Health News Update

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We have updated and consolidated our Health NetNews emails into one of the most comprehensive sources of professional health care information and solutions. Covering important monthly developments in the areas of Health Care Compliance, Medicare and Medicaid Reimbursement, Coding, Health Reform, and Food and Drug Law, we hope this resource provides useful content and features.

On the Front Lines
STRATEGIC PERSPECTIVES: HHS lets states open doors on Medicaid waivers

By Bryant Storm, J.D.

There is a Medicaid frontier, where states and federal administrators explore the scope and structure of programs, where decisions are made about things like eligibility, the permissibility of work requirements, premium payments, and delivery system changes. That frontier is the Section 1115 Medicaid waiver and its importance in shaping Medicaid has perhaps never been greater. Under the current administration, waivers are being used to give novel structural authority to the states and several states are jumping at the opportunity. This Strategic Perspective is intended to provide a snapshot of the current Medicaid waiver landscape (pending and approved waivers) and an analysis of the future and impact of those waivers.

Overview of Waivers.

HHS grants waivers under Section 1115 of the Social Security Act (SSA) (42 U.S.C. §1315) to allow states to test new approaches to Medicaid administration that differ from current federal requirements. Waivers are granted when they are determined by the HHS Secretary to propose an initiative that is designed to promote the objectives of the Medicaid program." An implied requirement of the Section 1115 waiver is that it remain budget neutral for the federal government. Additionally, while the Secretary has significant authority to alter state programs through waivers, there are some components that the Secretary cannot waive—federal matching and constitutional rights (e.g., a fair hearing) are among those unassailable provisions.

The Patient Protection and Affordable Care Act (ACA) (P.L. 111-148) established additional transparency, public comment, and evaluation rules for waivers. A list of state waivers—approved, denied, and pending—can be accessed on the CMS website.

Section 1115 of the SSA limits approval of Medicaid waivers to circumstances in which a state seeks to create an "experimental, pilot, or demonstration project . . . likely to assist in promoting the objectives of the program." The "core objective of the Medicaid program," as defined by CMS, is "to serve the health and wellness needs of our nation's vulnerable and low-income individuals and families." According to CMS guidance, to achieve the core objective, waivers should:

  1. Improve access to high-quality, person-centered services that produce positive health outcomes for individuals;
  2. Promote efficiencies that ensure Medicaid's sustainability for beneficiaries over the long term;
  3. Support coordinated strategies to address certain health determinants that promote upward mobility, greater independence, and improved quality of life among individuals;
  4. Strengthen beneficiary engagement in their personal healthcare plan, including incentive structures that promote responsible decision-making;
  5. Enhance alignment between Medicaid policies and commercial health insurance products to facilitate smoother beneficiary transition; and
  6. Advance innovative delivery system and payment models to strengthen provider network capacity and drive greater value for Medicaid.

Broadening Waiver Constraints

Under the Trump Administration, states now have the ability to include previously unacceptable terms such as higher premiums for certain Medicaid beneficiaries, work requirements for others, and incentives for providers to submit performance data.

Extension of waiver period. CMS usually grants waivers for a five-year period, and may extend a waiver for an additional three years. However, on November 6, 2017, CMS announced that it will consider approving 10-year waiver extension requests for "routine, successful, non-complex" demonstrations. CMS made good on that announcement, on December 28, 2017, by granting Mississippi a 10-year waiver for a family planning services demonstration. CMS noted in its approval that it would rely on a streamlined approach for annual monitoring and reporting of the state's demonstration.

Work requirements. The Trump Administration's intentions to broaden the utilization of Medicaid waivers goes beyond duration. The most notable (and contentious) example of this is states' inclusion of work requirements in waiver applications. The Trump Administration first signaled, via a March 14, 2017, letter, its willingness to approve work requirement waivers under Section 1115. Then, on January 11, 2018, the Trump Administration issued a letter to help states "test community engagement for able-bodied adults." The letter provided guidance to Medicaid directors on the types of considerations that should be included in waiver applications. States should clearly identify which eligibility groups would be subject to work or community engagement requirements. The letter specifically noted that states should make reasonable modifications available for individuals who are nondisabled for Medicaid purposes but who may have a disability under other provisions of state or federal law, and work requirements should be restricted to nonelderly, nonpregnant adult Medicaid beneficiaries who are eligible for Medicaid on a basis other than disability. CMS recommends that a wide range of activities satisfy states' work requirements, such as career planning, educational programs, job training, caregiving, and volunteer or tribal employment (see Trump's CMS endorses Medicaid work requirements, January 11, 2018).

As of January 2018, eight states—Arkansas, Arizona, Indiana, Kansas, Maine, New Hampshire, Utah, and Wisconsin—have pending waiver requests which, if approved, would require work as a condition of Medicaid eligibility for nondisabled, working-age adults in expansion or traditional Medicaid populations. Although the specifics differ among states, generally, the Medicaid employment waivers would require Medicaid beneficiaries to verify their participation a certain number of hours per week, in certain job related activities, including employment, job searching, or job training programs to receive health coverage.

