Category: Healthcare

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Massachusetts Proposed Legislation to Curb Health Care Costs by Regulating Hospital Reimbursement Rates

Massachusetts State Sign

In a previous blog post, we began to dissect the new Massachusetts State Senate bill, “An Act Furthering Health Empowerment and Affordability by Leveraging Transformative Health Care,” and focused on a provision that would ban hospitals from billing payors for many common outpatient hospital services.  In this second of a multipart series, we review how this bill proposes to improve the affordability of health care in the Commonwealth.

During the debate before the Massachusetts Senate Working Group on Health Care Costs and Containment Reform, the Senate Working Group stated that this proposal will curb costs associated with health care and predicted a savings of $425 million by 2020 to achieve goals including slowing the rate of premium increases.

Setting a Target Hospital Rate Distribution to Help Moderate Costs

One of the primary ways the bill proposes to moderate costs is by establishing a hospital alignment and review council which will set a “target hospital rate distribution,” the minimum floor payment that an insurance carrier must reimburse a hospital for services. The Senate Working Group hopes that setting a floor payment for carriers will address the price variation across hospitals in the Commonwealth and subsequently stabilize the market. During the hearing, Senators requested industry feedback on setting the rate at 0.9%. Some argue that setting a floor will help hospitals that currently receive lower reimbursement rates to “thrive and survive.” Others assert that setting a floor is not sufficient, rather, a cap on reimbursement rates should be implemented as well to compress rates and control spending.

To make sure that the target hospital rate distributions are met, Section 111 tasks insurance carriers with submitting annual certifications to the review council. If a certification uncovers that any hospital received an increase in reimbursement, all other hospitals contracting with that carrier must have received a similar increase.

Other Items to Achieve a Slower Growth Rate

The proposed bill provides the review council with other tools to achieve a slower growth rate. One such measure is that the council will set a “target growth in hospital spending.” In the event that hospital spending is greater than the target rate, the council may penalize the top three hospitals that contributed to above target spending. Each of these three hospitals will be required to pay its proportional share of the difference between the actual growth in hospital spending and the council’s target growth in hospital spending. Some view this penalty as needed government intervention to correct price variation in the market. In contrast, others argue this is penalty unfairly attacks three hospitals and will create perverse incentives for hospital spending just below the top three.

Setting a target hospital rate distribution will be one mechanism for addressing price variation, but the Working Group is still collecting industry feedback to determine the ultimate amount of governmental control needed in the Commonwealth’s health care market.

This bill is currently open for comments.  Any interested parties should strongly consider commenting on the State Senate bill.

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CMS Finalizes Reimbursement Cuts for 340B Hospitals

In a striking blow to 340B hospitals, the Department of Health and Human Services, Centers for Medicare and Medicaid Services (CMS) released a final Medicare Outpatient Prospective Payment System (OPPS) rule adopting its earlier proposal to significantly reduce Medicare reimbursement for separately payable outpatient drugs purchased by hospitals under the 340B program.  The final rule confirms that CMS will drop the reimbursement rate from the average sales price (ASP) plus 6 percent to ASP minus 22.5 percent.  The payment changes are scheduled to take effect on January 1, 2018.

Citing the large growth in provider participation in the 340B Program and the increasing prices for drugs administered under Medicare Part B to hospital outpatients, CMS’ stated goal is to align Medicare payment with the amounts hospitals are actually spending to acquire the drugs.  CMS relied on a May 2015 Medicare Payment Advisory Commission (MedPAC) Report to Congress to determine the new formula.  While MedPAC estimated that the ASP minus 22.5 percent figure that CMS ultimately adopted was the “lower bound of the average discount” on drugs paid under the Medicare OPPS, MedPAC’s March 2016 Report to Congress recommended a reduction in payment to ASP minus 10%, which would have allowed 340B hospitals to realize, on average, a financial benefit for participating in the 340B program.

The Financial Impact of the Changes to 340B Hospitals

The OPPS  changes will have a significant impact on 340B participating hospitals.  CMS estimated that the change will result in a $1.6 billion reduction in OPPS payments to 340B hospitals for separately payable drugs—an additional estimated reduction of $700 million over the $900 million estimate from the proposed rule.  While CMS had requested comments in the proposed rule on how to redistribute the savings to target hospitals that treat low-income patients, the final rule instead redistributes the amounts saved by the 340B payment reductions by increasing OPPS payments for non-drug services

CMS is exempting rural sole community hospitals, children’s hospitals, and PPS-exempt cancer hospitals from the new drug payment reductions for calendar year 2018; they will continue to be paid at ASP + 6%. The exempted hospitals will need to report 340B utilization to Medicare for information and tracking purposes.

