On February 5, 2018, the Government Accountability Office, a nonpartisan investigative arm of Congress, found that there are huge gaps in regulation of assisted living facilities. The report, entitled “Medicaid Assisted Living Services: Improved Federal Oversight of Beneficiary Health and Welfare is Needed,” comes on the heels of years of discussion as to whether assisted living facilities are sufficiently regulated by individual states, or whether further federal oversight is warranted.
The suggestion of the need for federal regulation of assisted living came from GAO’s finding that more than $10 billion a year is spent from federal and state funds for assisted living services for more than 330,000 Medicaid beneficiaries. With demand for additional Medicaid assisted living funding, and the potential increase in demands of the senior population in the next 5 years, these numbers will continue to rise significantly as noted by the GAO: “Medicaid spending on long-term care is significant, representing about one quarter of Medicaid spending annually and is expected to grow with an aging population.” Continue reading GAO Report: Assisted Living Providers & Federal Regulation
In January 2018, The Office of the Auditor General for the State of Illinois published its Performance Audit (“Audit Report”) of Medicaid Managed Care Organizations (“Medicaid MCOs”) for Fiscal Year 2016. What was unleashed was a startling review of the Medicaid MCOs’ performance over FY 2016 in administering the Medicaid Program for what was then called the Integrated Care Program (“ICP”) or Medicare/Medicaid Alignment Initiative (“MMAI”) Programs. You may recall these ICP and MMAI Medicaid MCO programs in Illinois involved almost a dozen Medicaid MCOs that covered about 70% of the State of Illinois Medicaid recipients.
The Audit Report played into health care providers’ deepest fears in Illinois: showing that Medicaid Managed Care may not be working as it was intended; namely, to reduce costs and improve quality of care in the Medicaid Program in Illinois. For example, long term care providers in Illinois had to fight tooth and nail with Medicaid MCOs under the ICP and MMAI programs, experiencing cumbersome Medicaid contracts, denied claims, delayed claims, and worse yet, a prior authorization administration problem (administrative MCO delay) which in some instances prevented residents from receiving care timely. Most, but not all, of those issues are still being resolved, but providers had hoped that there was a good reason for this madness involving Medicaid MCOs: better and lower cost care for Medicaid beneficiaries. Continue reading Illinois Posts Medicaid Managed Care Performance Report
On January 13, 2017, the Centers for Medicare and Medicaid Services (“CMS”) sent a Memorandum (“Memo”) to State survey agency directors encouraging long-term care providers to “consider cybersecurity when developing or reviewing their emergency preparedness plans.” The Memo was a follow-up to the CMS long-term care emergency preparedness rule published in the Federal Register on September 16, 2016: “Medicare and Medicaid Programs; Emergency Preparedness Requirements for Medicare and Medicaid Participating Providers and Suppliers.” Under that final rule, long-term care facilities were held to additional standards, including requirements to have emergency and standby power systems in place. Nursing homes were also required to create plans regarding missing residents that could be activated regardless of whether the facility has activated its full-scale emergency plan. The rule was spurred on by recent flooding in Baton Rouge, Louisiana, and other emergency disasters, such as Hurricane Sandy and the 2009 H1N1 pandemic, according to CMS.
Whether State surveyors will actually enforce lack of cybersecurity plans for emergency preparedness as violations remains to be seen from this Memo. But certainly, a State survey agency could impose deficiencies for failure to have a proper cybersecurity plan and/or a proper cybersecurity back‑up plan as part of a facility’s emergency preparedness going forward. It is not clear why CMS decided to send this encouragement Memo three months after the Final Rule on emergency preparedness, but it likely has something to do with the fact that 2016 was a banner year for HIPAA privacy infractions and HIPAA enforcement by the Office for Civil Rights (“OCR”), the entity responsible for HIPAA compliance. In 2016, payouts for HIPAA violations skyrocketed to record heights of $23.51 million from OCR enforcers against health care providers. That number was triple the previous record of almost $7.94 million in payouts in 2014, followed by $6.19 million in payouts in 2015.
Continue reading Cybersecurity and Emergency Preparedness for Long-Term Care
The impact of changing payment models on private equity investments in health care was the topic explored at a February 10 event co-hosted in New York by Duane Morris and Parthenon-EY. Speakers at the program were Rachel Kaprielian, regional director, New England, U.S. Department of Health & Human Services; Lisa Clark, partner, Duane Morris; and from the private equity sector David Terry, founder and CEO, Archway Health; and David Caluori, principal, General Atlantic. The moderator was Jeff Woods, managing director and co-head of health care, Parthenon-EY.
