News & Insights


November 15, 2021

Health Headlines – November 15, 2021

New Kidney Transplant Allocation Policy Survives Eighth Circuit Legal Challenge
On November 8, 2021, the Eighth Circuit affirmed a district court order that denied an attempt to preliminarily block the Organ Procurement and Transplant Network’s (OPTN) policy changing the manner in which donor kidneys are allocated to transplant patients. The challenged policy, known as the “Fixed Circle Policy,” gives priority to transplant candidates within 250 miles of the donor hospital. The Fixed Circle Policy is a departure from the longstanding method by which donated organs were first offered to transplant candidates within the donor hospital’s “defined service area” (DSA). 

The OPTN is a private, non-profit entity established by Congress to perform essential functions in implementing the National Organ Transplant Act of 1984, 42 U.S.C. § 273 et seq. (Transplant Act). The Transplant Act requires Organ Procurement Organizations (OPOs)--the not-for-profit organizations within the United States responsible for recovering organs from deceased donors for transplantation--to have a DSA and “effective agreements” with a substantial majority of the healthcare entities in its service area that “have facilities for organ donation.” § 273(b)(1)(E), (b)(3)(A). An OPO’s DSA is generally based on state or metropolitan area boundaries.

According to the Eighth Circuit, the DSA-based organ allocation policy was subject to criticism. The decision cites to an example that under the DSA policy, “if an organ became available in Charleston, South Carolina, it would be offered to a moderately ill patient in Memphis, Tennessee (600 miles away) before a critically ill patient in Atlanta, Georgia (266 miles away) -- and indeed, would have to be flown directly over Atlanta en route to Memphis.”

In 2018, the OPTN identified an alternative scheme to the DSA- and region-based policy. The alternative, known as the Fixed Circle Policy, gives priority to donor candidates within 250 nautical miles of the donor’s hospital. On December 3, 2019, the OPTN Board adopted the 250-mile Fixed Circle Policy and set an implementation date for December 2020. 

The hospital plaintiffs in the case sought preliminary injunctive relief against the Fixed Circle Policy.  The plaintiffs alleged that the policy was arbitrary and capricious and failed to undergo notice and comment rulemaking under the Administrative Procedure Act, and violated the Transplant Act because it would result in fewer total kidney transplants, worse outcomes, and greater donated kidney wastage. The district court denied the hospital’s motion for a temporary restraining order and preliminary injunction on March 12, 2021. The hospital plaintiffs appealed to the Eighth Circuit.

In agreeing with the district court, the Eighth Circuit found the hospital plaintiffs could not make the required showing of: 1) a likelihood to succeed on the merits, 2) irreparable harm, and 3) a balance of the equities and public interest in their favor to warrant a preliminary injunction. Among its findings, the Eighth Circuit concluded that criticisms of the DSA-based policy vitiated the plaintiffs’ claim of arbitrariness and also reasoned that the timing of the hospitals’ concerns “on the eve” of the implementation of the Fixed Circle Policy undermined a showing of irreparable harm. 

The Eighth Circuit’s Opinion is available here

Reporter Michael L. LaBattaglia, Washington, D.C., +1 202 626 5579,

152 Members of Congress Submit Letter Urging Revisions to No Surprises Act Independent Dispute Resolution Process 
On November 5, 2021, 152 members of the U.S. House of Representatives submitted a letter to the Secretaries of the Departments of Health and Human Services, Labor, and the Treasury (the Departments) urging the Departments to amend the second interim final rule implementing the independent dispute resolution (IDR) process under the No Surprises Act to comply with the letter of the law. The Representatives assert that by establishing the qualifying payment amount (QPA) as the presumptive out-of-network rate, the interim final rule contradicts Congress’s bipartisan intent to enact a fair, balanced dispute resolution process to resolve payment disputes between providers and plans. This letter comes on the heels of Texas Medical Association’s federal lawsuit challenging the portions of the interim final rule relating to the IDR process.

