Kusserow on Compliance: OIG program exclusions reported for second half of 2019

Total of 2640 new exclusions added to the LEIE in 2019

Under the Social Security Act, the HHS Office of Inspector General (OIG) is able to exclude individuals and entities from participation in Medicare, Medicaid, and other Federal health care programs. Exclusions are required (mandatory exclusion) for individuals and entities convicted of the following types of criminal offenses: (1) Medicare or Medicaid fraud; (2) patient abuse or neglect; (3) felonies for other health care fraud; and (4) felonies for illegal manufacture, distribution, prescription, or dispensing of controlled substances. The OIG is also authorized (permissive exclusion) to exclude individuals and entities on several other grounds, including misdemeanors for other health care fraud (other than Medicare or Medicaid); suspension or revocation of a license to provide health care for reasons bearing on professional competence, professional performance or financial integrity; provision of unnecessary or substandard services; submission of false or fraudulent claims to a federal health care program; or engaging in unlawful kickback arrangements. The Patient Protection and Affordable Care Act (ACA) added another basis for imposing a permissive exclusion, that is, knowingly making, or causing to be made, any false statements or omissions in any application, bid, or contract to participate as a provider in a federal health care program, including managed care programs under Medicare and Medicaid, as well as Medicare’s prescription drug program.

During this semiannual reporting period, the OIG excluded 1,347 individuals and entities from Medicare, Medicaid, and other federal health care programs. Most of the exclusions resulted from convictions for crimes relating to Medicare or Medicaid, patient abuse or neglect, financial misconduct, controlled substances, or as a result of license revocation. The OIG completed the deployment of a new service for State Medicaid Fraud Control Units (MFCUs) to report convictions through a central web-based portal for exclusion. This improved reporting from those agencies. A list of excluded individuals and entities can be found at https://exclusions.oig.hhs.gov/.

 

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 © 2020 Strategic Management Services, LLC. Published with permission.

CBO report examines bill designed to lower health care costs

The Congressional Budget Office (CBO) released a cost estimate stemming from S.1895, Lower Health Care Costs Act, which is intended to lower the cost of health care to individuals as well as to the federal government. The CBO and JCT estimate that several of the bill’s provisions would result in a reduction in the cost of health insurance that is subsidized through the federal government, through the Patient Protection and Affordable Care Act (ACA), or from employment-based plans. Overall, the agencies found that if S.1895 is enacted, there would be an increase in direct spending by approximately $18.7 billion in conjunction with an increase in revenues by $26.7 billion over the period spanning from 2019 to 2029, for a net decrease in the deficit of $7.6 billion (CBO Report, July 16, 2019).

The bill is divided into five titles, which the CBO considers individually in its cost estimate. The first title is related to surprise medical bills. Title I contains patient protections against surprise medical billing, such as prohibition against balance billing and by requiring insurers to treat out-of-network care as in-network care for purposes of computing copayments, coinsurance, deductibles and spending toward out-of-pocket limits. Moreover, Title I of the bill “would require insurers to reimburse out-of-network providers at the median in- network rate for a given provider type and geographic area.”

Title I would also affect private insurance premiums in four ways, each explained in the report. According to the CBO and JCT, estimated changes in the cost of these premiums varied according to insurance market and the type of plan. The net effect would be lower insurance premiums and savings to the federal budget. Additionally, in light of the creation of a means by which out-of-network services are reimbursed at median in-network rates, payments to all providers “would converge around those median rates.” This would reduce payments for in-network care. According to the CBO and JCT the most significant effects of Title I stem from these lower payments for in-network care. However, private insurance premiums are also affected by changes in payment rates.

Title II of the bill relates to reduction in the price of prescription drugs. The bill would modify the FDA’s framework for approval of certain drugs and biologics, which would ultimately pave the way for certain generics or biosimilar medications to make an earlier entry into the market. In the report, the CBO and JCT break down their estimates into various sections, citing the impact on direct spending and revenues for each section.

The CBO and JCT explain that in Title III, the bill imposes new rules governing insurers’ contracts with health care providers and pharmacy benefit managers, noting that sections 302, 303 and 306 of the bill specifically affect direct spending or revenues. The report describes the impact of tiered plans and estimates that increased enrollment in those type of plans would reduce spending for certain care, thereby reducing average health insurance premiums for employment-based coverage. The report also details the new requirements on pharmacy benefit managers.

The CBO and JCT also analyzes Title IV of the bill, noting that this section sets out to extend funding for certain federal health care programs, among other things raising the minimum age for the sale of tobacco products. One section of Title V delineates the requirements that health insurers create and maintain “application programming interfaces” the creation and maintenance of which would create new administrative costs. The CBO and JCT estimate the costs would be passed on to enrollees in the form of higher premiums. They estimate that balancing the increase in direct spending with the decrease in revenues, there would be an increase in the deficit for the relevant period.

The report also explains the estimates arising from the various sections of the bill are subject to uncertainty and lays out the nature of that uncertainty relating to different issues. It also explains that the bill imposes intergovernmental and private-sector mandates. CBO estimates that the former would average about $100 million annually and the latter, $15 billion annually. In each instance, the CBO estimates that in each of the first five years the mandates are in effect, those costs would exceed the respective threshold established in Unfunded Mandates Reform Act (UMRA). The CBO and JCT examine each mandate and estimate the impact upon outlays and revenues, as well as whether it applied to public, private or both types of entitles.

