CMS Releases Proposed Rules on Medicaid and CHIP Managed Care

On Tuesday, May 26, 2015, the Centers for Medicare & Medicaid Services (“CMS”) released the pre-publication proposed rule that updates Medicaid and Children’s Health Insurance Program (CHIP) managed care regulations.  In the accompanying press release, Andy Slavitt, Acting Administrator of CMS, indicated that “[t]his proposal will better align regulations and best practices to other health insurance programs, including the private market and Medicare Advantage plans, to strengthen federal and state efforts at providing quality, coordinated care to millions of Americans with Medicaid or CHIP insurance coverage.”Read More

Varsha Gadani

Varsha Gadani

Varsha Gadani focuses her practice on the health care industry. Her clients include hospitals, physicians, behavioral health care providers, long-term care facilities, and other providers. Prior to joining Parker Poe, Ms. Gadani served as Assistant Counsel at the North Carolina Medical Society (NCMS). In this role, she performed a variety of legal functions for the NCMS. She monitored and analyzed emerging state and federal health law issues and advised physicians on health policy matters.

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Are You in Compliance? Effect of Exclusion from Participation in Medicare and Medicaid

The Office of Inspector General’s (“OIG”) recent release of OIG Advisory Opinion No. 15-02 is an important reminder that providers must be vigilant in complying with prohibitions against receiving payment for items or services provided by excluded individuals or entities.

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Wendy Wright

Wendy Wright

Wendy Wright focuses her practice on resolving legal, regulatory and business issues affecting professionals and organizations in the health care industry. Her clients include hospitals, physician groups and other health care providers.

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Supreme Court Holds that Medicaid Providers Do Not Have Right to Challenge Medicaid Reimbursement Rates under Supremacy Clause

Yesterday, the United States Supreme Court issued an opinion that denies providers the right to challenge low Medicaid reimbursement rates by suing state agencies in federal court.

In Armstrong v. Exceptional Child Center (No. 14-15), several residential care providers in Idaho sued on the grounds that its Medicaid program failed to pay providers increased Medicaid rates that had been approved by the federal government.  The providers were initially successful in convincing the district court and Court of Appeals for the Ninth Circuit that the State should be forced to pay the higher rates because federal Medicaid law requires states to pay rates that are sufficient to ensure access to care.  The providers contended that they had the right to sue Idaho in federal court under the United States Constitution’s Supremacy Clause—which provides that federal law trumps State law.

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Matt Wolfe

Matt Wolfe

Matt Wolfe concentrates his practice in the areas of administrative litigation, government relations, and other regulatory matters. Matt formulates comprehensive political and public relations strategies on a broad range of federal and state policies. He drafts and monitors legislation, intervenes directly with legislative, executive, and local officials, and appears before state and federal executive agencies. Within his administrative litigation practice, Matt advises and counsels health care providers subject to federal and state regulatory actions.

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Proposed Exclusive Arrangement Between Lab and Physician Practices May Violate Federal Law

A laboratory proposing to enter into an exclusive relationship with physician practices has been advised that the arrangement may violate federal law.  The laboratory sought advice from the Office of Inspector General (“OIG”) of the Department of Health and Human Services on an arrangement in which the laboratory would contract with physician practices to provide all laboratory services to the practices’ patients, without regard to the patients’ health insurance coverage.  The requesting laboratory would not bill those patients whose health plans — so-called “exclusive plans” — require them to use other laboratories (nor would the lab bill the practices themselves).  In its Advisory Opinion posted on March 25, 2015, the OIG concluded that the arrangement may violate the Anti-Kickback Statute and subject the laboratory to administrative sanctions, including exclusion from federal health care programs (e.g., Medicare and Medicaid).
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Amanda Hayes

Amanda Hayes

Amanda Hayes counsels clients in connection with mergers and acquisitions, divestitures and other business matters, with a particular focus on the health care industry. She regularly serves as lead counsel on acquisitions and divestitures, guiding the client through deal structuring, due diligence, drafting, negotiation and closing. In addition to health care, Ms. Hayes’ mergers and acquisition experience includes a variety of industries, such as manufacturing, retail, automotive, contract research, environmental remediation, engineering and construction supply.

