Colorado Health Care Laws: Updates and Implementation

Amber Burkhart, Colorado Hospital AssociationLila Cummings, Colorado Hospital AssociationRyan Morgan, Polsinelli PC

Colorado Health Care Laws:Updates and Implementation

Roadmap: Regulatory Changes in 2019

• HB 19-1174 (Surprise Billing)• HB 19-1001 (Hospital Financial Transparency)• HB 19-1320 (Hospital Community Benefit Accountability)• HB 19-1044 (Psychiatric Advanced Directives)• HB 19-1269 (Behavioral Health Parity)• HB 18-1136 (Medicaid Inpatient SUD Benefit)• HB 19-1168 (Reinsurance Program)• HB 19-1004 (Public Option)• SB 17-267 (Hospital Transformation Program Developments)• CDPHE Stakeholder Process for Hospital Regulation• 2020 Legislative Preview

Surprise Billing (HB 19-1174)

• Requires disclosures to consumers about the potential effects of receiving services from an out-of-network provider or at an out-of-network facility

• Establishes payment rates for certain out-of-network health care services

• Creates an arbitration process for settling billing disputes

Surprise Billing (HB 19-1174)

• CDPHE Emergency Regulation amends Hospital Licensure Standards 6 CCR 1011-1, Ch. 2.

• Creates several relevant definitions;• Requires that patient rights policies include the patient’s right to request an in-

network provider;• Requires facilities to provide the required disclosure; and• Directs facilities regarding the timing of providing the disclosure.

• Emergency Regulation adopted December 19, 2019. Effective until April 30, 2020.

• Public comment during a stakeholder meeting scheduled for January 24, 2020, from 9:00-11:00 a.m. at CDPHE

Hospital Financial Transparency (HB 19-1001)• CRS § 25.5-4-402.8 requires Department of Health Care Policy and

Financing (“HCPF”) to annually prepare a hospital expenditure report• Policy Goal: Transparency regarding how hospitals spend federal and

state dollars • Hospitals must submit information to HCPF to prepare the

expenditure report:• Audited financial statements• Medicare Cost Reports (with forms and worksheets)• Financial and utilization information• Information about acquisitions and affiliations (protected from CORA

disclosure and only published in HCPF report in an aggregate and de-identified manner)

Hospital Community Benefit Accountability (HB 19-1320)• CRS § 25.5-1-701, et seq. requires nonprofit hospitals and

certain public hospitals to submit community benefit reports to HCPF

• HCPF includes this information in its annual hospital expenditure report• HCPF’s first community benefit report will likely be submitted to the Colorado

General Assembly on Jan. 15, 2021• Report to HCPF must include:

• Recent community health needs assessment and implementation plan• IRS Form 990 and list of investments from Schedule H• Description of certain community benefit spending and investments• Expenses and revenue as reported on IRS Form 990

• Report must be posted on hospital’s website

HB 19-1044 (Psychiatric Advanced Directives)

• CRS § 15-18.7 outlines form contents, amendment/revocation processes and provider duties to comply with PADs.

• Law effective Aug. 3, 2019; any form can be used as PAD as long as it contains contents specified in statute.

• Nothing in a PAD precludes an emergency hold as cited in CRS § 27-65.

• Providers must comply with PAD that is apparent and immediately available and reasonably satisfies statutory requirements, unless PAD will cause substantial harm to the adult.

HB 19-1269 (Behavioral Health Parity) and HB 18-1136 (Medicaid Inpatient SUD Benefit)

• HB 19-1269 requires private carriers and Medicaid to provide coverage for behavioral, mental health, and SUD services on par with coverage for physical health services and show compliance through new reports.

• CRS § 25.5-5-402 requires HCPF to include utilization management guidelines for RAEs (and other managed care entities) by July 1, 2020.

• HB 18-1136 authorized HCPF to create a residential and inpatient SUD benefit.

• HCPF will require RAEs to use American Society of Addiction Medicine (ASAM) criteria for utilization management purposes.

SB 17-267 (Hospital Transformation Program Developments)

• CRS § 25.5-4-402.4 instructed HCPF to create the Hospital Transformation Program (HTP), a delivery system reform incentives payment program, and seek appropriate federal waiver authority.

• HCPF submitted an 1115 waiver to CMS on Dec. 31 • Waiver concerns program savings calculations, how penalty dollars will be reallocated

and the creation and distribution of a rural support fund.• Other program details will be finalized though HCPF/CMS negotiations on

standard terms & conditions (STCs) and through State Plan amendments (SPAs).

• STCs available when waiver is finalized• SPAs submitted to CMS on Dec. 31, associated rulemaking TBD

• Hospitals will be required to submit HTP applications to HCPF by April 30, 2020 at the earliest.

HB 19-1168 (Reinsurance Program)

• The “Colorado Approach to Reinsurance”• From Rate-Setting → Assessment • Two-year program with up to $40M/year from hospitals;

amalgamation of other funding sources• Year One: $250M, $87M state share• Goal of statewide premium reduction of 16%, 30% in the

Mountain areas• Claims between $30,000-$400,000

Emergency Regulation 20-E-01- Concerning Hospital Special Fee Collection for the Colorado Reinsurance Program

Emergency regulation requires all hospitals to notify DOI by Jan. 15, 2020 to select from the following billing options:1. Monthly installments of one-sixth the hospital’s total amount owed in 2019-2020.2. Quarterly installments of one-half the hospital’s total amount owed in 2019-2020.3. A single, lump sum payment of the hospital’s entire amount owed, to be paid on a date

requested by the hospital and approved by the Division.

Critical Access Hospitals may request an extension to September 30, 2020 and may choose from the following payment options:1. Monthly installments of one-ninth the hospital’s total amount owed in 2019-2020.2. Quarterly installments of one-third the hospital’s total amount owed in 2019-2020.3. A single, lump sum payment of the hospital’s entire amount owed, to be paid on a

date requested by the hospital and approved by the Division.

HB 19-1004 (Public Option)

• HB 19- 1004 required HCPF and DOI to develop and submit a proposal for a state option for health care coverage

• Final report released Nov. 15• Forces insurers and providers to participate• Would allow government to dictate what providers are paid• May lower premiums 9-18% for individual market participants

(currently 403,000 Coloradans) • Would only expand coverage by 1-2% - 9,200 people at most –

375,000 Coloradans remain uninsured

Hospital Impacts: Using “Public Option” to Achieve Rate Setting

• Proposing lowest reimbursement rates in nation through rate-setting

• Rate setting only applies to hospitals• $185 million impact in Year 1 (2022);

growing impact over time• Average cut to current payments is 30%• Intent to collapse rating regions from 9 to 3;

all areas of the state will lose

• Changing rules to fit updated analysis• Proposed formula not available until Feb.

It fails to prioritize coverage and

affordability for 375,000 remaining uninsured

It fails to protect patient choice by undermining competition and forcing

participation

It fails to defend access to care by cutting

hospital payments 30% on average

The Polis Proposal isn’t the right answer for Colorado.

CDPHE Stakeholder Process for Hospital Rule Revision (Chapter 4)

Hospital Topics Covered:• Statutory Authority and Applicability• Governance and Leadership• Physical Plant Standards• Facility Operations• Infection Control Services• Emergency Services

• Implementation of HB 19-1010, Freestanding Emergency Departments Licensure• Personnel• Medical Records Department• Other Hospital Services

• Nursing, Patient Care, Pharmaceutical, Laboratory, Diagnostic Imaging, Nuclear Medicine, Dietary, Outpatient, Perinatal, Anesthesia, Pediatric, Critical Care, Respiratory Care, Rehab and Psychiatric

Chapter 4 Regulatory Timeline

Oct. 2019• Stakeholder

Meetings Begin

May 2021• Stakeholder

Meetings End

June 2021• Request for

Rulemaking

Aug. 2021• Rulemaking

Hearing

Oct. 2021• Effective

Date

2020 Session: Our Crystal Ball

PUBLIC/STATE OPTION

STATE BUDGET COMMITMENTS

UNIVERSAL ACCESS TO PRESCHOOL

PAID FAMILY LEAVE

PRESCRIPTION DRUGS

EXPANDED FACILITY MALPRACTICE LIABILITY

2020 Session: More Bill Drafts and Rumors

Immunization Requirements

Hospital Non-Competitive Conduct& Antitrust Regulation

Fixes to 2019 Legislation (Out of

Network, Reinsurance)

Expanded Facility Malpractice Liability

Easy Health Care Enrollment Process

Secure Behavioral Health Transportation

Program

Health Facility Violence Prevention

Plans

Health Care Sharing Ministries

Health Care Affordability

Carrier CredentialingBilling Efficiency & Consumer Debt

Protections

…And Many More…

Questions

Colleen Faddick, Shareholder, Polsinelli

EnrollmentUpdate

Enrollment Update

Agenda• New enrollment rule – application, confusion, traps• Denial, revocation and collateral issues of enrollment difficulties • Developments in rule for off-campus, provider-based

departments

New Enrollment Rule

• Effective Date: November 4, 2019 (proposed rule March 2016)• What does it do?

