Health Headlines – August 2, 2021

Senator Grassley Introduces Bipartisan Legislation to Change the Application of the FCA’s Materiality Standard– On July 26, 2021, a bipartisan group of legislators led by Iowa Senator Chuck Grassley introduced a pair of bills that would represent the most significant changes to the FCA in more than a decade.  In broad strokes, the legislation would make it more difficult for defendants to argue that certain regulatory violations are not material, make it more difficult for DOJ to dismiss qui tam cases, and strengthen the government’s ability to collect on smaller claims.

The impetus for the new legislation can be traced back to 2016, when the Supreme Court held in Universal Health Services v. Escobar that the FCA’s “materiality standard is demanding.”  In Escobar, the Court invited defendants to show that the government regularly pays claims despite knowing about the regulatory violations at issue, calling such a showing “very strong evidence that those requirements are not material.”  After Escobar, defendants now often seek information about the government’s payment practices. 

In Senator Grassley’s view, Escobar’s reasoning “fails to take into account that government bureaucrats are highly segmented and often unable to make key decisions for their monolithic organizations” and that government officials are not “highly motivated to stop fraud.” 

The first of the bills he introduced in response would not overrule Escobar, but it would reduce its significance.  Among other things, the bill would shift the burden of proof to the defendant to prove by clear and convincing evidence that violations are not material.  It would also require courts to award attorney’s fees and costs to the government in response to “irrelevant, disproportional, or unduly burdensome” discovery in declined qui tam cases. 

The first bill would also restrict DOJ’s authority to dismiss qui tam cases under section 3730(c)(2)(A).  It would place on the government “the burden of demonstrating reasons for dismissal” and give relators the right to “show that the reasons are fraudulent, arbitrary and capricious, or contrary to law.”  

The second bill would expand what many have called the “mini-False Claims Act” to allow for recovery of payments up to $1 million (up from $150,000) and expand the number of DOJ officials who can review these claims.  

This new legislation would expand the FCA’s footprint and breathe oxygen into many qui tam cases that under current law would likely be dismissed at an early phase of the proceedings as meritless.  With the double threat of mandatory attorney’s fees and costs along with a tougher standard of review, defendants would be less likely to argue materiality.  At the same time, the new hurdles to the exercise of DOJ’s dismissal authority would encourage the filing of more creative or questionable qui tam cases.

For more information on this and other FCA developments, visit King & Spalding’s blog produced in partnership with the U.S. Chamber of Commerce, available here.

Reporters, Ethan P. Davis, San Francisco, +1 415 318 1228, edavis@kslaw.com, and Yelena Kotlarsky, New York, +1 212 556 2207, ykotlarsky@kslaw.com.

CMS Issues Four Payment Rules for FY 2022 - On July 29, 2021, CMS issued final rules for FY 2022 in its yearly update to Medicare payment policies under the Skilled Nursing Facility (SNF) prospective payment system (PPS), Inpatient Rehabilitation Facilities (IRFs) PPS, and Inpatient Psychiatric Facilities (IPS) PPS.  CMS also issued an update to hospice payment rates for FY 2022.  In each of these updates, CMS also updated measures to the quality reporting programs and made adjustments to data collection to account for the COVID-19 public health emergency.  The following discussion highlights some of the proposed changes in each final rule.

SNF PPS

In the SNF PPS final rule, CMS notes that the changes to the PPS will result in an estimated $410 million (1.2%) increase in Medicare reimbursement for SNFs.  The update reflects an estimated 2.7% market basket update less a 0.8 percentage point forecast error adjustment, a 0.7 percentage point multifactor productivity adjustment, and a $1.2 million decrease due to the proposed reduction to SNF PPS rates to account for the recent blood-clotting factors exclusion.  In addition to these figures, CMS estimates $148.25 million of SNF value-based purchasing reductions. 

CMS also adopted changes to the Patient-Driven Payment Model (PDPM), including recalibrating the parity adjustment to account for the COVID-19 public health emergency and updating the PDPM ICD-10 code mappings.  Additionally, CMS adopted two new measures for the SNF quality reporting program beginning with the FY 2023 SNF Quality Reporting Program (QRP): (1) a new claims-based measure that will use Medicare FFS claims data to estimate the rate of Healthcare-Associated Infections (HAIs) acquired during SNF care and resulting in hospitalization; and (2) another measure that requires SNFs to report on COVID-19 health care personnel vaccination.  SNFs must report the vaccination data through the Centers for Disease Control and Prevention National Healthcare Safety Network beginning October 1, 2021.

For the FY 2022 SNF value-based purchasing program, CMS will suppress the 30-Day All-Cause Readmission Measure because, as a result of the COVID-19 public health emergency, the data did not allow for a fair and accurate comparison of SNF performances.  For FY 2022, CMS will assign a performance score of zero to all participating SNFs, regardless of how it performed under the previous scoring methodology.  CMS will “reduce the otherwise applicable federal per diem rate for each SNF by two percent and award SNFs 60% of that withhold, resulting in a 1.2% payback percentage to those SNFs.”

The CMS fact sheet on the SNF PPS final rule (CMS-1746-F) be found here.  The final rule is scheduled for publication on August 4, 2021.  The unpublished pdf is available here.

