Tag: healthcare providers

2017 MIPS Performance Feedback Reports may erroneously report 2019 Medicare payment adjustments

By Tayler Chambless, Class of 2020; Elizabeth N. Pitman, Counsel at Waller

2017 was the first year for participation in the Merit-based Incentive Payment System (MIPS), a Quality Payment Program (QPP) implemented by CMS, to award or penalize participating clinicians with regard to future Medicare reimbursements based upon reporting under four categories:

  1. Quality
  2. Improvement Activities
  3. Promoting Interoperability (2017 Advancing Care Information; previously Meaningful Use)
  4. Cost

In July, CMS released 2017 Performance Feedback Reports detailing clinicians’ MIPS final scores, performance category details, and 2019 MIPS Medicare payment adjustments. According to CMS, approximately 621,700 providers received negative adjustments.  At the same time as release of reports, CMS conducted a “targeted review” and discovered major calculation errors in the following areas:

  • Advancing Care Information and Extreme and Uncontrollable Circumstances Hardship Exceptions
  • Awarding Improvement Activity credit for successful participation in Improvement Activities Burden Reduction Study
  • All-Cause Readmission measure

On September 25th, CMS announced that clinicians have 20 days to request a targeted review of their  MIPS report.  Lack of transparency by CMS has buoyed critic positions that MIPS is too complicated.  CMS, however, states that it has “reviewed the concerns, identified a few errors in the scoring logic, and implemented solutions. The targeted review process worked exactly as intended, as the incoming requests quickly alerted us to these issues and allowed us to take immediate action.”

Clinicians are encouraged to review Performance Feedback Reports and request a Targeted Review by Oct. 15, 2018, at 8 p.m. EDT.

What is a targeted review, and how do I submit a request?

Clinicians must request a Targeted Review through the formal online process established by CMS. The Performance Feedback Report may be found at the QPP Portal.

No targeted review is available for:

  1. Methodology used to determine the amount of the MIPS payment adjustment factor and the amount of the additional MIPS payment adjustment factor and the determination of such amounts;
  2. Establishment of performance standards and performance period;
  3. Identification of measures and activities specified for a MIPS performance category and information made public or posted on the Physician Compare CMS website; and
  4. Methodology used to calculate performance scores and calculation of such scores (weighting measures and activities)

CMS will generally require additional supporting documents that the clinician must provide within 30 days. All targeted review decisions are final and without further review.

Clinicians should be prepared to submit supporting documents:

  • Supporting extracts from the electronic health record (EHR)
  • Performance data provided to third-parties
  • Performance data submitted to CMS
  • QPP Service Center ticket numbers
  • Signed contracts or agreements between clinician/group and third-party intermediaries
  • Alternative Payment Model participation agreements
  • Partial qualified participant (QP) election forms
  • Other requested documents.

CMS is in the process of reviewing over 15,000 comments on a proposed rule that was issued in July to outline changes for year three of the MIPS Quality Payment Program and update the Medicare physician fee schedule. The final rule will be issued later this fall.

 

Cigna-Express Scripts, CVS-Aetna deals continue vertical integration in healthcare

By Curtis Campbell, Class of 2019; Kim Looney, Partner at Waller

The Cigna-Express Scripts and the CVS Health-Aetna mergers are among the most significant healthcare mergers of the past decade and are anticipated to transform the U.S. healthcare business. Both of these vertical deals have successfully shown how they can provide consumer benefits in order to pass federal antitrust scrutiny.

Cigna-Express Scripts

The Department of Justice decided not to challenge Cigna’s $67 billion acquisition of Express Scripts because the deal would “unlikely result in harm to competition or consumers.” Regulators spent six months on the investigation, reviewed more than 2 million documents, and interviewed more than 100 people before reaching their conclusion. However, while the federal antitrust division will not seek to block the merger, the deal is still subject to state regulations and various departments of insurance. The deal is expected to close at the end of the year.

Because the DOJ is not challenging the merger, Cigna is closer to putting its medical benefit services and Express Scripts expertise in pharmacy benefit management under one roof. This will potentially help rein in spending on costly specialty drugs. However, there is some concern that consumers could end up at the “mercy of a handful of giants” as choices of medical care and pharmacy become a thing of the past. However, backers of the merger thought that it will create efficiencies in the market. Cigna CEO David Cordani stated that “we are another step closer to completing our merger and delivering greater affordability, choice and predictability to our customers and clients as a combined company.