Litigation is Expected

The changes to Medicare payment are likely to be challenged in court by one or more groups of stakeholders, including the American Hospital Association.  In comments submitted on the proposed rule, multiple groups contended that CMS lacks authority to implement such large payment changes or to single out 340B hospitals for reductions, and may not otherwise contravene the intent and scope of the 340B Program without further Congressional action.  These challenges will likely play out in courts as CMS implements the new rule and while Congress continues to debate the future of the 340B Program.

No Impact on Non-Excepted Hospital Outpatient Departments 

The changes to Medicare’s reimbursement also create new incentives for off-campus hospital outpatient departments(HOPD).  Since January 1, 2017, new off-campus hospital outpatient departments that do not fall within an exception (non-excepted HOPDs) are not eligible for payment under the OPPS, and instead receive a reduced reimbursement rate.  CMS has confirmed in the final rule that the new payment reductions for 340B drugs will not be applied to non-excepted HOPDs, as their drugs are not reimbursed under OPPS.  As a result, the use of 340B drugs by a non-excepted HOPD will not impact the HOPD’s Medicare reimbursement.

Implementation Challenges

In light of the new rule, 340B hospitals should prepare to come into compliance, which will require the use of a new modifier on each drug billed to Medicare OPPS that was purchased under the 340B Program. In some cases, this will require greater coordination between the hospital’s billing and pharmacy divisions to ensure the modifier is accurately applied.

We will continue to monitor the 340B Program and will update you on any further changes that may arise.

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Foley Named ACC Outstanding Committee Sponsor of the Year

For the second year in a row, Foley & Lardner LLP was named the Outstanding Committee Sponsor of the Year Award by the Association of Corporate Counsel (ACC) for Foley’s work on behalf of the ACC’s national Health Law Committee. Attorneys Alan Einhorn and Jana Anderson, Foley’s liaisons to the Health Law Committee, were presented with the Award on October 15th at the ACC’s Annual Meeting in Washington, D.C. The award recognizes a firm that has provided exceptional support to an ACC committee, including assistance with the committee’s quality of programs and development, and assistance in helping the committee achieve its goals.

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Medicare Claims Appeals: D.C. Circuit Reverses and Remands in Case Seeking Relief From Processing Delays

Summary of AHA v. Price, 2017 U.S. App. LEXIS 14887 (D.C. Cir. Aug. 11, 2017)

 

On August 11, 2017, the D.C. Circuit reversed the district court and held that the district court abused its discretion by ordering the Secretary of HHS to clear the backlog of administrative appeals of denied Medicare reimbursement claims within four years, because it failed to seriously test the Secretary’s assertion that this result was impossible. The underlying action demanded relief to address the Secretary’s inability to keep up with “an unexpected and dramatic uptick in appeals [that] produced a jam in the process” starting in fiscal year 2011.

In the initial proceedings, a group of hospitals sought a judicial order compelling the Secretary to provide relief from what they considered to be unreasonable delays in resolving Medicare claims appeals at the administrative appeals level.  The federal district court for the District of Columbia granted the Secretary’s motion to dismiss for lack of jurisdiction, but the D.C. Circuit reversed. The Circuit Court remanded the case back to the district court, with instructions to consider the merits of appeal, i.e., whether relief should be granted and if so the form of the relief.

The Four-Year Plan to Reduce the Backlog

In addressing the merits of plaintiffs’ allegations on remand, the district court adopted the hospitals’ so-called four-year plan and ordered the Secretary to reduce the current backlog of cases pending at the Administrative Law Judge level by 30% by the end of 2017; 60% by the end of  2018; 90% by the end of 2019; and 100% by the end of 2020.  The Secretary then appealed the district court’s order to the D.C. Circuit.  On appeal the Secretary argued that it would be impossible to comply with the timetable, because the only means of meeting the timetable would be to pay claims through mass settlements regardless of their merits, which (according to the Secretary) would be in violation of the Medicare statute.

