News & Insights


December 27, 2022

Health Headlines – December 27, 2022

Omnibus Bill Includes Relief from Medicare Payment Cuts, Allows for Medicaid Eligibility Assessments, and Extends Telehealth Flexibilities

The House of Representatives and Senate recently passed an omnibus spending bill that funds the Federal government through Fiscal Year 2023 and contains various provisions affecting healthcare providers. Among other things, the bill ameliorates planned Medicare provider cuts. The legislation also allows states to resume Medicaid eligibility determinations and extends telehealth flexibilities first authorized under the COVID-19 public health emergency (PHE).

Medicare payments for physicians, while reduced under the bill, will not be cut as much as anticipated. Originally, physicians faced an 8.5% total Medicare payment reduction beginning on January 1, 2023. This reduction was in addition to a 2% payment cut phased back in earlier this year. The bill waives the 4% Statutory Pay-As-You-Go (PAYGO) sequester cuts scheduled for 2023 and partially reduces the physician fee schedule cuts scheduled for 2023, limiting the expected reduction in Medicare physician pay to 2% in 2023. The cuts would increase to 3.5% in 2024.

Medicaid eligibility assessments (known as Medicaid redeterminations), which involve states checking to ensure that Medicaid beneficiaries meet program requirements before renewing benefits, were put on hold during the COVID-19 pandemic and were expected to restart at the end of the declared PHE. The bill allows states to resume these eligibility assessments at the beginning of April 2023. Providing this date certain and delinking the Medicaid eligibility assessments from the PHE declaration has been estimated to save the Federal government billions of dollars. Congressional negotiators used that savings to pay for expanding women’s postpartum coverage and extending funding for the Children’s Health Insurance Program for two years, until 2029.

The bill includes a two-year extension to telehealth waivers, through December 31, 2024, including the waivers on geographic site restrictions and audio-only telehealth. The bill allows continued flexibility in providing telehealth services and mental health treatment. The omnibus bill also includes several mental health and addiction treatment provisions that facilitate prescription of addiction treatment medications and the expansion of Federal mental health programs. Rural hospital programs, such as the Medicare-dependent hospital program and the low-volume hospital program, originally set to expire on December 23, 2022, are extended for two years, until December 31, 2024.

The omnibus bill includes several provisions to address workforce issues. Beginning in 2026, the bill provides an additional two hundred Medicare Graduate Medical Education (GME) residency positions, half of which would be reserved for psychiatry and psychiatry-subspecialty residencies. The bill waives the cap on annual payments for nursing and allied health education from 2010–2019. 

Reforms to help the government prepare for the next pandemic are included in the omnibus bill. The reforms include enhancing the White House’s ability to coordinate the Federal government’s response to infectious outbreaks and requiring Senate confirmation of the Director of the Centers for Disease Control and Prevention.

The omnibus bill also includes a one-year delay of implementation of the clinical lab fee schedule provisions previously included in the Protecting Access to Medicare Act (PAMA).

Not included in this legislation was a proposal to give FDA authority to regulate diagnostic tests. In addition, the Verifying Accurate Leading-Edge IVCT Development (VALID Act) was ultimately dropped from the final bill, meaning that laboratory-developed tests will continue to be regulated under the Clinical Laboratory Improvements Amendments (CLIA).

President Biden is expected to sign the bill soon.

A copy of the bill is available here.

Reporter, Doug Comin, Atlanta, +1 404 572 3525,

CMS Proposes Standardizing Electronic Health Care Attachments Transactions

On December 21, 2022, HHS issued a new proposed rule to implement the requirements of the Administrative Simplification subtitle of the Health Insurance Portability and Accountability Act of 1996 (HIPAA) and the Patient Protection and Affordable Care Act (ACA).  Specifically, the proposed rule would adopt standards for what HHS calls “health care attachments” transactions to enable patient health information to be exchanged more efficiently between provider and health plan in the claims adjudication and prior authorization processes.  The stated goal of the proposed rule is to reduce the burden on providers who may otherwise be required to submit health care attachments like prior authorization requests manually via mail or fax, and to standardize these processes across the health care industry.

Based on industry research by the Council for Affordable Quality Healthcare (CAQH), CMS estimates that implementing a fully electronic system for transmitting prior authorization information could save as much as $454 million annually, and that similar savings can be expected by switching to health care attachments for claims adjudication.

