News & Insights

Newsletter

April 27, 2020

Health Headlines - April 27, 2020


President Trump Signs $480 Billion Coronavirus Stimulus Bill to Support Small Business, Hospitals and Coronavirus Testing

On Friday, April 24, 2020, President Trump signed into law the Paycheck Protection Program and Health Care Enhancement Act, a $484 billion stimulus package aimed at providing relief for small businesses during the current coronavirus-related economic downturn (Stimulus Act).  The Stimulus Act, which garnered strong bipartisan support, replenishes small business relief programs that were depleted earlier this month after being swamped by demand.  The Stimulus Act also supplements assistance to hospitals and funds an expansion of coronavirus testing capacity.

The Stimulus Act injects $320 billion into the Paycheck Protection Program (PPP), a program designed to help small businesses continue paying wages and other necessary expenses through forgivable loans, $60 billion of which is earmarked for community banks and small lenders.  This funding allows the PPP to take new applicants for the program after initial funds ran out on April 16.  The Stimulus Act brings further support for small business through an additional $60 billion in economic disaster loans and grants for qualifying small businesses. 

The Stimulus Act provides an additional $75 billion in emergency relief for hospitals and other health care providers, through the same funding mechanism established in the Coronavirus Aid, Relief, and Economic Security (CARES) Act, discussed here, which appropriated $100 billion to support providers for healthcare-related expenses or lost revenue attributable to COVID-19.  The Stimulus Act also includes $25 billion in funds to expand coronavirus testing.     

This Stimulus Act, the fourth passed by Congress to respond to the pandemic, has been deemed a “Phase 3.5” response and an “interim” package by lawmakers who expect to put together larger follow-up legislation to the CARES Act. 

The full text of the bill can be found here.

Reporter, Jonathan Shin, Los Angeles, +1 213 443 4334, jshin@kslaw.com.

HHS Announces Policy for Allocation of CARES Act Provider Emergency Fund

On April 22, 2020, HHS provided additional detail as to how it intends to distribute the $100 billion appropriated by Congress for healthcare providers in the Coronavirus Aid, Relief, and Economic Security Act (CARES) Act. This policy statement came at the same time as HHS’s announcement that it was distributing an additional $20 billion from the healthcare provider fund, most of which was delivered to providers on Friday, April 24, 2020.

When it enacted the CARES Act, Congress appropriated $100 billion to be distributed to eligible healthcare providers through the Public Health and Social Services Emergency Fund. Last week, HHS announced that $50 billion from the Emergency Fund would be allocated to eligible healthcare providers impacted by COVID-19 based on their 2018 net patient revenue. This general distribution includes the initial distribution of $30 billion from the Emergency Fund which HHS delivered on April 10, 2020 and April 17, 2020 to providers based on their share of aggregate 2019 Medicare Fee-For-Service reimbursements. This formula, although simple and designed for quick implementation, disadvantaged certain hospitals due to their payor mix.

The $20 billion largely distributed on April 24, 2020 is intended to augment providers’ allocations so that the entire $50 billion general distribution is reallocated based upon a provider’s share of its 2018 net patient revenue. The funds distributed on April 24, 2020 were based on net patient revenue data disclosed in Medicare cost reports. Providers without adequate cost report data on file will need to submit net patient revenue information to HHS through an online portal. However, even providers who received funds automatically must submit net patient revenue information so that it can be verified. Providers who already received payment from the initial distribution of $30 billion are required to supply information from tax returns and to supply estimates of lost revenues in March and April of 2020. Payments will continue to be dispersed weekly, on a rolling basis, as information is validated.

