The Justice Department has intervened in a whistleblower lawsuit accusing former executives of San Antonio-based Merida Health Care Group of violating the False Claims Act, according to Law360.
The Justice Department is intervening in the action, which dates back to 2015, alleging the former executives submitted more than $120 million in false claims to Medicare for medically unnecessary home health services and hospice care. The Justice Department is also adding Merida Health Group’s former CEO Henry McInnis to the complaint, according to the report.
The Justice Department alleges Mr. McInnis and Rodney Mesquias, the former owner of Merida Health Care Group, violated the False Claims Act, and the government is also seeking damages under the common law and equitable theories of fraud and payment by mistake, according to court documents filed April 7 in the U.S. District Court for the Southern District of Texas.
Mr. McInnis was sentenced to 15 years in prison in February 2021 for his role in a healthcare fraud and money laundering scheme. Mr. Mesquias was sentenced to 20 years in prison in late 2020.
UnitedHealth Group’s Optum announced plans to acquire publicly traded, postacute care behemoth LHC Group for $5.4B. The Lafayette, LA-based company, which had $2.2B in revenue last year, operates more than 550 home health locations, 170 hospice sites, and 12 long-term acute care hospitals across 37 states, reaching 60 percent of the country’s Medicare-eligible seniors. LHC also has more than 430 hospital joint venture partners.
The Gist: This deal will greatly expand Optum’s ability toprovide home-based and long-term care, with the goal of moving more care for the insurer’s Medicare Advantage enrollees to lower-cost settings. The acquisition puts Optum’s home healthcare portfolio on par with competitor Humana, which has been the leader in amassing home-based and postacute care assets, and recently moved to take full control of home health provider Kindred at Home. LHC will be part of a growing portfolio of care assets managed by Optum Health, which also includes the company’s owned physician assets.
Success in lowering cost of care will require Optum to integrate referrals and care management across a rapidly expanding portfolio—and ensure its physician base has confidence in these new models of care.
Welcome to Friday’s Health 202, where today we have a special spotlight on the pandemic two years in.
🚨 The federal government is about to be funded. The Senate sent the long-term spending bill to President Biden’s desk last night after months of intense negotiations.
Two years since the WHO declared a pandemic, what health-care system changes are here to stay?
Exactly two years ago, the World Health Organizationdeclared the coronavirus a pandemic and much of American life began grinding to a halt.
That’s when the health-care system, which has never been known for its quickness, sped up. The industry was forced to adapt, delivering virtual care and services outside of hospitals on the fly. Yet, the years-long pandemic has exposed decades-old cracks in the system, and galvanized efforts to fix them.
Today, as coronavirus cases plummet and President Biden says Americans can begin resuming their normal lives, we explore how the pandemic could fundamentally alter the health-care system for good. What changes are here to stay — and what barriers are standing in the way?
A telehealth boom
What happened: Telehealth services skyrocketed as doctors’ offices limited in-person visits amid the pandemic. The official declaration of a public health emergency eased long-standing restrictions on these virtual services, vastly expanding Medicare coverage.
But will it stick? Some of these changes go away whenever the Biden administration decides not to renew the public health emergency (PHE). The government funding bill passed yesterday extends key services roughly five months after the PHE ends, such as letting those on Medicare access telehealth services even if they live outside a rural area.
But some lobbyists and lawmakers are pushing hard to make such changes permanent. Though the issue is bipartisan and popular, it could be challenging to pass unless the measures are attached to a must-pass piece of legislation.
“Even just talking to colleagues, I used to have to spend three or four minutes while they were trying desperately not to stare at their phone and explain to them what telehealth was … remote patient monitoring, originating sites, and all this wonky stuff,”said Sen. Brian Schatz (D-Hawaii), a longtime proponent of telehealth.
“Now I can go up to them and say, ‘So telehealth is great, right?’ And they say, ‘yes, it is.’ ”
A new spotlight on in-home care
What happened: The infectious virus tore through nursing homes, where often fragile residents share rooms and depend on caregivers for daily tasks. Ultimately, nearly 152,000 residents died from covid-19.
The devastation has sparked a rethinking of where older adults live and how they get the services they need — particularly inside their own homes.