On January 12, CMS approved Kentucky's Medicaid waiver, the first approval of a Medicaid waiver containing work requirements.

Delivery system reforms. There are four states with pending waivers which, if approved, would implement Medicaid delivery system reforms: Kansas, New Mexico, North Carolina, and Virginia. Sixteen states have waivers that impact their delivery systems—this means these states are using waiver authority to authorize spending of federal dollars on delivery systems that otherwise would not be available under federal law. A common group of delivery system reforms (used by 10 of these 16 states) are known as Delivery System Reform Incentive Payment (DSRIP) initiatives. DSRIP initiatives, which arose under the Obama Administration, tie providers' Medicaid reimbursement to performance metrics. Providers are subject, under DSRIP initiatives, to reporting and data collection efforts focused on improving clinical outcomes. Other delivery system reforms include efforts focused on care coordination and uncompensated care pools.

Fifteen states are using Medicaid waivers to impact the way behavioral health and substance abuse services are provided through Medicaid. These states have used waivers to expand Medicaid eligibility for specific populations or provide payment for services that would not otherwise be covered by Medicaid.

Alternative methods of Medicaid expansion. Seven states—Arizona, Arkansas, Iowa, Indiana, Michigan, Montana, and New Hampshire—have approved waivers to effectuate Medicaid expansion in ways that differ from expansion directly under the ACA (see Amendment of Healthy Indiana Plan implements Medicaid expansion, February 11, 2015) Some commonalities between these states include the use of premium assistance models, higher premiums than those otherwise authorized by federal law, prohibitions on non-emergency medical transportation, and healthy behavior incentives to reduce cost sharing. Indiana and Montana's expansion waivers include controversial provisions barring expansion adults from re-enrolling in coverage (for a certain period, three or six months) if they are disenrolled for unpaid premiums. Three states—Kentucky, Maine, and Wisconsin—have pending waivers (outside of the expansion context) that seek to impose similar premium obligations on Medicaid beneficiaries, where failure to pay premiums can result in disenrollment from the state's Medicaid program.

Concerns about Access to Care under New Waivers

Prior HHS Secretaries have rejected Medicaid waivers on the grounds that "the demonstration would eliminate coverage for as many as 13,381 very low-income individuals for an approximate one-year period, which is not consistent with the general statutory objective to extend coverage to low-income populations" (Connecticut waiver disapproval, 2013) or that a demonstrations provisions "would undermine access to coverage and the affordability of care, and do not support the objectives of the Medicaid program" (Ohio waiver disapproval, 2016). HHS Secretaries historically have rejected work requirement waivers on the grounds that those requirements would not further program goals of promoting coverage and access.

Critics are concerned that many of the waivers currently pending before CMS are likely to result in the same sort of undermined access to coverage and affordable care that led to previous waiver denials. The Kaiser Family Foundation expressed concerns that the inclusion of non-health-related eligibility criteria like work requirements in Medicaid turns the program into a cash welfare program instead of a program focused on health care coverage. A Center on Budget and Policy Priorities (CBPP) study showed very little long-term employment gain, from work requirements and suggested that families in such programs would be more likely to end up in deep poverty (see Medicaid work requirements may be counterproductive, undo reform efforts, July 18, 2016). On the other side of the coin, proponents of the work requirement argue that the expansion of the Medicaid program to able-bodied adults provides a disincentive for those adults to work. Some states have advocated the inclusion of work requirements to ensure that beneficiaries have "skin in the game" (see Does Medicaid work with a work requirement?, March 29, 2017). The CMS letter on work requirements includes a long description of health benefits purportedly tied to work and community engagement, noting that "higher earnings are positively correlated with longer lifespan" and the "protective effect of employment on depression and general mental health."


Through the use of Section 1115 waivers, states and HHS have the power to dramatically reshape the frontier of the Medicaid program. From Medicaid eligibility expansions to eligibility limitations through things like work requirements, HHS has poised itself to grant novel waivers, a stance that promises to make 2018 a watershed in the program's 53-year history. While it remains to be seen whether some pending Medicaid wavier requests will succeed in furthering the goals of the program, there is little doubt that the changes will have an impact.

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Health fraud enforcement continues, full steam ahead

By Kathryn S. Beard, J.D.

A change in administration and increased enforcement related to opioids did not change enforcement of health care fraud, which remains a national priority. In a webinar provided by the Health Care Compliance Association (HCCA), Jacob Elberg, Chief of the Health Care & Government Fraud Unit for the Department of Justice (DOJ) in the District of New Jersey, and two attorneys from Polsinelli—shareholder Brian D. Bewley and principal Richard K. Rifenbark—reviewed key health care fraud and abuse matters from 2017. They then used those matters to extrapolate trends and predict aggressive administrative actions with a continued focus on long-term care, hospice and home health, kickbacks, and opioid and controlled substances prescriptions in 2018.

