Category: Medicaid

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Top 5 Ways Telehealth Will Change Under the New Federal Funding Bill

The telemedicine industry has been abuzz upon learning that provider-friendly legislation was included in the new federal Bipartisan Budget Act of 2018, signed into law by the President on February 9, 2018.  But telehealth providers, hospitals, and entrepreneurs need to cut through the hype and understand what the provisions will really do for telehealth.  This article summarizes the key takeaways and insights on how the recent legislation will benefit the telehealth industry.

Significant Changes for Medicare and Telehealth Services

The bill introduces some of “the most significant changes ever made to Medicare law to use telehealth,” according to Senator Brian Schatz, a longtime sponsor and proponent of federal telehealth legislation.  Key elements of the bill include: (1) expanding stroke telemedicine coverage; (2) improving access to telehealth-enabled home dialysis oversight; (3) enabling patients to be provided with  free at-home telehealth dialysis technology without the provider violating the Civil Monetary Penalties Law; (4) allowing Medicare Advantage (MA) plans to include delivery of telehealth services in a plan’s basic benefits; and (5) giving Accountable Care Organizations (ACOs) the ability to expand the use of telehealth services.

No More Originating Site Restrictions for Telestroke?

Historically, only Medicare patients located in rural areas at qualifying originating sites were eligible for reimbursement for telestroke services.  Under Section 50325 of the new bill, beginning Jan. 1, 2019, the geographic and facility-type requirements on originating sites will no longer apply for purposes of diagnosis, evaluation, or treatment of symptoms of an acute stroke when delivered at certain originating sites.  These are 1) hospitals, 2) critical access hospitals, 3) any mobile stroke unit as defined by the Secretary of Health and Human Services (HHS), or 4) any other site determined appropriate by HHS, at which the eligible telehealth individual is located at the time the service is furnished via telehealth. One potential site that HHS could approve is the patient’s home

The full extent to which telemedicine providers and Medicare beneficiaries will benefit from expanded telestroke reimbursement largely depends on the sites that HHS will permit as qualified originating sites.

Allowing more qualified originating sites, such as the patient’s home, ambulances, and mobile stroke units, will provide broader  options for healthcare systems that do not have constant access to a neurologist and allow institutions with established stroke programs opportunities for destination medicine and new patients.

Now is the time to make your voice heard and inform HHS as to what you believe should be included among the new eligible originating sites for telestroke.

Note, the new reimbursement applies only to the distant site practitioner’s professional fee.  Originating sites qualifying for reimbursement under this provision that do not meet the historical originating site facility-type and rural geographic requirements will not be eligible for a facility fee.

Medicare Will Reimburse for Telehealth Dialysis Services at the Patient’s Home and at Independent Facilities

The new law also extends telehealth reimbursement to dialysis services provided remotely to patients located at home or at independent renal dialysis facilities (neither of which have historically been eligible originating sites under Medicare).  Under Section 50302 and effective January 1, 2019, an individual with end stage renal disease (ESRD) receiving home dialysis may choose to receive monthly ESRD-related oversight visits from their home via telehealth if the patient receives a “face-to-face” visit (in this context, meaning in-person) at least once a month during the initial 3 months of home dialysis and then, after the initial 3 months, at least once every 3 consecutive months.

These two new originating sites, along with hospital-based or critical access hospital-based renal dialysis centers, are also be exempt from the rural geographic are requirement for the monthly telehealth visits.  Keep in mind, however, that no facility fee payment is available when a patient is located at home.

Providers Can Give Free Telehealth Technology/Equipment for At-Home Dialysis Patients

Under the bill, the provision of free telehealth technologies by a provider of services or a renal dialysis facility to an individual with ESRD who is receiving home dialysis for which Medicare payment is received will not constitute illegal remuneration under the Civil Monetary Penalties Law if three factors are met:

  1. The telehealth technologies are not offered as part of any advertisement or solicitation;
  2. The telehealth technologies are provided for the purpose of furnishing telehealth services related to the individual’s ESRD; and
  3. The provision of the telehealth technologies meets any other requirements set forth in regulations promulgated by CMS.

