Mark Bina - Health Care Law Blog

Last week CMS published new federal regulations for nursing homes that will significantly change the way the government imposes and collects civil monetary penalties (“CMPs”). The regulations implement changes first mandated by Section 6111 of the health care reform law and become effective on January 1, 2012.  Some of the key provisions of the regulations include:       

• Mandatory Upfront Payment of CMPs.  Currently facilities may appeal a CMP imposition of remedies notice and need not pay the CMP until after all administrative appeals have been exhausted. Under the new regulations, facilities must pay the CMPs before the appeal is finally resolved and within certain specific deadlines.
  
  CMS will hold all CMPs in an escrow account pending the facility's appeal. If the facility wins the appeal, CMS will return the CMP to the provider with interest once the decision is final. Additionally, CMS may extend the time period for payments of the CMP into escrow if it finds immediate payment would create a “substantial and undue financial hardship on the facility.” If the facility does not timely pay the disputed CMP into escrow after receiving a demand, CMS may setoff the CMP amount from sums later due the facility.

• CMPs Reduced 50% For Self-Reporting and Correction of Deficiencies.  The new regulations also encourage facilities to self-report deficiencies by giving a 50% CMP reduction incentive if certain conditions are met. This reduction does not apply to Intermediate Jeopardy tags or non-compliance showing a pattern of harm, widespread harm to residents, or non-compliance resulting in a resident’s death. Additionally, the 50% reduction is not available for any deficiency existing in a previous survey.
  
  To qualify for the 50% reduction, the facility must:
  
  • Self-report the non-compliance to the State or CMS before it is identified by surveyors or before the government receives a complaint.
  • Correct the deficiency within a certain number of days of identifying the non-compliance or when the CMP is imposed.
  • Waive its right to a hearing regarding the deficiency and penalty. 
    
• Opportunity for Independent IDR Process.  If CMPs are assessed and are eligible for payment to the escrow fund, the facility has the opportunity to request a new “independent” IDR process. This IDR is a new alternative to the current State IDR process. CMS calls this IDR “independent” because it would be run by a separate State agency that must be approved by CMS. 

Last week Illinois Governor Pat Quinn signed into law major reforms to the State’s Medicaid program. Public Act 96-1501 authorizes the Illinois Department of Healthcare and Family Services (HFS) to expand HMO-style “coordinated care” to cover at least 50% of all recipients by the year 2015. The law also changes the Illinois Medicaid eligibility process by requiring certain income verifications and annual re-determinations.

On the provider side, the law empowers HFS to impose significant Medicaid fraud penalties. HFS may now impose civil monetary penalties up to $2,000 for each fraudulent claim submitted to the Illinois Medicaid program. Providers will be able to appeal the assessment of these civil monetary penalties through an administrative process before HFS and through the Circuit Court. Pharmacy providers, meanwhile, may now promote 90-day maintenance prescriptions to Medicaid beneficiaries. The law also reduces the interest rate the State must pay to pharmacies from 2% to 1% for late reimbursement payments.

For additional information about this new law, Illinois State health care, or other issues involving Medicare or Medicaid fraud, please contact Randall Fearnow or Mark Bina in the Firm’s Chicago office at 312-423-9300.

On November 17, 2010 the Centers for Medicare and Medicaid Services (“CMS”) published a final rule updating the Home Health Prospective Payment System (HH PPS) rates for 2011. The final rule also imposes new ownership, capitalization, and certification requirements for Home Health agencies.

CMS is reducing Home Health PPS rates by 4.89% for 2011. This reduction stems from the health care reform legislation, wage index and market basket updates, and case-mix coding changes. Under the final rule, the current home health outlier cap becomes permanent and PPS rates are reduced an extra 2.5%. CMS provides agencies an incentive to submit certain quality data; those agencies that do not report quality data receive an additional percentage point reduction. CMS notes that it continues to study the need for future reductions and thus the likelihood of continued cuts for 2012 is uncertain. In total, CMS believes the rule will decrease Medicare reimbursements to home health agencies by approximately $960 million for fiscal year 2011.

The rule also finalizes two controversial policies announced earlier this year regarding capitalization and ownership changes. First, the rule requires a newly enrolling home health agency to furnish proof it has “sufficient” initial reserve operating funds to survive a 90 day period. CMS may revoke billing privileges for enrolled home health agencies if they do not provide supporting documentation within 30 days of a request by CMS or a contractor that the agency had sufficient funds.

The second controversial policy in the final rule involves changes of ownership. Under the new rule rule, a home health agency that changes ownership within the first 36 months of initial enrollment may not transfer its provider agreement and Medicare billing privileges to a new owner. Instead, the new owner must file a new 855A and obtain a state survey or accreditation. Bowing to industry pressure, however, CMS did slightly modify the proposed rule and carved out some exceptions to benefit legitimate owners of home health agencies. The exceptions include:

• Change in majority ownership” is now defined as when an individual or organization acquires more than a 50% interest in a home health agency during 36 months following enrollment. A “change” also includes asset sales, stock transfer, mergers, or consolidations.
• Publicly traded companies acquiring a home health agency in which the buyer and seller had at least 5 years of cost reports in the previous 5 years are exempt from the 36 month policy.
• Restructuring of a current home health agency by its owners (e.g., partnership to LLC or S-Corp to LLC) are exempt where the individual owners remain the same and there is no change in majority ownership.
• Ownership changes involving the death of an owner with 49% or less interest in the home health agency are exempt from this rule.

Finally, the rule provides some guidance on the “face to face” encounter mandate. The health care reform act requires that a physician must document that they had a face-to-face encounter with a patient before certifying a patient’s eligibility for a home health benefit. This encounter and documentation must occur at least (a) 30 days preceding the start of home health care, or (b) 14 days after the start of care if no encounter occurs which is related to the primary reason the patient needs home health care. Similarly, a hospice physician or nurse practitioner must document they had a face-to-face encounter with a hospice patient 45 days prior to any 180 day recertification and prior to each subsequent recertification.

The rule and its new requirements go into effect on January 1, 2011.

For additional information on this rule, or if you have any questions about regulations affecting home health or hospice providers, please contact Mark Bina in Krieg DeVault’s Chicago office at 312-423-9305 or mbina@kdlegal.com.

• The nature and extent of the improper or illegal practice
• The timeliness of the self-disclosure;
• The cooperation in providing additional information related to the disclosure;
• The litigation risk associated with the matter disclosed; and 
• The financial position of the disclosing party

• Requiring CMS contractors to review State licensing board data on a monthly basis to check for license discipline. 
• Revoking a provider's Medicare billing privileges for failing to report a final adverse action (revocation, suspension, felony conviction) from a State licensing Board.
• Mandating Durable Medical Equipment (DME), Prosthetics, Orthotics, and Supplies providers (DMEPOS) undergo rigorous pre-enrollment site visits and unannounced post-enrollment site visits.
• Conducting comprehensive cross-database checks of eligible professionals, providers, owners, and employees for exclusion from the Medicare or Medicaid programs.  These checks also encompass State licensure verifications and Social Security Number data.
• Requiring certain "high risk" providers and applicants to submit to fingerprint and criminal history background checks.