HHS had originally issued a proposed rule implementing HIPAA’s administrative simplification requirements to require standardized electronic transactions for certain health care transactions in 2005, but that proposed rule was not adopted due to stakeholder feedback.  In 2010, the ACA reinforced HIPAA’s administrative simplification requirement by requiring the HHS Secretary to adopt and regularly update electronic transaction standards, code set standards, unique identifiers as well as operating rules for the electronic exchange and use of health information for health insurance administration.

The new proposed health care attachments standards cover three general use cases wherein a provider submits documentation to a health plan:

  • Prior Authorization: When a health plan requires prior approval for a service before it is rendered, the proposed rule implements a standardized electronic format for a provider to submit the necessary documentation supporting a prior authorization electronically using HIPAA standards, and for the health plan to provide a response.  Specifically, the proposed rule adopts X12N 278—Health Care Services Request for Review and Response (006020X315)—as the standard a health plan must use to electronically request attachment information from a health care provider to support a prior authorization transaction—and X12N 275—Additional Information to Support a Health Care Services Review (006020X316)—as the standard a provider must use to electronically transmit attachment information to a health plan to support a health care provider’s prior authorization request.
  • Solicited Documents: When a health plan requests additional information in order to adjudicate a submitted claim, the proposed rule adopts a standardized electronic format for a provider to submit the requested documentation.  Specifically, the proposed rule adopts X12N 277—Health Care Claim Request for Additional Information (006020X313)—as the standard a health plan must use to electronically request attachment information from a health care provider to support a health care claim.
  • Unsolicited Documents: When a provider submits a claims attachment along with their initial submission of a health care claim (for instance, if required by the health plan’s payment policies), the proposed rule adopts a standardized electronic format to submit such attachments.  Specifically, the proposed rule adopts X12N 275—Additional Information to Support a Health Care Claim or Encounter (006020X314)—as the standard a provider must use to electronically transmit attachment information to a health plan to support a health care claims or equivalent encounter information transaction.

The proposed rule also adopts the HL7 CDA standard for transmitting clinical information as part of these health care attachments.  Specifically, HHS is proposing adopting the following three HL7 CDA standards:

  • HL7 Implementation Guide for CDA Release 2: Consolidated CDA Templates for Clinical Notes (US Realm) Draft Standard for Trial Use Release 2.1, Volume 1—Introductory Material, June 2019 with Errata
  • HL7 Implementation Guide for CDA Release 2: Consolidated CDA Templates for Clinical Notes (US Realm) Draft Standard for Trial Use Release 2.1, Volume 2—Templates and Supporting Material, June 2019 with Errata
  • HL7 CDA R2 Attachment Implementation Guide: Exchange of C-CDA Based Documents, Release 1, March 2017

The proposed rule would also permit providers to sign health care attachments electronically.  The proposed rule defines the term “electronic signature” broadly so that it encompasses current and future electronic signature technologies, and adopts an implementation guide called the HL7 Implementation Guide for CDA Release 2: Digital Signatures and Delegation of Rights, Release 1 (Digital Signatures Guide).

Finally, the proposed rule adopts a modification to the standard for the referral certification and authorization transaction (X12 278) to move from Version 5010 to Version 6020.

The text of the proposed rule is available here.  A CMS fact sheet on the proposed rule is available here, and a CMS press release announcing the proposed rule is here.

Reporter, David Tassa, Los Angeles, +1 213 442 8848,  

GAO Releases Report and Recommendations to CMS to Address Risks Posed by Provider Enrollment Waivers and Flexibilities Implemented as Part of the COVID-19 Response

On December 19, 2022, the U.S. Government Accountability Office (GAO) released a report titled, “Medicare: CMS Needs to Address Risks Posed by Provider Enrollment Waivers and Flexibilities” (GAO-23-105494). The report summarizes GAO’s analysis of the forty-seven (47) waivers and flexibilities that CMS issued to sustain Medicare’s provider workforce and ensure that Medicare beneficiaries had access to care during the COVID-19 pandemic. In its report, GAO makes several recommendations to CMS to address the risks posed by the waivers and flexibilities.

