The November 2010 Labor and Employment Law Update focuses on the ADAAA, affirmative action plans, antitrust lawsuits, group health insurance and the PPACA, National Labor Relations Board, social networking, wage and hour claims, and wellness programs. Read more…
von Briesen Health Law Blog
November 18, 2010
November 16, 2010
CMS Releases its CY 2011 OPPS/ASC Final Rule
CMS has released its CY 2011 final rules for hospital outpatient and ambulatory surgery center payment (the “Final Rule”). As described by CMS, notable provisions of the Final Rule relate to:
- CMS’s application of a 2.35% update to the OPPS for CY 2011.
- CMS’s application of a 0.2% update to the ASC payment system for CY 2011.
- Waiver of the Part B deductible and coinsurance for certain preventive services paid under the hospital outpatient prospective payment system (including the initial preventive physical examination) and certain preventive services paid under the ambulatory surgery center payment system.
- CMS’s decision not to finalize a payment adjustment for cancer hospitals for 2011. The health care reform legislation (PPACA) requires CMS to make a budget neutral payment adjustment if outpatient costs incurred by certain cancer hospitals exceed the outpatient costs incurred by other OPPS hospitals.
- Additional quality measures for hospital outpatient departments to report. CMS is adding four quality measures (including a health information technology measure and three imaging efficiency measures) for the CY 2010 payment determination and eight new measures for the CY 2013 payment determination. Six of the new measures for the CY 2013 payment determination relate to the emergency department.
- CMS’s efforts to validate whether hospitals accurately report quality measures using chart-abstracted data. CMS will validate data from 800 randomly selected hospitals for the 2012 payment determination.
- Revisions to CMS’s supervision requirements for outpatient therapeutic services.
- The addition of six surgical procedures to the list of procedures that Medicare will cover in an ASC.
- A prohibition on the use of Stark’s “rural provider” and “whole hospital” exception by new physician-owned hospitals and limiting the ability of existing physician-owned hospitals to expand their capacity.
- Implementation of the direct and indirect graduate medical education provisions of PPACA. CMS must reallocate unused residency slots to certain hospitals with qualified residency programs. CMS also must reallocate residency slots from hospitals that will close down to other teaching hospitals. The new regulatory provisions also relate to how hospitals should count hours a resident spends in training and research activities and in patient care activities in a non-provider setting (e.g. in a physician’s office).
You can review the entire Final Rule here or CMS’s summary here.
November 11, 2010
von Briesen & Roper Health Law Update: TRICARE and OFCCP Jurisdiction Over Providers
Recent decisions by the Department of Justice have changed the standard under which the Office of Federal Contract Compliance Programs (“OFCCP”) exercises jurisdiction over hospitals and other providers in some circumstances.
Recent TRICARE Case
In the most recent case, a hospital’s agreement to provide services to veterans under the TRICARE program of the Department of Defense was found to make the hospital a federal subcontractor subject to affirmative action requirements and OFCCP jurisdiction. In an earlier case the Administrative Review Board (“ARB”) drew a distinction between hospital contracts with insurers, which do not create OFCCP jurisdiction, and hospital contracts with HMOs or other entities that provide medical services, which do create OFCCP jurisdiction. In the new case, the ARB found that the TRICARE program was not a contract to provide insurance but rather a contract to provide medical services, like an HMO. The key is that the hospital had “undertaken to perform a portion of the [prime contractor’s] obligations under the TRICARE contract.” OFCCP v. Florida Hospital of Orlando, Case No. 2009-OFC-00002 (Oct. 18, 2010).
What is the Law Now?
The recent cases make clear that the OFCCP is taking an aggressive approach to expand its jurisdiction over healthcare providers. However, there are still limits to OFCCP jurisdiction.
Grants and Federal Financial Assistance
Grants from the federal government are still not considered contracts that create affirmative action obligations or OFCCP jurisdiction. Several years ago, the OFCCP issued an internal directive confirming that receipt of Medicare reimbursement for services does not trigger affirmative action obligations or OFCCP jurisdiction. That has not changed.
Contracts With Health Insurance Providers (as opposed to HMOs)
As mentioned above, the OFCCP has previously ruled that healthcare providers’ contracts with insurance companies do not create OFCCP jurisdiction, even if the insurance company contracts to provide insurance to federal employees. Note that the OFCCP draws a distinction between insurance companies and HMOs.
TRICARE and HMOs that Serve Government Employees
While the decision involving an HMO serving government workers has been appealed, and the TRICARE case is likely to be appealed, the OFCCP’s current position stands. Healthcare providers that have contracts with TRICARE or with an HMO providing services to government employees are subject to affirmative action requirements and OFCCP jurisdiction. As the Department of Defense noted in the TRICARE case, affirmative action obligations and the prospect of an OFCCP audit are significant burdens that might discourage providers from contracting with TRICARE to provide services. Providers may determine that the most efficient response to the recent expansion of OFCCP jurisdiction is to end their relationships with TRICARE.
Incidental Relationships With Other Government Contractors
Healthcare providers’ contracts with other businesses that are federal contractors will not necessarily trigger affirmative action obligations and OFCCP jurisdiction. The recent cases expanding OFCCP jurisdiction focused heavily on the fact that the prime contractors’ obligations to the government required that they provide medical services, and the hospitals in question were providing those services. These cases do not provide a basis for OFCCP to assert jurisdiction over alleged subcontractors who are not performing any part of the prime contractor’s obligations to the government. For example, a hospital that provides occupational health services for a manufacturing company that contracts with the federal government to provide airplane parts is not performing any portion of that manufacturing company’s obligation to provide airplane parts. The prime contractor could provide airplane parts without the occupational health services of the hospital. The hospital, therefore, does not fit the definition of “subcontractor” and does not fall under the OFCCP’s jurisdiction.
