On July 13, the Centers for Medicare & Medicaid Services (“CMS”) put out its 2018 Medicare Hospital Outpatient Prospective Payment System Proposed Rule. The Rule proposes, among other things, to dramatically reduce Medicare Part B reimbursement of drugs procured by hospitals at 340B prices—from the current rate of Average Sales Price (“ASP”) plus 6 percent to ASP minus 22.5 percent.  By CMS’s estimate, this could result in savings to the Part B program of $900 million and a corresponding cut to the 340B hospitals which currently receive those payments (and ostensibly use them in furtherance of the 340B program’s goal of assisting safety net providers in stretching their scarce resources).   Continue Reading CMS Proposes Drastic Reduction to Medicare Part B Reimbursement of 340B Drugs

On May 27, 2017 the Texas Governor signed SB 1107 into law, making certain telehealth arrangements possible after the Texas Medical Board imposed limitations on telehealth services in June 2015.  Specifically, SB 1107 adds new §§111.005-7 to the Texas Occupations Code allowing a physician to prescribe drugs as part of a telehealth encounter involving only telephonic or text-based communication between the physician and patient if:  (i) the physician has access to patient medical records and uses either clinically relevant photographic or video images or the patient’s relevant medical records; and (ii) the physician provides the patient with guidance on appropriate follow-up care and, if the patient consents and has a primary care physician, provides to the patient’s primary care physician within 72 hours after the encounter a medical record or other report containing an explanation of the treatment provided by the physician, including the physician’s evaluation, analysis, or diagnosis. Continue Reading Texas Legislature Gives Telehealth a Call Back

money-closeup122486570On June 12, 2017, the Department of Health and Human Services Office of Inspector General (OIG) published a report with the objective of determining whether the Centers for Medicare & Medicaid Services (CMS) made proper incentive payments to providers for “meaningful use” of a certified electronic health record (EHR).  The report, entitled “Medicare Paid Hundreds of Millions in Electronic Health Record Incentive Payments That Did not Comply with Federal Requirements,” estimates that CMS improperly paid $729 million in EHR incentive payments to providers who did not actually comply with the requirements of meaningful use. Continue Reading OIG Turns Focus to Providers for Improper Meaningful Use Payments

Warning signThe Department of Justice (DOJ) recently announced a $155 million settlement agreement with an electronic health records (EHR) vendor, eClinicalWorks (ECW), to settle False Claims Act allegations against the company initially brought by a whistleblower/qui tam relator.  The whistleblower was a software technician for the City of New York City who was implementing ECW software in a prison healthcare system.  The DOJ subsequently intervened and filed suit.  The May 31, 2017 announcement is the first of its kind, holding an EHR vendor accountable for claims made about their certifications.

Provider clients of ECW relied on the assertions made by ECW that their EHR software met the criteria of the Office of the National Coordinator of Health Information Technology (ONC) certification program.  Based on ECW’s software and the assertion of EHR certification, providers believed they had achieved “meaningful use” and received incentive payments under the Medicare and Medicaid EHR Incentive Programs.  Continue Reading Warning EHR Vendors: Evaluate Certifications and Sales/Marketing Activities to Avoid Millions in Liability

On June 5, 2017, the U.S. Supreme Court held that the employee benefit plans of church-affiliated hospitals and healthcare facilities may be exempt from the federal Employee Retirement Income Security Act of 1974 (ERISA), in Advocate Health Care Network et al. v. Stapleton et al. More background information can be found in our December legal alert on this case.

Continue Reading Supreme Court Holds Church-Affiliated Hospitals are Exempt From ERISA Requirements

On May 23, 2017, Texas Governor Greg Abbott signed Senate Bill (SB) 507, expanding the current law dealing with “balance billing.”

Balance billing occurs when an insured patient receives care from a physician, hospital or other healthcare provider, who is not part of a patient’s health plan provider network. The out-of-network provider then bills the patient directly for the portion of medical expenses not covered by insurance, typically at a much higher rate.

In 2009, Texas passed legislation establishing a Texas Department of Insurance (TDI) mediation system aimed at resolving balance billing issues. The 2009 legislation made mediation available to patients who were balanced billed by six types of facility-based providers: radiologists, anesthesiologists, pathologists, ER physicians, neonatologists and assistant surgeons. Effective September 1, 2017, SB 507 expands access to balance billing mediation eligibility to all types of out-of-network providers treating patients at in-network hospitals and other facilities, including freestanding ERs. SB 507 also allows mediation for emergent care balance bills over $500 at any healthcare facility, whether in or out of network. The legislation will cover Texans with PPO plans receiving care from an out-of-network provider at an in-network facility. It will also cover the Teachers Retirement System, in addition to the Employee Retirement System covered by the original legislation.

SB 507 also expands disclosure requirements on network status by health plans, facilities, and other healthcare providers. These new requirements include, among other things, that a bill sent to a patient contain an explanation of the mediation process, and a statement that is substantially similar to the following:

“You may be able to reduce some of your out-of-pocket costs for an out-of-network medical or health care claim that is eligible for mediation by contacting the Texas Department of Insurance at (website) and (phone number, including requiring that the following statement be added to balance bills.”

