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September 21, 2020

Health Headlines – September 21, 2020


HHS Publishes General and Targeted Distribution Post-Payment Notice of Reporting Requirements – Under the Provider Relief Fund Terms and Conditions, each recipient is required to submit reports to HHS. This notice supplements HHS’ July 20, 2020 Post-Payment Notice of Reporting Requirements (previously reported on here).  This notice supplements HHS’ July 20, 2020 Post-Payment Notice of Reporting Requirements, available here (previously reported on in the July 27, 2020 Health Headlines, available here).  Furthermore, the reporting system will now be available to providers in early 2021 (previously HHS announced that the reporting system would go live on October 1, 2020).

Provider Relief Fund payment recipients must report on their use of funds by submitting: (1) healthcare-related expenses attributable to coronavirus; and (2) lost revenues attributable to coronavirus.

Expenses Attributable to Coronavirus

Providers that received between $10,000 and $499,999 in aggregated Provider Relief Fund payments are required to report healthcare-related expenses attributable to coronavirus, net of other reimbursed sources (e.g., payments received from insurance and/or patients, and amounts received from federal, state or local governments, etc.) in two aggregated categories: (1) general and administrative (G&A) expenses; and (2) other healthcare-related expenses. These are the actual expenses incurred over and above what has been reimbursed by other sources.

Recipients who received $500,000 or more in payments are required to report healthcare-related expenses attributable to coronavirus, net of other reimbursed sources, and they must do so by reporting more detailed information within the two categories of G&A expenses and other healthcare-related expenses.

G&A expenses include:

  • Mortgage/rent;
  • Insurance;
  • Personnel;
  • Fringe benefits;
  • Lease payments;
  • Utilities/operations; and
  • Other general and administrative expenses.

Healthcare-related expenses include:

  • Supplies;
  • Equipment;
  • Information technology;
  • Facilities; and
  • Other healthcare-related expenses.

Lost Revenues Attributable to Coronavirus

Payment amounts not fully expended on healthcare-related expenses attributable to coronavirus are then applied to lost revenues, represented as a negative change in year-over-year net patient care operating income.  Once revenue information is provided, cost/expense impacts will be calculated based upon a calendar year comparison of 2019 to 2020 healthcare expenses to determine net operating income.  Revenues and expenses include all lost patient care revenues and patient care cost/expense impacts.

The notice further explains revenue from patient care (as related to the payer mix) as follows:

  • Medicare Part A+B: The actual revenues/net charges received from Medicare Part A+B for patient care for the calendar year.
  • Medicare Part C: The actual revenues/net charges received from Medicare Part C for patient care for the calendar year.
  • Medicaid: The actual revenues/net charges received from Medicaid/Children’s Health Insurance Program for patient care for the calendar year.
  • Commercial Insurance: The actual revenues/net charges from commercial payers for patient care for the calendar year.
  • Self-Pay (No Insurance): The actual revenues/net charges received from self-pay patients, including the uninsured or individuals without insurance who bear the burden of paying for healthcare themselves, for the calendar year.
  • Other: The actual gross revenues/net charges from other sources received for patient care services and not included in the list above for the calendar year

Note that recipients may apply payments toward lost revenue, up to the amount of their 2019 net gain from healthcare-related sources.  Recipients that reported negative net operating income from patient care in 2019 may apply payment amounts to lost revenues up to a net zero gain/loss in 2020. 

Other Considerations

Providers will also need to provide non-financial data quarterly, including personnel metrics, patient metrics, and facility metrics.

Additionally, if recipients do not expend their funds in full by the end of calendar year 2020, they will have an additional six months in which to use remaining amounts toward expenses attributable to coronavirus but not reimbursed by other sources or to apply toward lost revenues in an amount not to exceed the 2019 net gain.

Finally, the reporting requirements do not apply to the Nursing Home Infection Control distribution or the Rural Health Clinic Testing distribution.  HHS explains that separate reporting requirements will be announced at a later date for these distributions.  Furthermore, these reporting requirements do not apply to reimbursement from the HRSA Uninsured Program.  Additional reporting may be announced in the future for these payments.

Reporter, Ahsin Azim, Washington, D.C., +1 202 626 9262, aazim@kslaw.com.

HHS Announces $2 Billion Provider Relief Fund for Nursing Homes that Keep COVID Infection and Mortality Low Among ResidentsOn September 17, 2020, HHS announced details about its $2 billion Provider Relief Fund (PRF) performance-based incentive payment distribution program for nursing homes and skilled nursing facilities originally announced on September 3, 2020.  The program will be divided into four performance periods (September, October, November, December), with $500 million available to nursing homes in each period.  Using data from the CDC, HHS will distribute payments to facilities who have demonstrated an ability to keep COVID infection and mortality low among residents in their facilities.

As previously reported, the $2 billion Provider Relief Fund for nursing homes is part of the $5 billion allocation of CARES Act Provider Relief Fund for nursing homes that HHS announced on August 7.  HHS previously announced it had delivered $2.5 billion in payments to nursing homes to help with COVID expenses for testing, staffing, and personal protective equipment. 

