Life Safety Code requirements for Medicare, Medicaid facilities streamlined

Medicare and Medicaid participating health care facilities, including hospitals, long-term care facilities, hospices, and others will be required to adhere to the 2012 edition of the Life Safety Code (LSC) established by the National Fire Protection Association (NFPA) to ensure the safety of patients and residents. When necessary, CMS stated in an advance release of its Final rule, the agency will grant waivers of some provisions of the LSC when the application of the rules would result in an unreasonable hardship and if patients’ health and safety would not be jeopardized by provision of the waiver. This Final rule published in the Federal Register May 4, 2016.

A necessary update

Following strong industry encouragement, CMS’ Proposed rule (79 FR 21552), published April 16, 2014, proposed to amend fire safety standards, adopt the 2012 LSC, and eliminate references to earlier editions of the LSC. The agency emphasizes that enforcing earlier editions of the code can result in confusion and limitations on options. New buildings are typically designed to meet the standards of the latest LSC, enforced by state and local jurisdictions. Requiring facilities to comply with two different editions of the code could result in inconsistencies and increased costs without increased patient benefit.

2012 LSC changes

The 2012 LSC differs significantly from the 2000 LSC, which was the previous edition for Medicare and Medicaid facility compliance. The format of the LSC was altered, and the use of exceptions was removed for clarity. In addition, the 2012 version contains a “building rehabilitation” chapter that clarifies the improvement standards for different types of rehabilitation work. Each category, such as repair, renovation, or change of use, will have different standards. CMS believes that these guidelines will reduce costs for health facilities during minor construction projects.

The 2012 edition also classifies a “health care occupancy” as a facility serving four or more individual as inpatients. However, CMS finds the LCS’s exception for those serving fewer than this amount inapplicable to Medicare and Medicaid facilities, and will require all occupancies providing care to one or more patients to comply with relevant 2012 requirements.

Kusserow on Compliance: Whistleblowers receive $98M in $784.6M FCA settlement

Pharmaceutical companies Wyeth and Pfizer Inc., agreed to pay $784.6 million to resolve allegations that Wyeth knowingly reported to the government false and fraudulent prices on two of its proton pump inhibitor (PPI) drugs, Protonix Oral® and Protonix IV®. The case was brought under the qui tam provisions of the federal False Claims Act (FCA) (31 U.S.C. § 3729 et seq.) by two relators, a former hospital sales representative for AstraZeneca Pharmaceuticals and a practicing physician. They will receive $98,058,190.00 as their share from the settlement. This amount ranks among the largest award for whistleblowers ever.

Pfizer acquired New Jersey-based Wyeth in 2009, approximately three years after Wyeth had ended the conduct that gave rise to the settlement. The Department of Justice (DOJ) alleged that Wyeth failed to report deep discounts on Protonix Oral and Protonix IV that it made available to thousands of hospitals nationwide through a bundled sales arrangement in which a hospital could earn deep discounts on both drugs, if it placed them on formulary and made them “available” within the hospital. Through this bundled arrangement, Wyeth sought to induce hospitals to buy and use Protonix Oral, which hospitals otherwise would have had little incentive to use, because other pre-existing oral PPI drugs were priced competitively and were considered to be as safe and effective. Wyeth wanted to control the hospital market because patients discharged from the hospital on Protonix Oral were likely to stay on the drug for long periods of time, rather than switch to competing PPIs, during which time payers, including Medicaid, would pay nearly full price for the drug.

All this resulted in their wrongfully avoiding paying hundreds of millions of dollars in rebates to Medicaid. Under the terms of the settlement, Wyeth will pay $413,248,820 to the federal government and $371,351,180 to state Medicaid programs.

Richard P. Kusserow served as DHHS Inspector General for 11 years. He currently is CEO of Strategic Management Services, LLC (SM), a firm that has assisted more than 3,000 organizations and entities with compliance related matters. The SM sister company, CRC, provides a wide range of compliance tools including sanction-screening.

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Copyright © 2016 Strategic Management Services, LLC. Published with permission.


