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HHS Releases $25.5 Billion in COVID-19 Relief Funding Targeting Smaller Providers

DHHS Releases $25.5 Billion in COVID-19 Relief Funding Targeting Smaller Providers

On September 10, 2021, the Biden-Harris Administration announced that the U.S. Department of Health and Human Services (“DHHS”), through the Health Resources and Services Administration, is making $25.5 billion in new funding available for health care providers affected by the COVID-19 pandemic.  This represents the first additional funding availed for these purposes in nearly 12 months.  The new funding comes roughly a week after Republican Senate leaders wrote to the Biden administration calling for the swift distribution of the remaining money.  The funding is intended to bolster reimbursement to providers that serve a disproportionate amount of Medicare and Medicaid patients. The September 10, 2021 announcement comes as some provider groups have advocated for DHHS to release the remainder of the $178 billion relief fund passed by Congress in 2020.  The funding includes $8.5 billion in resources from the American Rescue Plan Act passed earlier this year and another $17 billion from the Provider Relief Fund (“PRF”) previously established under the CARES Act.

The new funding will be allocated based on providers’ lost revenue and higher expenses from July 1, 2020 to March 31, 2021 (the “Reporting Time Period”).  DHHS is specifically targeting smaller providers for lost revenues and COVID-19 expenses incurred at a higher rate, as  compared to larger providers.  There will also be bonus payments for providers that serve Medicaid, Children’s Health Insurance Program and/or Medicare patients.  These bonuses will be based on the generally higher Medicare rates to ensure equity for those serving low-income children, pregnant women, people with disabilities and seniors.  DHHS will also make payments to rural providers based on the amount of Medicaid, CHIP and Medicare services provided to patients in rural areas.

In order to expedite and streamline the application process and minimize administrative burdens, providers will apply for both programs in a single application.  DHHS will use existing Medicaid, CHIP and Medicare claims data in calculating payments. The application portal will open on September 29, 2021. To help ensure that these funds are used for patient care, PRF recipients will be required to notify the HHS Secretary of any merger with, or acquisition of, another health care provider during the period in which they can use the payments.  Providers who report a merger or acquisition may be more likely to be audited to confirm their funds were used for coronavirus-related costs, consistent with an overall risk-based audit strategy.  Additionally, in light of the challenges providers across the U.S. are facing due to recent natural disasters and the Delta variant, DHHS has announced a 60-day grace period to help providers come into compliance with their PRF reporting requirements if they fail to meet the deadline on September 30, 2021, for the first PRF Reporting Time Period.  While the deadlines to use funds and the Reporting Time Period will not change, HHS has committed to not initiate collection activities or similar enforcement actions for noncompliant providers during this grace period.

For more information about eligibility requirements, the documents and information providers will need to complete their application, and the application process for PRF Phase 4 and ARP Rural payments, visit: https://www.hrsa.gov/provider-relief/future-payments.

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Law Offices of George W. Bodenger, LLC,  a boutique law firm specializing in healthcare law, is asked by a broad array of clients to provide innovative solutions to today’s legal and business challenges. For more information, please visit www.bodengerlaw.com.

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Pharmacist Arrested for Selling COVID Vaccination Cards Online

A licensed pharmacist was arrested on August 17, 2021 in Chicago on charges related to his alleged sale of several authentic Centers for Disease Control and Prevention (CDC) COVID-19 vaccination cards on eBay.

According to court documents, in March and April 2021, Tangtang Zhao, 34, of Chicago, sold 125 authentic CDC vaccination cards to 11 different buyers for approximately $10 per card.  Zhao was a licensed pharmacist in Illinois and was employed at Company 1, a pharmacy which distributed and administered COVID-19 vaccines at its physical locations nationwide.  As required by the CDC, Company 1 provided a CDC Vaccination Record Card to each vaccine recipient.  Zhao, who worked at Company 1 as a pharmacist during that time, obtained and subsequently offered authentic CDC vaccination cards for sale online. The indictment charges Zhao with 12 counts of theft of government property.

Zhao is charged by indictment with 12 counts of theft of government property.  Zhao made his initial court appearance on Aug. 17 before U.S. Magistrate Judge Sheila M. Finnegan of the U.S. District Court for the Northern District of Illinois. If convicted, he faces a sentence of 10 years in prison per count. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.