1. Substantially expands disclosure requirements on enrolling and revalidating providers and suppliers

2. Increases CMS authority to deny or revoke enrollments3. Allows CMS the ability to extend the re-enrollment bar for longer periods for

bad actors4. Implements new re-application bar5. Miscellaneous (not covered in this presentation) – expands certain document

retention periods to 7 years; modifies reactivation processes; addresses moratoria questions; and implications to opt-out physicians

New Enrollment Rule – Why?

• CMS believes these provisions will help make certain that entities and individuals who pose risks to Medicare, Medicaid and CHIP are removed from and kept out of these programs

• CMS also indicates this final rule will assist in preventing providers and suppliers from circumventing Medicare requirements through name and identity changes, as well as through elaborate, inter-provider relationships

• CMS estimates an annual cost to providers and suppliers of $937,500 in each of the first 3 years of this rule ($3M for each provider???)

• CMS estimates its new revocation authorities will lead to approximately 2,600 new revocations per year

• CMS estimates its new reenrollment and reapplication bar provisions will apply to approximately 400 of CMS’ revocations per year

New Enrollment Rule - Disclosures

• The basic requirement:• upon request by CMS … • all providers or suppliers…• Initially enrolling in or revalidating enrollment in…• the Medicare, Medicaid, or CHIP programs … • are required to identify any “affiliations” that the provider or supplier (or

any owning or managing individuals or organizations of the provider or supplier) currently has (or within the previous 5 years has had) …

• with any currently or formerly enrolled provider or supplier that has experienced a “disclosable event”

New Enrollment Rule – Key Terms

• Affiliation – Generically includes owners and managers, plus reassignors, but specifically:• A 5% or more direct or indirect ownership interest in another

organization; • A general or limited partnership interest (regardless of the percentage) in

another organization; • Managerial or operational control over the daily operations of another

organization; • Officers and directors of a corporation; and • Any reassignors of a provider or supplier [NEW]


• Disclosable Event – includes: • “Uncollected debt” to Medicare, Medicaid or CHIP (regardless of

amount, repayment status or any pending appeals); • Payment suspension under a federal health care program (regardless

when it occurred or was imposed); • Exclusion from Medicare, Medicaid, or CHIP (regardless of when it

occurred or the status of any pending appeals); and • Denial or revocation of Medicare, Medicaid, or CHIP billing privileges

(regardless of when imposed, the reasons for such action or status of any appeals


• Uncollected Debt includes: • Medicare, Medicaid, or CHIP overpayments for which CMS or the state

has sent notice of the debt to the affiliated provider or supplier;• Civil money penalties imposed under this title; and• Assessments imposed under this title

New Enrollment Rule – Application

• Breaking down the basic requirement:• Initiation requires a request by CMS to disclose affiliations

• CMS will look at (1) PECOS; and (2) other CMS databases and non-CMS databases that could indicate concerning behavior to CMS (e.g., improper billing patterns)

• Applies to everyone, but only at the time of initial enrollment and revalidation• Does not apply to CHOWs or other CHOIs

• Not limited to affiliations of just providers and suppliers, but includes affiliations of owners and managers

• Once requested, must disclose all affiliations with disclosable events not just those requested by CMS

• Disclosure of affiliations includes those in the 5 years preceding the request• Disclosure of disclosable events includes any disclosable event, including

those before the affiliation began and after it ended


• CMS requires the following information for each affiliation: 1. General identifying information (e.g., legal name, d/b/a, TIN, and NPI); 2. Reason for disclosing the identified provider or supplier; 3. Information regarding the affiliation relationship (e.g., length and type of

relationship and degree of affiliation); and 4. If the affiliation ended, when and why

• CMS/States then analyzes the reported affiliation to determine whether it poses an “undue risk” of fraud, waste, or abuse to the Medicare (or Medicaid or CHIP) program


In making that analysis of whether there is an undue risk of fraud, waste, or abuse CMS also weighs the following:

• The duration of the relationship with the affiliated provider or supplier;

• Whether the affiliation still exists and, if not, how long ago it ended and why it ended;

• The degree and extent of the affiliation (e.g., percentage of ownership);

• The type of disclosable event (e.g., revocation or payment suspension);

• When the disclosable event occurred or was imposed;

• Whether the affiliation existed when the disclosable event occurred or was imposed;

• If the disclosable event is an uncollected debt—(1) the amount of the debt; (2) whether the affiliated provider or supplier is repaying the debt; and (3) to whom the debt is owed (e.g., Medicare);

• If the disclosable event is a denial, revocation, termination, exclusion, or payment suspension, the reason for underlying action (e.g., felony conviction or failure to submit complete information); and

• Any other evidence that CMS deems relevant to its determination

New Enrollment Rule – Timing

PHASE 1• Effective November 4, 2019• Implementation requires new 855 Forms• New 855 Forms will undergo notice-and-

comment rulemaking• CMS anticipates it could take several

years to develop new forms• Even then, under Phase 1, only providers/

suppliers requested by CMS must disclose affiliates and disclosable events

• Any possibility for immediate enforcement (“undisclosed affiliations”)?

PHASE 2• Unknown effective date• Presumably will not require a

predetermination or request by CMS• Presumably will be required for all new

enrollments and revalidations• Process, implementation, timing, etc.,

subject to notice-and-comment rulemaking

• Comments requested by CMS

New Enrollment Rule – Medicaid/CHIP

• Medicaid and CHIP implementation requirements• State Medicaid and CHIP programs subject to the same requirements• States will follow CMS determinations for providers that also participate in Medicare• Implementation to be phased in because new Medicaid and CHIP enrollment forms

will be required• States have two implementation options:

• Option One: States may require all newly enrolling and re-enrolling providers to identify affiliates and disclosable events – broader option

• Option Two: States may to require those newly enrolling and re-enrolling providers to identify affiliates and disclosable events, but only after the states consult with CMS

• Exception: states may deny or terminate enrollment of any provider if the state determines that a provider has an affiliation(s) (via a source(s) other than provider reporting) that poses an undue risk of fraud, waste, or abuse (similar to “undisclosed affiliations”)

Affiliations - Summary

• The requirement to disclose affiliations applies to both:1. Direct and indirect affiliates; and2. Parties in an affiliation relationship (triggers

disclosures in both directions)• The timing for the disclosure of affiliations

includes those that are current, and those that extend back for the preceding 5 years

• Once an affiliation relationship is established, the requirement to identify disclosable events is unlimited in time or duration, and extends backwards in time, as well as forwards

• Affiliations include affiliates who are currently or were previously enrolled in the Medicare, Medicaid or CHIP programs

• An affiliated provider or supplier need not have been enrolled in Medicare, Medicaid, or CHIP while the disclosing party had its relationship with the affiliate

• The timing in regards to the identification of affiliations does not extend to CHOWs or other CHOIs, only new enrollments and revalidations

Disclosable Events - Summary

• CMS indicates that affiliation disclosures may support CMS contractor investigative efforts related to discovering networks of individuals and entities engaged in fraud, waste, or abuse (for example, information regarding new leads, new networks, or more extensive networks than previously known), in addition to revealing affiliations that pose an undue risk of fraud, waste, or abuse

• No protection from the disclosure requirements was afforded to NFP entities or officials or to publicly traded companies or “passive investors” (e.g., mutual or pension funds)

• The need to identify disclosable events arises regardless of whether the event has been appealed. However, if the appeal is successful, no disclosure is required

• Disclosable events include any civil monetary penalties, including those invoked by the OIG

• A finding of fraud, waste or abuse is not required by CMS to determine “undue risk”

• A finding of undue risk and a subsequent denial or revocation action by CMS will be appealable and the basis for the action will be outlined in the denial or revocation letter, as applicable

Uncollected Debts- Summary

• “Uncollected debts” include any overpayment for which CMS or the state has sent notice of the debt, such as a demand letter or other formal request for payment, to the affiliated provider or supplier and which has not been fully repaid

• Identification of debts to the US Treasury includes those that are currently being repaid (if on an extended repayment plan), and appealed

• Uncollected debts also could include EHR incentive program recoveries, reconciliations from alternative payment models, hospice CAP overpayments and regular Periodic Interim Payment settlements

• All program denials, revocations, terminations, OIG exclusions, and payment suspensions must be reported and are of concern to CMS, including those that are due to non-substantive reasons, like technicalities and misunderstandings

Implementation Recommendations


• Identify known current and past direct and indirect affiliates (i.e., from corporate structure and internal records)

• Review current and past affiliations, most notably current and former indirect owners, officers, and directors from the past 5 years

