Medicare

March 2, 2023

Posted on by Courtney Patterson

QUESTION:
I heard that CMS added a new kind of provider – A Rural Emergency Hospital (“REH”).  Is this a new category of hospital? Does the Stark Law treat it like a hospital for purposes of physician investment?

OUR ANSWER FROM HORTYSPRINGER ATTORNEY HENRY CASALE:
You have asked several questions and so I will take them one at a time.

WHAT IS A RURAL EMERGENCY HOSPITAL?
A Rural Emergency Hospital or REH is a new provider type that became effective on January 1, 2023.  In order to qualify to become an REH, a provider must have been either a Critical Access Hospital (“CAH”), or a rural hospital with not more than 50 beds, and must have been participating in Medicare as of the date of the December 27, 2020 enactment of the Consolidated Appropriations Act, and satisfy the new REH Conditions of Participation (which closely align with the current CAH Conditions of Participation).

AN REH IS NOT A HOSPITAL
Please do not be confused by the name of this new provider. An REH is not a “Hospital” for purposes of the Medicare Program or the Stark Law.  Rather, an REH is a new kind of provider.  The REH payment rules are unique as is the manner in which the Stark Law applies to an REH. 

AN REH DOES NOT PROVIDE INPATIENT SERVICES (EXCEPT SNF SWING BEDS)
An REH is defined as an entity that operates for the purpose of providing emergency department services, observation care, and other outpatient medical and health services specified by the Secretary in which the annual per patient average length of stay does not exceed 24 hours.

The time calculation for determining the length of stay of a patient receiving REH services begins with the registration, check-in or triage of the patient (whichever occurs first) and ends with the discharge of the patient from the REH. The discharge occurs when the physician or other appropriate clinician has signed the discharge order, or at the time the outpatient service is completed and documented in the medical record.

The REH must not provide inpatient services, except those furnished in a unit that is a distinct part licensed as a skilled nursing facility to furnish post-hospital extended care services.  This prohibition on providing inpatient services to a rural population is thought to be the major factor discouraging many eligible CAHs and rural hospitals with not more than 50 beds, from converting to an REH.

AN REH IS PAID AT A SPECIAL RATE
An REH is not a hospital and is not reimbursed in the same manner as a hospital.  Rather an REH is reimbursed at the then-current Medicare Hospital Outpatient Prospective Payment System (“OPPS”) rate PLUS 5%.  The REH is also entitled to a beneficiary copayment (which is not to take the additional 5% reimbursement into account).  In addition, an REH will be paid a monthly facility fee.

STARK APPLIES, BUT…
An REH is required to provide radiology and other outpatient services which fall within the Stark definition of a Designated Health Service (“DHS”).  Therefore, the Stark Law applies, and a physician may not have a compensation arrangement with, or an investment interest in, an REH unless an exception to the Stark Law can be satisfied.

Initially, CMS proposed a special exception for physician investment in an REH which was based on the whole hospital exception.  However, those regulations were never finalized.  Rather, CMS will require an REH to comply with the same compensation arrangement exceptions as any other entity that provides a DHS.

When it comes to whether a physician may have an investment interest in an REH, remember, an REH had to have been a critical access hospital or rural hospital with not more than 50 beds, and there is currently a broad exception to the Stark Law for physician investment in an entity that is located in a rural area.  Therefore, the rural provider exception should be available to most, if not all, REHs.   See 42 C.F.R. § 411.356(c)(1). 

However, an REH does not automatically qualify for this rural provider exception   Rather, this exception requires that in addition to the REH being located in a “rural” area, at least 75% of the REH’s services must be furnished to individuals who reside in a “rural” area.

Effective January 1, 2023, CMS also revised the definition of “Rural” for purposes of the Stark Law to state that a “Rural” area is any area that is not defined as “urban” under 42 C.F.R. § 412.64(b)

42 C.F.R. § 412.64(b) then states that a rural area is essentially any area located outside of a Metropolitan Statistical Area or a Metropolitan Division (in the case where a Metropolitan Statistical Area is divided into Metropolitan Divisions), as defined by the Executive Office of Management and Budget.  However, there are exceptions so you need to check the regulations.

Adding to the confusion is that CMS has stated in the preamble to the Stark regulations that the rural provider test “differs from the rural/urban test that a hospital uses for wage index purposes.”