Without finding whether in fact the Secretary would be unable to lawfully comply with the district court’s order, the D.C. Circuit held that because the Secretary represented that lawful compliance with the district court’s order was impossible, the district court committed reversible error by ordering the Secretary to comply with the timetable without first finding that lawful compliance was indeed possible. The Circuit Court also held that it was an error for the district court not to evaluate the Secretary’s assertion that the timetable would increase, not decrease, the number of backlogged appeals, because the timetable would generate an incentive for claimants to file additional appeals and hold out for big payouts.

The Case is Remanded to District Court to Determine Feasibility of Compliance Timetable

The D.C. Circuit therefore remanded the case again to the district court and ordered the district court to determine whether the Secretary’s compliance with the timetable is impossible. However, the Circuit Court noted that the Secretary will bears a “heavy burden to demonstrate the existence of an impossibility.” The Court further noted that if the district court finds on remand that the Secretary failed to carry his burden of demonstrating impossibility, it could potentially reissue its order without modification.

What Does this Decision Mean for Hospitals?

Many Medicare coverage appeals involve a hospital appealing the denial of a short stay on the basis that admission was not medically necessary, and that the patient could be treated as an outpatient. However, because CMS does not allow hospitals to rebill under Part B (except during the one year period following discharge, which in the majority of cases will have expired long before the RAC reopens and denies the inpatient claim), hospitals  believe that they have no choice but to appeal. It is important to keep in mind that although the D.C. Circuit faulted the district court for not considering the issue of whether the Secretary could legally comply with the prescribed timetable, the fact that the Secretary will bear the burden of proof on this issue may mean that the district court may end up issuing the same type of relief as it did before.

We will be following this case as the district court determines whether the Secretary’s compliance with the timetable is legally possible and will follow up once a decision is rendered.

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Alaska’s Telemedicine Business Registry: What You Need to Know

telemedicine business registry

Alaska’s Department of Commerce, Community, and Economic Development has finalized new regulations to create a special Telemedicine Business Registry for health care providers delivering telemedicine services in the Frontier State. The regulations in Title 12, Chapter 02 of the Alaska Administrative Code were effective on April 28, 2017 and implement provisions of Alaska SB 74 that was signed into law last summer.

Under the regulations, companies must be registered with the telemedicine business registry before providing telemedicine services to patients located in Alaska. To register, a business performing telemedicine services must submit an application and registration fee. A telemedicine company operating under multiple names to perform telemedicine services must file a separate registration for each name.

If the name, address, or contact information of a business on the telemedicine business registry changes, the business performing telemedicine services must submit a Business Registry Change Form within 30 days of the change.

A business that fails to comply with the regulations section in a timely manner may not perform telemedicine services in Alaska and must submit a new application to the telemedicine business registry before resuming telemedicine services.

Telemedicine companies and health care providers offering services in Alaska should be mindful of these developments. We will continue to monitor Alaska for any changes that affect or improve telemedicine opportunities in the state.

For more information on telemedicine, telehealth, and virtual care innovations, including the team, publications, and other materials, visit Foley’s Telemedicine Practice.

 

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Lessons Learned from 2017 OCR HIPAA Enforcement Actions

So far 2017 is proving to be an active year for Health Insurance Portability and Accountability Act (HIPAA) enforcement. This comes on the heels of 2016, which saw an unprecedented level of enforcement actions, with 13 total settlements and nearly a 300 percent increase in total collected fines over 2015. To date in 2017, nine actions have been settled and the average settlement amount continues to outpace 2016.

Three Tips to Help Reduce the Risk of a HIPAA Violation

Several themes have emerged from these enforcement actions that HIPAA-regulated entities should be mindful of to help reduce the risk of a HIPAA violation occurring and to reduce the potential resulting fine in the event of enforcement.

1. Conduct Risk Analyses Regularly. One of the most consistent themes that has emerged from the 2017 settlement and corrective action plans announced by the U.S. Department of Health and Human Services, Office for Civil Rights (OCR) is that organizations subject to HIPAA must regularly conduct risk analyses in accordance with the Security Rule to assess risk and vulnerabilities in an organization’s ePHI environment. The Security Rule does not proscribe a specific risk analysis methodology given that the analysis will vary depending on an organization’s size and capabilities. However, the risk analysis should comply with available OCR guidance, including the Guidance on Risk Analysis Requirements under the HIPAA Security Rule.

