News & Insights


March 28, 2016

Health Headlines - March 28, 2016


Office of Medicare Hearings and Appeals Launches Settlement Conference Facilitation Pilot for Medicare Part A Claims – The HHS Office of Medicare Hearings and Appeals (“OMHA”) recently launched Phase III of the Settlement Conference Facilitation (“SCF”) Pilot to help resolve outstanding Medicare Part A appeals.  The SCF program is one of several strategies initiated by HHS to attempt to resolve the historic backlog of Medicare claims appeals.  Phase III, which opened on February 26, 2015, covers Part A claims appeals that were not eligible for the 2014-2015 CMS Part A Hospital Appeals Settlement in which CMS offered to resolve at 68 percent outstanding appeals of inpatient claims denied by contractors on the theory the services should have been provided on an outpatient basis.

To be eligible for the new SCF pilot program, Medicare Part A providers must have a pending but unscheduled request for an Administrative Law Judge hearing to appeal a Medicare Part A Qualified Independent Contractor (“QIC”) reconsideration decision as of December 31, 2015; have a minimum of 50 claims at issue totaling at least $20,000 (but no individual claim for more than $100,000); and include all pending appeals for the same item or service type that meets the SCF criteria. 

There are a number of other conditions for participation.  Appellants must certify that they have not filed for bankruptcy and do not expect to file for bankruptcy in the future.  Appeals brought directly by beneficiaries are not eligible (they receive hearing priority over providers) and claims in which a beneficiary has been found liable also are ineligible.  Finally, Part A claims that have been addressed in other venues, like OMHA’s Statistical Sampling Initiative, are ineligible as well.

Both parties’ participation in the settlement process is voluntary and any resolution reached during this process will be binding and not available for appeal.  If the parties do not resolve the appeal, the appellant’s claims are returned to the ALJ hearing process queue in the order that the original hearing request was received.

It is worth noting that, at this time, claims that have been resolved via the SCF process will continue to appear as claim denials in Medicare’s payment systems.  This could cause complications if, for example, future claims related to the settled claims require appeals (for example, repair or future rental claims for equipment that was previously denied but now resolved in the settlement process).  CMS has reported that it is aware of this issue and exploring ways to allow payments for downstream claims in the future.

How to Participate

To formally request a settlement conference under this program, an appellant must first receive a preliminary report of appeals pending at the ALJ level.  While OMHA is responsible for distributing these SCF Preliminary Notifications to potential participants, an interested party can file a Medicare Part A Expression of Interest document to initiate OMHA’s record review process.  Following OMHA’s review of pending appeals, it will provide a preliminary report of pending appeals to CMS and grant the agency 15 calendar days to determine whether it will participate in the settlement conference.  If both parties have agreed to participate in the process, OMHA will issue an SCF spreadsheet with OMHA’s outlay of eligible appeals for the pilot.  The provider will have 15 calendar days to review OMHA’s materials and file a formal Settlement Conference Facilitation package before a settlement conference date is scheduled.  OMHA reports that to date, most settlement conferences have been conducted by telephone, but videoconferencing and/or in-person conferences may be possible depending on the needs and geographic locations of the parties.  Although each case will vary, the timeline that OMHA has articulated suggests that a settlement conference could be scheduled within four-to-six months of initial contact with the SCF program.

More information about OMHA’s Settlement Conference Facilitation Pilot is available here

Reporter, C’Reda Weeden, Washington, D.C. +1 202 626 5572,


DOJ Briefing Attempts to Avert Fourth Circuit Ruling on Use of Statistical Sampling in FCA Cases – On March 17, 2016, the U.S. Department of Justice (“DOJ”) filed a brief in an eagerly anticipated case that addresses the use of statistical sampling in FCA cases for the first time at the appellate level.  The case is United States ex rel. Michaels v. Agape Senior Community, Inc. et al., case nos. 15-2145 and 15-2147 (4th Cir. Sept. 29, 2015).  The DOJ brief attempts to convince the United States Court of Appeals for the Fourth Circuit that it need not consider the statistical sampling issue in issuing its ruling in Agape.

As explained in a previous Health Headlines article, the Fourth Circuit agreed to hear on interlocutory appeal the issue of whether relators can use statistical sampling to prove liability against defendants, who are a network of nursing homes.  The district court found that the use of sampling and extrapolation was inappropriate because this was not a situation where direct proof of damages was impossible.  When the government objected to a settlement agreement between relator and defendants based on its argument that the government’s use of statistical sampling extrapolated to the universe of potential claims would yield higher damages, the district court decided to certify the case for interlocutory appeal. 

In its brief, DOJ first argues that the United States has unreviewable authority to veto settlements in FCA cases, even when it has declined to intervene in the lawsuit.  DOJ contends that if the Fourth Circuit agrees with this view, the court need not even consider whether statistical sampling can be used to establish FCA liability.  DOJ proceeds to argue that if the Fourth Circuit does decide to consider the use of statistical sampling, there is no basis for the district court to “categorically reject” the use of statistical sampling in this case and that the district court’s decision reflected a “fundamental misunderstanding of the nature, purpose, and utility” of statistical sampling.

The DOJ brief is available here.

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


CMS Launches Initiative to Reduce Avoidable Hospitalizations of Nursing Facility Residents with Announcement of Six Cooperative Agreements – Following up on CMS’s August 2015 announcement that it was creating “a new funding opportunity” intended “to reduce avoidable hospitalizations by funding higher-intensity interventions in nursing facilities for residents who may otherwise be hospitalized upon an acute change in condition,” last Thursday CMS announced the six organizations selected to launch the initiative. 