2017 trends. The DOJ recovered over $2 billion in health care fraud settlements for the eighth consecutive year in 2017, while the HHS Office of Inspector General (OIG) estimates up to $4.4 billion in recoveries. Elberg noted that there has been no decrease in enforcement under the Trump Administration, which continues to focus on national enforcement with an emphasis on kickback cases. The government uses data as a tool to find fraud, and settlements are increasingly including individual liability as outlined under the Yates Memo. Regular targets of enforcement action include sales and marketing activities, Medicare Advantage fraud, ambulance swapping, and health information technology fraud. "Worthless services," which differ from unnecessary services or services not provided in that they were provided but were done so poorly that they had no effect or did harm, is another area of focus, particularly in the skilled nursing facility context.

The trio discussed major settlements with electronic health record vendors, hospitals, pharmacy networks, and physician staffing companies totaling more than $450 million, often including Corporate Integrity Agreements. They also shed light on major examples of individual liability, though they noted that it is unclear whether that trend will continue in light of statements from the DOJ that the Yates Memo is "under review." Courts spent much of 2017 interpreting a 2016 decision from the Supreme Court, Universal Health Services, Inc. v. U.S. ex rel. Escobar, with limited consistency. Lastly, the three men discussed a number of other trends in guidance, updated agency documents, exclusion authority, and other topics.

2018 predictions. Based on the trends they identified from 2017, Elberg, Bewley, and Rifenbark shared their enforcement predictions for 2018. They expect that aggressive administrative actions to terminate suspend, or exclude providers and suppliers will continue, and the DOJ and OIG will continue to focus on kickbacks, financial relationships, and long-term care, hospice, and home health. Courts will likely continue to interpret Escobar, but these three attorneys expect "no consistency or clarity" in the matter. Although enforcement actions targeting opioids are increasing, Elberg assured listeners that there will be no corresponding decrease in other enforcement activities. Another prediction was related to more compliance issues associated with off-campus provider-based departments.

$350M judgment reversed, failure to maintain patient comprehensive care plans insufficient proof

By Wolters Kluwer Editorial Staff

A relator's evidence at trial about a multi-facility nursing home operator's failure to maintain comprehensive care plans as required by Medicaid regulations, was not sufficient to establish the requisite materiality and scienter necessary for a False Claims Act (FCA) cause of action, a federal district court in Florida has ruled. The relator offered no meaningful and competent proof that the federal or the state government, if either or both had known of the disputed practices, would have regarded the disputed practices as material to each government's decision to pay the provider and, consequently, that each government would have refused to pay the providers.

Background. A relator in an FCA case alleged that the owners and operators of 53 specialized nursing facilities in Florida billed the state and federal governments for unnecessary, inadequate or incompetent service. She based her complaint on the failure of the providers to maintain a comprehensive care plan for patients as required by Medicaid regulations. The relator won judgments for almost $350 million based on the theory that upcoding of Resource Utilization Group (RUG) levels and failure to maintain care plans made the claims to Medicare and Medicaid false or fraudulent.

Deficient proofs. The court noted that both governments were aware of the providers' disputed practices, aware of the instant action, aware of the allegations, aware of the evidence, and aware of the judgments for the relator, yet neither government ceased to pay or even threatened to stop paying for the services provided to patients throughout Florida since long before the FCA action began in 2011.

Not only did the relator fail to prove that the governments regarded the disputed practices as material and would have refused to pay, but the relator failed to prove that the providers submitted claims for payment despite the providers' knowing that the governments would refuse to pay the claims if either or both governments had known about the disputed practices.

Elements of implied false certification. As established by the U.S. Supreme Court in Universal Health Services, Inc. v. Escobar, 136 S. Ct. 1989 (2016), the implied false certification theory under the FCA can only be a basis for liability if: (1) a claim for payment makes specific representations about the goods or services provided; (2) the defendant knowingly fails to disclose the defendant's noncompliance with a statutory, regulatory, or contractual requirement; and (3) the omission renders those representations misleading.

Liability for implied false certification does not depend on the government's labels of "condition of payment" or "condition of participation," but rather, to be actionable under the FCA, a misrepresentation about compliance must be material to the government's decision to pay.

No evidence practice regarded as material. The providers argued persuasively that the relator failed to offer evidence of materiality, and the evidence and the history of the FCA action established that the federal and state governments regarded the disputed practices with leniency, or tolerance, or indifference, or perhaps with resignation to the colossal difficulty of precise, pervasive, ponderous, and permanent record-keeping in the pertinent clinical environment. The evidence did not establish a single threat of nonpayment, a single complaint or demand, nor a single resort to an administrative remedy or other sanction for the same practices that resulted in the enormous verdict at issue.