Under Section 1135 of the Social Security Act, the circumstances surrounding the COVID-19 pandemic in March 2020 triggered CMS’s temporary authority to waive or modify Medicare requirements in response to the COVID-19 pandemic to expedite application processing and maintain the provider workforce during the public health emergency. Under this authority, in March 2020, CMS waived or modified forty-seven (47) Medicare enrollment related requirements in response to COVID-19, such as waiving fingerprint-based criminal background checks for providers, postponing all revalidation actions, and postponing site visits at provider locations, among others. CMS also set up toll-free hotlines through the Medicare Administrative Contractors (MACs) to allow certain providers to enroll in Medicare and receive temporary billing privileges to expedite the enrollment process. CMS also amended Medicare regulations and sub-regulatory guidance throughout the COVID-19 pandemic under its non-emergency authorities. This resulted in some of the changes in Medicare requirements made during the COVID-19 pandemic applying temporarily and others permanently. According to GAO, about 222,000 Medicare enrollments occurred under the waivers and flexibilities between March 2020 and March 2022, of which 208 were revoked as of March 2022. Of these revocations, 83% involved durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS) suppliers.

GAO’s report assesses CMS’s oversight activities to protect Medicare from fraud, waste, and abuse by mitigating the risks posed by provider enrollment waivers and flexibilities. According to GAO’s report, CMS has not fully addressed risks related to waiving fingerprint-based criminal background checks and postposing revalidations. GAO asserts that CMS has not developed a plan to evaluate the waivers and flexibilities to improve its response to future emergencies. According to the report, since ending the waiver of fingerprint-based criminal background checks, CMS has not conducted these checks on providers who had them waived, relying instead on monitoring of criminal records associated with providers based on the providers’ names rather than fingerprints. Additionally, GAO found that CMS may not complete all revalidations that were postponed via waiver within the established timeframes.

GAO’s report concludes that CMS has not planned an evaluation of the provider enrollment-related waivers and flexibilities. The report states that according to CMS’s Pandemic Plan, which provides a framework for CMS to respond to pandemics, the agency should conduct post-pandemic activities, including evaluations of its own performance to identify areas for improvement. According to GAO’s report, CMS has not planned any such evaluations, missing opportunities to improve its performance in areas such as preparing for revalidation backlogs and tracking and communicating waivers and flexibilities.

Based on its review of the implementation of the waivers and flexibilities by CMS during the COVID-19 pandemic and the associated risks of such waivers and flexibilities, GAO makes the following four recommendations to the Administrator of CMS:

  • conduct fingerprint-based background checks for high-risk provider types who enrolled during the COVID-19 public health emergency, such as when CMS revalidates these providers’ information;
  • develop policies and procedures to postpone rather than waive fingerprint-based criminal background checks during future emergencies;
  • develop and implement a plan for conducting provider enrollment revalidations to ensure providers are revalidated prior to the end of their 3 to 5-year revalidation cycles, prioritizing moderate- and high-risk provider types; and
  • evaluate waivers and flexibilities for provider enrollment, including related oversight challenges, and address any opportunities for improvement. This evaluation could consider targeting provider enrollment waivers and flexibilities to maintain requirements for provider types CMS considers high risk—including DMEPOS suppliers—and opportunities to track and communicate to program integrity contractors information about each waiver and flexibility providers enrolled under.

The GAO report includes a response from HHS, which concurs with all four recommendations and indicates its intention to explore ways to address these risks and assess the lessons learned from the waivers issued during the COVID-19 pandemic.

The GAO report is available here.

Reporter, Brittany Bratcher, Austin, +1 512 457 2071,

OIG Audit Finds That Providers Did Not Always Comply with Federal Requirements When Claiming Medicare Bad Debts

This month, OIG published its findings relating to its audit on providers who sought reimbursement from Medicare for bad debts.  OIG conducted the audit to confirm whether: (a) providers complied with Federal requirements when claiming Medicare reimbursement for Medicare bad debts; and (b) providers’ policies and procedures for collecting from beneficiaries’ Medicare deductible and coinsurance amounts claimed as Medicare bad debts complied with Federal requirements.

The Audit

OIG performed its audit from June 2020 to October 2022, consisting of a review of 67 randomly selected annual cost reports in which providers claimed Medicare bad debts for cost reporting periods ending in 2016 through 2018.  The cost reports, which are submitted annually to the Medicare Administrative Contractors (MACs), are based on the providers’ financial and statistical records and serve as a mechanism for providers to claim reimbursement for Medicare bad debts.  MACs are responsible for conducting desk reviews and, as appropriate in their discretion, audits of the cost reports to confirm Medicare reimbursement, including the bad-debt claims.  From this sample of cost reports, OIG selected a nonstatistical sample of 148 bad debts and reviewed the documentation submitted by the providers to confirm that they fulfilled their obligation to demonstrate to the MACs that: (a) reasonable collection efforts were made; (b) the debt was actually uncollectible when claimed worthless; and (c) there was no likelihood of future recovery based on sound business judgement.  