• Review records for “disclosable events” sustained by any entity in your organization• Contact identified affiliates, including direct, indirect, current or former affiliates, and

request information regarding disclosable events• Begin developing correspondence and a questionnaire that could be used to ask any

direct or indirect affiliates about possible disclosable events • Maintain written records and notes regarding attempts to contact affiliates and

responses and efforts to search available databases


• Determine frequency and manner to contact affiliates to satisfy obligation to determine if affiliate has any disclosable events

• Begin incorporating questionnaires and inquiries that could be utilized in transaction diligence efforts to identify any affiliates and disclosable events of the seller

• Consider making such disclosures a closing condition and whether failure to identify any disclosableevents constitutes a breach of the purchase agreement

• Expand reviews of current exclusion databases for affiliates by implementing a process to regularly review government databases for exclusions/sanctions of past affiliates, officers, and directors in effort to identify disclosable events

• If affiliations with a disclosable events are identified, consider whether those affiliations poses an “undue risk of fraud” because of the length and period of the affiliation, nature and extent of the affiliation, and the type of disclosable event and when it occurred

• Watch for the issuance of any sub-regulatory guidance by CMS and/or any applicable state Medicaid and/or CHIP programs

Expanded Revocation/Denial Authority

• CMS may deny and/or revoke the enrollment of a provider of supplier that:1. Fails to fully and completely provide a list of affiliates and disclosable events upon

request by CMS when the provider or supplier knew or reasonably should have knownof the information;

2. Has a disclosable affiliation that CMS determines poses an “undue risk” of fraud wasteor abuse to the Medicare program; or

3. Has a disclosable affiliation that poses undue risk of fraud, waste or abuse, but theprovider or supplier has not yet reported or is not required to report at that time

• CMS may deny or revoke a provider’s or supplier’s Medicare enrollment ifCMS determines that the provider or supplier is currently revoked under adifferent name, numerical identifier, or business identity, and the applicablere-enrollment bar period has not expired


• CMS may revoke a provider’s or supplier’s Medicare enrollment if theprovider or supplier billed for services performed at, or items furnished from,a location that it knew or should reasonably have known did not comply withMedicare enrollment requirements• Includes all of the provider’s or supplier’s practice locations, regardless of whether they

are part of the same enrollment• CMS may revoke a physician’s or eligible professional’s Medicare enrollment

if he or she has a pattern or practice of ordering, certifying, referring, orprescribing Medicare Part A or B services, items, or drugs that is abusive,represents a threat to the health and safety of Medicare beneficiaries, orotherwise fails to meet Medicare requirements


• CMS may revoke a provider’s or supplier’s Medicare enrollment if theprovider or supplier has an existing debt that CMS “appropriately” refers tothe United States Department of Treasury

• CMS may:1. Deny a provider’s or supplier’s Medicare enrollment if:

a) the provider or supplier is currently terminated or suspended (or otherwise barred)from participation in a state Medicaid program or any other federal health careprogram; or

b) the provider’s or supplier’s license is currently revoked or suspended in a state otherthan that in which the provider or supplier is enrolling, and

2. Revoke provider’s or supplier’s Medicare enrollment if the provider or supplier is currentlyterminated or suspended (or otherwise barred) from participation in a state Medicaidprogram or any other federal health care program


• CMS may deny a provider’s or supplier’s Medicare enrollment application ifsuch entity is currently under a Medicare or Medicaid payment suspension• Denial will not be reversed if the payment suspension at issue is lifted. However, the

provider or supplier can re-apply at that time• CMS may revoke a provider’s or supplier’s Medicare enrollment if the

provider or supplier voluntarily terminates its enrollment in the Medicareprogram in order to avoid a revocation action by CMS• When CMS discovers such behavior and invokes a revocation for such behavior the

revocation action will be effective the day before the voluntary termination applicationwas received by the Medicare Administrative Contractor

Extension of Re-Enrollment Bar

CURRENT• Re-enrollment bar can be instituted

for 1-3 years (depending on the underlying reason for the initial revocation)

• The re-enrollment bar prohibits the revoked provider or supplier from attempting to enroll in the Medicare program for the duration of the bar.

UNDER FINAL RULE• “Strike One” re-enrollment bar can be instituted for

1-10 years (depending on the reason for the revocation action).

• “Strike Two” re-enrollment bar can be instituted for up to 20 years for providers and suppliers who are revoked a second time.

• “Hit By Pitch” re-enrollment bar - CMS now has the ability to add up to 3 years to a provider’s or supplier’s reenrollment bar (even if such period exceeds the maximum 10-year period)

• CMS must determine that the provider or supplier is attempting to circumvent its existing reenrollment bar by enrolling in Medicare under a different name, numerical identifier or business identity.

New Re-Application Bar

• In addition to the expansion of the reenrollment bar, CMS newly instituted a “reapplication bar”

• Prohibits provider or supplier from enrolling in the Medicare program for up to 3 years if its initial enrollment application is denied because the provider or supplier submitted false or misleading information on or in connection with (or omitted information from) its enrollment application in order to gain enrollment in the Medicare program

Off–Campus Provider Based Issues

• May 2019 draft surveyor guidance changed CMS approach to space and personnel sharing “prohibitions”

• Common areas and public paths of travel – now okay• Clinical space sharing – still prohibited, must be “separate and distinct”• Some sharing is possible, but not during the same shift; no floating• Surveyors are to review floor plans• COP compliance must be met by independently

Questions

Bruce A. Johnson, Shareholder, Polsinelli

Value-Based Payment Innovation – Today and in the Future

Agenda

• Public and private sector innovation• Reimbursement and payment system drivers• Value-based proposals under Stark and Antikickback proposed

rules• Reading the tea leaves

Value-Based Care

• “Value-based” health care: • Health care delivery and payment models involving financial and other

incentives to ensure patients receive appropriate, high-quality care to increase the overall “value” of that care

• Care delivery and financial incentives linking fee-for-service payments to care quality and “value”

• Examples:• Pay-for-performance• Episodes of care and population health• Shared savings and risk• Linkage to “quality”• Hospital Value-Based Payment Program • Physician Quality Payment Program/MACRA

Colorado Trends

• Recent articles on health care costs, hospital profits and other variables – Denver Post, Oct. 2018; Wall Street Journal, Dec. 28, 2018

• Urban vs. Rural differences in hospital/health system challenges• Complexity of multiple public and private sector “value-based”

initiatives• Commercial and self-insured payor inconsistency and/or lack of

opportunity on value-based initiatives• Limited transparency to consumers related to quality and cost• New Governor and shifting of Colorado legislature• Federal policy shift and support of state innovation

Implications – Alive, Dying or Dead?

• Where you stand depends on where you sit• 10 SSP ACOs in Colorado; 8 Track 1 (shared savings only); 1 Track 2, 1

Track 3• Mixed use of MSSP fraud and abuse waivers• Perceptions in Colorado regarding health care costs and role of

hospital/health systems in addressing • Federal encouragement of state level innovation• What might the future hold?

• Regulatory alignment and consistency at state level• Shared savings offerings in commercial plan design and TPA support• Provider incentives• Capital, innovation and infrastructure (i.e., Private Equity; super MSO)• Transparency and incentives

• Value-Based Care – Not Dead Yet!

Colorado Developments

• HB 19-1168 – Reinsurance• DORA Emergency Regulation to implement reinsurance:

• “The hospital special fee shall aid hospitals in improving cost efficiency, patient safety and clinical and administrative processes by supporting carriers’ implementation of care management protocols for their members.”

• Peak Health Alliance – Purchasing Cooperative • Public Option

Peak Health Alliance/Western Slope Focus• Colorado Non-profit Corporation, based in Summit County• Health Care Coverage Cooperative, CRS 10-16-101 et. seq.-- Focused on changing

negotiation process for employer-based insuranceTraditional Model

Peak Health Alliance Model

Hospitals/Providers

Peak Health Alliance Employers Insurers

Negotiate prices

Sends negotiated prices to

Send prices to

Set premiums based on hospital/provider prices, plan

demographics and administer plan

Hospitals/Providers Insurers EmployersNegotiate

pricesSet premiums based on

hospital/provider prices, plan demographics and administer plan

Federal Payment Rule Changes

• Telehealth, care coordination and other changes• Substance abuse bundles• Tweaks and refinements to existing programs/practices• Core goals:

• Facilitate value-based care• Reduce costs• Improve quality

Health Care Payment Learning & Action Network• Public and private health care leaders providing leadership,

direction and support adoption of alternative payment models• Goal Statement: “Accelerate the percentage of US health care

payments tied to quality and value in each market segment through the adoption of two-sided risk alternative payment models.”