Furthermore, the relator failed to offer competent evidence that the providers knew that the governments regarded the disputed practices as material, but that despite such guilty knowledge, the providers requested money from the governments. The court found that with no evidence that the governments regarded the disputed practices as material, establishing the providers' knowledge of materiality seemed at least impractical, if not impossible. As the providers correctly pointed out, the relator's evidence proved the contrary: Medicaid and Medicare consistently paid "in the mine run of cases" despite Medicare's routine audits and Medicaid's knowledge of billing and documentation deficiencies.

Based on the foregoing, the court found that the relator failed to meet the rigorous and demanding materiality requirement under Escobar, and that her claims regarding lack of comprehensive care plans were fatally flawed. The providers' motion for judgment as a matter of law was granted, and the judgments were vacated. U.S. ex rel. Ruckh v. Salus Rehabilitation, No. 8:10-cv-01303-SDM-TBM, January 11, 2018.

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Average Wholesale Price' has plain meaning, not a term of the trade

By Wolters Kluwer Editorial Staff

Watson Laboratories, Inc. (Watson), a prescription drug manufacturer, inflated their reported average wholesale prices, which caused the Mississippi Division of Medicaid (DOM) to reimburse pharmacies at inflated rates, the Supreme Court of the State of Mississippi has ruled. Contrary to Watson's contentions, the term "Average Wholesale Price" was not a term of the trade having a different meaning than its plain meaning, and by publishing false and highly inflated average wholesale prices to a third-party publisher, the manufacturer violated the Mississippi Consumer Protection Act.

Background. For the DOM to reimburse pharmacies, CMS requires the state to have an approved State Plan that defines how services will be reimbursed. Under the Mississippi plan, once a pharmacist dispenses a drug to a Medicaid patient, the claim is reimbursed by the DOM based on the lowest rate produced by any one of three possible reimbursement formulas. One of those formulas is the "Estimated Acquisition Cost plus a reasonable dispensing fee" and is the formula at issue. The DOM defined the estimated acquisition cost as the best estimate of the price of a drug generally and currently paid by pharmacies and was quantified in terms of a certain percentage less than the average wholesale price (AWP).

The DOM subscribed to First DataBank and utilized the reported AWP as submitted by Watson in determining the estimated acquisition costs for drug reimbursements. The AWP which Watson submitted to First DataBank, however, was an inflated figure and not the actual AWP. The Chancery Court awarded the state a judgment totaling over $30 million, and Watson appealed.

Merely a "suggested price." At trial, Watson introduced a voluminous amount of evidence in support of its position that in the pharmaceutical industry, it has been understood for years that the term "AWP" does not mean what it says, and is in fact a term of the trade known and acknowledged by all participants in the pharmaceutical industry to mean a "suggested wholesale price" or "sticker price." Watson acknowledged that its published AWPs reflected a price that was higher than the average of wholesale prices paid by a retailer for Watson's pharmaceuticals. Furthermore, the trial court had determined that both Watson and the DOM understood that Watson's AWPs as published in First DataBank and relied upon by the DOM, were not true averages of wholesale prices. However, the court found that just because some employees of the DOM and individuals associated with the pharmaceutical industry recognized that published AWPs were inflated did not mean that the court was required to conclude that AWP was merely a term of art in the pharmaceutical industry that carried with it a particular definition.

Unfair and deceptive trade practice. Watson argued—and the court agreed—that Watson had no legal obligation to publish its AWPs. However, once Watson decided to publish its AWPs, it had an obligation to publish true and accurate AWPs, knowing that they would be relied upon by the DOM. The court further found that Watson's conduct in causing to be published AWPs that had no predictable relationship to what customers paid for its drugs while aware that the DOM relied on that information in determining the estimated acquisition cost, was an unfair and deceptive trade or practice within the meaning of Mississippi's Consumer Protection Act. Because Watson published inflated AWPs 241 times between 1990 and 2005, the court ordered Watson to pay $1,000 per publication for a total of $5,241,000. In addition, the court awarded compensatory damages of over $7 million for Watson's having engaged in common law fraud, and over $17 million in punitive damages. For the foregoing reasons, the state supreme court affirmed the award of judgment to the State of Mississippi. Watson Laboratories, Inc. v. State of Mississippi, No. 2014-CA-01213-SCT, January 11, 2018

Bad debt reimbursement allowable in states where a provider could not enroll as a Medicaid provider

By Wolters Kluwer Editorial Staff

The denial of a Community Mental Health Center's (CMHC) bad debt reimbursement for dual enrolled individuals was improper when the provider was prohibited from enrolling in some states' Medicaid programs, the Provider Reimbursement Review Board (PRRB) determined. Because the provider was unable to enroll in the states Medicaid program, the provider was entitled to bad debt reimbursement under an exception to CMS's bad debt policy. The PRRB also found that the dual eligible bad debt adjustments were allowed in states that retroactively enrolled CMHC providers when the provider did not retroactively submit claims, and other states where the provider could have but did not enroll in the Medicaid program.