“That is clearly what people prefer,” said Gail Wilensky, an economist at Project HOPE who directed the Medicare and Medicaid programs under President George H.W. Bush. “The challenge is whether or not it’s economically feasible to have that happen.”
More money, please: Finding in-home care — and paying for it — is still a struggle for many Americans. Meanwhile, many states have lengthy waitlists for such services under Medicaid.
Experts say an infusion of federal funds is needed to give seniors and those with disabilities more options for care outside of nursing homes and assisted-living facilities.
For instance, Biden’s massive social spending bill included tens of billions of dollars for such services. But the effort has languished on Capitol Hill, making it unclear when and whether additional investments will come.
A reckoning on racial disparities
What happened: Hispanic, Black, and American Indian and Alaska Native people are about twice as likely to die from covid-19 than White people. That’s according to age-adjusted data from a recent Kaiser Family Foundation report.
In short, the coronavirus exposed the glaring inequities in the health-care system.
“The first thing to deal with any problem is awareness,” said Georges Benjamin, the executive director of the American Public Health Association. “Nobody can say that they’re not aware of it anymore, that it doesn’t exist.”
But will change come? Health experts say they hope the country has reached a tipping point in the last two years. And yet, any real systemic change will likely take time. But, Benjamin said, it can start with increasing the number of practitioners from diverse communities, making office practices more welcoming and understanding biases.
We need to, as a matter of course, ask ourselves who’s advantaged and who’s disadvantaged” when crafting new initiatives, like drive-through testing sites, Benjamin said. “And then how do we create systems so that the people that are disadvantaged have the same opportunity.”
After months of negotiations, House Democrats on Friday passed their version of the Build Back Better bill—an expansive $1.7 trillion package that contains some of the largest health reforms since the Affordable Care Act’s passage in 2010.
While the overall scope of the bill is roughly half the size of President Biden’s original $3 trillion proposal, many of Democrats’ key health care provisions made it in, albeit with some modifications. What’s more, the Congressional Budget Office projected that while the overall bill would add $367 billion to the deficit over the 10 year period, the health care provisions would all be largely paid for by provisions aimed at lowering drug prices.
Below, I round up the five biggest health care changes included in the House bill.
The House bill leverages the ACA’s exchanges and federal tax credits to expand access to coverage in two ways. First, the bill would extend the American Rescue Plan’s enhanced ACA tax credits through 2025. The enhanced tax credits, which are currently slated to expire in 2023, fully subsidize coverage for people with annual incomes up to 150% of the federal poverty level (FPL) and have enabled people above 400% FPL to qualify for subsidies and capped their premium costs at 8.5% of their incomes.
While Democrats had originally proposed to permanently expand those subsidies, they ultimately had to scale back this—and other proposals—to ensure they could cover the costs. But as we’ve seen in the past, it is much harder to take away an existing benefit or subsidy than it is to create a new one—so while the current bill was able to cover the cost of the health care provisions by making them temporary, lawmakers will have to revisit the tax credits before 2025 and find new money to either further extend them or permanently authorize them. This is one of several health care provisions we could see the Senate take a closer week at in the coming weeks.
Second, the House bill takes aim at the so-called Medicaid coverage gap. The bill would enable residents below 138% FPL who live in states that have not expanded their Medicaid programs to qualify for fully subsidized exchange plans through 2025. While an earlier version of the House bill included language for a new federal Medicaid program covering those below 138% FPL who live in non-expansion states to begin in 2025, the final House bill contains no such program.
Instead, the bill aims to encourage non-expansion states to expand their Medicaid programs by reducing their Disproportionate Share Hospital (DSH) payments by 12.5% beginning in 2023—a significant cut that the American Hospital Association (AHA) estimates would reduce DSH payments in those states by $2.2 billion over five years and $4.7 billion over 10 years. At the same time, expansion states would see their federal match for spending on the Medicaid expansion population rise from 90% to 93% from 2023 through 2025.
While the AHA and others are pushing back against the proposed DSH payment cuts—the move addresses the moral hazard component that critics raised about earlier versions. It no longer rewards holdout states for not expanding their programs—effectively punishing those who did and are now on the hook for 10% of their expansion population’s costs. It’s a clever move, and one we’ll be watching to see if it survives the Senate.