[A] lack of risk management not only costs individuals the security of their data, but it can also cost covered entities a sizable fine.
– OCR Acting Director Robinsue Frohboese

2. Implement a Risk Management Plan and Reasonable Safeguards. While conducting a risk analysis is critical, equally important is the risk management plan and the reasonable safeguards an organization adopts in light of any risks or vulnerabilities that are identified in the risk analysis. For example, OCR assessed a $3.2 million civil monetary penalty against a hospital in February, after noting that the hospital continued to use unencrypted devices even after reporting a breach in 2009 involving the loss of an unencrypted, non-password protected device. Note that the issuance of a penalty is rare, as most OCR enforcement actions result in a settlement, not a penalty. Here, however, the hospital chose to pay the penalty as opposed to negotiate with OCR.

hipaa3. Report Breaches in Timely Manner. A settlement announced in January made headlines as the first HIPAA settlement based on the untimely reporting or notification of a breach under the HIPAA Breach Notification Rule. OCR found that the healthcare network failed, with unreasonable delay, to notify OCR, the affected individuals, and the media within the required 60-day timeframe. Instead, the notifications were made over 100 days after discovery of the breach. This settlement highlights the importance of having clear policies and procedures that workforce members have been trained on in order to respond within HIPAA’s breach notification timeframes.

OCR Updated Web Tool

OCR recently announced the release of an updated web tool to provide enhanced transparency to the HIPAA breach reporting tool. New features include: 1) breaches currently under investigation and reported within the last 24 months; 2) an archive of all older data breaches; 3) tips for consumers; and 4) navigation to additional breach information.

Foley regularly assists clients with implementing HIPAA compliance programs, handling data breach notification requirements, and responding to OCR audits and investigations. For more information contact: Jennifer Rathburn, Jennifer Hennessy, or Julie Kadish.

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New Jersey’s Telemedicine Law: What Providers Need to Know

new jersey telemedicine

New Jersey has a new telemedicine law, recently signed by Governor Chris Christie. The law cements the validity of telehealth services in the Garden State, establishes telemedicine practice standards, and imposes telehealth coverage requirements for New Jersey Medicaid, Medicaid managed care, commercial health plans, and other State-funded health insurance. After a year of debate in the New Jersey Legislature, the bill (SB 291 now P.L.2017, c.117) unanimously passed both the House and Senate before going to the Governor’s Office. The law is effective July 21, 2017.

The new law is quite lengthy, but we have summarized and explained the essential provisions below:

Key Definitions

  • Telemedicine is broadly defined as the delivery of a health care service using electronic communications, information technology, or other electronic or technological means to bridge the gap between a health care provider who is located at a distant site and a patient who is located at an originating site. The term does not include “the use, in isolation, of audio-only telephone conversation, electronic mail, instant messaging, phone text, or facsimile transmission.

  • Telehealth is defined as the use of information and communications technologies, including telephones, remote patient monitoring devices, or other electronic means, to support clinical health care, provider consultation, patient and professional health-related education, public health, health administration, and other services.
  • Asynchronous Store-and-Forward is defined as the acquisition and transmission of images, diagnostics, data, and medical information either to, or from, an originating site or to, or from, the health care provider at a distant site, which allows for the patient to be evaluated without being physically present.
  • Health Care Provider is broadly defined as an individual who provides a health care service to a patient, which includes, but is not limited to, a licensed physician, nurse, nurse practitioner, psychologist, psychiatrist, psychoanalyst, clinical social worker, physician assistant, professional counselor, respiratory therapist, speech pathologist, audiologist, optometrist, or any other health care professional acting within the scope of a valid license or certification issued pursuant to Title 45 of the New Jersey Statutes.

Telemedicine Communication Modalities

  • The law also states that telemedicine services must be provided “using interactive, real-time, two-way communication technologies” (a requirement that interestingly does not appear to extend to “telehealth services” under the statute itself). Synchronous audio-video is not mandated except for Schedule II prescribing.
  • Interactive Audio with Store-and-Forward. A provider engaging in telemedicine or telehealth may use asynchronous store-and-forward technology to allow for the electronic transmission of images, diagnostics, data, and medical information; except that the provider may use interactive, real-time, two-way audio in combination with asynchronous store-and-forward technology, without video capabilities, if, after accessing and reviewing the patient’s medical records, the provider determines that the provider is able to meet the same standard of care as if the health care services were being provided in person.
  • Audio-Only or Text-Based Communications. The law excludes from the definition of telemedicine consultations provided by “the use, in isolation, of audio-only telephone conversation, electronic mail, instant messaging, phone text, or facsimile transmission.”

