The US Supreme Court recently announced that it will hear an ongoing debate over cuts to 340B drug payments to Medicare hospitals.
The case will be heard during the Supreme Court’s upcoming term, which starts in October. A decision is expected sometime next year.
The case was brought on by the American Hospital Association (AHA) and other national hospital groups seeking to overturn HHS’ decision to reduce Medicare reimbursement to hospitals in the 340B Drug Pricing Program by nearly 30 percent.
HHS had finalized the cuts in the 2018 Outpatient Prospective Payment System (OPPS) rule. The federal department said in a fact sheet that the cuts address the “recent trends of increasing drug prices, for which some of the cost burden falls to Medicare beneficiaries.”
Hospital groups led by the AHA challenged the cuts, arguing that reduced drug payments would harm access to care since the 340B Drug Pricing Program includes safety-net hospitals. An appeals court did not agree with their arguments in August 2020, ruling in favor of HHS.
“We are pleased that the U.S. Supreme Court has agreed to hear the compelling arguments in our case on payments cuts to the 340B drug pricing program that are adversely impacting care to patients,” Melinda Hatton, the AHA’s general counsel, said publicly on Friday.
“We are hopeful that the Court will reject the appellate court decision deferring to the government’s interpretation of the law that clearly imperils the important services that the 340B program helps allow eligible hospitals and health systems to provide to vulnerable communities, many of which would otherwise be unavailable,” Hatton continued.
Other hospital groups also cheered the Supreme Court’s decision to hear the 340B drug payment case.
“We are pleased that the Supreme Court has agreed to review the appellate court decision, which we believe was legally flawed,” Maureen Testoni, CEO of 340B Health, said on the group’s website.* “We are hopeful that the justices will reverse the lower court decision that upheld these damaging cuts to many 340B hospitals treating patients with low incomes. In the meantime, we continue to urge the Biden administration to change this harmful policy by abandoning the payment cuts for 2022 and beyond.”
The other plaintiff, Association of American Medical Colleges (AAMC), also said it is looking forward to the consideration of the case.
“The current reimbursement rates reduce the 340B drug discounts granted to safety-net providers, many of which are teaching hospitals,”explained David J. Skorton, MD, AAMC president and CEO. “These hospitals use the current savings to deliver critical health care services to low-income and vulnerable patients, which includes providing free or substantially discounted drugs to low-income patients, establishing neighborhood clinics, and improving access to specialized care previously unavailable in some areas. A reversal of the cuts will ensure that low-income, rural, and other underserved patients and communities are able to access the vital services they need.”
Neither HHS nor CMS provided a public statement regarding the Supreme Court’s decision to hear the 340B drug payment case.
President Biden released his budget proposal for fiscal year 2022 on Friday, clocking in at a whopping $6T of federal spending on programs aimed at making sweeping investments in infrastructure, education, and social services, and banking on hefty government borrowing at low interest rates to fuel a major overhaul of the American economy.
The proposal includes big increases in discretionary spending, including raising funding for the Department of Health and Human Services (HHS) by 23.4 percent, to $133.7B, the largest increase in almost two decades. The budget bolsters funding for a variety of healthcare programs, but notably includes specifics on only two major increases in mandatory healthcare spending: making permanent the temporary subsidy increases for individual coverage that are part of the American Rescue Plan Act ($163B); and expanding home- and community-based services in Medicaid ($400B). Both of those proposals were announced earlier this year as part of Biden’s twin recovery packages for infrastructure and social programs.
Notably absent, apart from statements of general support, are any details for implementing a “public option” health plan, or for lowering the Medicare eligibility age to 60—two healthcare proposals that figured prominently in Biden’s campaign platform. Nor are there specifics on lowering spending on prescription drugs, another key area of interest among lawmakers. Like all presidential budgets, the Biden document is simply a statement of priorities, providing a starting point for negotiations in Congress.