HHS reiterated in its April 22, 2020 announcement that all providers who receive funds from the Emergency Fund are required to sign an attestation. The attestation, available on the CARES Act Provider Relief Fund portal here, requires providers to confirm receipt of funds and agree to the terms and conditions of payment and confirm CMS cost report information. One of the conditions for receiving general funds is that providers must agree not to balance bill certain patients. That is, providers cannot seek collection of out-of-pocket payments from a presumptive or actual COVID-19 patient that are greater than what the patient would have otherwise been required to pay if the care had been provided by an in-network provider. The terms and conditions also include other measures to help prevent fraud and misuse of the funds. HHS notes that all recipients will be required to submit documents sufficient to ensure that these funds were used for healthcare-related expenses or lost revenue attributable to coronavirus. Further, HHS warns that there will be significant anti-fraud and auditing work done by HHS, including the work of the Office of the Inspector General.

In addition to the $50 billion general allocation to all eligible healthcare provides based on net patient revenue, HHS also announced that the remaining $50 billion would be targeted to specific types of providers. For example, HHS intends to distribute $10 billion to providers in COVID-19 high impact areas, with hospitals in New York expected to receive a large share of these funds. This distribution will take into account data that providers previously reported to HHS on COVID-19 inpatient admissions and the number of available intensive care unit (ICU) beds.

An additional $10 billion will be allocated to rural providers, $400 million to the Indian Health Service, and additional funds to specific providers who solely receive Medicaid. Finally, the bulk of the remaining $50 billion will be distributed to providers for providing uncompensated care to COVID-19 patients. HHS did not announce a specific amount for the allocation for treatment of the uninsured but indicated that providers can register for the program beginning April 27th and can begin submitting claims in early May. These funds will allow healthcare providers who provided treatment to uninsured COVID-19 patients on or after February 4, 2020 to receive reimbursement at Medicare rates, subject to available funding.

Finally, HHS’s policy announcement came in advance of the passage of the Paycheck Protection Program and Health Care Enhancement Act, often referred to as the COVID-19 “Phase 3.5” relief legislation, which was signed into law Friday, April 24th. This new legislation appropriates an additional $75 billion to the Public Health and Social Services Emergency Fund to be distributed to eligible healthcare providers. HHS has not yet indicated how it will determine the allocation of this additional appropriation.

HHS’s Press Release with additional information is available here. The CARES Act Provider Relief Fund Application Guide is available here.

Reporter, Isabella E. Wood, Atlanta, + 1 404 572 3527, iwood@kslaw.com.

CMS Reevaluating Accelerated Payment Program and Suspending Advance Payment Program to Part B Suppliers, Effective Immediately

On April 26, 2020, CMS announced that it is reevaluating the amounts that will be paid under its Accelerated Payment Program and suspending its Advance Payment Program to Part B suppliers effective immediately. CMS had previously expanded these temporary loan programs (the Programs) in light of the COVID-19 pandemic, but on Sunday, CMS stated that it is making these changes in light of the $175 billion recently appropriated for healthcare provider relief payments by the Coronavirus Aid, Relief, and Economic Security (CARES) Act and the Paycheck Protection Program and Health Care Enhancement Act.

An accelerated or advance payment pursuant to these Programs are loans intended to provide necessary funds when there is a disruption in claims submission and/or claims processing, such as during a public health emergency. Previously, on March 28, CMS announced it would allow Medicare providers to request accelerated and advance payments during the COVID-19 pandemic. By April 7, 2020, CMS had approved nearly $34 billion in Medicare Payment Advances to providers and suppliers impacted by the COVID-19 pandemic. By April 26, CMS made over $100 billion in payments through these Programs. Pursuant to the April 26, 2020 announcement, CMS will not be accepting any new applications for the Advance Payment Program to Part B suppliers, and CMS will be reevaluating all pending and new applications for the Accelerated Payments in light of historical direct payments made available through HHS Provider Relief Fund.