Goals^ Medicaid Commercial Medicare Advantage

Traditional Medicare

2020 15% 15% 30% 30%2022 25% 25% 50% 50%2025 50% 50% 100% 100%

^Source: https://hcp-lan.org/workproducts/HCPLAN-Overview.pdf

Direct Contracting Model – CMS Innovation Center• Announced April 2019 -- Builds on Next Generation ACO Model• 5 Year model; 2021 first performance year• Direct Contracting Entities (DCE) (similar to ACOs)

• Standard• New Entrant DCEs• High Needs Populations

• Participation options and payment model: • Professional capitation^ • Global capitation^ • Geographic (TBD) capitation^

Direct Contracting Model – Financial/ Operational Highlights

Professional Global Geographic

Risk Sharing Arrangement 50% shared savings/losses 100% shared savings/losses 100% shared savings/losses

Discount or MSR/MLR No discount, 1st dollar savings; no MSR/MLR

1st dollar save/loss; Discount applied to PY benchmark 2-5%

Discount applied to PY; amount TBD

Risk Adjustment TBD; will capitalize on MA calculations; considering alternatives

Payment PCP capitation (7% of estimatedTCOC); advanced payment option

Options: • PCP capitation or • Total Care Capitation – 100%

capitation to DCE; with claims submission

Full capitation with option to pay claims for contracted providers

Minimum # of Beneficiaries • Standard: 5,000• New Entrants: 1,000 PY, increase to 3,000• High Needs Population: 250 PY increase to 1,400 by PY5

75,000

Other • Quality measures with reporting/performance• 75% Electronic Health Record use • Payment rule waivers: SNF 3 day rule; telehealth, beneficiary

incentives and other benefit enhancements

TBD

Proposed Stark and AKS Rule Changes

• October 17, 2019 “Notice of Proposed Rule Making” by CMS

• Federal Physician Self-Referral or “Stark Law”

• Prohibits physicians from making referrals of designated health services (DHS) to entities with which a physician (or immediate family member) has a financial relationship (i.e., direct or indirect ownership, compensation or both), unless the financial relationship meets an applicable exception.

• Federal AntiKickback Statute (AKS)

• Prohibits offer, receipt, solicitation etc. of remuneration – essentially anything of value – to influence furnishing of Federal Health Care Program items and services.

• Federal Beneficiary inducements Civil Monetary Penalties Law

Current Value-Based Care Compliance Strategies• “Traditional” fraud and abuse compliance analysis focused on meeting elements of existing

exceptions/safe harbors e.g.,

• Written agreements

• Fair market value (FMV) compensation; not based on Volume/Value of referrals

• Detailed, fact-specific analysis

• CMS program-specific “waivers”

• MSSP and Next Generation ACO broad fraud and abuse waivers

• CMS Innovation Center programs (BPCI, CPC+ others) narrow waivers

• Only available to entities “participating” in the CMS program; so limited application

• Under current proposals, parties can still rely on these strategies

Compliance Scope and Utility for Value-Based Arrangements

Scope/Breadth of Compliance Protection

Highest

Lowest

Moderate

Utility (e.g., simplicity, flexibility) to health systems, hospitals, physicians and other users

Highest Moderate Lowest

MSSP/Next Generation Waivers

CMS Program-Specific Waivers

New Stark and AKS Value-Based Proposals

Existing/ Traditional Analysis

Major Value-Based ProposalsStark Law Exceptions Anti-Kickback Safe Harbors

Value-based arrangements• Exception for payment to physician by DHS entity under

VB arrangement. No downside risk required.

Care coordination arrangements to improve quality, health outcomes and efficiency• Evidence-based, valid outcome measures anticipated to

advance coordination/ management of population. Meaningful financial risk to physician VB arrangements• Physician at “meaningful downside financial risk”

• 25% of remuneration under VB arrangement, or is financially responsible for all or a defined set of patient care items and services covered by the payor

Substantial downside risk value-based arrangements • Value-based enterprise at substantial financial risk (e.g.,

Repayment of 40%+ of shared losses; Episode/bundled repayment of 20%+ of total loss; Prospective population based payment or partial capitation, with 60%+ discount

• VB participant share in VBE’s arrangement losses (e.g., Risk share payment of 8% of amount VBE at risk; Partial/full capitation; or Stark meaningful financial risk

Full financial risk arrangements that facilitate value-based health care delivery payment• VBE responsible for cost of all patient care items/services

covered, for each patient in the target patient population

Full financial risk value-based arrangements (gg)• VBE responsible for cost of all patient care items/services

covered, for each patient in the target patient population

Threshold Requirements

• Two or more “value-based participants” (e.g., physician groups, hospitals etc.); • Establish a “value-based enterprise” in connection with a “value-based arrangement”

in which the enterprise and/or its participants; • Undertake “value-based activities” (such as providing items/services, taking actions or

refraining from taking certain actions), that are directed at:• A defined “target patient population,” and • At least one “value-based purpose” (i.e., coordinating and managing care, improving

care quality, appropriately reducing costs/growth in expenditures of payors (without reducing quality), or transitioning from health care delivery and payment mechanisms based on the volume to mechanisms based on the quality and cost management), for a target patient population.

• All must be present, plus must meet additional specific requirements of exception or safe harbor.

Conclusion and Future Direction

• Federal/State and private sector focus on reducing cost of care• CMS and OIG seeking to reduce regulatory burden, promote

value-based care and innovation • Broad payment system movement from fee for service to

provider assumption of financial risk • Local payment system movement to rate reduction with limited

(if any) attention to value • Future direction?

Questions

Neal Shah, Shareholder, Polsinelli

CMS and OIG Proposed Changes to Stark and Anti-Kickback Rules

Background

• October 17, 2019 notices of proposed rule-making by CMS and OIG related to the Stark Law, Anti-Kickback Statute and Civil Monetary Penalties

• 84 FR 55694 (AKS & CMP Law) & 84 FR 55766 (Stark)• Informed by Agency experience

• Requests for Information responses received as part of Regulatory Sprint to Coordinated Care

• Stark Self Disclosure Reporting Protocol • Advisory Opinions• Enforcement activities

• Comments were due December 31, 2019

Content of Proposed Rules

• Two broad themes: supporting value-based care and reducing regulatory burden.

• New exceptions & safe harbors for various value-based care models. • “Technical” modifications to underlying laws:

• Significant overhaul of many prior regulatory interpretations of the Stark Law• New exceptions to Stark Law and Beneficiary Inducement CMP• Expanding scope of certain key AKS safe harbors

Importance of Proposals

• Stark Law and AKS regulate relationships with referral sources, while beneficiary inducement CMP regulates relationships with patients.

• Violations may cause large financial penalties or (for AKS) criminal sanctions.

• Significant implications for hospitals in many core business areas, such as:

• Employment or contractor arrangements with physicians;• Recruitment and retention of physicians;• Discounts, warranties, or other arrangements with vendors; • Engaging patients and encouraging health-promoting behaviors; and• Supporting technological innovation and process improvement.

Compliance Strategies

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Hospitals often build their compliance strategies around these laws, so their provisions may affect many aspects of hospital contracting and operations. Changes in these laws may impact core hospital operational processes, including:

• Contract management systems to ensure agreements are in writing; • Valuation process to set compensation in physician employment and contractor

agreements;• Dispute resolution processes with physicians;• Physician recruitment strategies; • Identification and development of affiliations or partnerships with other entities that may be

in a position to refer (or receive referrals of) patients or business. Special compliance processes for ACOs:

• Unique existing area of flexibility for this model of value-based care.• Special compliance tools available, with “self-implementing” waivers that may be approved

by the ACO’s Board (or other governing body) if an arrangement is reasonably related to statutory purposes of the Medicare Shared Savings Program.

Goals of Proposed Rules

• Stark Law:• These proposals would reassess our regulations to ensure they appropriately reflect the scope of the

statute's reach, establish exceptions for common nonabusive compensation arrangements between physicians and the entities to which they refer Medicare beneficiaries for designated health services, and provide critically necessary guidance for physicians and health care providers and suppliers whose financial relationships are governed by the physician self-referral law.” – 84 FR 55836

• AKS & CMP Law:• “The Department has identified the broad reach of the Federal anti-kickback statute and beneficiary

inducements CMP as potentially inhibiting beneficial arrangements that would advance the ability of providers, suppliers, and others to transition more effectively and efficiently to value-based care and to better coordinate care among providers, suppliers, and others in both the Federal health care programs and commercial sectors. . . . This proposed rule attempts to address these concerns by removing unnecessary impediments to the transformation of the healthcare system into one that better pays for and delivers value.” – 84 FR 55757.

