September 5, 2023

Health Headlines – September 5, 2023

D.C. Circuit Affirms Order Directing CMS to Produce Evidence in Case Alleging SSI Data Matching Errors

On September 1, 2023, the D.C. Circuit affirmed the D.C. District Court’s decision in Pomona Valley Hosp. Med. Ctr. v. Azar, 2020 WL 5816486, at *1 (D.D.C. Sept. 30, 2020) requiring CMS to produce affirmative evidence as to the accuracy of its SSI data matching process. Pomona Valley Hospital Medical Center (Pomona) argued that HHS undercounted the number of its Medicare patients who were entitled to SSI benefits, thereby deflating its Medicare disproportionate share hospital (DSH) payment. Pomona produced evidence demonstrating that its SSI data was understated while HHS offered no countervailing evidence. The Provider Reimbursement Review Board (PRRB) held that Pomona failed to prove its case, but the D.C. District Court (the District Court) set aside the Board’s decision and ordered CMS to provide countervailing evidence or a reason for rejecting the hospitals’ case. The D.C. Circuit Court affirmed the District Court.

The DSH adjustment increases payments to hospitals who serve a disproportionate number of low-income patients. The sum of the DSH adjustment totals the Medicare fraction and Medicaid fraction. The Medicare fraction represents the percentage of a hospital’s Medicare patients who are entitled to SSI benefits. The Social Security Administration (SSA) administers the SSI program and CMS relies on the SSA for SSI data. CMS cross-checks the SSI eligibility data with its MedPAR file but does not provide hospitals the SSI data.

Pomona suspected that CMS’s determination of its Medicare fractions for fiscal years 2006-08 was too low and sought to recalculate the fractions by matching MedPAR data from CMS and Medi-Cal data from the California Department of Healthcare Services. CMS’s Medicare fraction calculations were about 20 percent lower than the fractions calculated by Pomona. The reimbursement difference exceeded $3 million.

Pomona appealed to the PRRB and presented testimony evidence supporting its undercount calculation and explained that the undercount likely indicated a systemic program with CMS data. The Medicare Contractor put forward no countervailing evidence before the Board and offered no explanation to support its data accuracy. The PRRB concluded that Pomona failed to prove an undercount because there were other potential explanations for the disparity results that Pomona had failed to rule out. Pomona appealed the PRRB’s ruling to D.C. District Court.

The District Court determined that the PRRB’s decision was unsupported by substantial evidence and ordered that the case be remanded to the agency for further proceedings. The District Court imposed on CMS what it characterized as a shift in the burden of producing evidence on remand—specifically, CMS would have to produce either countervailing

evidence, or it would have to provide a reason for rejecting Pomona’s affirmative case that was not based on the insufficiency of Pomona’s showing.

On review, the D.C. Circuit decided that Pomona showed that the evidence was so one-sided that, absent countervailing evidence from the agency, the Board would be compelled to resolve the disputed factual issues in Pomona’s favor. The Circuit Court held that “Pomona went about as far as it could, in attempting to reverse-engineer the SSI-eligibility data from publicly available data ….” The court rejected the Board’s criticism of Pomona’s use of Medi-Cal data using patient days for those receiving supplementary payments (SSP) but not SSI because Pomona eliminated any SSP-only days which likely produced an overcorrection. Next, the Circuit Court rejected the Board’s criticism of Pomona’s case for failing to estimate the size of the long-term nursing home populations and first-time applicants for SSI and Medi-Cal benefits. The Court credited Pomona’s expert testimony that such discrepancies would be immaterial and certainly would not account for the large disparity in results. Finally, the Court found that the Board erred in faulting Pomona for not providing a “crosswalk” between Medi-Cal and SSI codes because Pomona explained how Medi-Cal codes have served reliably to establish SSI or SSP eligibility and that Pomona adjusted to eliminate any SSP-only patient days.