The FBI and HHS-OIG are investigating the case.

Trial Attorney Leslie S. Garthwaite of the Criminal Division’s Fraud Section is prosecuting the case.

George W. Bodenger, Esquire
Law Offices of George W. Bodenger, LLC
575 S. Goddard Blvd, #213
King of Prussia, PA 19406
Office (610) 212-5031
Fax – (484) 416-0229
www.bodengerlaw.com

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CMS ISSUES STARK LAW ADVISORY OPINION CLARIFYING THE “SINGLE LEGAL ENTITY” REQUIREMENT

In June 2021, the Centers for Medicare & Medicaid Services (“CMS”) published Advisory Opinion No. CMS-AO-2021-01 (“AO”), indicating that a physician practice could qualify as a “group practice” under the federal physician self-referral prohibitions (a.k.a. the “Stark Law”) if the practice furnishes designated health services (“DHS”) through a wholly-owned subsidiary entity that is enrolled in the Medicare program as a physician practice.

GENERAL RULE

As a general matter, the Stark Law prohibits a physician from referring Medicare beneficiaries to an entity for the furnishing of DHS if the physician (or one of their immediate family members) has a financial relationship (either an ownership interest or a compensation arrangement) with the entity (the “DHS Entity”) unless a statutory or regulatory exception applies. The Stark Law also prohibits the DHS Entity from billing Medicare or any other person or entity for improperly referred DHS.  DHS includes the following twelve (12) categories of services:

 

Clinical laboratory services                                                    Durable medical equipment and supplies Physical

therapy services                                                                        Parenteral and enteral nutrients, equipment, and supplies

Occupational therapy services                                               Prosthetics, orthotics, and prosthetic devices and supplies

Outpatient speech-language pathology services                Home health services

Radiology and certain other imaging services                    Outpatient prescription drugs

Radiation therapy services and supplies                             Inpatient and outpatient hospital services

 

One of the most popular exceptions for physician practices is the in-office ancillary services exception (the “IOAS Exception”). The IOAS Exception generally is available to a physician practice consisting of two (2) or more physicians only if the physician practice qualifies as a “group practice.”  Under the Stark Law definition,  a group practice must be a single legal entity operating primarily for the purpose of being a physician group practice.  The group practice definition further requires that the single legal entity may be organized or owned by another medical practice, provided that the other medical practice is not an operating physician practice (regardless of whether the medical practices meets the conditions of being a group practice). The Stark Law also state that a group practice that is otherwise a single legal entity may itself own subsidiary entities, but does not specify whether the subsidiary can be a medical practice.  Prior to this AO, CMS specifically referenced the ability of a group practice to own and operate other legal entities (e.g., a clinical laboratory) for purposes of providing services to the group practice, but had not opined as to whether such a subsidiary entity could itself be enrolled in Medicare as an operating physician practice.

 

ANALYSIS AND DISCUSSION

The advisory opinion request was submitted by a group practice (the “Group”) which owned and operated physician practices (each a “Subsidiary,” and collectively, the “Subsidiaries”) located in separate states. Each Subsidiary is enrolled as a physician practice in the Medicare program.  In this AO, CMS indicated that furnishing DHS through the Subsidiaries would not prevent the Group from qualifying as a group practice, thus permitting the Subsidiaries to furnish DHS.

As part of the CMS Stark Law advisory opinion process, the Group certified that all clinical employees and contractors of the Subsidiaries would be employed or contracted by the Group and assigned to work at the Subsidiaries.  The Group also certified that all revenues and expenses of the Subsidiaries would be treated as revenue and expenses of the Group, and patients seen by the Subsidiaries would be considered patients of the Group.  The favorable AO permits each Subsidiary of the Group to remain a Medicare-enrolled practice and bill Medicare for DHS without giving rise to a violation of the Stark Law, so long as the other requirements of the group practice definition and the IOAS Exception were satisfied.