2. New Medicare benefits.
The House bill adds a hearing benefit to Medicare beginning in 2023. The hearing benefits would cover hearing aids and aural rehabilitation, among other services. While this is certainly a win for many Medicare beneficiaries who do not have or cannot afford private Medicare Advantage plans, this is significantly scaled back from the original proposal to add hearing, as well as dental and vision benefits.
However, given that Sen. Bernie Sanders (I-Vt.) has named Medicare benefit expansions as one of his top priorities, it’s possible we could see this topic revisited in the Senate. But any meaningful change would mean Democrats need to find more money to cover the costs—and so far, that has proved challenging.
3. Medicaid home and community care.
The House bill allocates $150 billion for home- and community-based care. The funding would be used to help increase home care provider reimbursement rates and help states bolster home- and community-based care infrastructure.
While the funding is down from an original proposal of $400 billion, the Biden administration—and the Covid-19 pandemic—have made it clear that home-based health care will continue to grow and be a key player in the U.S. health care delivery system. Providers looking at their offerings should keep an eye on how states are investing these funds and building out home-based health care delivery in their areas.
4. Lowering the costs of prescription drugs.
Democrats scored a huge win in the House bill, and that is securing Medicare authority—albeit narrower authority than they sought—to negotiate prices for some of the highest-priced Part B or Part D drugs. Under the bill, HHS would be able to select 10 drugs to negotiation in 2025, up to 15 drugs in 2026 and 2027, and then up to 20 drugs per year in 2028. To be eligible for negotiation, a drug could no longer be subject to market exclusivity.
Drug manufacturers that do not negotiate eligible drug prices could be subject to an excise tax. This was perhaps one of the most contentious provisions debated in the health care portions of this bill. Democrats for years have been seeking to give Medicare drug pricing authority, but intense lobbying and Republican—and some Democrat—objections have kept this proposal on the shelf. While it’s not the first time the House has passed a bill with drug price negotiation—it is the first time we are in a place where the Senate could reasonably pass either this or a modified version of the proposal.
The bill also would redesign the Medicare Part D benefit to create an annual cap of $2,000 on seniors’ out-of-pocket drug costs, and impose an inflation rebate on drug manufacturers’ whose drug prices rise faster than inflation (based on 2021) in a given year.
5. Other notable provisions.
The House bill also includes provisions to permanently fund CHIP, bolster the country’s pandemic preparedness and response, and bolster the health care workforce through new training and workforce programs, the nation’s first permanent federal paid family and medical leave program, investments in childcare, and more.
While the health care provisions in the House bill are notable, it’s important to remember that this is not the end of the road. The House bill now goes to the Senate, where the Senate parliamentarian will check provisions against the Byrd rule—a Senate rule requiring reconciliation bills to meet certain budgetary requirements.
Democrats also will enter a new round of negotiations, and industry groups—including PhRMA and AHA—are expected to launch a new round of lobbying. PhRMA objects to the bill’s drug price negotiation provision and AHA is fighting the provision to reduce DSH payments in non-Medicaid expansion states by 12.5%. Any Senate-passed reconciliation bill will need to go back to the House for final approval before it can go to Biden’s desk.
But this is not the only thing on lawmakers’ plates in December. Members of Congress also face several other deadlines, including addressing looming physician payment cuts and passing end of the year spending bills. The short-version is, while there’s a lot to learn from the House-passed bill, it’s possible the Senate version could look very different—and it may take several weeks before we see that bill take shape.
One of the most important initiatives for President Biden since taking office in 2021 has been to pass a sweeping infrastructure bill to improve roads, bridges, water systems, and to make affordable housing more available to Americans in need, to name a few key components. While a bill has not yet been passed, initial estimates range from $2.5 – 3.5 Trillion in total spending across all sectors. How will the proposed infrastructure bill affect healthcare for Americans? Healthcare remains the largest component of household spending in the U.S. In 2019, Americans spent approximately $3.8 Trillion on healthcare, or about 18% of the Gross Domestic Product. More importantly, we learned from the pandemic that healthcare service providers are a critical infrastructure support network to our nation. What does the infrastructure bill provide to assist with this going forward? The largest healthcare components in the infrastructure bill are estimated to be:
$400 Billion for Home and Community Based care for the disabled and elderly. According to census, an estimated 20% of the U.S. population will be over 65 by
Caring for elderly relatives or living independently will become a top concern for most Americans. Home care is projected to grow by 22.6% in the next decade.
