Translate this page RSS Share this page Print this page


Health Headlines - November 12, 2012

12 Nov 2012

State Health Insurance Exchange Deadline Extended – Department of Health & Human Services (HHS) Secretary Kathleen Sebelius notified the governors of all 50 states by letter dated November 9, 2012, that HHS is extending the deadline for states to submit details of their plans to establish a health insurance exchange.  While states must still declare their intention to create a State-based health insurance exchange by November 16, 2012, they now have until December 14, 2012 to submit the State-based Blueprint application to HHS, which provides the particulars on how the states will implement their respective exchanges.  According to Secretary Sebelius, the extension for submission of the blueprint details is being provided in response to requests from states for additional time, and to enable HHS to continue to provide additional technical support to the states.  Approval (or conditional approval) of a State-based exchange for 2014 will occur by the statutory deadline of January 1, 2013. 

Secretary Sebelius also reminded the governors that funding is now available for the establishment of an exchange “no matter where you are in the process of establishing an Exchange and no matter whether you plan to run your own Exchange, partner with another state, or work with the federal government.”  States have until the end of 2014 to apply for federal funds and have the “flexibility to use such funds both for building Exchanges and for associated start-up costs provided that a state’s Exchange is not yet self-sustaining.”

A copy of the letter is available here.

Reporter, Tracy Weir, Washington, D.C., +1 202 626 2923,

CMS Issues Medicaid EHR Incentive Program FAQ on Zero-Pay Days – CMS has posted a new frequently asked question (FAQ) stating CMS’s policy to exclude zero-pay Medicaid days—those inpatient days for which payment is not made on a patient’s behalf by a State Medicaid program—from the numerator of the Medicaid Share of the Medicaid EHR Incentives Program payment methodology. Pursuant to section 4201 of the HITECH Act, the Medicaid Share is intended to capture a hospital’s Medicaid utilization by including, among other data points, the “number of inpatient-bed-days (as established by the Secretary) which are attributable to individuals who are receiving medical assistance under [Title XIX of the Social Security Act].” This policy arguably conflicts with CMS policy on the treatment of Medicaid inpatient bed days in the numerator of the Medicaid fraction of the Medicare DSH calculation, which includes both paid and unpaid inpatient bed days attributable to Medicaid patients. 

CMS’s FAQ, however, distinguishes between the two policies by focusing on the discretion afforded the Secretary by the HITECH Act in determining “the number of inpatient bed days.” The FAQ states that “the Secretary has ‘established’ how she counts the number of inpatient bed days” by excluding zero-pay days from the Medicaid Share. Moreover, the FAQ reiterates language in the preamble to the Stage 1 Meaningful Use Rule in which CMS distinguishes the Medicare DSH calculation from the Medicaid EHR Incentives Program as distinct programs subject to different rules. See 75 Fed. Reg. 44,314, 44,500 (July 28, 2010). Section 4102 of the HITECH Act precludes judicial review of CMS’s “methodology and standards” for counting inpatient bed days for purposes of determining incentive amounts. The FAQ is available by clicking here.

Providers should note, however, that this policy applies solely to the calculation of the Medicaid Share. The policy does not affect CMS’s recent change in the Stage 2 Meaningful Use rule to begin counting all encounters with a Medicaid patient toward an eligible hospital’s Medicaid patient volume calculation, regardless of whether Medicaid made payment for the encounter. See 77 Fed. Reg. 53,968, 54,121 (Sept. 4, 2012). An eligible hospital that meets or exceeds the threshold is eligible for Medicaid EHR incentives; the Medicaid Share is simply part of the calculation used to determine the eligible hospital’s incentive amount.

