No Judicial Relief to the ALJ Waiting Game — Yet

In May 2014, the American Hospital Association filed suit against the United States Department of Health and Human Services seeking to compel Administrative Law Judges (ALJs) to comply with applicable statutory deadlines for deciding Medicare claim appeals.

By law, ALJs are required to render a decision within ninety days of a request for hearing to appeal the second-level reconsideration determination (in the case of claims appeals) and the first-level reconsideration determination (in the case of entitlement appeals).   ALJs are currently not in compliance with this requirement.  The backlog of appeals is significant.   The number of appeals made to the ALJ increased by over 500% from the 2011 fiscal year to the 2013 fiscal year, largely driven by the appeal of determinations by Recovery Audit Contractors.  The number of appeals outstanding in July 2014 was 800,000.  While both the Office of Medicare Hearings and Appeals and the Centers for Medicare and Medicaid Services have implemented a number of projects and pilot programs to try to reduce the number of appeals currently before the ALJ, many providers expect to wait years for an ALJ hearing.

In December 2014, the United States District Court for the District of Columbia determined that the delay did not warrant judicial intervention and granted a motion to dismiss the lawsuit.   In a letter published in response to the decision, the AHA announced its intent to appeal the decision.

Joy Hord

Joy Hord

Joy Hord focuses her practice on regulatory and compliance matters specifically related to the health care industry. Her clients include hospitals, physicians, pharmacies and other health care providers. Ms. Hord also has significant experience representing health care professionals and organizations with business law and transactional issues, such as mergers, acquisitions and joint ventures. Ms. Hord leads Parker Poe’s Health Care Practice, which includes attorneys from the firm’s North Carolina and South Carolina offices.

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Certificate of Need Opportunities in 2015

While many of us were shopping for last-minute gifts for our families, Governor McCrory was busy approving the 2015 State Medical Facilities Plan (“SMFP”). The SMFP is a document created annually by the State Health Coordinating Council that sets forth the methodology and allocations of available Certificates of Needs (“CON”) for the upcoming year.  Under North Carolina law, the SMFP must be approved by the Governor.  On December 22, 2015,  the Governor approved the need allocations that will be available for the award of CONs in 2015 by signing the SMFP.  Although the 2015 SMFP does not allocate a large number of potential CONs, there are some significant healthcare projects in the 2015 SMFP for which providers may wish to apply in the coming months.

In terms of technology and equipment, a CON for a fixed MRI scanner in Harnett County will be up for review in 2015.  Applications for the fixed MRI scanner are due on August 17, 2015.  Otherwise, 2015 looks to be a relatively quiet year for equipment applications.

Adult care home CONs provide one bright spot in the 2015 SMFP.  The 2015 SMFP allocated 340 beds to Brunswick County.  Applications for this allocation are due August 17, 2015.  Providers should be mindful that they can apply for all or part of the 340 available beds.  This allocation provides a good opportunity for adult care home providers to grow in a part of the state that is seeing an increased number of retirees.

On the home care and hospice front, the 2015 SMFP has no allocation for additional  home health offices.  However, the SMFP allocates one CON for a hospice home care Medicare-certified office in Cumberland County.  Applications for the Cumberland County hospice home care CON are due June 15, 2015.  Read More

Robb Leandro

Robb Leandro

Robb Leandro assists his client with a broad range of legal issues relating to health care, administrative law and public policy. His legal practice focuses on helping health care providers navigate the minefield of regulations that they face in their practices. Robb routinely assists his clients with issues including Medicaid and Medicare regulations; Medicaid and Medicare audits; Certificate of Need Applications and litigation; licensure, surveys, and certification issues; and HIPAA and privacy laws. Robb also provides counsel to health care providers with complex government contract procurement issues.

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BCBSNC Release of Data

After objecting to the release of hospital reimbursement rates mandated under North Carolina’s Health Care Cost Reduction and Transparency Act of 2013 (NCGS Section 131E-214.5), Blue Cross Blue Shield of North Carolina released its own collection of reimbursement data by posting the cost of more than 1,200 non-emergency encounters and procedures, including encounters and procedures commonly performed in physician offices.

The information is reported based on historical claims data, and in in the case of treatments/procedures involving more than a physician encounter, reflects all costs (such as facility fees, physician fees, drugs and supplies) in the aggregate. As pointed out by several commentators, the difference in reimbursement rates is striking, though in some cases the data does not differentiate the site of service. The types of treatments/procedures included in the release vary widely and include: office encounters (existing patient, new patient or office consultation) in a physician’s office, imaging services, and major medical events such as knee replacements and cardiac angioplasty. Health care providers were taken by surprise and expressed concerns regarding the potential for consumer confusion.

The January 7th release is available to the public at http://www.bcbsnc.com/content/providersearch/treatments/index.htm#/.

Joy Hord

Joy Hord

Joy Hord focuses her practice on regulatory and compliance matters specifically related to the health care industry. Her clients include hospitals, physicians, pharmacies and other health care providers. Ms. Hord also has significant experience representing health care professionals and organizations with business law and transactional issues, such as mergers, acquisitions and joint ventures. Ms. Hord leads Parker Poe’s Health Care Practice, which includes attorneys from the firm’s North Carolina and South Carolina offices.

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The $10,000 Access Clause

This paragraph (or some variation) finds its way into lots of contracts when one or both of the parties to the contract are participants in the health care industry:

If [Party name] provides services, the cost or value of which is $10,000 or more over a 12-month period, including contracts for both goods and services in which the service component is worth $10,000 or more over a 12-month period, then  [Party name] allows the Comptroller General of the United States, HHS, and their duly authorized representatives access to [Party name]’s contract, books, documents, and records until the expiration of four years after the services are furnished under the terms of this Agreement.  [Party name] will also allow access to the subcontractor’s contracts of a similar nature between subcontractors and related organizations of the subcontractor, and to their books, documents, and records.

