2018 Michigan Rural Health Conference. Health Law Update. Presented by Brian F. Bauer

Transcription

1 2018 Michigan Rural Health Conference Health Law Update Presented by Brian F. Bauer

2 Overview CAH Mileage Requirements Lab Arrangements Bipartisan Budget Act of 2018: ACOs 3 CAH Mileage Requirements CAH Conditions of Participation: (c) The CAH is located more than a 35 mile drive (or, in the case of mountainous terrain or in areas with only secondary roads available, a 15 mile drive) from a hospital or another CAH, or before January 1, 2006, the CAH is certified by the State as being a necessary provider of health care services to residents in the area. 42 C.F.R (c) 4 2

3 5 CAH Mileage Requirements CAH Conditions of Participation: (e)(2) If a CAH or a necessary provider CAH operates an off campus providerbased location, excluding an RHC as defined in (b) of this chapter, but including a department or remote location, as defined in (a)(2) of this chapter, or an off campus distinct part psychiatric or rehabilitation unit, as defined in , that was created or acquired by the CAH on or after January 1, 2008, the CAH can continue to meet the location requirement of paragraph (c) of this section only if the off campus provider based location or off campus distinct part unit is located more than a 35 mile drive (or, in the case of mountainous terrain or in areas with only secondary roads available, a 15 mile drive) from a hospital or another CAH. 42 C.F.R (e)(2) 40 miles Hosp A PPS or CAH CAH CAH Clinic Hosp A Clinic 6 Clinics Provider Based

4 40 miles Necessary Provider Hosp A PPS or CAH CAH CAH Clinic Hosp A Clinic 7 After miles Necessary Provider Hosp A PPS or CAH CAH CAH Clinic Hosp A Clinic 8 Clinics Provider Based

5 40 miles Necessary Provider Hosp A PPS or CAH CAH Hosp A Clinic 9 Clinics Provider Based 2018 CAH Mileage Requirements Some Possible Solutions: CAH Provider Based Location Convert to Freestanding Clinic Convert to Provider Based RHC Primarily used for 10 5

6 Lab Arrangements Every 4-6 Years There Seems To Be A New Waive of Lab & Other Service Line Arrangements. These Have Made The News In the Last Few Months: NPR/KCUR article on rural hospitals and laboratory arrangements: CBS story on laboratory arrangements in rural hospitals: Follow-up story by CBS on laboratory arrangements in rural hospitals: Follow-up story by NPR/KCUR on the laboratory arrangement with one of the hospitals in the original story: 11 Lab Arrangements (cont d) These Arrangements are Appealing Because They Work (at Least in the Short Term) One rural hospital that had a little over $7,500,000 in revenues the preceding fiscal year, Had over $24,000,000 of lab revenue in the first 4 months of the new lab arrangement Another rural hospital that billed a particular insurance company $1,300 per month in the previous year, billed that insurance company $1,300,000 per month after the new lab arrangement was implemented 12 6

7 Lab Arrangements (cont d) These Arrangements are Appealing Because They Work (at Least in the Short Term) (cont d) These arrangements are often designed to take advantage of the higher reimbursement rates paid to rural hospitals Example: one insurance company paid $2,250 for a test because it was submitted as being performed in a rural hospital that insurance company would have paid $120 if it has been performed by a large national lab company 13 Lab Arrangements (cont d) These Arrangements are Appealing Because They Work (at Least in the Short Term) (cont d) A significant problem arises when the insurance companies determine that the new arrangement violates their provider agreements (or constitutes fraud) and demand a refund 14 7

8 Lab Arrangements (cont d) Common Characteristics of These Arrangements 1. Management Agreement Usually gives the management company control over the clinical and operational aspects of the hospital s lab Usually includes a marketing program to build and maintain provider relationships and a provider network Often the arrangements will exclude Medicare and Medicaid Fees for the management services are typically 75%-80% of hospitals lab receipts 15 Lab Arrangements (cont d) Common Characteristics of These Arrangements (cont d) Often the management company is a new Limited Liability company set up just for this arrangement with this hospital o In one case, the lab management company was set-up in Florida on October 13, 2016, and signed the lab management contract with the hospital on October 20,

