Reforming Stark/Anti-Kickback Policies

https://www.brookings.edu/events/reforming-stark-anti-kickback-policies/?utm_campaign=Economic%20Studies&utm_source=hs_email&utm_medium=email&utm_content=69407322

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An event from the USC-Brookings Schaeffer Initiative for Health Policy

In recent years, the health care system has accelerated experimentation into new payment and delivery models that reward care coordination, integration, and value.  However, observers and market participants have expressed concerns that long-standing anti-fraud rules in Medicare and Medicaid prevent innovation and hold back potentially promising new arrangements.  In 2018, the Trump administration sought stakeholder feedback on how the regulations implementing those laws might be modified to promote value-based, coordinated, integrated care delivery while protecting taxpayers and beneficiaries from fraud.

On January 30, 2019 the USC-Brookings Schaeffer Initiative for Health Policy will host Eric Hargan, the Deputy Secretary of Health and Human Services, for a discussion about this effort. Following his presentation, experts in health care payment and delivery system reform will discuss the issue and the path forward.

 

 

 

38 hospitals sue HHS over site-neutral payment rule

https://www.healthcarefinancenews.com/news/38-hospitals-sue-hhs-over-site-neutral-payment-rule?mkt_tok=eyJpIjoiT0RrNVpXSmpZV1UzTTJVdyIsInQiOiJNNFh6MElhd0lmVE5Zc09kZTl5d3BPc1h3ZkRpZGNIbWhHSE9RNVp5NkN1MFwvXC9kK3h6WHh5KzRHTWdsQTlWZ203aitRRnhUYWZ5QTVScVZcL01HaTkyUm5LNDRvanVuY0NUdVN4Y0czMzRkMzdNZzMrdVp6WjlmV2N5WHYxMEkrNCJ9

Hospitals named in the suit include Vanderbilt Medical Center, Atrium Health, Rush University Medical Center, Ochsner Clinic Foundation, Montefiore.

A month and a half after several hospital advocacy groups joined together to sue the U.S. Department of Health and Human Services over it’s finalized site-neutral payment policy, 38 hospitals have followed, filing suit against HHS Secretary Alex Azar for a policy they say will deprive hospitals of hundreds of millions of dollars and could compel them to cut patient services due to loss of reimbursement.

The complaint argues that medical services provided in hospital outpatient departments are more “resource-intensive”–and therefore more costly–than those performed in an independent physician’s office. It also sharply criticized Secretary Azar, saying he “has blatantly disregarded a specific and unambiguous statutory directive, acted well beyond his authority and nullified that statutory exemption” that would have had hospital outpatient centers reimbursed for services at the higher grandfathered rate previously legislated.

The hospitals suing include Vanderbilt Medical Center, Atrium Health hospitals, Rush University Medical Center, Ochsner Clinic Foundation, Montefiore Health System and many others.

THE IMPACT

The outpatient prospective payment system seeks to equalize what physician offices and hospital outpatient departments are paid for certain clinical visits, a change that will be phased in over two years. The new rule cuts payments for hospital outpatient clinic visits at off-campus provider- based facilities in order to level them out against what is paid to physician offices. Half of the total reduction, $380 million, will take effect in 2019 and the remaining cuts will be phased the next year.

THE TREND

The Bipartisan Budget Act of 2015 amended the Social Security Act such that Medicare pays the same rates for medical services regardless of whether they are provided in a physician’s office or in an “off campus” hospital department. At the time, Congress provided an exemption from the rule for all off-campus hospital outpatient departments that were providing services before the enactment.

The AHA, in the suit they are part of, said the Azar’s reversal on the grandfathered exemption exceeds the administration’s legal authority. The AHA previously called the OPPS final rule  “unsupportable analyses and erroneous policy rationales,” and said it will have “negative consequences” for patients, with those in rural and vulnerable communities getting hit especially hard. The AHA and other hospital associations are already challenging the 340B policy included in the current outpatient rule.

ON THE RECORD

“The Secretary’s unlawful rate cut directly contravenes clear congressional directives and will impose significant harm on affected off-campus hospital outpatient departments and the patients they serve. Accordingly, this Court should declare the Secretary’s Final Rule to be ultra vires and enjoin the agency from implementing any payment methodology other than OPPS rates for all E/M services provided by excepted off-campus PBDs,” the complaint states.