Does it need to be in the contract?  The simple rule is that, unless the contract relates to provision of services to an entity that is enrolled as a provider with Medicare (Part A), it does not need to be included.   If, however, the contract does relate to services to a provider (such as a hospital, skilled nursing facility, or hospice), then the provision must be included–or Medicare can deny reimbursement for the service.

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Joy Hord

Joy Hord

Joy Hord focuses her practice on regulatory and compliance matters specifically related to the health care industry. Her clients include hospitals, physicians, pharmacies and other health care providers. Ms. Hord also has significant experience representing health care professionals and organizations with business law and transactional issues, such as mergers, acquisitions and joint ventures. Ms. Hord leads Parker Poe’s Health Care Practice, which includes attorneys from the firm’s North Carolina and South Carolina offices.

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A Christmas Present for Home Care Providers

The home care industry received a welcome holiday gift from the United States District Court in Washington, D.C. shortly before Christmas when Judge Richard J. Leon vacated a portion of a new regulation that would have required employers to pay minimum wage and overtime to workers providing companionship services.   (The regulation also impacts live-in providers of domestic services, but my focus here is on companionship services.)  The new regulation, first proposed in 2011, was set to go into effect on January 1, 2015, and had home care providers scrambling to figure out how they would pay significantly increased labor costs.

The Court’s December 22, 2014 ruling provided some welcome relief, but the final outcome remains uncertain. A new more restrictive definition of companionship services was set to go into effect on January 1, 2015.  Under the current rule, a worker providing companionship services can devote up to twenty percent of his/her time to general household work and engage in unlimited care tasks such as meal preparation, bed making, and clothes washing.   The new definition would limit all household and incidental care services to twenty percent of the worker’s time with the remaining hours dedicated to engaging the recipient in social, physical, and mental activities, such as conversation, reading, and games.

On December 31, 2014, however, Judge Leon issued a Temporary Restraining Order (TRO),  blocking DOL from enforcing the proposed definition of “companionship Services.”  In its motion for a temporary stay, the plaintiffs contended that home care recipients, providers, employees, and payers of services (like Medicaid) would suffer irreparable harm if the DOL rule went into effect.  The plaintiffs’ motion was supported by detailed affidavits of two disability rights advocacy groups, The Centers for Independent Living and ADAPT.  A hearing on plaintiffs’ preliminary injunction motion is scheduled for January 9, 2015.  Judge Leon has indicated that he will rule on the motion as early as at the hearing and no later than January 13, 2015.  If the requested injunction is granted, the exemption from overtime will continue until the trial court’s final ruling or an appellate court reverses the injunction.

To back up a bit, this case is about the Fair Labor Standards Act (“FLSA”), which requires employers to pay their employees at least minimum wage (and time and a half for any time worked over 40 hours in a single week), unless their employees are exempted from those requirements.   Employees who provide companionship services to individuals unable to care for themselves due to age or infirmity always have been exempted from the minimum wage and overtime rules.   The DOL wanted more workers to receive minimum wage and overtime, so it sought to narrow the exemption in two ways.

First, the DOL narrowed the definition of “companionship services.”     More on that aspect of the regulations, which was not vacated by Judge Leon, below.   Second, the DOL declared that third-party employers (like home care providers) would not be eligible to take advantage of the exemption at all.    As a practical matter, this meant that 90% of workers providing companionship services – the approximate percentage employed by home care entities – would have been entitled to receive minimum wage and overtime, regardless of how those services were defined.   The 10% of companionship services workers employed solely by individuals or families would have continued to be exempt from those requirements assuming that their schedules complied with the new, stricter definition of allowable services.

The National Association of Home Care, the Home Care Association of America, and the Independent Franchisers Association filed a lawsuit on behalf of their members to block the new regulations, arguing in part that the DOL did not have the authority to dictate which employers could take advantage of the exemption and which could not.   Judge Leon agreed, stating in his opinion that Congress intended the exemption to apply to all employees who provide companionship services and that the DOL is not entitled to draw policy lines “based on who cuts a check rather than what work is performed.”   Judge Leon went on to note that the purpose of the companionship exemption was to make it more financially feasible for families to care for infirm relatives at home and that whether home care entities were providing the workers is not of particular concern.    If the decision stands, it will mean that all workers providing companionship services will be subject to the same rules regardless of who employs them.

While the TRO is in effect, home care providers can continue to pay home care aides and personal care attendants without added overtime compensation—except if state law requires otherwise.  Providers should consult legal counsel to determine if they qualify for the exemption.  For additional information on how these new developments impact your business and assistance with next steps, contact one of the following members of our Parker Poe Team:  Sarah Ford (sarahford@parkerpoe.com, 919.835.4507) or Patti Bartis (pattibartis@parkerpoe.com, 919.890.4161).

Sarah Ford

Sarah Ford

Sarah Ford assists employers in the areas of compliance counseling, internal investigations and litigation. Ms. Ford has experience defending employers against the claims of current and former employees as well as charges brought by government agencies. These include the Equal Employment Opportunity Commission (EEOC), Citizenship and Immigration Services (USCIS), the Civil Rights Division of the U.S. Department of Education and the Federal and North Carolina Departments of Labor. Ms. Ford has experience handling sensitive employment issues such as claims of sexual harassment, racial bias and disability discrimination. Her clients include health care entities, schools and universities, financial institutions and retailers.

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