Health News Update

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In This Issue
Welcome to Health News Update

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
Senate Republicans release discussion draft of 'Better Care' health bill

By Sheila Lynch-Afryl, J.D., M.A.

Senate Republicans have released a discussion draft of their health care overhaul bill. The bill—the Better Care Reconciliation Act of 2017 (H.R. 1628)—would repeal the individual and employer mandates and end the small business tax credit in 2019. The exclusion of abortion services also figured prominently in the bill—for example, it prohibits federal Medicaid payments to states for providers that provide for abortions, other than an abortion resulting from rape or incest or when the woman is danger of death unless an abortion is performed.

Tax repeals. The legislation would eliminate the following:

  • the individual mandate;
  • the employer mandate;
  • the tax on employee health insurance premiums and health plan benefits;
  • the tax on over-the-counter medications;
  • the tax on health savings accounts;
  • limitations on contributions to flexible spending accounts;
  • the tax on prescription medications;
  • the medical device excise tax;
  • the health insurance tax;
  • elimination of the deduction for expenses allocable to the Medicare Part D subsidy;
  • the chronic care tax;
  • the Medicare tax increase;
  • the tanning tax; and
  • the net investment tax.

State stability. The legislation would appropriate a combined $50 billion from 2018 to 2021 to fund arrangements with insurers to address coverage and access disruption and respond to urgent health care needs in states. It also creates a long-term stabilization fund for states, which would provide financial assistance to help high-risk individuals enroll in health insurance and provide assistance to reduce out-of-pocket costs.

Premium tax credit. Under section 1401 of the ACA, the premium tax credit applies to taxpayers with incomes whose household income is between 100 and 400 percent of the federal poverty level. Section 102 of the bill would limit the applicability of the premium tax credit to those whose income is less than 350 percent of the federal poverty level.

Medicaid expansion. The ACA's Medicaid expansion would be phased out over four years from 2020 through 2023. In 2020, the federal medical assistance percentage will be 90 percent; 85 percent in 2021; 80 percent in 2022; and 75 percent in 2023.

The ACA's Medicaid expansion, beginning January 1, 2014, reimbursed states for providing Medicaid to individuals between the ages of 19 and 65 with incomes up to 133 percent who are not eligible for Medicaid under any other category and also are not eligible for or enrolled in Medicare. The bill would end eligibility for this category effective December 31, 2019, and beginning January 1, 2020, would include "expansion enrollees," defined as individuals (1) who are under age 65; (2) who are not pregnant; (3) who are not entitled to or enrolled in Medicare Parts A or B; (4) who are not described in other benefit categories; and (5) whose income does not exceed 133 percent of the poverty line.

Under new Soc. Sec. Act Sec. 1923A, a nonexpansion state may adjust payments to providers that furnish health services to individuals eligible for Medicaid or have no health insurance. The federal medical assistance percentage for these providers is 100 percent for fiscal years (FYs) 2018 through 2021 and 95 percent for FY 2022.

Medicaid costs. The bill would eliminate the requirement that an individual found eligible for Medicaid receives assistance in or after the third month in which he or she made the application. It also provides for optional coverage of qualified inpatient psychiatric hospital services for individuals between the ages of 22 and 64. The federal matching rate for such services would be 50 percent.

Medicaid optional work requirement. New Soc. Sec. Act sec. 1902(oo) would allow states to condition medical assistance to a nondisabled, nonelderly, nonpregnant individual upon his or her satisfaction of a work requirement. Some exceptions apply. The federal matching percentage for the administrative costs of administering this requirement would be increased by 5 percent.

Medicaid block grants. States would also have the option to conduct a Medicaid Flexibility program that provides targeted assistance to program enrollees. Such states would receive block grants instead of per capita support.

Medicaid quality incentives. For FYs 2023 to 2026, states that have lower than expected aggregate medical assistance expenditures and submit information on quality measures will have their federal matching percentages increased.

Waivers. If a state has a grandfathered managed care waiver, it may, through state plan amendment, continue to implement the managed care delivery system that is the subject of the waiver without submitting a new application, as long as the state does not modify the terms and conditions of the waiver.

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Whistleblower gets 'one last, best chance' in kickback case

By Wolters Kluwer Editorial Staff

Anti-kickback and self-referral allegations under the False Claims Act (31 U.S.C. §3729 et seq.) must contain specific and plausible allegations of false claims, a federal district court in Pennsylvania ruled in a qui tam lawsuit challenging a provider's physician compensation arrangements. The court held that the whistleblower failed to provide specific factual support for the kickback and self-referral allegations. Although the court granted the provider's motion to dismiss, the whistleblower was granted "one last, best chance" to plead legally cognizable claims.

Work relative value units. The whistleblower filed a qui tam action under the FCA, alleging that the provider's physician compensation system, based upon physicians' work relative value units (wRVUs), encouraged physicians to perform medically unnecessary or unnecessarily complex surgeries. Specifically, the whistleblower alleged that because more complex services obtain a higher wRVU and, therefore, a higher level of reimbursement, physicians were incentivized to artificially "drive up" their wRVUs and their personal remuneration with unnecessary services, resulting in false claims.

Pleading. The provider moved to dismiss, asserting that the claims were not plead with sufficient particularity and the FCA claims could not stand because the whistleblower disavowed the notion that false claims arose due to "medically unnecessary" services.

Insufficient allegations. The court agreed with the provider, noting that the complaint failed to provide specific factual evidence of kickback or illegal self-referrals that gave rise to false claims. The court also speculated that even if the whistleblower was allowed to engage in discovery, it would be difficult or impossible to reconcile the absence of medically unnecessary claims with the insistence that the compensation system induced unlawful referrals. The court explained that to demonstrate such an unlawful referral, the whistleblower would have to show that the unnecessary procedures failed the "medical necessity" standard.