IRF PPS

The FY 2022 update for IRFs will result in an estimated $130 million, or 1.5%, increase in payments.  The update reflects an estimated 2.6% market basket update less a 0.7 percentage point productivity adjustment.  The rule also contains a 0.4 percentage point decrease in outlier payments to maintain outlier payments at 3.0% of total outlier payments.

CMS finalized the adoption of the COVID-19 Vaccination Coverage among Healthcare Personnel (HCP) Measure, which will require public reporting of COVID-19 vaccination among HCPs beginning with the September 2022 Care Compare refresh or as soon as technically feasible based on data collected for Q4 2021.  CMS also finalized the methodology for public reporting refreshes to account for public reporting with fewer than standard numbers of quarters due to COVID-19 public health emergency exemptions.

CMS also finalized an exclusion from fee schedule adjustments based on information from the DMEPOS Competitive Bidding Program for wheelchair accessories and cushions furnished in connection with group 3 or higher complex rehabilitative power wheelchairs and complex rehabilitative manual wheelchairs.

The CMS fact sheet on the IRF PPS final rule (CMS-1748-F) be found here.  The Final Rule is scheduled for publication on August 4, 2021. The unpublished pdf is available here.

IPF PPS

The FY 2022 update will result in an estimated $80 million, or 2.1%, increase in payments to IPFs.  The update reflects an estimated 2.7% market basket update less a 0.7 percentage point productivity adjustment.  The rule also contains a 0.1% overall increase to aggregate payments to maintain outlier payments at 2.0%.

CMS also adopted teaching policy changes with respect to displaced residents from closures of IPF hospitals teaching programs, and to align IPF teaching policy with changes finalized in the FY 2021 IPPS/LTCH PPS final rule.  The final rule also includes the following updates to five (5) measures to the IPF quality reporting program:

• The COVID-19 Vaccination Coverage Among Healthcare Personnel Measure will require reporting of COVID-19 vaccination coverage of HCPs using the COVID-19 Modules on the CDC’s National Healthcare Safety Network web portal.  This measure applies to the FY 2023 payment determination and subsequent years.

• The Follow-up After Psychiatric Hospitalization (FAPH) Measure will use an expanded cohort based on the Follow-up After Hospitalization for Mental Illness (FUH) measure, which is currently in the IPF QRP, to include patients with substance use disorders and to include more provider types who can provide follow-up care.  The FAPH measure will replace the FUH measure and will apply to the FY 2024 payment determination and subsequent years.

• The Timely Transmission of Transition Record (Discharges from an Inpatient Facility to Home/Self Care or any Other Site of Care) Measure will be removed from the IPF QRP for the FY 2024 payment determination and subsequent years.  CMS estimates this will reduce the information collection burden by nearly 290,000 hours or approximately $0.5 million per year across all IPFs.

• In response to comments, CMS is not removing the Alcohol Use Brief Intervention Provided or Offered and Alcohol Use Brief Intervention (SUB-2/2a) Measure or the Tobacco Use Treatment Provided or Offered and Tobacco Use Treatment (TOB-2/2a) Measure.

• CMS is transitioning to patient-level reporting for chart abstracted measures beginning with voluntary reporting of data for the FY 2023 payment determination and transitioning to required patient-level reporting for the FY 2024 payment determination and subsequent years.

The CMS fact sheet on the IPF PPS final rule (CMS-1750-F) be found here.  The Final Rule is scheduled for publication on August 4, 2021. The unpublished pdf is available here.

Hospice Payment Rates

The FY 2022 update will result in an estimated $480 million, or 2.0%, increase in payments to hospices.  The update reflects an estimated 2.7% market basket update less a 0.7 percentage point productivity adjustment.  The rule also contains increases the statutory aggregate cap amount by 2 percentage points to $31,297.61.  This number is the limit of overall payments per patient that are made to a hospice annually.

The final rule also rebases and revises the labor shares for all four levels of hospice care based on the compensation cost weights for each level of care from the 2018 Medicate cost report data for freestanding hospices.  The FY 2022 labor shares are 66.0% for routine home care, 75.2% for continuous home care, 61.0% for inpatient respite care, and 63.5% for general inpatient care. Additionally, the rule makes changes to hospice CoPs regarding hospice aide competency evaluation standards.  Specifically, CMS is finalizing changes to allow the use of pseudo-patients for hospice aide competency trainings, and to require hospices to conduct competency evaluations related to the deficient and related skills noted during a hospice aide supervisory visit to allow for quicker retraining of aides.

CMS is implementing a new measure to the Hospice Quality Reporting Program for a total of four quality measures. The new measure, the Hospice Care Index, contains 10 indicators of quality calculated from claims data to provide “a comprehensive characterization of the quality of care furnished by a hospice throughout the stay.”  This measure will be publicly reported no earlier than May 2022.  The final rule also requires public reporting of the claims-based Hospice Visits in the Last Days of Life (HVLDL) Measure and adds Consumer Assessment of Healthcare Providers and Systems (CAHPS®) Hospice Survey Star ratings to Care Compare.

The CMS fact sheet on the SNF PPS final rule (CMS-1754-F) be found here.  The Final Rule is scheduled for publication on August 4, 2021.  The unpublished pdf is available here.
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Reporter, Alana Broe, Atlanta, +1 404 572 2720, abroe@ksaw.com.

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