9 Lab Arrangements (cont d) Common Characteristics of These Arrangements (cont d) 2. Laboratory Billing Contracts Usually required to use a billing company designated by the management company for all non-medicare and non-medicaid laboratory services o $5,000-$10,000 set-up fees o 6%-7% of gross receipts 17 Lab Arrangements (cont d) Common Characteristics of These Arrangements (cont d) 3. Agreement for Reference Laboratory Services May require that the hospital use certain designated labs for reference laboratory services At prices above hospital s current cost for reference laboratory services 18 9

10 Lab Arrangements (cont d) Common Characteristics of These Arrangements (cont d) 4. Equipment Purchase/Lease Lease payments for new equipment Debt service on new equipment Provision of reagents and consumables Sometimes maintenance fees 19 Checklist of Questions & Protections Where else have they implemented this lab management program? o o With the same management company, or was a new LLC created for your arrangement? How long have the arrangements been in operation? It usually takes the insurance companies months to begin questioning the increased volume, and request/impose a refund and an adjustment in rates 20 10

11 Checklist of Questions & Protections (cont d) How have the commercial insurance companies responded to the increase in lab volume? o Ask to speak with the person at the hospital that negotiated the settlement and/or new rates with the insurance companies o Hospital may wish to discuss the arrangements with the insurance companies in advance 21 Checklist of Questions & Protections (cont d) How have the provider community responded to the lab management and services? Request/insist on indemnification language that requires the management company (and billing company?) to repay its applicable fees if an insurance company requests a refund The insurance company only has a contract with the hospital, and it is the hospital that will be required to make any repayment 22 11

12 Checklist of Questions & Protections (cont d) Under the lab arrangement (the management agreement, billing arrangement, equipment lease, etc.), the hospital has paid out 83%-92% of its commercial lab receipts If the insurance company demands a refund of $1,000,000 for lab services, how will the hospital be able to make the repayment? The hospital only received 8%-17% of the payments. If the lab management company is confident that the arrangement is legally compliant and acceptable to insurance companies, the lab management company should be willing to agree to reasonable repayment indemnification language 23 Checklist of Questions & Protections (cont d) Can the hospital use other billing companies, reference labs, and equipment vendors, or does the hospital have to use the vendors chosen by the lab management company? o Do the billing company and reference labs work only with hospitals that engage the lab management company? o Ask for contact information for those hospitals that use the billing company but not the lab management company 24 12

13 Checklist of Questions & Protections (cont d) o o Will all the lab work billed through the hospital be performed on-site at the hospital? Will all the lab work billed through the hospital be for patients that reside (at least part of the year) in the hospital s service area? 25 Checklist of Questions & Protections (cont d) Ask about the Marketing Plan o Ask to see the marketing materials o Why will the providers leave their current lab vendor to begin using the hospital? o How will the marketing staff be compensated? o Is the lab management fee fair market value for the services being provided by the lab management company? The hospital should have the arrangement and the documents reviewed by legal counsel familiar with these arrangements 26 13

14 Bipartisan Budget Act of 2018: ACOs Providing ACOs the Ability to Expand the Use of Telehealth Services o In the case of telehealth services for which payment would otherwise be made under this title furnished on or after January 1, 2020, for purposes of this subsection only, the following shall apply with respect to such services furnished by a physician or practitioner participating in an applicable ACO to a Medicare fee-for-service beneficiary assigned to the applicable ACO 27 Bipartisan Budget Act of 2018: ACOs (cont) Providing ACOs the Ability to Expand the Use of Telehealth Services the home of a beneficiary shall be treated as an originating site The geographic limitation shall not apply The term applicable ACO means an ACO that operates under a two-sided model and for which Medicare fee-for-service beneficiaries are assigned to the ACO using a prospective assignment method There shall be no facility fee paid to the originating site 28 14