Although the complaint was dismissed, the whistleblower was granted until July 10, 2017, to make "last, best efforts to state viable claims." U.S. ex rel. Bookwalter v. UPMC, No. 2:12-cv-00145-CB, June 21, 2017

Documents considered while issuing Fraud Alerts privileged; FCA defendant's need for discovery may require production

By Wolters Kluwer Editorial Staff

Documents considered by the government in issuing Special Fraud Alerts were subject to the deliberative processes privilege in a False Claims Act (FCA) (31 U.S.C. §3729) action, according to a federal district court in South Carolina. However, the court ordered the government to submit the documents to the court for an in camera review because it had to balance the government's privilege with the requesting party's need for discovery of documents possibly related to scienter. Moreover, a request for documents "issued by" the government could not reasonably be interpreted to include internal government communications.

The FCA violations. The federal government intervened in a suit against several parties alleging violations of the FCA arising from the marketing of laboratory tests for two medical labs between 2010 and 2014. The relator and United States alleged that the FCA was violated through multiple kickback schemes to induce physicians to refer blood samples to the labs for large panels of blood tests, many of which were medically unnecessary. The alleged violation of the Anti-Kickback Statute (42 U.S.C. §1320a-7b) resulted in $330 million in false claims to government programs. The matter under consideration by the court was a motion to compel the government to respond fully to a first set of Requests for Production (RFPs).

Discovery of internal government documents. The defendant's RFP sought documents "issued by" the government concluding that fee payments to physicians were in violation of federal statute or potentially in violation of federal statute. The government interpreted the term "issued by" to mean documents that were formally issued and asserted it had produced all such documents. After serving the RFP, however, the defendant clarified that she was seeking internal government communications. The court determined that the term "issued by" would not normally refer to communications in general among employees within an organization, accordingly, the request was denied without prejudice to a new discovery request.

The defendant also sought documents in which "any attorney... and/or Government agency... opined on the legality of the payment of P&H fees to physicians by any lab." The court found that this request sought privileged documents and the government had not waived the privilege. Accordingly, the motion to compel production of these documents was denied.

In addition, the defendant sought documents involving all communications and documents relating to the payment of "fraudulent claims," including internal government communications. The court noted that this demand was broader than the demand that sought privileged attorney-client communications and could be relevant to the issue of mitigation. The government contended that it had produced all documents responsive to this demand except for "documents reflecting legal discussions." The court ordered the government to review all documents that were responsive to this demand, produce all nonprivileged documents, and provide a privilege log detailing each document it withheld on the basis of privilege.

Deliberative process privilege. The defendant demanded documents considered by the government in issuing the Special Fraud Alerts and "documents, including all emails," relating to the issuance of the Special Fraud Alert. The government argued that these documents were not discoverable because they were privileged under the deliberative process privilege. The defendant responded that this privilege was not properly invoked and, even if it were, her need for the documents outweighed the need for confidentiality. The court opined that because the person asserting the privilege was the chief of the division responsible for producing the documents relating to the Special Fraud Alert, he was someone in a good position to assert the deliberative process privilege. However, the government's internal communications about the decision to issue the Special Fraud Alert were possibly relevant to the reasonableness of the accused party's actions, positions, or interpretations. Because the court had to balance the government's privilege with the defendant's need for the communications, the court ordered the government to submit the subject documents to the court for in camera review.

The defendant also sought all communications involving the defendant, including but not limited to emails sent to her or received from her, on which she was copied and/or that mentioned her. The court determined that these documents were clearly relevant and the government's assertion of the deliberative process privilege here was misplaced. Therefore, the court ordered production of the documents.

Finally, the defendant sought all documents relating to lab industry standards relating to the payment of fees. As these documents were relevant to scienter and the government failed to specify which privilege it was relying on to withhold production, the court granted the motion requiring the turnover of these documents. U.S. ex rel. Lutz v. Berkeley Heartlab, Inc., No. 9:14-cv-00230-RMG (consolidated with Nos. 9:11-cv-1593-RMG and 9:15-cv-2458-RMG, June 19, 2017

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Fifth Circuit affirms ruling validating overpayment methodology

By Wolters Kluwer Editorial Staff

In an appeal brought by a home health agency (HHA) against HHS, the Fifth Circuit Court of Appeals affirmed the ruling of the United States District Court for the Western District of Texas, which upheld a Medicare Appeals Council's finding that the company auditing the agency's records used a valid extrapolation methodology in determining an overpayment calculation of over $773,000 against the agency. The HHA's appeal challenged the integrity of the extrapolation methodology used by the auditing company and asserted due process violations based on the agency's alleged deprivation of a meaningful opportunity to dispute and contest the overpayment calculation due to the withholding of critical evidence. The Fifth Circuit found no merit in the home health agency's arguments.

Case history. A 2010 audit of 40 of the HHA's Medicare claims resulted in the denial of all but one claim, which amounted to an overpayment to the HHA in the amount of $773,967 (see Statistical analysis finding $773K overpayment conducted properly enough for court, January 25, 2016). The HHA appealed, but the Medicare administrative contractor confirmed the audit findings. The HHA sought reconsideration, but dissatisfied with the ruling upon reconsideration, requested a hearing before an administrative law judge (ALJ). The ALJ found that one of the 39 remaining Medicare claims was erroneously denied and that the overpayment methodology was invalid. The ALJ agreed with the HHA, finding that the statistical sampling methodology did not conform with the requirements of the Medicare Program Integrity Manual (Pub. 100-07) (PIM), in that the auditor failed to record the random numbers used in the sample, did not properly define sampling units, failed to demonstrate the independence of these units, and did not demonstrate that the average overpayment was normally distributed.

More appeals resulted in a Medicare Appeals Council finding disputing the ALJ's ruling that the extrapolation methodology was invalid. The Medicare Appeals Council cited CMS Ruling 86-1, which states that sampling for extrapolation purposes "only creates a presumption of validity as to the amount of an overpayment, which may be used as the basis for recoupment." Once an overpayment determination has been made, the burden shifts to the Medicare provider to "attack the statistical validity of the sample" or "challenge the correctness of the determination in specific cases identified by the sample." The Medicare Appeals Council determined that the sampling was conducted in accordance with the requirements of the PIM and, moreover, the HHA could not overcome the presumption of the validity of the sampling.

