News & Insights


January 17, 2017

Health Headlines – January 17, 2017

Congress Passes Budget Resolution as First Step to Repeal the Affordable Care Act (ACA); President-elect Trump to Deliver Own Healthcare Reform Plan; First Confirmation Hearing for HHS Nominee; Governors to Discuss Medicaid with Senate – Last week, Congress took the first step in a process to repeal and replace the ACA by passing S. Con. Res. 3, a Fiscal Year 2017 budget resolution, to instruct congressional health committees to write legislation, known as budget reconciliation bills, to rescind many key features of the ACA.

On January 12, 2017, the Senate approved S. Con. Res. 3 by a vote of 51-48, and the House approved the resolution on January 13 by a vote of 227-198.  Senator Rand Paul (R-KY) was the sole Republican vote against the resolution in the Senate; nine Republicans in the House opposed the resolution.  The President does not need to sign this resolution; only simple majorities in Congress are required to pass the legislation and have it take effect.

As directed by S. Con. Res. 3,  four congressional committees with jurisdiction over health care – Senate Finance; Senate Health, Education, Labor, and Pensions; House Energy and Commerce; and House Ways and Means – will each draft legislation to “replace” the ACA, and the content of these reconciliation bills will be forwarded to the House and Senate Budget Committees, which will craft a single bill.  “Replace” legislation needs to pass both the House and Senate, where reconciliation legislation is not subject to filibuster. 

Over the weekend, President-elect Trump promised to deliver his own healthcare reform plan with the goal of providing “insurance for everybody” and including a requirement that drug companies negotiate prices with the Medicare and Medicaid programs.  President-elect Trump noted that his plan is “very much formulated down to the final strokes” but that he is waiting to unveil his proposal after Representative Tom Price is confirmed as HHS Secretary. 

Congress and the President-elect have not come to an agreement on timing of the next step in the “repeal and replace” process.  President-elect Trump has stated that “repeal and replace” should occur  “simultaneously.” House Speaker Paul Ryan (R-WI) has urged that the two be done “concurrently.” Senator Lamar Alexander (R-TN), chairman of the Health, Education,  Labor and Pensions (HELP) Committee, outlined a three step process and urged his colleagues fully repeal the law “only when there are concrete, practical alternatives in place.”  Chairman Alexander’s statement can be found here, on pages S195-196.

Representative Price will have two confirmation hearings – one before the Senate HELP Committee on January 18, 2017, and one to be scheduled before the Senate Finance Committee.   Only the Finance Committee will vote on the Price nomination, and a full Senate vote on the Price nomination is expected in February.  If confirmed as HHS Secretary, Representative Price has promised to divest any holdings in companies that may pose a conflict of interest and to resign as an American Medical Association delegate.  

As Congress considers reforms to Medicaid as part of an ACA replacement plan and more broadly to provide states with greater flexibility, Republican governors and lieutenant governors are scheduled to meet with Senate Finance Committee Republicans this week.  The state officials  from states that did and did not expand Medicaid under the ACA will include:  Gov. Asa Hutchinson (AR); Gov. Rick Scott (FL); Gov. Butch Otter (ID); Gov. Terry Branstad (IA) and Lt. Gov. Kim Reynolds (IA); Lt. Gov. Jeff Colyer (KS); Gov. Rick Snyder (MI); Gov. John Kasich (OH); Gov. Dennis Daugaard (SD); Gov. Greg Abbott (TX); and Gary Gov. Herbert (UT).

Reporter, Allison Kassir, Washington, D.C., +1 202 626 5600,

HHS OIG Issues Final Regulation Addressing Exclusion Authority – On January 12, 2017, the HHS OIG issued its final rule amending regulations relating to its authority under the Affordable Care Act (ACA) to exclude individuals and entities from participation in federal healthcare programs.

One important aspect of the final rule is that the OIG declined to finalize a proposed rule that had no time limitation on the OIG’s ability to initiate an exclusion action under section 1128(b)(7) of the ACA.  Instead, in the final rule, the OIG codified a limitations period.  OIG states that the 10-year limitations period is based on section 1128’s interaction with the False Claims Act (FCA), which allows complaints to be filled up to ten years after the conduct (i.e., the FCA statute of repose).

In addition, the final rule implements proposed definitions of several key terms relating to the concept of “furnishing” goods “directly” or “indirectly.”   According to the OIG, the language in the final rule aligns with the FCA’s definition of what it means to submit a “claim” for payment.  “Because the underlying conduct triggering an exclusion action is comparable to that pursued under the FCA, it would be incongruous to limit the exclusion statute’s reach to outdated payment methodologies and not extend it to newer fraud schemes.”

The final rule also increases the amount of the government’s financial loss to $50,000 in order to be an aggravating factor that would trigger an increase in the period of the exclusion.  “In the current health care fraud environment, the $5,000 and $1,500 financial aggravating factor thresholds do not reflect unusual or relatively high losses.  In order to best reflect the current trends in health care fraud cases, we believe that an increase in amount is appropriate.”