The D.C. Circuit Court concluded that “[g]iven the strength of the hospital’s showing, and the absence of any countervailing evidence, the Board’s conclusion that Pomona had failed to prove an undercount was unreasonable.” Pomona Valley Hosp. Med. Ctr. v. Becerra, 2023 WL 5654315, at *7 (D.C. Cir. Sept. 1, 2023). The Court, therefore, affirmed the District Court’s order to set aside the PRRB’s decision and remand back to the PRRB for further proceedings so that the agency can provide countervailing evidence or reason for why the SSI numerator was accurate. The court, however, declined to draw an adverse inference to conclude that CMS’s evidence would be unfavorable.

The full text of Pomona Valley Hosp. Med. Ctr. v. Becerra is available here.

Reporter, Kasey Ashford, Washington D.C., +1 202 626 2906, kashford@kslaw.com.

D.C. Circuit Holds that Those “Entitled to Supplemental Security Income Benefits” Means Receiving Cash Payment for Hospital DSH Calculation

Last week, the D.C. Circuit held that Medicare beneficiaries “entitled to supplemental security income [(SSI)] benefits under Title XVI of the Social Security Act” means only those patients receiving cash payments for purposes of the Medicare disproportionate share hospital (DSH) calculation. The DSH adjustment provides additional compensation to hospitals serving a high percentage of low-income patients. The D.C. Circuit Court’s ruling affirms the D.C. District Court’s grant of summary judgment to HHS, which was decided in June 2022.

The case involves more than 200 acute care hospitals across the country challenging HHS’s interpretation of the Medicare DSH calculation. The DSH adjustment derives from two statutory formulas known as the Medicare fraction and the Medicaid fraction. This case turns on the Medicare fraction. The numerator of the Medicare fraction is the number of patient days attributable to Medicare patients who are “entitled Part A” and “entitled to” SSI benefits, while the denominator is the number of patient days attributable to all patients entitled to Medicare Part A.

Title XVI of the Social Security Act establishes the Supplemental Security Income (SSI) program which provides cash payments to financially needy individuals who are aged, blind, or disabled. Individuals must apply for this benefit, and their eligibility to receive cash payments is determined monthly, depending on their income and resources during the month. Once an individual qualifies for the cash payment during a particular month, the individual remains enrolled in the SSI program, and their eligibility for cash payments is determined each month until the individual fails to qualify for cash payments for a period of twelve consecutive months. While enrolled in the program, individuals may also receive two further benefits: (1) they are eligible for a subsidy under Medicare Part D, which they receive for at least six months regardless of whether they continue to qualify for monthly payments; and (2) they are eligible to receive vocational rehabilitation services, which eligible enrollees may continue to use after they fail to qualify for monthly payments.

HHS interpreted the phrase “entitled to SSI benefits” to denote only those patients who are determined to be entitled to the cash payment during the month they were hospitalized as inpatients. The hospitals, on the other hand, argued the phrase included all patients enrolled in the SSI program at the time of hospitalization, even if they did not qualify for a cash payment during the month in which they were hospitalized. The hospitals posed two key arguments among others—none of which the court found availing.

First, the hospitals argued that SSI benefits under Title XVI included not only cash payments but also the Medicare Part D subsidy and vocational rehabilitation services. The question turned on what counted as “income” benefits under Title XVI. The D.C. Circuit sided with HHS, finding that “at every turn,” Title XVI “is about cash payments.”