It should be noted that accelerated and advance payments through the Programs are loans that would need to be repaid. These loans are separate and apart from the $100 billion provided for healthcare providers and suppliers in the CARES Act, which are funds that do not need to be repaid. Likewise, the Paycheck Protection Program and Health Care Enhancement Act appropriated $75 billion specifically to reimburse healthcare providers for the cost of treating COVID-19 patients, including diagnosis, testing, and care of these individuals. Funds disbursed pursuant to the Paycheck Protection Program and Health Care Enhancement Act likewise will not need to be repaid. For more information on the CARES Act Provider Relief Fund and how to apply, visit hhs.gov/providerrelief.

The Updated Fact Sheet from CMS is available here, and the press release is here.

Reporter, Ariana Fuller, Los Angeles, +1 213 443 4342, afuller@kslaw.com.

Health Care Companies Afforded Extra Time to Adopt Data Sharing Rules, Including ONC’s Cures Act Final Rule and CMS’s Interoperability Final Rule

On Tuesday, April 21, 2020, ONC and CMS, in conjunction with HHS, announced a policy of enforcement discretion to allow compliance flexibilities.  This affords providers additional time to come in compliance with the interoperability final rules the agencies announced on March 9th, 2020 in response to the coronavirus disease COVID-19 public health emergency. The announcement allows providers several more months to reach compliance, allowing them to focus their current efforts on battling the pandemic.

The rules in question, by ONC and CMS, promote patient access to data and improved information sharing, implementing the interoperability provisions of the 21st Century Cures Act (Cures Act). ONC’s Cures Act final rule, available here (ONC Final Rule), focuses on giving patients more power over their health care by providing access to information. The ONC Final Rule requires that electronic health information provide the clinical data necessary to advance common data through the U.S. Core Data for Interoperability (USCDI).  The USCDI is a standardized set of health data classes and elements essential for nationwide, interoperable health information exchange, including “clinical notes,” allergies, and medications. The USCDI is designed to help improve the flow of electronic health information and ensure that the information can be effectively understood when received. It also includes essential demographic data to support patient matching across care settings.

The ONC Final Rule also establishes new rules to prevent information blocking practices.  As an example, previously, several electronic health record (EHR) contracts prevented or were perceived to prevent users from sharing information related to the EHRs in use, such as screen shots or video.  ONC will now require all images, imaging information, and imaging elements that can be considered EHR to be stored and made available for transfer between medical institutions. This involves establishment of new provisions to ensure that providers using the certified technology have the ability to communicate about health IT usability, user experience, interoperability, and security including (with limitations) screenshots and video.

The ONC Final Rule will be published in the Federal Register on May 1, 2020.  However, ONC will not enforce the requirements for six months after publication, meaning they will go into effect on November 2, 2020. ONC’s enforcement discretion notice can be found here.

CMS’s Interoperability and Patient Access final rule (CMS-9115-F) (IPA Rule) requires providers participating in Medicare Advantage, Medicaid and federal exchanges to share claims and other health information with patients electronically using a secure channel.  As part of the Trump Administration’s MyHealthEData initiative, the rule focuses on driving interoperability and patient access.  The IPA Rule allows patients to access their health data through a third-party mobile application of their choosing.  CMS’s fact sheet on the new policies can be found here.

While the IPA rule goes into effect on January 1, 2021, CMS will not enforce the requirements for an additional six months.  This means enforcement will begin July 1, 2021.  CMS’s announcement can be found here.

The new rules are designed to improve patient access, which is becoming more important as COVID-19 results in more patients seeking medical care.  However, the agencies are aware that the same public health emergency is resulting in healthcare providers being unable to focus their efforts on compliance.  It appears that the extra time afforded is designed to allow providers to focus on providing appropriate care for their patients during this time while still working toward the eventual goal of improved patient data access and protection.  HHS’s statements regarding the enforcement discretion can be found here.

Additional discussion about the ONC Final Rule and the IPA Rule is available here.

Reporter, Yujin Chun, Los Angeles, +1 213 443 4322, ychun@kslaw.com.