But the relatively narrow scope of the healthcare proposals—as hefty as their price tags are—indicates that the White House is likely not willing to throw down over a major overhaul of coverage, at least while Congress is so closely divided. While there are bills afloat in both the House and Senate to more aggressively expand coverage, we’d expect this summer’s legislative horse-trading to result in something resembling what’s in the President’s budget—and not much more.
“Medicare at 60” and a national public option are likely on hold, at least until after the 2022 midterm elections.
The United States Supreme Court should keep in place a lower court ruling that bars hospitals from receiving higher Medicare reimbursements for outpatient services compared to other providers, according to a brief HHS filed late last week.
The 33-page brief filed with the high court is in response to a petition by the American Hospital Association and the Association of American Medical Colleges to hear the case. The Court of Appeals for the District of Columbia ruled last July that HHS had the right to cut payments to hospital-owned facilities in order to achieve site neutrality, reversing the judgment of a district court.
Hospitals and HHS have been wrangling about the issue since the federal agency moved to cut payments to hospital-owned outpatient sites in 2019. The Supreme Court will have the final say, whether it decides to hear the case or not.
Site-neutral payments have been a hot button issue in the healthcare world for the better part of a decade, after many larger hospital systems began buying up physician practices. Hospitals are reimbursed by Medicare for evaluation and management services at a higher rate than standalone physician groups.
They began collecting those higher fees at the outpatient sites they acquired or opened. From 2012 to 2015, E&M encounters per Medicare enrollee grew at outpatient sites by 22%, versus a 1% drop at physician practices, HHS noted in its brief.
That strategy not only drove up costs to the Medicare program but also put more pressure on individual medical practices to merge with one another to better compete with hospital-owned practices, or be bought out. HHS attempted to remedy the issue by moving toward a site-neutral payment scheme beginning in 2019. Acute care providers, led by AHA and AAMC, sued to stop the change. They appealed to the Supreme Court last summer.
The brief filed by HHS attorneys with the high court asked that its new site-neutral payment policy be retained. The department argued that it did not act beyond the powers delegated to it by Congress, and that body would remedy such a disturbing financial trend on its own if it needed to.
The likelihood the high court will hear the case is low. Attorneys note that the Supreme Court only agrees to hear no more than 5% of cases brought to it for review that involve a federal agency. Moreover, they are even less likely to act if there is no conflict on the issue between the appeals court — which HHS noted in its brief.
If the Supreme Court declines to hear the case, the appellate court ruling would stand and the site neutral payment rule would remain on the books.
UPDATE: May 21, 2021: Late Thursday, drug manufacturing giant Eli Lilly filed a motion in an Indiana district court to halt 340B-related monetary penalties, scant days after the Biden administration set a June 1 deadline for biopharmaceutical companies to comply with new conditions in the drug discount program and allow hospital contract pharmacies access to discounted drugs.
The suit alleges a Monday letter from Diana Espinosa, acting head of the Health Resources and Services Administration, gives “no legal explanation or justification for the arbitrary June 1 deadline.”
Lilly previously filed an almost identical lawsuit January 2020. The Indianapolis-based biopharma said it expected the government to follow the briefing schedule outlined in that suit before mandating compliance with 340B and forcing it to pay “substantial and irretrievable sums of money.”
“If the Court ultimately decides Lilly was required to extend 340B pricing to contract pharmacies, Lilly will comply with that decision. Conversely, if the Court ultimately decides manufacturers are not required to extend 340B pricing to contract pharmacies, then we surely expect the government will comply with that decision. But there is no explanation or justification for the government’s attempt to make Lilly pay now, other than to evade this Court’s review and leave Lilly without recourse for such payments,” the motion reads.
In the petition, Lilly, which brought in $6.2 billion in profit last year, alleges the shifting terms of the program are due to HHS director Xavier Becerra bending to political pressure to “take action” against drug manufacturers, as pharmaceutical prices continue to climb.
Lilly asked the district court to temporarily block HHS from moving against Lilly until the drugmaker’s request for a preliminary injunction is resolved; and for an accelerated legal schedule to settle its claims before the looming June deadline.
An HRSA spokesperson declined to comment on the suit.