Background: Progressive Health Centers, Inc., a CMHC, claimed bad debts on its Medicare cost report for the 2006 fiscal year for dual enrolled beneficiaries who were also eligible under various state Medicaid programs. The Medicare contractor disallowed the bad debts claiming the provider failed to comply with CMS's "must bill" policy. The "must bill" policy requires that prior to reimbursement of a bad debt claim that involves a dual enrolled beneficiary, the provider must bill the applicable state Medicaid program and obtain a remittance advice (RA) denying payment. A provider generally must enroll in Medicaid programs to receive Medicaid reimbursement; however, some states do not allow enrollment of certain types of providers. The CMCH provider was unable to enroll in in Alabama, Florida, Kentucky, Mississippi, Missouri, North Carolina, and Illinois for 2006 and was unable to enroll in Louisiana until after July 1, 2008. The provider filed a timely appeal and a hearing was held.

Bad debt reimbursement: The PRRB found that an exception to the "must bill" policy applied for claims in states in which the provider could not enroll in the state program and was consequently unable to bill the states' Medicaid programs. The PRRB agreed with the CMHC's allegations that it met the requirements to establish the bad debts were uncollectable and it was impossible to comply with the must bill policy in certain states because it was unable to enroll as Medicaid provider in each of these states. Thus, the bad debts on the CMHC's Medicare cost report for the 2006 fiscal year for dual enrolled beneficiaries were allowable for Medicare reimbursements.

The PRRB also found that the disallowance of the provider's bad debts was proper in states where it was not barred from enrolling in the Medicaid program but did not enroll. Furthermore, there was sufficient evidence to show that the state of Louisiana retroactively allowed CMHC providers to enroll as Medicaid providers effective prior to 2006, but there was no evidence to support the provider's claim that it retroactively submitted claims to Louisiana. Progressive Health Centers, Inc. v. Novitas Solutions, Inc., PRRB hearing, Decision No. 2018-D10, Case No. 09-0233, December 28, 2017

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AMA Coding Guidance: November 2017 CPT® Assistant

Edited by Wolters Kluwer Editorial Staff

Psychiatric Collaborative Care Management Services

A new subsection and three new codes have been created in the Evaluation and Management Services/Care Management Services subsection of the Current Procedural Terminology (CPT®) 2018 code set to report psychiatric collaborative care management services. Because psychiatric problems are recognized as common and disabling health conditions that could benefit from collaborative care management services, the Centers for Medicare & Medicaid Services (CMS) and the American Psychiatric Association (APA) worked together to develop coding structures that could facilitate the appropriate valuation of these psychiatric collaborative care management services for different patient populations. As a result, three CPT® codes (99492, 99493, 99494) have been developed for the general population, and three Healthcare Common Procedural Coding System (HCPCS) codes (G0502, G0503, G0504) have been created specifically for the Medicare population to report the monthly services furnished using the psychiatric collaborative care model (CoCM). The CMS psychiatric CoCM is defined as evidence-based psychiatric services that ensure patients seen in primary care settings, who are diagnosed with a mental health or substance use disorder have access to psychiatric services through their primary care provider, including access to nonface-to-face psychiatric consultation and collaborative psychiatric care management.

The services represented by the G-codes are almost identical to the services reported by the CPT® codes, however, they have been created specifically for Medicare payment purposes. The goal of CoCM is to enhance routine primary care by adding the components of care management support for patients receiving behavioral health treatment, and regular psychiatric inter-specialty consultation to the primary care team, particularly for patients whose conditions may not be improving.

Skin and Muscle Flap Procedures of the Midface and Neck: An Update

This article addresses several important changes that have been made to the Flaps (Skin and/or Deep Tissues) subsection of the Integumentary System section of the CPT® 2018 code set. In this subsection, one code has been deleted (15732) and two new codes have been created (15730, 15733) to distinguish skin and/or muscle flap procedures of the midface and neck, respectively.

Based on survey results and utilization data reviewed by the American Medical Association/Specialty Society Relative Value Services Update Committee (RUC), it became clear that improving the specificity of the type of flap performed was necessary to accurately report these procedures.

Cryoablation of Pulmonary Tumors

In the CPT® 2018 code set, Category III code 0340T, which described cryoablation therapy of pulmonary tumors including imaging guidance, has been deleted and replaced with new Category I code 32994. As a result of this change, code 32998 has been revised and a new instructional parenthetical note has been added following code 32994. This article provides a brief description of this change to the Surgery/Respiratory System subsection in the CPT® code set.