Given the lack of overlap between Cigna’s business versus Express Scripts, analysts stated that it is not surprising that the merger went through. Cigna had to overcome last-minute opposition from some investors, but they backed down after major shareholder advisory firms came out in support of the deal. Cigna executives said they expect the deal to result in earnings per share to increase from $18 to $20-21 by 2021 with a long-term annual growth of 6 to 8 percent.

CVS Health-Aetna

Shortly after approving the Cigna-Express Scripts merger, the DOJ also conditionally approved the $69 billion merger between CVS Health and Aetna. The conditional approval was based on Aetna’s decision to sell off its private Medicare drug plans. This addressed the government’s concerns that the combined companies would control too much of the healthcare market.

CVS Health had revenues of about $185 billion last year and provided prescription plans to roughly 94 million customers. Aetna had about $60 billion in revenue last year and currently covers 22 million people in its prescription health plans. With this merger, the two companies hope to better coordinate care for consumers as the mergers aim to help tighten cost controls. The merger focuses on Aetna’s addition of a retail component and the use of CVS’s 10,000 pharmacies and 1,100 retail clinics to deliver care, enabling a variety of new services to be brought into its retail stores, potentially transforming the corner pharmacy chain to a healthcare hub with thousands of locations.   This change could enable CVS stores to serve as a location where someone could get care for ailments ranging from a sore throat to diabetes. A person could also potentially go to a CVS store to get blood tests to monitor chronic conditions.

These two mega-mergers continue the growing trend of healthcare companies vertically integrating to improve quality and lower healthcare costs. With more consumers going to outpatient facilities instead of hospitals, this merger could help claim more of a market share in the healthcare industry by utilizing the CVS stores to attract more consumers. The merger also could help by decreasing deductibles and lowering out-of-pocket spending, which are two primary concerns for consumers when deciding to seek medical care.

These mergers could also put pressure on rival companies to come up with their own deals.  Critics worry that these mergers mean that consumers could end up with fewer options and higher expenses because consumers could have less control over their medical care and prescription drugs. Only time will tell how these mergers actually affect consumers going forward.

Federal government tightening enforcement for hospice, post-acute care providers

By Curtis Campbell, Class of 2019; Jessie C. Neil, Partner at Waller; J. Logan Wilson, Associate at Waller

The Department of Health and Human Services’ Office of Inspector General (OIG) recently announced that it had found several vulnerabilities in the Medicare hospice program while examining practices between 2006 and 2016.

The number of beneficiaries in the program expanded 53 percent between these dates, growing from 930,000 beneficiaries in 2006 to 1.4 million beneficiaries in 2016. However, spending in the same period grew 81 percent, increasing from $9.2 billion in 2006 to $16.7 billion in 2016. The number of hospices also increased 43 percent, growing from 3,062 in 2006 to 4,374 in 2016.

Beneficiaries of the program forgo curative care for terminal illnesses and instead receive palliative care. Palliative care can be provided in a variety of settings, including the patient’s home, a nursing facility, a hospital or a hospice inpatient unit. Medicare pays hospices for each day a beneficiary receives care, regardless of the quantity or quality of services. Medicare pays a different daily rate for four (4) different levels of hospice care: routine home care, general inpatient care, continuous home care and inpatient respite care.

While conducting its examination, OIG concluded that hospices did not always provide necessary services to beneficiaries. In some cases, hospices did not manage patients’ symptoms or medications effectively, leaving them in pain for many days. Additionally, OIG found that hospices often did a poor job care planning, that hundreds of hospices only offered routine home care, that many hospices did not offer services on the weekend, and that many beneficiaries did not see a physician. Some beneficiaries and their families and caregivers also did not receive critical information needed to make informed decisions about the care the beneficiary received.

OIG also identified issues with hospices inappropriately billing costs and higher-than-appropriate levels of care to Medicare worth hundreds of millions of dollars. OIG noted several fraudulent activities, including enrolling beneficiaries who are not eligible for hospice care and billing for services that were never provided.