To be eligible, a facility must first demonstrate a rate of COVID-19 that is below the rate of infection in the county in which the facility is located and have a COVID-19 death rate that is below a nationally established performance threshold for mortality among nursing home residents infected with COVID-19.  For facilities that satisfy these eligibility requirements, HHS will then measure COVID infection and mortality rates of qualified nursing homes and SNFs using data from the CDC and compare facilities’ rates against a baseline level of infection in the community where a given facility is located. 

Facilities will have their performance measured against this baseline for two outcomes: ability to keep new COVID infection rates low and ability to keep COVID mortality low among residents.  Eighty percent of bonus payments will be directed towards facilities that have positive performance on the infection measure, and twenty percent of bonus payments will be directed towards facilities that have positive performance on the mortality measure.  Incentive payments will be subject to the same terms and conditions applicable to the initial infection control payments announced last week.

The new distribution details for the program can be found here

Reporter, Ariana Fuller, Los Angeles, +1 213 443 4342, afuller@kslaw.com.

OCR’s HIPAA Right of Access Initiative Enforcement Trend Continues with Five New Settlements – This month, OCR announced that it had settled five more investigations and enforcement actions under its HIPAA Right of Access Initiative.  OCR first announced its HIPAA Right of Access Initiative in 2019.  The HIPAA Right of Access Initiative is focused on enforcing patients’ rights to quickly get copies of their medical records without being overcharged.  However, it is important to note that the HIPAA Right of Access Initiative does not impact the Ciox decision and the HHS announcement that the patient rate limitation does not apply to requests for patient records to be sent to third parties.

In 2019, OCR settled two cases in its HIPAA Right of Access Initiative for $85,000 each – one case settled against a Florida hospital and the other case settled against a Florida-based comprehensive care and pain management company. 

Of the five recently settled cases, three of the five cases settled after OCR had received two complaints.  After the first complaint that the covered entities had failed to provide the patient or personal representative with the requested record, OCR provided technical training to the covered entities.  After the second complaint that the covered entities had not provided the requested records, OCR brought an enforcement action.  The enforcement actions were settled for $38,000, $3,500, and $10,000 and each covered entity entered into a corrective action plan with OCR.

The two other cases settled after OCR received only one complaint.  A California-based multi-specialty clinic settled with OCR for $15,000 after it allegedly refused a patient access to her records.  The complaint was filed just three months after the patient made her request to inspect and receive a copy of her records underscoring the importance of promptly responding to requests.

When determining the settlement amount, OCR takes into account the entity’s financial condition, the entity’s past compliance, the nature and extent of the harm, and the nature and extent of the violation.

The Privacy Rule gives patients the right to access their “designated record sets,” a group of records that is maintained by or for a covered entity.  The designated record set is made up of not only medical records, but also billing records, enrollment forms, claims adjudication documents, and any document used by or on behalf of the covered entity to make decisions about an individual.  A covered entity should draft policies that clearly describe what is included in their designated record set so that it can easily and quickly retrieve and provide the record set to the requesting patient.  Business associates may also be required to provide access to and maintain designated record sets on behalf of covered entities pursuant to a business associate agreement so it is important to work with counsel to review and draft business associate agreements that clearly outline each party’s responsibility for granting patients access to their designate record sets.

OCR’s press release regarding the settlements is available here.

Reporter, Taylor Whitten, Sacramento, +1 916 321 4815, twhitten@kslaw.com.

CMS Releases 2019 Medicare Shared Savings Program Accountable Care Organization Program Results – CMS Administrator Seema Verma announced the 2019 financial and quality results for Accountable Care Organization (ACOs) in the Medicare Shared Savings Program (MSSP) in a Health Affairs Blog post on September 14, 2020.  According to Verma, the 541 ACOs in the MSSP generated $1.19 billion in total net savings for Medicare in 2019—the largest annual savings to date.  These savings were largely driven by reductions in spending on post-acute care, hospitalizations, and emergency department visits.  In addition to achieving savings, most eligible ACOs met quality benchmarks.  Significant differences in savings remain, however, between ACOs led by hospitals versus physicians as well as rural versus urban ACOs.

The 2019 results include both ACOs that joined one of the new participation options created under the December 2018 “Pathways to Success” final rule and “legacy” ACOs that remained in existing tracks.  As previously reported, the Pathways to Success rule requires participating ACOs to take on “downside” risk for cost increases more quickly than legacy ACOs, typically after two years.  In addition, the Pathways to Success rule includes an option for “low-revenue” ACOs—which are typically run by physicians, rather than hospitals—to add an additional participation year before taking on downside risk.  Organizations could begin joining the Pathways to Success tracks in July 2019. 