Telemedicine Practice Standards

  • Provider-Patient Relationship. A valid provider-patient relationship may be established via telemedicine or telehealth without an in-person exam. Moreover, New Jersey licensing boards are prohibited from passing regulations that would require an in-person exam as a prerequisite to delivering telemedicine or telehealth services. A valid provider-patient relationship must include, at a minimum, the following:
    • Properly identifying the patient using, at a minimum, the patient’s name, date of birth, phone number, and address. The provider may additionally use the patient’s assigned identification number, social security number, photo, health insurance policy number, or other appropriate patient identifier associated directly with the patient.
    • Disclosing and validating the provider’s identity and credentials, such as the provider’s license, title, and, if applicable, specialty and board certifications.
    • For an initial consult with a new patient, the provider must review the patient’s medical history and any available medical records before initiating the telemedicine consult. (For telehealth consults conducted in connection with a pre-existing provider-patient relationship, the provider may review the information with the patient contemporaneously during the consult.)
    • The provider must determine whether or not he/she will be able to meet the standard of care. This determination must be done prior to each unique patient consult.
  • A health care provider delivering services via telemedicine or telehealth must adhere to the following practice standards.
    • The provider’s identity, professional credentials, and contact must be made available to the patient during and after the provision of services. The contact information must enable the patient to contact the provider (or a substitute provider authorized to act on behalf of the provider who provided services) for at least 72 hours following the provision of services.
    • The provider must review the patient’s medical history and any available medical records.
    • After the consult, the patient’s medical information must be made available to the patient upon his/her request. If the patient consents/requests, the information must be forwarded directly to the patient’s primary care provider or health care provider(s) of record.
    • If a patient has no health care provider of record, the telemedicine or telehealth provider is allowed to advise the patient to contact a primary care provider, and, upon request by the patient, may assist the patient with locating a primary care provider or other in-person medical assistance that, to the extent possible, is located within reasonable proximity to the patient.
    • The telemedicine or telehealth provider must refer the patient to appropriate follow up care where necessary, including making appropriate referrals for emergency or complimentary care, if needed.
  • Standard of Care. Diagnosis, treatment, and consultation recommendations, including discussions regarding the risk and benefits of the patient’s treatment options, made via telemedicine or telehealth, including the issuance of a prescription based on a telemedicine or telehealth consult, are held to the same standard of care or practice standards as are applicable to in-person settings. If telemedicine or telehealth services are not consistent with this standard of care, the provider must direct the patient to seek in-person care.
  • Telemedicine Prescribing. A provider may prescribe medications via telemedicine only after establishing a valid provider-patient relationship.
    • Unless the provider has established a valid provider-patient relationship, a provider shall not issue a prescription to a patient based solely on the responses provided in an online questionnaire.
    • With regard to prescribing controlled substances via telemedicine, the law does not prohibit the activity except for Schedule II drugs. A provider may prescribe Schedule II controlled substances via telemedicine only after conducting an initial in-person examination of the patient. Moreover, subsequent in-person exams are required every three months for the duration of time that the patient is being prescribed the Schedule II controlled dangerous substance. Note: despite the New Jersey law, providers must still comply with the prescribing requirements under the federal Ryan Haight Act.
    • The New Jersey in-person exam requirement does not apply to prescriptions for Schedule II controlled stimulant drugs for use by a patient under the age of 18 if: 1) the provider uses interactive, real-time, two-way audio and video technologies; and 2) has obtained written consent from the minor patient’s parent or guardian to waive the in-person exam.
  • Patient Consent. The law does not require patient informed consent to telehealth services (although New Jersey Medicaid requires it for certain specialties). However, to the extent the provider must obtain patient consent for certain activities (e.g., recommending a primary care referral, clinical procedures), the patient’s consent may be oral, written, or digital in nature, provided that the chosen method of consent is deemed appropriate under the standard of care.
  • Originating site. There are no geographic or facility restrictions on originating sites, which are simply defined as “a site at which a patient is located at the time that health care services are provided to the patient by means of telemedicine or telehealth.”
  • Patient-Site Telepresenter. There is no requirement to use a patient-site telepresenter, unless otherwise needed by medical standard of care expectations.
  • Medical Records; HIPAA. Providers must maintain a complete record of the patient’s care and comply with all applicable State and federal statutes and regulations for recordkeeping, confidentiality, and disclosure of the patient’s medical record.

