Government Issues

When governing information, it works well to identify and bundle rules (for legal compliance, risk, and value), identify and bundle information (by content and context), and then attach the rule bundles to the information bundles. Classification is a great means to that end, by both framing the questions and supplying the answers. With a classification scheme, we have an upstream “if-then” (if it’s this kind of information, then it has this classification), followed by a downstream “if-then” (if it’s information with this classification, then we treat it this way). A classification scheme is simply a logical paradigm, and frankly, the simpler, the better. For day-to-day efficiency, once the rules and classifications are set, we automate as much and as broadly as possible, thereby avoiding laborious individual decisions that reinvent the wheel.

Recent remarks made by the Centers for Medicare & Medicaid Services (“CMS”) Acting Administrator Andy Slavitt at a healthcare conference indicated that CMS will be ending the “meaningful use” electronic health record (“EHR”) Incentive Program in 2016, five years ahead of its original final end date of 2021. Acting Administrator Slavitt did not elaborate on the specifics of what will replace meaningful use, but stated it would likely be tied to the implementation of the Medicare Access and CHIP Reauthorization Act of 2015 (“MACRA”) and would include various streamlined quality reporting programs. MACRA emphasizes a new Merit-Based Incident Payment System and alternative payment models, and according to Acting Administrator Slavitt, this new law warrants a new streamlined regulatory approach to EHR as well.

Congress has agreed to an omnibus appropriations bill, which contains a number of immigration-related provisions. Though the vote on the bill is set for Dec. 18, it is widely expected to pass. In it, Congress has agreed to extend the EB-5 Regional Center program without change until Sept. 30, 2016. The EB-5 Regional Center program permits foreign nationals to obtain a green card if they invest at least $1 million ($500,000 if invested in a targeted employment area) in a U.S. business that creates at least 10 jobs for U.S. workers.  Several bills have been introduced over the past year to reform the EB-5 program; however, House and Senate leaders were unable to agree on the changes to the program before it was to expire on Dec. 16. Look for changes to the program in upcoming months.

The Centers for Medicare & Medicaid Services (“CMS”) issued its Final Rule on Nov. 16 for the Comprehensive Care for Joint Replacement (“CJR”) model, which mandates that CMS pay providers a bundled payment per episode of care for a Medicare beneficiary undergoing a hip or knee replacement, also referred to as lower extremity joint replacement or LEJR. This marks the first mandated episode-based bundled payment by CMS; all other episode-based bundled payments programs (e.g., Bundled Payment for Care Improvement, or BPCI, initiatives) are voluntary with regard to provider participation. The CJR model will require hospitals in 67 markets to participate in the program initially. A list of the participant hospitals in the selected markets is available here.

In the 2016 Physician Fee Schedule Final Rule published on Nov. 16, 2014, the Centers for Medicare & Medicaid Services (CMS) finalized the proposed exception for timeshare arrangements that we discussed in our earlier blog post [80 Fed. Reg. 70,886, 71,300 (Nov. 16, 2015)]. As we stated in our earlier post, a timeshare or part-time “space use” arrangement typically provides a physician with the use of office space during scheduled time periods. The space usually includes furnishings with basic medical office equipment, supplies and support personnel so that the physician is able to use the space, on a turn-key basis, to see patients during scheduled times. Prior to the implementation of the new timeshare exception, these types of arrangements needed to be structured to comply with the Rental of Office Space Exception, which includes “exclusive use” requirements that many hospitals and physicians found burdensome [42 C.F.R. § 411.357(a)].

The Office of the Inspector General (OIG) for the U.S. Department of Health & Human Services recently published its Fiscal Year 2016 Work Plan, which summarizes OIG’s priorities over the coming year. Notably, the 2016 Work Plan demonstrates the OIG’s expanded focus on delivery system reform and the effectiveness of alternate payment models, coordinated care programs, and value-based purchasing.

There were also noteworthy areas of new focus for several provider types, including skilled nursing facilities, hospice organizations, ambulatory surgical centers, and physician practices.  Below we have highlighted a few key areas from the FY 2016 Work Plan that will likely impact these providers. Please note this is not intended to be a comprehensive summary of the 2016 Work Plan and is focused only on the new OIG focal areas for these certain providers.

The Office of Inspector General (OIG) for the U.S. Department of Health & Human Services (HHS) issued a fraud alert on June 9, 2015, targeting physician compensation agreements that potentially violate the federal Anti-Kickback Statute (42 U.S.C. § 1320a-7b). The Anti-Kickback Statute prohibits remuneration of payment in exchange for referrals of patients receiving aid from federally funded healthcare programs (i.e. Medicare and Medicaid). The OIG alert references 12 recent settlements with individual physicians who entered into “questionable” medical directorship and office staff arrangements. The key concern in those cases centered on individual physicians entering into arrangements where the compensation did not “reflect [the] fair market value for bona fide services the physicians actually provide[d].”

Proposed Stark exception could impact hospital and physicians timeshare/ part-time agreement arrangements

In July 2015, the Centers for Medicare & Medicaid Services (“CMS”) published a proposed rule pertaining to payment policies under the 2016 Medicare Physician Fee Schedule (“Proposed Rule”) (80 Fed. Reg. 41,685). In addition to changes to the Medicare Physician Fee Schedule and other Medicare Part B payment policies, the Proposed Rule addresses modifications to the Stark Law and provides guidance on CMS’s interpretation of existing Stark Law exceptions.

The U.S. Court of Appeals for the District of Columbia Circuit issued an opinion June 12, 2015, lambasting the Centers for Medicare & Medicaid Services’ (“CMS”) rationale in implementing the ban on “per-click” space and equipment leases under the Stark Law. This ban, which went into effect Oct. 1, 2009, was effectively challenged by the Council for Urological Interests (“Council”), which was also behind the successful challenge against the application of the Stark Law to hospital lithotripsy services in 2002.

Among the more colorful descriptions used by the Court in describing CMS’s position were that it was “incomprehensible,” “tortured”, and “the stuff of caprice.” And on an even more scathing note, the Court described CMS’s reading of the legislative history of the Stark Law as belonging to the “cross-your-fingers-and-hope-it-goes-away school of statutory interpretation.”