This means telehealth dialysis providers are allowed to provide at-home telehealth technology/equipment at no charge to patients if the above requirements are met.  It is a patient (and provider) –friendly change to the definition of “remuneration” as it relates to patient inducements and  the Civil Monetary Penalties Law.  Providers can benefit from the improved outcomes and cost-effectiveness of delivering services remotely while simultaneously providing comfort for ESRD patients to know that someone is available when concerns arise without requiring that patients travel to the dialysis center.

Medicare Advantage Plans Can Finally Include Telehealth Services as a Basic Benefit

Medicare Advantage (MA) plans will be allowed to offer additional, clinically appropriate telehealth benefits in their annual bid amounts beyond the services that currently receive payment under Medicare Part B.  This has been a major sticking point and a reason why, historically, MA plans have not been as quick to cover telehealth services compared to Medicaid managed care plans.

Section 50323 of the bill gives MA plans the ability to offer telehealth services as part of their basic benefit package (i.e., as if the telehealth services were benefits under the original Medicare fee-for-service program option).  However, exactly what telehealth services will qualify as a “basic benefit” have not been fully defined.  HHS will solicit public comments before November 30, 2018 to determine what types of telehealth items and services (e.g., remote patient monitoring, secure messaging, store and forward technologies, and other non-face-to-face services) should be considered to be an “additional telehealth benefit” (meaning, eligible to be counted as part of the basic benefit package).  HHS will also solicit comments on the requirements for providing and furnishing such telehealth services (e.g., training and coordination rules).  An expansive list of eligible telehealth services by HHS likely would stimulate a big uptick in telehealth service coverage by MA plans.

These new provisions go into effect in 2020, so now is a smart time for hospitals and telehealth providers to engage their MA plan partners in discussions on how to amend their participation agreement and cover telehealth services.

The Patient’s Home is an Eligible Originating Site for Accountable Care Organizations

Accountable Care Organizations (ACOs) have even more flexibility to use telehealth services.  Beginning January 1, 2020, the patient’s home qualifies as an eligible originating site for telehealth services provided by a physician or practitioner participating in certain ACOs (Next Generation, MSSP Track II, MSSP Track III, and certain two-sided risk models).  No payment may be made for telehealth services CMS deems to be inappropriate to furnish in the home setting (e.g., inpatient hospital services).  Additionally, the law eliminates the rural geographic area requirements for ACOs (i.e., the originating site need not be located in a rural health professional shortage area or a non-metropolitan statistical area).  As with many of the other changes introduced by the new law, the patient’s home is not eligible for a facility fee.

Conclusion

The 2018 Act represents federal lawmakers’ continued and increasing support for expanding Medicare telehealth reimbursement.  Telehealth providers should embrace the Act and use it as an opportunity to contribute to and develop meaningful telehealth reimbursement policies.

We will continue to monitor the law’s progress as CMS begins to promulgate regulations, so please check back for updates.  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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New Funding Legislation’s Impact on Health Care Programs

Congress passed a funding bill early this morning just after the February 8th deadline. The new legislation will make several changes to the Medicare program, delay cuts to disproportionate share hospitals, provide two years of funding for community health centers, and renew certain expired or expiring health care programs. The legislation increases government funding caps by about $300 billion over two years, extends government funding through March 23rd, and provides for a one year suspension on the debt ceiling.

The legislation includes several Medicare extenders (legislation that extends Medicare programs that were set to expire or have expired) that have developed out of the House and the Senate along with extensions for other health care programs discussed below.

Medicare Cap for Therapy Services

The new legislation removes Medicare caps for therapy services. Currently, Medicare beneficiaries receive assistance paying for outpatient physical and occupational therapy, and speech-language pathology services.  When a beneficiary receives those services from an outpatient provider, there is a cap on how much Medicare will cover unless an exception applies. This cap will be removed.

Special Needs Plans

Special Needs Plans (SNPs) were set  to expire at the end of 2018 and the legislation makes SNPs permanent. SNPs are Medicaid managed care plans that enroll beneficiaries with low income, chronic conditions, or who reside in a nursing home. The most well-known SNP is the D-SNP that is available to individuals that are eligible for both Medicare and Medicaid. Other SNPs are available to patients who are institutionalized, I-SNPs, or have chronic conditions, C-SNPs.  Several plans have expressed concerns about the temporary nature of SNPs and have lobbied for a permanent solution.