The HHA sought judicial review of the Medicare Appeals Council's decision and raised claims challenging the validity of the overpayment methodology and asserting due process violations. The district court granted summary judgment to HHS agreeing with the Medicare Appeals Council's finding, and affirming the Medicare Appeals Council's reasoning and final determination. The HHA then moved to amend or alter the judgment, presenting four complaints from different lawsuits, as "new evidence" to bolster its claims challenging the extrapolation process. The district court denied the motion because the complaints did not include adequate information pertaining to the parties' evidence, records, testimony, and statistical sampling, and whether they were exactly the same as those at issue in the present case. The HHA appealed the district court's ruling.

As requested by the HHA, the Fifth Circuit applied the standard of review pursuant to the Administrative Procedure Act, which requires the court to consider whether the Secretary's decision is not founded on substantial evidence or is "arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law." The HHA argued on appeal that substantial evidence does not support the Medicare Appeals Council's decision to approve the auditor's sampling and extrapolation methodology, and that the Medicare Appeals Council's decision was arbitrary and capricious. The HHA focused its arguments on the claims that random numbers should have been recorded, the sampling units were not independent, the Rule of Thumb prohibits extrapolation, the four lawsuit complaints highlighted in its post-judgment motion demonstrate arbitrary extrapolation, and its due process rights were violated. The appellate court found the HHA's arguments to be without merit.

Random numbers. The HHA did not argue that the failure to record the random numbers rendered the sampling invalid, and the appellate court found that the HHA ignored the PIM's stated goal for maintaining the random numbers, particularly as the auditor was able to replicate the sample of 40 claims using information available to the HHA. The Fifth Circuit held that the PIM makes clear that the auditor's failure to follow one or more of the requirements does not necessarily invalidate the statistical sampling or the projection of the overpayment. Instead, an appeal challenging the validity of the sampling methodology must be predicated on the actual statistical validity of the sample as drawn and conducted. The appellate court found that the HHA's argument was inconsistent with the PIM, and the Secretary did not arbitrarily reject the HHA's argument.

Sampling unit's independence. The HHA contended that the sampling was fatally dependent because the same Medicare beneficiary could have multiple claims or claim lines in the sample. The Fifth Circuit found that the PIM expressly permits a sample to include multiple claims or claim lines from the same beneficiary. It also found that the HHA's argument relied solely on the PIM, and there is no basis for its PIM argument. Therefore, HHS did not act arbitrarily and capriciously in rejecting the challenge to the independence of the sampling units.

Rule of thumb. Under the Rule of Thumb provision, a determination of whether home health services are reasonable and necessary must be based on an assessment of each beneficiary's individual care needs. The HHA argued that the use of extrapolation violated the Rule of Thumb, because extrapolation is not based on an assessment of each beneficiary's individual care needs. The Fifth Circuit agreed with the Medicare Appeals Council and the district court's finding that the HHA could point to no authority for such a sweeping proposition. It further noted that the use of extrapolation is appropriate when "there is sustained or high level of payment error," as in the case at hand. Thus, the appellate court found that Congress clearly envisioned extrapolation in overpayment determinations involving HHAs, and the Secretary's reliance on extrapolation was justified.

Similarity. The appellate court disputed the HHA's assertion that the four similar complaints were "newly discovered evidence" and by due diligence could not have been discovered ahead of the district court's decision. The appellate court found the assertion factually inconsistent with the filing dates of the four complaints. Further, the appellate court found that the complaints did not contain details of the methodologies and other evidence at issue in those cases. Accordingly, the appellate court held that the district court did not abuse its discretion in denying the HHA's motion to amend or alter the judgment.

Due Process. The Fifth Circuit also found that it was unclear whether the HHA requested detailed information earlier in the administrative process, and the HHA alleged in only conclusory terms that it was prejudiced by late disclosure. Thus, the district court properly rejected the claim. Maxmed Healthcare, Incorporated v. Price, No. 16-50398, June 22, 2017

HHS decision to offset hospitals' Medicare reimbursements by Medicaid payment amounts affirmed

By the Wolters Kluwer Editorial Staff

An HHS decision to offset the amount of Medicare reimbursement payments to several Kentucky hospitals by the amount of Medicaid disproportionate share hospital (DSH) payments the hospitals received "was not arbitrary, capricious, or manifestly contrary to the Medicare statute," the United States Court of Appels for the Sixth Circuit concluded. The appellate court thus affirmed a federal district court's judgment, which upheld HHS's decision to make the offset.

Medicare reimburses the hospitals for the reasonable and necessary costs of providing services to Medicare patients. Medicaid requires states to create a plan to provide additional payments to hospitals serving a disproportionate number of low-income patients, such as the hospitals that brought the lawsuit. Kentucky funds its share of these DSH payments through a 2.5 percent tax on gross revenues known as the Kentucky Provider Tax (KP-Tax) and payments from state university hospitals. The hospitals sought reimbursement for their entire KP-Tax payments for 2009 and 2010, claiming that those payments are reasonable costs for reimbursement under the Medicare Act. Though they had received full reimbursement in prior years, the Medicare administrative contractor denied full reimbursement for 2009 and 2010, instead offsetting the KP-Tax cost by the DSH payment amounts the hospitals received. The reasoning was that because they were receiving money out of the fund into which they had paid the KP-Tax, the DSH payments were a refund of some of the KP-Tax. Thus, the reimbursable Medicare cost "actually incurred" was the gross amount after the offset. After this decision was upheld by the Provider Reimbursement Review Board and affirmed by the CMS Administrator, as well as a federal district court, the hospitals appealed to the Sixth Circuit (see Kentucky hospitals lose appeal of tax reimbursement offset, February 27, 2015).