HHS’ Health Resources and Services Administration called out six pharmaceutical companies Tuesday for violating rules under the 340B drug discount program, ordering them to repay affected providers for previous overcharges and warning of more penalties if they don’t comply.
In July 2020 some drugmakers stopped giving the 340B ceiling price on their products sold to covered entities and dispensed through contract pharmacies, while others limited sales by requiring specific data or selling products only after a covered entity demonstrated 340B compliance, according to HRSA.
In letters from Diana Espinosa, acting administrator of HRSA, the agency requested AstraZeneca, Eli Lilly, United Therapeutics, Sanofi, Novo Nordisk and Novartis give an update on their plans to restart selling covered outpatient drugs at the 340B price to covered entities that dispense medications through contract pharmacies by June 1.
Providers and drugmakers have sparred for years over the 340B drug discount program that requires pharmaceutical companies to give discounts on outpatient drugs for providers serving low-income communities.
AHA along with five other provider groups in December filed a federal lawsuit against HHS, alleging the department failed to enforce 340B program requirements and allowed actions from drug companies that undermined the program. That lawsuit was later dismissed.
But with the change in administrations, providers now seem to have an ally in the fight.
Previously, as California’s Attorney General, newly minted HHS chief Xavier Becerra led a group of states pushing the agency to force drugmakers to comply with the law late last year.
Provider groups cheered the move after raising the alarm last year that an increasing number of drug companies were refusing to offer discounts to such eligible hospitals.
“The denial of these discounts has damaged providers and patients and must stop. It is vital that these companies immediately begin to repay the millions of dollars owed to these providers,” 340B Health CEO Maureen Testoni said in a statement.
In separate letters to drugmakers, HRSA outlines complaints against them and their actions, ultimately saying their policies violated the statute and resulted in overcharges that need to be refunded. The companies must work to ensure all impacted entities are contacted and efforts are made to pursue mutually agreed upon refund arrangements, according to the letters.
Any additional violations will be subject to a $5,000 penalty for each instance of overcharging under the program’s Ceiling Price and Civil Monetary Penalties final rule.
The American Hospital Association also praised the agency in a release for “taking the decisive action we’ve called for against drug companies that skirt the law by limiting the distribution of certain 340B drugs through community pharmacies.”
Hospitals in the 340B program provide 60% of all uncompensated care in the U.S. and 75% of all hospital care to Medicaid patients, according to 340B Health.
Three Ascension hospitals in Texas agreed to pay $20.9 million for allegedly paying multiple physician groups above fair market value for services, according to a recent news release from the HHS’ Office of Inspector General.
The three Texas hospitals are Ascension’s Dell Seton Medical Center in Austin, Ascension Seton Medical Center Austin and Ascension Seton Williamson in Roundrock. Ascension self-disclosed the conduct to the inspector general.
The hospitals allegedly violated the Civil Monetary Penalties Law, including provisions related to physician self-referrals and kickbacks in seven instances, according to the April 30 news release.
Some of the allegations the report outlined include Dell Seton paying an Austin physician practice above fair market value for on-call coverage; Ascension Seton Austin paying an Austin practice above fair market value for transplant on-call coverage and administrative services; and Ascension Seton Williamson paying a practice above fair market value to lease the practice’s employed registered nurses and surgical technologists who assisted in surgeries at the hospital.
The release did not disclose the physician groups allegedly involved.
Hospitals enrolled in the 340B drug discount program may no longer be eligible after the pandemic shifted their payer mix, according to a Wednesday letter the American Hospital Association sent to HHS Secretary Xavier Becerra.
Depleted patient volumes and canceled elective surgeries lowered the proportion of hospital patients who are Medicaid and Medicare SSI patients in 2020, according to AHA. When hospitals file their Medicare cost reports reflecting those changes, they may no longer meet the criteria for the program and lose access.
AHA wants HHS to waive certain eligibility requirements for hospitals in the program to allow them continued access during the public health emergency, according to the letter.