Private equity investors see many opportunities to improve health care delivery through payment reforms being driven by the Centers for Medicare and Medicaid Services (CMS). CMS’ August 2011 launch of a bundled-payment initiative created a model for encouraging specialists to manage care and be held accountable for results. “When Medicare leads, you can bet everybody else is paying attention,” she said.
HHS is embracing value-based payments in part because of the success Accountable Care Organizations (ACOs) have had in improving the quality of care while lowering costs. Private equity firms are pursuing investments in entities that drive those changes, including ACO and bundled-payment models.
“There’s a ton of opportunity to do that better, and to make money,” Archway’s David Terry said.
The complexity of structuring risk-sharing deals was another key theme that emerged from the discussion. Providers must craft their ACO and bundled payment contracts carefully, advised Duane Morris’ Lisa Clark.
An ACO contract requires providers to calculate the risk level they are comfortable with, but it also must take into account such factors as exclusivity and market share. That complexity, Clark noted, is why contracts can take two to three months longer than projected to finalize. Payment reform is a source of anxiety and trepidation for many providers as well as their private equity investors. But for those who have guidance from financial and legal experts in value-based care, the new models represent a unique and lucrative opportunity for them to manage the health care premium dollar. Private equity investors have opportunities to invest in the companies helping providers navigate new payment models or the health care services companies poised to capitalize on those models.
Health systems attempting to fulfill the mandate of integrating hospitals and physicians may find themselves accused of going too far. Although the Affordable Care Act, shared savings, gainsharing and other alternative payment methodologies have made integration of physicians, hospitals and other providers an operational goal, success in reaching that goal may be challenged by private antitrust actions.
In a recent Florida federal court decision, the antitrust complaint of “several of Southern Brevard County’s physicians and physicians practice groups” was held to have stated a monopolization claim against Health First, Inc. and three of its wholly-owned subsidiaries — an insurer, a hospital and a physician practice group. Essentially, by fully integrating its business, and incentivizing in-network referrals and managed care pricing, Health First became vulnerable to claims of tying, exclusive dealing, price discrimination and monopolization.
Continue reading Health System Integration and Antitrust Laws on Collision Course
As outlined in our prior Alert, the Obama administration recently announced a one-year delay in the effective date of three key provisions of the Patient Protection and Affordable Care Act (ACA): (1) the annual information reporting requirements applicable to insurers, self-insuring employers and certain other providers of minimum essential coverage, (2) the annual information reporting requirements applicable to large employers (i.e., those with 50 or more full-time equivalent employees); and (3) the employer shared responsibility provisions. These provisions of the ACA will now be fully effective for 2015.
Click here to read the full Alert, which provides highlights from the IRS Notice 2013-45.
In a July 2, 2013, blog posting on the U.S. Department of the Treasury website titled “Continuing to Implement the ACA in a Careful, Thoughtful Manner” the Obama administration announced that it will provide an additional year before the Patient Protection and Affordable Care Act’s (ACA) mandatory employer and insurer reporting requirements begin. These reporting requirements, which were originally scheduled to go into effect on January 1, 2014, will now be delayed until January 1, 2015. More significant is the fact that the Obama administration acknowledges that the delay in the reporting requirements will make it impractical to determine which employers owe shared responsibility payments for 2014. Therefore, the employer shared responsibility provisions will also not be applicable until 2015.
Click here to read the full Alert.
On June 28, 2012—the last day of the 2011 term—the U.S. Supreme Court ruled in a 5-4 decision, with Chief Justice Roberts writing for the majority, that the individual mandate provision of the Patient Protection and Affordable Care Act (the “Act”) is constitutional based on Congress’s taxing power. A key passage read from the bench by Chief Justice Roberts is as follows:
Continue reading Affordable Care Act Declared Constitutional … For the Most Part
On June 28, 2012, the United States Supreme Court upheld the Affordable Care Act’s (“ACA”) individual mandate in a long-anticipated decision on the constitutionality of the ACA. The Court upheld the ACA’s individual mandate under Congress’ taxing power, and also held that the lawsuits challenging the ACA were not barred by the anti-injunction act. The Court, however, found the ACA’s Medicaid expansion unconstitutional because it “threaten[ed] States with the loss of their existing Medicaid funding if they decline to comply with the expansion.”
The full slip opinion may be accessed here.
On May 3, 2012, the Centers for Medicare and Medicaid Services (CMS) officially announced that it will delay data-collection and reporting requirements under the Patient Protection and Affordable Care Act’s (ACA) Physician Payments Sunshine Act (the “Sunshine Act”), due in part to the large number of comments received in response to CMS’s December 19, 2011, proposed rules. Data collection by CMS will not start until at least January 1, 2013.
Continue reading CMS Delays Data Collection Under ACA’s Physician Payments Sunshine Act to January 1, 2013