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JULY 2017

OIG Issues Favorable Advisory Opinion Relating to Waivers of Copayments

On July 7, 2017, the U.S. Department of Health and Human Services, Office of Inspector General (OIG) issued Advisory Opinion 17-02.  The Advisory Opinion relates to a request by a hospital outpatient facility and a biomedical company that proposed to reduce or waive the cost-sharing amounts owed by Medicare beneficiaries for items and services furnished in connection with a clinical research study.

Brief Summary of Fact
The hospital is a non-profit, full-service, 171-bed regional medical center that provides inpatient and outpatient services and operates an outpatient facility (“Center”). The Center furnishes comprehensive wound care services, primarily to patients with chronic, non-healing wounds.

The biomedical company manufactures biodynamic therapies for wound care, including a product cleared by the U.S. Food & Drug Administration, which is indicated for the management of ulcers and exuding wounds (“Wound Care System”).

Under the proposed arrangement, the Center would reduce or waive applicable cost sharing amounts owed by financially needy beneficiaries for all study-related items and services.  The biomedical company certified that it would not compensate or reimburse the Center or the hospital in any manner for reduced or waived cost-sharing amounts owed by Medicare beneficiaries.

Under the Proposed Arrangement, the Center would determine a beneficiaries’ financial need in accordance with the hospital’s financial need policy. According to the financial need policy, to qualify for financial assistance, individuals must complete an application and provide documentation such as payroll check stubs, unemployment records, documentation of government benefits, and any other financial documentation requested by the hospital.  In addition, the hospital’s financial need policy requires patients to certify that all information provided on the financial need application is true.  Additionally, the waivers or reductions would not be on a non-routine basis and would not be advertised.

Brief Legal Summary
The anti-kickback statute makes it a criminal offense to knowingly and willfully offer, pay, solicit, or receive any remuneration to induce or reward referrals of items or services reimbursable by a Federal health care program. For purposes of the anti-kickback statute, “remuneration” includes the transfer of anything of value, directly or indirectly, overtly or covertly, in cash or in kind.  Where remuneration is paid purposefully to induce or reward referrals of items or services payable by a Federal health care program, the anti-kickback statute is violated. By its terms, the statute ascribes criminal liability to parties on both sides of an impermissible “kickback” transaction.

The Beneficiary Inducement Civil Monetary Penalty rule provides for the imposition of civil monetary penalties against any person who offers or transfers remuneration to a Medicare or Medicaid beneficiary that the offeror knows or should know is likely to influence the beneficiary’s selection of a particular provider, practitioner, or supplier of any item or service for which payment may be made, in whole or in part, by Medicare or Medicaid. The OIG may also exclude a party from Medicare for violations of the Beneficiary Inducement CMP rule.

Conclusion
The OIG concluded that the Proposed Arrangement would not constitute grounds for the imposition of civil monetary penalties and although the Proposed Arrangement could potentially generate prohibited remuneration under the anti-kickback statute, the OIG would not impose administrative sanctions.  The OIG relied on several factors including: (1) there was no advertising of the offer to reduce or waive the cost-sharing or waiver, (2) the study participants would not be told of the offer unless the study participant expressed an inability to pay the cost sharing portion, (3) the reduction or waiver of cost sharing amounts was not routine, and (4) the waiver would be based on objective evidence of financial need.

To view the advisory opinion you may click on the following link: https://oig.hhs.gov/fraud/docs/advisoryopinions/2017/AdvOpn17-02.pdf

 

 

JUNE 2017

 

CMS Lifts Prohibition on Nursing Home Arbitration Agreements After SCOTUS Decision

On Monday, June 6, 2017, the Centers for Medicare and Medicaid Services (CMS) proposed a rule rescinding a previous regulation that prohibited nursing homes and long-term care facilities from offering pre-suit arbitration agreements to incoming residents and their families as a condition of admittance.

The proposed revision represents a major change in course for CMS. In October of 2016, the regulation published by CMS prohibited nursing homes and long-term care facilities that participate in Medicare or Medicaid from requiring prospective residents to enter arbitration agreements. Soon after the regulation took effect, the American Health Care Association (AHCA) and several nursing homes in Mississippi brought suit in Federal Court, challenging the regulation and seeking a preliminary injunction to enjoin CMS from its enforcement. (See American Health Care Association vs. Burwell, District Court for the Northern District of Mississippi, Civil Action No. 3:16-Cv-00233). The suit alleged the regulation violated the Federal Arbitration Act and that CMS had exceeded its authority under the Medicare and Medicaid Acts, among other things. The District Court agreed, and issued a preliminary injunction enjoining CMS from enforcing the ban on arbitration. Thereafter, CMS appealed the ruling to the United States Circuit Court of Appeals for the Fifth Circuit. However, rather than submit their appellate brief in the case, CMS voluntarily withdrew its appeal and has now issued the proposed revision eliminating the prohibition on arbitration agreements.

The new proposed rule and CMS’s withdrawal of its appeal comes less than a month after the Supreme Court of the United States (SCOTUS) issued its decision in Kindred Nursing Centers LP vs. Clark. In Kindred, SCOTUS struck down a decision by the Kentucky Supreme Court which held arbitration agreements executed pursuant to a power of attorney were unenforceable unless they contained specific provisions giving the signor authority to waive a resident’s right to a trial by jury.  Accordingly, assuming the proposed revision is implemented, nursing homes and long-term care facilities will be able to offer pre-suit binding arbitration agreements to residents prior to admittance without any legal impediments. The deadline for public comment on the proposed revision is August 7, 2017.

 

May 2017


No Business Associate Agreement Leads to a $31,000 Penalty

Jim Hoover

Suite 3400 • 420 North 20th Street • Birmingham, Alabama 35203

jhoover@burr.com   www.burr.com

 

On, April 20, 2017, the Center for Children’s Digestive Health (CCDH) paid the U.S. Department of Health and Human Services (HHS) $31,000 to settle potential violations of the Health Insurance Portability and Accountability Act of 1996 (HIPAA) Privacy Rule and agreed to implement a corrective action plan. CCDH is a small, for-profit health care provider with a pediatric subspecialty practice that operates its practice in seven clinic locations in Illinois. 

 

In August 2015, the HHS Office for Civil Rights (OCR) initiated a compliance review of the Center for Children’s Digestive Health (CCDH) following an initiation of an investigation of a business associate, FileFax, Inc., which stored records containing protected health information (PHI) for CCDH. While CCDH began disclosing PHI to Filefax in 2003, neither party could produce a signed Business Associate Agreement (BAA) prior to Oct. 12, 2015. Additionally, neither party could produce a signed BAA prior to Oct. 2015.

 

The OCR has penalized more and more cases with covered entities and business associates for not having a business associate agreement.  It is important for you to remember that if your law firm represents a healthcare client and has access to patient health information as a result of that representation your firm is likely a business associate of the healthcare client.  As a result, the law firm and healthcare client must enter into a HIPAA compliant business associate agreement.  Otherwise, both the healthcare client and the law firm are subject to penalties. 

 

 


 

 

more Calendar

7/24/2017 » 7/29/2017
2017 FDCC Annual Meeting/ Bridging The Gap Insurance Summit

9/17/2017 » 9/19/2017
Corporate Counsel Symposium

10/23/2017 » 10/24/2017
2017 Fall Deposition Boot Camp

11/9/2017 » 11/10/2017
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