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The Game Plan for Health Care Enforcement: Office of Inspector General Releases 2015 Work Plan

The Office of Inspector General (“OIG”) within the federal Department of Health and Human Services (“HHS”) is charged with protecting the integrity of HHS programs by combating fraud, abuse and waste.  On October 31, 2014, the OIG released its Work Plan for fiscal year 2015.  The Work Plan highlights the projects and issues that OIG intends to prioritize in 2015.

According to the Work Plan, the OIG will continue to emphasize oversight of Medicare and Medicaid payments, emerging payment models, IT systems security vulnerabilities (particularly in health insurance marketplaces), quality of care and access in Medicare and Medicaid, and public health and human services programs.  The Work Plan indicates that the OIG is also considering new work in the areas of food, drug and medical device supply chain integrity, electronic data security, health information technology and emergency preparedness and response.

Within these broad categories of focus, the Work Plan highlights many specific initiatives.  Many of these are ongoing projects, while others are new to this year’s Work Plan.

Some notable new initiatives include review of:

  • Hospital wage data used to calculate Medicare payments
  • Factors contributing to adverse and temporary harm events for Medicare beneficiaries receiving care in long-term care hospitals, determination of preventability of those events, and estimation of the costs to Medicare
  • Medicare payments to independent clinical laboratories to determine labs’ compliance with selected billing requirements, with the goal of identifying those that routinely submit improper claims and recovering overpayments
  • Medicaid beneficiary transfers from group homes and nursing facilities to hospital emergency rooms, with a particular focus on potential quality issues raised by high transfer rates
  • Managed care organization payments for services after beneficiaries’ deaths and for ineligible beneficiaries

The Work Plan also continues a number of initiatives from prior years.  These focus areas span the healthcare provider industry – including hospitals, nursing homes, physician practices and other providers, hospices, long-term care providers, home health, ambulatory surgery centers, end-stage renal disease facilities, ambulance providers and others.  The following are a few notable initiatives relevant to various industry segments:

Hospitals

  • Impact of the “two midnight” rule on inpatient and outpatient billing
  • Compliance with provider-based status criteria
  • Provider-based versus free-standing clinic payment rates
  • Reimbursement for swing-bed services at critical access hospitals, as compared to the same level of care provided at traditional skilled nursing facilities
  • Duplicate or excessive graduate medical education payments
  • Outpatient evaluation and management services billed at the new patient rate, rather than the established patient rate
  • Oversight of pharmaceutical compounding
  • Review of medical staff candidate credentialing

Nursing Homes

  • Billing for high level therapy when beneficiary characteristics remain largely unchanged
  • Questionable billing patterns for Part B services during stays not paid under Part A
  • Oversight of state agency verification of correction plans for deficiencies identified during recertification surveys
  • Hospitalization of residents for conditions manageable or preventable in the nursing home setting


Hospices

  • Review of extent of hospice services rendered to beneficiaries resident in assisted living facilities, including length of stay, levels of care and common terminal illnesses
  • Appropriateness of hospice general inpatient care

Home Health

  • Compliance with prospective payment system requirements, including documentation requirements
  • Employment of individuals with criminal convictions

Medical Equipment

  • Competitive bidding and post-award audit
  • Power Mobility Devices, including rental v. lump sum payments, medical necessity and face-to-face examination requirements
  • Lower limb prosthetic billing practices
  • Medical necessity of nebulizer machines and related drugs
  • Diabetic testing supplies, including medical necessity, frequency and other requirements

Ambulatory Surgery Centers (“ASC”)

  • Review of Medicare’s methodology for ASC payment rates
  • Review of disparity between payments to ASCs and hospital outpatient departments for similar surgical procedures

End-Stage Renal Disease Facilities

  • Medicare payments under prospective payment system

Ambulance Providers

  • Questionable billing, including medical necessity, level of transport and transports billed but not conducted
  • Analysis of Part B data to identify vulnerabilities, inefficiencies and fraud trends