Furthermore, OIG found that the current payment system incentivizes hospices to minimize patient services and seek beneficiaries who have uncomplicated needs. The Centers for Medicare & Medicaid Services (CMS) has made some changes to the payment system, but the underlying structure remains unchanged.

As a result, OIG made several recommendations to CMS about how to improve the hospice program, including:

  • Strengthening the survey process to better ensure that hospices provide beneficiaries with needed services and quality care;
  • Seeking statutory authority to establish remedies for hospices with poor performance;
  • Developing and disseminating additional information on hospices to help beneficiaries and their families and caregivers make informed choices about their care;
  • Educating beneficiaries and their families and caregivers about the hospice benefit;
  • Promoting physician involvement and accountability to ensure that beneficiaries get appropriate care;
  • Strengthening oversight of hospices to reduce inappropriate billing; and
  • Taking steps to tie payment to beneficiary care needs and quality of care to ensure that services rendered adequately serve beneficiaries’ needs, seeking statutory authority if needed.

OIG is telegraphing its intent to focus enforcement efforts around hospice care in particular and post-acute care in general. Companies with a proactive compliance program will wisely adapt their processes to reflect these new government priorities.

Pathways to Success: CMS proposes accelerated shift to provider risk in ACOs

By Clay Brewer, Class of 2020; Jesse C. Neil, Partner at Waller

In an effort to facilitate the American healthcare system’s transformation from volume-based to value-based payment, the Centers for Medicare and Medicaid Services (CMS) is requesting public comment regarding its newly proposed rule that would shift the amount of risk participants in Accountable Care Organizations (ACOs) assume under the Medicare Shared Savings Program (MSSP).

An ACO is a group of physicians, hospitals, and other healthcare providers that care for a group of beneficiaries under Medicare Parts A and B. The core principles of the system are to streamline care and reduce costs within a cohesive structure. Under the current MSSP framework, ACOs may join one of three tracks with each differing primarily on the amount of risk each ACO opts to assume. Currently, 561 of the 649 ACOs are members within one of the tracks, with eighty-two percent of the 561 being enrolled in Track 1. Under Track 1, the ACOs only experience “upside-risk,” which means the ACO members are eligible to receive any achieved savings but are not financially responsible if the ACO incurs a loss.[1] CMS Administrator Seema Verma, however, recently opined that “[t]he results show that ACOs that take on regular levels of risk show better results for cost and quality over time.”[2] As a result, CMS is requesting comment on a new proposed rule, entitled “Pathways to Success,” to shift more of the downside risk to providers with the goal of incentivizing more efficient care and across-the-board savings.

The proposed framework establishes two tracks: (1) BASIC and (2) ENHANCED. Each ACO would be permitted to choose the track that best fits its needs while also being able to enter into five-year agreements as opposed to three-year. This would enable the ACOs to adjust to the risk that will need to be assumed over time while also learning to manage the associated costs.

The BASIC approach will permit the ACOs to assume risk over a five-year period with the first two years being upside-only risk with a “glide path” into years three, four, and five with increasing risk assumption. One caveat to the glide path is that ACOs currently within an upside-only risk plan, such as Track 1, would be limited to one of the two years of upside-only risk under the BASIC track. However, after year five, this newly-assumed risk would qualify the ACO as an Advanced Alternative Payment Model (APM), permitting the ACO to receive additional incentive payments for meeting quality thresholds.

Under the ENHANCED approach, ACOs may enter the program immediately qualifying as an APM at a set risk amount for the entire five-year period as long as the risk is greater than year five of the BASIC approach. On the other hand, ACOs that have had no experience under a two-sided risk approach may enter into any of the BASIC’s glide paths or enroll into the ENHANCED model from the start.

Due to the differences that exist between low revenue (i.e., physician practices) and high revenue (i.e., hospitals) entities, those who qualify as low revenue would be eligible to reapply for another five-year BASIC program at the highest level of risk. High revenue entities would be required to move into the ENHANCED track and assume additional risk.

