American Hospital Association Submits Letter to HHS Secretary Sebelius Commenting on Details of Forthcoming Stark Self-Disclosure Protocol – On July 16, 2010, the American Hospital Association (AHA) submitted a letter to Secretary Sebelius suggesting that HHS create a two-track process for reviewing self-disclosures to be made under the new Stark Law self-disclosure protocol mandated by the Patient Protection and Affordable Care Act (PPACA).
In a March 24, 2009 “Open Letter,” the HHS Office of Inspector General narrowed the scope of the then-HHS-OIG self-disclosure protocol, such that OIG would no longer accept self-disclosure of violations of 42 U.S.C. § 1395nn (the Stark Law) unless there was a colorable suggestion of an Anti-Kickback Statute violation. In response to this, PPACA Section 6409(a)(1) requires HHS to create a self-disclosure protocol through which actual or potential Stark Law violations may be reported. PPACA requires that this new protocol be established no later than six months from PPACA’s enactment—making the deadline September 23, 2010.
Anticipating forthcoming guidance on the protocol, AHA’s letter suggests a two-track process for review of Stark Law self-disclosures. The proposal calls for an expedited review in cases that can be resolved “without significant additional evidence” such as cases of inadequate or incomplete writings. These might include “missing signatures, mistaken payments, mistaken non-collection of payment, and holdover leases” and “any disclosure where the provider can readily demonstrate the material facts and circumstances of an otherwise legitimate, compliant arrangement.” AHA proposes a more detailed review might be appropriate for situations involving “complex payment methodologies, or situations where the extent to which the self-referral law applies is unclear.” In either case, AHA suggests that the protocol not rigidly define categories for each track, as this would limit HHS’s ability to address disclosures on a case-by-case basis.
AHA’s letter further suggests HHS specify additional factors for consideration in resolving Stark Law matters, as provided for in PPACA § 6409(b)(4) which permits HHS to consider “such other factors as the Secretary considers appropriate” in establishing the amount for a violation. Additional proposed mitigating factors include “whether the parties’ failure to meet all the prescribed criteria of an applicable exception was due to an innocent or unintentional mistake; the corrective action taken by the parties; whether the services provided were reasonable and medically necessary; whether access to a physician’s services was required in an emergency situation; [or] whether the Medicare program suffered any harm beyond the statutory disallowance.” The letter also raises the concept of setting stipulated damages for specific categories of violations.
Finally, the letter contends that a self-disclosure under the new protocol “should satisfy the obligation to report an overpayment created under the PPACA (Section 6402(a)). [Moreover,] the timeframe for returning an overpayment should be suspended until the Secretary determines the amount, if any, of an overpayment subject to return.” AHA suggests that the protocol “should address how a provider’s disclosure . . . relates to actions by other agencies and how it relates to other laws.” Although the disclosure of an issue in a self-disclosure protocol would likely preclude any finding of False Claims Act liability, additional clarification would be helpful.
Given the September 23, 2010 deadline for promulgation of the protocol, healthcare industry entities wishing to weigh in on the details of the protocol should take action now to submit comments to HHS. The text of the AHA letter is available by clicking here.
Reporter, Mike Paulhus, Atlanta, +1 (404) 572 2860, mpaulhus@kslaw.com.
Proposed Changes in Outpatient PPS Rule Would Implement Health Reform Law’s Provisions on GME and IME Payments – On July 2, 2010, the Centers for Medicare and Medicaid Services (CMS) posted on its website a proposed rule to implement provisions in the Patient Protection and Affordable Care Act (PPACA) governing direct graduate medical education (GME) and indirect medical education (IME) payments to hospitals. These provisions were included as part of the agency’s proposed updates to the outpatient prospective payment system.
Counting Didactic Time in Non-hospital Settings for GME Purposes
Effective for cost reporting periods beginning on or after July 1, 2009, the proposed rule would permit hospitals to count certain didactic time spent in non-hospital settings for GME (but not IME) purposes. Hospitals that did not include didactic time in non-hospital settings where the resident was primarily engaged in patient care in their as filed cost reports for cost reporting periods beginning on or after July 1, 2009 should make a claim now for that resident time. (In contrast to the IME provisions discussed below, this retroactive provision is not limited to hospitals with “jurisdictionally valid” appeals.)