Stark Law Proposals

Technical Stark Law ProposalsStark Law Modification Citation

Changes to definitions of key terms including “fair market value,” “commercially reasonable,” “designated health services,” and “isolated transactions”

42 CFR § 411.351

Changes to rules for distributing group practice profits 42 CFR §§ 411.352(i)(1) & (3)

Changes to indirect compensation and directed referrals rules, and new definition of “volume or value”; temporary noncompliance with writing requirement

42 CFR §§ 411.354(c)(4); (d)(4)-(6); (e)(3)

Changes to exceptions including:• Clarifying that leases of space & equipment must be exclusive as between the lessor

and lessee, but not for others.• “Pass-through” physician recruitment arrangements no longer required to be signed by

physician. • Expanding exception for hospital payments unrelated to DHS.• Allowing “payments by a physician” exception to be used in more circumstances.• Allowing “fair market value” exception to cover leases.• Changes to EHR donation exception.• Proposed exception for “limited remuneration” up to $3,500 per year• Proposed exception for donations of cybersecurity technology

42 CFR § 411.357:• (a) & (b)

• (e)(4)

• (g)• (i)• (l)• (w)• (z)• (bb)

Clarification that Stark Law is designed to regulate Medicare only 42 CFR § 411.353(c)(1)

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Definitions – Fair Market Value (FMV) & Commercially Reasonable (CR)• Key parts of many compensation exceptions & often a major focus of

regulatory or whistleblower claims.• Line of cases suggesting an arrangement must be profitable in order to be “commercially

reasonable”.• Definition of “fair market value” stated it would “usually” be amount paid for similar transactions –

created opportunities for second guessing.

Proposed definitions could add significant flexibility:• Commercial Reasonableness: “Commercially reasonable means that the particular arrangement furthers a

legitimate business purpose of the parties and is on similar terms and conditions as like arrangements. An arrangement may be commercially reasonable even if it does not result in profit for one or more of the parties.”

• Fair Market Value: “The value in an arm’s-length transaction with like parties and under like circumstances, of assets or services, consistent with the general market value of the subject transaction.”

• General market value: would mean: “The price that assets or services would bring as the result of bona fide bargaining between the buyer and seller in the subject transaction on the date of acquisition of the assets or at the time the parties enter into the service arrangement.”

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Example of proposed FMV/CR standard

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“We are cognizant that the hypothetical value of a transaction may not always be identical to the market value of the actual transaction being considered. Extenuating circumstances may dictate that parties to an arm's length transaction veer from values identified in salary surveys and other hypothetical valuation data that is not specific to the actual parties to the subject the transaction.” – 84 FR 55799

Example of FMV compensation above survey rate:• Hospital employing orthopedic surgeon.• Salary surveys indicate compensation of $450,000 per year. • Hospital pays above this amount, where orthopedic surgeon is “one of the top orthopedic surgeons in the entire country

and is highly sought after by professional athletes with knee injuries due to his specialized techniques and success rate.”

Example of FMV payment below survey rate:• Hospital employing family physician. Independent surveys indicate rate of $250,000/year.• No survey available for local area, only national surveys.• Cost of living lower than average despite other amenities.• Poor hospital finances due to declining reimbursement and poor payor mix.

Group Practice ModificationsMost relevant for hospitals due to “captive” or affiliated physician practices. Practices that qualify as “group practices” may take advantage of in-office ancillary services exception to distribute profits or pay physicians based on productivity of advanced practitioners billing “incident to.”Proposed rule limits groups’ flexibility to distribute profits based on category of DHS.

• Current rule allows distribution of profits based on subgroup of five or more physicians.• Proposal would clarify that practices cannot use different methods to distribute profits based on the category of

DHS.

Significant implications for multi-specialty groups, where some categories of DHS may be more relevant to certain specialties:

• E.g., physical therapy profits distributed to orthopedists, infusion profits distributed to oncologists. • Open questions about scope of proposal - may require a single methodology to distribute all DHS and explicitly

says groups cannot define components based on type of DHS.

Could make it harder for large physician groups to operate effectively. Separately, CMS proposes to allow group practices to distribute DHS revenues due to a value-based enterprise directly to physicians.

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Changes to Limit Inadvertent / Temporary Noncompliance CMS proposes three changes that would reduce most non-compliance associated with beginning an arrangement without written terms.

• Expanding the 90-day exception for signature requirements to the whole “signed writing” requirement.

• Clarifying the “set in advance” rules so that amount or formula is no longer required “in writing” to protect arrangement.

• New exception for “limited remuneration” up to $3,500 per year (42 CFR § 411.357(z)).• Compensation must be FMV & CR, not take into account V/V of referrals or other business generated, and

must not be based on a percentage or per-unit fee reflecting business generated by lessor for lessee.

Under 2016 Physician Fee Schedule & 2018 Bipartisan Budget Act changes, “signed writing” can be shown through documents evidencing course of conduct.

• Combined with proposed changes, would create a significant new cushion for parties beginning relationships before reducing all terms to a formal signed writing.

• Formal signed agreement is still a best practice.

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Limits on Tools to Resolve Noncompliance

COPYRIGHT 2019 - POLSINELLI, P.C.

“Isolated transactions” exception (411.357(f) & definition at 411.351):• Often used in the past to settle disputes or adjust administrative problems with compensation.• CMS rejects this use of the exception, stating the exception will not protect cases in which “a party makes a

single payment for multiple services provided over an extended period of time.”

Period of disallowance:• Parties cannot make administrative fixes after the expiration of a contract; only during original term.

Would severely limit a hospital’s options when it discovers an incorrect payment under a physician agreement:

• Hospital would need to recoup excess payments during term of agreement (i.e., reduction of future payments).

• Hospital might not be able to correct underpayments or excess payments through post-term settlements. • But unintentional excess payment may not cause a federal “overpayment” if corrected during term.

CMS characterizes both changes as “clarifications” – agency may intend immediate effect.

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Definitions – Volume or ValueMany Stark Law compensation exceptions prohibit remuneration that “takes into account” or “varies with” the volume or value of referrals or other business generated.Longstanding challenge for value-based payment arrangements because of concerns that payments incentivizing savings might be considered to be based on “volume or value.”

• For example, a bonus for reducing low-value care. CMS proposes a new definition requiring a “formula” or “direct correlation” between referrals and compensation.CMS also rejects conflation of “volume or value” and “fair market value” standard.

• “A careful reading of the statute shows that the fair market value requirement is separate and distinct from the volume or value standard and the other business generated standard. . . . The volume or value and other business generated standards do not merely serve as “limiting phrases” to modify the fair market value requirement.” (84 FR 55797)

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Revised Definition of “DHS”

“Designated health service”• Set of services regulated under the Stark Law, including all hospital services.• CMS proposals would amend definition to indicate Stark Law does not prohibit services paid by

Medicaid or services that do not increase the amount paid by Medicare for an inpatient DRG.• CMS also solicited comment on whether or not this should be expanded to outpatient settings and ASCs?

Example:• “To illustrate, suppose that, after an inpatient has been admitted to a hospital under an established diagnosis-

related group (DRG), the patient's attending physician requests a consultation with a specialist who was notresponsible for the patient's admission, and the specialist orders an X-ray. By the time the specialist orders the X-ray, the rate of Medicare reimbursement under the IPPS has already been established by the DRG (diagnosticimaging is bundled into the payment for the inpatient admission), and, unless the X-ray results in an outlierpayment, the hospital will not receive any additional payment for the service over and above the payment rateestablished by the DRG.” – 84 FR 55805

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Other interesting modificationsApparent disagreement with cases finding that personal productivity payments for services generating facility fees necessarily “vary with or take into account the volume or value of referrals or other business generated.” Lease exceptions (411.357(a) &(b))

• “Exclusivity” requirements would only apply to lessor; lessee and licensees can share use.Physician recruitment (411.357(e))

• No need to obtain physician signature for practice support if all compensation passed through.Payments by hospital unrelated to DHS (411.357(g))

• Expanded definition of “unrelated to DHS” to cover other administrative services typically not provided by medical professionals.

Payments by a physician (411.357(i))• Can now cover a variety of payments made by a physician, including for non-clinical space.

Fair market value exception (411.357(l))• Can cover leases of space for less than one year.

Solicited comments on expanding EHR donation exception (411.357(w)) and proposing a new exception for donation of cybersecurity technology (411.357(bb)).

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Anti-Kickback Statute Proposals

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Personal Services and Management Contracts and Outcomes-Based Payment Arrangements(42 CFR § 1001.952(d))Main safe harbor covering personal service contracts. Typically limited use for part-time or intermittent contracts.OIG proposes to replace the requirement that aggregate compensation under personal services or management agreements be set in advance with a requirement that the methodology for determining compensation be set in advance of the initial payment under the arrangement.OIG also proposes to delete the requirement that part-time contractual arrangements specify their timing and duration.OIG also proposes to add a new subsection for “outcomes-based payments”

• Alternative or supplement to value-based payment safe harbor proposals.• Would protect monetary remuneration, potentially including arrangements without risk.• Proposes many safeguards similar to other “freestanding” value-based payment safe harbors.