Providers should become familiar with the new balance billing requirements to determine how they will impact current billing practices. A full copy of SB 507 is available at Texas Legislature Online.

Beginning on June 1, 2017, health care providers of services and suppliers must submit all information necessary for the Centers for Medicare and Medicaid Services (“CMS”) to analyze actual or potential violations of the federal physician self-referral law (the “Stark Law”) using approved forms designed to streamline the CMS Voluntary Self-Referral Disclosure Protocol (the “SRDP”).  If you are currently working on a self-disclosure filing for CMS, you must convert that disclosure to this new format or risk CMS rejecting the disclosure in its entirety. The new forms, contained within Form CMS-10328 available here, must be used for all voluntary Stark Law self-disclosures submitted on or after June 1, 2017, except disclosures by physician-owned hospitals and rural providers regarding a failure to disclose physician ownership on the provider’s website or in any public advertisement.[1] Continue Reading Revised SRDP Process Begins June 1

The United States Supreme Court has long upheld the validity and enforceability of arbitration agreements. Thus, it was no surprise when the Court reversed a decision from the Kentucky Supreme Court that declined to recognize arbitration agreements executed by individuals pursuant to powers of attorney. In Kindred Nursing Centers LP. v. Clark, the Court held that family members with powers of attorney may enter into arbitration agreements on behalf of nursing home residents.

In Kindred Nursing Centers, two separate families admitted their elderly family members, (hereafter “the residents”) to a Nursing Home. In both cases, the family members completed admission paperwork on behalf of the residents, pursuant to powers of attorneys. The admission paperwork included an arbitration agreement, which provided that “any and all claims or controversies arising out of or in any way relating to…the Resident’s stay at the Facility” would be resolved through binding arbitration. When the residents subsequently died, their estates brought lawsuits against the Nursing Home. The Nursing Home moved to compel arbitration.

The Kentucky Supreme Court held that the arbitration agreements were invalid. In so holding, the Kentucky Supreme Court purported to create a “clear statement rule.” Under the “clear statement rule,” the Kentucky Supreme Court held that the family members could only enter into arbitration agreements on behalf of the residents, if the powers of attorney expressly gave them the right to enter into arbitration agreements. Because neither power of attorney expressly addressed arbitration agreements, the Kentucky Supreme Court found them insufficient to authorize the family member to waive the residents’ right to a jury. The United States Supreme Court reversed.

On appeal, the United States Supreme Court explained that the Federal Arbitration Act (FAA) makes arbitration agreements valid, irrevocable, and enforceable.  While arbitration agreements are subject to generally applicable contract defenses, they cannot be invalidated pursuant to rules that apply only to arbitration agreements. The Supreme Court then held that Kentucky’s “clear statement rule” ran afoul of the FAA because it required arbitration agreements to be expressly authorized by powers of attorney when other contracts did not require such express authorization. This violates the FAA because the FAA requires that arbitration agreements be on equal footing as all other contracts.

The United States Supreme Court then analyzed the specific powers of attorney at issue. The first power of attorney authorized the family member to (among other things) “institute legal proceedings” and “make contracts of every nature in relation to both real and personal property.” On remand, the United States Supreme Court instructed the Kentucky Supreme Court to evaluate whether the forgoing language encompassed the ability to execute arbitration agreements. The second power of attorney authorized the family member to “transact, handle, and dispose of all matters affecting [the resident] and/or [the resident’s] estate in any possible way” including the power to “draw, make, and sign in [the resident’s] name any and all … contracts, deeds or agreements.” The Supreme Court held that this second power of attorney was broad enough to encompass the execution of an arbitration agreement. Thus, the second resident’s arbitration agreement must be enforced.

Kindred Nursing Centers removes any doubt that nursing homes may enforce arbitration agreements executed on a resident’s behalf by their attorney-in-fact, provided that the underlying power-of-attorney provides sufficient contracting authority.

ChildrenRunningHallway99900284According to an article published by USA Today, nearly $1 trillion in federal cuts to the Medicaid program approved by House Republicans threaten getting low income and special needs children covered by insurance. Concerns are magnified by the Sept. 30 deadline for CHIP reauthorization, which some worry will be used as a bargaining tool to get the House-passed American Health Care Act (AHCA) through the Senate. AHCA would cut $880 billion from Medicaid over a 10-year period, leaving the most vulnerable without coverage. To read the full article, please visit USA Today.

After a month of spirited efforts to accommodate the disparate interests of the Freedom Caucus and the Tuesday Group, Amendments offered by Representatives Tom MacArthur (R-NJ) and Fred Upton (R-MI) facilitated the hurried House passage of H.R. 1628 – – the American Health Care Act of 2017. Passed as a “reconciliation bill” (more on that later), the House voted 217-213 on May 4, 2017, to dismantle the Affordable Care Act (ACA) and make sweeping changes to the nation’s health care system.

Continue Reading From Slow Repeal to No Repeal to “Amended” Repeal