Second, the hospitals argued that the Supreme Court’s decision in Empire v. Becerra compelled their construction of the phrase. Empire held that the phrase “entitled to benefits under part A,” as used to determine the Medicare fraction, covers patients who meet “the threshold requirements for Part A benefits,”, even if Medicare does not pay for specific treatments because of coverage limitations, alternative insurance, or the like. The hospitals believed that if the phrase “entitled to benefits under part A” covered patients who meet basic eligibility requirements without regard to specific payment decisions, then so too must the adjacent phrase “entitled to SSI benefits.” The Circuit Court found that the hospitals failed to adequately account for two key distinctions between the Part A and SSI schemes: (1) Part A benefits extend beyond payment for specific services at specific times, for which there is no comparable parallel in the SSI context; and (2) age or chronic disability makes a person eligible for Part A benefits without an application and individuals rarely lose eligibility over time, unlike the SSI program which requires an application and where enrollees “routinely ping-pong in and out of eligibility depending on fluctuations in their income or wealth from one month to another.”

Lastly, the hospitals sought an order compelling HHS to provide them with payment codes assigned by SSA to their respective patients under the Mandamus Act, 28 U.S.C. § 1361—the hospitals wanted this data to verify or challenge CMS’s calculation of their respective Medicare fractions. The hospitals had already received data that identifies SSI eligible matched to Part A enrolled individuals which HHS uses to calculate the numerator of the Medicare fraction. In this case, the hospitals sought the specific codes used by SSA to track why those individuals did or did not qualify for the monthly cash payment. The Circuit Court however, affirmed the denial of this request, stating that because the SSA did not provide HHS with the specific codes assigned to individual patients, HHS could not give hospitals data that it never received from SSA in the first place.

Despite this significant setback in the D.C. Circuit, hospitals should consider continuing to protect their appeal rights on this issue. The same issue was presented as an argument in the alternative in Empire, i.e., the case that went to the Supreme Court. While the Supreme Court did not address the alternative argument – it merely upheld CMS’s broad interpretation of “entitled to benefits under Part A”—that argument is now back before the district court upon remand. Not only is the D.C. Circuit’s opinion not binding in the Ninth Circuit, but Empire can emphasize the several categories of patients that CMS excludes from the SSI fraction for reasons independent of income, including several categories of patients that the D.C. Circuit refused to consider because it deemed the argument regarding those patients waived. A favorable decision in Empire would benefit all hospitals that have recourse to the Ninth Circuit – the adverse D.C. Circuit decision notwithstanding--and would also create a circuit split that could ultimately be decided by the Supreme Court itself.

The case is Advocate Christ et al. v. Becerra. The D.C. Circuit decision is available here and the D.C. District Court decision is available here.

Reporter, Ahsin Azim, Washington, D.C., + 1 202 626 5516, aazim@kslaw.com.

New York State OMIG Announces Updates to Self-Disclosure Program

On August 21, 2023, the New York State Office of the Medicaid Inspector General (OMIG) published an update to its self-disclosure program. The update allows for two (2) types of self-disclosures: (i) an Abbreviated Statement Self-Disclosure; and (ii) a Full Statement Self- Disclosure.

The Abbreviated Self-Disclosure process is aimed at addressing overpayments that result from routine transactional errors. This process requires the provider to complete and submit a Self-Disclosure Abbreviated Statement within 60 days of identification of an overpayment, or by the date any corresponding cost report was due, whichever is later. It is important to note that an Abbreviated Self-Disclosure is still required even when the error has been repaid through voids or adjustments.

The other type of OMIG self-disclosure that a provider can submit is a Self-Disclosure Full Statement. This disclosure process is also required within 60 days of identification of an overpayment, or by the date any corresponding cost report was due, whichever is later. That being said, this disclosure is aimed at addressing overpayments that result from more traditional self-disclosure issues such as: (a) errors that require a provider to implement a formal corrective action plan; (b) actual potential or credible allegations of fraudulent behaviors by employees; (c) systemic billing or claiming issues; (d) any error with substantial monetary or program impacts; and (e) non-claim based Medicaid overpayments.

The development of the Abbreviated Statement will likely result in a higher administrative burden for Medicaid providers. Historically, these more routine errors did not require formal reports. Although the Abbreviated Statement is a short form, it is likely that providers will have to implement a process to report these (in some cases) more frequent overpayments.

The updated Self-Disclosure Guidance is available here.