Refund. Because Congress gave HHS discretion to determine what are reasonable costs meriting reimbursement, the hospitals had to show that the HHS decision to make the offset was "arbitrary, capricious, or manifestly contrary to the statute," for a court to overturn it. The appellate court agreed with the district court that the hospitals failed to meet this burden. The Medicaid DSH payments to the hospitals constitute a refund of at least a portion of the KP-Tax costs that the hospitals incurred, the appellate court determined, citing that the DSH payments derived from the very fund into which the hospitals made the KP-Tax payments. Thus, the decision to make the offset is within HHS's discretion, according to the court.

The district court had relied on a decision by the Seventh Circuit, Abraham Lincoln Memorial Hospital v. Sebelius, in which that court affirmed HHS's decision that a tax paid by Illinois hospitals to the state of Illinois was a reasonable cost eligible for Medicare reimbursement, but should be offset by payments from the state Medicaid fund to the Illinois hospitals (see Hospitals may claim cost of only the net Medicaid tax on Medicare cost reports, October 17, 2012). While the hospitals in this case pointed to several factual distinctions between the Illinois payment scheme and Kentucky's, the appellate court concluded that those differences do not compel a different outcome.

Finally, the appellate court rejected the hospitals' argument that the applicable Final rule (75 FR 50363, August 16, 2010) does not mandate an offset of taxes associated with disbursements. The court noted that the Final rule makes clear that "in determining the net amount of taxes incurred by a provider, the tax reimbursed should be reduced by the amount received associated with the tax." The hospitals could not establish that the DHS payments, made from a fund consisting of the KP-Tax, is not "associated with" that tax, the court stated. Breckinridge Health, Inc. v. Price, No. 16-6269, June 14, 2017

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AMA Coding Guidance: April 2017 CPT® Assistant

By Edited by Wolters Kluwer Editorial Staff

Pathology and Laboratory: GSPs, MAAAs

This article continues the discussion about changes made in the Pathology and Laboratory section of the Current Procedural Terminology (CPT®) 2017 code set. The previous article, which was published in the March 2017 issue of CPT® Assistant, discussed changes to the Presumptive Drug Class Screening (PDCS) subsection. In this installment, the changes to the Genomic Sequencing Procedures and Other Molecular Multianalyte Assays, and Multianalyte Assays with Algorithmic Analyses subsections will be discussed.

Genomic Sequencing Procedures and Other Molecular Multianalyte Assays

Genomic sequencing procedures (GSPs) are DNA or RNA sequence analysis methods that simultaneously analyze multiple genes or genetic regions relevant to a particular clinical situation. GSP panels differ from Multianalyte Assays with Algorithmic Analyses (MAAAs) in that the GSP results are not combined using an algorithmic analysis to assign a risk score, probability index, or other value. The analyses included in this section, like those in the Tier 1 and Tier 2 Molecular Pathology sections of CPT, are method agnostic, hence, the reason that "Other Molecular Multianalyte Assays" is included in the title.

In addition to the establishment of new codes, existing guidelines in this subsection were revised to clarify that when a GSP assay includes gene(s) that are listed in more than one code descriptor, the code for the most specific test for the primary disorder sought should be reported, rather than reporting multiple codes for the same gene(s). Four new codes that specifically identify cardiac ion channelopathies, fetal chromosomal aneuploidy and microdeletion(s), and inherited cardiomyopathy were created. In the Molecular Pathology Tier 1 subsection, three codes for long QT syndrome testing (81280, 81281, 81282) were deleted, as the procedures would now be reported with the new GSP codes 81413 and 81414. New parentheticals also were added to aid the user in appropriate coding.
  • 81413 Cardiac ion channelopathies (eg, Brugada syndrome, long QT syndrome, short QT syndrome, catecholaminergic polymorphic ventricular tachycardia); genomic sequence analysis panel, must include sequencing of at least 10 genes, including ANK2, CASQ2, CAV3, KCNE1, KCNE2, KCNH2, KCNJ2, KCNQ1, RYR2, and SCN5A
  • 81414 Duplication/deletion gene analysis panel, must include analysis of at least 2 genes, including KCNH2 and KCNQ1
    • (For genomic sequencing panel testing for cardiomyopathies, use 81439)
    • (Do not report 81413, 81414 in conjunction with 81439 when performed on the same date of service)
  • 81422 Fetal chromosomal microdeletion(s) genomic sequence analysis (eg, DiGeorge syndrome, Cri-du-chat syndrome), circulating cell-free fetal DNA in maternal blood
    • (Do not report 81228, 81229, 88271 when performing genomic sequencing procedures or other molecular multianalyte assays for copy number analysis)
  • 81439 Inherited cardiomyopathy (eg, hypertrophic cardiomyopathy, dilated cardiomyopathy, arrhythmogenic right ventricular cardiomyopathy) genomic sequence analysis panel, must include sequencing of at least 5 genes, including DSG2, MYBPC3, MYH7, PKP2, and TTN
    • (Do not report 81439 in conjunction with 81413, 81414 when performed on the same date of service)
    • For genomic sequencing panel testing for cardiac ion channelopathies, see 81413, 81414)

Larynx Repair

Six new codes have been added to the Respiratory System/Larynx Repair subsection of the Current Procedural Terminology® (CPT®) 2017 code set to report open treatment of laryngeal stenosis, open vocal cord medialization, and open cricotracheal resection. As a result of these code additions, codes 31580, 31584, and 31587 were revised and codes 31582 and 31588 were deleted. This article provides an overview of these coding changes.