Health Care Program Extensions

The legislation grants a five-year extension for the home health rural add-on payment, a 3% payment increase that expired on January 1. Ambulance providers will receive increased payments for services provided in rural  and underserved areas and will also be required to provide cost reporting for ambulance services and Health and Human Services (HHS) could impose penalties for incomplete reports.

Along with the five-year extensions, the legislation tacks on a two-year extension for health programs such as the National Health Service Corps, the Medicare Dependent Hospital Program, and the low-volume hospital payment adjustment for hospitals that discharge fewer than 1,600 Medicare patients each year.

Medicare Expansion

Several measures in the legislation address expanding Medicare coverage for individuals with chronic conditions. Telehealth services would expand for end-stage renal disease treatments, stroke evaluations, accountable care organizations, and Medicare Advantage plans. The legislation also allows Medicare Advantage plans to offer supplemental benefits to those with chronic conditions and modify Affordable Care Organizations to incentivize primary care programs.

The legislation creates a Medicare payment program for in-home infusion drug services to fill in the gap before the 21st Century Cures Act payment program takes effect and will codify certain Centers for Medicare and Medicaid Service (CMS) changes to the Stark law.

Home Health

The legislation also impacts home health providers. The home health services eligibility determination process documentation review now includes medical records of home health providers. The legislation also directs Health and Human Services (HHS) to modify payments for home health services beginning in 2020.

Funding of the Legislation

The legislation is funded through a variety of fiscal offsets including Medicare payment modifications and shifting money from other funds. The legislation reduces certain Medicare payments such as hospital payments made when a patient is transferred to a hospice after a short stay. Funding in the Medicare and Medicaid Improvement Funds will be withdrawn and the Affordable Care Act’s Prevention and Public Health Fund payment structure will be modified. The proposal also modifies the Medicaid Disproportionate Share Hospital reductions, adding $6 billion to FY21-FY23 to offset the elimination of reductions scheduled for FY18 and FY19. Payment for biosimilars will be included in the Medicare Coverage Gap Discount Program, a program that gives Medicare Part D beneficiaries a discount when out-of-pocket spending meets a certain threshold amount.  And the legislation closes the gap in Medicare prescription drug coverage, known as the “donut hole,” by shifting more of the cost onto drug companies.

We will continue to monitor the changes introduced in the legislation.

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CMS Announces an Advanced Alternative Payment Model – BPCI Advanced

On January 9, 2018, The Centers for Medicare & Medicaid Services (CMS) announced a new voluntary bundled payment model program – Bundled Payment for Care Improvement Advanced (BPCI Advanced). The episode payment model, which is a second generation version of the BPCI program, will qualify as an Advanced Alternative Payment Model (APM) under the Quality Payment Program adopted as part of MACRA, which means that physicians, because they take on financial risk, may earn the Advanced APM incentive payments.

What is BCPI Advanced?

The BPCI Advanced program is a voluntary program that offers a single retrospective bundled payment covering services within a 90-day Clinical Episode.  Participants may be involved in 29 inpatient Clinical Episodes and also, unlike the prior BPCI program, three outpatient clinical episodes –  Percutaneous Coronary Intervention, Cardiac Defibrillator, and Back & Neck except Spinal Fusion.  As with the prior BPCI model, target prices are provided in advance and are measured against the total Medicare fee for service spending and services during the selected Clinical Episodes. Participants who enter into the Participation Agreement with CMS will take on downside-financial risk from the outset of an episode.

Eligible Program Participants

BPCI Advanced will allow participation by Non-Convener Participants and Convener Participants.  Convener Participants may or may not be Medicare enrolled entities and agree to take on risk for downstream entities.  The Convener Participants facilitate coordination among episode initiators and bear the financial risk for the model. Non-Convener Participants are acute-care hospitals or Physician Group Practices, enrolled in Medicare, who are themselves episode initiators. They do not take risk for downstream entities.

Clinical Episodes are attributed at the episode initiator level with a CMS-defined hierarchy for attribution among different types of episode initiators.  The Clinical Episode will begin with an inpatient admission for an inpatient procedure or the start of the outpatient procedure.  Clinical Episodes continue for 90 days after the end of the inpatient stay or the outpatient procedure.

As with the prior BPCI program, payment under the BPCI Advanced program is tied to performance on specified quality measures.