Additionally, the OIG expanded application of its exclusion authority to include obstruction of audits, noting that the expansion of authority is statutory and therefore required.  In addition, the OIG declined to define “audit” in the regulations and stated it would apply the “general, commonsense” meaning of the word “audit” for purposes of the exclusion rule.

The final rule also created an early reinstatement process for providers who have been excluded and are seeking reinstatement.  The OIG states that a three-year presumption against reinstatement is generally sufficient.  However, the OIG will look at the facts and circumstances individually to determine whether reinstatement is appropriate.

The final rule is available here.  It takes effect on February 13, 2017.

Reporter, Jennifer S. Lewin, Atlanta, + 404 572 3569,

MedPAC Votes on Medicare Payment Rate Sufficiency – On January 12, 2017, Medicare Payment Advisory Commission (MedPAC) members unanimously voted to maintain Medicare’s existing updates (i.e., maintain the increases Congress and the HHS Secretary have already established) to hospital and physician service payments.  Members also voted to eliminate updates for ambulatory surgical centers (ASCs) and hospices (i.e., no rate increases).  The only actual increase to payment rates, above current updates, was recommended for outpatient dialysis.  MedPAC generally found Medicare payment rates to be too high for post-acute care and called for payment reductions and rebasing of some of those payment systems.  Although unclear precisely what happens if and when Congress repeals (or replaces) the Affordable Care Act, MedPAC estimates that, under current law, hospitals will have “negative Medicare margins,” but expects access to be preserved in the hospital setting under current rates.  These recommendations will become part of the report MedPAC submits to Congress later this year.

MedPAC came to these recommendations by assessing provider capacity, service volume, access to capital, quality of care, and providers’ costs and payments for Medicare services.  MedPAC estimated that hospital spending recently increased by approximately three percent per beneficiary, due to inpatient price growth, outpatient price growth, increase in outpatient volume, and increase in Part B payments for separately payable drugs.  Nonetheless, a MedPAC staffer stated the current payment update (an approximately 1.85 percent increase) “will balance the need to have payments high enough to maintain access to care and low enough to maintain fiscal pressure on hospitals to control their costs” and MedPAC members unanimously voted to maintain that update.  MedPAC voted that the estimated current law update of a 0.5 percent increase for physician services was likewise sufficient.  MedPAC also recommended that CMS require hospitals to add a modifier to submitted claims related to off-campus, stand-alone emergency departments, which would allow CMS to track such departments’ expansion.

In the ASC context, MedPAC expressed concern that the current quality measures are insufficient and suggested two new measures.  Furthermore, it unanimously voted to recommend that Congress eliminate the payment rate update for ASCs in 2018 (currently two percent) and require ASCs to submit cost data.  MedPAC estimated that hospices would make a 7.7 percent margin in the Medicare context in 2017, and thus recommended unanimously that Congress eliminate the 2018 payment update.  By comparison, MedPAC estimated a negative one percent margin for outpatient dialysis services in 2017, and thus unanimously recommended that Congress increase the payment rate update for 2018.

Lastly, MedPAC found that Medicare payments for post-acute care (home health, skilled nursing facilities (SNFs) and inpatient rehabilitation facilities (IRFs), and to a smaller extent long-term care hospitals (LTCHs)) were high, compared to the costs of caring for beneficiaries.  In years past, MedPAC has recommended lowering or freezing Medicare payment rates for post-acute care.  Looking ahead, MedPAC unanimously voted to recommend the following:

  • For home health, that Congress reduce payments by five percent in 2018 and then require a rebasing of payment rates, and make the system fully prospective based on patient characteristics (and not, e.g., based on therapy visits as a payment factor);
  • For SNFs, that Congress eliminate the market basket update for 2018/2019 and require the Secretary to revise the prospective payment system;
  • For IRFs, that Congress reduce the 2017 payment rate by five percent; and
  • For LTCHs, that Congress eliminate the update to payment rates under the LTCH prospective payment system for 2018.

A transcript of the MedPAC meeting is available here.  The meeting brief is available here.

Reporter, Elizabeth Swayne, Washington, D.C., +1 202 383 8932,

CMS Releases Final Rule Updating Home Health Agency Conditions of Participation­ – CMS issued a final rule, which was published in the Federal Register on January 13, 2017, intended to modernize the home health agency Conditions of Participation (CoPs).  The rule, which goes into effect on July 13, 2017, seeks to improve “the quality of health care services for all home health patients and strengthen patients’ rights,” according to CMS’s January 9, 2017 announcement of the final rule.