CMS has also amended each compensation arrangement exception that applies to a Federally Qualified Health Center (“FQHC”) and Rural Health Clinic (“RHC”), to state that as of January 1, 2023, that exception will also apply to an REH.

DON’T FORGET ABOUT STATE LAW
Please keep in mind that your analysis of whether you should organize an REH should not rely solely on the new REH Medicare rule.   Some states (Pennsylvania for example) do not permit free-standing Emergency Departments.  Unfortunately, regardless of whether Medicare will recognize an REH as a provider, an REH cannot operate in a state unless it is licensed, and in order to be licensed, the state must either permit a free-standing Emergency Department, or adopt new rules licensing an REH.

Therefore, there are some states where REHs cannot lawfully operate under state law and as a result do not have the opportunity to achieve the enhanced reimbursement available to an REH.  If you are in such a state you must wait for your state to create a license category that will recognize either a free-standing Emergency Department or an REH.  But do not lose hope, even where currently prohibited, state licensure bodies are under pressure from rural providers to create a license category for an REH – but until they do, an REH will not be permitted to operate in some states.

If you want to learn more about the Stark Law, the False Claims Act, the Anti-Kickback Statute, recent developments like REHs, and other current issues in Hospital-Physician compliance, consider joining Dan Mulholland and Henry Casale at our next Hospital‑Physician Contracts and Compliance Clinic that will be held in Phoenix on November 16-18, 2023.

If you cannot wait until November for more information on these and many other health law related topics, check out HortySpringer’s Health Law Expressions “Kickback Chronicles” podcast episodes with Henry Casale and Hala Mouzaffar.

November 10, 2022

Posted on by Courtney Patterson

QUESTION:
I hear the new Medicare Hospital Outpatient Payment Rules that were just published by CMS last week created a new breed of cat called a “Rural Emergency Hospital.”  What’s that?

OUR ANSWER FROM HORTYSPRINGER ATTORNEY DAN MULHOLLAND:
Rural Emergency Hospitals (“REHs”) are a new provider type established by the Consolidated Appropriations Act, 2021 to address the growing concern over closures of rural hospitals.  The REH designation provides an opportunity for Critical Access Hospitals (“CAHs”) and certain rural hospitals to avert potential closure and continue to provide essential services for the communities they serve.  Conversion to an REH allows the facility to continue providing emergency services, observation care, and, if elected by the REH, additional medical and health outpatient services, that do not exceed an annual per patient average of 24 hours.  The implementation of this new provider type, effective January 1, 2023, is designed to promote equity in health care for those living in rural communities by facilitating access to needed services.

For more information, see the CMS information page here.

October 20, 2022

Posted on by Courtney Patterson

QUESTION:
We are currently updating our informed consent forms. Can you remind us of what information should be included on these forms

OUR ANSWER FROM HORTYSPRINGER ATTORNEY MARY PATERNI:
Informed consent is critical to providing quality care, so I commend your efforts to review your forms. In almost every state, the treating provider is responsible for explaining to the patient ˗ in such a way that the patient can understand ˗ (1) the item or service that will be provided, (2) the benefits and risks associated with that care, and (3) any alternatives. In some states, failure to obtain a patient’s informed consent may render the treating provider liable for any injury that results from the rendered care, so be sure to check your state law!

Under the Medicare Conditions of Participation, the medical record must contain documentation of the patient’s informed consent for certain treatments and procedures. The Medicare Conditions of Participation Guidelines offer a detailed explanation of what a properly executed informed consent form should look like. When revising your informed consent forms, be sure that they have at least the following elements:

  • The name of the facility where the care is going to take place;
  • The name of the procedure or treatment for which consent is being given;
  • A statement that the procedure or treatment, including the anticipated benefits and material risks, and alternative treatments, was explained to the patient or the patient’s legal representative;
  • The signature of the patient or their legal representative; and
  • The date and time the informed consent form is signed by the patient or their legal representative.

CMS also states that a well-designed informed consent form may also include:

  • The name of the provider who conducted the informed consent discussion;
  • Date, time, and signature of the person witnessing the patient or their legal representative signing the consent form;
  • An indication or listing of the benefits and material risks of the procedure or treatment discussed; and
  • A statement that physicians and providers who are not physicians, other than the treating provider, including residents, will be involved in the care of the patient and will perform important parts of the procedure or treatment, as allowed under state law and regulations, in accordance with the clinical privileges granted and/or scope of practice.