Applications for participation in BPCI Advanced must be submitted by March 12, 2018.  The Model starts on October 1, 2018 and continues through December 31, 2023.

The Future of Alternative Payment Programs

BPCI Advanced is the first Advanced APM announced by the Trump Administration.  Although  it is voluntary, it does reflect continuation of alternative payment programs under the Trump Administration. Some have questioned the new Administration’s commitment to alternative payment programs, although there have been suggestions that HHS Secretary Nominee Alex Azar has indicated enthusiasm for programs that pay providers based on quality, and Nominee Azar has suggested mandatory programs may be appropriate.  Former Secretary Price was opposed to  mandatory programs such as the Episode Payment Models (EPMs),  the Cardiac Rehabilitation (CR) Incentive Payment Model, and the Comprehensive Joint Replacement (CJR) program. At the end of 2017, CMS terminated the EPMs and the CR Incentive Payment Model outright and terminated the mandatory nature of the CJR program.

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New OIG Project Expands Telemedicine Audits to State Medicaid Programs

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Following on the heels of its plans to review Medicare payments for telehealth services, the federal Office of Inspector General (OIG) at the Department of Health & Human Services (HHS) just announced a new project to review state Medicaid payments for telemedicine and other remote services. Accordingly, providers who bill state Medicaid programs for telemedicine, telehealth, or remote patient monitoring services may expect to have those claims reviewed to confirm payment was correctly made in accordance with the conditions for coverage. The project will be added to the OIG’s 2017 Work Plan.

How Does OIG Define Projects Contained on their 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 this past June, OIG began updating 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 Medicaid telemedicine project will be run by the OAS.

Review of Medicaid Services Delivered Using Telecommunication Systems

OIG describes its new telemedicine review project as follows:

“Medicaid pays for telemedicine, telehealth, and telemonitoring services delivered through a range of interactive video, audio or data transmission (telecommunications). Medicaid programs are seeing a significant increase in claims for these services and expect this trend to continue. We will determine whether selected States’ Medicaid payments for services delivered using telecommunication systems were allowable in accord with Medicaid requirements.”

The expected issue date of the OIG report is 2019, and this is understandable given the sweeping scope of the project and the significant variances in coverage rules across different state Medicaid programs.

As with the OIG’s Medicare review, telemedicine 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 state Medicaid 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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Medicare Payments for Telehealth Increased 28% in 2016: What You Should Know

Telehealth providers can celebrate another successful year of growth, as CMS reported a 28% increase over total 2016 payments for telehealth services under the Medicare program. Providers continue to successfully integrate telehealth services into their traditional health care delivery approaches, and are realizing payment opportunities both within the Medicare FFS program and in other sources of revenue.  Our thanks to POLITICO Pro Morning eHealth Reporter, David Pittman, who first reported on the story and shared the claims data.

2016 Medicare Telehealth Claims Data

Let’s review the numbers. In CY 2016, Medicare paid a total of $28,748,210 for telehealth services, spread across a total of 496,396 claims. This includes payments to distant site providers and originating site payments. Compare this amount to last year, in which Medicare paid a total of $22,449,968 for telehealth services, spread across a total of 372,518 claims. (The figures are slightly different than reported in prior years, as CMS changed its data collection and calculation methodology this year.)

The result: 2016 saw a 33% increase in the number of Medicare telehealth claims submitted and a 28% increase in total payments. This uptick in total payments is not attributable to fee schedule rate increases, but rather to more providers using telehealth services with their traditional Medicare FFS beneficiaries.

More Originating Site Claims Filed Than Ever Before

Perhaps the most interesting element in the new data is the significant increase in originating site claims (HCPCS Code Q3014)..  Before 2015, approximately half of all distant site claims did not have a corresponding originating site claim.  This gap has closed in the last two years, and in 2016, 66% of all distant site claims had a corresponding originating site claim.  The remaining gap could be due to providers not bothering to bill for the $25 originating site facility fee, or it could be that some claims were billed when the patient was located at home (a different site of service for which a facility would not bill).  The federal Office of Inspector General at the Department of Health & Human Services has announced a new audit project to review Medicare payments for telehealth services and understand the reason(s) for this gap.