Mark Polston, a partner with King & Spalding, the firm representing the plaintiffs: “Our clients’ mission is to provide high-quality healthcare. They have relied for years upon their off-campus departments to expand access to care and bring hospital services directly to their communities, many of which are underserved by other providers. Congress preserved their ability to do that work when it excepted them from the changes contained in Section 603 of the Bipartisan Budget Act of 2015. But the Secretary overstepped his bounds when he took that away. We are asking the court to reinstate the decision Congress made to preserve our clients’ ability to bring the best possible care to their patients.” Mark Polston, a partner with King & Spalding, the firm representing the plaintiffs:

 

 

 

Loosening Up Stark and Anti-Kickback Laws: What Would It Look Like?

https://mailchi.mp/burroughshealthcare/pc9ctbv4ft-1611881?e=7d3f834d2f

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The Department of Health and Human Services under the Trump administration has taken a deregulatory approach toward healthcare delivery. Its efforts on the payer side includes expanding the availability of individual health insurance policies that don’t conform to the rules of the Affordable Care Act, and more recently liberalizing the use of tax credits to purchase them.

However, the HHS has made one of its boldest proposals on the provider side. Over the summer, the Centers for Medicare & Medicaid Services issued a request for information (RFI) regarding potentially loosening up the Stark and anti-kickback laws.

Originally signed into law in 1972, the Anti-Kickback Statute barred any sort of renumeration to a provider to induce the referral of a patient. The Stark Law, enacted in 1990, bars doctors from referring Medicare or Medicaid patients to any ‘designated facility’ in which they have any form of a financial relationship. Both laws have been updated – and strengthened – numerous times in the intervening years. The HHS’ proposed changes would signal a shift away from how those laws are interpreted.

According to Mark Hardiman, partner with the Nelson Hardiman healthcare law firm in Los Angeles, the move represents a desire by HHS “to move all payments away from fee-for-service and make the providers at risk on both the upside and downside.”

Although the proportion of fee-for-service payments made to Medicare providers has shrunk in recent years, it still comprises the majority. A total of $392 billion in Medicare fee-for-service payments were made in 2017, according to the Kaiser Family Foundation, 56 percent of all payments made from the program. Although that’s down from 70 percent of all Medicare payments made a decade prior, the continuing aging of the Baby Boomer population and healthcare cost inflation is putting pressure on CMS and HHS to find ways to continue to pare back costs. Coordinated care initiatives such as accountable care organizations comprise just a small fraction of all Medicare payments, and many providers are balking about taking on too much downside financial risk when forming accountable care organizations.

 According to HHS, the intent is to make it easier for providers to implement value-based care initiatives. “Removing unnecessary government obstacles to care coordination is a key priority for this administration,” said HHS Deputy Secretary Eric Hargan of the rationale behind the regulatory review. “We need to change the healthcare system so that it puts value and results at the forefront of care, and coordinated care plays a vital role in this transformation.”

Nonetheless, the hospital sector has been generally supportive of regulatory changes. In testimony to a U.S. House Ways and Means subcommittee over the summer, Michael Lappin, chief integration officer at Advocate Aurora Health, observed that strict liability rules discourage value-based arrangements.

So, what would the healthcare delivery environment resemble with looser regulations governing both laws?

   According to Hardiman, the changes HHS is seeking to the regulations are far from sweeping.
“They are really on the margins, and they are not signaling a fundamental shift in the enforcement of the Stark and  Anti-Kickback Law,” he said. 

Why would there not be a major regulatory unraveling? Hardiman notes that doing so would create chaos in healthcare delivery. Moreover, qui tam(whistleblower) lawsuits in healthcare have become a major source of income for attorneys, and they would object to too much of an unwinding. Data from the non-profit watchdog organization Taxpayers Against Fraud bears that out: Of the more than $3.7 billion in False Claims Act settlements reached in 2017, $2.4 billion involved litigation involving healthcare enterprises. It was the eighth consecutive year that healthcare case settlements topped $2 billion. Hardiman also noted that more and more litigation is being settled for large sums even when the U.S. Justice Department declines to intervene in a case.

Hardiman believes that if the regs are loosened, they would likeliest be in the form of a “series of fraud and abuse waivers.” They would cover initiatives such as managed care ventures or ACOs, making it easier for hospitals and physicians to collaborate on care coordination, as well create models to more equitably share expenses and profits and encourage cross-referrals.

“You are going to see a much more comprehensive definition as to what types of risk-sharing arrangements will not be reviewed as renumeration under the kickback statute,” Hardiman said. “I wouldn’t be surprised to see safe harbors around Medicare Advantages, ACOs, and participants in other innovative risk-sharing arrangements.”