Frequently Asked Questions

Surgery: Musculoskeletal System

Question: A podiatrist performed a right second and third metatarsophalangeal joint arthroplasty with insertion of a hinged silicone implant in each toe. How is this reported?

Answer: Currently, there is no specific CPT® code to report this procedure. Therefore, an implant of a lesser metatarsophalangeal joint (MTPJ) should be reported with code 28899, Unlisted procedure, foot or toes. When reporting an unlisted code to describe a procedure or service, it will be necessary to submit supporting documentation (eg, procedure report) along with the claim to provide an adequate description of the nature, extent, and need for the procedure; and the time, effort, and equipment necessary to provide the service. It would not be appropriate to report code 28291, Hallux rigidus correction with cheilectomy, debridement and capsular release of the first metatarsophalangeal joint; with implant, because this code is specific for the first MTPJ.

Surgery: Male Genital System

Question: What code should be reported for a right hydrocelectomy?

Answer: Code 55040, Excision of hydrocele; unilateral, should be reported for a right hydrocelectomy.

Surgery: Digestive System

Question: How should the reporting of these CPT® codes 41010, 41115, and 41520 be distinguished?

Answer: A simple incision, cut, or lysis of the lingual frenum (eg, a "snip") should be reported with code 41010, Incision of lingual frenum (frenotomy). Excising the frenum (which is often thickened and foreshortened) with or without simple repair or closure should be reported with code 41115, Excision of lingual frenum (frenectomy). Excising the frenum with the equivalent of an intermediate or complex closure (eg, with a small flap or a z-plasty that requires tissue rearrangement and likely includes more postoperative care) should be reported with code 41520, Frenoplasty (surgical revision of frenum, eg, with Z-plasty).

Question: A patient with Barrett's dysplasia was referred for an esophageal endoscopy. Which CPT code should be reported when the endoscopic mucosal resection is performed with a volumetric laser endomicroscopy device to provide two-dimensional, cross-sectional, real-time depth visualization to guide where the resection should be performed?

Answer: The procedure described is an optical endomicroscopy. Therefore, codes 43211, Esophagoscopy, flexible, transoral; with endoscopic mucosal resection, and 43206, Esophagoscopy, flexible, transoral; with optical endomicroscopy, should be reported with modifier 59, Distinct Procedural Service, appended.

Surgery: Nervous System

Question: How should a sural nerve neurolysis performed at the level of the ankle be reported?

Answer: For CPT® coding purposes, the ankle is considered part of the leg. Therefore, code 64708, Neuroplasty, major peripheral nerve, arm or leg, open; other than specified, would be the appropriate code to report.

To view these articles via Coding Comply, search from the Search Code Sets tab in Coding Comply for any of the codes listed above, view the Related Documents by clicking on the paper icon next to the code, then select the article. To view these articles in The Coding Suite, go to the CPT® Assistant Archives folder and in the Search field within this folder and enter "November 2017."

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Proposed rulemaking protects conscience rights in health care

By Wolters Kluwer Editorial Staff

HHS' new proposed rule would grant its Office for Civil Rights (OCR) overall responsibility for ensuring that HHS, its components, HHS programs and activities, and those who participate in HHS programs or activities comply with Federal health care conscience and associated anti-discrimination laws. In an advance release, the agency noted that the proposed regulation is designed to more effectively and comprehensively enforce those laws (see Conscience, religious freedoms focus of new OCR division, January 18, 2018).

Existing statutes. OCR has enforcement authority over federal conscience protection statutes, such as the Church, Coats-Snowe, and Weldon Amendments; Section 1553 of the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148); and certain federal nondiscrimination laws that prohibit discrimination on the basis of religion in a variety of HHS programs.

HHS has concluded that there is a significant need to amend the 2011 Rule to ensure knowledge, compliance, and enforcement of the Federal health care conscience and associated anti-discrimination laws. According to the current proposed rulemaking, the 2011 Rule created confusion and narrowed OCR's enforcement authority.

In its reasoning for the new rulemaking, HHS describes an uptick in the allegations and evidence of discrimination. New state and local laws have also led to suits by conscientious objectors.

Expanded coverage. The proposed rule will expand that coverage to the following:

  • Conscience protections for objections to counseling and referral for certain services in Medicaid or Medicare Advantage (42 U.S.C. §§1395w-22(j)(3)(B) and 1396u-2(b)(3)(B));
  • Conscience protections related to the performance of advanced directives (42 U.S.C. §§1395cc(f), 1396a(w)(3), and 14406);
  • Conscience protections related to Global Health Programs to the extent administered by the Secretary (22 U.S.C. §7631(d); Consolidated Appropriations Act, 2017, P. L. 115-31, Div. J, Tit. VII, sec. 7018 (Helms Amendment));
  • Exemptions from compulsory health care or services generally (42 U.S.C. §§1396f & 5106i(a)(1)), and under specific programs for hearing screening (42 U.S.C. §280g-1(d)), occupational illness testing (29 U.S.C. 669(a)(5)); vaccination (42 U.S.C. §1396s(c)(2)(B)(ii)), and mental health treatment (42 U.S.C. §290bb-36(f)); and,
  • Protections for religious nonmedical health care (e.g., 42 U.S.C. §§1320a-1, 1320c-11, 1395i-5 and 1397j-1(b)).

