“Have no fear of perfection – you’ll never reach it.” — Salvador Dali
Somewhere in Rural America
Settled in 1845, the city of Sumter rests in the bucolic middle of South Carolina and boasts the only public park in the United States containing all eight known species of swan. Originally named Sumterville, this sleepy, rural Southern town has for nearly one hundred years been home to the Tuomey Healthcare System (“Tuomey”), an acute care hospital also providing a 36-bed nursery, 10 operating suites, Cancer Treatment Center, Tuomey Home Services and a subacute skilled care program. As of 2013, and affirmed in June 2015, Tuomey also faced a record-breaking $237,454,195 judgment for violating federal law.
The path leading up to this verdict was a crooked one. As it attempted to hedge projected losses of more than $15 million at the turn of the millennium over the next fifteen years, Tuomey knew the treacherous landscape into which it entered, and from the outset had no intention of navigating the federal physician self-referral prohibitions (commonly known as the “Stark Laws”) or the Federal False Claims Act (“FCA”) alone. To secure its end, Tuomey consulted with a former Inspector General for the Department of Health and Human Services, a prominent health care law firm, and its longtime counsel, Nexsen Pruit, who in turn sought assistance from a national consulting firm. While implementing new contracts with local physicians, Tuomey’s lone hold out, Michael Drakeford, M.D., filed the qui tam action in 2005 that resulted in the record-breaking outcome. … Read more →
This article, The Decay in Regulating California’s Corporate Practice of Medicine, first appeared in the Business Law News (Issue 2, 2015) of the State Bar of California on June 24, 2015.
“There is nothing worse than a sharp image of a fuzzy concept.”
In the 1990s, dentists in North Carolina began to whiten teeth. A decade later, nondentists across the state began to provide the same services, but at a lower price. In 2006, the North Carolina State Board of Dental Examiners (the “N.C. Dental Board”) responded by issuing more than 47 cease-and-desist letters to parties whitening teeth without degrees in dentistry, and in 2007 the N.C. Dental Board enlisted the aid of the North Carolina Board of Cosmetic Art Examiners to issue similar warnings, specifically to cosmetologists Their combined efforts were successful, and North Carolina nondentists soon stopped offering teeth whitening services.
The United States Federal Trade Commission (the “FTC”) took exception to the actions by the N.C. Dental Board, and in 2010 the FTC filed an administrative complaint, alleging the N.C. Dental Board acted deliberately for the benefit of North Carolina dentists and to the detriment of North Carolina nondentists. According to the FTC, these anticompetitive and unfair tactics violated the Federal Trade Commission Act, and in particular Section 5.
After multiple hearings before an administrative law judge, followed by the FTC’s internal oversight and a review by the Court of Appeals for the Fourth Circuit in February 2015, the United States Supreme Court agreed with the FTC’s 2010 allegations, namely that the anticompetitive conduct of the N.C. Dental Board violated antitrust law, and in particular the Sherman Act. The Supreme Court also held that sovereign immunity did not protect the actions of the N.C. Dental Board.
In its 6-3 decision referring to the roles of dentists and nondentists in North Carolina, the Supreme Court reached a far greater audience than those concerned with tooth color in the Tar Heel state. In point of fact, the Court’s ruling did much to undermine most if not all authority held by professional organizations in California, including in particular the Medical Board of California (“MBC”). This article explores how and why such change came about. … Read more →
“God hates violence. He has ordained that all men fairly possess their property, not seize it.”
Modern American health care affords every hospital patient the inalienable right to emergency treatment, although this same system has yet to create any parallel infrastructure beyond the clinical delivery of such care. While today’s emergency department physicians across the nation have access to cutting-edge, integrated technology-based tools designed to improve patient outcomes by combining advances in medicine with evidence-based clinical guidelines, the science of overseeing managed care patients often appears to be light years removed from the era in which it was born. As a result, American health care has become a system of fundamental brilliance that finds itself limited by gross inefficiencies, a combination that has led to a symbolic, if not actual, nationwide revolution.
At their core, the 2010 Patient Protection and Affordable Care Act and the amendments set forth in the 2010 Health Care and Education Reconciliation Act address the concept of patient access, one of health care’s greatest challenges in recent years. Notwithstanding the 961 regulatory pages known as the Affordable Care Act, or “Obamacare,” the relationship between the patient and the entity responsible for covering the cost of care has received surprisingly less attention in comparison.