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Other AKS Safe Harbor Proposals

“CMS Model” Safe Harbor protecting remuneration under a CMS APM• Administrative requirements similar to waivers.• Cannot be conditioned on referrals outside CMS-sponsored model.

Allowing “bundled warranties” in which vendors can guarantee performance of services as well as items.

• Must include at least one item (e.g., adherence services associated with a medication).

• Other safeguards limiting the kinds of conditions manufacturers can place on these warranties.

• May create new opportunities for drug or device purchasing.

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Proposals on Beneficiary Engagement

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Beneficiary Incentive Changes

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New AKS safe harbor for in-kind tools and supports with a retail value of less than $500 to increase patient engagement with their care and adherence to care protocols.

Increasing size of “local transportation” safe harbor from 50 to 75 miles and removing any mileage limit for discharges to residence;

Adding an exception to the CMP law related to telehealth for in-home dialysis services.

Beneficiary Incentives (42 CFR §1001.952(hh))Remuneration does not include patient engagement tool or support furnished by a VBE participant to a patient in a target population, if following conditions met:

• Patient engagement tool or support is furnished directly to patient by a VBE participant; • No outside individual/entity outside of VBE funds/contributes to the provision of the tool or support• Patient engagement tool or support:

• Is in kind preventive item or service;• Has direct connection to coordination and management of care• Does not include any gift card, cash or cash equivalent• Does not include in-kind item, good or service used for patient recruitment or marketing of items/services; • Does not result in medically unnecessary or inappropriate items/services, • Is recommended by the patients licensed HC provider; and • Advances one or more goals (e.g., adhere to treatment, drug, or follow-up care plan regimen, management of disease or

condition, improvement in measurable evidence-based health outcomes; or insuring patient safety. • No offer knowledge/expectation that remuneration diverted/sold or used for other than intended purpose. • Aggregate value of engagement tool or support does not exceed $500 annually, unless furnished based on

patient financial need. • Records are made available to Secretary upon request.

Additional safe-harbor for patient incentives in CMS-sponsored model (42 CFR §1001.952(ii)(2))

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Questions

Ann McCullough, Shareholder, Polsinelli

Colorado Candor Act, Colorado Professional Review Act and NPDB Reporting

Colorado Candor Act

We are sorry …• Colorado Candor Act SB 19-201, C.R.S. §25-51-101, et seq. • Candor Act encourages candid, open discussions regarding an

“adverse health care incident” resulting in physical injury or death of a patient

• Health care providers and health facilities may investigate, disclose, and communicate with patients regarding the cause of the adverse health care incident and what steps are being taken to prevent a similar outcome in the future

• Health care providers and health facilities may determine whether or not an offer of compensation to the patient is warranted

Colorado Candor Act

• Discussions and offers of compensation:• Privileged and confidential, and • Not an admission of liability

• Health care provider may initiate Candor process• Written notice to the patient of desire to enter into open discussion and

patient rights• Alone or jointly with a health facility • Within 180 days of the adverse health incident • Before a complaint or written demand from the patient

Colorado Candor Act

• Notice of Patient’s rights includes • Receive copy of medical record and disclose to third party • Seek legal counsel and have legal counsel present • Copy of statute of limitations (discussion do not toll)• Filing deadline under the Governmental Immunity Act, if applicable• Privileged and confidential nature of discussions

• Notice of Offer of Compensation, if deemed warranted, includes• Patient’s right to seek legal counsel • Patient may be required to repay medical expenses paid by a third party • Offer of compensation is not an admission of liability • (Health care provider or health facility may require a release of liability)

Colorado Candor Act

• Take Aways for Hospitals ….• Candor process is initiated by health care provider, who may work jointly with

the Hospital• Collaborate with health care provider • Determine internal team to lead the Candor process (collaboration with the

provider, investigation, notices to the patient, empathy and compassion, how to frame the patient discussions, consideration of compensation)

• Develop form notices with all statutory elements, as well as the appropriate tone for Candor process

• Work quickly – notice must precede a patient complaint or written demand, and must be within 180 days of adverse health care incident

• Quality Improvement • Educate Medical Staff and Mid-Levels

Colorado Professional Review Act

• Old CPRA – C.R.S. §12-36.5-101, et seq. • Promote effective professional review through:

• Qualified immunity for professional review activities• Professional review records not subject to subpoena or discovery and are not

admissible in any civil suit • Sunset September 1, 2019


• New CPRA – Senate Bill 19-234, relocated to C.R.S. §12-30-201, et seq.

• CPRA reauthorized; sunset again September 1, 2030• Qualified immunity unchanged • Changes to the scope of privileged and confidential records• Updates Governing Body registration process• Eliminates requirement to report results of a hearing committee (prior to

final Governing Board action)• Encourages (but does not require) a consumer on the professional

review committees


• “Records arising from professional review activity” are confidential and privileged

• Records arising from professional review activity do not include:• Incident reports prepared in the ordinary course of business, • Relevant hospital or facility policies, procedures and protocols, or • Other “original source documents”


• “Original Source Documents” • Prepared in the ordinary course of business, • Are not otherwise privileged and confidential, and • Contain “factual information related solely to the individual patient in

interest in a civil action”


• Original Source Documents • Not protected from subpoena or discovery merely because they were

considered by or presented to a professional review committee • Upon request or subpoena, the entity (e.g., a hospital) must “provide a

log of all original source documents” in the professional review files• Original source documents generally subject to subpoena or discovery

from the original source• If the original source does not product the documents, the patient may

subpoena or seek discovery from the professional review committee


• Take Aways for Hospitals …• Review and update Hospital Medical Staff policies for maintaining

confidential professional review files • Identify and label “original source documents” that are contained in the

professional review files • Consider maintaining a log of original source documents, subject to

legal review

NPDB Reporting – The Basics

• National Practitioner Data Bank (NPDB) • Certain health care entities (including Hospitals) must report to, and

query, the NPDBHealth Care Quality Improvement Act (HCQIA) - 42 U.S.C. §11101, et seq; 45 C.F.R. Part 60


Hospitals must report…• Any professional review action that adversely affects the clinical

privileges of a physician or dentist for a period of more than 30 days, or

• The acceptance of the surrender of clinical privileges, or any restriction of such privileges by a physician or dentist,

• While the physician or dentist is under investigation by a health care entity relating to possible incompetence or improper professional conduct, or

• In return for not conducting such an investigation or proceeding


• NPDB interprets the word "investigation" expansively. [NPDB] retains the ultimate authority to determine whether an investigation exists.

• The NPDB considers an investigation to run from the start of an inquiry until a final decision on a clinical privileges action is reached. ….

• NPDB Guidebook https://www.npdb.hrsa.gov/resources/aboutGuidebooks.jsp

https://www.npdb.hrsa.gov/resources/aboutGuidebooks.jsp

NPDB Reporting

• On October 26, 2018 the NPDB issued a Revised Guidebook• No warning was provided prior to release• NPDB has called this a “revision” rather than a new Guidebook• Revised NPDB Guidebook was effective immediately

• Several critical changes • Q&A Section

• See, NPDB Guidebook, Section E, Reporting• Discuss key revisions

Proctoring Reportable When More than 30 Days• A proctoring requirement means the practitioner cannot perform

certain procedures without proctor approval or without the proctor being present and watching

• When does the 30-day period begin?• The NPDB removed the word “assigned” from the proctoring section,

thus preventing the argument that the 30-day period does not begin until the Hospital actually “assigns” a proctor

• Take Aways… Now, the 30-day period begins at the time that the proctoring requirement is imposed, even if a proctor is not yet assigned

Question 22: Agreement Not to Exercise Privileges May Be ReportableQuestion 22: Is an agreement not to exercise privileges during an investigation, without actually surrendering the privileges, a resignation while under investigation that is reportable?Answer: Yes, the agreement not to exercise privileges is reportable if other reportability conditions are met. NPDB regulations state that “acceptance of the surrender of clinical privileges or any restriction of such privileges . . . while under investigation” is reportable. An agreement not to exercise privileges is a restriction of privileges. Any restriction of privileges while under investigation, temporary or otherwise, is considered a resignation and must be reported.