Despite the increase, Medicare’s $28.7 million payments in 2016 remains a small portion of the $600+ billion overall Medicare program budget. Remember: in 2001, the Congressional Budget Office estimated it would cost the Medicare program $150 million to cover telehealth services for the first five years ($30 million a year).  Fifteen years later, total payments (2011-2016) still have not cracked that $150 million forecast and annual spend has not hit $30 million.

Medicare Coverage of Telehealth Services is Limited

Coverage of telehealth services under Medicare remains limited, with the 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).

How to Request Additional Medicare Telehealth Services

Providers and other interested parties need not wait on federal legislation to pass. Anyone may send CMS a request to add services (HCPCS codes) to the list of covered Medicare telehealth services. This can include medical specialty societies, individual physicians or practitioners, hospitals, state and federal agencies, telehealth companies, vendors, and even patients. Requests may be submitted at any time on an ongoing basis. The requests will be consolidated and considered during the CMS rulemaking cycle that establishes the physician fee schedule rates.

Each request should address the following:

  • Name(s), address(es) and contact information of the requestor.
  • The HCPCS code(s) that describes the service(s) proposed for addition or deletion to the list of Medicare telehealth services. If the requestor does not know the applicable HCPCS code, the request should include a description of services furnished during the telehealth session.
  • A description of the type(s) of medical professional(s) providing the telehealth service at the distant site.
  • A detailed discussion of the reasons the proposed service should be added to the definition of Medicare telehealth service.
  • An explanation as to why the requested service cannot be billed under the current scope of telehealth services, for example, the reason why the HCPCS codes currently on the list of Medicare telehealth services would not be appropriate for billing the service requested.
  • Evidence that supports adding the service(s) to the list on either a category 1 or category 2 basis as explained in the section labeled “CMS Criteria for Submitted Requests.”

Email your request to Telehealth_Review_Process@cms.hhs.gov and title it “Telehealth Review Process.” Alternatively, you can mail the request to: Division of Practitioner Services, Mail Stop: C4-03-06, Centers for Medicare and Medicaid Services, 7500 Security Boulevard Baltimore, Maryland 21244-1850. Attention: Telehealth Review Process.

Continued expansions in reimbursement mean providers should make enhancements to telehealth programs now, both for the immediate cost savings and growing opportunities for revenue generation, to say nothing of patient quality and satisfaction.

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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Ninth Circuit Victory Opens the Door to Medicaid Reimbursement Challenges Based on Equal Access Requirement

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The Ninth Circuit held August 7 that the Department of Health and Human Services Secretary erred in approving a Medicaid State Plan Amendment (SPA) that cut reimbursement for outpatient hospital services in California by 10% for eight months in 2008-2009. The Hoag Memorial decision sided with the 57 hospitals that challenged the SPA under the theory that the reimbursement cut violated the federal Medicaid requirement that payment rates be sufficient to provide Medicaid beneficiaries with equal access to care and services.

In Hoag Memorial, the Court Did Not Defer to the Secretary’s Interpretation of the Medicaid Statute

The decision is particularly significant because prior Ninth Circuit caselaw had largely deferred to the Secretary when considering how reimbursement cuts would impact the availability of Medicaid services. In 2013, the court rejected a hospital challenge in Managed Pharmacy Care v. Sebelius, in which plaintiffs had alleged that a reimbursement cut did not satisfy the Medicaid requirement under section 1902(a)(30)(A) of the Social Security Act (Section 1902(a)(30)(A)) to “assure that payments are consistent with efficiency, economy, and quality of care” because the Secretary did not consider provider costs.

Hoag Memorial distinguished Managed Pharmacy Care by relying on a different clause in section 1902(a)(30)(A). The court wrote that the requirement that payments “are sufficient to enlist enough providers so that care and services are available under the plan at least to the extent that such care and services are available to the general population in the geographic area,” unambiguously expressed Congress’ intent such that the court need not defer to the Secretary’s interpretation about whether the requirement was met. It said that the equal-access requirement is a “concrete standard, objectively measurable against the health care access afforded among the general population,” in contrast to the “broad and diffuse” requirement that payments be “consistent with efficiency, economy and quality of care.” Based on this analysis, the court held that the Secretary’s approval of the SPA was arbitrary and capricious under the Administrative Procedure Act (APA) because it failed to consider Medicaid beneficiaries’ access to care relative to that of the general (i.e., non-Medicaid) population.