In this AO, CMS emphasized that the requirement for a “group practice” to be a “single legal entity” expressly permits a group practice to own subsidiaries and, although CMS previously provided only the example of a laboratory wholly-owned by a group practice, this does not prevent a group practice from furnishing other services—including physicians’ professional services to its patients through other types of wholly-owned subsidiaries.  CMS also noted that a group practice must “primarily provide services of the type provided by a supplier that is enrolled in Medicare as a clinic/group practice.” This language serves to highlight that, although a group practice may own and operate subsidiary entities to furnish services to its patients, the group must remain, at its core, a physician practice, and cannot utilize the IOAS Exception to circumvent the referral prohibition of the Stark Law by establishing subsidiary entities that are not central to group practice’s services to patients.

 

KEY TAKEAWAYS

For purposes of physician practice acquisitions, consolidating under a single taxpayer identification number (“TIN”) has been the standard practice for purposes of meeting the Stark Law definition of a group practice.  This AO establishes that an existing physician practice platform that is acquiring a physician practice may maintain the existing practice legal entity of the acquired practice as a wholly-owned subsidiary.  This development eliminates the need for transferring payor contracts and provider recredentialing such efforts in a practice acquisition transaction.  It is critical to note, however, that all other elements of the group practice definition must still be met for the relevant group practice to satisfy the IOAS Exception.  In particular, the practice must operate as a unified business with centralized decision-making, consolidated billing, accounting and financial reporting.  When structuring a group practice that intends to rely on subsidiary entities, extra care should be taken to ensure the “unified business” requirement is satisfied by the physician practice for Stark Law compliance.

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Law Offices of George W. Bodenger, LLC,  a boutique law firm specializing in healthcare law, is asked by a broad array of clients to provide innovative solutions to today’s legal and business challenges. For more information, please visit www.bodengerlaw.com.

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Biden’s Executive Order Takes Aim at Non-Competes in Medical Spas and Medical Practices

On July 13, 2021, President Biden signed an Executive Order directing the Federal Trade Commission (“FTC”) to take actions on anti-competitive labor practices, including employee non-compete agreements for medical spas and medical practices.

This is not the first step toward federal regulation of non-compete agreements.  In October 2016, President Barack Obama issued a “State Call to Action on Non-Compete Agreements” to “address wage collusion, unnecessary non-compete agreements, and other anticompetitive practices.”  In Congress, multiple bipartisan bills aiming to ban non-competes have fallen by the wayside since that time.  More recently, the FTC hosted a workshop in January 2020 “to examine whether there is a sufficient legal basis and empirical economic support” to restrict non-competes.

The argument against non-competition agreements is that they can discourage workers from seeking out higher-paying jobs in their geographic areas and make it difficult for them to seek gainful employment in their fields.  Additionally, such arrangements can be difficult for lower-wage workers to defeat, since they typically lack the financial wherewithal to seek legal recourse.  It is not possible, at this nascent stage, to ascertain how the FTC will interpret and enforce such directives. As such, the impact on medical spas and physician practices remains to be seen.

While non-competes are fairly common in the realm of medical spas and medical practices, they still must have limitations in order to be enforceable.  A few states have, in fact, adopted laws and rules that prohibit these provisions, except in very limited circumstances.  Even in states that generally allow non-competition arrangements for licensed professionals, there still are limitations on their scope.  Generally, the permissible goal for a non-compete is to protect trade secrets and proprietary information that would damage the business or provide an unfair advantage to the former employee.  From a public policy standpoint, the clauses still need to be narrowly written to achieve that goal and not deprive the community of a trained and skilled professional.

It is important to note that an Executive Order is not a new law. Such an order cannot change existing law or give an agency more power than it currently has.  An Executive Order can, however, direct the agency to refocus their priorities or to change their interpretation of existing law.   Much remains to be done before any ban or limitations on restrictive covenant agreements by the FTC become reality.  In the instant case, legal experts appear divided on whether the FTC has the power to enforce such a ban on non-competes.  The FTC does have authority to act against “anti-competitive practices,” which they define as unfair business practices that are likely to reduce competition and lead to higher prices, reduced quality or levels of service, or less innovation.  It seems possible, therefore, that the FTC would have authority regarding non-competes in the context of “anti-competitive practices.”

If the FTC engages in rulemaking, it is unclear what level of regulation it may pursue.  Will the FTC seek to ban non-competes entirely?  Will it take a more nuanced approach, imposing restrictions on non-competes only for low-wage workers, as a number of states have done?  Will the FTC also try to regulate other restrictive covenants, such as non-solicitation and non-servicing provisions?  Moreover, if the FTC exercises its rulemaking authority to regulate restrictive covenants, will anyone challenge its legal authority to do so and what will the courts say? All these questions, and many more, remain unanswered.