Individual physicians and medical groups may also have the opportunity to pay inducements to patients to lose weight or engage in another health-enhancing activity – something they are currently barred from doing under most circumstances.

“Everybody knows we’re heading toward a value-based coordinated care model,” Hardiman said. “And promoting and incentivizing it is still a risky business. You want at least some practical guideposts.” 

 

Supreme Court hears case over disproportionate share hospital payments

https://www.healthcarefinancenews.com/news/supreme-court-hears-hospital-case-over-disproportionate-share-hospital-payments?mkt_tok=eyJpIjoiWW1KbFlXUTRPV1V6WlRjeSIsInQiOiJ1VTVCYWtvaUMwRXRLbGd2N1BTSlhLVjYrT0VjdEpVdUlKc0hhaEVYZ3d1UjdORUp3RzkrNWd6Zjl0elwvSkwyMlwvMkxDSjZxN3I0alVzV1ZwbjZ0R0xBU3o4QWZpUlhsdkl0czMxMWY5MUVuV1hpWUxNeDhEXC9rcjg2Y01nYXA5VCJ9

Hundreds of millions of dollars in reimbursement are at stake; $3-4 billion from 2005 to 2013.

The Supreme Court was expected to hear oral arguments today over notice and rulemaking requirements for Medicare reimbursement.

The outcome of Azar vs. Allina Health Services could greatly affect reimbursement for hospitals that serve a disproportionate share of low-income patients. The DSH payment calculation is based on the percentage of low-income patients served.

The government wants to add Part C, or Medicare Advantage beneficiaries into the calculation, a move hospitals fear would decrease payments based on their belief that MA members are, on average, wealthier than Medicare Part A beneficiaries.

But the lawsuit is about how the Department of Health and Human Services went about attempting to implement its rule.

The hospitals in the lawsuit argue that HHS is required to conduct notice and comment rulemaking before providing the instructions to a Medicare administrative contractor that makes the initial determinations of payments due under Medicare. Medicare uses private contractors to administer its reimbursements to providers.

The case went to the District of Columbia Circuit Court, which vacated the rule. The hospitals argue that after the circuit court’s decision, CMS simply tried to make the same change without undertaking notice and comment.

The judge in the District of Columbia Circuit Court case was Brett Kavanaugh, who as Supreme Court Justice, is recusing himself in the HHS case Azar vs. Allina Health.

WHY THIS MATTERS

CMS’s proposed rule changes affect hundreds of millions of dollars in reimbursement for hospitals. The government estimates that the DSH payments from 2005 to 2013 totaled $3 to $4 billion, according to SCOTUSblog.

Hospitals suing HHS said the Centers for Medicare and Medicaid Services “botched” attempted rulemaking in 2004, when the department tried to change the standard governing Medicare payment to hospitals nationwide for services furnished to low-income patients.

The Medicare Act requires the agency to engage in notice-and-comment rulemaking, the hospitals argue.

HHS disagrees, saying the Medicare Act does not require HHS to issue formal notice-and-comment rulemaking prior to changing the DSH calculation formula. Doing so would cripple the Medicare program, requiring the agency to use rulemaking for any change in its lengthy and detailed operations manuals, it argues.

The hospitals involved in the lawsuit are Allina Health System and its affiliated hospitals, Abbott Northwestern, United, and Unity; Florida Health Sciences Center; Montefiore Medical Center; Mount Sinai Medical Center, New York-Presbyterian/Queens; New York Presbyterian Brooklyn Methodist Hospital; and New York and Presbyterian Hospital.

ON THE RECORD

“The agency botched that rulemaking: the final rule was not the ‘logical outgrowth’ of the proposed rule, and the D.C. Circuit vacated it,” Allina and other health systems said.

HHS Secretary Alex Azar said in court documents, “As the government has explained, respondents’ theory, if adopted, has the potential to substantially undermine effective administration of the Medicare program, not least because its rationale would encompass not just the Medicare fractions at issue here but nearly every instruction to the agency’s contractors, including those contained in the Provider Reimbursement Manual.”

 

 

How government shutdown is hampering some federal health efforts — 5 takeaways

https://www.beckershospitalreview.com/hospital-management-administration/how-government-shutdown-is-hampering-some-federal-health-efforts-5-takeaways.html?origin=bhre&utm_source=bhre

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Despite a meeting between President Donald Trump and various members of Congress, officials have not come to an agreement to end the partial government shutdown, which began Dec. 22. While the majority of the federal government’s public health efforts are continuing as usual, several agencies, including the FDA, are at a loss for funding as long as the temporary closure is in placeKaiser Health News reports.