Throughout the pandemic HHS has issued a number of regulatory flexibilities to help providers, and the hospital lobby is asking it to do so again by waiving the current eligibility requirements for the 340B drug discount program before providers experiencing a temporary shift in payer mix are kicked out.
The program requires drug companies to give discounts on outpatient drugs to providers serving a large share of low-income patients, particularly those in rural areas.
The discounts can range from 25% to 50% of the cost of the drugs, according to HRSA, which operates the program.
But many of those patients did not seek care last year, hampering hospitals’ finances and altering the mix of payers.
Hospitals currently qualify for the program based on their volume of inpatient Medicaid and Medicare SSI patients, reported through their most recently filed Medicare cost reports.
“Losing access to 340B discounted drugs and program savings could jeopardize the ability of these hospitals to provide critical services for their communities, which would be particularly catastrophic at a time when they remain on the front lines of the ongoing pandemic,” AHA said in its letter.
This latest issue comes after several years of clashes over the 340B program.
Last year, a federal appeals court sided against the hospital lobby, ruling that HHS’ significant rate cut for some 340B drugs could remain in place. HHS made the reimbursement cut arguing that the hospitals already received steep discounts for the drugs and could be incentivized to overuse them.
At the time, AHA said it was weighing its options over whether to appeal to the Supreme Court.
To head off other issues, HRSA finalized a rule late last year that created a dispute resolution process for when hospitals believed they were overcharged for 340B drugs. The drug manufacturers have a similar mechanism to raise concerns about whether hospitals received duplicate discounts.
Xavier Becerra narrowly won confirmation Thursday to lead the Department of Health and Human Services, the agency pivotal to President Biden’s urgent goal of defeating the coronavirus pandemic and expanding access to health care.
Becerra, a congressman from Los Angeles for two dozen years and then California attorney general, squeaked by on a vote of 50 to 49, the closest margin for any of the Biden cabinet members the Senate has confirmed so far.
He becomes the first Latino secretary of HHS, the largest federal department in terms of spending. The department includes agencies at the core of the federal response to the pandemic that has infected more than 29.5 million people in the United States and killed more than 535,000. They include the National Institutes of Health, the Centers for Disease Control and Prevention, the vaccine-approving Food and Drug Administration, and the Centers for Medicare and Medicaid Services, which oversees the country’s vast public insurance programs.
Sen. Ron Wyden (D-Ore.), chairman of the Senate Finance Committee, which considered the nomination, said that “after four years of going in reverse,” Becerra will make it “possible to go to drive and actually make progress for the American people, progress in terms of lowering the cost of health care.”
Republican Sen. John Barrasso (Wyo.), countered that Becerra is “an aggressive culture warrior from the radical left,” who is “out of touch with the views of the American people.” Barrasso noted that, as state attorney general, Becerra sued the Trump administration more than 150 times over immigration, environmental and health policies.
“In this time of crisis, our secretary of Health and Human Services may be the single most important member of the president’s cabinet,” Barrasso said, contending that “the president has chosen a nominee, no public health experience, extremely partisan record.”
Sen. Susan Collins (R-Maine) was the only member of the GOP to vote for Becerra’s confirmation along with a solid wall of Senate Democrats.
During his confirmation hearing last month before the Senate Finance Committee, Becerra said, “The mission of HHS — to enhance the health and well-being of all Americans — is core to who I am.”
In keeping with Biden’s emphasis on portraying his administration’s top rung as diverse and having working-class roots like his own, Becerra told the senators his immigrant parents had insurance through his father’s laborers union, making his family more fortunate when he was a boy than many of their neighbors.
As a longtime member of the House Ways and Means Committee, Becerra testified, he worked on several major pieces of health-care legislation, including the Children’s Health Insurance Program created in the late 1990s and changes to the way Medicare is run and financed, as well as the Affordable Care Act.
He did not mention that he was a longtime advocate of a single-payer health-care system, akin to the Medicare-for-all proposals backed by several Democratic candidates in last year’s presidential election, but rejected by Biden. Becerra has renounced his previous support since his nomination, echoing the president’s view that affordable insurance coverage should be widened by building upon the ACA.
