medicare Part D “Senior Savings Model” Designed to Drive Down Insulin Copayments

The Centers for Medicare and Medicaid Services (CMS) has announced a new voluntary Part D Senior Savings Model (the Model) intended to reduce Medicare beneficiary cost sharing for insulin.  Under the Model, participating insulin manufacturers and participating sponsors of Medicare Part D prescription drug plans (PDPs) and Medicare Advantage Part D plans (MA-PDs) will make available 30-day supplies of insulin to beneficiaries of certain “enhanced benefit” PDPs and MA-PDs, with cost-sharing capped at no more than $35 during all phases of the Part D benefit, other than the catastrophic benefit.

The Model appears to reflect a balancing of plan and manufacturer concerns.  If there is significant participation by Part D sponsors, the Model could provide meaningful relief to beneficiaries facing high out-of-pocket costs for insulin under Part D.  As of the writing of this post, three of the largest insulin manufacturers – Eli Lilly, Novo Nordisk and Sanofi Aventis –have announced their intention to participate.

The Model, which was announced March 11, 2019, will be a five-year program, beginning in plan year 2021.  CMS is offering the Model through the Center for Medicare and Medicaid Innovation (CMMI) pursuant to authority under section 1115A of the Social Security Act (added by the Affordable Care Act).  The following is a summary of the new Model, along with our initial observations regarding some of its implications.

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HHS Finalizes Healthcare Interoperability and Information Blocking Rules

The U.S. Department of Health and Human Services (HHS) issued eagerly anticipated and hotly debated companion interoperability and information blocking final rules that are expected to transform the way in which certain health care providers, health information technology (IT) developers, and health plans share patient information.  The two rules, issued by the HHS Office of the National Coordinator for Health Information Technology (ONC) and Centers for Medicare & Medicaid Services (CMS), implement interoperability and patient access provisions of the 21st Century Cures Act (Cures Act) and support the MyHealthEData initiative, designed to allow patients to access their health claims information electronically through the application of their choosing.

Major provisions of each final rule are highlighted below. Note that the final rules have not yet been formally submitted to the Federal Register, so some of the precise effective dates are still to be determined.

ONC Final Rule

For Providers, Health Information Networks or Exchanges, and Health IT Developers

  • Prohibition on Information Blocking. Effective six months following the publication of the final rule, health care providers, health IT developers of certified health IT, and health information exchanges and networks, are banned from “information blocking.”  Information blocking is defined in the rule as engaging in a practice that is likely to interfere with, prevent, or materially discourage access, exchange or use of electronic health information (EHI) and, if (a) conducted by a health IT developer or health information network or exchange, such developer, network or exchange knows, or should know or (b) if conducted by a health care provider, such provider knows – the practice is likely to interfere with, prevent, or materially discourage access, exchange, or use of EHI.
    • EHI means electronic protected health information (EPHI) as the term is defined for HIPAA, to the extent that it would be included in a designated record set, with certain exceptions, regardless of whether the group of records are used or maintained by or for a HIPAA covered entity. This EHI definition will be effective 24 months after the publication of the final rule.  In the interim, for purposes of information blocking, EHI is limited to the EHI identified by the data elements represented in the U.S. Core Data for Interoperability (USCDI) standard.
    • Health care providers include health care facilities, entities, practitioners, and clinicians listed in the Public Health Service Act. ONC did not expand the definition of health care provider in the Final Rule to cover all individuals and entities covered by HIPAA.  However, the final rule leaves this door open by giving the Secretary of HHS discretion to expand the definition of health care provider to any other category the Secretary deems appropriate by future rulemaking.
  • Examples of Information Blocking. According to ONC, information blocking practices could involve, among other things: formal restrictions in contract or licensing terms; limiting or restricting the interoperability of health IT through organizational policies or procedures or other EHI or health IT documentation; information restrictions, such as if an entity simply refuses to exchange or facilitate access to EHI as a general practice or in isolated cases; or use of certain technological measures that limit EHI exchange.
  • Information Blocking Exceptions. The final rule identifies eight activities as exceptions to information blocking.  According to ONC, the exceptions apply to certain activities that are likely to interfere with, prevent, or materially discourage the access, exchange, or use of EHI, but that would be reasonable and necessary if certain conditions are met.  Each exception falls into one of two categories: (i) exceptions that involve not fulfilling requests to access, exchange, or use EHI; and (ii) exceptions that involve procedures for fulfilling requests to access, exchange, or use EHI.
  • Penalties for Information Blocking. Consistent with the Cures Act, ONC’s information blocking prohibition seeks to deter information blocking through penalties that differ based on the actor.  Health IT developers and health information networks and exchanges are subject to civil money penalties capped at $1 million per violation, while health care providers who violate the information blocking provisions may face unspecified disincentives for violations, to be determined by the appropriate HHS department or agency in subsequent rulemaking.