In order to analyze the data set forth in the 148 bad debts, OIG reviewed the documentation submitted by the providers to document collection efforts associated with the bad-debt claims.  OIG then contacted the MACs responsible for reviewing such data and confirmed what level of review was conducted by the MAC on the bad debt reported.

OIG also obtained a sample of the providers’ policies and procedures for collecting Medicare bad debts and evaluated whether the policies set out reasonable efforts for collecting such debt.  Generally, “reasonable efforts” means that such efforts are similar to the efforts put forth by a provider to collect comparable amounts from non-Medicare patients.


OIG states that the audit revealed that of the 148 Medicare bad debts in the nonstatistical sample, 86 bad debts were associated with beneficiaries whom providers had deemed indigent and for whom reasonable collection efforts were not required.  Of the remaining 62 bad debts, providers did not make or document reasonable collection efforts and did not comply with Federal requirements when claiming 18 bad debts, resulting in the improper reimbursement of $29,124 by CMS.  OIG also found that MACs did not concentrate on reviewing bad debts when performing audits of cost reports and did not perform a review to ensure that providers engaged in reasonable collection efforts on any of the 67 randomly-selected cost reports.

OIG’s Recommendations

OIG recommends that CMS issue guidance to the MACs that require or encourage more review of Medicare bad debts claimed in cost reports.  OIG indicated that implementing guidelines and thresholds that require an audit may be a mechanism pursuant to which such monitoring could occur.  CMS concurs with the recommendation and states that it would consider OIG’s report when issuing future guidance to the MACs on Medicare bad debts while also considering the budgetary constraints and competing priorities for the MACs.

OIG’s full report is available here.

Reporter, Kimberly Rai, New York, +1 212 556 2198,

OIG Issues Favorable Advisory Opinion Regarding Health System’s Use of Nurse Practitioners for Services Traditionally Performed by Attending Physicians

On December 19, 2022, OIG posted Advisory Opinion 22-20, responding to a request submitted by an acute care hospital (the Hospital) regarding the utilization of its employed nurse practitioners (NPs) to perform services that traditionally have been performed by the patient’s attending physician in two general care units (the Units) of one of its hospital campuses. Although OIG considered the use of the Hospital’s NPs to take on duties for which the physicians would otherwise be responsible to be “remuneration” to those physicians within the meaning of the Anti-Kickback Statute (AKS), OIG ultimately determined the arrangement presented minimal risk of fraud and abuse. Citing several factors that mitigated the risk of abuse in the arrangement, OIG determined that it would not impose administrative sanctions in connection with the AKS or the Civil Monetary Penalty (CMP) Law.

The Arrangement

Physicians who choose to participate in the arrangement may have Hospital-employed NPs render certain care to their patients who are inpatients or in observation status in the Units. OIG cited the following examples of such care, some of which the physicians would otherwise perform:

  • promptly initiating plans of care through existing protocols;
  • implementing any applicable care protocols instituted by the Hospital (e.g., stroke or community-acquired pneumonia protocols);
  • making rounds on assigned units, during which the NPs address concerns of patients, their families, nurses, and other clinicians;
  • responding to laboratory or imaging studies, including arranging prompt follow-up testing and attending to abnormal results as needed;
  • addressing rapid changes in patient condition, including adjusting care plans and ordering diagnostic tools or interventions in real time;
  • educating and supporting patients and families;
  • coaching, educating, and otherwise supporting nurses on the unit, including providing certified continuing education;
  • overseeing and supporting unit-based quality improvement projects; and
  • discharge planning, which at times includes obtaining insurance authorizations for post-acute care and scheduling follow-up testing and appointments.

The Hospital still requires physicians participating in the arrangement to round daily, communicate and collaborate with NPs in rendering care to their patients, and maintain the same accountability for patient care that non-participating physicians do. Per the Hospital, patients in the Units are undergoing active evaluation to determine the cause and extent of their illnesses, which often requires ongoing attention throughout the day and real-time responses to changes in their condition. According to OIG, the Hospital’s experience shows that providing readily available NPs allows for improvements in patient care, with greater efficiency in diagnosis and treatment.

With respect to the process for physicians to participate in this arrangement, the Hospital noted that it sends an annual offer letter describing the arrangement to all physicians with privileges to the Hospital who regularly admit patients to the Units, including physicians employed by Hospital affiliates and physicians in independent practices. The Hospital certified that when offering this arrangement, it does not consider a physician’s volume or value of expected or past referrals. OIG states that there are no ancillary agreements with participating physicians that would induce or reward referrals, and compensation paid to participating physicians outside of the arrangement does not account for any services performed by NPs under the arrangement. Participating physicians are not allowed to bill for the services rendered by NPs, nor rely on the NPs’ documentation in billing for their own services. In addition, the Hospital does not bill payors separately for the NPs’ services.