Becerra, 63, became a lightning rod for conservatives immediately after Biden announced his selection in early December.
Senate Republicans targeted his defense of abortion rights. They contended he is unqualified because he is not a physician, though few HHS secretaries have had medical training. And they have denounced his previous advocacy of a larger government role in health insurance.
An undercurrent running through opposition to his nomination was Becerra’s leadership in recent years of a coalition of Democratic attorneys general fighting to preserve the ACA. Republicans, including President Donald Trump, are seeking to overturn the 2010 law in a case now before the Supreme Court.
Sen. James Inhofe (R-Okla.) lambasted Becerra, saying he has “an appalling track record disrespecting the sanctity of life. . . . He has no shame when it comes to his pro-abortion beliefs.”
Inhofe also criticized Becerra’s support last year for California’s ban on indoor worship services as part of the state’s efforts to slow the cornavirus’s spread. And the senator criticized Becerra’s position that undocumented immigrants should be allowed public benefits, such as Medicaid.
Senate Majority Leader Charles E. Schumer (D-N.Y.) said Republicans’ arguments against Becerra “almost verge on the ridiculous.”
Schumer said Republicans challenging Becerra’s qualifications for the job had embraced the nomination of Alex Azar as Trump’s second HHS secretary, though he was a pharmaceutical executive who also was an attorney and had no medical training.
In addition to working to tame the pandemic, which Biden has identified as the government’s job number one for now, Becerra will face many major decisions at the helm of the sprawling department over whether to continue or reverse policies established by the Trump administration.
CMS has already announced it was rescinding a significant Medicaid policy of the Trump era that had allowed states to require some residents to hold a job or be preparing for work to qualify for the safety-net insurance program. HHS officials are reviewing other Trump-era Medicaid policies.
Another HHS agency, the Administration for Children and Families, oversees the nation’s policies regarding welfare and unaccompanied children coming across the country’s borders — a flashpoint during the Trump administration.
The CDC, the government’s public-health agency, has been working to regain its footing and scientific moorings after repeated intrusions into its advice to the public by the Trump White House. The agency has been involved in the largest mass vaccination campaign in U.S. history to immunize the public against the coronavirus. And it is developing guidance on aspects of American life — and ongoing public safety measures — as research findings evolve for the virus and vaccine’s effects.
The FDA is in the thick of decisions about coronavirus vaccines, developed in record time, as additional manufacturers, such as AstraZeneca, have devised them and tested their safety and effectiveness. The three vaccines being given to about 2 million Americans a day — by Pfizer-BioNTech, Moderna and Johnson & Johnson — are being allowed so far for emergency use and have not yet secured full FDA approval.
Becerra almost certainly will continue to face hostility from social conservatives after his swearing in, expected Friday.
Roger Severino, who led HHS’s Office for Civil Rights during the Trump administration and created a division to promote “conscience and religious freedom,” is building an “HHS Accountability Project” within the conservative Ethics and Public Policy Center.
While at HHS, Severino tangled directly with Becerra during his tenure as attorney general of the nation’s most populous state, twice citing him in violation of federal laws for upholding California statutes involving abortion rights.
Severino said this week he believes those on the right might find common ground with Biden health officials on disability rights. But on matters of abortion and deference to religion, Severino said, “We will be watching.”
The Supreme Court announced Thursday it will no longer hear oral arguments later this month on an appeal over the controversial Medicaid work requirements program in New Hampshire and Arkansas.
Legal experts say the move likely means the case won’t be heard this term and possibly may not be heard at all, especially with the Biden administration signaling a different approach to work requirements.
“By taking the cases off the docket, the court is signaling that it won’t hear them this term and probably that it’ll never hear them at all,” University of Michigan Law Professor Nicholas Bagley told Fierce Healthcare.
A major question mark,though, is whether the court will vacate the decisions by several appellate courts that upheld lower court rulings that the programs should be struck down.