Reporter, Christopher Kenny, Washington, D.C., +1 202 626 9253,

CMS Adopts Final Rule Regarding Medicaid Payments for Primary Care Services and Vaccines – The Affordable Care Act (ACA) amended the Social Security Act to require State Medicaid agencies to pay for certain primary care services at rates equivalent to the higher of Medicare rates in effect in CYs 2013 and 2014, or at the rates that would be applicable using the CY 2009 Medicare physician fee schedule conversion factor.  It also provided for 100 percent Federal Financial Participation (FFP) for the difference between the amount a state is required to pay under the new law and the Medicaid State Plan rate that was in effect on July 1, 2009.  The ACA mandated that these rates apply to both payments by fee-for-service Medicaid and Medicaid managed care organizations to physicians with specialty designations of family medicine, internal medicine and pediatrics.  With the expansion of Medicaid looming, the government hopes these higher payments will entice primary care physicians to participate in the Medicaid program.  The final rule published November 6, 2012, in the Federal Register specifies which services and physicians qualify for the higher payment and the method for calculating such payments.  The final rule also updates the maximum administration fee that providers may charge a child’s parents or legal guardian for vaccines administered under the Vaccines for Children (VFC) program.   

With respect to the statutory higher payments for primary care services, CMS clarifies that the higher payment is not applicable to physicians reimbursed through a Federally Qualified Health Center (FQHC), Rural Health Clinic (RHC), health department/clinic encounter or visit rate, or a nursing facility per diem rate.  The agency also permits higher payments for services performed by advance practice clinicians under the personal supervision of physicians and requires that states reimburse advance practice clinicians in CYs 2013 and 2014 in the manner in which the state reimbursed such services as of July 1, 2009.   This means that if the state reimbursed advance practice clinicians at a percentage of the physician fee schedule on July 1, 2009, then it should continue to do so.  CMS also establishes how the higher rates will be calculated and finalizes the proposed list of codes to which the higher statutory payment applies.  As there are codes on the list that some states and managed care organizations do not cover, the agency clarifies that state Medicaid agencies are reimbursed at the higher statutory rate for codes that are covered under the State’s Medicaid Plan or included in a managed care contract.  States and Medicaid managed care organizations are not required to cover services that were not previously otherwise covered. 

With respect to the VCF program, the final rule also adopts the proposed updates to the maximum administration fees that States may permit providers to charge.  Providers continue to have flexibility to determine the administration fee as long as it does not exceed the state’s maximum administration fee and the provider does not deny a vaccine to an eligible child due to the inability to pay the administration fee.  A state is not required to update the maximum administration fee that a provider may charge in its state in light of the final rule, but it must submit an amendment to its State Plan if it chooses to do so. 

Click here to view a copy of the final rule.

Reporter, Kate Stern, Atlanta, +1 404 572 4661,

OIG Approves Proposal to Provide Volunteer Non-Skilled Services to Terminally Ill Patients – In Advisory Opinion No. 12-17, posted November 9, 2012, OIG concluded that a proposal by a non-profit, hospital-based hospice agency (“Requestor”) to provide non-skilled community services to terminally ill patients who do not meet the eligibility requirements for hospice services would not trigger sanctions under the patient inducement statute or the anti-kickback statute.  The Requestor proposes to establish a volunteer program to provide services including companionship, visitation, transportation in the volunteers’ personal automobiles, running errands, food preparation, respite for caregivers, and assistance with reading and writing to terminally ill patients who live at home, “but who do not qualify for hospice services either because they are projected to have more than six months to live or because they do not wish to renounce curative treatment.”

Under the proposed arrangement, the Requestor would employ a volunteer coordinator “to oversee the volunteers and communicate with the patients receiving the non-skilled services.”  Clients would be referred to the program from nearby hospitals, physician offices, and family members. 

OIG acknowledged that the volunteer program “could influence the patients to select the Requestor as their provider of hospice services in the future,” but concluded that the program “would be unlikely to influence patients to choose the [Requestor’s] Hospital for medical care.”  In any event, OIG concluded that there was low risk of fraud and abuse in Federal health care programs because of three factors.  First, the volunteer program would not be marketed within the community, and clients receiving services would receive information about all home health and hospice providers in the area.  Second, there would be no increased cost to Federal health care programs as a result of the program.  Finally, a patient’s decision to elect hospice care (once diagnosed with a life expectancy of six months or fewer) is unlikely to be based on the availability or unavailability of the volunteer services, but rather on the patient’s comfort with rejecting curative treatment.  For this reason, even to the extent that the program might constitute an “inducement,” there is low risk of overutilization of hospice services.