Other unique and notable highlights of the New Jersey law include:

  • Business Registration for Telemedicine or Telehealth Organizations. The law requires each telemedicine or telehealth organization operating in New Jersey to annually register with the Department of Health and submit annual reports on activity and encounter data. The content of the reports will be specified further in forthcoming regulations, but we know the reports will include, at least, for each consult: the patient’s race and ethnicity; the diagnostic codes; the evaluation management codes; and the source of payment for the consult. The Department of Health will compile the information into a statewide database. A “Telemedicine or telehealth organization” is a corporation, sole proprietorship, partnership, or limited liability company that is organized for the primary purpose of administering services in the furtherance of telemedicine or telehealth.
  • Telemedicine and Telehealth Review Commission. The law creates a seven-member New Jersey Telemedicine and Telehealth Review Commission. The Commission will review the information reported by telemedicine and telehealth organizations and make recommendations for policy and law changes to promote and improve the quality, efficiency, and effectiveness of telemedicine and telehealth services in New Jersey.
  • Exceptions to Provider-Patient Relationship. Telemedicine or telehealth may be practiced without a proper provider-patient relationship in the following circumstances:
    • During informal consultations performed by a provider outside the context of a contractual relationship, or on an irregular or infrequent basis, without the expectation or exchange of direct or indirect compensation.
    • During episodic consultations by a medical specialist located in another jurisdiction who provides consultation services, upon request, to a properly licensed or certified health care provider in New Jersey.
    • When a provider furnishes medical assistance in response to an emergency or disaster, provided that there is no charge for the medical assistance.
    • When a substitute provider, who is acting on behalf of an absent provider in the same specialty, provides health care services on an on-call or cross-coverage basis, provided that the absent provider has designated the substitute provider as an on-call provider or cross-coverage service provider.
  • Mental health screeners, screening services, and screening psychiatrists subject to the provisions of P.L.1987, c.116 (C.30:4-27.1 et seq.) are not required to obtain a separate authorization in order to engage in telemedicine or telehealth for mental health screening purposes, and are not required to request and obtain a waiver from existing regulations prior to engaging in telemedicine or telehealth.

New Jersey Telemedicine and Telehealth Insurance Coverage

The law establishes fairly broad coverage of telemedicine and telehealth services, both under New Jersey Medicaid and commercial health insurance plans. However, the law does not explicitly impose a payment parity requirement (i.e., mandating that reimbursement for telemedicine and telehealth services be equal to reimbursement rates for identical in-person services). Instead the law sets the in-person reimbursement rate as the maximum ceiling for telemedicine and telehealth reimbursement rates.

  • With regard to Medicaid and Medicaid managed care, the law states that the State Medicaid Program and NJ FamilyCare Program “shall provide coverage and payment for health care services delivered to a benefits recipient through telemedicine or telehealth, on the same basis as, and at a provider reimbursement rate that does not exceed the provider reimbursement rate that is applicable, when the services are delivered through in-person contact and consultation in New Jersey.”
    • Reimbursement payments may be provided either to the individual practitioner who delivered the reimbursable services, or to the agency, facility, or organization that employs the individual practitioner who delivered the reimbursable services, as appropriate.
    • The programs may limit coverage to services that are delivered by participating health care providers, but may not charge any deductible, copayment, or coinsurance for a health care service, delivered through telemedicine or telehealth, in an amount that exceeds the deductible, copayment, or coinsurance amount that is applicable to an in-person consultation.
  • With regard to commercial health insurance plans, the law states that “a carrier that offers a health benefits plan in [New Jersey] shall provide coverage and payment for health care services delivered to a covered person through telemedicine or telehealth, on the same basis as, and at a provider reimbursement rate that does not exceed the provider reimbursement rate that is applicable, when the services are delivered through in-person contact and consultation in New Jersey.”
    • Reimbursement payments may be provided either to the individual practitioner who delivered the reimbursable services, or to the agency, facility, or organization that employs the individual practitioner who delivered the reimbursable services, as appropriate.
    • A carrier may limit coverage to services that are delivered by health care providers in the health benefits plan’s network, but may not charge any deductible, copayment, or coinsurance for a health care service, delivered through telemedicine or telehealth, in an amount that exceeds the deductible, copayment, or coinsurance amount that is applicable to an in-person consultation.
  • The law establishes similar telemedicine and telehealth coverage requirements for contracts purchased through the New Jersey State Health Benefits Commission and the New Jersey School Employees’ Health Benefits Commission.