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CMS Plans to Add Outpatient Hip/Knee Replacements to CJR Model, Seeks Comments on ASC Joint Procedure Bundled Payment Model

The Centers for Medicare & Medicaid Services (CMS) has issued a proposed rule that would extend and modify the Comprehensive Care for Joint Replacement (CJR) Model, under which CMS makes 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).  Notably, CMS has proposed incorporating outpatient hip and knee replacements into the episode of care definition, now that these procedures are no longer on the CMS “inpatient only” list.  CMS also requests comments on a potential future bundled payment model focusing on LEJR procedures performed in ambulatory surgical centers (ASCs).  CMS will accept comments on until April 24, 2020.

Highlights of the proposed rule include the following:

  • Extension of CJR Model. The CJR Model began April 1, 2016 and currently is scheduled to run through December 31, 2020.  CMS has proposed extending the model for an additional three years, through December 31, 2023 for participant hospitals physically located in the 34 mandatory metropolitan statistical areas (MSAs), excluding rural or low-volume hospitals in those MSAs.  CMS anticipates that approximately 350 participants would participate in the CJR model during the proposed three-year extension, compared with about 470 providers as of October 2019.
  • Outpatient Joint Replacements. The proposed rule would expand the definition of a CJR “episode” to include outpatient total knee arthroplasty (TKA) and total hip arthroplasty (THA), in light of previously-adopted CMS policies that allow total knee and total hip replacements to be treated in the outpatient setting.  This change would apply to episodes initiated by an “anchor procedure” furnished on or after October 4, 2020 (because the 90-day episode would end on or after January 1, 2021, the first day of proposed new plan year 6).  CMS proposes to group all outpatient TKA procedures into MS-DRG 470 (LEJR without complications and/or comorbidities) without hip fracture historical episodes for purposes of calculating a single, site-neutral target price.  Outpatient THA cases would be grouped into either MS-DRG 470 with hip fracture or MS-DRG 470 without hip fracture depending on hip fracture status.
  • Target Price Calculation. CMS has proposed changing the basis for the target price from three years of claims data to the most recent one year of claims data.  The proposed rule also would discontinue the use of the regional and hospital anchor weighting steps in the target price calculation methodology, and it would end the annual updates to the target prices.  Furthermore, CMS proposes to incorporate additional risk adjustment to the target pricing and modify the high episode spending cap calculation methodology.

The proposed rule also would, among other things: Continue Reading

CDC Offers Guidance to Health Providers on ICD-10 Coding for Coronavirus/COVID-19 Encounters

The Centers for Disease Control and Prevention (CDC) recently released official diagnosis coding guidance for health care encounters and deaths related to the 2019 novel coronavirus (COVID-19), potentially in anticipation of more frequent cases in the United States. The guidance identifies specific ICD-10-CM codes to be used to code encounters.