States likely to succeed in lawsuit challenging contraceptive exemption regulations

Pennsylvania and New Jersey are likely to succeed in proving that the agencies did not follow the Administrative Procedure Act (APA) in creating the contraceptive mandate exemption regulations and that the regulations are not authorized under the Affordable Care Act (ACA) or required by the Religious Freedom Restoration Act (RFRA), held the Third Circuit Court of Appeals. The court also concluded that the States will suffer a concrete and imminent financial injury from the increased use of state-funded services were the regulations to go into effect, and that an injunction would redress that injury. Therefore, it affirmed the district court’s order preliminarily enjoining the rules’ enforcement nationwide (Commonwealth of Pennsylvania V. Trump, July 12, 2019, Shwartz, P.).

State challenges to regulations

As previously reported, the Health Resources and Services Administration determined that health plans covered by the Affordable Care Act (ACA) (P.L. 111-148) must provide contraceptive services. This mandate included a narrow exemption for certain religious organizations. In 2017, President Trump issued an executive order directing the relevant agencies to consider amending regulations to address conscience-based objections to the contraception mandate. These agencies promulgated two interim final rules (IFRs) which expanded the religious exemptions authorizing employers with religious objections to limit employees’ access to health insurance coverage for contraception (see Contraception coverage exemptions extended for objecting employers on religious, moral grounds, Health Law Daily, October 11, 2017).

Pennsylvania and New Jersey (the States) sued seeking to enjoin enforcement of these two new rules. Both have state-funded programs that provide family planning and contraceptive services for eligible individuals and argued that when women lose contraceptive insurance coverage from their employers, they will seek out these state-funded programs and services. The district court granted a preliminary injunction, enjoining the rules’ enforcement nationwide. While the appeal of the order preliminarily enjoining the IFRs was pending, the agencies promulgated two final rules, virtually identical to the interim final rules.

States have standing

The court concluded that the States will suffer a concrete and imminent financial injury from the increased use of state-funded services, and that an injunction would redress that injury. The States are not required to define a specific woman who will be affected by the final rules.

Preliminary injunction granted 

The court held that the States are likely to succeed on their procedural APA claims because the agencies failed to comply with the notice-and-comment requirement and this defect tainted the final rules. The regulation provision of the Health Insurance Portability and Accountability Act of 1996 (HIPAA) does not grant the agencies discretion to proceed by IFR in lieu of notice-and-comment rulemaking and the agencies lacked good cause for dispensing with notice of and comment to the IFRs. The court rejected the agencies’ argument that there was an urgent need to alleviate harm to those with religious objections to the current regulations. It also held that previous notice and comment does not allow agencies to forego notice and comment for a later regulation on similar matters. In addition, the notice and comment provided for the final rules suggest that the opportunity for comment was not a meaningful because the final rules are virtually identical to the IFRs and the IFRs impaired the rulemaking process by altering the agencies’ starting point in considering the final rules.

The court also held that the States were likely to succeed on their substantive APA challenges because neither the ACA nor RFRA authorized the agencies to create exemptions. The unambiguous language of the ACA’s Women’s Health Amendment only authorized the agencies to decide what services would be covered, not who provides them, and RFRA did not require or authorize such broad exemptions, particularly given RFRA’s remedial function that places the responsibility for adjudicating religious burdens on the courts, not the agencies. In addition, the final rules would impose an undue burden on nonbeneficiaries—the female employees who will lose coverage for contraceptive care. The public interest favors minimizing harm to those third parties. Because the current accommodation does not substantially burden employers’ religious exercise and the exemption is not necessary to protect a legally-cognizable interest, the States’ financial injury outweighs any purported injury to religious exercise. Finally, a nationwide injunction is appropriate to provide complete relief (for example, 14 percent of the New Jersey workforce works out of state).

Kusserow on Compliance: Countdown to mandated nursing facility compliance programs

– Only months remain to evidence having an effective compliance program

– Many have a lot to do before state agencies begin their assessments

– Nursing homes lag behind hospitals in compliance program development

Tom Herrmann, J.D., served over 20 years in the OIG’s Office of Counsel and for the past ten years has been a compliance consultant, specializing in nursing home compliance programs. He explained that the Affordable Care Act included a mandate that skilled nursing facilities and nursing homes adopt and implement an effective compliance and ethics program as a condition of participation in the Medicare and Medicaid programs with a November 28, 2018 deadline established in regulations issued by CMS. At that time, State survey agencies will begin assessing nursing facility development and implementation of an effective compliance and ethics program, as a condition for participation in the Medicare and Medicaid programs. Reviews will be conducted under the CMS State Operation Manual “Guidance to Surveyors for Long Term Care Facilities”.  The new mandate parallels the HHS OIG Compliance Program Guidance for Nursing Facilities with its identified seven elements of an effective compliance program. Those that followed the OIG guidance will have little problem in meeting the new mandate, but those who did not, have only months to come into compliance. Based on his experience, he believes that facilities have a lot to do to come into compliance before state agencies begin their assessments, as many have delayed or limited resources for compliance program development.   He suggests that the most cost effective method to begin catching up to have a compliance expert perform a gap analysis to identify elements needed for the compliance program and how be able to evidence program effectiveness. A gap analysis should provide a “road map” and step-by-step plan for bringing a facility into compliance with the mandates. Those that have already implemented their compliance program should consider having an effectiveness evaluation conducted to experts that follow the review protocols that will be used by government auditors.

For more information about meeting the standards of these new mandates, Tom Herrmann may be reached at thermmann@strategicm.com or at (703) 535-1410.

 

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.

Connect with Richard Kusserow on Google+ or LinkedIn.

Subscribe to the Kusserow on Compliance Newsletter

Copyright © 2018 Strategic Management Services, LLC. Published with permission.