Health Law Blog - Healthcare Legal Issues

Archive for June, 2016

False Claims Act Liability – Conditions of Participation and Conditions of Payment

Friday, June 24th, 2016

7th Circuit Law on False Certification Completely Changed Overnight

False claims act supreme courtUp until June 16, 2016, the law in the 7th Circuit was very clear; violations of conditions of participation did not support a potential False Claims Act claim.  Only violation of a specific condition of payment could support potential liability.

That all changed with a decision of the United States Supreme Court that was issued on June 16, 2016.  In a case arising out of the Massachusetts Medicaid program, the Supreme Court held that under the right circumstances, the violation of a condition of participation can give rise to False Claims Act liability.  Universal Health Services v. United States ex rel. Escobar, http://www.scotusblog.com/case-files/cases/universal-health-services-v-united-states-ex-rel-escobar/

In rejecting the distinction between conditions of payment and conditions of participation.  Instead, in the Court’s opinion “what matters is not the label that the Government attaches to a requirement, but whether the defendant knowingly violated a requirement that the defendant knows is material to the Government’s payment decision.”

When evaluating the FCA’s materiality requirement, the Government’s decision to expressly identify a provision as a condition of payment is relevant, but not automatically dispositive.  A misrepresentation cannot be deemed material merely because the Government designates compliance with a particular requirement as a condition of payment.  Nor is the government’s option to decline to pay if it knew of the defendant’s noncompliance sufficient for a finding of materiality.  Materiality also cannot be found where the noncompliance is minor or insubstantial.

The net effect of the decision is to case uncertainty over the false certification analysis.  At least in the 7th Circuit, prior to the Court’s decision, we at least knew that only failures in condition of payment could support potential False Claims Act liability.  Simple violation’s of conditions of participation could not support such a claim.  Now we are told that violation of a condition of participation can result in a False Claim if it is “material” to the Government’s payment decision.  The standard no requires analysis of each situation under the “materiality” requirement.

People in the health care industry know that violations of conditions of participation happen frequently.  Facilities often receive citations, and must correct deficiencies.  When those deficiencies can result in False Claims is now quite nebulous.

CMS Releases Final Rules Under Medicare Shared Savings Program

Tuesday, June 21st, 2016
  • final aco rule revision 2016 msspMSSP Final Rules Revision ACO Requirements Under Shared Savings Program – 2016 Revised MSSP Regulations Issues

On June 10, just in time for my birthday (thanks CMS), the Centers for Medicare & Medicaid Services (CMS) released final rules amending the regulatory requirement applicable to the Medicare Shared Savings Program (MSSP). The Final Rules that were published on June 10, 2016 state the intent to encourage additional participation in the program and to ease financial burdens on participating Accountable Care Organizations (ACOs). The regulations attempt to provide incentives for existing ACOS to renew their participation and elect to pursue higher levels of risk. The revised rules reflect an element of additional flexibility that ACOs may be able to take advantage of when transitioning between participation tracks.

There are a variety of changes in the new regulations. A few of these changes include:

  • Clarifications regarding times that shared savings and shared loss claims may be re-opened by CMS.
  • Changes in how benchmarks will be calculated beginning in 2017. (Increasing consideration of regional Medicare expenditures total population health of the population that is assigned to the ACO).
  • Adoption of adjustments based on average fee-for-service Medicare expenditures applicable to the relevant regional service area for purposes of calculating benchmark adjustments. County-by-county averages will be utilized for expenditures attributable to the total cost of services to beneficiaries within the applicable county.
  • Adoption of risk-adjustment factors when revising an ACO’s benchmarks. Risk adjustment is to be based on the relative health status of the ACO’s assigned population.
  • Revision of the manner in which CMS performs truncating and trending calculations.

The new rules clarify that CMS has the authority to reopen and make revisions to MSSP payments in cases of fraud and for other similar reasons. Even when fraud does not exist, CMS will have four years after providing notice of initial determination of shared savings or loss to reopen and revise for any good cause. Unfortunately, there is not definition of what constitutes “good cause” in the new rules. In comments, CMS indicates that it will excercise this authority where there evidence that was previously unavailable evidence that indicates error in the original determination or where previously available evidence is clearly determined to have been relied on erroneously. This rather broad “reopening” authority presents significant financial uncertainty for ACOs.