“If the Supreme Court is not going to vacate the D.C. Circuit ruling, that means the decision on the books is one that clearly explains why work requirements are not permitted under the Medicaid statute,” said Rachel Sachs, associate professor of law at Washington University, in an interview with Fierce Healthcare.
She added that it is unlikely for the case to come back and “extremely unlikely that this issue will return in the near future.”
The Biden administration asked the court back in February to cancel the oral arguments originally scheduled for March 29. The administration said in a filing that allowing the requirements to take effect won’t promote the objectives of Medicaid to extend health insurance to low-income people.
President Joe Biden’s Department of Justice called for the court to vacate judgments of appeals courts and remand the case back to the Department of Health and Human Services so it can finish a review of all the waivers.
Arkansas Attorney General Leslie Rutledge said in a statement back in February that the legal filing seeking the delay was a “politically motivated stunt designed to avoid a Supreme Court decision upholding a program that encourages personal responsibility while still providing healthcare coverage for those seeking gainful employment.”
Arkansas’ work requirements program was installed in 2018 and led to approximately 18,000 people losing Medicaid coverage before the program was struck down by a federal judge.
Appellate courts upheld judgments from lower courts that New Hampshire and Arkansas’ programs did not meet the objectives of the Medicaid program. The states appealed to the Supreme Court, which agreed to hear the cases late last year.
Court rulings have also struck down programs in other states including Kentucky and Michigan. Kentucky pulled its program in 2019 after a Democrat was elected governor.
Arkansas and New Hampshire’s attorneys general did not return requests for comment on the Supreme Court’s decision Thursday.
The payment gap was $63,000 for primary care doctors, $178,000 for medical specialists and $150,000 for surgeons.
Doctors who work for hospital outpatient facilities get much higher payments for their services from Medicare than doctors who practice independently, according to a new study.
The research, based on Medicare claims data from 2010-2016,found that the program’s payments for doctors’ work were, on average, $114,000 higher per doctor per year when billed by a hospital than when billed by a doctor’s independent practice.
Published in Health Services Research, results found that the amount Medicare would pay for outpatient care at doctors’ offices would have been 80% higher if the services had been billed by a hospital outpatient facility. In 2010, the average set of Medicare services independent doctors performed annually for patients was worth $141,000, but charging for the same group of services would have grossed $240,000 if a hospital outpatient facility billed for them.
The payment difference varied by specialty. The payment gap was $63,000 for primary care doctors, $178,000 for medical specialists and $150,000 for surgeons.
Moreover, the study found the differential grew over time. From 2010-2016, the average difference between hospital outpatient and private practice payments grew from 80% higher to 99% higher.
WHAT’S THE IMPACT?
The main reason for these large payment differences: facility fees. For each service a doctor performs, Medicare pays hospital outpatient facilities both a fee for the doctor’s work and a fee for the facility, whereas private practices receive only doctor fees.
Although the doctor fees are a bit lower in hospital outpatient locations, the facility fees more than make up for the difference, and the total payments to hospitals are reflected in higher doctor salaries and bonuses.
The Centers for Medicare and Medicaid Services has been trying to correct this imbalance for years with policies that would pay both sites the same amount. In 2015, the Bipartisan Budget Act authorized CMS to impose site-neutral payments but grandfathered existing hospital outpatient facilities. Later, CMS expanded the equal payments to other hospital outpatient facilities, but the American Hospital Association sued to overturn this regulation.
The groups filed for a petition for a rehearing, which was denied.
In February, the Supreme Court acknowledged the AHA’s request for judicial review. The government response was due by March 15, but on March 3, Norris Cochran, acting Secretary of Health and Human Service asked for an extension until April 14 to file the government’s response, according to court documents.
The significant difference between Medicare payments to hospital outpatient facilities and independent offices has encouraged hospitals and health systems to buy doctor practices, but the study noted that good research about this has been lacking up to now.
It found little evidence of a direct relationship linking the size of the pay gap between hospital outpatient facilities and independent offices, with hospitals buying doctor practices, in particular medical specialties. But it did find that doctors whose services had larger pay gaps were more likely to have a hospital buy their practice than doctors whose services had a smaller pay gap.
