Recipients of cost-sharing reductions seek to intervene in House v. Burwell

Two recipients of cost-sharing reductions under section 1402 of the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148), concerned that the House Republicans might alter their position after the inauguration of President-elect Donald Trump (R), sought permission to intervene in the pending appeal in House of Representatives v. Burwell.

House v. Burwell

The Department of Treasury has been reimbursing insurers for their payment of reductions under section 1402 from the permanent appropriation in the Internal Revenue Code (31 U.S.C. §1324). The U.S. House of Representatives filed suit against the Secretaries of HHS and the Treasury claiming that the payments are not authorized by section 1324. The district court entered an injunction barring the payments (see Court sides with House Republicans, finds no appropriation for cost-sharing reductions, Health Law Daily, May 18, 2016) and the Secretaries appealed. On December 5, 2016, the D.C. Circuit granted the House’s motion to hold the appeal in abeyance until February 21, 2017 (see Court puts cost-sharing appeal on hold, awaits possible Trump policy, Health Law Daily, December 7, 2016).

Possible about-face

According to the movants, their interests were aligned with those of the Executive Branch, which advocated for a construction of section 1324 that permits the continued payment of cost-sharing reductions to insurers. However, statements in the House’s motion suggest that it could change position after Trump’s inauguration and enter into an agreement to dismiss the appeal or otherwise agree that the injunction should take effect—for example, that the House and the incoming Administration are “discussing possible options for resolution” of the appeal other than to “continue prosecuting” it. To defend their interest in continued payment of the cost-sharing reimbursement, the recipients asked to intervene in the case.

Potential for harm

The motion noted that if cost-sharing reimbursement payments stop, recipients of cost-sharing reductions who purchased insurance policies for 2017 will likely face early termination of those policies because the government will allow insurers to leave the exchanges. Even if the insurer remained in the market until the end of 2017 without government reimbursement for cost-sharing reductions, it would “surely exit the marketplace at the end of the plan year in order to shed any obligation to provide cost-sharing reductions.” All of this, say the movants, would drastically increase their costs for insurance.

Kusserow on Compliance: HHS Office of Inspector General adopts new Anti-kickback safe harbors

In a Final rule effective January 6, 2017, the HHS Office of Inspector General OIG amended the rules to the Anti-Kickback Statute (AKS) by adding new safe harbors that protect certain payment practices and business arrangements from sanctions under the AKS. The law provides criminal penalties for individuals or entities that knowingly and willfully offer, pay, solicit, or receive remuneration in order to induce or reward the referral of business reimbursable under federal health care programs. This law was so broad that, as Inspector General, I requested Congress to create an administrative alternative. Upon enactment, I was permitted to identify and create safe harbors that would identify practices that would not result in enforcement actions.  The changes created additional safe harbors that enhance flexibility for providers and others to engage in health care business arrangements to improve efficiency and access to quality care while protecting programs and patients from fraud and abuse. They include:

Changes to existing safe harbors for cost-sharing waivers. Changes were made to the definition of the term “remuneration,” allowing the waiver or reduction of certain patient cost-sharing obligations. Previously, there were cost-sharing waiver exceptions that included waivers for some amounts owed for inpatient hospital services, and amounts owed by individuals who qualified for subsidized services or amounts paid to federally qualified health care centers or certain other qualified health care facilities. The new rule expands these existing safe harbors to cover cost-sharing waivers issued to beneficiaries in all federal health care programs, which includs Medicare, Medicaid, the State Children’s Health Insurance Program (SCHIP), TRICARE, the Veterans Health Administration (VHA) program, and the Indian Health Service (IHS) program.

