This Diagnosing Health Care Podcast episode dives into the growth of physician practices accepting risk-based payments from health plans and examines why these practices are attractive to investors. Special guest Jason Madden, Managing Director at Accordion, and Epstein Becker Green attorneys Joshua Freemire, Jason Christ, and Tim Murphy, discuss the health
Epstein Becker Green (“EBG”) has released Value-Based Payments: A Comprehensive State Survey.
EBG has researched, compiled, and analyzed state-specific content about the regulatory requirements involved in providers moving away from fee for service reimbursement (such as discounted fees and per diems) and towards value-based payment arrangements involving “downside” risk or insurance risk-sharing with insurers, HMOs,…
In an important win for healthcare providers, on July 17, 2020, the Third Circuit determined in a published opinion that an out-of-network provider’s direct claims against an insurer for breach of contract and promissory estoppel are not pre-empted by ERISA. In Surgery Ctr., P.A. v. Aetna Life Ins. Co. In an issue of first impression, the Third Circuit addressed the question of what remedies are available to an out-of-network provider when an insurer initially agrees to pay for the provision of out-of-network services, and then breaches that agreement.
This case arose because two patients—identified as J.L. and D.W.—required medical procedures that were not available in-network through Aetna. J.L. needed bilateral breast reconstruction surgery following a double mastectomy and D.W. required “facial reanimation surgery,” which the Third Circuit describes as “a niche procedure performed by only a handful of surgeons in the United States.” Neither J.L. nor DW had out-of-network coverage for these procedures. D.W.’s plan also contained an “anti-assignment” clause, which would have prevented D.W. from assigning his or her rights under the plan to the Plastic Surgery Center, P.A.…
Continue Reading Third Circuit: Provider’s Out-of-Network Claims not Pre-empted by ERISA
In a previous post, we discussed the appropriate use of the Provider Relief Funds authorized and appropriated by Congress under the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act, Public Health and Social Services Emergency Fund (“Relief Fund”) for healthcare providers and facilities. Within that post, we specifically discussed the limitation imposed on use of the Relief Funds for payment of salaries, a topic of great interest to many recipients. Under the Terms and Conditions, recipients are prohibited from using the funds for salaries in excess of the Senior Executive Service Executive Level II amount – an annual salary of $197,300 – or $16,441 a month. We noted that, although the Department of Health and Human Services (“HHS”) had not spoken to this requirement with respect to the Provider Relief Funds, HHS permits other HHS grant Recipients to pay individuals’ salaries in excess of the $197,300 limit with non-federal funds. Also, HHS’ federal contract regulations similarly limit use of federal contract funds for salary costs to the Executive Level II amount, but allow for amounts in excess of that limit to be paid with non-federal funds.
Continue Reading Acceptable Use of CARES Act Provider Relief Funds – Salary Limitation Update
To address the COVID-19 public health emergency fiscal burdens, Congress authorized and appropriated the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act, Public Health and Social Services Emergency Fund (“Relief Fund”) for healthcare providers and facilities. The Department of Health and Human Services (“HHS”) has begun to distribute several tranches of the Relief Funds. All totaled, Congress provided $175 billion to the Public Health and Social Services Emergency Fund (“Relief Fund”) through the CARES Act and the Payroll Protection Program and Health Care Act.
As of May 7, 2020, HHS identified $50 billion for general distribution to Medicare providers. HHS distributed to Medicare providers the Relief Fund’s initial $45 billion tranche in April 2020, and is distributing the Relief Fund’s second $20 billion tranche. Also, HHS allocated Relief Funds to: hospitals in COVID-19 high impact areas ($10 billion); rural providers ($10 billion); Indian Health Services ($400 million), and skilled nursing facilities, dentists, and providers that take solely Medicaid (unidentified amounts).
One of the many relief efforts contained in the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), signed into law on March 27th, 2020, is a hiatus of sequestration as it applies to Medicare payments. Section 4408 of the CARES Act exempts Medicare from the effects of sequestration from May 1, 2020, through December 31, 2020. It also postpones the sunset of sequestration as it applies to Medicare from the end of 2029 to the end of 2030.
As background, on January 2, 2013, “sequestration,” automatic spending cuts applicable to all categories of the Federal budget, went into effect. Sequestration included a 2.0% reduction in most Medicare spending, and as a result of its implementation, many providers experienced reductions in their reimbursement. In addition to traditional fee-for-service Medicare payments, some Medicare Advantage plans reduced reimbursement under their contracts with providers to reflect the effect of sequestration, effectively passing on to providers the reductions in premiums recovered by such plans due to sequestration. Even non-Medicare reimbursement was affected for many providers whose participation agreements with plans contained fee schedules based off of Medicare reimbursement.
While this suspension of sequestration is certainly good news for providers participating in traditional fee-for-service Medicare, and plans offering Medicare Advantage products, the effect the suspension will have on reimbursement for providers participating in Medicare Advantage or commercial lines of business which rely on Medicare rates is slightly less clear.
On April 10, 2020, the U.S. Department of Health and Human Services (“HHS”) provided additional details regarding its plan to provide billions in relief to providers in an effort to off-set healthcare-related expenses resulting from the Coronavirus (“COVID-19”) outbreak.
