Health Headlines– July 5, 2022

CMS Proposes Updated Distance Rules and Continued Eligibility Reviews for Critical Access Hospitals and Conditions of Participation for Rural Emergency Hospitals – On July 1, 2022, CMS issued a proposed rule in which the agency proposes to update and potentially liberalize the distance rules applicable to Critical Access Hospitals (CAHs) as well as procedures for monitoring the continued eligibility of CAHs (the Proposed Rule). CMS also proposes to establish the enrollment rules and conditions of participation (COPs) for Rural Emergency Hospitals (REHs). Comments on the Proposed Rule are due August 29, 2022.

CMS regulations currently require CAHs to be located more than a 35-mile drive from a hospital or another CAH, or 15 miles in the case of mountainous terrain or in areas with only secondary roads. The regulations do not define secondary roads. But in 2015, CMS issued guidance defining “primary road” to include all U.S. highways. This meant that only roads that were not U.S. highways could qualify as secondary roads. CMS’s new definition put the status of many CAHs in jeopardy because they could no longer meet the 15-mile criterion if any part of the route they relied upon for eligibility was on a U.S. highway.  Under the proposed new definition, a primary road would include all numbered federal highway (with any number of lanes) plus all state highway with two or more lanes in each direction.

The threat to CAHs was very real. In 2017, the United States Court of Appeals for the Fifth Circuit upheld CMS’s decision to deny CAH status to a hospital that was located 31.8 driving miles from the nearest hospital. Baylor Cnty. Hosp. Dist. v. Price, 850 F.3d 257, 259 (5th Cir. 2017). The single road connecting the hospitals has only one lane, no median strip, no passing lanes and no paved shoulders. CMS nonetheless denied CAH status because 28.4 miles of the road was designated a federal highway. 

Several members of Congress, including Senator Chuck Schumer (D-NY) and Representative Elise Stefanik (R-NY), among others, have urged CMS to reconsider its definition of primary road. In response to those concerns, CMS proposes in the Proposed Rule to codify and potentially liberalize its definition of “primary road.” Again, under the proposed new definition, a primary road would include all numbered federal highways (with any number of lanes) plus all state highways with two or more lanes in each direction. Notably, this proposed definition would not have helped the hospital in Baylor because a primary road would continue to include all federal highways. However, CMS is also soliciting comments as to whether federal highways, like state highways, should have two or more lanes in each direction to qualify as a primary road. 

CMS is also proposing to establish a “centralized, data-driven review procedure” to determine both the initial and continued eligibility of CAHs. Under the proposal, every three years CMS will review whether new hospitals have opened within a 50-mile radius of each CAH. If no new hospitals have opened within that radius, the CAH will be automatically recertified. CAHs will be subject to further review if new hospitals have opened within a 50-mile radius since the last review cycle.

CMS’s Proposed Rule also proposes eligibility rules and conditions of participation (COPs) for Rural Emergency Hospitals (REHs). The Consolidated Appropriations Act of 2021 (CAA) created REHs as a new type of Medicare provider effective January 1, 2023. REHs will be the only Medicare provider type that cannot offer inpatient services. They will only be permitted to offer emergency department, observation, and other outpatient services as specified by CMS. REHs will receive enhanced payments from Medicare. This includes 105% of the OPPS rate for covered outpatient services and an additional monthly stipend. REHs will also have to comply with quality reporting requirements. 

The Proposed Rule does not address the payment policies or quality reporting requirements for REHs. CMS says those topics will be addressed in a future rulemaking. The Proposed Rule only addresses the enrollment rules and conditions of participation for REHs.

CMS proposes that in order to enroll as an REH, a hospital must have been either a CAH or a rural hospital with fewer than 50 beds as of December 27, 2020 (the date CAA was enacted). An urban hospital that has reclassified as rural would qualify if its reclassification was active as of December 27, 2020. CMS further proposes that REHs will have to maintain an average length of stay of fewer than 24 hours (as required by the statute).

The agency proposes that hospitals that enroll as REHs will have to comply with a laundry list of conditions to participate in the Medicare program, including but not limited to the following:

• Compliance with state and federal laws, including being located in a state that will license REHs;
• Possess a governing body that is legally responsible for the conduct of the REH;
• Furnish health services in accordance with a written policy that is consistent with state law and developed with the advice and input of the medical staff;
• Provide emergency care necessary to meet the needs of its patients;
• Provide 24/7 laboratory services that are consistent with nationally recognized standards of care for emergency services;
• Provide diagnostic radiologic and pharmacy services to meet the needs of the community;
• Provide mental health services;
• Have a doctor, physician assistant, or nurse practitioner on call and immediately available to provide emergency care; and
• Have in place a transfer agreement with a Level I or Level II trauma center.

The Proposed Rule is expected to be published in the Federal Register on July 6, 2022.  A display copy of the Proposed Rule is available here. The CMS fact sheet is available here.

Reporter, Alek Pivec, Washington D.C., +1 202 626 2914, apivec@kslaw.com. 