Waivers or reductions by pharmacies. Pharmacies will now be allowed to reduce or waive cost-sharing amounts imposed under a federal health care program if the waivers or reductions are not offered as part of an advertisement or solicitation which could result in abusive steering of patients. Waivers or reductions offered to certain individuals eligible for Medicare Part D subsidies need only meet the no-advertising, no-solicitation requirement to fall within this safe harbor. For waivers or reductions offered to individuals not eligible for subsidies, the pharmacy must meet several additional requirements. It must not routinely waive or reduce cost-sharing amounts, and must only waive the cost-sharing amounts “after determining in good faith that the individual is in financial need or after failing to collect the cost-sharing amounts after making reasonable collection efforts.”  Providers should note that this rule only applies to pharmacies, and thus would not allow a physician to waive cost-sharing for Part B drugs.

Waivers or reductions for emergency ambulance services. Cost-sharing reductions or waivers for emergency ambulance services will now be allowed, but extend only to emergency ambulance services furnished by a state, municipality, or federally recognized Indian tribe. However, they must not take into account insurance or financial status of the beneficiary, nor can the ambulance provider shift costs to a federal health care program.

Free or discounted shuttle service and local transportation. A new safe harbor will allow eligible entities to provide free or discounted local transportation or shuttle services, as long as they meet defined requirements. An eligible entity is any individual or entity, except for individuals or entities (or family members or others acting on their behalf) that primarily supply health care items, such as durable medical equipment suppliers, pharmaceutical companies, and pharmacies. Transportation is divided into two categories: (1) a “shuttle service” provided by an eligible entity and (2)other transportation offered to federal health care program beneficiaries. Eligible entities must meet five standards: (1) have the availability of the free or discounted local transportation services set forth in a policy, applied uniformly and consistently and not determined in a manner related to volume or value of federal health care business; (2) not be air, luxury, or ambulance-level transportation; (3) not market or advertise the services, nor market health care items and services during the course of transportation, or pay drivers on a per-beneficiary-transported basis; (4) only make the transportation available to established patients; and (5) bear the cost of the transportation services and not shift the burden onto federal health care programs, other payers, or individuals. Simply put, hospitals and other eligible entities will be able to provide some forms of transport services for their patients without fear of violating the AKS, so long as they meet the applicable safe harbor requirements laid out above.

Protected remuneration between FQHCs and Medicare Advantage. Another safe harbor was created that will protect any remuneration between a federally qualified health center (FQHC) (or an entity controlled by such a health center) and a Medicare Advantage (MA) organization pursuant to a written agreement required by regulations. The payment to the FQHC must not be less than the level and amount of payment that the MA organization would make to a non-FQHC entity. Provision of free space by the FQHC to the MA organization would not be covered by the safe harbor, because arrangements must be related to MA plan enrollees being treated at the FQHC. Similarly, financial support from the MA to the FQHC for outreach services or infrastructure costs, for example, would not be covered.

Medicare Coverage Gap Discount Program. A new safe harbor was created that supplements the already-existing statutorily-based Medicare Coverage Gap Discount Program, which allows prescription drug manufacturers to enter into an agreement with HHS to provide access to discounts on drugs at the point of sale. “Applicable drugs” furnished to “applicable beneficiaries” under the Medicare Coverage Gap Discount Program will not be considered remuneration. The rule requires manufacturers to be “in compliance with the requirements of the Medicare Coverage Gap Discount Program,” rather than “in full compliance with all requirements” of the program. “A manufacturer that knowingly and willfully provided discounts without complying with the requirements of the Medicare Coverage Gap Discount Program could be subject to sanctions.”

Technical revision of the AKS. There is in the Final rule a technical correction pertaining to referral services, whereby the language was changed inadvertently in 2002 to say “. . . business otherwise generated by either party for the referral service . . .” and is now changed back to the 1999 language, “. . . business otherwise generated by either party for the other party”.

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.