The No Surprises Act, enacted in December 2020, prohibits balance billing patients for out-of-network emergency services and non-emergency services rendered by out-of-network providers at in-network facilities. When the No Surprises Act applies, the out-of-network rate payable by the plan is determined by state law or an all-payer model, if applicable. In the absence of state law, reimbursement is determined by the IDR process when the payor and provider cannot agree on a negotiated out-of-network rate. In the IDR process, both parties must submit final offers for payment along with supportive written material to an IDR entity who is required to select between the two offers. The No Surprises Act directs the IDR entity to consider seven factors in making the payment determination, including the qualifying payment amount, which is defined as the plan’s median in-network rate for same or similar items or services in the geographic area; the provider’s level of training experience, and quality outcomes; the market share of the provider and plan; teaching status, case, mix, and scope of services of the provider; patient acuity; demonstrations of good faith efforts to enter into a network agreement with the other party; and, if applicable, prior contracted rates between the parties in the previous four years. The IDR entity cannot consider the provider’s usual and customary rate or the rates paid by government reimbursement programs.

On April 29, 2021, in anticipation of regulations implementing the IDR process, Senators Hassan and Cassidy sent a letter to Secretary Becerra, Secretary Yellen, and Secretary Walsh emphasizing Congress’s desire for the IDR process to be fair and balanced for both providers and facilities on the one hand, and payors and issuers on the other. On September 30, 2021, the Departments issued the second set of implementing regulations which, in part, provided significant additional detail regarding the IDR process and placed a thumb on the scale in favor of the QPA. The second interim final rule established that the IDR entity should presume that the QPA is the appropriate payment amount and should select the offer closest to the QPA unless either party submits credible evidence to establish that the appropriate payment amount is materially different than the QPA. If the IDR entity does not choose the offer closest to the QPA, then the written decision must explain the additional consideration relied upon, whether the information was credible, and the basis by which it determined that the credible information demonstrated that the QPA was materially different from the appropriate out-of-network rate. Additional information on the second interim final rule is available here in a previous issue of Health Headlines.

The portions of the second interim final rule relating to the IDR process have been the topic of much controversy. On October 28, 2021, the Texas Medical Association filed suit in federal district court alleging that the Departments ignored the text of the Act and congressional intent, effectively rewriting portions of the No Surprises Act by requiring the IDR entity to presume the QPA is the appropriate payment amount. The Texas Medical Association asked the court to strike the IDR portions of the second interim final rule that are contrary to the statute and reinstate the process set out in the No Surprises Act.

On November 5, 2021, 152 U.S. Members of the House of Representatives (the Members) submitted a bipartisan letter to Secretary Becerra, Secretary Yellen, and Secretary Walsh (the Secretaries) urging the Secretaries to amend the second interim final rule to align with the letter of the statute and Congress’s intent in enacting the No Surprises Act. Specifically, the letter explained that the No Surprises Act was the result of multiple years of bipartisan and bicameral deliberations wherein Congress considered and declined to implement a benchmark rate in favor of a fair and balanced IDR process. The letter explains that, under the No Surprises Act, the IDR entity is required to consider any information submitted by the parties in light of each of the seven enumerated factors to evaluate the unique circumstance of each billing dispute with no one factor being the default.

The Members explain that the IDR process as implemented does not reflect the way the No Surprises Act was written, does not reflect a policy that could have passed Congress, and does not create a balanced process to settle payment disputes. Instead, the Members assert that the second interim final rule changed the statutory IDR process by creating a de-facto benchmark out-of-network rate. The Members expressed concern that this could incentivize insurance companies to drive payment rates down, which could result in narrower provider networks and decreased patient access to care, particularly in rural and urban underserved areas. The letter urges the Secretaries to amend the second interim final rule to specify that the IDR entity should not default to the QPA but instead consider all of the factors enumerated in the No Surprises Act.

A copy of the Members’ letter is available here. The Departments are still accepting comments on the second interim final rule. Comments are due no later than 5 p.m. on December 6, 2021, and may be submitted here.