Lowering the Medicare eligibility age from 65 to 60. If it passes, this will increase the participants in the Medicare program by an estimated 20 million.
$18 Billion for needed upgrades to VA hospitals. The average age of a VA hospital is 58 years. The private-sector hospitals median age is 11 years old. There are 1,700 VA hospitals and clinics with 69% are more than 50 years old. Additionally, nearly 100 VA sites, mostly in the western part of the country, need seismic correction. Other President Biden Healthcare Priorities There are several other healthcare topics that President Biden has added to his Agenda. • Expand coverage to Medicaid at the state level to provide access to almost 5 million additional individuals • Lowering drug costs for consumers by requiring drug companies to negotiate with Medicare, limiting drug price increases and import drugs to save costs • Ending surprise billing
Expand funding for mental health care through the ACA and bring parity between mental health and other healthcare services
Tax credits for eligible families who enroll in coverage through the Marketplace
Unfortunately, while these estimates may continue to change between now and when a final bill is passed, healthcare is not a meaningful part of the infrastructure bill. Given our recent experience during the pandemic with hospital capacity being overloaded, one would have thought that the infrastructure bill would have addressed this critical shortfall.
Health Partners, one of the largest home healthcare providers in Michigan, laid off 560 employees at the beginning of July, including nurses, nursing assistants, therapists and direct care workers, according to Crain’s Detroit Business.
The layoffs occurred July 1 and happened as the Bingham Farms-based company is winding down business. The job losses are attributed to a 2019 state law capping Health Partners’ payment rates at 55 percent of what it bills insurance companies to care for injured motorists, said Chad Livengood, a senior editor at Crain’s Detroit Business.
Health Partners owner John G. Prosser II, who has been in the home health business for decades, said the company couldn’t absorb the losses from the new fee schedule, which cuts payments by 45 percent, according to Crain’s.
Other home healthcare companies in Michigan haven’t met the same fate as Health Partners because they rely more heavily on Medicaid, workers’ compensation insurance or private payers, according to the report.
In his first address to a joint session of Congress, delivered on the eve of his 100th day in office, President Biden laid out his vision for two major legislative proposals to follow the $1.9T stimulus package he signed into law last month.
The first, described as an “infrastructure” bill, focuses largely on investing in transportation-related improvements, building projects, and “green” upgrades to the nation’s energy grid, along with a $400B investment in home-based care for the elderly and people with disabilities—which amounts to over 17 percent of the package’s $2.3T price tag.
The second, which he unveiled in Wednesday’s speech, is a $1.8T “families” bill, is largely aimed at expanding childcare subsidies, early childhood education, paid family and medical leave, and educational investments. Included in that package is $200B to extend the temporary subsidies—approved as part of last month’s stimulus law—for those seeking health insurance coverage on the individual marketplaces created by the Affordable Care Act (ACA).
Notably absent from either proposal were two categories of healthcare reform that received much focus and airtime during last year’s election campaign: reducing the cost of prescription drugs and lowering the eligibility age for Medicare to 60 or below. Given the closely divided makeup of the new Congress, and the relatively moderate position staked out by the Biden administration on healthcare issues (with a bias toward bolstering the ACA rather than pursuing sweeping changes), we’re not surprised to see the Medicare expansion go unmentioned.
But the bipartisan popularity of lowering prescription drug costs seems like a missed opportunity for Biden, who encouraged the Congress to return to it separately, later in the year. We’ll see. For now, with even some Democrats expressing concern about the $4.1T price tag of Biden’s proposals, we would be surprised if all $600B of the healthcare-related spending makes it to the final legislation. In particular, our guess is that some portion of the home-care spending will get traded away in favor of other components of the package. Expect negotiations to be intense.
A key Medicare advisory panel is calling for a 2% bump to Medicare payments for acute care hospitals for 2022 but no hike for physicians.
The report, released Monday from the Medicare Payment Advisory Commission (MedPAC)—which recommends payment policies to Congress—bases payment rate recommendations on data from 2019. However, the commission did factor in the pandemic when evaluating the payment rates and other policies in the report to Congress, including whether policies should be permanent or temporary.