Although efficient care and lower costs are appealing to practically everyone, the timing of the announcement and a change in the economic model will have a material impact on hospitals and physicians that participate in the programs. There are few areas where public policy is so intertwined with the clinical, operational, and financial performance of healthcare providers. Some stakeholders may see a competitive advantage to an accelerated move to downside financial risk. For others, it could lead them to withdraw from participation in the program altogether. Regardless, it is a critical moment in the transition to a value-based system, and these programs will benefit immensely from thoughtful, practical feedback from the physicians, hospitals, payors, and even investors that are trying to lead the way.

 

[1] Tracks 2 and 3 consist of only eighteen percent of enrollees with varying degrees of two-sided risk. Track 3 becomes the ENHANCED approach in the proposed rule.

[2] Seema Verma, Pathways to Success: A New Start for Medicare’s Accountable Care Organizations. August 9, 2018.

10 ways you can protect your company from a cyberattack

By Emmie Futrell, Class of 2018; Robb S. Harvey, Partner at Waller; Elizabeth N. Pitman, Counsel at Waller

The government, through the United States Department of Justice, has increased its efforts to respond to cyberattacks, a hot-button issue that extended across disciplines in 2017. The newly created Cyber-Digital Task Force has been charged with developing policies to combat global cyber terror and involve federal law enforcement on the front lines of this virtual battlefield.

The OCR’s January and February 2018 OCR Cybersecurity Newsletters provided targeted tips to HIPAA-covered entities and business partners to prevent cyber extortion as a means to obtain ransom money and to avoid the consequences of phishing attacks. The OCR recommended training, vigilance and bolstering defenses by encrypting and backing up sensitive data and training workforce. Specifically, OCR provided the following list of suggestions:

  1. Train employees to identify unusual emails and other messages that hackers could use to break into your system.
  2. Document suspicious activity and review those logs regularly.
  3. Perform a risk analysis that looks at the entire organization and addresses known risks.
  4. Use anti-malware programs to prevent access by malicious software proactively.
  5. Implement and test cyberattack recovery plans.
  6. Encrypt and back up sensitive data.
  7. Stay on top of new and emerging cyber threats, perhaps by signing up for governmental alerts known as US-CERT alerts, which are generated by the government’s National Cyber Awareness System and received via email or an RSS feed and provide timely information about security issues
  8. Be wary of unusual emails and text messages
  9. Use multi-factor authentication
  10. Stay updated with anti-malware software and system patches

These measures can both protect and prove cost-effective.

The 2017 Ponemon Data Breach report found that the healthcare industry in the United States stands to lose the most from a data breach, with the average cost per lost or stolen record at $380. Estimated savings for companies that only chose to extensively encrypt information are $16 per record and, companies that have a prepared Incident Response Team and Plan could save $19 per record. Saving these costs per record could significantly lessen the inevitable economic impact of a large-scale breach. The report made clear that time is of the essence in a breach, a sentiment that has been echoed by the OCR’s guidance and HIPAA’s response requirements.

Implementing the OCR’s guidance can help healthcare companies save costs when faced with cyber extortion. Many of the suggestions from the OCR will also ensure that HIPAA standards are satisfied. For example, documenting suspicious activity will be key in creating the necessary paper trail in the event of an OCR investigation. This type of documentation is already required by HIPAA. Implementing cyberattack recovery plans like training an Incident Response Team and developing contingency plans, including the possible necessity of paying the ransom, will guarantee that the breach can be identified and contained as quickly as possible and data availability and integrity are maintained. These measures will ensure that electronic health records and other healthcare information continue to be a pathway towards innovation, rather than a backdoor for an insidious attack.

Why telehealth was a big winner in new budget deal

By Andy Cole, Class of 2018; Amber Greene Arnold, Associate at Waller

Hidden in the details of the Bipartisan Budget Act of 2018 are some key telehealth provisions that are receiving praise from many industry groups and could mark a significant development for Medicare telehealth policy.

The new legislation promotes telehealth in several ways.

Tele-stroke. Medicare currently only covers tele-stroke services for patients located in rural health professional shortage areas and counties not classified as a metropolitan statistical area.  Effective January 1, 2019, however, Medicare will cover a telehealth consultation for any Medicare beneficiary presenting at a hospital with acute stroke symptoms, without regard to current geographic restrictions.