It is a measure of the breadth of the illegal remuneration statute that the Requestor felt it necessary to seek an advisory opinion on the basis of these seemingly benign facts.

A copy of OIG Advisory Opinion No. 12-17 is available by clicking here.

Reporter, Susan Banks, Washington, D.C., +1 202 626 2953,

MedPac Recommends Significant Cuts to Medicare Payment Caps for Therapy by Nearly 33 Percent – During its November 2 meeting, the Medicare Payment Advisory Commission (MedPAC) voted to recommend lowering Medicare payment caps for outpatient therapy by almost 33 percent.  Medicare currently caps combined payments for occupational and physical therapy at $1,880, and it caps payments for speech-language pathology therapy at the same level. MedPAC will recommend lowering both of these caps to $1,270. 

According to a transcript released by MedPAC, Commission Chairman Glenn M. Hackbarth stated that the recommendation “seeks to strike an appropriate balance” between “limit[ing] Medicare spending and ensuring quality of care by “[d]oing away with hard caps yet tak[ing] steps to manage that cost insofar as possible and, in effect, have . . . a rate of spending that is lower than is happening as we speak.”  Currently, beneficiaries can seek exception from the caps if the beneficiary’s provider attests that the outpatient therapy is medically necessary.  Nevertheless, Congress is required to reauthorize the exceptions process each year, and the current “exceptions process sunsets at the end of 2012,” according to a presentation released by MedPAC in connection with its November 2 meeting.  MedPAC believes that “caps without exceptions may impede access to necessary treatment.” 

“Currently, we have a system effectively with no caps because there are open-ended exceptions to the caps.  So that’s the current high level of spending, if you will,” Hackbarth added.  “If we allow hard caps to go into effect, there would be a dramatic drop down beginning January 1.  I’m looking for a line somewhere in between those two levels that can help assure appropriate access to needed services while keeping the cost below an unrestrained level of spending.”

MedPAC’s November 2 recommendation to lower outpatient therapy caps was part of a Congressionally-mandated report entitled “Improving Medicare’s payment system for outpatient therapy services.”  MedPAC  is an independent Congressional agency established by the Balanced Budget Act of 1997 to advise Congress regarding issues that affect Medicare.

MedPAC’s report is available by clicking here.

Reporter, Ramsey Prather, Atlanta, +1 404 572-4624,

Insurance Coverage & Recovery Practice Group Client Alert – The following client alert was published on November 9 by the firm’s Insurance Coverage & Recovery Practice Group: “How to Maximize Your Insurance Recovery for Property Damage, Business Interruption, and Supply Chain Losses After Superstorm Sandy.”  The client alert is available by clicking here.

Post-Election Roundtable – On Wednesday, November 14, 2012, from 1:00-2:30 PM Eastern, King & Spalding will be hosting a Roundtable in our Atlanta office focused on how the Presidential and Congressional elections are likely to impact the healthcare industry.  The discussion will focus on both the political and policy implications of topics such as:

  • The future of the Affordable Care Act and other healthcare reform initiatives
  • Medicaid expansion and reform
  • Impending across-the-board cuts to the Federal budget, known as "sequestration"

Our speakers will include The Honorable Robert L. Ehrlich, the former Governor of Maryland and former Member of the United States House of Representatives.  Governor Ehrlich serves as Senior Counsel in our Government Advocacy and Public Policy practice group.  He will be joined by Thomas J. Spulak of our Government Advocacy and Public Policy practice group, as well as by Thomas H. Hawk and Christopher Kenny of our Healthcare practice group. 

You can register to attend in person or by audioconference by visiting  For in-person attendees, lunch will be provided between 12:00 and 1:00 PM if you would like to arrive early for that.  We hope you will be able to join us.

This bulletin provides a general summary of recent legal developments. It is not intended to be and should not be relied upon as legal advice.

>> Back to Top