Each of the federal laws is discussed in more detail in the proposed rulemaking.

According to the proposed rule, the OCR will have the authority to initiate compliance reviews, conduct investigations, supervise and coordinate compliance by the HHS and its components, and use enforcement tools which are to be comparable to those available under other civil rights laws to effectively address violations and resolve complaints.

Also under the proposed rule, certain funding recipients of HHS funds will be required to maintain records, cooperate with OCR's investigations, reviews, or enforcement actions; submit written assurances and certifications of compliance to HHS, and provide notice to individuals and entities about conscience and associated anti- discrimination rights (as applicable).

Association asks IRS to exclude excepted benefits from GHP definition for QSEHRAs, (Jan. 24, 2018)

By Carol Potaczek

Employers offering plans that provide only excepted benefits should be eligible to establish Qualified Small Employer Health Reimbursement Arrangements (QSEHRAs), according to the Employers Council on Flexible Compensation (ECFC). The ECFC recently sent a letter to the IRS that included comments on IRS Notice 2017-67, which contained guidance on QSEHRAs, and which advised that a group health plan includes a plan providing only excepted benefits described in Code Sec. 9831(c).

To establish a QSEHRA, an employer must not be an applicable large employer and must not offer a group health plan to any of its employees, as per Internal Revenue Code Sec. 9831(d)(3)(B). The ECFC believes that existing rules proposed in Notice 2017-67 that would make an employer ineligible to offer a QSEHRA by virtue of the fact that it provides certain types of health coverage are needlessly broad and potentially harmful to small employers.

Excepted benefits. The ECFC states that the IRS has the authority to interpret Code Sec. 9831(d)(3)(B) as stating that an employer offering a plan consisting only of excepted benefits is eligible to offer a QSEHRA. The ECFC theorizes that strict application of the broad definition of "group health plan" in Code Sec. 5000(b) would lead to perverse results that were not intended by Congress. According to the ECFC, the prohibition on employer-provided health coverage was meant to be a way to ensure that an employer did not offer major medical coverage to some employees via a group plan, while at the same time letting high-risk employees purchase their coverage on the individual market, which would drive up market costs. Coverage for excepted benefits presents no such risk, says the ECFC.

HSA and FSA carryover amounts. Counterproductive to policies behind consumer-directed health accounts, the ECFC contends, is an IRS provision in Notice 2017-67 that states employers would not be eligible to offer QSEHRAs if they provide current employees with access to amounts accumulated in a health reimbursement arrangement (HRAs) in a previous year or carryover amounts in flexible spending arrangements (FSAs). HRAs and FSAs are intended to make individuals better consumers of health care dollars, the ECFC points out, and the above provision in Notice 2017-67 would instead encourage employees to engage in unnecessary health care spending before a suspension occurs. A small employer who offers an FSA or HRA before a QSEHRA provision was available should not have employees lose access to accumulated health care funds, the ECFC recommends.

Proof of MEC. ECFC also states in its letter that it is concerned about the administrative burden of providing proof of minimum essential coverage (MEC) under Code Sec. 9831(d)(2)(B)(ii), the details of which are provided in Notice 2017-56. According the Notice, proof must consist of either (1) a document from a third party showing that an employee has coverage, plus attestation by that employee that the coverage is MEC, or (2) attestation by the employee that they have coverage that is MEC, along with the date coverage began and the name of the coverage provider. Furthermore, the employee must attest, at each request for reimbursement that the individual whose expense is being reimbursed continues to have coverage that is MEC. The ECFC is suggesting that attestation alone should be sufficient for QSEHRA reimbursements.

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Life Sciences
Justice served: Indictments stand for shipping drugs to Wonder Woman, other fictitious patients

By Wolters Kluwer Editorial Staff

An appellate panel reversed a lower court's dismissal of federal Food, Drug, and Cosmetic Act (FDC Act) charges against a group of pharmacists indicted for causing misbranded drugs to be introduced into interstate commerce with the intent to defraud or mislead. Pharmacists who fulfill their duties in confirming shipments of drugs, should have reason to notice that drugs being shipped to patients with the names of super heroes and cartoon characters may not be for legitimate prescriptions.