Here are five things to know:

1. Congress has already passed five major appropriations bills, which were responsible for funding roughly 75 percent of the federal government, including HHS and the U.S. Department of Veterans Affairs. However, seven bills are still outstanding, including bills funding the Interior, Agriculture and Justice departments, the report states.

2. While the government’s flagship programs, like Medicare, Medicaid and the ACA, are insulated from the effects of the shutdown, other public health agencies are beginning to feel the squeeze from narrowing funding streams. For example, the FDA’s food safety operations are funded through the Department of Agriculture, which has been affected by the shutdown. The FDA’s contingency plan states that in the event of a shutdown, roughly 40 percent of the the agency’s workforce is furloughed.

3. Funding for the Indian Health Service — which is funded by the Department of the Interior — has also not been approved, meaning that the only IHS’ services currently available are those that meet the “immediate needs of the patients, medical staff, and medical facilities,” according to the agency’s contingency plan cited by Kaiser Health News. Many IHS facilities across the country remain open, with staffers reporting to work because they are necessary employees and  “excepted” from the furlough, an agency spokesperson told the publication.

4. The Department of Homeland Security’s Office of Health Affairs has also been scaling back its resources to survey threats posed by infectious diseases, pandemics, and biological and chemical attacks, the report states.

5. Roughly 800,000 federal employees nationwide have been affected by the shutdown and have found themselves in financial uncertainty, a New York City-based New York University professor told CNBC. One IRS employee told CNBC he cannot afford his more than $200 insulin prescription because he doesn’t know when he will begin work again.

 

Federal judge says HHS overstepped authority in cutting 340B payments

https://www.fiercehealthcare.com/hospitals-health-systems/federal-judge-says-hhs-overstepped-authority-cutting-340b-payments?mkt_tok=eyJpIjoiTnpBNE1HTmtObUl3WVRkayIsInQiOiJFOU1xMDRPMGtzMCtnWXU4MExUVFAzZ3Jrdm5cL2s3S1dMRkVldTRWS2QyNmJZU255UWRIWW14QmtXVkJ2T2VTeGpYTVBvQXZWWW1JVnB0S0crTXV3aFhDS0wrY3NzTmtEYmJEMHdvSG03bGkxS2ZlREdiaWZydFZkbkdlXC9tTHE1In0%3D&mrkid=959610&utm_medium=nl&utm_source=internal

Drug prices

A federal judge has sided with hospitals in the ongoing battle over cuts to 340B drug discount payments, saying the Department of Health and Human Services’ rule slashing money to the program overstepped the agency’s authority.

District Judge Rudolph Contreras from the District of Columbia has issued an injunction (PDF) on the final rule, as requested by the American Hospital Association, the Association of American Medical Colleges and America’s Essential Hospitals.

Contreras also denied HHS’ request for the hospital groups’ ongoing litigation against the 340B payment cuts to be dismissed.

The Centers for Medicare & Medicaid Services finalized the payment changes late last year, cutting the rate in 340B from up to 6% more than the average sales price for a drug to 22.5% less than the average sales price of a drug, slashing $1.6 billion in payments.

Hospital groups have warned that the cuts could substantially hurt their bottom lines, especially for providers with large populations of low-income patients. Higher cost for drugs in 340B could also lead to access problems for these patients.

Contreras said in his opinion (PDF) that the payment changes overstepped HHS’ authority.

Because the payment changes affect many drugs—any in the 340B program—and the payment cuts are a significant decrease, the agency bypassed Congress’ power to set those reimbursement rates with the rule, Contreras said.

But simply siding with the hospital groups could prove disruptive, he said, as retroactively adjusting payments and reimbursing hospitals for lost money over the past year would impact budget neutrality, requiring cuts elsewhere to offset the payments. So both parties will have to reconvene to determine the best way forward, Contreras said.

The AHA, AAMC and AEH issued a joint statement praising the ruling.

“America’s 340B hospitals are immeasurably pleased with the ruling that the Department of Health and Human Services unlawfully cut 2018 payment rates for certain outpatient drugs,” the groups said.

“The court’s carefully reasoned decision will allow hospitals and health systems in the 340B Drug Pricing Program to serve their vulnerable patients and communities without being hampered by deep cuts to the program.”

The case marks the groups’ second attempt at a legal challenge of the 340B cuts. A federal court rejected their initial appeal in July. 

An HHS spokesperson said in a statement emailed to FierceHealthcare that the agency is “disappointed” in Contreras’ ruling, but said it looks forward to addressing the judge’s concerns about potential disruption to payments.