The code additions and revisions made in the Respiratory System/Larynx Repair subsection of the CPT® 2017 code set were initiated when previous code 31588, Laryngoplasty not otherwise specified (eg, for burns, reconstruction after partial laryngectomy), was identified on the AMA/Specialty Society Relative Value Scale Update Committee (RUC) screen for codes with a 90-day global period with more than six postoperative office visits. This resulted in a review of the family of codes for larynx repair (31580-31588) by the American Academy of Otolaryngology-Head and Neck Surgery (AAO-HNS), and the Triological Society to define laryngoplasty services for different patient populations. For example, it was noted that the work for the same procedure may be substantially different when performed on pediatric patients versus adults, or whether an indwelling stent (other than the endotracheal tube) was left in place at the end of the procedure. As a result, the larynx repair codes were significantly revised to differentiate services based on age (younger than 12 years, 12 years or older), to indicate whether tracheostomy is inherent to the procedure and provide coding guidance for graft harvest and removal of a stent or keel, when performed.

Coding Brief: Radiofrequency Ablation of Uterine Fibroid(s)

In the CPT® 2017 code set, Category III code 0336T was converted to a new Category I code 58674. In addition, an exclusionary parenthetical note was added to the CPT 2017 code set to restrict reporting of this procedure. This article provides an overview of this change to the Surgery/Female Genital System subsection of the CPT code set.


  • 58674 Laparoscopy, surgical, ablation of uterine fibroid(s) including intraoperative ultrasound guidance and monitoring, radiofrequency
    • (Do not report 58674 in conjunction with 49320, 58541-58554, 58570, 58571, 58572, 58573, 76998)

Code 58674 bundles laparoscopic ablation of uterine fibroids using radiofrequency with intraoperative ultrasound guidance and monitoring. An exclusionary parenthetical note was added to indicate that code 58674 may not be reported with the codes for diagnostic laparoscopy of the abdomen, peritoneum, and omentum (49320); surgical laparoscopic hysterectomy (58541-58554, 58570, 58571, 58572, 58573); and/or intraoperative ultrasound guidance (76998).

Clinical Example (58674)

A 40-year-old female has been treated for abnormal uterine bleeding for the past 6 months. An evaluation was done, and she has a normal coagulation panel and is mildly anemic. Pap smear and endometrial biopsy are both normal. A pelvic sonogram demonstrated multiple uterine fibroids, ranging in size from 1 cm to 7 cm in diameter that are intramural and submucosal in location. The patient does not want additional pregnancies but does not want a hysterectomy. She is interested in a laparoscopic uterine-sparing treatment for the uterine fibroids and abnormal uterine bleeding.

Frequently Asked Questions

Evaluation and Management: Case Management Services

Question: How many times may code 99489 be reported, given that the time frame specified within the code descriptor is "per calendar month?"

Answer: The time frame "per calendar month" refers to how often codes 99487 and 99489 may be reported and not how many units of service. The instructions in the Complex Chronic Care Management Services subsection direct physicians or qualified health care professionals (QHPs) to sum up clinical staff care management time providing complex chronic care management services to a patient in a calendar month and report these codes for the total time, as appropriate. For example, for the month of January, a physician/QHP directs 150 minutes of clinical staff time for complex chronic care management services. Code 99487 (for the initial 60 minutes of clinical staff time) and three units of add-on code 99489 (for the additional 90 minutes of clinical staff time) would be reported in that calendar month. These codes are only to be reported once per calendar month (typically at the end of the month) to capture the total time spent for complex chronic care management services.

Surgery: Integumentary System

Question: What are the appropriate codes to report for a bilateral subcutaneous brow lift with full facelift corset platysmaplasty?

Answer: It is appropriate to report code 15824, Rhytidectomy; forehead, for the brow lift procedure, and code 15825, Rhytidectomy; neck with platysmal tightening (platysmal flap, P-flap), for the facelift corset platysmaplasty procedure. For the bilateral brow lift, append modifier 50 to code 15824.

Question: A surgeon performs complex closures of the large dead space left following mastectomy, which double the operating time in most cases as these are meticulous and complex closures. Is the complex closure separately reportable?

Answer: No, the elimination of dead space is inherent to a mastectomy procedure. This may require a complex repair (eg, 13100-13102, 13131-13133), which is not separately reported with mastectomy. If this complex repair is substantially greater than typically required, it may be appropriate to append modifier 22, Increased Procedural Services, to the mastectomy code. Documentation must support the substantial additional work and the reason for the additional work (ie, increased intensity, time, technical difficulty of procedure, severity of patient's condition, physical and mental effort required). Lastly, if more than complex repair is performed, such as tissue transfer or rearrangement (eg, V-Y plasty [14301]), then it may be appropriate to separately report the additional work with the appropriate code.

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 "April 2017."

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Net premiums would increase, vary among states under the AHCA

By Sheila Lynch-Afryl, J.D., M.A.

Net premiums, after federal tax credits, would increase under the American Health Care Act of 2017 (AHCA) as compared to the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148), with premiums differing drastically among states and rating areas within states, according to an analysis by the Urban Institute.

Section 1401 of the ACA created premium assistance tax credits by adding Sec. 36B to the Internal Revenue Code. According to the Urban Institute, the AHCA would replace the ACA's premium tax credits tied to income and the price of available policies with an age-based tax credit available to all people up to a high income level. The Senate is working on its own version of the bill and age-based tax credits are expected to remain in some form.

The Urban Institute compared the net premiums a single, 50-year-old nonsmoker with an annual income of $31,000 (250 percent of the federal poverty level in 2020) would face under the ACA and the AHCA in 2020. It presented data for each of the 499 premium rating areas across the country to demonstrate that the implications of the AHCA vary across states and also within states.

For example, in Illinois rating area 2, which includes Lake and McHenry Counties, the net premium would increase from $2,586 under the ACA to $6,451 under the AHCA. In Minnesota, the net premium would increase from $2,586 under the ACA to between $7,183 and $16,611 under the AHCA.

The analysis supplements earlier analysis, Premium Tax Credits Tied to Age Versus Income and Available Premiums: Differences by Age, Income, and Geography, which argued that age-related tax credits as proposed by the AHCA provide insufficient help to people with low incomes, people in high-premium markets, and people as they near age 65.