If in doubt, reach out to Mary Paterni to review whether your informed consent forms comply with state and federal law.

August 11, 2022

Posted on by Courtney Patterson

QUESTION:
Our state Department of Health informed us that we are required to have cameras installed in our chemotherapy unit so that patients receiving treatment can be observed via a monitor at the nurses’ station. Since we will be recording patient care activity, do we need to post signs stating that cameras are in use?

OUR ANSWER FROM HORTYSPRINGER ATTORNEY HALA MOUZAFFAR:
CMS’s Interpretive Guidelines to the Medicare COPs regarding physical privacy indicate that “audio/video monitoring (does not include recording) of patients in medical surgical or intensive-care type units would not be considered violating the patient’s privacy, as long as there exists a clinical need, the patient/patient’s representative is aware of the monitoring,” and the monitors or speakers are not visible or audible to visitors or the public.  However, “video recording of patients undergoing medical treatment requires the consent of the patient or his/her representative.”

If the hospital is only monitoring the patients via video and not creating a recording, the patients and their representatives only need to be “aware of the monitoring.” In that case, signs would satisfy the requirement and be an appropriate way to inform them that monitoring is occurring.  On the other hand, if a true “recording” will be made, then a more formal consent would be required by CMS.

It is also important to check state law in these circumstances, as most states have their own laws that govern audio and video recordings that could be applicable.

May 19, 2022

Posted on by Courtney Patterson

QUESTION:
Our hospital is negotiating with health insurers to perform delegated credentialing on their behalf.  The insurers are telling us that we cannot have a hearing officer option for conducting a hearing when providers are subject to certain adverse actions, such as termination of participation on a panel. Is this correct?

OUR ANSWER FROM HORTYSPRINGER ATTORNEY CHARLES CHULACK:
Yes. This is how health insurers interested in delegating credentialing functions to health care providers interpret the Medicare Advantage rules for provider participation.  According to those rules, a health insurer involved in the Medicare Advantage program has to give physicians certain rights when it suspends or terminates the physician’s participation agreement.  Among those rights are the right to receive notice of the reasons for the action and the right to appeal that action. The rules go on to talk about a hearing panel but only state that the insurer (or insurer’s delegate) must ensure that the majority of the hearing panel members are peers of the affected physician.

Now you could follow the constitutional principle of English law that instructs that “everything that is not forbidden is permitted” and go ahead and draft your delegated credentialing policies so that they allow for the hearing officer alternative to using a hearing panel.  However, this may create headaches down the road since health insurers have to perform a pre-delegation audit of your policies and procedures before delegating credentialing and will most likely require a revision to your policies if they permit the hearing officer option. Some providers, such as hospitals, use their existing medical staff credentialing policies and procedures to build off of to put delegated credentialing processes in place. To the extent that a hospital is interested in doing so and its existing Credentials Policy allows for the hearing officer option, it can simply revise its Credentials Policy to indicate that the option is not available when a hearing is offered for delegated credentialing purposes (as opposed to medical staff purposes).

March 10, 2022

Posted on by Courtney Patterson

QUESTION:

Is the “No Surprises Act” in effect?  I heard that a court enjoined it.  Is the No Surprises Act limited to Emergency Care?  Can you give me an example of how the Act works?  What recourse do I have if I do not agree with the amount that the insurer pays me under this Act?

OUR ANSWER FROM HORTYSPRINGER ATTORNEY HENRY CASALE:
The No Surprises Act and its implementing regulations (the “Act”) have been in effect since January 1, 2022.  The Act prohibits emergency department physicians and the facility from billing a patient an out-of-network fee for emergency care provided at any hospital Emergency Department and, if permitted by your state, any free-standing emergency department, regardless of whether the hospital or emergency department physicians participate in the patient’s insurance network.