Reporter, Alana Broe, Atlanta, +1 404 572 2720,

CMS Releases Final Guidance on Hospital Shared Space Arrangements
On November 12, 2021, CMS released “final guidance” for state survey agencies regarding shared space and co-location arrangements between hospitals and other hospitals or healthcare providers.  This guidance is intended to provide clarification on how hospitals may share and organize spaces, personnel and emergency services. The guidance relatedly seeks to provide clarity on how CMS and state surveyors will evaluate co-location arrangements within the Medicare Conditions of Participation (CoPs). This published guidance, which CMS states is effective immediately, is a revision to draft guidance proposed back on May 3, 2019.

At the outset, CMS clarifies that under Medicare CoPs, hospitals are permitted to share a campus or building with other hospitals and healthcare facilities, recognizing that such facilities may achieve certain efficiencies or accommodate different delivery systems of care by doing so. The stated goal of this guidance is to “allow flexibility” in shared space arrangements while “simultaneously protecting the safety and quality of care for patients.” 

Both the draft and final guidance specify that participating hospitals are to be evaluated as a whole for compliance with the CoPs. However, the final guidance appears to omit specific requirements placed on co-locating facilities, and instead provides general instruction regarding how hospitals should consider how the use of shared spaces, contracted services, staffing and emergency services in co-location arrangements and how such arrangements might implicate compliance with the CoPs. 

For example, the prior draft guidance expressly provides that hospitals are expected to have “defined and distinct spaces of operation” that include clinical spaces and provides description and examples of what could be permissible shared spaces. The final guidance forgoes this granularity, in favor of general guidance that the hospital should “consider whether the hospital’s spaces that are used by another co-located provider risk their compliance with” the CoPs. The final guidance specifies that some concerns that might be implicated by sharing space are patient rights such as the rights to personal privacy, confidentiality of patient records, and to receive care in a safe environment, and infection prevention and control. 

CMS specifies that hospitals are each responsible for providing services in compliance with the hospital CoPs, and when those services are contracted or provided under arrangement in a co-located hospital, they must be provided under the oversight of the governing body of the hospital providing (and thus billing for) the arranged-for services and are treated and evaluated as any other service that is provided directly by the hospital. Some examples of such services given by CMS are laboratory, pharmacy, maintenance, housekeeping, security, and safety related utilities.

With respect to hospital staffing, the final guidance clarifies that whether staff are provided directly by the hospital or under arrangement or contract from another entity, including from facilities co-located with the hospital, the hospital is responsible for ensuring that hospital CoP staffing requirements are met. This final guidance removes specific prohibitions in the draft guidance against staff “floating” between two hospitals during a single shift for purposes of meeting staffing requirements.

With respect to emergency services, CMS recognizes that while hospitals should have policies and procedures to address potential emergency scenarios, that it may be appropriate in certain circumstances to transfer a patient to another provider, such as a co-located facility, for continuation of care. CMS clarifies that co-location does not change a hospital’s Emergency Medical Treatment and Labor Act (EMTALA) obligations, such that a co-located hospital being surveyed that has an emergency department or that is identified as providing emergency services must meet the requirements of EMTALA. The final guidance removes certain emergency services requirements set forth in the proposed draft guidance for a hospital co-located with another that does not have an emergency department. For example, the final guidance omits previously proposed requirements that any contracted staff for the appraisal and initial treatment of emergency patients not be working simultaneously at multiple facilities, and that hospitals without emergency departments co-located with another hospital cannot arrange to have that other hospital respond to its emergency patients.

The final guidance closes with procedures for surveyors examining co-located facilities. Again, the final guidance omits any of the substantive detail provided in the proposed draft guidance regarding what surveyors must obtain and will look for as part of the survey process. Instead, CMS now provides more general instruction that hospitals are to be evaluated for compliance with CoPs, the same as any other hospital and independent of its co-located provider. The final guidance does specify that during a survey, a deficiency might trigger a complaint for a co-located hospital. If this occurs, a complaint investigation can be performed while the surveyor is on-site but would result in two separate surveys with two separate survey reports.