Private discrimination claims by providers not allowed under ACA

By Wolters Kluwer Editorial Staff

An association of chiropractors and one of its members were barred from bringing a private action alleging discrimination by health plans under Section 2706 of the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148) when a federal district court in New Jersey held that the section does not provide a private remedy either by express language or by implication. The court held that the section, which prohibits discrimination by group health plans and health insurance issuers against health care providers, did not expressly create a private right of action nor did it create a remedy for non-compliance, and it differed from another section of the ACA which contained an implied private right of action through the incorporation of federal civil rights statutes

Health plan design. Horizon Healthcare Services, Inc. (Horizon) was approved in 2015 to sell a health insurance policy that contained two tiers of health care providers. This plan provided lower costs for members when they sought treatment from a provider under the first tier. In 2016, the Association of New Jersey Chiropractors, Inc. (the Association) and one of its members brought a suit against Horizon, arguing that the two tier plan violated the ACA. The association claimed that only 6.1 percent of in-network chiropractors were part of the first tier of the plan, and that this was much lower than other integrative medicine groups, which had as low as 66.46 percent and as high as 79.85 percent of their in-network providers as part of the first tier. They claimed that the decision making process used by Horizon lacked transparency, and brought the federal claim with other state claims in a New Jersey district court. Horizon subsequently filed a motion to dismiss, claiming that section 2706 of the ACA does not contain a private right of action.

Private Right of Action. A private right of action can be found either in express language in the statute or by implication. In order to determine if Congress intended the section to contain a private right of action, the court must look to see if the statute displays intent to create an action for a class of beneficiaries that includes the Association and a private remedy. After doing so, the court declared neither a private right for a class nor a private remedy existed. The court noted that the Association did not provide any case law or legislative history that would suggest that Congress intended a right or remedy by implication, and declared that although its circuit had not contemplated this issue, another district court in Virginia had stated that a private right of action does not exist in this section of the ACA. Although section 1557 of the ACA had been found to contain a private right of action, the court noted that this section differed because it had incorporated four civil rights statutes and had stated that those mechanisms apply to the section.

Supplemental Jurisdiction. Although a federal court can decide state law claims with federal law claims when the claims are of the same case and controversy, the court declined to extend supplemental jurisdiction over the state law claims brought by the Association. Noting that other courts generally decline to exercise supplemental jurisdiction when a federal claim is dismissed early in the case, the court held that the case brought by the Association was in its infancy and so it would decline to hear the state law claims, and it remanded the case to state court. Association of New Jersey Chiropractors v. Horizon Healthcare Services, Inc., No. 16-08400(FLW), June 13, 2017.

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Life Sciences
BPCIA's patent-dance rules clarified; notice allowed before FDA license received

By Kathryn S. Beard, J.D.

A manufacturer intending to market a biosimilar product-a drug that is similar to a biologic that has already been licensed by the FDA-does not have to wait until it obtains FDA approval for the biosimilar before providing notice to the biological product's manufacturer, according to the Supreme Court. The decision partially resolved a dispute between Amgen Inc. and Sandoz Inc. over their filgastim products, and corrected the Federal Circuit's reasoning in its lower decision-the requirement in the Biologics Price Competition and Innovation Act of 2009 (BPCIA) that applicants provide sponsor with application and manufacturing information is not enforceable with an injunction under federal law. Instead, the BPCIA's remedy is the authorization for the sponsor to bring an immediate declaratory-judgment action for artificial infringement. The Court remanded the case to the Federal Circuit to determine whether state law provides an opportunity for injunctive relief.

Justice Clarence Thomas authored the unanimous decision, and Justice Stephen Breyer wrote a short concurrence.

BPCIA. The dispute is rooted in the BPCIA, passed as sections 7001-7003 of the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148). The BPCIA sought to streamline the FDA approval process for biosimilars-similar but not identical to biologics and must be individually approved by the FDA, unlike generic drugs which are identical to the brand-name drug-while also providing a process to address patent issues arising from biosimilar creation. The manufacturer of a new biologic, known as the "sponsor," receives a 12-year exclusivity period to market the biologic without competition. The BPCIA created the abbreviated biologics license application (aBLA) process, which streamlines the FDA application process and provides exclusivity incentives to the first approved biosimilar.

Patent dance. In addition to the exclusive ability to market a biologic, however, sponsors may hold multiple patents covering the biologic, its therapeutic uses, and the processes used to manufacture it; these patents may constrain the ability for another applicant to market a biosimilar even after the 12-year exclusivity period has expired. The BPCIA created a way for the biosimilar manufacturer to exchange information with the sponsor, and created a requirement for the biosimilar manufacturer to provide notice to the biologic manufacturer no later than 180 days (that is, six months) before the date of first commercial marketing for the biosimilar.

As part of the aBLA process under the BPCIA, biosimilar applicants seeking to enter the market prior to expiration are required to notify the sponsor and provide a detailed analysis as to why each challenged patent is invalid or will not be infringed. If the sponsor files suit within 45 days of the biosimilar applicant's notice, the FDA is required to suspend review and approval of the abbreviated new drug application for 30 months unless shortened or lengthened by court order.

A biosimilar applicant can only discover the patents that protect the innovator biologic after providing the innovator manufacturer with access to the aBLA application and related manufacturing process. This is the first step in the "patent dance" (see Shall we dance? Biosimilars step toward new legal and regulatory future, March 31, 2016). The biosimilar applicant and sponsor then undertake a limited duration, complex exchange of patent information and collaborate to identify a list of patents that will be subject to an initial pre-launch litigation. Once the list has been compiled, the sponsor has 30 days to file suit concerning those patents to enjoin the biosimilar's launch or forfeit all monies but royalties in subsequent litigation on those patents.

A second round of pre-launch litigation can begin once the biosimilar applicant provides the sponsor with its notice of commercial marketing, which must be given at least 180 days prior to the intended launch of the biosimilar. In this second step, disclosed patents that were not on the initial pre-launch litigation list are eligible for possible injunctive relief, and applicants can file declaratory judgments during this time regarding patents that the sponsor elected not to pursue.