The Act also prohibits balance billing a patient for non-emergency services provided in an in-network hospital by certain out-of-network physicians, including all traditional hospital-based physician specialties.  A physician can get a patient’s waiver of their rights under the No Surprises Act by using the notice and consent form provided by CMS for (1) certain non-emergency services and (2) post-stabilization services.  However, out-of-network physicians cannot obtain waivers for non-emergency services provided at an in-network hospital if they provide traditional hospital-based ancillary services (such as pathology), diagnostic services (including lab and x-ray); services provided by hospitalists, assistant surgeons, or intensivists; or if there are no in-network physicians on the hospital’s medical staff who can provide the care needed by the patient.  The waiver will also not apply to any emergent conditions that arise during a non-emergency service to which the patient provided his/her consent and waiver to be balance billed.

This section of the Act is best exemplified by one of the questions and answers provided by CMS’s Center for Consumer Information & Insurance Oversight:

Rhonda is a 50-year-old female with employer-sponsored health insurance who discovers a lump in her breast.  Her primary care provider orders a mammogram, which shows a suspicious mass. She is referred to the local in-network hospital’s outpatient department for a biopsy.  The biopsy is reviewed and found to be negative for malignant cells by a pathologist who happens to be out of network.

How much can the pathologist bill Rhonda under the rules of the No Surprises Act? 

ANSWER
Under the No Surprises Act, the pathologist is banned from billing Rhonda more than the in‑network cost-sharing amounts, as determined by her health plan.  The pathologist, as an ancillary service provider, is banned from obtaining consent from the individual to waive these balance billing protections.

In the past, the pathologist could bill the out-of-network patient his/her usual and customary charge.  The patient would submit the bill to her insurer and the insurer would pay the provider the out-of-network rate and the pathologist could then balance bill the patient for any amount not covered by insurance – NO MORE.  The No Surprises Act regulations also prohibits the pathologist from obtaining the patient’s consent to waive these rights (although, as described above, certain other specialties can obtain the patient’s waiver for (1) certain non-emergency services and (2) post-stabilization services).

As stated above, the pathologist cannot bill the patient more than the pathologist would bill the patient if the patient was in-panel.  The pathologist must then bill the insurance carrier.  If the pathologist is not happy with the amount paid by the insurer, the pathologist must negotiate with the plan for 30 business days.  If the pathologist is still not happy with the amount being offered by the plan, the pathologist must go to arbitration to determine the amount of payment.

However, on February 23, 2022, a federal court has enjoined the CMS provider/health plan arbitration process (but only the arbitration process – the rest of the No Surprises Act regulations are in full force and effect).  That arbitration process created a presumption that the amount that the provider should be paid is the “Qualified Payment Amount” (“QPA”), which is typically the median rate the insurer would have paid for the service if provided by an in-network provider or facility.

The regulations also limited the information that can be presented to the arbitrator and specifically prohibited the arbitrator from considering the provider’s usual and customary charges for an item or service, the amount the provider would have billed for the item or service in the absence of the Act, or the reimbursement rates for the item or service under Medicare or Medicaid.  Finally, the arbitration is “baseball-type” arbitration, which means that the arbitrator must pick one of the amounts proposed – the arbitrator does not have the discretion to split the difference or to choose an amount other than the amount proposed by the provider or by the health plan.

The federal court enjoined this arbitration process from going into effect.  However, the court did not provide any guidance as to how disputed fees are to be resolved while this case is on appeal, or how payment disputes are to be resolved until new regulations are promulgated.

February 3, 2022

Posted on by Courtney Patterson

QUESTION:
What’s all this I hear about “appropriate use criteria” that Medicare will use to determine payment for outpatient imaging?

OUR ANSWER FROM HORTYSPRINGER ATTORNEY DAN MULHOLLAND:
The Protecting Access to Medicare Act of 2014 (a/k/a “PAMA”) established a new program to increase the rate of appropriate advanced diagnostic imaging services provided to Medicare beneficiaries.  Examples of such advanced imaging services include:  CT, PET and MRI scans.  Under this program, at the time a practitioner orders an advanced diagnostic imaging service for a Medicare beneficiary, he/she, or clinical staff acting under his/her direction, will be required to consult a qualified Clinical Decision Support Mechanism.  CDSMs are electronic portals through which appropriate use criteria can be accessed.