For now, if they are not already doing so, employers should start thinking about how to protect their business interests if the FTC were to ban or limit some or all non-competition agreements or other restrictive covenants.

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Law Offices of George W. Bodenger, LLC is a boutique legal practice providing sophisticated legal services to a broad range of healthcare providers.  The Firm has significant experience in drafting, negotiating and enforcing non-competition arrangements involving licensed health care professionals.  Please contact George W. Bodenger at 610-212-5031 or gwb@bodengerlaw.com if you have any questions regarding these matters or if you would like additional information about the Firm.

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2022 MEDICARE PHYSICIAN FEE SCHEDULE PROPOSED RULE ISSUED ON JULY 13, 2021

BACKGROUND

On July 13, 2021, the Centers for Medicare & Medicaid Services (“CMS”) released the calendar year 2022 Medicare Physician Fee Schedule proposed rule (the “Proposed Rule”). The Proposed Rule describes CMS’ plans to revise Medicare payment policies and rates for the upcoming year.  In the Proposed Rule, CMS sets forth its proposed changes in the regulations which codify its long-standing guidance on billing for “split (or shared)” evaluation and management (“E/M”) visits.  Split (or shared) visits are E/M visits provided in part by both physicians and non-physician practitioners (“NPPs”). NPPs generally include nurse practitioners, physician assistants and advanced practice practitioners.

As a general matter, Medicare reimburses physicians at a higher payment rate than NPPs for various services.  In the physician office setting, when a patient visit is performed in part by a physician and a NPP, the physician is permitted to bill for the visit, provided the visit meets the Medicare requirements for services furnished “incident to” a physician’s professional services.  Historically, CMS relied on guidance found in the Medicare Claims Processing Manual (“MCPM”) to permit a physician to bill for visits performed in part by a NPP outside of the physician office setting.  In May 2021, in response to a petition submitted under the U.S. Department of Health and Human Services Good Guidance Practices Regulation, CMS formally withdrew the MCPM sections specifically addressing split (or shared) visits and indicated that CMS would reissue the guidance as proposed regulations.

The Proposed Rule specifies the requirements that must be met in order for a physician or NPP to bill a split (or shared) visit in a hospital, skilled nursing facility (“SNF”) or other facility setting. If passed, the Proposed Rule will expand the clinical scenarios under which a healthcare professional can bill for services performed in part by another practitioner and would also impose restrictions on which performing practitioners can bill for the split (or shared) visit.

ANALYSIS AND DISCUSSION

In addition to clarifying when split (or shared) visits may be billed to Medicare, the Proposed Rule modifies CMS policy, permitting physicians and NPPs to bill for split (or shared) visits for both new and established patients, critical care services and certain E/M visits in a SNF.  The prior guidance limited split (or shared) visit billing to established patients and prohibited billing for split (or shared) visits involving critical care services or in SNFs.  The Proposed Rule defines “split (or shared) visit” as E/M visits performed in part by a physician and NPP in institutional settings for which “incident to” payment is not available.  This is intended to distinguish between the policy applicable to services furnished “incident to” the professional services of a physician in a physician office setting and the policy applicable to services furnished in a facility setting on a split (or shared) basis.

Additionally, CMS is proposing to establish which of the physician or NPP performing a split (or shared) visit can bill Medicare for the visit.  This is a very important concept because the visit is paid at a higher rate if the physician submits the claim rather than the NPP.  Historically, in determining whether a physician or an NPP may bill for a split (or shared) visit, either the physician or NPP could bill for the service so long as the billing provider performed a “substantive portion” of the visit. In the Proposed Rule, CMS seeks to codify this policy by using time—as opposed to medical decision-making or a key component of the E/M visit—as the key factor in determining whether the physician or the NPP performed the substantive portion of the visit.  The Proposed Rule would further limit the billing provider to the individual who performed more than 50% of the visit.  In addition, CMS is proposing a list of activities that may count toward the total time of the E/M visit for purposes of determining the provider who performed the substantive portion of the visit.  Under the Proposed Rule, documentation in the medical record will need to identify both professionals who performed the visit and the individual who performed the substantive portion (and bills for the visit) would need to sign and date the medical record.

