CMS proposes new rules and OSHA rolls out a memorandum

At the agencies

On June 25, the Occupational Safety and Health Administration (OSHA) rolled out a memorandum regarding guidance for inspections of inpatient healthcare settings, which included new areas of emphasis for compliance officers conducting inspections in hospitals and nursing/residential care facilities. The new areas of emphasis include ergonomic issues (such as overexertion), bloodborne pathogens and tuberculosis standards, workplace violence, and slips/trips/falls. OSHA stated these hazards are being focused on due to labor statistics such as the high rate of healthcare workers suffering from musculoskeletal disorders (MSDs). The agency’s decision to emphasize inspecting these issues has been lauded by healthcare worker advocates including the American Nurses Association. Although many of these compliance standards are older, the agency’s emphasis on inspecting inpatient facilities is new.

On July 1, the Centers for Medicare and Medicaid Services (CMS) released a proposed rule that if implemented, would make it easier to get an exception to the two-midnight rule. The administrators recognized that there are cases where a Medicare beneficiary may stay in a hospital less than two midnights but still be considered an inpatient, though they also noted that they expect exceptions to the rule to be rare. When considering whether a short stay would qualify for an exemption to the two-midnight rule, the agency said it will take into account the following: the severity of a patient’s symptoms, the predictability of adverse events, and whether or not the necessary diagnostic tests require a long hospital stay. Furthermore, the proposed rule would change the way the two-midnight policy is enforced by having most audits done by quality improvement organizations instead of Recovery Audit Contractors (RACs).  RACs will instead only be used for hospitals with high denial rates. Although these proposed changes are beneficial to providers in that they place more emphasis on the importance of physician judgment, the agency will maintain its frequently criticized 0.2 percent reduced payment that is tied to the two-midnight rule. These proposed revisions are expected to go into effect as of October 2015.

On July 6, CMS issued a proposed rule regarding the 2016 home health payment system, which would reduce payments to this industry by 1.8 percent (roughly $350 million) for the next two years, in addition to the pay rebasing expected by the industry. The agency proposed these additional cuts due to analysis of provider claims, and their belief that home health providers exaggerated their patients’ illnesses to overcharge Medicare in previous years. Additionally, this rule proposed a pilot program that, starting in January 2016, would apply to all home health agencies (HHAs) in nine states: Tennessee, Maryland, North Carolina, Massachusetts, Florida, Washington, Arizona, Iowa, and Nebraska. This proposed pilot would move HHAs toward value-based purchasing payments, using specific metrics to determine how well an agency performed. Then, payments to the HHAs would be increased or decreased (as much as 8 percent) depending upon their performance.

On July 6, the Government Accountability Office (GAO) released a report suggesting that Congress should take action around the 340B prescription drug program, specifically, that the program should be revised to remove any financial incentives 340B hospitals may have to overprescribe to Medicare beneficiaries. The GAO compared 2012 Medicare Part B spending of 340B designated hospitals to hospitals not in the drug-pricing program, and determined that beneficiaries at 340B hospitals spent on average $144, compared to an average $66 that beneficiaries at non-340B hospitals spent. These numbers suggest that patients at 340B hospitals are either being prescribed more drugs, or more expensive drugs. GAO argues that health status of patients at 340B designated facilities alone cannot account for the disparity in average spending, and advised Congress that without changes to the program, such overspending may continue.

Also on July 6, CMS announced that they will institute a 12-month grace period during which doctors will not be denied payments for coding mistakes under the new ICD-10 coding system that will be implemented Oct. 1. Doctors will not be denied payment for coding errors, provided the diagnosis codes used by the doctors are 1) valid and 2) from the correct family of codes.

On July 9, CMS issued a proposed rule, which would establish a new Medicare Part A and Medicare Part B payment model called the comprehensive care for joint replacement (CCJR) payment model. This model would impact acute care hospitals in seventy-five specified geographic regions that provide lower joint replacement services. The rule would create bundled payments for providers doing hip and knee replacement surgeries, including necessary hospitalization services as well as related services provided during the first ninety days after the surgery. Over 800 hospitals would be affected if the proposed rule is implemented, and these hospitals will be rewarded or penalized based upon the quality and efficiency of the care provided for these services.   


In the courts

On June 30, the New Jersey Tax Court denied Morristown Memorial Hospital in New Jersey three years of property tax exemptions that it had claimed as a not-for-profit hospital.  Judge Vito L. Bianco ruled that the hospital and parent company’s not-for-profit and for-profit activities were so closely intertwined that the hospital failed to prove that it was a true not-for-profit, and therefore not eligible for the tax breaks. One of the various linkages of charitable and profit-driven activities cited by the judge included the fact that a majority of the physicians at the hospital were so-called “voluntary physicians” who were private, for-profit providers with hospital privileges, and who had admitted roughly 83 percent of the hospital’s patients. 

On June 30, the Office of Inspector General at the Department of Health and Human Services announced the creation of a new litigation team of roughly ten lawyers that will be focused on levying penalties and purging Medicare and Medicaid of fraudsters. Administration officials stated this specialty unit will likely feature increased enforcement targeted at doctors, drugmakers, and others suspected of giving and receiving kickbacks or overbilling.

For more information on this topic, or to learn how Baker Tilly healthcare specialists can help, contact our team.