The program won’t go into effect until January 1, 2023 or the January 1 after the current public health emergency ends, whichever is later.  And it only applies to services in a physician’s office, hospital outpatient department (including the emergency department), an ambulatory surgical center or an independent diagnostic testing facility and whose claims are paid under the physician fee schedule, hospital outpatient prospective payment system or ambulatory surgical center payment system.  So (at least for now) it does NOT apply in critical access hospitals.

For more information, check out the CMS website.

October 10, 2019

Posted on by hortyspringer

QUESTION:        The five medical staffs in our system are thinking about unifying.  Are there any particular steps we need to follow and any changes we need to make to our bylaws?

 

ANSWER:          In May 2014, CMS revised the Medicare Conditions of Participation to allow a multi-hospital system to have a unified and integrated Medical Staff.  There are several steps that must be taken in the integration process.  First, the system must ensure that there is nothing in the state hospital licensing statutes or regulations that would prohibit the medical staffs of separately licensed hospitals from integrating into a single staff.

Second, the Board (and there must be a single Board) must document in writing its decision to use  a unified medical staff model.  This decision would be conditioned on acceptance by the hospitals’ medical staffs to opt-in to an integrated medical staff model.

Third, the medical staff of each of the hospitals must take a separate vote to opt in or opt out of the unified medical staff.  The vote at each hospital must be governed by the respective medical staff bylaws in effect at the time.  Only voting members of the medical staff who hold privileges to practice on site at the hospital may participate in the vote.

Fourth, the unified medical staff will also want to adopt new medical staff bylaws and related policies.  The new bylaws should take into account the unique circumstances of each hospital, including any significant differences in the patient populations and the clinical services that are offered at each hospital.

Importantly, the new bylaws must also include a process by which the voting members of the medical staff who exercise clinical privileges at the hospital may vote to opt out of the unified medical staff in the future.

September 19, 2019

Posted on by hortyspringer

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QUESTION:        What is the significance of the CMS “Pathways to Success” program for ACOs in the Medicare Shared Savings Program?

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ANSWER:            At the end of 2018, the Centers for Medicare & Medicaid Services (“CMS”) redesigned the Medicare Shared Savings Program.  Although the Medicare Shared Savings Program had been in operation since 2012, it had failed to generate the kinds of cost savings that CMS hoped to manifest.  “Pathways to Success” was intended to accelerate the process of transitioning Accountable Care Organizations (“ACOs”) to performance-based risk models.

Among other things, the Pathways to Success program implemented certain kinds of “risk tracks” that offer different mixtures of risk and reward.  Each risk track balances factors such as the potential for financial rewards (in the form of shared savings), the risk of financial penalties (in the form of shared losses), and the opportunity to qualify as an Advanced Alternative Payment Model (which provides certain benefits for individuals subject to the MIPS program).

There are many different variables that govern an ACO’s performance and opportunities under the Shared Savings Program, which means that a full discussion of the program details falls well outside the scope of this article.  The key takeaway to understand is that Pathways to Success was designed to accelerate ACOs to take on higher levels of financial risk and responsibility.  This is yet another example of the ongoing federal effort to promote population health while simultaneously combating the growth of health care expenditures.

To learn more about the Medicare Shared Savings Program, click here.

 

April 4, 2019

Posted on by hortyspringer

QUESTION:        Do the Medicare Conditions of Participation place any requirements on the use of standing orders?

 

ANSWER:            Yes, they do.  The Centers for Medicare & Medicaid Services (“CMS”) have established multiple requirements for compliant use of standing orders in the hospital setting.  For example, each standing order must be reviewed and approved by the hospital’s medical staff and nursing and pharmacy leadership prior to use.  CMS emphasizes that this should be a “multi-disciplinary collaborative effort.”  Crucially, each standing order must have clearly identified specific criteria that govern when it will be executed.  CMS is very clear:  “Under no circumstances may a hospital use standing orders in a manner that requires any staff not authorized to write patient orders to make clinical decisions outside of their scope of practice in order to initiate such orders.”

Note that there is some ambiguity in the term “standing order,” and CMS recognizes this.  Consequently, it is possible that some of your pre-printed and electronic order sets could fall outside the scope of this regulation.

As part of your compliance efforts, we recommend periodically reviewing your policies on standing orders, order sets, and protocols for patient orders to ensure compliance with the Conditions of Participation and with state law.  We also recommend periodic compliance audits of medical records to verify that your policies are being implemented appropriately.