End-Stage Renal Disease (ESRD) Services.  Beginning January 1, 2019, the legislation allows nephrologists to use telehealth to provide monthly clinical assessments for ESRD patients on home dialysis.  This provision is not subject to any geographical restrictions and the “originating site” may be a freestanding dialysis facility or the patient’s home. However, ESRD patients benefiting from this provision will still be required to have an in-person assessment each of the first three months of home dialysis and once every three months thereafter.  This provision is notable for ESRD patients who may have difficulty traveling.

Medicare Advantage Plans.  Currently, Medicare Advantage plans may cover telehealth services in addition to those covered by the traditional Medicare program, but these additional telehealth services are not paid for separately by Medicare.  The new legislation, however, authorizes Medicare Advantage plans, beginning with the 2020 plan year, to offer to include additional telehealth benefits beyond those available under traditional Medicare in their annual bid to the government.  These additional telehealth services would also have to be available to patients through in-person visits as well.  Due to the rapidly growing number of beneficiaries enrolling in Medicare Advantage plans, this provision may have a significant effect on the growth of telehealth services under Medicare.

Accountable Care Organizations.  The legislation also allows for increased coverage of telehealth services provided to Medicare patients assigned to certain ACOs.  More specifically, after January 1, 2020, for two-sided ACOs (meaning the ACO shares in both savings and losses) or an ACO tested or expanded through the Center for Medicare and Medicaid Innovation, existing telehealth geographic limitations will not apply.  This will allow for a patient’s home to qualify as an “originating site” even if the patient’s home is not located in a rural health professional shortage area.

These changes reflect a continued interest by lawmakers in supporting and expanding telehealth services and have the potential to increase access to care for Medicare beneficiaries while potentially lowering costs.  Healthcare providers should monitor the implementation of these provisions and evaluate opportunities for participating in Medicare’s expansion of coverage for telehealth.

Between a rock and a hard place: medical-device stakeholders disappointed by cancelled CMS rulemaking

By Emmie Futrell, Class of 2018; Denise D. Burke, Partner at Waller

Another attempt at bridging the gaping lag between FDA approval for medical devices and CMS’s Medicare coverage determinations has been struck down, after a nine-month standstill.

CMS’s proposed rulemaking included a promising new program called EXCITE, or expedited coverage of innovative technology. The proposed rulemaking had not been made public in substance, and the reasons for its cancellation are still unclear.

CMS officials confirmed that EXCITE was intended to improve access to innovative medical-device technologies for Medicare patients.

Members of the medical-device industry, however, believe that EXCITE was patterned after a 2016 industry proposal that had been presented to CMS to correct the backlog.

The 2016 proposal, known as PACER, or the provisional accelerated coverage to encourage research initiative, suggested that CMS grant provisional coverage under Medicare for FDA-approved devices. This would ensure that patients could access innovative technology, while CMS could gather the information necessary for its own approval process.

The provisional coverage would also alleviate pressure on device sponsors, who would not suffer from having to bankroll expensive and highly specific clinical tests before devices are even on the market.

EXCITE is not CMS’s first attempt to reduce the backlog between FDA and Medicare approval for medical devices.

This backlog, which can sometimes last years, results from the independent statutory mandates that tie the hands of the respective agencies. FDA must ensure that the drugs and devices it approves are “safe and effective,” while CMS can only approve products for Medicare coverage if the products are “reasonable and necessary.” This coverage determination requires CMS to evaluate the necessity of devices for typical Medicare patients, which are generally more medically complex than those of patients in FDA clinical trials.

In 2011, the Department of Health and Human Services attempted to address the lag between FDA and Medicare approval by initiating a parallel review program. This program focused on increasing communication between CMS, the FDA and device manufacturers, including providing medical-device stakeholders and manufacturers with detailed information about the study data that each agency would require in the approval process.

It was believed that this would speed the review process by allowing manufacturers to tailor their studies to encapsulate necessary data for each agency.   Lack of resources, however, largely doomed this program before it was effectively launched. Critics have condemned the program, which only resulted in two approvals by CMS.

CMS’s cancellation of the EXCITE program is a strong indication that, for at least the immediate future, medical-device manufacturers will continue to suffer from the bottleneck between the FDA and CMS and experience lengthy delays between FDA approval and CMS reimbursement.