OIG Issues Proposed Rule for Information Blocking Enforcement and Other CMP Matters

On Friday, April 24, OIG issued a proposed rule to amend its civil monetary penalty (CMP) rules to incorporate a number of statutory changes, including the authorization under the 21st Century Cures Act (Cures Act) passed by Congress in 2016 for OIG to investigate claims of information blocking and to impose CMPs for information blocking against health IT developers and certain other healthcare technology entities (Proposed Rule). The Proposed Rule addresses the types of entities subject to enforcement of information-blocking rules, the maximum penalties and relevant factors for determining the penalties to be imposed, the effective date for enforcement to commence, and OIG’s enforcement priorities.  Comments on the Proposed Rule are due by June 23, 2020.

Proposal for Information-Blocking Enforcement

The Cures Act defines “information blocking” generally as “a practice that is likely to interfere with, prevent, or materially discourage access, exchange, or use of electronic health information.” For healthcare providers, the Cures Act additionally requires knowledge that the practice in question is unreasonable and is likely to interfere with, prevent, or materially discourage access, exchange, or use of electronic health information (EHI). Last month, ONC issued a final rule recognizing exceptions for certain “reasonable and necessary activities” that do not constitute information blocking. Those exceptions are discussed here . OIG’s Proposed Rule incorporates the relevant definition of “information blocking” and exceptions from the ONC final rule and would not impose any new information-blocking requirements. Set forth below is a high-level summary of OIG’s enforcement authority under the Proposed Rule.

  • Scope of Coverage / Carveout of Providers: The Proposed Rule provides for OIG to enforce information-blocking rules against health IT developers or other entities offering certified health IT, health information exchanges, and health information networks. It does not apply to healthcare providers, except in the case of any healthcare provider that meets the definition of a health information exchange or health information network.
  • Penalties: OIG may impose a CMP of up to $1 million per violation, which is consistent with the maximum established under the Cures Act. The Proposed Rule defines “violation” as a “practice” that constitutes information blocking, and the preamble discussion includes examples illustrating how OIG intends to distinguish between situations involving a single violation and multiple violations. In determining the amount to impose, OIG must consider certain factors such as the duration of the violations, whether the violations were of the same nature or of several types, and whether the violations could have resulted in physical harm.
  • Effective Date: OIG proposes that it will not begin enforcing the information-blocking rules until 60 days after the establishment of its final rule in order to allow individuals and entities time to comply with the requirements in ONC’s final rule. Alternatively, OIG is considering a firm effective date of October 1, 2020. At a minimum, OIG notes that enforcement would not begin before the ONC final rule becomes effective.
  • Enforcement Priorities: In the preamble discussion, OIG notes that its enforcement priorities will include conduct that (i) caused actual or potential patient harm, (ii) significantly impacted patient care, (iii) was of “long duration,” (iv) caused financial loss to Federal healthcare programs, or (v) was performed with actual knowledge.

Other Proposed Modifications to CMP Regulations

In addition to the proposed information-blocking enforcement regulations, the Proposed Rule also incorporates into OIG’s regulations the authority granted under the Cures Act to impose CMPs and exclusions for “fraud and other misconduct related to HHS grants, contracts, and other agreements.” Finally, the Proposed Rule includes modifications to OIG’s CMP regulations to adjust the maximum penalties, as provided under the Bipartisan Budget Act of 2018 and previously discussed here.

Please click here for a copy of the Proposed Rule.  OIG’s press release announcing the Proposed Rule is available here.

Reporter, J. Gardner Armsby, Atlanta, +1 404 572 2760, garmsby@kslaw.com.

CMS Issues Additional COVID-19 Emergency Declaration Blanket Waivers for Health Care Providers

On April 22, 2020, CMS issued new blanket waivers related to payment for Long-Term Care Hospitals, temporary expansion locations of Rural Health Clinics and Federally Qualified Health Centers, staffing and training modifications in Intermediate Care Facilities for individuals with intellectual disabilities, and the 60-day limit for substitute billing arrangements (e.g., locum tenens).