Passage of this new legislation is welcome news for telemedicine companies and health care providers looking to offer telemedicine services in New Jersey. We will continue to monitor New Jersey for any rule changes that affect or improve telemedicine opportunities in the state.

For more information on telemedicine, telehealth, virtual care, and other health innovations, including the team, publications, and other materials, visit Foley’s Telemedicine and Virtual Care practice.

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OIG to Audit Medicare Telehealth Services: What You Need to Know

medicare telehealth

For what may be the first time, the Office of Inspector General (OIG) at the Department of Health & Human Services (HHS) recently announced a new project to review Medicare payments for telehealth services. Accordingly, providers who bill the Medicare program for telehealth services may expect to have those claims reviewed to confirm the patient was at an eligible originating site and that the statutory conditions for coverage were met. The audit is a new project added as a supplement to the OIG’s 2017 Work Plan.

OIG Work Plan

Historically, at the beginning of each new fiscal year, the OIG issued its Work Plan, setting forth the compliance and enforcement projects and priorities OIG intends to pursue in the coming year. Beginning in June 2017, OIG will update the annual Work Plan on a monthly basis.  The Work Plan contains dozens of projects affecting Medicare and Medicaid providers, suppliers and payors, as well as public health reviews and Department-specific reviews.

The Work Plan reflects (in large part) two aspects of the work of OIG:

1) Projects originating within the Office of Audit Services (OAS), which conducts financial, billing, and performance audits of HHS programs; and

2) Projects originating within the Office of Evaluations and Inspections (OEI), which provides management reviews and evaluations of HHS program operations.

Except by providing general statistics, the Work Plan itself does not detail the work of the Office of Investigations or the Office of Counsel to the Inspector General in investigating and enforcing matters involving specific individual providers and suppliers.  The new telehealth project will be run by the OAS.

Review of Medicare Payments for Telehealth Services

OIG describes its new telehealth review project as follows:

“Medicare Part B covers expenses for telehealth services on the telehealth list when those services are delivered via an interactive telecommunications system, provided certain conditions are met (42 CFR § 410.78(b)). To support rural access to care, Medicare pays for telehealth services provided through live, interactive videoconferencing between a beneficiary located at a rural originating site and a practitioner located at a distant site. An eligible originating site must be the practitioner’s office or a specified medical facility, not a beneficiary’s home or office. We will review Medicare claims paid for telehealth services provided at distant sites that do not have corresponding claims from originating sites to determine whether those services met Medicare requirements.”

The expected issue date of the OIG report is 2017, so presumably the review will commence shortly (although OIG Work Plan projects are sometimes continued or extended from year-to-year).

Medicare 2014 Telehealth Claims Data

The new OIG project is not the first time Medicare claims data has identified a potential mismatch regarding the conditions for coverage for telehealth services. A July 2016, Medicare Payment Advisory Commission (MEDPAC) Report to Congress: Medicare and the Health Care Delivery System contained a detailed chapter on telehealth services and the Medicare program.  In it, MEDPAC analyzed Medicare claims data from 2014 for preliminary qualitative assessments on the state of telehealth services under Medicare. The report included a paragraph on telehealth distant site claims without a corresponding originating site claim, stating:

“Among the 175,000 telehealth claims from distant sites, 95,000 (55 percent) were without an originating site claim.  This discrepancy could be due to providers not bothering to bill for the $25 facility fee, or it could be that some services inappropriately originated from a patient’s home, as other research has suggested (Gilman and Stensland 2013).  Among the distant site telehealth claims without an originating site claim, 56 percent (53,000 visits) were associated with rural beneficiaries and 44 percent (41,000 visits) were associated with urban beneficiaries.  Both claims groups suggest that beneficiaries could be inappropriately receiving telehealth services from home or another unapproved location that did not file an originating site claim.  The urban claims are also potentially problematic because they could be occurring in urban originating sites, which is inconsistent with Medicare statute.”