In the first phase of the initiative, begun in 2012, CMS partnered with organizations referred to as “enhanced care & coordination providers” (“ECCPs”) to implement evidence-based clinical and educational interventions that reduce avoidable hospitalizations. CMS reported that during the second performance year of the initiative, calendar year 2014, all sites generally showed reductions in Medicare expenditures relative to a comparison group, with statistically significant declines in total Medicare expenditures at two sites. All sites also generally showed a decline in all-cause hospitalizations and potentially avoidable hospitalizations, with some sites showing statistically significant reductions in at least one of the hospitalization measures.

On August 27, 2015, CMS announced a new funding opportunity as the second phase of the initiative.  The intent of the new payment model is to reduce potentially avoidable hospitalizations by funding higher-intensity treatment services in nursing facilities for residents who otherwise may be hospitalized upon an acute change in condition.  CMS believes the new model will encourage practitioners to provide additional treatments for especially ill or frail nursing facility residents.

CMS has stated that approximately 250 long term care facilities will be selected to implement this second phase of the initiative.  On March 24, 2016, CMS announced cooperative agreements with the following six organizations to first implement this phase:   

  • Alabama Quality Assurance Foundation – Alabama

  • HealthInsight of Nevada – Nevada

  • Indiana University – Indiana

  • The Curators of the University of Missouri – Missouri

  • The Greater New York Hospital Foundation, Inc. – New York

  • University of Pittsburgh Medical Center Community Provider Services - Pennsylvania

CMS will test whether this new payment model further reduces avoidable hospitalizations, lowers Medicare and Medicaid spending and improves the quality of care received by nursing facility residents.

A copy of CMS’s press release announcing the Initiative and the participating sites is available here

Reporter, Ramsey Prather, Atlanta, + 1 404 572 4624,


Medicare Proposal to Expand Coverage of Prediabetes

The Centers for Disease Control and Prevention estimates that 86 million adults, 22 million of those 65 or older, are prediabetic.  Prediabetes, which increases the risk for heart disease, stroke, and diabetes, is a condition in which patients have increased blood sugar levels but not high enough to be considered diabetes.  On Wednesday, the Obama administration plans to propose expanding Medicare to cover programs to prevent diabetes through “lifestyle change programs” in which trained counselors promote healthier eating habits and increased physical activity. 

The expansion in coverage is possible under Affordable Care Act provisions, which President Obama signed six years ago.  The coverage expansion comes after the Y.M.C.A. received a 2012 federal grant of $12 million to test the value of diabetes prevention programs in eight states.  After evaluating the results of the study, Sylvia Mathews Burwell, the Secretary of Health and Human Services, said the “program has been shown to reduce health care costs and help prevent diabetes.”

Specifically, Medicare saved $2,650 for each person enrolled in the prevention program over 15 months compared to similar people not enrolled in the program.  The cost savings more than make up for the cost of the program, according to officials at CMS.  Participants also lost about 5 percent of their body weight, significantly reducing their risk of diabetes.

The proposal, set to be announced at a Y.M.C.A. in Washington, D.C., must go through a period of public comment.  However, after a 2010 change in Medicare, the Secretary can expand programs such as these if she finds, and the Medicare actuary agrees, they would reduce spending without reducing the quality of care.  Because the proposal does not need congressional approval, there is little doubt it will be expanded nationwide.

A press release on the expansion is available here.  The Office of the Actuary certification is available here.

Reporter, Scott Cameron, Sacramento, CA, +1 916 321 4807,


Also In the News

OMB to Review Proposed Rule on Merit-Based Medicare Payment for Physicians – The White House Office of Management and Budget (OMB) is reviewing a proposed rule that would implement the Merit-Based Incentive Payment System (MIPS) for physicians in 2019 based on physician performance grades or physician participation in alternative payment models.  MIPS was established by Congress in 2015 as part of the replacement of the Medicare sustainable growth rate.

Bill Introduced to Delay Implementation of the Comprehensive Care for Joint Replacement Program – On March 24, 2016, Rep. Tom Price and Rep. David Scott introduced H.R. 4848, a bill to delay the implementation of the Comprehensive Care for Joint Replacement (“CJR”) program from April 1, 2016, to January 2018.  Under the CJR model, certain hospitals will receive retrospective bundled payments for lower extremity joint replacement or lower extremity reattachment, including all related care provided within 90 days of discharge.  The final rule, published in November, is available here.  A press release about H.R. 4848 is available here.

King & Spalding to Host Reception at AHLA Institute on Medicare & Medicaid Payment Issues – Please join King & Spalding on April 14, 2016 from 7:00-9:00 p.m. in the Laurel Room (4th Floor) of the Baltimore Marriott Waterfront during the AHLA Institute on Medicare & Medicaid Payment Issues.  Please RSVP by April 7 by clicking here

Save the Date: King & Spalding Reception at HCCA Compliance Institute – Please join Sara Kay Wheeler, President of the Health Care Compliance Association (HCCA), and the King & Spalding team at a reception during the 20th annual HCCA Compliance Institute.  The reception will be held at the Aria Café in Las Vegas on Monday, April 18, 2016, from 5:00-8:00 p.m.

2016 Atlanta Cybersecurity & Privacy Summit, Monday, April 25 – Save The Date – Make plans to join the cybersecurity and privacy experts from King & Spalding, Grant Thornton, and Lockton Companies for the 2016 Atlanta Cybersecurity & Privacy Summit – Moving From “Issue Spotting” To Implementing A Mature Risk Management Model. Join us on Monday, April 25 to learn about the latest strategies for protecting your company against the legal and financial risks of cybersecurity breaches and other privacy incidents. More details and a registration link will be available in the coming weeks. For more information, please click here.