In California, the recent decision in Children’s Hospital Central California v. Blue Cross of California has been seen by many as the culmination, and by some as the resolution, of conflict between providers and payers within the managed care system. This article focuses on events preceding the Children’s Hospital Central California decision, how the managed care system of private payers has evolved over the past 40 years, and the challenges faced by payers and providers simply trying to coexist. … Read more →
CMS Issues ACO Final Rule
Last week the Centers for Medicare & Medicaid Services (“CMS”) issued its proposed final rule for Accountable Care Organizations (“ACOs”) participating in the Medicare Shared Savings Program (“MSSP”), a program designed to promote accountability for a patient population, foster coordination of items and services under Medicare Parts A and B, and encourage investment in infrastructure and redesigned care processes for high quality and efficient health care service delivery. CMS issued its proposed rule on December 8, 2014, expanding the original rule from November 2011 (76 Federal Register 67802).
The final rule focuses on the following areas:
- Data-sharing requirements;
- Eligibility relating to ACO participants, providers and suppliers;
- Application updates;
- ACO legal structure and beneficiary requirements;
- Assignment methodology;
- Methodology for determining financial performance; and
- Program integrity and transparency concerns
The final rule also addresses some of the 275 comments CMS received in response to the December 2014 proposed rule. In response to concerns about the program’s integrity, CMS commented as follows:
“In 2011, Medicare made almost no payments to providers through alternative payment models, but today such payments represent approximately 20 percent of Medicare payments. Earlier this year, the Secretary announced the ambitious goal of tying 30% of Medicare fee for service payments to quality and value by 2016 and by 2018 making 50% of payments through alternative payment models, such as the [MSSP]. . . . With over 400 ACOs serving over 7 million beneficiaries, the [MSSP] plays an important role in meeting the Secretary’s recently articulated goal.”
The following e-Bulletin was published by the California State Bar, Business Law Section, on May 21, 2015.
CMS issued its proposed final regulations for accrediting organizations, revising the survey, certification and enforcement procedures relating to CMS oversight of entities such as the Joint Commission and the Healthcare Facilities Accreditation Program. These revisions implement provisions under the Medicare Improvements for Patients and Providers Act of 2008 (MIPPA), as well as clarify CMS’ oversight of these accrediting organizations.
In general, providers and suppliers of health care services must be substantially in compliance with certain statutory requirements before participating in the Medicare program. These obligations are known as “conditions of participation” (CoPs) for hospitals and most providers, “requirements” for skilled nursing facilities, and “conditions for coverage” (CfCs) for ambulatory surgical centers. Failure to meet the standards set forth by CMS may compromise a provider’s ability to participate in the Medicare Program.
Following the April 5, 2013 proposed regulations, the final regulations accomplish, in part, the following:
- Confirm CMS’ standards to the MIPPA revisions.
- Clarify and reorganize existing regulations, eliminate potentially confusing and unnecessary duplication.
- Strengthen CMS’s ability to oversee the 21 CMS-approved accrediting organizations.
The text of these final regulations can be found here.
“Secrets, silent, stony sit in the dark palaces of both our hearts: secrets weary of their tyranny: tyrants willing to be dethroned.” – James Joyce, Ulysses
Codified in American Law through Article Three of the United States Constitution and evolving through changing times by way of the Sixth and Fourteenth Amendments, the right to trial by jury remains a sacrosanct keystone of our nation’s legal system. Even so, there exists a degree of delicacy with which the judicial system evaluates the facts of any given case, and all involved must remain mindful that at times pertinent information may not be available for consideration. Significant violations of judicial filtering may result in the end of deliberations, known more abrasively as a “mistrial.”
The judicial system understands all too well that information cannot be honestly disregarded or ignored once heard, and does its best to account for the imperfections of the human mind. To enforce the Constitutional tenets of trust and truth upon which the faith of a jury must rest, today’s health care providers find themselves held to a unique standard of scrutiny when dealing with issues of privacy. … Read more →
2016 Hospital IPPS For Acute Care Hospitals
This e-bulletin from the Health Law Committee of the Business Law Section for the State Bar of California, published on April 20, 2015, summarizes recent proposed regulations by the Centers for Medicare & Medicaid Services (“CMS”) for the Fiscal Year (“FY”) 2016 Hospital Inpatient Prospective Payment Systems (“IPPS”) for Acute Care Hospitals.