In an accompanying commentary, Dr. Michael Chernew of Harvard Medical School in Boston said the study had found that the ability of hospitals and employed doctors to earn more from Medicare had resulted in a greater amount of integration.
THE LARGER TREND
However, the authors pointed out that the Medicare payment difference is only one of many factors that have contributed to the huge increase in the share of doctors employed at hospitals over the past decade. For example, they found a higher probability of a doctor going to work for a hospital in highly concentrated hospital markets and rural areas.
Other studies, they said, have established that some health systems use integration with doctors’ offices as a bargaining chip with commercial health insurance plans. Also, some doctors may find that independent practice is less viable than it used to be for a variety of reasons.
It has also been suggested that many younger doctors prefer hospital employment to private practice because they crave economic security and work-life balance.
It’s been estimated that even the payments to hospitals vs. doctors could save CMS $11 billion over 10 years. But the paper illustrates that the payment disparities can also create broader market distortions because consolidation of hospitals and doctors’ offices has been shown to lead to higher prices overall.
The Medicare Act “prohibits Medicare payment for services that are not furnished within the United States,” according to the filing.
RemoteICU, a telemedicine provider group, is suing the Department of Health and Human Services and the Centers for Medicare and Medicaid Services for not reimbursing telehealth services provided by physicians who are located outside the United States, according to a federal lawsuit filed last week in Washington.
RICU wants reimbursement for telehealth services provided within the U.S., but not necessarily by a physician who lives within its borders.
The company employs physicians who live outside the country, but are U.S. board-certified critical-care specialists and licensed in one or more U.S. jurisdictions. With RICU’s telecommunications system, these physicians can provide critical-care services in U.S. hospital ICUs, the lawsuit said.
“Although RICU’s physicians live abroad, they serve as full-time, permanent staff members of the U.S. hospitals at which they serve patients,” the company said in the court filing.
“By employing U.S.-licensed intensivists who live overseas, RICU has enabled the American healthcare system to recapture talent that would otherwise be lost to it – and this has helped to alleviate the ongoing shortage of intensivists in American hospitals.“
However, after the company reached out to several officials from HHS and CMS, it was notified that Medicare could not reimburse the client hospitals for RICU’s services, because the Medicare Act “prohibits Medicare payment for services that are not furnished within the United States,” according to the filing.
The company is seeking a preliminary injunction to stop HHS and CMS from denying Medicare reimbursement for telehealth services on the basis of a provider’s physical location outside of the United States at the time of service.
WHAT’S THE IMPACT?
RICU claims that, by failing to reimburse for the critical care telehealth services provided by its physicians, HHS and CMS are causing “immediate harm both to RICU and to the public.”
It argues that it’s filling a gap in critical care that has been exacerbated by the pandemic.
“There remains [a] significant unmet need for critical care services, as desperately sick patients have overwhelmed ICU resources across the country,” RICU said in the court filing.
“In some cases, lack of adequate care can mean the difference between life or death. And one of the groups most at risk from death and serious illness due to COVID-19 is the elderly – the very same population that relies upon Medicare.”
Without reimbursement, RICU says that some of its current clients, as well as potential customers, will not be able to offer its services.
The company argues that this causes “significant, unrecoverable monetary damages” because tele-ICU providers that use physicians located within the U.S. are eligible for reimbursement and therefore have a competitive edge over RICU.
Further, it says that it has already begun losing business because of hospitals’ inability to receive Medicare reimbursement.
“The Critical Care Ban is causing irreparable harm to RICU, which is suffering ongoing financial and reputational harms that cannot be remedied in the future,” the court filing said.
“The balance of the equities favors an injunction, because Defendants have already admitted that there is a desperate medical need for the critical care that RICU would provide but for the Critical Care Ban.
“And, finally, preliminary injunction would be in the public interest because, across the United States, Americans stricken by the COVID-19 pandemic are in desperate need of critical care – a need that RICU can help meet. It is not hyperbole to say that the requested injunctive relief is in the public interest because it could save lives.”