CDC advises that patients presenting with certain signs and symptoms, but where a definitive diagnosis has not been made, should be coded as follows:

R05 – Cough

R06.02 – Shortness of breath

R50.9 – Fever, unspecified

For pneumonia cases confirmed as due to COVID-19, providers should use J12.89, Other viral pneumonia, and B97.29, Other coronavirus as the cause of diseases classified elsewhere.

For acute bronchitis confirmed as due to COVID-19, CDC advises providers to use J20.8, Acute bronchitis due to other specified organisms, or J40, Bronchitis not otherwise specified. In both instances, the provider should also use B97.29.

For lower respiratory infection or acute respiratory infections not otherwise specified that are documented as being associated with COVID-19, CDC recommends using code J22, Unspecified acute lower respiratory infection. If the COVID-19 is documented as being associated with a respiratory infection not otherwise specified, CDC advises that it would be appropriate to use code J98.8, Other specified respiratory disorders. Acute respiratory distress syndrome should be assigned code J80, Acute respiratory distress syndrome. These codes should also be used with B97.29.

Where a patient is evaluated following concern of possible exposure to COVID-19, but COVID-19 is ruled out, CDC advises using Z03.818, Encounter for observation for suspected exposure to other biological agents ruled out. If the patient has actual exposure to COVID-19, the provider should assign Z20.828, Contact with and (suspected) exposure to other viral and communicable diseases. B97.29 should not be used where the provider documents “suspected,” “possible” or “probable” COVID-19.

Additional information can be found here.

Potential Tensions Lie Ahead Between Federal and State Authorities Over the Application of CDC Quarantine Powers

According to the U.S. Centers for Disease Control and Prevention (CDC), although there have been imported cases of Covid-19 detected in the United States, “at this time, the virus is NOT currently spreading in the community in the United States.”[1]  However, on Tuesday, February 25, 2020, Nancy Messonier, the CDC’s Director of National Center for Immunization and Respiratory Diseases, urged American businesses and families to start preparing for the possibility of a large outbreak, noting that the virus spread quickly once it appeared in other countries.[2]  Although the World Health Organization (WHO) still has not called Covid-19 a pandemic, Mike Ryan, head of WHO’s health emergencies program, suggests that countries need to be doing everything they can to contain the virus, at least in order to buy some time.[3]

To that end, the CDC has been tapping some of its quarantine powers.  CDC has authority to oversee quarantine and isolation of persons who carry communicable diseases, derived from the Commerce Clause of the Constitution, and codified in section 361 of the Public Health Service Act (42 U.S.C. § 264).[4]  The CDC’s authority, however, is limited to persons arriving in the United States or traveling between states.  Each state has its own laws regarding quarantine powers, and the CDC also relies on state authorities to implement and enforce quarantine orders.  There is some risk that state health authorities could act in a manner that is inconsistent with the intentions of the CDC (to be more or less restrictive).  The CDC has not issued a large-scale isolation and quarantine since the Spanish influenza pandemic of 1918-1919.[5]

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Medicare/Medicaid Policy Provisions in Trump Administration’s FY 2021 Budget Proposal

The Trump Administration’s proposed fiscal year (FY) 2021 budget calls for significant cuts to federal health spending, including a 10% decrease in Department of Health and Human Services (HHS) discretionary spending in FY 2021 and a $1.6 trillion net reduction in health entitlements over the next decade.  House Budget Committee leaders have blasted the HHS provisions, and the package as a whole is unlikely to be advanced by Congress.  Nevertheless, the document reflects the Administration’s current Medicare and Medicaid priorities, some of which are administrative and could be advanced without Congress.  Furthermore, Medicare provider/supplier cost-saving recommendations could be incorporated into future budget agreements or potentially other entitlement reform efforts down the road.

Highlights of the Trump Administration’s major Medicare and Medicaid budget proposals are presented below.