CMS unveils new bundled payment model

By Chase Doscher, Class of 2018; Elizabeth N. Pitman, Counsel at Waller; Zachary D. Trotter, Associate at Waller

Earlier this month, CMS announced the launch of the Bundled Payment for Care Improvement Advanced (BPCI Advanced) payment model.

This is the first Advanced Alternative Payment Model (Advanced APM) introduced under the Trump Administration and the start of the next generation of BPCI models offered through the Center for Medicare and Medicaid Innovation and authorized under the Affordable Care Act.  Under the MACRA Quality Payment Program, providers will be subject to Medicare payment adjustments through one of two tracks: Merit-based Incentive Payment System (MIPS) or Advanced APM.

Under MIPS, a provider may receive a negative, neutral or positive adjustment with the expectation that the majority of participants will experience either negative or neutral adjustments. The BPCI Advanced model, however, entices providers to participate in an Advanced APM by offering the potential for bonus payments under MACRA for those who meet or achieve certain benchmarks during a 90-day episode of care, including the all-cause hospital readmission measure and advance care plan measure.  As with other Advanced APMs, BPCI Advanced requires that participants assume some of the risk and ties payment to quality performance metrics and the required use of certified healthcare technology.

After cancelling an Obama-era proposal for converting certain of the BPCI episode models to mandatory bundled-payment models, the Trump Administration effort to maintain voluntary participation is an attempt to decrease the administrative burdens such models placed on providers. Voluntary participation in BPCI models, such as Comprehensive Care for Joint Replacement and the Cardiac Rehabilitation Incentive model, has been offered since 2016.

This new model will give providers, “an incentive to deliver efficient care,” Seema Verma, CMS Administrator, said. “BPCI Advanced builds on the earlier success of bundled payment models and is an important step in the move away from fee-for-service and toward paying for value.”

Thirty-two clinical care episodes will initially be included in BPCI Advanced, 29 inpatient-setting episodes of care and three outpatient-setting episodes of care and the potential for episode revision for new and existing participants beginning January 1, 2020.   The clinical care episodes include services such as major joint replacement of a lower extremity, percutaneous coronary intervention and spinal fusion.

BPCI Advanced performance period is from October 1, 2018 through December 31, 2023.  Participants joining in the initial stage may not exit prior to January 1, 2020.

Providers interested in at least one of the 32 clinical episodes to apply to the model have until 11:59 pm EST on March 12, 2018 to apply via the application portal.

Back to the Future: CMS revives Obama-era proposed rule on critical access hospitals

By Emmie Futrell, Class of 2018; Kristen A. Larremore, Partner at Waller; Amber Green Arnold, Associate at Waller

Since the 1997 Balanced Budget Act, which created the designation for Critical Access Hospitals (CAH), the requirements for Medicare and Medicaid participation for these rural facilities have largely remained untouched.  But, a recent decision by CMS to revive and finalize an Obama-era proposed CAH rule will change certain Medicare participation requirements for CAHs.

According to a recent rulemaking notice, CMS intends to issue a final version of the proposed CAH rule sometime in the next 17 months.

The CAH designation was created to protect financially vulnerable rural hospitals that provide vital care to rural communities and combat a string of rural hospital closures. However, the intervening years since 1997 have brought many changes to healthcare in the United States, and in June 2016 CMS issued a proposed rule in an attempt to modernize Medicare participation requirements for CAHs and other hospitals.

Highlights of the wide-ranging proposed rule include a requirement that CAHs maintain an infection prevention program, as well as an antibiotic stewardship program to promote the appropriate use of antibiotics.  CAHs would also be required to designate leaders for each of these programs.

CMS hopes these programs will result in a reduction in hospital-acquired infections, including those that may be drug-resistant, which can lengthen inpatient stays and result in increased costs to the Medicare program. However, critics of these proposed requirements have noted that many drug-resistant organisms come into hospitals from other settings and have questioned whether these anti-infection requirements will improve patient care if care delivered outside of the hospital setting is not subject to similar requirements.