OIG Issues Advisory Opinion Regarding Funding for Continuing Education Programs – On June 23, 2022, OIG issued Advisory Opinion No. 22-14 in which it responded to a request for an advisory opinion regarding an ophthalmology practice’s proposal to offer continuing education (CE) programs for local optometrists (Proposed Arrangements) within the context of the federal Anti-Kickback Statute (AKS). In providing a partially favorable opinion as detailed below, OIG shed further light on the concepts of free or reduced-cost goods or services and “substantial independent value” under the AKS.

Factual Background

Requestor is an ophthalmology practice which specializes in cataract and refractive surgery, with one ophthalmologist performing surgical procedures and three optometrists providing primary eye care in support of these surgeries. Under the Proposed Arrangements, Requestor would offer, on an annual basis, two CE programs to local optometrists that would address new technology and pharmacological practice treatment protocols relevant to treating patients who require ophthalmic surgeries, including Requestor’s patients. The course options would consist of a full-day CE program providing 6 hours of CE credit and an evening CE program providing 2 hours of CE credit. Requestor would design the programs to meet requirements for CE certification for optometrists in its state.

Requestor proposed four potential options to fund the CE programs:

• Arrangement A: Requestor would cover all CE program costs and charge attendees a fair market value registration fee.
• Arrangement B: Requestor would cover all CE program costs with no registration fee or outside funding.
• Arrangement C: Requestor would not charge any registration fee to attendees, but instead seek funding from industry sponsors (e.g., medical device and pharmaceutical companies). If the funding from sponsors results in a shortfall, the Requestor would cover the difference. If the funding results in an overage, any such amounts would be donated to a local charity.
• Arrangement D: Requestor would charge a registration fee to attendees, and seek funding from industry sponsors (e.g., medical device and pharmaceutical companies). Again, if the revenue from the registration fees and sponsors results in a shortfall, the Requestor would cover the difference and, if they result in an overage, any such amounts would be donated to a local charity.

Legal Analysis

OIG determined that each of the above the Proposed Arrangements could generate prohibited remuneration under the AKS and the beneficiary inducement provision of the civil monetary penalties law. However, OIG stated that it would not impose administrative sanctions on Requestor in connection with Arrangement A, but did state that Proposed Arrangement B, Proposed Arrangement C, and Proposed Arrangement D, if undertaken, would generate prohibited remuneration under the AKS, if the requisite intent were present, which would constitute grounds for the imposition of sanctions. OIG analyzed each Proposed Arrangement separately under the AKS, as follows:

• Arrangement A: OIG concluded that this arrangement presents a sufficiently low level of risk under the AKS because Requestor certified that the registration amounts Requestor proposes to charge and the anticipated number of attendees comport with the estimated amount of expenses, such that any revenue shortfall or overage should not be substantial. Further, there would be no industry sponsors or sources of funding other than the registration fees and, in certain circumstances, Requestor’s contribution to cover remaining expenses.
• Arrangement B and Arrangement C: OIG concluded that these arrangements pose more than a minimal risk of fraud and abuse because the CE program would be entirely free to all local optometrists who may be in a position to refer federal healthcare program business to the Requestor. OIG noted that it has a longstanding concern about the provision of free goods or services to an existing or potential referral source. The provision of goods or services that have independent value to the recipient or for which the recipient would otherwise pay confers a benefit on the recipient. With respect to Requestor’s funding under Proposed Arrangement B and Proposed Arrangement C, there is heightened risk this remuneration could induce the optometrist attendees and external faculty to refer surgical patients, including Federal health care program beneficiaries, to Requestor, which could result in inappropriate patient steering.
• Arrangement D: OIG concluded that this arrangement poses more than a minimal risk of fraud and abuse under the AKS because the CE programs would be sponsored by industry sponsors, relieving the Requestor of paying any expenses that the Requestor would otherwise incur. OIG has concerns regarding the provision of free goods or services to an existing or potential referral source. The provision of goods or services that have independent value to the recipient or for which the recipient would otherwise pay confers a benefit on the recipient.  Thus, the OIG was unable to conclude that the industry sponsorships in Proposed Arrangement D would pose a sufficiently low risk of fraud and abuse such that it would not potentially seek to impose administrative sanctions.

As is typical, OIG stated that Advisory Opinion No. 22-14 is limited in scope to the Proposed Arrangement. However, this opinion provides guidance as to how OIG might respond to similar requests. The OIG Advisory Opinion is available here.

Reporter, Michelle Huntsman, Houston, +1 713 751 3211, mhuntsman@kslaw.com.

ALSO IN THE NEWS

King & Spalding Webinar – The CMS SAFER Self-Assessment Attestation: New Requirements and New Opportunities for Patient Safety

This panel presentation will explore the recent CMS requirement for Medicare Promoting Interoperability Program (MIPS) eligible hospitals to attest to an annual completion of a Safety Assurance Factors for Electronic Health Records (EHR) Resilience Guides (SAFER) self-assessment. The SAFER Guides are a nine-part risk assessment that includes 147 unique recommended practices to promote the safe use of EHR systems. Topics for discussion include:

• An overview of the SAFER Guides and recommended practices;
• The new hospital self-assessment attestation requirement; and

• Practical strategies to leverage this attestation requirement to create an EHR patient safety advantage for organizations.

The webinar will be held July 27, 2022 from 1:00 to 2:00 p.m. ET.  Registration is free.  More information about the webinar and a link to registration is available here.