Under the new rules, ACOs will now be able to remain in Track 1 for a fourth year before transitioning into Tracks 2 and 3 which involve higher degrees of risk. Additionally, ACOs that choose to progress to higher risk tracks will be able to have their benchmark recalculation deferred for an additional year. These changes are being made to make it easier for ACOs to transition to higher risk tracks.

 

Population Health Management and Clinical Integration

Monday, June 13th, 2016

Population Health ManagementPopulation Health Management and Clinical Integration – The Center of the Reformed Health Care System

Population health management is bigger than ever now that health reform has become ingrained in our health care system.  The concept of population health management is not necessarily new.  Related concepts emerged in the 1990s when capitated reimbursement gained some converts.  It was known then that in order to succeed under fixed levels of total compensation required systems to be developed to make people healthier while at the same time managing cost and resource utilization.  When a network took on capitation, it knew that it had to look at its patients as a population.  This was a change from the fee-for- service mindset that was previously and subsequently predominant in the health care system.  I think it is fair to say that there were very few organizations that successfully applied population management standards under alternative payment systems in the 1990s.  We very quickly saw capitation fall into the background because, with a few exceptions, the system just did not have it figured out yet how to view and manage population health.

Population health management has come a long way since those early efforts in the 1990s.  The concept is again front stage, but this time organizations have a head start building on what was learned in the past.  Technology and data analysis has become much more sophisticated and commonplace.  Technology is a necessary component of managing a population health and quality.  Evidence based medicine supports population management by collecting and applying baseline data, comparing data to other baselines, helping to structure evidence based care protocols based on current medical outcomes studies, and the ability to measure the success of an applied process or protocol.  This move toward technological support of population management was behind the move to virtually mandate electronic health records through legislation and regulations.  This technological infrastructure now serves as the backbone to permit data to be extracted in support of evidence-based population health management.

Population management is being embraced by forward looking organizations that have a vision of the future.  It can be quite an adjustment to make the changes that are necessary to indicate success under a population management system.  The old system rewarded providing more services that were reimbursed on a fee for service basis.  The old fee-for-service model is changing rapidly.  Overall population quality, outcomes and cost efficiency are now taking front seat.  Some providers who did very well under the old system can have difficulty adjusting their practice patterns to adjust to the new regimen.  More service led to more revenues under the old system.  Under population management, more is not always better.  Concepts of “more” are being replaced by concepts of “appropriate.”  Appropriate levels of service performed in appropriate service locations, by appropriate providers.

Hospitals, health care system, physician groups and others are finding it necessary to adapt to a new world in which providers are rewarded for meeting quality objectives for their entire patient population.   Where volume used to be king, efficiency and quality have now taken over the health care kingdom.

Our health care practice is normally a great indicator of trends in the industry.  In the 90’s we did a lot of provider integration work.  This work has now come full circle and is again a major part of our health care practice.  Our health law practice is involved creating clinically integrated organizations that are equipped to manage population health on several fronts.  This is an exciting process for our health law team as we are on the cutting edge of the hottest issues in health care.  We are creating new health care systems that include new collaborative relationships between providers.  We are applying these concepts in unique and creative ways.  This creative process results in a very exciting legal practice.

We will be posting a series on clinical integration in which we share some f our experience applying population management and evidence-based evidence standards to a number of specific types of organizations.  We will touch on some of the legal, business and operational challenges that we have encountered.

Grab our rss feed and come along for the journey as we cover “clinical integration in the new millennium.”

About the Author

John H. Fisher

Health Care Counsel
Ruder Ware, L.L.S.C.
500 First Street, Suite 8000
P.O. Box 8050
Wausau, WI 54402-8050

Tel 715.845.4336
Fax 715.845.2718

Ruder Ware is a member of Meritas Law Firms Worldwide

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