Conclusion
Most healthcare providers previously lumped TRICARE and HMOs in with Medicare and insurance providers and believed all were outside the scope of contracts that create OFCCP jurisdiction. The recent cases change that. Healthcare providers that have agreements with HMOs serving government employees (not health insurance providers) or with TRICARE (valued over $50,000) will need to comply with affirmative action requirements and submit to OFCCP audits. Beyond that, however, these cases do not establish greater OFCCP jurisdiction.
November 9, 2010
CMS Releases its CY 2011 PFS Final Rule
CMS has released its CY 2011 Medicare Physician Fee Schedule (PFS) Final Rule. As described by CMS, notable provisions of the Final Rule relate to:
- Waiver of the Part B deductible and coinsurance for most preventive services (including preventive services recommended by the U.S. Preventive Services Task Force).
- Coverage of annual wellness visits in which beneficiaries receive prevention plan services.
- Incentive payments for certain primary care practitioners who provide a certain amount of primary care. To make it easier for rural practitioners to qualify for the incentives, CMS will not consider charges for inpatient care and emergency department visits in calculating whether the practitioner met the primary care threshold of sixty percent. CMS will generally identify eligible practitioners for CY 2011 using claims data and the physician’s specialty designation from 2009, but will use 2010 claims data for newly enrolled practitioners.
- An incentive payment for major surgical procedures performed by in health professional shortage areas. General surgeons will be eligible for the incentive payments.
- Permission for physician assistants to perform the level of care certification required for coverage under Medicare’s skilled nursing facility benefit.
- An increase in the payment for certified nurse-midwife services to 100% of the PFS amount.
- The reinstatement of reasonable cost payment for certain clinical diagnostic laboratory tests provided by hospitals with fewer than 50 beds and which are located in certain rural areas.
- Amendments to the in-office ancillary services exception to the Stark laws. With respect to magnetic resonance imaging, computed tomography and positron emission tomography, physicians will have to disclose to a patient in writing at the time of referral that they may obtain such services from another supplier. The physician will have to provide the patient a list of five alternative suppliers within a 25-mile radius of the physician’s office.
- The expansion of round two of the DMEPOS competitive bidding program to 91 metropolitan statistical areas.
- The identification of additional categories of codes that may be misvalued under the PFS.
- A 25% reduction for the practice expense component of the second and subsequent outpatient therapy service provided by a given provider to a beneficiary on the same date of service. The policy will apply to all Part B outpatient therapy services.
- An adjustment to the equipment utilization factor for expensive diagnostic imaging equipment and an increase in the multiple procedure payment reduction for the technical component of certain single-session imaging services.
- A reduction in the maximum period for submitting Medicare claims to not more than 12 months after the date of service and a requirement to file claims for services performed prior to January 1, 2010 no later than December 31, 2010. Exceptions to these filing requirements are made for retroactive entitlement situations, dual-eligible beneficiary situations and retroactive disenrollment from Medicare Advantage plans or PACE provider organizations.
You can review the entire Final Rule here or CMS’s summary here. The Final Rule is effective January 1, 2011.
November 5, 2010
CMS’s Supervision Rules Still in Flux
CMS has released its CY 2011 OPPS Final Rule. The Final Rule contains the following significant developments to CMS’s supervision policy for hospital outpatient therapeutic and diagnostic services:
- Non-enforcement policy for critical access hospitals extended for another year. CMS provided notice in early 2010 that it would not enforce the supervision requirements for outpatient therapeutic services provided by critical access hospitals (“CAHs”) in 2010. In contrast to its original intentions, CMS has extended its non-enforcement policy for CAHs through CY 2011.
- Non-enforcement for small rural hospitals in CY 2011. In addition to extending the non-enforcement policy for CAHs, CMS has decided not to enforce the direct supervision requirement for outpatient therapeutic services provided by small rural hospitals that have 100 or fewer beds. CMS will consider a hospital to be rural if it is geographically located in a rural area or paid through the OPPS with a wage index for a rural area. CMS stated that this definition of “small rural hospitals” is the same definition recognized for Transitional Outpatient Payments.
- Removal of physical boundary limitations. For both hospital outpatient therapeutic services and outpatient diagnostic services, direct supervision will no longer include physical boundary limitations for most settings effective January 1, 2011. Direct supervision will only require the supervisor to be “immediately available.” The exception is for diagnostic services provided under arrangements in non-hospital locations, for which direct supervision will still require the supervisor’s physical presence in the office suite at the non-hospital location.
- Non-Surgical extended duration therapeutic services. CMS has established a category of “nonsurgical extended duration therapeutic services” for which direct supervision is required during the initial stage of the service/procedure, followed by general supervision. This category includes 16 services, including observation services. CMS declined, however, to include blood transfusion or chemotherapy in this category. Chemotherapy and blood transfusion services must still be provided under direct supervision during the duration of the treatment.
- Independent review process for alternative supervision levels. CMS plans to establish an independent review process and committee to consider requests for alternative supervision levels (e.g. general supervision or personal supervision) for outpatient therapeutic services. Effective for CY 2012, the committee would assess whether specific services should require general, direct or personal supervision. All outpatient therapeutic services currently require direct supervision. Time will tell what this process could mean for ongoing supervision requirements.
This Final Rule is good news for providers, especially CAHs and small rural hospitals. The new flexibility regarding physical boundaries also especially helps providers in meeting this Medicare requirement. What has not changed, however, are physician/non-physician practitioner qualification requirements, which continue to raise questions.
You may access a display copy of the full 2011 OPPS Final Rule here.