Although the results include only the first six months of data for Pathways to Success ACOs, the results generally show that the newer ACOs achieved somewhat higher net per-beneficiary savings than the legacy ACOs.  Low-revenue ACOs also generated net savings per beneficiary of more than double those for high-revenue ACOs.   Verma indicated that these differences could potentially be explained by differences in services provided—low-revenue ACOs mostly provide outpatient services, while high-revenue ACOs typically provide both inpatient and outpatient services.  CMS plans to release additional data on Pathways to Success ACOs in the future and King & Spalding will continue to track developments in this area. 

The results also reflect differences in performance between rural and urban ACOs.  Historically, rural ACOs have generated smaller savings than urban ACOs.  This trend continued in 2019, with rural ACOs generating $64 in net savings per beneficiary and urban ACOs generating $125.  Looking at early results from only the Pathways to Success ACOs, however, the margin between rural and urban ACOs was narrower—rural ACOs generated $158 in savings and urban ACOs generated $170. 

In addition to savings, most ACOs continue to demonstrate similar, or better, quality results compared to other organization types.  Almost all ACOs successfully reported quality data within the quality reporting period, which was extended due to the coronavirus pandemic.  Over ninety percent of ACOs earned quality improvement reward points, with the greatest improvements in care coordination and patient safety.

CMS Administrator Seema Verma’s Health Affairs Blog post on the results is available here.  CMS’s full 2019 quality and performance data for MSSP ACOs is available here.

Reporter, Rebecca Gittelson, Atlanta, +1 404 572 4679, rgittelson@kslaw.com.

ALSO IN THE NEWS

CMS Withdraws Its Proposed Medicaid Fiscal Accountability Regulation Amid Concerns Raised by States and Providers – On September 14, 2020, CMS Administrator Seema Verma announced on Twitter that CMS would be withdrawing its proposed Medicaid Fiscal Accountability Regulation (MFAR).  Administrator Verma stated that “[w]e’ve listened closely to concerns that have been raised by our state and provider partners about potential unintended consequences of the proposed rule, which require further study” and “[t]herefore, CMS is withdrawing the rule from the regulatory agenda.”  MFAR was designed to require increased transparency and accountability from state Medicaid programs, particularly concerning certain supplemental payments for providers.

New HHS Payment System Encourages At-Home Kidney Care – On September 18, 2020, CMS announced that it has finalized the End-Stage Renal Disease (ESRD) Treatment Choices (ETC) Model and the Radiation Oncology Model.  The ETC Model adjusts payment on certain Medicare claims for selected ESRD facilities and clinicians.  Participation for selected facilities and clinicians is mandatory, and the selection will be conducted according to location in randomly selected geographic areas so as to account for approximately 30% of adult ESRD beneficiaries in all 50 states and the District of Columbia so that CMS can evaluate the ETC Model.  The ETC Model adjusts payments in two ways: (1) by increasing payments for home dialysis and home dialysis services in order to incentivize investment in home dialysis; and (2) by either increasing or decreasing payment to both home or in-center dialysis claims based on the participant’s home dialysis rate, transplant waitlist rate, and living donor transplant rate.  The CMS Final Rule Implementing the new ETC Model and Radiation Oncology Model can be found here. The CMS announcement about the ETC Model is available here, and CMS’s Fact Sheet on the new ETC Model is available here.

HHS Finalizes Rule Allowing Organ Donors to Recoup More Expenses – On September 18, 2020, HHS, through the Health Resources and Services Administration (HRSA) issued a final rule expanding the scope of reimbursable expenses incurred by living organ donors to include lost wages, child-care and elder-care expenses.  The new rule amends prior regulations issued under the National Organ Transplant Act of 1984.  The final rule is available here

CMS Releases Part I of the 2022 Advance Notice of Methodological Changes for Medicare Advantage Capitation Rates and Part C and Part D Payment Policies – On September 14, 2020, CMS published its 2022 Advance Notice containing information about proposed payment changes for Medicare Advantage and Medicare Part D payment methodologies.  For Contract Year 2022, CMS’s notice proposes to fully phase in the Hierarchical Condition Categories (HCC) model first implemented for Contract Year 2020 as required by the 21st Century Cures Act.  This represents a change from the 2021 payment model, which used a risk score calculated by weighting the 2020 HCC model as 75%, and the 2017 HCC model as 25% of the total score.  With this change, the risk score used for payment in 2022 would rely entirely on encounter data rather than relying in part on diagnoses submitted into CMS’s Risk Adjustment Processing System by Medicare Advantage Organizations.  CMS’s press release announcing publication of the notice is available here.  A Fact Sheet can be found here, and the complete text of Part I of the 2022 Advance Notice is available here.

CMS Issues Roadmap for State Medicaid Value-Based Payment Models – On September 15, 2020, CMS issued guidance to State Medicaid Directors to advance value-based care with State Medicaid programs.  The guidance encourages States to consider adopting value-based payment models, including advanced fee-for-service payments, bundled payments, and total cost of care models in their State Medicaid programs.  The guidance does not announce any new funding models or opportunities for federal funding, but instead aims to inform State Medicaid programs of the options available to them for implementing more value-based payment models.  CMS’s Fact Sheet announcing the new guidance is available here, and a copy of the letter addressed to the State Medicaid Directors is available here.