Question 22: Agreement Not to Exercise Privileges May Be ReportableTakeaways….Agreement not to exercise privileges or other resignation of privileges is reportable on day 1. But a summary suspension is not reportable until day 31

Question 23: Leave of Absence Reportable If Under or To Avoid Investigation

Question 23: Is a leave of absence while under investigation considered to be a resignation of privileges that is reportable?Answer: If a leave of absence while under investigation restricts privileges, it is reportable. NPDB’s regulation states that “[a]cceptanceof the surrender of clinical privileges or any restriction of such privileges” is reportable. To the extent a leave of absence restricts a practitioner’s ability to exercise privileges, it is considered a surrender that is reportable. If a practitioner can take a leave of absence without affecting his or her privileges, and his or her privileges remain intact during the leave of absence, the leave of absence is not reportable to the NPDB

Question 23: Leave of Absence Reportable If Under or To Avoid Investigation

Takeaways…. Reconsider use of LOA in certain circumstances. Consider whether investigation is pending. If practitioner takes a LOA for health concerns, be aware of reporting implications if practitioner is under investigation

Question 24: Reappointment Review May Be an InvestigationQuestion 24: When does the review of an application for reappointment become an investigation if the physician resigns before final action is taken on the reappointment application? …

Question 24: Reappointment Review May Be an InvestigationAnswer: It depends. A routine or general review is not considered an investigation….. Takeaways…. It always depends. Recommend that Medical Staff Bylaws include routine practice to seek follow-up information on malpractice cases for all practitioners. The NPDB’s definition of investigation excludes a routine or general review of cases or a practitioner. Be aware of whether Credentials Committee focus on the practitioner’s cases during reapointment might be deemed an “investigation”

Question 25: Quality Improvement Plans May Be Reportable as Restrictions and May Qualify as Investigations

Question 25: Is a resignation while subject to a “quality improvement plan” [FPPE] a resignation while under investigation? …. Answer: Imposition of a [FPPE] plan raises two issues with respect to reportability. First, a [FPPE] plan may restrict a practitioner’s clinical privileges. If so, and if the restriction is the result of a professional review action, concerns the practitioner’s professional competence or conduct, and is in place longer than 30 days, the plan may be reportable.

Question 25: Quality Improvement Plans May Be Reportable as Restrictions and May Qualify as Investigations

Answer continued: Second, if the [FPPE] plan does not meet these requirements, it nonetheless may be considered an investigation so long as it meets the other requirements for an investigation….

Question 31: Requirement to Operate with a Qualified First Assistant May Be ReportableQuestion 31: Is the requirement that a surgeon operate only with a qualified first assistant a restriction of privileges?Answer: It depends. If all new surgeons are required to operate with a qualified first assistant, such as when the surgeons first receive privileges at a hospital, imposition of this requirement would not be a restriction of privileges that is reportable. However, if the requirement is imposed on one specific surgeon, is a professional review action about professional competence and conduct, and runs more than 30 days, the action would be reportable as a restriction of clinical privileges. Takeaways…. A first assistant requirement for individual practitioner based on professional review action that lasts > 30 days is reportable.

Question 49: Addressing a NPDB Report When a Court Order Changes the Clinical Action Taken by The Hospital

Question 49: How should a hospital report to the NPDB when an adverse clinical privileges action it took against a practitioner is changed by court order?

Answer: Assuming all reporting prerequisites are met, the hospital should report the initial adverse action; the hospital should then report the judicial decision as either a revision or a void. ....

Question 49: Addressing a NPDB Report When a Court Order Changes the Clinical Action Taken by The Hospital

Takeaways…. Talk to your lawyer

Jennifer Evans, Shareholder, Polsinelli

The Year in Review: Fraud and Abuse

So What Happened In 2019?

Large dollar settlements: • Invidior ($700 million, false marketing of opioid and filing of

discontinuation petition to FDA containing false information)• Walgreens Boots Alliance, Inc. ($269 million, falsely reported the days

of available supply on insulin pens resulting in excessive reimbursement and dispensed medically unnecessary insulin pens)

• Insys Therapeutics ($225 million, AKS violations based on marketing practices)

• Astellas Pharma and Amgen Inc. ($122 million, unlawfully covering Medicare patient co-pays)

• Duke University ($112 million, research misconduct)

So What Happened In 2019?

Large dollar settlements: • Inform Diagnostics ($63 million, AKS and Stark violations based on EHR

subsidy payments to doctors)• Greenway EHR ($57 million, causing false “meaningful use” certifications)• Jazz Pharmaceuticals ($57 million, AKS violations based on kickbacks to

charitable organizations acting as conduits to cover Medicare patient cost-sharing)

• Encompass Health ($48 million, medically unnecessary IRF admissions and providing inaccurate information to Medicare)

• MedStar Health ($35 million, AKS violations based on professional services contracts)

Noteworthy Court Decisions

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United States vs. AseraCare (11th Cir.)• A claim cannot be deemed “false” under the FCA based on a difference

in clinical judgment alone• The court held that the government’s expert evidence amounted to a

mere difference in opinion, and that “contradiction based on clinical judgment or opinion alone cannot constitute falsity under the FCA as a matter of law”

• Allowing an FCA plaintiff to prove falsity by presenting a mere difference of opinion would “totally eradicate the clinical judgment required” of certifying providers


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United States vs. AseraCare (11th Cir.)• A claim cannot be deemed “false” under the FCA based on a difference

in clinical judgment alone• The court held that the government’s expert evidence amounted to a

mere difference in opinion, and that “contradiction based on clinical judgment or opinion alone cannot constitute falsity under the FCA as a matter of law”

• Allowing an FCA plaintiff to prove falsity by presenting a mere difference of opinion would “totally eradicate the clinical judgment required” of certifying providers


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UnitedHealthcare Ins. Co. v. Azar (D.D.C.)• United challenged the CMS regulation interpreting the Medicare

overpayment refund statute in context of Medicare Advantage

• Court ruled that regulation created FCA liability for negligence (i.e., lack of “reasonable diligence” to identify and repay) which contradicts FCA’sknowingly requirement

• Court invalidated the refund regulation for all of Medicare Part C


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U.S. ex rel. Hunt v. Cochise Consultancy, Inc. (S.Ct.)

• FCA limitations period in 31 U.S.C. § 3731(b)(2) applies to False Claims Act (FCA) lawsuits in which the government declines to intervene

• This could be up to 10 years after the date on which the FCA violation is committed

• Limitations period begins to run when the government official responsible for acting, and not the relator, knew or should have known the relevant facts


Azar v. Allina Health Services (S.Ct.)• HHS must go through notice-and-comment rulemaking for any rule,

requirement, or policy statement that establishes or changes a “substantive legal standard” affecting Medicare benefits

• SCOTUS did not explicitly define “substantive legal standard”• Medicare rules are held to a higher procedural standard under the

Social Security Act relative to the Administrative Procedure Act (which excludes interpretive rules and general statements of policy from notice-and-comment rulemaking)


United States ex rel. Bookwalter v. UPMC (3rd Cir.)• Reversed and remanded for further proceedings• Relators properly pled violations of Stark when they alleged that:

• Every time the defendant-physicians performed a surgery or procedure at the hospital they made a referral for the associated hospital claims because those procedures required hospital and nursing charges, and

• The surgeons’ compensation varied with the volume or value of referrals because the surgeons’ bonuses fluctuated based on the amount of work they did and therefore the number of referrals they made for hospital services.

• Because the surgeons’ compensation and wRVU production both exceeded the 90th percentile, the arrangement was inherently suspicious

Granston Dismissals – A Mixed Bag

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DOJ “Granston Memo” (Jan. 2018) • Directs DOJ lawyers to consider dismissing meritless FCA

whistleblower cases

• Factors to consider:

• Meritless qui tams, parasitic or opportunistic qui tams, burden and government resources, safeguarding classified information, addressing egregious procedural errors, interference with agency policies


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Role of the Courts - Two Competing Standards

• Swift v. U.S: • Standard adopted by D.C. Circuit • Because the United States remains the real party in interest, the DOJ has

“unfettered discretion” to dismiss a case

• Sequoia Orange v. Baird-Neece Packing Corp• Standard adopted by 9th Circuit • DOJ must: (1) identify a valid purpose for dismissal; and (2) show a “rational

relation” between the dismissal and accomplishing that purpose


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• Before the Granston Memo, Section 3730(c)(2)(A) used in less than 1% of FCA matters

• Since Granston memo:

• Notable uptick in dismissals – 16 cases in 2018 alone • More activity in 2019

• 10 FCA cases brought by serial relator National Healthcare Analysis Group• United States v. EMD Serono, Inc. (E.D. Pa. Apr. 3, 2019)


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• In some instances, courts not DOJ, have been the impediment to dismissal

• Conservation of DOJ, CMS, OIG resources has been a main factor cited by DOJ in seeking dismissals

• Using discovery burden as cudgel to push DOJ for dismissal• BUT… Granston remarks during March 2019 speech:

"Defendants should be on notice that pursuing undue or excessive discovery will not constitute a successful strategy for getting the government to exercise its dismissal authority," and that "[t]he government has, and will use, other mechanisms for responding to such discovery tactics."