OIG Determination

OIG advises that the proposal would implicate the AKS due to the remunerative value of NPs providing services to participating physicians’ patients, especially in the Medicare context where physicians are reimbursed for one daily evaluation and management service regardless of the number of visits the physician actually performs in a day. Such renumeration could induce referrals from participating physicians, according to OIG. However, OIG has determined that because the proposed arrangement presents a minimal risk of fraud and abuse under the AKS, OIG will exercise its discretion and not impose sanctions under the AKS. OIG identifies several factors supporting this decision:

  1. The arrangement is restricted to two non-surgical, general care units at one of the Hospital’s campuses. Because the Units are geared towards primary care, the potential referrals are not as profitable to the Hospital as they would be if the Units were surgical units or specialized in nature. OIG noted that it would view the arrangement differently if the Units were specialized or otherwise presented more lucrative opportunities to the Hospital.
  2. Importantly, the Hospital certified that the compensation it pays to participating physicians outside of this arrangement does not account for any services performed by NPs under the arrangement, nor does the Hospital consider a physician’s volume or value of expected or past referrals when offering the arrangement.
  3. Safeguards are in place that lower the potential for fraud or abuse under the AKS. For instance, the Hospital still requires participating physicians to round daily, communicate and collaborate with NPs in rendering care to their patients, and maintain accountability for patient care.  The Hospital makes no payments to physicians under the arrangement and there are no ancillary agreements with participating physicians that would induce or reward referrals.  Participating physicians are not allowed to bill for the services rendered by NPs, nor rely on the NPs’ documentation in billing for their services. OIG distinguishes these facts about the arrangements from “suspect arrangements where, for example, hospitals permit their employed NPs to provide services to physicians’ patients at no cost to the physicians, and the physicians then bill payors, including Federal health care programs, for the services performed by these NPs.”
  4. OIG found that services rendered by NPs in this arrangement appear reasonably designed to improve patient care by making diagnosis and treatment more efficient. In addition, the risk of inappropriately increased costs to Federal health care programs is mitigated since the Hospital does not bill for the services of the NPs. 

The Advisory Opinion includes the customary note that it may not be relied upon by anyone other than the requestor Hospital. A copy of Advisory Opinion 22-20 is available here.

Reporter, Peyton Pair, Washington, D.C., +1 202 626 9229,

OIG Publishes Annual Medicare Laboratory Test Spending Report: COVID Tests, Chemistry Tests Drive Largest Annual Increase in Spending to Date

On December 19, 2022, OIG released its annual report analyzing Medicare Part B spending on laboratory tests over the past year. According to OIG, Medicare Part B spending on laboratory tests increased 17% from $8.0 billion in 2020 to $9.3 billion in 2021. This constitutes the largest one-year increase in Medicare spending on laboratory testing since OIG began monitoring Medicare laboratory test payments in 2014.

According to OIG, spending on chemistry tests remained the highest portion of Medicare laboratory test payments, at $2.1 billion. Chemistry tests measure amounts of proteins, electrolytes and hormones in samples and are used to analyze organ function and overall health. Although the total volume of chemistry tests in 2021 increased from 2020, according to the OIG, it was still lower than in pre-pandemic years, indicating that people have yet to completely return to pre-pandemic behavior in terms of routine medical appointments and testing. 

OIG also reports that COVID tests constituted a huge portion of total spending as well, at $2.0 billion. Based on OIG’s data, more than 10 million Medicare enrollees received at least one COVID test paid for by Medicare Part B in 2021. This COVID test spending included, among other categories, panel tests, antibody tests, and tests billed under a new code (U0005) introduced in 2021 that allows for additional payment from CMS in return for faster test turnaround times.

Spending on genetic tests also increased in 2021 to $1.9 billion. OIG reports that genetic testing spending has continued to increase since it began monitoring laboratory test payments in 2014.

OIG performs this review of the top 25 laboratory tests annually as required by the Protecting Access to Medicare Act of 2014 (PAMA). Its results were largely based on claims data for laboratory tests in 2021 paid for by CMS under the Clinical Laboratory Fee Schedule (CLFS).

The full report can be found here.

Reporter, Will Mavity, Los Angeles, +1 213 218 4043,