The APA’s Role in Challenging Medicaid State Plan Amendments

About two years ago, in Armstrong v. Exceptional Child Center, the United States Supreme Court rejected a Section 1902(a)(30)(A) Medicaid reimbursement challenge brought against the state of Idaho for lack of a viable cause of action. In that case, the plaintiff providers had argued that they were entitled to challenge the sufficiency of Idaho’s Medicaid rates pursuant to the Supremacy Clause of the United States Constitution. The Courtheld that the Supremacy Clause “instructs courts what to do when state and federal law clash, but is silent regarding who may enforce federal laws in court, and in what circumstances they may do so.” The Court also asserted that “the Medicaid Act implicitly precludes private enforcement of §30(A)” and expressed skepticism of efforts to “circumvent Congress’s exclusion of private enforcement.” Notwithstanding the Supreme Court’s observation that the Medicaid Act precludes private enforcement, Hoag Memorial allowed a challenge to the sufficiency of Medicaid rates in federal court based on the express statutory cause of action in section 702 of the APA for persons who suffer legal wrong because of agency action.

CMS is Likely to React to the Decision by Considering Additional Evidence When Approving Medicaid Reimbursement SPAs

The holding in Hoag Memorial relied on what the court found to be the Secretary’s failure to consider any evidence regarding the general population’s access to care and services. In the court’s view, such oversight rendered it logically impossible for the Secretary to meet the statutory standard because there could be no way of proving that Medicaid beneficiaries had at least the same level of access to care and services as the general population if the Secretary did not know anything about the general population’s access. Without the ability to make the statutorily mandated comparison, it was not enough that the administrative record included evidence that Medi-Cal beneficiary utilization of hospital outpatient services had not decreased after the payment cut, nor that it included evidence that just as many hospitals provided outpatient services to Medi-Cal beneficiaries.

In 2015, the Centers for Medicare and Medicaid Services (CMS) issued a final rule requiring states considering reductions or restructuring of Medicaid reimbursement that could have an adverse impact on beneficiary access to care to conduct access reviews and submit those findings to CMS along with the request for approval of the reimbursement change. Although the rule references section 1902(a)(30)(A), it does not provide detailed instruction about the evidence that CMS needs from states to evaluate whether the equal-access-to-service component of section 1902(a)(30)(A) has been satisfied. CMS may propose modifications to the rule in response to the Ninth Circuit’s ruling, and begin directing states to submit the kind of evidence the court did not find in the administrative record in Hoag Memorial —either studies directly comparing access to care and services for Medicaid beneficiaries with access for the general population, or independent evidence of the level of access for both groups that CMS can compare when evaluating the SPA.

If CMS modifies the information it requires states to submit in an access review, or if states independently collect comparison data as part of their access reviews, the next round of litigation over equal access for Medicaid beneficiaries may focus not on the Secretary’s failure to consider any evidence at all, but on whether the Secretary considered the right kinds of evidence and drew reasonable conclusions from it. If so, the question of deference will again become paramount because plaintiffs will continue to face uphill battles challenging SPA approvals if courts defer to CMS’ evaluation and interpretation of the evidence. On the one hand, the complexity of the Medicaid program and CMS’ agency expertise in administering it may counsel in favor of deference to the agency. But on the other hand, plaintiffs are likely to argue that deference is not warranted based on the court’s statement in Hoag Memorial that a “straightforward comparison of data under the equal-access requirement would derive little benefit from the Secretary’s expertise.”

It is also possible that the federal government will appeal Hoag Memorial by requesting en banc review at the Ninth Circuit or by appealing to the Supreme Court. As of publication of this article, no petition for further review had been filed.

The Path for Future Medicaid Reimbursement Challenges

Ultimately, Hoag Memorial proves the continuing viability of section 1902(a)(30)(A) challenges to Medicaid reimbursement, even after the defeats for providers in the last few years in the Ninth Circuit and Supreme Court. While APA litigation over the federal approval of Medicaid SPAs is likely to remain challenging for plaintiffs, Hoag Memorial potentially lays the groundwork for future equal-access-to-care arguments and provides support for an argument that courts need not defer to CMS’ conclusions if they are convinced that the Medicaid statute is clear.

Copyright 2017, American Health Lawyers Association, Washington, DC. Reprint permission granted.