Every spring CMS issues its proposed regulations to modify the inpatient prospective payment systems for acute care hospitals, as well as other facilities. Sometime in August CMS issues its final regulations in anticipation of the new fiscal year starting October 1. This year like all others, the 1,526 pages of regulatory guidance (reduced to approximately 800 triple-columned-pages in the Federal Register on April 30, 2015) provide hospitals with the most important revenue information for the year, especially as these institutions try to navigate through the current climate of health care reform.
The proposed regulations cover the gamut of Medicare reimbursement concerns, including the types of hospitals that must adhere to the 2016 changes as well as what’s new with the already established Hospital Value-Based Purchasing (“VBP”) Program, the Hospital-Acquired Condition (“HAC”) Program, the Hospital Readmissions Reduction Program (“HRRP”) and disproportionate share hospital payments. One new additions to CMS’ annual encyclopedia of regulatory modifications includes a recoupment adjustment to account for changes in Medicare-severity diagnosis-related group (“MS-DRG”) documentation and coding that do not reflect real changes in case-mixing, totaling $11 billion over the next four years.
As the Medicare program continues to swell in ranks and hospitals become more dependent on revenue therefrom, just about any of the 382,000 words in the proposed regulations may hold the key to unlocking the mystery behind Medicare in 2016. For more information, the proposed regulation can be found here.
The following Health Law E-Bulletin was published by the Business Law Section of the California State Bar on March 27, 2015.
The following summarizes recent instructions from the Centers for Medicare & Medicaid Services (“CMS”) for disclosures of noncompliance arising solely from a violation of 42 C.F.R. § 411.362(b)(3)(ii)(C) (physician-owned hospitals: website and advertising disclosures).
As part of the Affordable Care Act, Section 6001, physician-owned hospitals and rural providers must disclose on any public website for the hospital, and in any public advertising, that the hospital is owned or has physician investors. See 42 C.F.R. § 362(b)(3)(ii)(C). CMS has determined that for providers to comply with the requirements in section IV.B of the CMS Voluntary Self-Referral Disclosure Protocol (OMB Control No.: 0938-1106), physician-owned hospitals disclosing non-compliance with this very specific part of the regulation need only provide the following information:
- Name and address of hospital
- Hospital’s CMS Certification Number(s) (CCN), national provider identification number(s) (NPI), and tax identification number(s) (TIN)
- Hospital’s contact person/representative for the disclosure
- Names and NPI numbers of all physicians who were owners/investors during the period(s) of noncompliance identified below.
- Period(s) of noncompliance: For the period beginning on September 23, 2011, identify the months during which the hospital had at least one noncompliance. The hospital can provide a date range to satisfy this requirement.
- Provide the requested certifications
The complete instructions appear online here. Other disclosures, including those that include website and advertising concerns, must follow the Voluntary Self-Referral Disclosure Protocol.
The following E-Bulletin discussing a recent OIG Report on Medicare and CAHs was published on March 18, 2015, by the State Bar of California, Business Law Section’s Health Law Committee.
The following summarizes a recent report by the Office of Inspector General (OIG) that found Medicare could have saved billions over a 6-year period at Critical Access Hospitals if swing-bed services were reimbursed using the skilled nursing facility prospective payment system rate.
To ensure that beneficiaries in rural areas have access to a range of hospital services, Congress established the Rural Flexibility Program, which created Critical Access Hospitals (CAHs). CAHs have broad latitude in the types of inpatient and outpatient services they provide, including “swing-bed” services, which are the equivalent of services performed at a skilled nursing facility (SNF). Medicare reimburses CAHs at 101 percent of their reasonable costs for providing services to beneficiaries rather than at rates set by Medicare’s prospective payment system (PPS) or Medicare’s fee schedules.
For a hospital to be designated as a CAH, it must meet certain Conditions of Participation (CoPs). Some of these CoP requirements include: (1) being located in a rural area; (2) either being at a certain distance from other hospitals or being grandfathered as a State-designated necessary provider; (3) having 25 or fewer beds used for inpatient care or swing-bed services; and (4) having an annual average length of stay for a patient that does not exceed 96 hours. … Read more →