As conceived by the BPCIA, the parties will have the opportunity to litigate all relevant patents before a biosimilar is marketed. The law also includes provisions to encourage parties to comply with each step of the process. Sponsors are permitted to bring declaratory judgment actions for infringement if the biosimilar applicant fails to provide the necessary information (see 262(l)(9)(B) and (C)). Another provision, 271(e)(2)(C)(ii), makes it an artificial act of infringement to submit a biosimilar application with respect to any patent that could have been included on the applicant's lists of applicable patents.

Factual background. Amgen has marketed its biologic filgrastim under the brand name Neupogen® since 1991. In 2014, Sandoz filed an application for a biosimilar filgrastim product referenced to Neupogen, and the FDA accepted the application for review. Sandoz notified Amgen that it anticipated obtaining approval for its biosimilar and that it intended to launch the product immediately upon approval. Sandoz did not provide Amgen with product information required under the patent-dispute provisions of the BPCIA. Upon receiving FDA approval of its biosimilar, Sandoz notified Amgen that it intended to take its biosimilar to market, and Amgen filed suit. The parties disagreed upon whether the BPCIA requires a biosimilar manufacturer to exchange information with the sponsor, and on the timing of the required notice. Specifically, whether the notice could be given before receiving FDA approval, therefore allowing marketing of the biosimilar upon receipt of approval as long as 180 days had passed, or whether notice could only be provided after the FDA approved the biosimilar, requiring the biosimilar manufacturer to wait an additional 180 days to market, and thereby giving the sponsor an additional six months' exclusivity.

The Federal Circuit's decision held that the information exchange is optional despite statutory language saying "shall provide," and that Amgen was entitled to an additional 180-day marketing exclusivity period based on Sandoz's late notification (see Court interprets biosimilar 'enigma' in favor of abbreviated biologic license applicant, July 22, 2015; Biosimilar dispute headed to the Supreme Court, January 17, 2017). The consolidated action was somewhat rare for the Court; it consisted of a Sandoz petition appealing the Federal Circuit's decision on two questions presented, and a conditional cross-petition from Amgen presenting a third question.

Decision. The unanimous Court held that the remedy provided by the BPCIA—permitting a sponsor to bring an immediate declaratory-judgment action for artificial infringement as defined under the BPCIA—is effective, because Sandoz failed to disclose requisite information to Amgen, and was accordingly subject to an action for artificial infringement. In so holding, the Court determined that the Federal Circuit misinterpreted the statute, and clarified that Sec. 271 specifically states that submitting an application for FDA approval of a biosimilar for a patent that could have been identified on the list required by the patent dance is an act of artificial infringement, not an element of artificial infringement. Statutory language offset by commas and reading, "if the applicant for the application fails to provide the application and information required," according to the Court, "merely assists in identifying which patents will be the subject of the artificial infringement suit." Therefore, the submission of an application with the FDA represents an act of artificial infringement with respect to any patent that could have been included on the required list for the patent dance. The exclusive remedy is the sponsor's ability to bring an immediate declaratory-judgment action for artificial infringement. Therefore, injunctive relief is not available as a federal remedy. The Court remanded the case to the Federal Circuit to determine whether California's state unfair competition statute provides the injunctive remedy precluded by the BPCIA and if so, whether the BPCIA preempts state remedies.

The Court also determined that notice of commercial marketing can be provided before FDA approval is obtained-brand-name biologic manufacturers are not entitled to an additional six months' of exclusivity for their products. Thomas interpreted the statutory language to find that "licensed" merely means that on the date of the first commercial marketing, the biosimilar product must be licensed, not before the notice is provided. Therefore, notice of intent to market a biosimilar may be provided to the biologic's sponsor either before or after the biosimilar obtains FDA approval. Sandoz therefore "fully complied" with the statute when it gave its first notice to Amgen, and the Federal Circuit erred in issuing an injunction prohibiting Sandoz from marketing its biosimilar for 180 days after licensure.

Concurrence. In a one-paragraph concurrence, Breyer joined the opinion of the Court, but wrote separately to request FDA interpretation of the statute. He suggested that the Court's interpretation of the BPCIA, while "a reasonable interpretation," may need to be departed from or altered if the agency, once it obtains "greater experience administering this statute," finds that a "different interpretation would better serve the statute's objectives." The concurrence is not surprising; during oral arguments, Breyer repeatedly brought up agency rulemaking and suggested that FDA regulations would have made the case clearer (see SCOTUS, attempting to untangle biosimilar notice knot, suggests help from agency rulemaking, April 26, 2017).

Impact. Apotex, Inc., which had been in a similar dispute against Amgen for a pegfilgrastim biologic, failed in its suit when the Federal Circuit held that notice of intent to market must be given only after FDA approval is obtained (see Biosimilar applicant must give 180-day post-licensure notice to reference sponsor, July 6, 2016) participated in the suit as amicus curiae after the Court denied its petition for writ of certiorari (see SCOTUS denies cert in biosimilar licensing dispute, December 12, 2016). The Court's decision makes it likely for Apotex to request that the Federal Circuit reopen or reconsider its earlier opinion.

Sandoz's Global Head of Biopharmaceuticals, Carol Lynch, told Wolters Kluwer that the decision will "help expedite patient access to life-enhancing treatments." Lynch added that "the clarity provided on the patent dance . . . will help the biosimilars industry move forward." To date, the FDA has approved five biosimilars, with the most recent approval two months ago. Sandoz Inc. v. Amgen Inc., June 12, 2017.