Counting Didactic Time in Hospitals for IME Purposes
In addition, effective January 1, 1983, the proposed rule would permit hospitals to count didactic time spent in the hospital for IME payment purposes. However, the proposed rule reiterates CMS policy that research time unrelated to the care of a particular patient cannot be counted for IME purposes in any setting. A hospital can benefit from the retroactive effective date permitting the counting of didactic time for IME purposes only for unsettled cost reports or for cost reports for which the hospital has a “jurisdictionally valid” appeal on IME that was pending as of March 23, 2010 (the date of enactment of PPACA). We assume, but have not been able to verify that CMS intends to permit retroactive application of the liberalization of the IME counting rules for hospitals that had not yet filed an appeal as of March 23, 2010, but could still timely file such an appeal. CMS also has not set forth the specific procedures that a teaching hospital should follow to make a claim to count didactic time for IME purposes for prior periods.
Counting Resident Vacation and Other Leave Time
The proposed rule permits hospitals to count vacation time, sick time, and other approved leaves of absence for both IME and GME purposes. This is consistent with longstanding CMS policy. This proposed rule also includes the provision, however, that it will apply only to prior cost reports when there is a jurisdictionally valid appeal pending. This makes no sense since PPACA only confirmed what had been longstanding CMS policy to allow hospitals to count resident leave time when that leave did not extend the duration of the resident’s training. The preamble discussion relating to resident leave time says that it can be counted only by the site to which the resident was assigned at the time of the leave without regard to the entity bearing the cost for the resident’s compensation during the leave period.
Counting Resident Time for GME and IME Purposes in Non-hospital Settings
The proposed rule would implement PPACA provisions relating to counting resident time spent in non-hospital settings. Under the proposed rule, in order to count time spent in a non-hospital setting for IME and GME purposes, the hospital must incur the costs of the salaries and fringe benefits of the resident during the time spent in the non-hospital setting. This eliminates the requirement imposed by CMS that a hospital would also have to compensate the non-hospital site for the time supervising physicians spent training residents. This provision is effective for IME purposes for claims submitted on or after July 1, 2010 and for GME purposes for cost reporting periods beginning on or after July 1, 2010.
In addition, the proposed rule implements a provision of PPACA permitting multiple hospitals to count time spent by a resident training in a non-hospital setting. To qualify under this provision, however, the hospitals must have a written agreement explaining how the time will be allocated, show a reasonable basis for the allocation, and document the amount that they are paying collectively.
Reallocation of Resident Slots
The proposed rule also includes provisions that would implement provisions of PPACA authorizing a redistribution of unused resident slots. For hospitals under the cap (with some exceptions), effective July 1, 2011, CMS will reduce the hospitals’ caps by 65 percent of the difference between the hospital’s cap and the highest number of residents in the three most recent cost reports submitted before March 23, 2010. The rule provides that 70 percent of the redistributed slots would go to states that have the lowest resident-to-population ratios, while 30 percent would go to rural hospitals that are in one of the ten states with the highest percentage of the population living in health professional shortage areas. In addition, the proposed rule sets forth a process that would be used to redistribute slots from hospitals that closed on or after March 23, 2008. The rule sets forth an application process that hospitals should follow in order to apply for a redistribution of unused or closed hospital slots. The application for unused resident slots is due by December 1, 2010, and the application for closed hospital slots is due January 1, 2011.
The full text of the proposed rule is available by clicking here.
Reporter, Harry Richards, Washington, D.C., +1 (202) 626 9126, jrichards@kslaw.com.
CMS Publishes Update to FY 2011 Hospice Wage Index; Seeks Comments on Hospice Cap Calculation – On July 22, 2010, the Centers for Medicare and Medicaid Services (CMS) published in the Federal Register a notice with comment period announcing the FY 2011 hospice wage index. 75 Fed. Reg. 42944 (July 22, 2010). In addition to recalculating the yearly wage indexes for hospices, the notice also implements a 15 percent reduction in the hospice payment budget neutrality adjustment factor (BNAF). The notice also seeks comments regarding possible changes to the hospice cap calculation.
In 1997, CMS (then the Health Care Finance Agency) adopted a new wage index methodology for hospices. Included in that new methodology, however, was a BNAF to ensure that hospice payments under the new methodology would equal hospice payments using the original wage indexes created in 1983. In the FY 2010 hospice wage index final rule, CMS implemented a seven-year elimination of the BNAF. As a result, the BNAF will be reduced by 15 percent in FY 2011, resulting in a 0.6 percent reduction in total hospice payments.