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CMS Revokes Billing Privileges for Competitive Bid Supplier

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The Centers for Medicare and Medicaid Services (CMS) has demonstrated that it will not hesitate to use one of its most crippling administrative enforcement tools—the revocation of Medicare billing privileges—against one of its largest suppliers, as is evident in its case against Arriva Medical, LLC. Medicare billing privileges may be revoked for any one (or more) of several grounds laid out in the regulations at 42 C.F.R. § 424.535. In this case, CMS relied upon 42 C.F.R. § 424.535(a)(8), “abuse of billing privileges,” and specifically subsection (i)(A), regarding the submission of a claim for an item or service that could not have been furnished to a specific individual on the date of service because the beneficiary was deceased.

A revocation of billing privileges precludes payment for any claims submitted after the effective date of the revocation, and is accompanied by a ban on re-enrollment. A revocation has much the same impact as an exclusion imposed by the Department of Health and Human Services (HHS) Office of Inspector General (OIG), i.e., no Medicare payment, and in some cases revocations have been imposed after OIG declined to exclude an individual or entity.1 A Medicare revocation can also result in similar actions under Medicaid.

Arriva provides diabetic testing supplies under Medicare’s competitive bidding program, and describes itself as the nation’s largest supplier of home-delivered diabetic testing supplies.2 In October 2016, Arriva was notified by CMS that its billing privileges would be revoked, effective November 4, 2016, with a three year ban on reenrollment, due to the submission of Medicare claims for deceased beneficiaries. On December 6, 2016, Arriva was notified that its competitive bidding contract would be terminated effective January 20, 2017, based upon its lack of Medicare billing privileges.

Arriva filed for administrative review of the revocation of its billing privileges, an appeal that as of this writing is pending with the Departmental Appeals Board (DAB), and filed for a temporary restraining order and injunctive relief in light of the upcoming deadline for termination of its competitive bid contract. In its filing, Arriva alleged that the revocation was based upon 211 claims (0.003%) for supplies shipped to beneficiaries after they had died, out of approximately 5.8 million claims over a five-year period.3 Arriva further noted that CMS found concerns with the supporting claims documentation for 47 of those 211 beneficiaries. However, Arriva argued that any errors in billing for these claims after the beneficiary died were primarily the result of Medicare system flaws, and the revocation itself was related to the backlog of claims appeals before the Office of Medicare Hearings and Appeals.

Defendants (HHS) responded by filing an Opposition to Plaintiff’s First Application for Temporary Restraining Order (TRO) and Preliminary Injunction and Motion to Dismiss Plaintiff’s Complaint (Defendants’ Opposition), in which it was reported that CMS had advised Arriva that CMS was willing to defer the termination of the competitive bidding contract until such time as the DAB rendered the final agency decision on the revocation. Defendants’ Opposition notes that several courts have addressed revocation actions imposed by CMS, including allegations of imminent and irreparable harm, and have dismissed the complaints for lack of jurisdiction. Here, HHS again argued that administrative exhaustion is required before revocation disputes can be heard by a court. Moreover, HHS argued that a post-deprivation avenue for appeal did not violate the supplier’s due process rights, with a lengthy discussion of case law on this issue. Defendants’ Opposition also includes a lengthy discussion of Defendants’ view on the standard for granting a TRO, including arguments that the case law does not support a finding of “irreparable harm” for health care entities even against allegations that they might have to shut down as a result of the challenged action.

By minute order entered on January 4, 2017, the request for a TRO was denied, with the court setting a schedule for plaintiff to file a renewed motion for preliminary injunction and for defendant to file an opposition to that motion as well as a motion to dismiss. The hearing on both motions is currently scheduled for February 8, 2017.

This case should be closely watched for its evaluation of CMS’ revocation authorities.

Originally, this post was an alert sent to the American Health Lawyers Association’s (AHLA) Regulation, Accreditation, and Payment Practice Group Members. It appears here with permission. For more information, visit AHLA’s website.


1 For a discussion of the difference between exclusions and revocations, see Desfosses v. Noridian Healthcare Solutions, LLC, 2015 WL 1196018 (Mar. 16, 2015).

2 Complaint for Declaratory and Injunctive Relief, Arriva Medical, LLC v United States Department of Health and Human Services, Case No. 1:16-cv-02521-JEB (D.D.C.).

3Id.

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