Physicians and Other Providers

  • Place-of-service coding errors by physicians
  • Payments for personally performed anesthesia services (and incorrect service code modifiers)
  • Questionable billing for chiropractic services
  • Inappropriate billing by opthalmologists
  • Medical necessity of high-cost diagnostic radiology tests
  • Documentation and medical necessity of outpatient physical therapy services
  • High utilization of sleep testing procedures

The foregoing are just a few of the many initiatives outlined in the Work Plan.  Download the full Work Plan here: http://oig.hhs.gov/reports-and-publications/workplan/index.asp

Amanda Hayes

Amanda Hayes

Amanda Hayes counsels clients in connection with mergers and acquisitions, divestitures and other business matters, with a particular focus on the health care industry. She regularly serves as lead counsel on acquisitions and divestitures, guiding the client through deal structuring, due diligence, drafting, negotiation and closing. In addition to health care, Ms. Hayes’ mergers and acquisition experience includes a variety of industries, such as manufacturing, retail, automotive, contract research, environmental remediation, engineering and construction supply.

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Behavioral Managed Care Organizations Do Not Have Unbridled Discretion – Providers Have Rights

Here is a common scenario:  A behavioral healthcare provider has committed substantial resources into developing specialized behavioral healthcare services in the counties managed by a Managed Care Organization (“MCO”) under the Medicaid Waiver Program.  The provider has a contract with the MCO to provide these services and has a good quality track record.  Unexpectedly, the provider receives a letter from the MCO stating that the provider’s contract is being terminated – either because the provider’s contact is ending by its terms or because the MCO has decided to terminate the provider’s contract with 30 or 60 days’ notice.  Question:  Does the provider shut down its operations and transition its consumers, or does the provider have other options?

The simple answer: There are other options.  Although some MCOs in North Carolina believe that the concept of a “closed network” allows them to eliminate providers when they choose to do so, there are many cases in which providers have successfully challenged those MCOs’ decisions.

Under North Carolina’s Medicaid laws, providers that receive adverse determinations from the Department’s contractors, including MCOs, have the right to a contested case hearing under the Administrative Procedure Act.  N.C. Gen. Stat. § 108C-12.  The venue for these hearings is the Office of Administrative Hearings (“OAH”).  Administrative Law Judges (“ALJs”) with OAH have presided over dozens of cases by providers challenging adverse decisions of MCOs.  Adverse determinations made by MCOs can be reversed when those determinations violate law, are erroneous, arbitrary and capricious, or failed to use proper procedure.  N.C. Gen. Stat. § 150B-23(a). Some MCOs are completely ignoring the specific procedures that must be followed under State and federal law and regulations before deciding to eliminate a provider from their networks.

In numerous appeals to OAH that have been filed by providers, MCOs have argued unsuccessfully that the provisions in their contracts with providers or the law allowing them to operating “closed networks” permits them to terminate providers with no appeal rights.  In one of those cases in which attorneys at Parker Poe represented the provider, the ALJ reversed the decision terminating the provider and the MCO appealed to Superior Court on the issue of whether the provider had the right to challenge the MCO’s decision.  The Superior Court recognized the provider’s right to challenge the MCO’s decision.  Yelverton’s Enrichment Services, Inc. v. PBH, 13 CVS 11337 (March 11, 2014).

In the Yelverton’s case, the Honorable Donald W. Stephens, Senior Resident Superior Court Judge in Wake County, concluded that contract provisions cannot override or negate the protections provided under North Carolina law, specifically the appeal rights set forth in North Carolina’s Medicaid law.  In cases brought by providers since Judge Stephens’ decision, Administrative Law Judges have cited and relied upon that decision and have concluded that providers have the right to challenge an MCO’s decision to terminate or not renew a provider’s contract, notwithstanding the language in the provider’s contract.

Renee Montgomery

Renee Montgomery

Renee Montgomery focuses her practice in the health law area and has extensive experience in regulatory and administrative law. For more than 25 years, Ms. Montgomery has represented health care providers and other organizations in administrative proceedings and litigation matters. Ms. Montgomery frequently lectures on health law and administrative law issues.

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