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

Kusserow on Compliance: Civil monetary penalty rules revised regarding inducements

In December 2016, the HHS Office of Inspector General (OIG) issued a Final rule applying to the Civil Monetary Penalty Law (CMPL) administered by the OIG. The legislation creating the law came about in 1981, upon my request as HHS Inspector General. In testimony before Congress, I requested legislation to provide an administrative alternative to the False Claims Act.  This was to permit taking action against wrongdoers administratively, rather than through the court system. The resulting legislation authorized the imposition of administrative penalties and assessments on any person who “offers to or transfers remuneration to any individual eligible for benefits” under a federal health care program “that such person knows or should know is likely to influence such individual to order or receive from a particular provider, practitioner, or supplier any item or service for which payment may be made, in whole or in part” by a federal health care program–in short, it imposes financial penalties and exclusion from federal health care programs and participation in any state health care programs. The HHS Secretary assigned these authorities to the OIG. Remuneration is a major element in the CMPL and is implicated in other legislation, including the Anti-Kickback Statute and Stark Laws. It has undergone changes in definition over time.  The following outlines the five new exceptions to its definition under CMPL.

Five new exceptions to the definition of remuneration

  1. Reduction in copayment for certain outpatient services. The rule adds a cost-sharing exception permitting reduction in the copayment amount for covered outpatient department services, but does not apply to physician practice billing.
  2. Remuneration that poses a low risk of harm and promotes access to care. A provider can avoid the CMPL when it provides items or services that improve a beneficiary’s ability to obtain items and services payable by Medicare or Medicaid, and pose a low risk of harm to beneficiaries and the programs. This does mean it permits remuneration that would be likely to influence a patient to access unnecessary care. The inclusion of “items and services” revises the earlier proposed language, “medically necessary health care items and services.”  Cash and cash equivalents would not meet the criteria for the exception.
  3. Retailer rewards and discounts. Retailers may offer or transfer items or services for free or less than fair market value without being subject to civil monetary penalties. However, they must consist of coupons, rebates, or other rewards from a retailer; be offered or transferred on equal terms available to the general public, regardless of health insurance status; and must not be tied to the provision of other items or services reimbursed in whole or in part by a federal health care program.
  4. Remuneration to financially needy individuals. The regulations also provide for a financial need-based exception to the definition of remuneration, wherein a person may offer or transfer items or services for free or less than fair market value if: the items or services are not offered as part of an advertisement or solicitation and are not tied to the provision of other items or services reimbursed in whole or in part by a Federal health care program; there is a reasonable connection between the items or services and the medical care of the individual; and the person providing the items or services must determine in good faith that the individual is in financial need.
  5. Copayment waivers for the first fill of generic drugs. A Medicare Part D Plan sponsor may waive any copayment for the first fill of a covered Part D drug that is a generic drug, as long as the waiver is included in the benefit design package submitted to CMS.

These regulatory changes are effective January 6, 2017. A separate section of the same rule package focused on revision of the Anti-Kickback provisions.  For information about those changes, see my December 29, 2016, post.

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

Marketplace deductibles down, cost-sharing for common services low

Health coverage from the marketplace covers, on average, seven common health care services other than preventive services with no or low cost sharing before policyholders meet their deductibles. Additionally, the median individual deductible for HealthCare.gov policies went down $50 from 2015 to 2016, according to a CMS Data Brief. The brief looked through data on marketplace plans and discussed the numbers showing that health insurance is more affordable for consumers than it was before passage of the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148).

The Data Brief noted that 60 percent of marketplace consumers qualified for financial assistance to reduce deductibles, out-of-pocket maximums, and other cost-sharing obligations in 2016. It also found that consumers are overwhelmingly choosing silver plans, with higher premiums and lower cost sharing, over bronze plans. Over all, approximately one-third of marketplace enrollees have deductibles less than or equal to $250.

All marketplace plans cover preventive care like cancer screenings and immunizations without cost sharing; however, the Data Brief shows that most HealthCare.gov policies also cover common health care services either without cost sharing or with low copayments, even if the yearly deductible has not been met. The main services accounting for this finding are primary care visits and prescription drugs.