15 Bipartisan Budget Act of 2018: ACOs (cont) Choice of Prospective Assignment For each agreement period (effective for agreements entered into or renewed on or after January 1, 2020), in the case where an ACO established under the program is in a Track that provides for the retrospective assignment of Medicare fee-forservice beneficiaries to the ACO, the Secretary shall permit the ACO to choose to have Medicare fee-for-service beneficiaries assigned prospectively, rather than retrospectively, to the ACO for an agreement period 29 Bipartisan Budget Act of 2018: ACOs (cont) Assignment Based on Voluntary Identification by Medicare Fee-For- Service Beneficiaries For performance year 2018 and each subsequent performance year, if a system is available for electronic designation, the Secretary shall permit a Medicare fee-for-service beneficiary to voluntarily identify an ACO professional as the primary care provider of the beneficiary for purposes of assigning such beneficiary to an ACO 30 15

16 Bipartisan Budget Act of 2018: ACOs (cont) Assignment Based on Voluntary Identification by Medicare Fee-For- Service Beneficiaries The Secretary shall establish a process under which a Medicare fee-for-service beneficiary is (I) notified of their ability to make an identification described in clause (i); and (II) informed of the process by which they may make and change such identification. A voluntary identification by a Medicare fee-for-service beneficiary under this subparagraph shall supersede any claimsbased assignment 31 Bipartisan Budget Act of 2018: ACOs (cont) Beneficiary Incentive Program In order to encourage Medicare fee-for-service beneficiaries to obtain medically necessary primary care services, an ACO participating under this section under a payment model described in clause (i) or (ii) of paragraph (2)(B) may apply to establish an ACO Beneficiary Incentive Program to provide incentive payments to such beneficiaries who are furnished qualifying services The Secretary shall implement this subsection on a date determined appropriate by the Secretary. Such date shall be no earlier than January 1, 2019, and no later than January 1,

17 Bipartisan Budget Act of 2018: ACOs (cont) Beneficiary Incentive Program An ACO Beneficiary Incentive Program established under this subsection shall provide incentive payments to all of the following Medicare fee-for-service beneficiaries who are furnished qualifying services by the ACO: With respect to the Track 2 and Track 3 payment models, Medicare fee-for-service beneficiaries who are preliminarily prospectively or prospectively assigned to the ACO 33 Bipartisan Budget Act of 2018: ACOs (cont) Beneficiary Incentive Program For purposes of this subsection, a qualifying service is a primary care service, with respect to which coinsurance applies under part B, furnished through an ACO by: an ACO professional described in subsection who has a primary care specialty designation or a Federally qualified health center or rural health clinic 34 17

18 Bipartisan Budget Act of 2018: ACOs (cont) Beneficiary Incentive Program An incentive payment made by an ACO pursuant to an ACO Beneficiary Incentive Program established under this subsection shall be (i) in an amount up to $20, with such maximum amount updated annually by the percentage increase in the consumer price index (ii) in the same amount for each Medicare fee-for-service beneficiary (iii) made for each qualifying service furnished to such a beneficiary (iv) made no later than 30 days after a qualifying service is furnished 35 Bipartisan Budget Act of 2018: ACOs (cont) Beneficiary Incentive Program An ACO conducting an ACO Beneficiary Incentive Program under this subsection shall, at such times and in such format as the Secretary may require, report to the Secretary such information and retain such documentation as the Secretary may require, including the amount and frequency of incentive payments made and the number of Medicare fee-for-service beneficiaries receiving such payments 36 18

19 Brian F. Bauer This presentation is solely for educational purposes and the matters presented herein do not constitute legal advice with respect to your particular situation. Anchorage Annapolis Dallas Denver Detroit Indianapolis Milwaukee Raleigh Seattle Washington, D.C. 19