“The financial stress on providers is unpredictable, although it has been alleviated to some extent by government assistance and rebounding service utilization levels,” the report said.
MedPAC recommended that targeted and temporary funding policies are the best way to help providers rather than a permanent hike for payments that gets increased over time.
“Overall, these recommendations would reduce Medicare spending while preserving beneficiaries’ access to high-quality care,” the report added.
MedPAC expects the effects of the pandemic, which have hurt provider finances due to a drop in healthcare use, to persist into 2021 but to be temporary.
It calls for a 2% update for inpatient and outpatient services for 2022, the same increase it recommended for 2021.
The latest report recommends no update for physicians and other professionals. The panel also does not want any hikes for four payment systems: ambulatory surgical centers, outpatient dialysis facilities, skilled nursing facilities and hospices.
MedPAC also recommends Congress reduce the aggregate hospice cap by 20% and that “ambulatory surgery centers be required to report cost data to [Centers for Medicare & Medicaid Services (CMS)],” the report said.
But it does call for long-term care hospitals to get a 2% increase and to reduce payments by 5% for home health and inpatient rehabilitation facilities.
The panel also explores the effects of any policies implemented under the COVID-19 public health emergency, which is likely to extend through 2021 and could continue into 2022.
For instance, CMS used the public health emergency to greatly expand the flexibility for providers to be reimbursed for telehealth services. Use of telehealth exploded during the pandemic after hesitancy among patients to go to the doctor’s office or hospital for care.
“Without legislative action, many of the changes will expire at the end of the [public health emergency],” the report said.
MedPAC recommends Congress temporarily continue some of the telehealth expansions for one to two years after the public health emergency ends. This will give lawmakers more time to gather evidence on the impact of telehealth on quality and Medicare spending.
“During this limited period, Medicare should temporarily pay for specified telehealth services provided to all beneficiaries regardless of their location, and it should continue to cover certain newly-covered telehealth services and certain audio-only telehealth services if there is potential for clinical benefit,” according to a release on the report.
After the public health emergency ends, Medicare should also return to paying the physician fee schedule’s facility rate for any telehealth services. This will ensure Medicare can collect data on the cost for providing the services.
“Providers should not be allowed to reduce or waive beneficiary cost-sharing for telehealth services after the [public health emergency],” the report said. “CMS should also implement other safeguards to protect the Medicare program and its beneficiaries from unnecessary spending and potential fraud related to telehealth.”
This week Brookdale Senior Living, the nation’s largest operator of senior housing, with 726 communities across 43 states and annual revenues of about $3B, announced the sale of 80 percent of its hospice and home-based care division to hospital operator HCA Healthcare for $400M. The transaction gives HCA control of Brookdale’s 57 home health agencies, 22 hospice agencies, and 84 outpatient therapy locations across a 26-state footprint, marking its entry into new lines of business, and allowing it to expand revenue streams by continuing to treat patients post-discharge, in home-based settings.
Like other senior living providers, Brookdale has struggled economically during the COVID pandemic; its home and hospice care division, which serves 17,000 patients, saw revenue drop more than 16 percent last year. HCA, meanwhile, has recovered quickly from the COVID downturn, and has signaled its intention to focus on continued growth by acquisition across 2021.
In separate news, Optum, the services division of insurance giant UnitedHealth Group, was reported to have struck a deal to acquire Landmark Health, a fast-growing home care company whose services are aimed at Medicare Advantage-enrolled, frail elderly patients. Landmark, founded in 2014, also participates in Medicare’s Direct Contracting program.
The transaction is reportedly valued at $3.5B, although neither party would confirm or comment on the deal. The acquisition would greatlyexpand Optum’s home-based care delivery services, which today include physician home visits through its HouseCalls program, and remote monitoring through its Vivify Health unit.
The Brookdale and Landmark deals, along with earlier acquisitions by Humana and others, indicate that the home-based care space is heating up significantly,reflecting a broader shift in the nexus of care to patients’ homes—a growing preference among consumers spooked by the COVID pandemic.
Along with telemedicine, home-based care may represent a new front in the tug-of-war between providers and payers for the loyalty of increasingly empowered healthcare consumers.