Passed into law on March 27, 2020, the Coronavirus Aid, Relief and Economic Security Act, also called the “CARES Act”, provided $100 billion in funding for the Public Health and Social Services Emergency Fund (the “Fund”). The Fund is a pre-existing resource overseen by the Office of Financial Planning & Analysis within HHS. The $100 billion added via the CARES Act was made available to qualifying healthcare providers to reimburse them for “health care related expenses or lost revenues that are attributable to [COVID-19]”. The CARES Act stipulated that the $100 billion would be made available to public entities, Medicare or Medicaid enrolled suppliers and providers and other entities as may be further specified in regulations or guidance, provided that any such provider must “provide diagnoses, testing or care for individuals with possible or actual cases of COVID-19”. Monies received from the Fund may not be used to cover expenses that have already been reimbursed through other sources or that other sources are obligated to reimburse. Little other detail regarding the funding or mechanism for disbursal was provided in the CARES Act itself.
In a new issuance on its website, found here, HHS provided additional details on the program. HHS noted that $30 billion out of the appropriated $100 billion will be distributed immediately via direct deposit, starting April 10, 2020. Further, HHS clarified that the money is “payment” and not a loan, and thus will not need to be repaid. The initial $30 billion tranche is being made available only to providers that received Medicare fee-for-service payments in 2019. The payments are being distributed according to the Taxpayer Identification Number (TIN) of the billing organization.
The ongoing pandemic caused by the novel coronavirus has upended the American health care system in many ways. One of the many effects of COVID-19 will likely be substantial disruption in value-based payment arrangements between health plans and providers. Though this is an issue that is not on the top of providers or payors minds as the health care system prepares to respond to the crisis, there are some simple steps that providers can take now to avoid issues in the future.
Any iteration of value-based payments (“VBP”) is likely to be disrupted by COVID-19; be it shared savings, shared risk, or full risk arrangements. Quality targets and reporting deadlines are likely to be missed as providers move many routine and preventative services to telehealth services or suspend them entirely for the time being, as well as turn the bulk of their clinical focus to COVID-19. Under some VBP arrangements, providers may be ineligible for any savings due to their inability to meet “quality gates” (i.e., certain quality metric thresholds that must be met before any savings payments are made) in the current climate. Cost savings targets are likely to be missed or at least distorted as providers focus on building out their capabilities to address the pandemic. How will these sudden and substantial changes affect the parties participating in value-based arrangements?
CMS has already announced that it will amend its quality reporting requirements from the fourth quarter of 2019 through the end of the second quarter of 2020. The announcement covers a variety of quality reporting requirements and payment programs with the stated purpose of alleviating reporting requirements and disregarding unrepresentative data created during the emergency. CMS has also stated that it intends to prorate any losses incurred by Medicare accountable care organizations (“ACOs”) in 2020 for the duration of the public health emergency (e.g., if the public health emergency lasts for six months, the annual losses an ACO incurs in 2020 would be halved). Many – including a bipartisan group of Senators – have argued that this approach is insufficient to truly address the pandemic-related costs incurred by ACOs. CMS has also stated that it will disregard all costs associated with care related to COVID-19 when performing benchmark calculations. States may make similar changes for VBP arrangements in Medicaid programs. How these government steps would flow down into VBP agreements between managed care plans and providers is not clear and requires analysis of the specific agreements.
As the coronavirus spreads throughout the country, hospitals and other health care providers are finding themselves inundated with patients. Those providers who are in-network with payors have and will likely continue to experience difficulty in complying with certain provisions of their contracts. For instance, as payors are also experiencing an unexpected influx of telephone traffic, the wait time for various approvals, including, but not limited to, pre-authorizations are being delayed.
Providers are often contractually obligated to obtain pre-authorizations for certain procedures and services prior to rendering the care. Due to the increased telephone traffic and increased wait times on the payor end, these providers are now faced with a dilemma. A process that as of two weeks ago only took a matter of ten to fifteen minutes now can take up to an hour or more. This creates a serious dilemma for those providers who need to render care to their patients and comply with their contractual obligations to payors.
The Senate has spoken to this issue via the Families First Act which prohibits cost sharing and imposing prior authorizations for COVID-19 related testing under Medicare, CHIP, and individual and small/large self-funded group plans. See Division F-Health Provisions, § 6001, Coverage of Testing for COVID-19. While some payors have recognized and acknowledged the difficulties posed by COVID-19 and have made exceptions to the standard requirements, those exceptions have been limited. For example, the Blue Cross Blue Shield Association has indicated that its network of 36 BCBS companies will waive prior authorizations for diagnostic tests and covered services that are medically necessary for members diagnosed with COVID-19. Similarly, Wellmark and Anthem, Inc., have waived prior authorizations for covered services related to COVID-19. While these limited pre-authorization waivers are a start, they do not resolve the dilemma faced by those providers treating patients who are not suffering from COVID-19.
Many physicians rely on publicly available reports to assess the safety of the devices they use on patients, but in some cases, these reports aren’t painting the full picture. A recent Kaiser Health News (“KHN”) article raises serious questions about FDA’s practice of allowing a significant number of medical device injury and malfunction reports to…