Reporter, Kimberly Rai, New York, +1 212 556 2198, krai@kslaw.com.

OIG Publishes Strategic Plan for Managed Care Oversight on New Featured Webpage

On August 28, 2023, OIG released a new webpage on managed care oversight, which features the HHS-OIG Strategic Plan for Oversight of Managed Care for Medicare and Medicaid. OIG has designated oversight of managed care as a priority area. OIG’s Strategic Plan outlines how OIG can align its audits, evaluations, investigations, and enforcement to combat the risks associated with managed care.

Managed Care Life Cycle

OIG developed an oversight framework it calls the managed care life cycle. The managed care life cycle consists of four stages, each of which presents unique risks that inform OIG’s oversight functions:

(1) plan establishment and contracting;

(2) enrollment;

(3) payment; and

(4) provision of services.

Plan Establishment and Contracting

Risks for plans at this stage include the failure of plans to meet operational requirements or not providing adequate access to care for enrollees. OIG’s oversight of plan establishment and contracting will focus on review of contracts with the State or CMS, plan benefit design, establishment of plan service area, as well as accuracy and integrity of plan bids.

Enrollment

Risks for plans at this stage include aggressive marketing tactics by managed care plans to attract enrollees, and incorrect information reporting by plans to government entities. OIG’s oversight of enrollment will focus on marketing, agent or broker activities, eligibility determinations, as well as accuracy and use of enrollment data.

Payment

Risks for plans at this stage include misreporting member health status to receive higher payments, and improper plan payments to providers. OIG’s oversight of payment will focus on risk adjustment, payment accuracy, medical loss ratio, and the value-based care or other alternative payment mechanisms used by plans, States, and CMS. OIG will also continue to investigate the overlap in providers engaging in fraud while participating in fee-for-service Medicare and Medicaid while also providing services to patients enrolled in managed care networks.

Services

Risks to plans at this stage include barriers to access of healthcare services imposed by plans, and lack of transparency in data reporting. OIG’s oversight will focus on network adequacy, ineligible or untrustworthy providers, coverage determinations, whether enrollees are receiving care that meets clinical guidelines, and fraud schemes that cross multiple plans and/or Federal health care programs.

Strategic Goals and Objectives

The OIG’s Strategic Plan presents three goals to combat the risks associated with each stage of the managed care life cycle:

(1) promote access to care for people enrolled in managed care;

(2) provide comprehensive financial oversight; and

(3) promote data accuracy and encourage data-driven decisions.

To implement this strategy, OIG will conduct rigorous oversight of managed care plans while also coordinating with those same plans to fight fraud, waste, and abuse.

Access

A key priority for OIG is to ensure managed care plans provide enrollees with adequate access to healthcare services, including mental health services. OIG’s oversight will focus on whether healthcare services are available and obtainable in a timely manner. OIG will also ensure that the care provided to enrollees is safe, effective, and equitable. Not only should care meet established quality standards, but financial mechanisms should create a nexus between quality of care and payment. In addition, care should aim to promote the ability of all people to attain the highest level of health.

The Strategic Plan highlights OIG’s current work in this area, including its cross-program behavioral health study examining the ratio of providers to enrollees, the ability of providers to accept new patients and schedule appointments, and network adequacy. In addition, OIG analyzed denials of prior authorization requests by Medicare Advantage Organizations (MAOs) and found that MAOs routinely deny both prior authorization requests and payment requests that meet Medicare coverage rules.

Financial Oversight

The Federal Government spent more than $650 billion on Medicare and Medicaid managed care in 2022. According to OIG, financial oversight is critical to safeguarding taxpayer dollars and promoting a culture of compliance. OIG has two objectives to provide comprehensive financial oversight. First, OIG will ensure that payments made to Medicare Advantage and Medicaid plans are accurate, including by focusing on risk-adjusted capitation payments as well as the documentation and diagnostic submission patterns underlying them. OIG is aware that there are concerns that Medicare Advantage plans are using tools to increase risk-adjustment payments. Second, OIG will work to combat fraud in managed care plans, including by expanding its engagement with plans in coordinate with Federal and State law enforcement partners.