Highlight on North Carolina: State entities join to build mental health workforce

North Carolina local management entities (LMEs) and managed care organizations (MCOs) announced a joint workforce-development initiative to offer training resources to professionals on the front lines of providing services to individuals with disabilities. Cardinal Innovations Healthcare, Smoky Mountain LME/MCO, and Trillium Health Resources will offer both raining and evidence-based curricula to direct support professionals through DirectCourse.

Workforce development

CMS standards for direct support professionals focus on improving the quality of services for individuals with intellectual and developmental disabilities. The curricula offered by the initiative were created to align with the CMS competencies adopted in the NC Innovations Waiver. The waiver was created to help the state’s Medicaid beneficiaries with intellectual or developmental disabilities live a more independent lifestyle. Under the waiver, LME/MCOs receive a set amount of money each year to help these individuals get specialized services. The curricula offered through the initiative includes: College of Direct Support & College of Frontline Supervision and Management; College of Employment Services; College of Personal Assistance and Caregiving; and College of Recovery Community and Inclusion.

Increasing mental health workforce

Recent recommendations from members of the state’s Task Force on Mental Health and Substance Abuse focus on increasing the number of mental health providers in the state. The Task Force noted that about 60 counties in North Carolina have no psychiatric provider and suggested expanding the scope of practices for nurses, as well as education loan-repayment programs to make mental health treatment more accessible. The issue reflected in the governor’s budget, with $30 million directed toward enhancing case management for those with mental health disabilities and creating transitional housing.

The ACA is making medical debt a little less red

Medical debt is falling thanks to higher insurance rates under the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148), according to a study by the National Bureau of Economic Research (NBER). The study estimates that the medical debt held by people with new Medicaid coverage fell between $600 and $1000 each year since 2014. Additionally, the study determined that the ACA’s Medicaid expansions resulted in beneficial financial impacts that extend beyond the use of and access to health care.


The financial impacts of not having health insurance can be severe. According to data from the Medical Expenditure Panel Survey (MEPS), the annual cost of inpatient care for a person aged 18 to 64 who was hospitalized in 2012 was approximately $15,000 and the annual cost of all types of care for that person for the year was $25,000. Thus, it is hardly surprising that those without insurance are more likely to have difficulty paying, become delinquent on, and be contacted by a collection agency regarding their medical bills. The study cited data suggesting that when an uninsured individual is hospitalized, that individual doubles their likelihood of bankruptcy and experiences other hardships like reduced access to credit.


Using credit-reporting data for a large sample of individuals, the NBER compared individuals living in Medicaid expansion states with individuals that live in states that have not expanded Medicaid. The study relied on Federal Reserve Bank of New York Consumer Credit Panel/Equifax (CCP) data to measure financial outcomes of individuals in the population between the ages of 19-64. The study used data from 2010 through 2015—four years of pre-Medicaid-expansion data and two years of post-expansion data. Demographic information was acquired based upon zip code data.


The study found that Medicaid expansion significantly reduced the amount of debt in third-party collections among those individuals that live in zip codes containing the most poor and uninsured individuals. The study primarily looked at individuals earning less than $16,000 a year. The NBER estimated that reductions in collection amounts in 2014 were between $51 and $85. The overall impact of debt reduction fell between $600 and $1000. Although the impact is positive, it is not complete in terms of health care related debt or hardship elimination. A Kaiser Family Foundation survey identified that, even with the passage of the ACA, one in five Americans still struggle to pay their medical bills.

Other impacts

Medical debt and its impact on financial security is an important measure of success for the ACA. The significance stems in part from the fact that the impacts of Medical debt go beyond health. Medical debt can force people to rely on savings, cut back on other necessities (including other health care expenditures), and fall behind on other payments (car, rent, etc.), any and all of which can put employment at jeopardy. Medical debt is often both a symptom of and a factor leading towards other financial hardships.  The ACA’s positive impact at reducing those hardships is, at least for those with medical debt, a good sign. Additionally, the reduction of medical debt is yet another reason for non-expansion states to consider expansion of their Medicaid programs.