Other Fraud & Abuse Developments

The Cleary Memo• Expands on the holding in Allina in the context of enforcement actions

(most notably, overpayment actions based on audits) by HHS and CMS• HHS and CMS cannot take enforcement actions based on sub-

regulatory standards or manuals unless such guidance is closely tied to statutory or regulatory requirements

• Confirms that enforcement actions based solely on Local Coverage Determinations are unsupportable

• Loosely defines “enforcement action” to include overpayment collections but not routine claims and cost report procedures


The Cleary Memo• Explicitly acknowledges the limitations on CMS’ enforcement authority

involving sub-regulatory guidance• Provides needed certainty and consistency in the wake of the Brand

memo• Underscores the importance of verifying the basis of a government

enforcement action and the standards upon which the enforcement action is based

• States that continued payment of claims by CMS with knowledge of a party’s non-compliance with a law or regulation is strong evidence of a lack of materiality


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May 7, 2019 – DOJ Civil Division issued guidance on False Claims ActMatters and updates to the Justice Manual. Cooperation credit in FalseClaims Act cases may be earned by:

• Voluntarily disclosing misconduct unknown to the Government• Cooperating in an ongoing investigation

• Sharing of information gleaned from an internal investigation• Identifying individuals involved in the misconduct or who have knowledge of the

misconduct• Preserving/producing documents, information and metadata beyond what is legally

required• Undertaking remedial measures in response to a FCA violation

The amount of credit that the DOJ will provide remains highly discretionary


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The OIG continues to track settlements and update its Fraud Risk Indicator


133

OIG adds just one entity to its “Heightened Scrutiny” Category

Questions

David King, Shareholder, Polsinelli

Commercial PayorDisputes

Hot Topics in Managed Care Disputes

• Unilateral Contract Amendments by Payors

• Payor Recoupments and Offsets

• “No-Network” Plans

• Out-of-Network Considerations

Payors’ Unilateral Contract Amendments

• Payors seek to change reimbursement terms through “updates” to documents incorporated by reference into the contract.

• Examples:• Provider Manual• Billing Policies• Utilization Management Policies• Administrative Policies• Process Changes

Provider’s Process for Responding to Unilateral Contract Amendments1. Create a system to identify new “rules” / payment discrepancies.2. For existing contracts, identify any contract rights to challenge new rules.3. Create a system to challenge new “rules”:

• Date received• Deadline to object• Carefully worded objection

4. Create a system to escalate challenges, including arbitration.5. Going forward, build protections into your contract on front end, if

possible:• Prohibit direct or indirect changes in reimbursement• Require revenue neutrality• Require affirmative notice (not just looking at website)

Payor Recoupments and Offsets

• Recoupment: Payor makes a demand for return of money for a duplicate payment, erroneous payment, retroactive application of a new policy or rule, or “change of heart” on what they originally paid.

• Offset: Payor unilaterally takes back money referenced in a recoupment demand by taking a credit on future unrelated claims.

Provider Response to Recoupments and Offsets1. Does the payor have a contract right?2. Are there limitations / requirements in contract?

• Notice requirements• Limited look-back period• Objection / arbitration rights

3. Do you have any state law protections? • Notice requirements• Look-back periods• Voluntary payment rule • Prohibitions• Arbitration

4. Do you have any federal law protections? • Prohibitions (e.g. cross-plan offsetting)• ERISA rights and obligations

Statutory Limitations on Recoupment

Health insurers are required to comply with Colorado Law in order to recoup prior payments:

“All claims paid by a carrier shall be considered final unless adjustments are made pursuant to this subsection…”

Colo. Rev. Stat. Ann. § 10-16-704(4.5)(a).


In most cases, payors have twelve months from the date of the EOB to recoup prior payments unless the parties agree to a shorter time period:

“Adjustments to claims…shall be made within the time period set out in a contract between the provider and the carrier…Such time period…shall not exceed twelve months after the date of the original explanation of benefits.”

Colo. Rev. Stat. Ann. § 10-16-704(4.5)(b).


Shorter time frame for adjustments to claims paid under a risk assumption or risk sharing agreement:

“Adjustments to claims paid under a risk assumption or risk sharing agreement shall be made within six months after the last date of service for a period for which a settlement is being reconciled...”

Colo. Rev. Stat. Ann. § 10-16-704(4.5)(d)(I).


Longer time frame for claims related to coordination of benefits with federally funded health benefit plans:

“Adjustments to claims related to coordination of benefits with federally funded health benefit plans, including Medicare and Medicaid, shall be made within thirty-six months after the date of service.”

Colo. Rev. Stat. Ann. § 10-16-704(4.5)(e).


Eligibility-based recoupments are significantly limited:

“A carrier shall not retroactively adjust a claim based on eligibility if the provider received verification of eligibility within two business days prior to delivery of services…”

Colo. Rev. Stat. Ann. § 10-16-704(4.5)(f).

“A carrier shall not retroactively adjust a claim based on eligibility if the provision of benefits is a required policy provision…”

Colo. Rev. Stat. Ann. § 10-16-704(4.5)(j).


Notice is required to recoup “overpayments”:

“Any adjustment made by the carrier that recovers carrier overpayments to a provider shall include a written notice to the provider and shall contain a complete and specific explanationof such adjustments and information regarding the carrier’s provider dispute resolution procedures pursuant to section 10-16-705(13).”

Colo. Rev. Stat. Ann. § 10-16-704(4.5)(l)(I).

Carrier / Provider Dispute Resolution Procedures

Carriers are required to establish provider dispute resolution procedures:

“A carrier shall establish procedures for resolution of administrative, payment, or other disputes between providers and the carrier.”

Colo. Rev. Stat. Ann. § 10-16-705(13).

Exceptions for Fraud and Abuse

“Adjustments to claims made in cases where a carrier…has reported fraud or abuse committed by the provider shall not be subject to the requirements of this subsection (4.5).”

Colo. Rev. Stat. Ann. § 10-16-704(4.5)(m).

Voluntary Payment Rule

“Where one makes a voluntary payment with knowledge of all relevant facts, and then sues to recover that payment, there generally can be no recovery, even if there was no legal liability to pay in the first place.”

Skyland Metro. Dist. v. Mountain W. Enter., LLC, 184 P. 3d 106, 127 (Colo. Ct. App. 2007).

“No-Network” Health Plans

• TPAs and other companies seek to impose steep discounts (typically reference-based pricing) where:

• No prior notice• No network• No discount agreement• No “volume steering”

• TPAs typically target self-funded plans for these “products.”• If you don’t accept the “cram down” rate, TPA will either hire a lawyer

for the patient to sue the provider for “unreasonable” charges or the lawyer will defend the patient in a collection action.

Provider’s Response to No-Network Health Plans1. Seek to identify “no-network” plan activity in your area.2. Consider a non-defamatory educational / communication plan

with key employers who could be targeted. 3. Consider an aggressive plan for early identification of patients

with these plans: • Consider refusal to provide non-emergency services (consult state law). • Consider post-stabilization transfer of emergency patients (consult state

law). 4. Make sure you have strong and carefully worded patient financial

responsibility agreements / AOBs.5. Aggressively pursue and exhaust all administrative appeals while

preserving all rights. 6. Create an offensive and defensive litigation strategy.

Out-of-State Legal Authority on “No-Network” Plans

• PHC-Martinsville v. Dennis, 2017 WL 4053898 (Va. 2017):

• Patient with “No-Network” plan manifested his assent to the terms of the hospital’s Financial Responsibility Agreement simply by signing the agreement.

• Key takeaway: Providers can maintain leverage with “No-Network” plans by balance-billing patients.

Application of Colorado “Surprise Billing” Laws to “No-Network” Plans

Balance-billing is prohibited in certain circumstances, such as:• Emergency services provided at OON hospitals, and• Non-emergency services provided at an in-network hospital by an OON

provider.

Conclusions: • OON hospitals likely cannot balance-bill “No-Network” plan patients for

emergency services provided.• Because no hospitals are “in-network” for a “No-Network” plan, patients

can be balance billed for non-emergency services.

Be Wary of Accord and Satisfaction from “No-Network” PlansThe elements of an accord and satisfaction are:

• A bona fide dispute over an unliquidated claim amount,• A check tendered in full settlement of the claim amount, and• Acceptance of the payment.

Mischek v. State Farm Mut. Auto. Ins. Co., 2018 WL 1569754, at *4 (D. Colo. Mar. 30, 2018).

Train relevant employees to spot language on checks from “No-Network” Plans.

Common Out-of-Network (“OON”) Scenarios• OON Facility

• By Provider Choice• By Payor Choice

• Narrow Network• “No Network” Plan

• In-Network Facility / OON Facility-Based Providers• Examples:

• ER Doctors• Anesthesia• Radiology• Pathology• Intraoperative Neuromonitoring

Typical OON Disputes

Refusal to honor AOBs for direct payment to provider

Refusal to honor AOBs for administrative appeals

Rate of payment

Timely payment (prompt pay)

Fee forgiveness

Right to file suit

Recoupments / offsets

Questions

Colorado Health Care Laws: Updates and Implementation

Documents

Transcript of Colorado Health Care Laws: Updates and Implementation