As previously reported, CMS has not successfully updated the home health CoPs since 1989.  On October 9, 2014, CMS issued the proposed version of the current rule. The final rule, which deviates minimally from the October 2014 proposed rule, the final rule establishes or modifies the following CoPs:

  • Reporting OASIS information.  In this CoP, the final rule incorporates most of the requirements of 42 C.F.R. § 484.20, relating to the electronic reporting of the OASIS data.  CMS, however, has revised the communications requirement that previously required home health agencies to transmit data using electronic communications software that provided a “[d]irect telephone connection from the [home health agency] to the state agency or CMS OASIS contractor.”  Now, CMS permits OASIS data to be transmitted “[i]n accordance with current CMS transmission policy,” which requires home health agencies “[t]o transmit data using electronic communications software that complies with the Federal Information Processing Standard.”
  • Patient rights.  This CoP establishes several patient rights, which include among others: (1) the right “[t]o have his or her property treated with respect”; (2) the right “[t]o be free from verbal, mental, sexual and physical abuse, including injuries of unknown source, neglect, and misappropriation of property”; (3) the right “[t]o make complaints to the [home health agency] regarding treatment or care that was (or failed to be) furnished which the patient and/or their family believe was inappropriate”; and (4) the right “[t]o participate in, be informed about, and consent to or refuse care.”

In addition to these rights, this CoP provides that patients and patient representatives are entitled to adequate notice of the patient rights.  Specifically, home health agencies are required to provide patients and patient representatives with verbal notice of the patient rights “[d]uring the initial evaluation visit, and in advance of care being furnished by the [home health agency].”  In addition, the home health agency must provide the patient with a written copy of the patient rights information.

  • Comprehensive assessment of patients.  While this CoP retains the majority of the requirements provided in the current § 484.55, CMS expands the CoP to include a new standard, “Content of the comprehensive assessment.”  Specifically, CMS adds “[n]ew content requirements, such as an assessment of psychosocial and cognitive status, which we believe would provide for a more holistic patient assessment.”  This CoP further requires “[t]hat the comprehensive assessment must accurately reflect the patient’s status.” 
  • Care planning, coordination of services, and quality of care.  Under this CoP, home health agencies “[h]ave to provide the patient a plan of care that would set out the care and services necessary to meet the patient-specific needs identified in the comprehensive assessment, and the outcomes that the HHA anticipates would occur as a result of developing the individualized plan of care and subsequently implementing its elements.”  In addition, this CoP requires home health agencies to “[i]ntegrate services, whether services are provided directly or under arrangement, to assure the identification of patient needs and factors that could affect patient safety and treatment effectiveness, the coordination of care provided by all disciplines, and communication with the physician.”
  • Quality assessment and performance improvement (QAPI).  The purpose of QAPI is to “[r]educe medical errors” and to “[i]mpove the quality of health care in all settings.”  To accomplish these goals, the final rule replaces two current CoPs—“Group of professional personnel” and “Evaluation of the agency’s program”—and establishes QAPI, which is a data-driven program meant to evaluate and improve home health agency care for patients.
  • Infection prevention and control.  CMS organizes this CoP under the following standards:  “(1) Prevention, (2) Control, and (3) Education.”  This final rule directs home health agencies to “[f]ollow infection prevention and control best practices, which include the use of standard precautions, to curb the spread of disease.”  Under the “control” standard, CMS expects home health agencies “[t]o maintain a coordinated agency-wide program for the surveillance, identification, prevention, control, and investigation of infectious and communicable diseases.”
  • Skilled professional services.  This new CoP sets forth the requirements for skilled professionals who participate in the interdisciplinary team approach to home health care delivery.  This CoP proposes that skilled professionals “[a]ctively participate in the coordination of all aspects of care where appropriate.”  For purposes of this CoP, “skilled professional services” include “[p]hysician services, skilled nursing services, physical therapy, speech-language pathology services, occupational therapy, and medical social work services.”

To be eligible to provide services to Medicare and Medicaid beneficiaries, home health agencies must meet the above requirements, among others, by July 13, 2017.

Reporter, Brittany Strandell, Atlanta, +1 404 572 2796,


Law360 Names King & Spalding “Firm of the Year” and a Life Sciences “Practice Group of the Year” Law360 named King & Spalding one of three “Firms that Dominated in 2016.”  Law360 described King & Spalding as a “global powerhouse[ ] that strive[s] to deliver excellence and consistency in client service.”  Of note, Kind & Spalding’s Life Sciences practice group won Practice Group of the Year honors.  Other Notable achievements highlighted by Law360 include representing numerous large corporate retailers in significant class action matters involving data and privacy breaches.  King & Spalding also won Practice Group of the Year honors for its, Privacy, Product Liability, White Collar, International Arbitration, and International Trade groups.  Learn more about the announcement here.

King & Spalding to Host 26th Annual Health Law & Policy Forum – Join us on Monday, March 20, 2017, 8:00 AM – 5:30 PM ET, for the 26th Annual Health & Law Policy Forum at the St. Regis Hotel, in Atlanta, Georgia. Keynote speaker Jeffrey Toobin, a senior analyst for CNN and a staff writer for The New Yorker, will discuss the Supreme Court and how it may impact health policy in the next administration. As in previous years, Forum sessions will cover a variety of health law and policy topics. Attendance is $95 per person (lunch included). Capacity is limited. Register here.

Save the Date: 2017 Cybersecurity & Privacy Summit – On Monday, April 24, 2017, King & Spalding will host its 2017 Cybersecurity & Privacy Summit via webinar and in person in Atlanta, Georgia. The Summit will cover the latest developments and strategies for data protection. Additional details to follow.