Previous MCPM guidance generally prohibited the billing of split (or shared) visits for new patients.  In the Proposed Rule, CMS is proposing important clarifications to its policy to permit either a physician or a NPP to bill for split (or shared) visits for both new and established patients and for initial or subsequent visits.  This change expands the availability of split (or shared) visit billing in the facility setting.  Under the previous MCPM guidance, CMS did not permit healthcare professionals to bill for split (or shared) visits for critical care services or for E/M visits furnished in a SNF.  In the Proposed Rule, CMS is proposing to permit healthcare providers to bill for split (or shared visits) that are critical care services.  The Proposed Rule also states that no other E/M visit can be billed for a patient on the same date as critical care services are furnished when the services are furnished by the same professional (or professionals) in the same specialty and group.  The Proposed Rule also expands split (or shared) visit billing to permit E/M visits to be furnished by a physician and a NPP in a SNF setting.

In the Proposed Rule, CMS explicitly declined to define “same group” for purposes of the new split (or shared) visit billing rule and is seeking comments on how to define same group.  While the Proposed Rule retains the requirement that split (or shared) visits be performed by a physician and NPP who are in the same group, CMS noted that it considered several options, including using the “group practice” definition under the Stark Law or considering practitioners under the same billing tax ID number to be the same group practice.  CMS also noted that some of the options it evaluated do not align with the definition of “group” used for Medicare enrollment purposes.  This determination is of significant import because if the two practitioners are determined not to be in the same group, neither of them may be able to bill for the visit if neither performed a complete E/M visit.  CMS, under the Proposed Rule, will not pay for partial E/M visits.

Finally, the Proposed Rule seeks to create a claim modifier that would be mandatory for split (or shared) visits.  This modifier would allow CMS to identify services furnished in part by NPPs and allow for more targeted review of services furnished by physicians and NPPs.

In summary, the Proposed Rule provides both new opportunities for billing split (or shared) visits, but also restricts the reimbursement opportunity for services that are performed primarily by NPPs.  Providers have an opportunity to provide comments to the Proposed Rule, which must be submitted by September 13, 2021.

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Law Offices of George W. Bodenger, LLC is a boutique legal practice providing sophisticated legal services to a broad range of healthcare providers.    Please contact George W. Bodenger at 610-212-5031 or gwb@bodengerlaw.com if you have any questions regarding these matters or if you would like additional information about the Firm.

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OCR to Ease HIPAA Enforcement for Web-Based Scheduling of COVID-19 Vaccinations

On February 12, 2021, the Office for Civil Rights (“OCR”) of the U.S Department of Health and Human Services (“HHS”) provided additional information regarding its previously-announced discretion in the enforcement of the Health Insurance Portability and Accountability Act of 1996 (“HIPAA”) and the Health Information Technology for Economic and Clinical Health (“HITECH”) Act related to privacy, security, and date breaches. OCR stated that it will not penalize covered entities or their business associates for non-compliance under HIPAA for the good faith use of online or web-based scheduling applications (“WBSAs”) for scheduling COVID-19 vaccination appointments during the COVID-19 pandemic.

During the COVID-19 public health emergency, covered entities, such as large pharmacy chains, or business associates acting on behalf of the covered entities, are permitted to use WBSAs to schedule individual appointments for COVID-19 vaccinations. For the purposes of this exercise of discretion, a WBSA is defined as an online or web-based application that only allows the intended parties to access the data and that provides individual appointment scheduling related to large-scale COVID-19 vaccination efforts. Technology that directly connects to electronic health records (“EHR”) systems used by covered entities is excluded from the definition of a WBSA. The HIPAA privacy rules allow business associates of a covered entity to use and disclose protected health information (“PHI”) for certain functions, only as dictated by a business associate agreement. During the COVID-19 pandemic, however, covered entities need to schedule a large number of vaccine appointments and often do this through the use of WBSAs. Some of these online scheduling applications, and the way in which covered entities use them, may not comply with the HIPAA privacy rules. Furthermore, vendors of the WBSAs may not know providers are using these applications to create and send PHI, potentially making the WBSA vendors business associates under HIPAA.