Background. The FDC Act bans the introduction or delivery for introduction into interstate commerce of any drug that is dispensed without a written prescription of a practitioner licensed by law to administer such a drug. Violation with the intent to defraud of mislead is punishable with up to three years in prison. Three pharmacists were indicted in connection to a scheme to cause misbranded drugs to be introduced into interstate commerce with the intent to defraud or mislead. The indictment identifies particular drug shipments to particular places on particular dates based on prescriptions for fake patients. The pharmacists were assigned to the pharmacy's packing area where they checked drug orders before shipment to customers.

Lower court decision. The pharmacists filed motions to dismiss arguing that they were not personally responsible for taking the steps they deemed necessary for them to have "dispensed" the drugs. A pharmacist dispenses a drug when she acts in her role as a licensed professional to fill (put together) a medical prescription for delivery to a patient. When a defendant seeks dismissal of an indictment, the questions is not whether enough evidence was presented to support the charge, but instead whether the allegations in the indictment are sufficient to apprise the defendant of the charged offenses. The district court dismissed the FDC Act counts against the pharmacists, finding that "a reasonable pharmacist" would not know from the indictment that by matching orders to packages prior to their being shipped, she was criminal liable for participating in the filling of a prescription that she had never approved (or is even alleged to have seen). The government appealed this ruling.

Decision. The appellate court found that the lower court judge took a simplistic view of the charges in the indictment by interpreting it to indicate that the pharmacists simply performed a clerical task of checking the address on a package's mailing label. However, viewed in context and with common sense, it is easy to assume that the pharmacists did the kind of checking that pharmacists regularly do when filling prescriptions, such as confirming that legitimate prescriptions triggered the drug shipments. At minimum the pharmacists should have noticed that the patient names were obviously fake when the prescriptions were for Wonder Woman, Flash Gordon, Tony Tiger, Chester Cheeto, and the like. The court held that a common-sense reading of the indictment's allegations suggests that each pharmacist performed assigned tasks that caused misbranded drugs to be introduced into interstate commerce and the pharmacists were not merely present but were culpably present. U.S. v. Stepanets, January 12, 2018

FDA seeks additional time for "intended use" rule on tobacco related products

By Wolters Kluwer Editorial Staff

The effective date for a Final rule when products made from tobacco are regulated as drugs, devices, or combination products would be delayed under an FDA proposal. The FDA seeks to delay the effective date of the "intended use" rule, currently set to take effect March 19, 2018. If adopted, the Proposed rule would push back the effective date for the new rule until further notice to allow time to address the substantive issues raised in comments. The FDA received comments from the drug and device industries, various associations, academia, and individuals addressing both legal concerns and the potential for negative public health implications.

Background. During the final days of the Obama administration, the FDA published a Final rule entitled "Clarification of When Products Made or Derived From Tobacco Are Regulated as Drugs, Devices, or Combination Products; Amendments to Regulations Regarding 'Intended Uses'" (see Product use intent key component in tobacco product regulation, January 9, 2017). The Final rule added a new regulation to describe the circumstances in which a product made or derived from tobacco that is intended for human consumption will be subject to regulation as a drug, device, or a combination product under the federal Food, Drug and Cosmetic Act (FDC Act). The rule also amended the FDA's existing regulations describing the types of evidence that may be considered in determining a medical product's intended uses.

The incoming Trump administration delayed until March 21, 2017, the effective date of the Final rule as part of the "Regulatory Freeze Pending Review." The FDA further delayed the effective date of the final rule until March 19, 2018, and reopened the docket to invite additional public comment on the rule.

Summary of comments. The FDA received 15 comments from the drug and device industries, various associations, academia, and individuals addressing both legal concerns and the potential for negative public health implications. One comment criticized the modified risk tobacco product provisions of the FDC Act. Another comment supported the new regulation and criticized the delay in its issuance. Thirteen of the 15 comments related to the FDA's existing regulations describing the types of evidence that may be considered in determining a medical product's intended use. Many of these comments opposed what they described as a broadening the types of evidence that could be considered in determining intended use, and specifically raised concerns with the "totality of the evidence" language included in the final rule. Several of these comments urged a narrowing of the types of evidence that could be considered in determining intended use. Some comments stated that only promotional or external claims should be included in the consideration of intended use, while other comments asserted that scientific exchange, truthful nonmisleading communications, or mere knowledge of unapproved use should be expressly excluded from consideration.

In addition to legal concerns, several comments asserted that the Final rule could have potentially negative public health implications. The potential public health concerns include impeding important communications between manufacturers and patients, healthcare professionals, and payors; reducing healthcare options for patients; and harming patient outcomes. Another comment asserted that narrowing the scope of evidence of intended use could jeopardize the FDA's ability to take enforcement actions against illicit substances, counterfeit products, and synthetic drugs, among other products.

The deadline to submit comments on the proposed rule for partial delay of the new "intended use" rule is February 5, 2018. Proposed Rule, 83 FR 2092, January 16, 2018

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