Furthermore, the notice seeks comments on potential changes to the calculation of the hospice cap. By statute, hospice reimbursement is subject to a cap whereby payments to a given hospice cannot exceed a per-beneficiary cap amount multiplied by the total number of beneficiaries a hospice treats in a given cap year. Under the Social Security Act, the number of Medicare beneficiaries considered to be in a hospice program in a given year should be “reduced to reflect the proportion of hospice care that each such individual was provided in a previous or subsequent accounting year . . . .” See 42 U.S.C. § 1395f(i)(2)(C). In other words, a beneficiary’s stay in a hospice that spans multiple cap years is to be apportioned for purposes of the cap based on the beneficiary's length of stay during each cap year. However, CMS’s regulation implementing this provision calculates each hospice’s payment using “the number of Medicare beneficiaries who elected to receive hospice care during the cap period,” 42 C.F.R. § 418.309(b); that is, it includes an individual’s entire stay in a single accounting year depending solely on when the individual filed an election to receive hospice care. Several federal district courts have invalidated the hospice cap regulation as a plain violation of the statute.
CMS seeks comments on a revision to the hospice cap calculation that seemingly attempts to align the calculation methods with the statutory command. The notice states that CMS could “establish that hospice payments will be apportioned . . . in the year of election plus one additional year.” 75 Fed. Reg. at 42950. While CMS’s proposal would apportion hospice stays during multiple cap years, as required by statute, it would only do so over one additional year. The Medicare statute, however, permits hospice beneficiaries to receive an unlimited number of 60-day extensions of hospice care. 42 U.S.C. § 1395d(a)(4). While CMS's notice claims that more than 90 percent of hospice beneficiaries die within two consecutive cap years, the proposal arguably nonetheless violates the statute in that it would only apportion hospice stays for two cap years when a beneficiary may live longer.
Comments on the notice are due by September 20, 2010. The notice is available for viewing by clicking here.
Reporter, Christopher Kenny, Washington, D.C., +1 (202) 626 9253, ckenny@kslaw.com.
CMS Revises CY 2010 OPPS Conversion Factor; IRF PPS Outlier Threshold – On July 15, 2010, CMS announced that it is rescinding Transmittal 726, released July 8, 2010, and replacing it with Transmittal 728 (Change Request 7029). Transmittal 726, and its replacement Transmittal 728, outline certain changes affecting the Fiscal Year (FY) 2010 Inpatient Prospective Payment System (IPPS), Calendar Year (CY) 2010 Outpatient Prospective Payment System (OPPS), Rate Year (RY) 2010 Long Term Care Hospitals Prospective Payment System (LTCH PPS), and FY 2010 Inpatient Rehabilitation Facilities Prospective Payment System (IRF PPS).
The changes are due to certain provisions of the Patient Protection and Affordable Care Act, Pub. L. 111-148, as amended by Pub. L. 111-152, that require changes to the wage index and market basket update, resulting in changes to area wage indices, rates and outlier thresholds for these provider payment systems. CMS released Transmittal 728 to decrease the CY 2010 OPPS conversion factor from $67.362 to $67.241, and increase the IRF PPS outlier threshold for the first half of FY 2010 from $10,625 to $10,652. Otherwise, all information in Transmittal 728 remains the same as set forth in Transmittal 726.
For additional information, see MLN Matters article number MM7029.
Reporter, Kerrie S. Howze, Atlanta, +1 (404) 572 3594, khowze@kslaw.com.
Rick Shackelford Becomes President of American Health Lawyers Association – Richard L. Shackelford, a partner in the healthcare practice of King & Spalding, was installed as president of the 10,000 member American Health Lawyers Association (AHLA) at the close of its annual meeting in Seattle, Washington, in June. Mr. Shackelford is the fourth King & Spalding lawyer elected to the AHLA’s highest office. Partner Glen A. Reed was president from 1998 to 1999; partner Gary W. Eiland, from 1996 to 1997; and retired partner Robert W. Miller, from 1988 to 1989. In addition, King & Spalding partner Dennis M. Barry serves on the AHLA Board of Directors, partner James W. Boswell serves as Chair, Healthcare Liability and Litigation Practice Group, and dozens of other King & Spalding attorneys participate as AHLA authors, committee participants and listserve monitors.
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.
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