Medicare Coverage of Telehealth Services

Current coverage of telehealth services under Medicare is limited, with the coverage restrictions established via statute under the Social Security Act.  Any notable expansion of telehealth coverage under Medicare would require legislation by Congress.  There are several bills pending in Congress to remove these limitations, but until such time, there are five main conditions for coverage for telehealth services under Medicare.

  1. The beneficiary is located in a qualifying rural area (providers can check if the originating site is in a qualifying rural area by using the Medicare Telehealth Payment Eligibility Analyzer);
  2. The beneficiary is located at one of eight qualifying originating sites (i.e., the offices of physicians or practitioners; Hospitals; Critical Access Hospitals; Rural Health Clinics; Federally Qualified Health Centers; Hospital-based or CAH-based Renal Dialysis Centers (including satellites); Skilled Nursing Facilities; and Community Mental Health Centers);
  3. The services are provided by one of ten distant site practitioners eligible to furnish and receive Medicare payment for telehealth services (i.e., physicians; nurse practitioners;™physician assistants;™nurse-midwives;™ clinical nurse specialists;™ certified registered nurse anesthetists; clinical psychologists; clinical social workers; registered dietitians; and nutrition professionals);
  4. The beneficiary and distant site practitioner communicate via an interactive audio and video telecommunications system that permits real-time communication between them (store and forward is covered in Alaska and Hawaii under demonstration programs); and
  5. The CPT/HCPCS (Current Procedural Terminology/Healthcare Common Procedure Coding System) code for the service itself is named on the CY 2017 (or current year) list of covered Medicare telehealth services.

In order to bill Medicare for telehealth services, the distant site practitioner must fully comply with each of these requirements. If the service does not meet each of these above requirements, the Medicare program will not pay for the service.  If, however, the conditions of coverage are met, the use of an interactive telecommunications system substitutes for an in-person encounter (i.e., it satisfies the “face-to-face” element of a service).

Providers ought not fear the new OIG project, or see it as a reason not to offer telehealth services to their patients. Indeed, the project and its eventual report can help shed light on those areas of compliance which the OIG believes important. In the interim, providers should continue to ensure their telehealth programs and claims comply with Medicare requirements, including coverage, coding, and documentation rules.

For more information on telemedicine, telehealth, and virtual care innovations, including the team, publications, and other materials, visit Foley’s Telemedicine Practice.

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Opioid Crisis Initiating New State Gift Ban Laws

opioid

The Maine legislature passed with broad bipartisan approval L.D. 911, An Act to Prohibit Certain Gifts to Health Care Practitioners. The legislation prohibits gifts to practitioners who are licensed to prescribe and administer drugs by manufacturers, wholesalers, or agents of manufacturers or wholesalers of prescription drugs.

What’s Excluded?

  • Free samples of prescription drugs for patients
  • Items less than $50 over a calendar year
  • Payments to sponsors of educational programs
  • Honoraria for educational conferences
  • Compensation for research
  • Publications or educational materials
  • Salaries to employees

At the Heart of the Bill is the State’s Opioid Crisis

While similar in substance to what already exists in Massachusetts, Vermont, and other states as a law designed to curtail conflicts of interest in physician prescribing practices, the purported impetus here is the state’s opioid crisis. Representative Scott Hamann, the sponsor for the bill, said that the goal is to ensure doctors do not have conflicts of interest when prescribing drugs, especially opioids. According to Hamann’s testimony before the legislature, “People are dying, and the addiction often starts in the doctor’s offices.” The bill intends to curb any influence on the prescribing of opioids given the perspective that there is a correlation between payments and prescribing behavior. Maine has seen a forty percent increase in drug overdose deaths in the last year, and spending on physicians nearly doubled from 2014 to 2015.

The “gift ban” law is now awaiting the Maine Governor’s signature. It will be interesting to see if other states impacted heavily by heroin and opioid abuse will follow suit with increased surveillance or banning of industry gifts to physicians.

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