Long-Term Care Hospitals (LTCHs)

As required by Section 3711(b) of the CARES Act, CMS is waiving Section 1886(m)(6) Social Security Act (the Act) relating to certain site neutral payment rate provisions for LTCHs.   Normally, LTCHs must demonstrate that more than 50 percent of their admitted Medicare cases are reimbursed under the LTCH Prospective Payment System (PPS) rate for a given cost reporting period. If not, CMS cuts payments in a subsequent cost reporting period to an amount comparable to the lower inpatient PPS rate.  Under the waiver, however, all admissions during the COVID-19 Public Health Emergency (PHE) will be counted as discharges paid at the LTCH PPS rate.  Additionally, all admissions during the COVID-19 PHE will be paid at the higher LTCH PPS rate and not the inpatient PPS rate.

Rural Health Clinics (RHCs) and Federally Qualified Health Centers (FQHCs)

While CMS previously waived certain staffing and physician supervision requirements, CMS is now waiving the requirement that RHCs and FQHCs be independently considered for Medicare approval if services are furnished in more than one permanent location. With this restriction temporarily removed, RHCs and FQHCs now have the flexibility to expand locations to meet the needs of Medicare beneficiaries. This includes expanding beyond a rural area that is designated as a shortage area under 42 C.F.R. § 491.5.

Intermediate Care Facilities

For the first time, CMS has issued waivers for intermediate care facility services for individuals with intellectual disabilities or persons with related conditions.  Specifically, CMS is waiving the following:

  • The staffing requirements at 42 C.F.R. §483.430(c)(4)—A facility now has flexibility to cut back on direct support staff who typically perform services such as cleaning of the facility, cooking and laundry services.  Facilities must continue to maintain the minimum staffing ratios for direct care staff required at 42 C.F.R. § 483.430(d)(3), and it is anticipated that activities normally performed by the direct support staff will be performed by the direct care staff. 
  • The community outing requirements at 42 C.F.R. § 483.420(a)(11)—CMS has suspended the requirement that individuals must be afforded the opportunity to participate in social, religious, and community group activities. 
  • The routine staff training requirements at 42 C.F.R. § 483.430(e)(1)—CMS has suspended its requirements for training for programs that are unrelated to the public health emergency.  CMS is not waiving the training requirements, however, at 42 C.F.R. § 483.430(e)(2)-(4) which focus on developmental, behavioral and health needs, and being able to demonstrate skills related to interventions for inappropriate behavior and implementing individual plans.  CMS is also not waiving initial training for new staff hires or training for staff around prevention and care for the infection control of COVID-19.
  • The requirements at 42 C.F.R. § 483.440(a)(1)—CMS is waiving its requirements that mandate a continuous active treatment program, such as supported employment, when such activities would violate state and location requirements regarding stay-at-home orders, social distancing, and travel. 

Reciprocal Billing and Locum Tenens Arrangements

CMS is waiving the 60-day limit in Section 1842(b)(6)(D)(iii) of the Act.  Under Medicare billing rules, a physician or physical therapist can arrange to have a substitute fulfill their duties during an absence (e.g., sick leave), but they must find a different substitute or return to work at the end of the 60-day period.  This waiver allows a physician or physical therapist to use the same substitute for the entire time he or she is unavailable to provide services during the COVID-19 emergency plus an additional period of no more than 60 continuous days after the public health emergency expires.  On the 61st day after the public health emergency ends (or earlier if desired), the regular physician or physical therapist must use a different substitute or return to work in his or her practice for at least one day in order to reset the 60-day clock.

The current list of blanket waivers is available here.

Reporter, Michael L. LaBattaglia, Washington, D.C., +1 202 626 5579, mlabattaglia@kslaw.com.

