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Rural Hospitals at Risk of Financial Ruin as Medicare Loans Come Due

Alisha Patel, Class of 2022, Belmont Law

A recent report by the Kaiser Health News reported that rural health hospitals are struggling to keep doors open or even pay back their Medicare Accelerated and Advance Payment loans they received to assist navigating the pandemic. However, repayment of these loans is officially due this month and if they are not paid, federal regulators may stop reimbursing the hospital for Medicare patients’ treatments until the loan is fully repaid.

Medicare’s Accelerated and Advance Payments Program existed before the pandemic, and hospitals would only access these funds in times of emergencies such as hurricanes or tornadoes. The Coronavirus Aid, Relief, and Economic Security (CARES) Act expanded the Accelerated Payment Program to include during a public health emergency acute care hospital, but also critical access hospitals and cancer hospitals. The CARES Act also issued more flexible payment and repayment terms for these providers. The Centers for Medicare & Medicaid Services (CMS) provided $59.6 billion in accelerated payments to Medicare Part A providers, including hospitals, during the early weeks of the pandemic. These payments provided critical funding to our hospitals and health systems and were used to support front-line health care workers, build new sites of care to minimize the spread of the virus, and purchase the ventilators, drugs and supplies necessary to care for critically ill patients. Full repayment of a hospital’s loan is technically due one hundred and twenty days after it was received. If it is not paid, Medicare will stop reimbursing claims until it recoups the money it is owed, as detailed in the program’s rules. Currently, Medicare reimburses several payments in health care providers nationwide.

At the end of April, CMS halted all new loan applications to the program in April. As the pandemic continues, many hospitals are left wondering when will the next funds come to them or how will they pay these owed funds in a timely fashion when still dealing with the impacts of the ongoing pandemic.

More than 65% of the nation’s small, rural hospitals were operating at a deficit before the pandemic. These hospitals looked to these loans as an avenue to utilize the funds to provide services to those in need, but also to alleviate the debts the entities were already facing. For several hospitals, Medicare payments consist of forty percent or more of their revenue and rely on Medicare reimbursements to remain afloat. As must as health administrators need the funds for their hospitals, they feared the inability to return the funds to CMS, but especially did not expect or prepared for the pandemic to continue for this long.

Initially, as elective procedures were prohibited, employees were furloughed, and hospitals prepared for a pandemic to last months, hospitals aimed to cope with situation the faced. One hospital administrator stated that the Medicare loan helped them “survive.”

Trade groups, committee proposals, and conversations continue to urge lawmakers to push back these payments. Though the federal government navigated away from a federal shutdown, the House and Senate have not approved or heard a continuing resolution to relieve hospitals of the loan repayment.

United States Supreme Court Hears Oral Arguments in Landmark Pharmacy Benefit Manager Regulation Case

Anthony Huber, Class of 2021, Belmont Law

On October 6, 2020, the Supreme Court of the United States listened to oral arguments from opposing parties in the Rutledge v. Pharmaceutical Care Management Association (“Rutledge”) case.  The issue in the Rutledge case is whether the 8th Circuit erred in holding that Arkansas’ statute regulating pharmacy benefit managers’ drug-reimbursement rates is preempted by the Employee Retirement Income Security Act of 1974 (“ERISA”)

In 2015, the Arkansas Legislature passed Act 900, a law which effectively regulates the practices and conduct of pharmacy benefit managers (“PBMs”).  PBMs are entities that function as intermediaries between health plans and pharmacies.  PBMs process claims, disburse drugs, and contract with pharmacies to create pharmacy networks.  In addition, PBMs create a maximum allowable cost (“MAC”) list to set reimbursement rates to pharmacies dispensing generic drugs.

Sometimes, when a pharmacy contracts with a PBM, the result is that the pharmacy is reimbursed for a drug at a lesser amount than it paid to a wholesaler for that same drug.  As a result, independent and rural pharmacies in Arkansas began to decrease.  Arkansas recognized this and sought to remedy the issue through Act 900.  Some of the provisions in Act 900 provide: (1) pharmacy reimbursements should be at a rate which is at least equal to a drug’s acquisition cost; (2) MAC lists should be updated within seven days of a ten (10) percent increase in a pharmacy’s acquisition cost from sixty (60) percent of wholesalers; and (3) pharmacies can challenge MAC reimbursements through an administrative appeal process.