Examples of OIG’s current and completed work in furtherance of financial oversight are OIG’s audits of health plans to validate risk-adjusted payments, as well as OIG’s series of evaluations relating to the oversight and integrity of managed care plans’ reported medical loss ratios.

Data Accuracy and Data-Driven Decisions

OIG emphasizes that data must be accurate, timely and complete to ensure correct payments and the appropriate direction of resources. To this end, OIG will work to ensure that data are reported accurately, as well as to encourage the timely collection of complete data. This measure is meant to allow for identification of emerging risks in real time.

As an example of this work, OIG’s audits of Medicaid enrollment found that states made approximately $1 billion per year in questionable payments for concurrent enrollment in two different states or two different Managed Care Organizations (MCOs). OIG has also reported that the lack of provider identifiers of Medicare Advantage encounter data has prevented it from providing robust oversight.

OIG will continue to examine data issues, in both Medicare and Medicaid managed care, especially regarding collecting more robust data that will give critical insights into the program.

OIG’s Strategic Plan can be accessed here.

Reporter, Elizabeth Key, Sacramento, +1 916 321 4821, ekey@kslaw.com.

Compliance Column

CMS Focuses on Hospice Benefit Integrity

In a blog posted August 22, 2023, CMS summarized key aspects of its hospice program integrity strategy, including a new provisional period of enhanced oversight in Arizona, California, Nevada, and Texas due to rapid growth in the number of what CMS describes as “potentially fraudulent” hospices in those states (e.g., hospices certifying patients who are not terminally ill, hospices providing little to no services, and hospices with non-operational addresses). CMS also announced a new pilot program to review hospice claims following an individual’s first 90 days of hospice care.

Hospice continues to be an area of enforcement scrutiny. CMS states that its research has identified instance of hospices certifying patients for hospice care when they were not terminally ill and providing little to no services to patients. In response, CMS states it has revisited its integrity strategy to focus on “identifying bad actors and addressing fraudulent activity.” For example, CMS initiated a nationwide hospice site visit program, making unannounced site visits to every Medicare-enrolled hospice. As part of that program, CMS reviewed whether each hospice was operational at the address listed on their Medicare enrollment form. As a result, hundreds of hospices have been identified for potential administrative action (e.g., deactivation and revocation of Medicare billing privileges).

As noted, due to the growth in what CMS describes as “potentially fraudulent” hospices in Arizona, California, Nevada, and Texas, CMS is also implementing a provisional period of enhanced oversight in these states for newly enrolled hospices and hospices undergoing ownership changes, effective July 13, 2023. This enhanced oversight period will last from 30 days to one year for each hospice included in the program and will include medical review such as prepayment review. Additional information regarding the enhanced oversight program is available here.

CMS is also rolling out a pilot program to review hospice claims following a beneficiary’s first 90 days of hospice care. CMS explains that this pilot is aimed to help inform future medical review activities in connection with patient eligibility. This pilot will be broadly implemented and is not limited to the states listed above. It is not yet clear how CMS will use the results of the pilot to inform future review and integrity activities.

CMS has also been implementing new hospice survey and enforcement requirements. For example, CMS recently finalized policies requiring surveyors to use multidisciplinary survey teams, prohibiting surveyor conflicts of interest, and requiring surveyors from accrediting organizations to complete comprehensive training and testing.

Hospice continues to be a target of enforcement activity including contractor reviews. This blog post underscores the continued enforcement attention on the hospice industry, and the importance of proactive compliance efforts for hospice providers. The CMS blog post is available here.

Reporter, Lauren S. Gennett, Atlanta, + 1 404 572 3592, lgennett@kslaw.com.

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