California Gives Green Light for Hospitals to Resume Scheduled Surgeries That Are “Essential”

On April 22, 2020, California Governor Gavin Newsom announced that scheduled surgeries can resume at hospitals around the State. In making the announcement, the Governor noted that the focus was on “delayed surgeries” for “essential” care, “such as heart valve replacements, angioplasty and tumor removals, and key preventive care services, such as colonoscopies.” He explained that hospitals and local agencies have to work together in making a determination to resume operations, including whether the hospital had implemented appropriate testing and contact-testing protocols, sufficient hospital capacity, while ensuring the safety and health of our health care workers and patients. Governor Newsom explained that the Department of Health and Human Services had concluded that the State’s medical facilities had expanded enough to handle any future surges of new coronavirus patients. Officials determined that hospitals and other healthcare facilities could restart medical procedures based on the increased bed capacity, as well as flattening trend lines in admissions for COVID-19, State Health Secretary Dr. Mark Ghaly said Wednesday.

Governor Newsom’s order can be found here.

The K&S Healthcare Team has created a COVID-19 Recovery Response Assessment specifically tailored for healthcare executives. It identifies a number of issues that should be considered and guidelines and questions to navigate the resumption of operations. Specifically, it identified the following issues that should be considered in the resuming surgeries:

  • Does the healthcare facility have the capability to handle future surges of new COVID-19 patients?
  • Does the healthcare facility have sufficient testing and contact-testing protocol?
  • Does the healthcare facility have adequate supplies and personal protective equipment (PPE)?
  • Have the relevant Medical Boards provided guidance on the resumption of elective services?
  • Has the organization’s geographic region met the gating criteria announced by the White House on April 16, 2020 and referenced in CMS’s recommendations for reopening facilities to provide non-emergent, non-COVID-19 care?
  • Does the organization have the capacity to establish a non-COVID care (NCC) zone to care for patients’ non-COVID healthcare needs?
  • How can organizations safely staff practitioners who may have been delegated to other service lines for COVID-19 purposes?
  • Has the organization implemented policies and procedures to prioritize types of patients and surgical/procedural care and high-complexity chronic disease management in determining which delayed procedures will be performed and in what order and/or groupings?
  • How can primary care providers prepare to safely resume normal volumes of office visits?

To access the K&S Assessment toolkit, please click here.

Reporters, Zuzana Ikels, Los Angeles, +1 415 318 1238, zikels@kslaw.com, and Amanda Hayes-Kibreab, Los Angeles, +1 213 443 4375, ahayes-kibreab@kslaw.com.

ALSO IN THE NEWS

King & Spalding Business Recovery Task Force – Healthcare organizations now must navigate the challenge of both resuming and continuing work in the context of the ever-changing “new normal.” To help our healthcare clients address this challenge, the King & Spalding Coronavirus Business Recovery Task Force has created a tool for healthcare organizations to assess and strengthen their recovery response.  Access the COVID-19 Recovery Response Assessment for Healthcare Organizations here.  Access the Coronavirus Business Recovery – Return to Work Hub here.

CMS Permits Independent Freestanding Emergency Departments to Participate in Medicare and Medicaid – On April 21, 2020, CMS announced that it will allow licensed independent freestanding emergency departments (IFEDs) to participate in Medicare and Medicaid during the COVID-19 pandemic. IEFDs may participate by: (1) becoming affiliated with a Medicare/Medicaid-certified hospital under the temporary-expansion Section 1135 emergency waiver; (2) participating in Medicaid under the clinic benefit if permitted by the State; or (3) enrolling temporarily as a Medicare/Medicaid-certified hospital to provide hospital services. CMS has also outlined the steps for processing attestations for licensed IFEDs to enroll as hospitals during the COVID-19 public health emergency in the memorandum, which can be found here.

Survey of State Shelter-in-Place / Stay-at-Home Orders – As the COVID-19 public health emergency continues, King & Spalding has compiled a survey addressing the range of State orders that have been issued to date, including orders with minimal restrictions up to orders affirmatively ordering individuals to “shelter in place” or “stay at home” with all non-essential business operations ceasing. The survey is available here.