OCR will exercise discretion in the enforcement of HIPAA privacy rules and will not penalize covered entities, their business associates, or WBSA vendors who are technically business associates, for noncompliance as it relates to the scheduling of individual COVID-19 vaccination appointments during the COVID-19 pandemic. This enforcement discretion applies to covered healthcare providers and their business associates, which are, in good faith, using WBSAs to schedule COVID-19 vaccination appointments, as well as WBSA vendors whose platforms are being used to schedule COVID-19 vaccination appointments. Discretion does not apply to covered entities or business associates for activities unrelated to the scheduling of COVID-19 vaccinations or if the covered providers or business associates fail to act in good faith. Instances where a covered entity or business associate is not considered to be acting in good faith include: (i) the use of a WBSA that allows the sale of personal information collected; (ii) the use of a WBSA for purposes other than scheduling COVID-19 vaccination appointments; (iii) the use of a WBSA without reasonable safeguards to protect the PHI; and (iv) the use of a WBSA to screen individuals for COVID-19 before an in-person visit.

George W. Bodenger, Esquire
Law Offices of George W. Bodenger, LLC
575 S. Goddard Blvd, #213
King of Prussia, PA 19406
Office (610) 212-5031
Fax – (484) 416-0229
www.bodengerlaw.com

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CMS Implements Changes to Prior Authorization Regulations

On January 15, 2021, the Centers for Medicare & Medicaid Services (“CMS”) issued the final rule for CMS Interoperability and Prior Authorization (the “Final Rule”) to improve the prior authorization process and give patients more control in accessing and understanding their health information. Under the Final Rule, certain payers, such as Medicaid and CHIP managed care plans, state Medicaid and CHIP fee-for-service (“FFS”) programs and those that issue individual market qualified health plans (“QHPs”) on the federally-facilitated exchanges (“FFEs”) must develop and implement technology known as application programming interfaces (“APIs”). APIs are commonly used in smartphone applications, and when incorporated into electronic health records (“HER”), can enable simple and immediate access to health information for providers.

Each payer covered by the Final Rule must create a documentation search capability driven by an API, and make the program public, allowing providers to access health documentation and prior authorization requirements from various EHR platforms. Once a provider determines what each prior authorization requires, the authorization can then be submitted electronically. Payers are also required to provide, under the already established patient access API, laboratory results and other claims and encounter data, as well as information regarding a patient’s pending and active prior authorizations.

Payers are also required to share this data with a patient’s provider if requested, and with other payers, in circumstances where a a patient’s coverage or provider changes. This requirement will allow patients, providers, and payers to have access to all the necessary data when needed, automating the process and reducing the administrative burden on providers. As a result, providers will be less likely to work with incomplete health information and the likelihood of repeat prior authorization requests will decrease, resulting in more time the provider has to spend with the patient. Notably, Medicare Advantage plans are not subject to the requirements of the Final Rule; however, CMS is continuing to consider whether Medicare Advantage plans should be included.

Under the Final Rule, payers will have up to 72 hours to make prior authorizations on urgent requests, and 7 calendar days for non-urgent requests. All payers covered by the Final Rule must provide an exact reason for any denial, giving providers increased transparency in the authorization process. To further encourage accountability, payers are also required to make public statistics related to prior authorizations that illustrate how the payer operates its prior authorization process.

The Final Rule will benefit patients as well; patients will have a better understanding of the prior authorization process, and will be able to better coordinate with their provider to properly plan for their healthcare needs. Patients will also have easier access to their health information and can take their information with them as they change plan

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CMS Finalizes Overhaul To Stark And Anti-Kickback Laws

On November 20, 2020, the Centers for Medicare & Medicaid Services (“CMS”) released the final rules amending two (2) of the primary bodies of federal law governing commercial conduct in the healthcare industry, the physician self-referral prohibitions (known as the “Stark Law”) and the Anti-Kickback Statute (“AKS”).  The Stark Law and AKS were initially created for a fee-for-service healthcare system, where there are financial incentives to provide more services to patients.  Efforts to clarify these outdated laws began in 2018, with the goal of accommodating changing financial arrangements triggered by the shift from fee-for-service to value-based care in the U.S. healthcare system.