A copy of the CMS’s Final Guidance for Hospital Co-location with Other Hospitals or Healthcare Facilities, Ref: QSO-19-13-Hospital as revised November 11, 2021 can be found on the CMS website here. A copy of the initial draft guidance from May 3, 2019 can also be found here.

Reporter, Jonathan Shin, Atlanta, +1 213 443 4334,


OIG Updates the Self-Disclosure Protocol
On November 8, 2021, OIG released an update to the Self-Disclosure Protocol (SDP). The revised SDP includes a name change for the SDP, increased minimum amounts required to settle under the SDP, a requirement that SDP submissions be made through OIG’s website, and additional clarifications. Fundamental elements of the SDP remain unchanged, such as submission timelines, submission content requirements, and approaches to damages calculations.
The OIG first published the SDP in 1998. The SDP established a process for healthcare providers, suppliers, or other individuals or entities subject to Civil Monetary Penalties (CMPs) to voluntarily report and resolve occurrences of potential fraud involving Federal healthcare programs. The SDP provides guidance on how to investigate conduct, quantify damages, and report conduct to OIG to resolve liability under OIG’s CMP authorities. Between 1998 and 2020, OIG resolved over 2,200 disclosures. Prior to the November 2021 update, the SDP was last amended in 2013.

The November 2021 update to the SDP contains a number of changes, including the following:

  • OIG renamed the protocol from the OIG Provider Self-Disclosure Protocol to the OIG Health Care Fraud Self-Disclosure Protocol. Similarly, OIG changed references in the SDP from “health care providers” to “persons,” which is now a defined term that means an individual, trust or estate, partnership, corporation, professional association or corporation, or other entity, public or private.

  • OIG increased the minimum settlement amounts for the SDP to match statutory minimum penalty amounts. For kickback related submissions accepted into the SDP, OIG increased its minimum settlement amount from $50,000 to $100,000. For all other matters accepted into the SDP, OIG increased its minimum settlement amount from $10,000 to $20,000.

  • OIG now requires SDP disclosures be submitted through OIG’s website. Disclosures by mail will no longer be accepted.

  • OIG did not change the methodology for calculating damages under the SDP. However, OIG clarified that the damage estimate should identify the total estimated damages amount for each affected Federal healthcare program and the sum of estimated damages for all affected Federal healthcare programs.

  • Like in the prior version, OIG reiterated that disclosing parties under Corporate Integrity Agreements (CIAs) may use the SDP. In the updated version, OIG specified that the disclosure must reference the fact the party is subject to a CIA, the disclosing party must send a copy of the disclosure to the disclosing party’s OIG monitor, and disclosures that are Reportable Events under the CIA must also be disclosed separately to OIG.

  • OIG also clarified that the SDP is not suitable for disclosures more appropriately disclosed through the OIG’s Grant Self-Disclosure Program or OIG’s Contractor Self-Disclosure Program.

The updated SDP is available here.

Reporters, Andi Bosshart, Atlanta, +1 404 572 2657, and Lauren S. Gennett, Atlanta, + 1 404 572 3592,


King & Spalding Webinar - The Biden Administration’s New OSHA and CMS Rules: Implications for Healthcare Providers - On Tuesday, November 16, at 12:00 pm ET, King & Spalding will be hosting a 60-minute webinar to discuss the impact of the Biden administration’s release of the new Department of Labor’s Occupational Safety and Health Administration (OSHA) and CMS rules regarding vaccine mandates.

Topics our speakers will discuss include:          

  • The scope of the CMS rule and its applicability to various provider types;

  • The required standards for medical and religious exemptions; and

  • Steps providers can take to document compliance and to maintain Medicare/Medicaid payment and participation.

The presenters include Chris Kenny, Kim Roeder, and Amanda Sonneborn.  To register for the event, click here.