Mass tort suits dealt a blow by High Court's jurisdictional ruling in Plavix® case

By Wolters Kluwer Editorial Staff

California courts lack specific jurisdiction to entertain product liability claims against the manufacturer of the blood-thinning drug Plavix® by plaintiffs allegedly harmed by the drug who are not residents of that state, the United States Supreme Court ruled today, reversing a decision of that state's highest court that would have allowed claims against the drug maker by hundreds of non-Californians to proceed in a single lawsuit. In an 8-1 opinion written by Justice Alito, the High Court took issue with California's "sliding scale" approach to specific jurisdiction, finding that the bare fact that the drug maker had contracted with a California distributor was not enough to establish personal jurisdiction in the state. Justice Sotomayor, the lone dissenter, expressed her fear that the majority's decision will make it impossible to bring a nationwide mass action in state court against defendants who are "at home" in different states, resulting in unnecessary piecemeal litigation and the bifurcation of claims.

More than 600 plaintiffs—the majority of whom were not California residents—filed suit in California state court against Bristol-Myers Squibb Company (BMS), asserting various state-law claims based on injuries allegedly caused by the prescription anti-clotting drug Plavix. The drug maker did not develop Plavix in California, did not create a marketing strategy for the drug in that state, and did not manufacture, label, package, or work on the regulatory approval of the product there (the company had engaged in all of those activities in either New York or New Jersey). However, BMS sells Plavix in California, and took in more than $900 million from sales of the drug between 2006 and 2012.

The non-resident plaintiffs did not allege that they had obtained Plavix through California physicians or from any other California source, nor did they claim that they had been injured by Plavix or had been treated for their injuries in California. Asserting lack of personal jurisdiction, BMS moved to quash service of summons on the nonresidents' claims but the California Superior Court denied the motion, holding that the California courts possessed general jurisdiction over the drug maker because the company had engaged in extensive activities in the state.

The California Court of Appeal ruled that general jurisdiction clearly was lacking, but found that California courts had specific jurisdiction over the nonresidents' claims. The California Supreme Court affirmed the appellate panel's decision, after which the U.S. Supreme Court granted certiorari to decide whether the California courts' exercise of jurisdiction in the case violated the Due Process Clause of the Fourteenth Amendment to the U.S. Constitution.

Precedential limits of specific jurisdiction. Under long-standing precedent, in order for a state court to exercise specific jurisdiction over a claim, there must be an affiliation between the forum and the underlying controversy; principally, an activity or an occurrence that takes place in the forum state. When there is no such connection, specific jurisdiction is lacking regardless of the extent of a defendant's unconnected activities in the state, and even regularly occurring sales of a product in a state do not justify the exercise of jurisdiction over a claim unrelated to those sales, the High Court instructed.

The California Supreme Court's "sliding scale approach"—which resembles a loose and spurious form of general jurisdiction and under which the strength of the requisite connection between the forum and the specific claims at issue is relaxed if the defendant has extensive forum contacts that are unrelated to those claims—could not be easily squared with those precedents, the majority of justices advised, adding that a defendant's general connections with the forum are not enough to confer specific jurisdiction.

In the instant case, the California Supreme Court had found that specific jurisdiction was present without identifying any adequate link between the state and the nonresidents' claims. As noted above, the nonresidents were not prescribed Plavix in California, did not purchase Plavix in California, did not ingest Plavix in California, and were not injured by Plavix in California. The mere fact that other plaintiffs were prescribed, obtained, and ingested that prescription medication in California, and allegedly sustained the same injuries as did the nonresidents, did not allow the state to assert specific jurisdiction over the nonresidents' claims. Standing alone, a defendant's relationship with a third party is an insufficient basis for jurisdiction, the High Court advised.

This rationale remains true even when third parties (i.e., plaintiffs who reside in California) can bring claims similar to those brought by the nonresidents. Nor was it sufficient—or even relevant—that BMS conducted research in California on matters unrelated to Plavix. What is necessary (and missing in the case at bar) was a connection between the forum and the specific claims at issue.

Third-party contacts insufficient. In a last ditch contention, the plaintiffs contended that the drug maker's decision to contract with a California company to distribute Plavix nationally provided a sufficient basis for personal jurisdiction. However, the requirements of the seminal precedent on personal jurisdiction had to be met as to each defendant over whom a state court exercises jurisdiction, and a defendant's relationship with a third party, standing alone, is an insufficient basis for jurisdiction, the Court held.

It was not alleged that BMS had engaged in relevant acts together with the third-party distributor in California, nor was it alleged that the drug maker was derivatively liable for the distributor's conduct in the state. Furthermore, the non-resident plaintiffs adduced no evidence to show how or by whom the Plavix they took had been distributed to the pharmacies that dispensed it to them. Thus, the bare fact that BMS contracted with a California distributor was not enough to establish personal jurisdiction in the state, the High Court ruled, reversing and remanding the judgment of the California Supreme Court.

Dissent. Although the majority cast its decision as compelled by precedent, those cases point in the other direction, Justice Sotomayor stated in her dissent. In the end, the majority's animating concern appeared to be federalism, she said, adding that the majority appeared to concede that the case at bar was not about fairness but, rather, was about power, i.e., one in which "the defendant would suffer minimal or no inconvenience from being forced to litigate before the tribunals of another state." But there was little reason to apply such a principle in a case brought against a large corporate defendant arising out of its nationwide conduct, she asserted.

The consequences of the majority's decision could be substantial, as even absent a rigid requirement that a defendant's in-state conduct actually must cause a plaintiff 's claim, the upshot of the majority's opinion is that plaintiffs cannot join their claims together and sue a defendant in a state in which only some of them have been injured. Noting that this ruling is likely to have consequences far beyond this case, Justice Sotomayor said that the majority's opinion will make it profoundly difficult for plaintiffs who are injured in different states by a defendant's nationwide course of conduct to sue that defendant in a single, consolidated action.

Moreover, the decision may make it impossible to bring certain mass actions at all, she charged, noting that after today's ruling it will be difficult to imagine where it might be possible to bring a nationwide mass action against two or more defendants headquartered and incorporated in different states. There will be no state where both defendants are "at home," and so no state in which the suit can proceed, she said. Bristol-Myers Squibb Co. v. Superior Court of California, June 19, 2017.

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