The Stark Law, was initially enacted to prohibit physicians from making referrals to entities with which they had a financial relationship (i.e., ownership interest, compensation arrangement).  The final rule creates exceptions for specific value-based payment arrangements among and between various providers and suppliers, and offers new guidance for providers with a financial relationship governed by the Stark Law.  Under the rule, a value-based arrangement is one that provides at least one (1) value-based activity to a patient between the value-based enterprise and at least one of its participants, or the participants in the same value-based enterprise.  A value-based activity can mean the provision of a service, an action, or refraining from taking an action, so long as the activity reasonably related to the achievement of a value-based purpose.

The final rule creates three (3) new exceptions to the Stark Law:

  1. Value-based arrangements for participants in a value-based enterprise that is financially responsible for, and assumes the entire prospective financial risk, for the cost of all related patient care items and services for every patient;
  2. Value-based arrangement remuneration to physicians at meaningful downside financial risk of failing to reach the value-based purpose of the enterprise; and
  3. Value-based compensation arrangements, no matter the risk undertaken by the enterprise or participants. This exception also allows for monetary and nonmonetary remuneration among the parties.

The AKS is a criminal statute, focused on the intent of the provider, that prohibits intentional remuneration, in cash or in kind, in exchange for referrals of items and services reimbursable by a Federal healthcare program. This final rule adds new safe harbors to protect specific payment practices and business arrangements from AKS penalties to allow for improved coordination and patient care management and value-based care.  Under the final rule, three (3) new AKS safe harbors are created:

  1. Care coordination arrangements that enhance quality, health outcomes, and efficiency, without necessitating that the participants assume risk. Protected remuneration under this safe harbor must be mainly used to engage in value-based activities directly associated with coordination and management of patient care;
  2. Value based arrangements involving the exchange of remuneration among a value-based entity that has substantial downside financial risk from a payor and a value-based participant that meaningfully shares in this financial risk; and
  3. The protection of remuneration between value-based entity and value-based participant in a value-based arrangement in which the entity assumes full financial risk for the cost of items and services covered by the payor for each patient.

These new Stark Law exceptions and AKS safe harbors are receiving mixed reviews from healthcare providers.  Hospital industry groups such as the American Hospital Association and the Federation of American Hospitals were optimistic about the regulatory changes, while physician groups such as the American Medical Group Association expressed some degree of skepticism. ______________________________________________________________

Law Offices of George W. Bodenger, LLC is a boutique legal practice providing sophisticated legal services to various types of healthcare providers.  The Firm plans to issue additional commentary on these important changes to the Stark Law and the AKS.  Please contact George W. Bodenger at 610-212-5031 or gwb@bodengerlaw.com if you have any questions regarding these matters or if you would like additional information about the Firm.

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Providers Must Apply by November 6, 2020 for a Share of $20 Billion CARES Act Distribution

As stated in our previous blog post, on October 1, 2020, HHS announced it would be allocating an additional $20 billion as its Phase 3 General Distribution from the Provider Relief Fund (“PRF”) through the CARES Act. This Phase 3 General Distribution is intended for providers who were either excluded from the initial two (2) phases, or who were eligible under the first two (2) phases but require additional funding to cover ongoing financial losses incurred during the pandemic.  Time is running out for health care providers to apply to HHS for these funds. The application deadline for what may be the final round of relief funds is November 6 at 11:59 pm EST.  HHS urges providers to apply as soon as practicable. The applications are accepted on a rolling basis, so HHS asks that providers not apply during the final days of the application period.

The following paragraphs highlight key information regarding the Phase 3 General Distribution:

Who Can Apply?

The following providers are eligible for Phase 3 General Distribution funding: (1) providers who have previously received, rejected or accepted a General Distribution PRF payment; (2) behavioral health providers, including those that have previously received funding; and (3) healthcare providers that began providing services from January 1, 2020 through March 31, 2020.

On October 22, 2020, HHS announced that additional providers, such as residential treatment facilities, chiropractors, and eye and vision providers that have not yet received PRF distributions, are also eligible to receive funds from this last distribution.

When Will Distributions Be Made?

HHS will issue Phase 3 – General Distribution payments as soon as practicable after the November 6th application deadline.  Entities that have not yet received two percent (2.0%) of annual revenue from patient care will be first to receive funds from the Phase 3 General Distribution.

The Phase 3 final payment amounts for applicants that have already received payments equaling two percent (2.0%) of annual patient care revenue will be determined once all applications have been received and reviewed.