The proposed rule also establishes an explicit requirement that CAHs comply with federal anti-discrimination laws — – a requirement already applicable to Medicare providers.  The proposed rule would address this disparity and seek to address reports of discriminatory barriers to access by requiring CAH facilities to adopt and implement nondiscrimination policies.

In addition, the proposed rule would clarify that each patient’s medical records must contain adequate documentation justifying the patient’s admission and continued hospitalization, support the patient’s diagnoses, and describe the patient’s progress and response to medications and services.  The proposed rule also clarifies that patients should be able to access their medical records in form and format requested by the patient, including electronically, if readily producible in that form and format.

In light of recent findings in a Bipartisan Policy Center report that was published in January 2018, CMS may consider additional revisions to the proposed rule.

The report considered the rural communities of seven upper Midwest states and the relationship between local communities and CAHs. The report indicated that, while in many of the smaller localities studied, there were still barriers to access of critical primary care services, CAHs would not necessarily be helpful in addressing such access issues in each rural community.

The report found that, in some instances, CAHs are not financially sustainable due to low occupancy of patients requiring inpatient services. Proposals are wide-ranging to correct this issue, but many proposals include modifying the CAH designation to allow these facilities to include primary care and other outpatient services in addition to the inpatient care that they are already required to provide.

Although the extent to which the Trump administration will finalize the rule as initially proposed remains unclear, CAHs should closely monitor developments for any new CMS proposals addressing CAHs and a final rule implementing changes, because CAHs continue to be a focus of lawmakers and healthcare policy advisors.

OIG Gives Green Light to Gainsharing Arrangement

By Brandon Huber, Class of 2019; Kim Harvey Looney, Partner at Waller; Justin Hickerson, Associate at Waller

A gainsharing arrangement between a non-profit hospital and members of a multi-specialty physician group has been authorized by the Office of Inspector General for the first time since the 2015 enactment of MACRA removed certain roadblocks from the expanded use of gainsharing in the healthcare industry.

An OIG advisory opinion issued earlier this month involves a proposed arrangement in which a non-profit medical center will pay certain neurosurgeons a share of cost savings realized by the selection and use of certain products during spinal fusion surgeries. Thirty-four cost-reduction measures were identified by the medical center based upon considerations of costs, quality of patient care, and utilization on a national level. Thirty-one recommendations involved standardizing certain devices and supplies used in spinal fusion surgeries. The remaining three suggested that the neurosurgeons use Bone Morphogenetic Protein for spine surgeries only on an as-needed basis.

The proposed arrangement established a three-year term, whereby the neurosurgeons would receive 50 percent of the annual cost savings, paid each year over the term of the arrangement. The compensation paid to the neurosurgeons would then be divided on a per capita basis, with the remainder being allocated towards paying the practice group’s administrative expenses. Other safeguards implemented under the arrangement included an oversight committee and a requirement that all patients be given written notice of the arrangement and an ability to review the details prior to the performance of their procedure.

In assessing the legality of the arrangement, the OIG examined the application of both the CMP and the Anti-kickback Statute. Regarding the CMP, although the OIG could not opine as to whether the arrangement would reduce medically necessary services, it found that, based on the methodology for development and payment of the cost savings, along with the monitoring and safeguards put in place, it would not impose sanctions.

Likewise, the OIG concluded that it would not impose sanctions under the Anti-kickback Statute because the arrangement presented a sufficiently low risk of fraud and abuse. The OIG based its decision on several factors:

  • the majority of the money received pursuant to the cost-sharing arrangement would be divided per capita amongst the four neurosurgeons, thereby reducing the risk that any particular physician would be incentivized to generate disproportionate cost savings;
  • there was no prohibition on using nonstandardized products, despite the product standardization recommendations; and
  • no other neurosurgeons from outside groups were allowed to participate, reducing the likelihood that the medical center would use the arrangement to attract neurosurgeons from competing hospitals to perform surgeries at its facility.

Although the opinion only applies to the parties who requested it, the opinion can serve as a valuable reference tool for those wanting to ensure future gainsharing arrangements are legally appropriate. Furthermore, this opinion highlights the OIG’s willingness to support gainsharing arrangements as the healthcare industry transitions from a fee-for-service model of care to a system which emphasizes value-based payments.