In response to the provisions of Act 900, Pharmaceutical Care Management Association (“PCMA”), a pharmacy trade association, filed a lawsuit against Arkansas Attorney General Leslie Rutledge arguing that Act 900 is preempted by ERISA.  The gravamen of PCMA’s claim is that Act 900 is impermissibly connected to ERISA, and, as a result, ERISA should preempt Act 900 because it is a state law.  PCMA argues, among other things, that Act 900 directly regulates the administration of prescription-drug benefits on behalf of ERISA-governed plans.  In its brief, PCMA claims that Act 900 “establishes state-specific rules controlling the amount plans must pay for benefits, the methodology for determining the amount to be paid, the timing and procedures for updating payment schedules, and dispute-resolution processes and remedies—matters that are central to plan administration.”

On the other hand, Arkansas Attorney General Rutledge claims that Act 900 does not have an impermissible connection to ERISA plans, and, therefore, it is not preempted by ERISA. Arkansas argues that Act 900 does not regulate plan administration because it simply regulates reimbursement rates, and other provisions, such as the appeal provision, are merely incidental to that primary purpose.

It will be interesting to see where the Supreme Court draws the line on preemption, and its reasoning for doing so, because many other states have already passed statutes similar to Arkansas’ Act 900.  If Act 900 is struck down, the Supreme Court’s decision could have a domino effect on the states which have already implemented pharmaceutical regulations similar to Arkansas.  On the other hand, if the Supreme Court does not find that Act 900 is preempted by ERISA, its decision and reasoning may provide clarity and guidance for states who seek to regulate the practices and conduct of PBMs in the future.

 

Works Cited:

https://www.scotusblog.com/case-files/cases/rutledge-v-pharmaceutical-care-management-association

https://www.c-span.org/video/?470375-1/rutledge-attorney-general-arkansas-v-pharmaceutical-care-management-association-oral-argument

https://www.law.cornell.edu/supct/cert/18-540

https://www.supremecourt.gov/DocketPDF/18/18-540/139090/20200325115916809_18-540%20bs.pdf

 

Amy Coney Barret and the Future of the ACA

Jacob Freeland, Class of 2021, Belmont Law

As a result of President Donald Trump’s latest pick for the United States Supreme Court: Amy Coney Barrett, there has been a great deal of discussion regarding the implication that this appointment could mean for the future of the Affordable Care Act.

The appointment of Barrett is surely going to shift the Supreme Court more to the right, if she is in fact confirmed to replace the late Justice Ruth Bader Ginsburg. Based on their views, if Barrett is appointed, the Supreme Court will be compromised of six justices that were appointed by Republican presidents and three justices that were appointed by Democratic presidents.

If Barrett is confirmed, she could potentially be the deciding vote in a case that is being heard just days after the election, which seeks to overturn and strike down the Affordable Care Act. The Central issue in the case is whether the individual mandate, which requires individuals to have medical insurance, is constitutional. If the Supreme Court determines that it is not constitutional, the justices must then also decide whether the individual mandate can be separated from the law or if its unconstitutionality means the rest of the law is also invalid. Previously when hearing cases regarding these challenges, the Supreme Court has left the ACA largely intact.

It is relevant to note that Barrett has been critical of the ACA in the past. During her time as a law professor at Notre Dame, Barrett wrote a twenty-five-page article that reviewed a book by a legal scholar who was considered one of the main architects of one of the prior challenges brought against the ACA. In this article, Barrett wrote that, “Chief Justice Roberts pushed the Affordable Care Act beyond its plausible meaning to save the statute.” Further, she stated that had Roberts “treated the payment as the statute did – as a penalty – he would have had to

invalidate the statute as lying beyond Congress’s commerce power.” Barrett essentially argued that judges should not defer to what is popular in their judicial decisions. In furtherance of this point, she stated, “The author is surely right that deference to a democratic majority should not supersede a judge’s duty to apply clear text.”

While it is clear that Barrett has had some harsh words regarding the court’s previous rulings regarding the ACA, it still is not known whether or not she thinks there is lawful justification to throw out the whole ACA simply because the individual mandate is ruled as unconstitutional. Further, even if Barrett is appointed and holds against the totality of the ACA, the Court would still have to secure a 5-4 majority for throwing out the entirety of the ACA in order to do so, which previous holdings have shown the court has been reluctant to do as a result of the justices differing views regarding severability.

Thus, ultimately there is still no guarantee that the Supreme Court will rule against the Affordable Care Act, even with a conservative majority of justices on the court. However, it is still something that should be closely monitored and watched going forward with the appointment of the next Supreme Court Justice of the United States.

 

Works Cited

Samantha Liss, What Trump’s SCOTUS pick could mean for the ACA challenge, Healthcare Drive (Sep. 28, 2020), https://www.healthcaredive.com/news/what-trumps-scotus-pick-could-mean-for-the-aca-challenge/585977/.