How Will HHS Calculate 2% of Annual Revenue for Providers in Operation Less Than a Year?

Providers that began providing patient care in 2020 will be paid approximately 2% of patient care revenue based on the applicant’s reported financial information for those months in 2020 that they were in operation.

HHS has also stated that it may consider data from the same type of provider as the applicant when assessing the amount to be paid.  However, no additional details have been provided regarding how that assessment of similar providers will be utilized to assess funds to be received.

How Will Distributions Over 2% of Annual Revenue Be Calculated?

The Phase 3 General Distribution will also take into account the financial impact of COVID-19 on individual providers and assess whether additional funds should be distributed to certain providers. The actual additional amount to be received will depend in part on the CARES Act funds available after the Phase 3 General Distribution to those that have not yet received an amount equivalent to 2% of annual revenue.

In assessing whether to award a provider additional funds over the two percent (2.0%) annual revenue amount, HHS will consider: (1) a provider’s change in operating revenue from patient care; (2) a provider’s change in operating expenses from patient care, including coronavirus expenses, and (3) payments received by the provider as part of previous Targeted Distributions.

Providers are encouraged to start the application process as soon as possible so as to not miss out on what may be the last general distribution of funds.

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If you or your healthcare organization has any questions pertaining to Provider Relief Fund reporting, audits, or healthcare compliance, please contact George W. Bodenger at 610-212-5031 or gwb@bodengerlaw.com.

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Provider Relief Fund Introduces Phase 3 General Distribution

Around the time of the start of the coronavirus (“COVID-19”) pandemic, Congress established the Provider Relief Fund (“PRF”) through the CARES Act in order to help providers who were financially damaged by COVID-19.  Through October 1, 2020, there were two (2) phases for general funding, and multiple targeted allocations. The Phase 1 General Distribution allocated $30 billion to eligible providers, and the Phase 2 General Distribution allocated $20 billion to eligible providers, to be distributed by the U.S. Department of Health and Human Services (“HHS”).  In addition to the general distributions, HHS also provided several targeted allocations, including to areas which were hit especially hard by COVID-19, including rural healthcare providers and skilled nursing facilities.

On October 1, 2020, HHS announced it would be allocating an additional $20 billion as its Phase 3 General Distribution. This Phase 3 General Distribution is intended for providers who were either excluded from the initial two (2) phases, or who were eligible under the first two (2) phases but require additional funding to cover ongoing financial losses incurred during the pandemic. The application period for this funding began on October 5, 2020 and will end on November 6, 2020.  HHS urges providers to apply as soon as practicable. The applications are accepted on a rolling basis, so HHS asks that providers not apply during the final days of the application period.

The following providers are eligible for Phase 3 General Distribution funding: (1) providers who have previously received, rejected or accepted a General Distribution PRF payment; (2) behavioral health providers, including those that have previously received funding; and (3) healthcare providers that began providing services from January 1, 2020 through March 31, 2020. All providers who receive payments must attest to receiving the payment and accept the associated terms and conditions.

HHS will be using the following criteria in making payment determinations: (1) whether the provider has previously received a PRF payment equal to two percent (2.0%) of patient services revenue; (2) any change in operating revenues from patient care services; (3) any change in operating expenses from patient care services; and (4) any payment already received through prior PRF distributions that represented less than two percent (2.0%) of patient services revenue.

Behavioral health providers are a particular focus of this Phase 3 General Distribution.  Although some were eligible for earlier general distributions, HHS has made it a point to include all behavioral health providers as eligible in this Phase 3 General Distribution. As the COVID-19 pandemic has progressed, the prevalence of symptoms of anxiety in the U.S. has increased from 8.1% in 2019 to 25.5% in 2020, and the prevalence of symptoms of depressive disorder grew from 6.5% in 2019 to 24.3% in 2020.  As a result, many behavioral health providers had to adopt new telehealth technologies to provide patient care—which required a significant amount of funding.  This distribution is intended to assist with these increased costs and increased utilization of behavioral health services.

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If you or your healthcare organization has any questions pertaining to Provider Relief Fund reporting, audits, or healthcare compliance, please contact George W. Bodenger at 610-212-5031 or gwb@bodengerlaw.com.

Sign up to receive Bodenger Law Firm alerts on topics related to health care law.

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