Medicare Payment Policies

The Administration estimates that its proposed Medicare legislative package would result in $756 billion in Medicare Trust Fund savings over 10 years (net impact after offsets of $450 billion/10 years).  Many of the legislative recommendations have been made in previous budget proposals.  Budget provisions that would result in significant net Medicare savings include the following (net savings figures are over the 10-year period of FYs 2021-2030):  

  • Elimination of the Medicare Advantage (MA) benchmark cap and quality “double bonus” for plans in eligible counties [$1.2 billion].
  • Reform of hospital uncompensated care payments, including basing payments on a hospital’s share of charity care and non-Medicare bad debt [$87.9 billion].
  • Establishment of site neutral payments between on-campus hospital outpatient departments and physician offices for certain services (e.g., clinic visits) [$2 billion] and payment for all off-campus hospital outpatient departments under the physician fee schedule [$47.2 billion].
  • Adoption of a unified post-acute care system for skilled nursing facilities (SNFs), home health agencies, inpatient rehabilitation facilities, and long-term care hospitals (LTCHs) beginning in FY 2026, with reduced annual Medicare payment updates from FYs 2021-2025 [$101.5 billion].
  • Elimination of Medicare reimbursement for disproportionate share hospital (DSH) bad debt, with an exemption for rural hospitals [$33.6 billion].
  • Reduced Medicare payment for hospice services under the SNF routine home care level of care. [$4.5 billion].
  • An increase in the intensive care unit minimum stay threshold from three days to eight days to qualify for LTCH prospective payment system payment [$9.4 billion].
  • Expansion of the durable medical equipment (DME), prosthetics, orthotics, and supplies competitive bidding program to all geographic areas and to inhalation drugs, payment of contract suppliers based on their own bids, and elimination of the surety bid bond requirement [$7.73 billion Medicare savings, $435 million in Medicaid savings]. Separate from the bidding program, the Centers for Medicare & Medicaid Services (CMS) would be authorized to update DME rates based on retail prices through rulemaking, without using the inherent reasonableness process [$1.6 billion Medicare savings, $85 million in Medicaid savings].

Other legislative proposals are intended to promote value-based care; in some cases, these proposals also would result in cost savings.  For instance, the budget proposes the following:

  • Basing Medicare beneficiary accountable care organization assignment on a broader set of non-physician primary care providers [$80 million].
  • Consolidation of the four Medicare inpatient hospital quality programs into a single hospital quality payment program [budget neutral].
  • Implementation of hospital outpatient department and ambulatory surgical center (ASC) value-based programs, with 2% of payments linked to quality/outcomes performance. Payment would be risk adjusted based on patient diagnosis severity to promote site neutrality [budget neutral].
  • Creation of a risk-adjusted monthly Medicare Priority Care payment for providers eligible to bill for evaluation and management (E/M) services who provide ongoing primary care to beneficiaries. The payment would be funded by a 5% annual cut in valuations of non-E/M services [budget neutral].

Medicare Transparency, Quality, Coverage, and Benefits

The budget includes a series of proposals intended to increase access to price and quality information and/or clarify Medicare coverage and payment processes.  For instance, the budget would: Continue Reading

CMS Releases Proposed Medicare Advantage and Part D Rules for Contract Year 2021 and 2022

CMS has put on display a proposed rule that would update Medicare Advantage (MA) and Medicare Part D prescription drug benefit policies for contract year 2021 and 2022.  CMS projects that its proposed policies would decrease federal spending by $4.4 billion over 10 years, primarily as a result of a proposal to remove outliers prior to calculating Star Rating system cut points.  Other major provisions of the proposed rule include the following:

  • CMS proposes to implement several legislative provisions intended to address the opioid epidemic, including expanded beneficiary education requirements and mandatory drug management programs for beneficiaries at-risk for misuse or abuse of frequently abused drugs.
  • The proposed rule would codify a statutory provision allowing Medicare-eligible individuals with end-stage renal disease (ESRD) to enroll in MA plans.  Effective January 1, 2021, organ acquisitions for kidney transplants for MA beneficiaries will be covered under the Medicare fee-for-service program, and such costs will be excluded from MA benchmarks.
  • CMS proposes to strengthen MA plan network adequacy rules, including new policies intended to improve access to providers in rural areas and encourage the use of telehealth providers in contracted networks.
  • Part D plan sponsors would be allowed to establish two specialty tiers, instead of the single specialty tier currently permitted.  In such cases, one tier must be a “preferred” tier that offers lower cost sharing. CMS believes the additional tier would allow Part D plan sponsors to negotiate additional rebates from manufacturers, but it is also soliciting comment on whether placement on the preferred specialty tier should be limited to generics and biosimilars whose cost exceeds the specialty threshold established by CMS.
  • Part D plan sponsors would be required to make available to beneficiaries, through a web portal or mobile app, a real-time benefit tool (RTBT) that provides accurate, timely, and clinically appropriate patient-specific real-time formulary and benefit information (including cost-sharing amount, formulary alternatives and utilization management requirements). While this would generally parallel the RTBT that Part D plan sponsors are required to make available to prescribers beginning January 1, 2021, CMS is considering numerous issues, including P&T committee determination of which formulary alternatives can be omitted and prohibition on outputs “that are intended to promote choices based upon the commercial interests of the part D sponsor rather than the beneficiary’s best interests, or the promotion of medications or refills based on the rebates that would be received.”  CMS is also considering allowing Part D plan sponsors to make available rewards and incentives for beneficiaries using the RTBT, including gift cards.  CMS proposes an effective date of January 1, 2022, but solicits comments on whether January 1, 2021 is a feasible effective date.
  • CMS proposes to make a series of changes to its Medical Loss Ratio calculations.

Comments on the proposed rule will be accepted until April 6, 2020.

CMS Proposes Updates to ACA Exchange Plan Policies for 2021

The Centers for Medicare & Medicaid Services (CMS) has proposed updates to its standards for health plan issuers offering plans through federally-facilitated and state-based Exchanges for 2021.  The proposed rule would, among other things:  revise the risk adjustment methodology; update issuer user fees and cost-sharing limits; amend medical loss ratio regulations (including with regard to treatment of prescription drug rebates received and retained by an entity that provides pharmacy benefit management services to the issuer); modify special enrollment period rules; encourage value-based insurance plan designs; and make changes to the quality rating information display requirements for Exchanges.

With regard to drug manufacturer coupons, CMS proposes to give plans and issuers “flexibility to determine whether to include or exclude coupon amounts from the annual limitation on cost sharing, regardless of whether a generic equivalent is available.”  Under the proposed rule, to the extent consistent with applicable state law, amounts paid toward reducing enrollee cost sharing using any form of direct support offered by drug manufacturers to enrollees for specific prescription drugs are permitted, but not required, to be counted toward the annual cost sharing limitation.

Comments on the proposed rule will be accepted until March 2, 2020.  CMS is accepting comments on its related Draft 2021 Letter to Issuers in the Federally-facilitated Exchanges until February 24, 2019.  Finally, CMS issued a bulletin extending for an additional year its current non-enforcement policy that permits states to allow issuers to offer certain non-grandfathered health insurance coverage in the individual and small group market that does not meet all Affordable Care Act coverage standards.

HHS Adopts New Retail Pharmacy HIPAA Transaction Requirements for Schedule II Drug Prescriptions

The Department of Health and Human Services (HHS) has modified HIPAA retail pharmacy transaction requirements to differentiate between partial fill and full refills of opioids and other Schedule II drug prescriptions.  Specifically, HHS has finalized the requirements for use of the National Council for Prescription Drug Programs (NCPDP) Telecommunication Standard Implementation Guide, Version D, Release 0, August 2007, by requiring use of the Quantity Prescribed (460-ET) field to identify partial fills for Schedule II drugs.  The Administration believes that the more robust prescribing information will help prevent impermissible refills of Schedule II drugs and enhance researchers’ understanding of prescribing trends.  The rule is effective on March 24, 2020, and compliance is required by September 21, 2020.