“As the court correctly recognized, its judgment has the potential to wreak havoc on the system,” the agency said. “Importantly, it could have the effect of reducing payments for other important services and increasing beneficiary cost-sharing.”

Chip Kahn, president of the Federation of American Hospitals, said Contreras’ ruling puts lowered drug costs, that benefit all hospitals, at risk.

“The DC Federal District Court’s ruling to stop reforms to Medicare payment for drugs acquired under the 340B drug discount program is unfortunate because it undermines HHS efforts to cut drug costs and promote fairer payments,” Kahn said in a statement.

 

 

 

 

340B FINAL RULE WILL LAUNCH ON JANUARY 1, 2019

https://www.healthleadersmedia.com/340b-final-rule-will-launch-january-1-2019

HHS shortens the 340B final rule implantation by six months after determining that it would not ‘interfere’ with the departments ‘comprehensive policies’ to address high drug costs.


KEY TAKEAWAYS

PhRMA says the ‘overly burdensome’ final rule fails to address hospital abuse of the program.

The new rule provides drug pricing information to 340B participants through a closed website.  

Proponents scoff at drug makers’ claims that more time is needed before the oft-delayed final rule is implemented.

After several delays, hundreds of public comments, a lawsuit, and an eight-year-old Congressional mandate, the federal government on Thursday bumped up the starting date of its 340B drug pricing final rule by six months.

In a notice published this week in the Federal Register, the Department of Health and Human Services said the final rule—which is designed to protect hospitals from being overcharged by drug manufacturers—would take effect on January 1, 2019, instead of July 1, 2019.

The final rule was supposed to take effect on January. 5, 2017, but HHS delayed implementation because it said it was in the midst of “developing new comprehensive policies to address the rising costs of prescription drugs.”

Hospitals got tired of waiting and filed suit, asking a federal judge to order the Trump Administration to launch the final rule on January 1, 2019. The hospitals allege that the delays are causing significant financial harm to the nearly 2,500 hospitals nationwide that participate in the 340B Drug Pricing Program.

In late October, the Trump Administration said it was considering accelerating implementation.

In bumping up the final rule implantation by six months, HHS said it “has determined that the finalization of the 340B ceiling price and civil monetary penalty rule will not interfere with HHS’s development of these comprehensive policies.”

Under the new rule, federal regulators will provide pricing information to 340B hospitals through a closed website, which proponents of the rule say is essential for ceiling price enforcement.

As expected, hospitals praised the action, and drug makers expressed disappointment.

“This rule is good for patients and for essential hospitals, which rely on 340B savings to make affordable drugs and health care services available to vulnerable people and underserved communities,” said America’s Essential Hospitals President and CEO Bruce Siegel, MD.

“It also ends years of delay for much-needed measures to hold drug companies accountable for knowingly overcharging covered entities in the 340B program,” Siegel said.

Maureen Testoni, interim president and CEO of 340B Health, called the announcement “a big step toward stopping drug companies from overcharging 340B hospitals, clinics, and health centers.”

“The next step toward ensuring true 340B drug maker transparency is for the administration to launch its ceiling price website so hospitals, clinics, and health centers can ascertain that they are paying the correct amounts for 340B medications,” Testoni said.

“We are encouraged that HHS says it will release that pricing reporting system shortly and that the department will communicate additional updates through its website,” she said.

PhRMA said it was “disappointed the Administration did not issue new proposals for this rule as it repeatedly stated it would.”

The pharmaceutical industry advocates said HHS “ignored the numerous concerns raised by stakeholders on the proposed ceiling price calculations, offset policy and civil monetary penalty provisions.”

Drug makers allege that hospitals have been scamming the 340B program, and PhRMA said Thursday that the final rule’s “flawed policies are not in line with the 340B statute and fail to address root problems in the 340B program that have enabled private 340B hospitals to generate record profit without commensurate benefit to patients.”

“Not only is the final rule itself overly burdensome in its requirements, but moving up its effective date also leaves manufacturers with very little time to make operational changes to systems and procedures,” PhRMA said.

Testoni scoffed at claims that more time was needed.

“The regulation now will be going into effect more than eight years after Congress mandated it—and only after a lawsuit filed by 340B Health and other hospital organizations to stop repeated administrative delays to the effective date,” Testoni said.

“As today’s final rule notes, these delays have given drug makers ‘more than enough time to prepare for its requirements.'”

“THESE DELAYS HAVE GIVEN DRUG MAKERS MORE THAN ENOUGH TIME TO PREPARE FOR ITS REQUIREMENTS.”