Sam Baker, If Trump Replaces Ginsburg, the ACA Really is at Risk, Axios (Sep. 21, 2020), https://www.axios.com/supreme-court-trump-rbg-affordable-care-act-062fc3a6-0b5a-4ba2-b739-8d2ac17d7f22.html.

Amanda Holpuch, Fears for Obamacare if Amy Coney Barrett Confirmed to Supreme Court, The Guardian (Aug. 19, 2020), https://www.wallerlaw.com/news-insights/3738/Tennessee-enacts-COVID-19-Recovery-Act.

President Trump Signs Mental Health Executive Order

David Brust, Class of 2022, Belmont Law

On October 5, 2020, President Trump signed an executive order to address “ongoing mental- and behavioral-health concerns” magnified by the COVID-19 pandemic. In the order, President Trump stated his Administration’s goals are to prevent suicide, end the opioid crisis, and improve mental and behavioral health. The order was signed after a Center for Disease Control and Prevention survey showed that over the last week of June 2020, “40.9 percent of Americans struggled with mental-health or substance-abuse issues and 10.7 percent reported seriously considering suicide.” Overall, the order makes five calls for action to:

(1) provide “crisis-intervention services to treat those in immediate life-threatening situations;”

(2) increase “the availability of and access to quality continuing care” following the resolution of the initial crisis “to improve behavioral-health outcomes;”

(3) “permit and encourage” mentorship and support groups;

(4) increase the availability of telehealth, online mental-health resources, and online substance use resources; and

(5) “marshal public and private resources to address deteriorating mental health, such as factors that contribute to prolonged unemployment and social isolation.”

In addition to the above calls for action the order also established the Coronavirus Mental Health Working Group. This group is tasked with facilitating “an ‘all-of-government’ response to the mental-health conditions induced or exacerbated by the pandemic.” This includes suicide prevention issues and a focus on the populations most vulnerable to the pandemic. Furthermore, the group must submit to President Trump, within 45 days, an outline of a plan to improve service coordination between public and private players to help individuals in crisis receive treatment and recovery services. Lastly, the order provides grant funding to states and organizations that “permit in-person treatment and recovery support activities for mental and behavioral health.”

 

Works Cited:

https://www.whitehouse.gov/presidential-actions/executive-order-saving-lives-increased-support-mental-behavioral-health-needs/

American Hospital Association Criticizes Provision in CMS’ Inpatient Prospective Payment Systems Final Rule

Anthony Huber, Class of 2021, Belmont Law

On September 2, 2020 the Centers for Medicare and Medicaid Services (“CMS”) filed an unpublished version of the upcoming Inpatient Prospective Payment Systems (“IPPS”) Final Rule for 2021.  According to CMS, the finalized policies in the IPPS Final Rule support its key priorities such as, strengthening Medicare and fostering innovation.  CMS also claims that the policies will “help ensure that Americans continue to have access to a world-class healthcare system with access to potentially life-saving diagnosis and therapies by unleashing innovation in medical technology and removing barriers to competition.”

The final rule incorporates several important policies related to:

  • Price transparency and use of private-sector negotiated charge data in calibrating Medicare Severity-Diagnostic Related Group (“MS-DRG”) payment weights;
  • Payment rates;
  • New or revised MS-DRGs;
  • Uncompensated Care Payments; and
  • Wage index

For a summary of these policies, click here.

All provisions within the IPPS Final Rule are not without controversy, however.  Perhaps the most controversial provision is related to the price transparency and changes to MS-DRG payment weights. An MS-DRG is a classification system through which hospitals are paid for patient hospital stays.  This controversial provision, which will be in effect for cost reporting periods ending January 1, 2021 or later, would require hospitals to report on their Medicare cost report the median payer-specific negotiated rates for inpatient services by MS-DRGs for Medicare Advantage organizations.

The American Hospital Association (“AHA”) is one of the critics of this new provision.  According to a statement made by Ashley Thompson, AHA Senior Vice President for Public Policy Analysis and Development, “the AHA remains deeply disappointed that CMS continues to require hospitals and health systems to disclose privately negotiated contract terms with payers.”   Ashley Thompson further stated that “by continuing to focus on negotiated rates rather than expanding access to a patient’s out-of-pocket costs, [CMS] fails to meet the goal it set for itself—assisting consumers in becoming more prudent purchasers of health care.” As a result, Ms. Thompson opined that “[the policy] will require hospitals to divert critically needed resources during [the] pandemic to administrative tasks that will not benefit patients.

On the other hand, CMS argues that “the additional calculation and reporting of the median payer-specific negotiated charge will be less burdensome for hospitals” because the payer-specific negotiated charges used by hospitals to calculate these medians are payer-specific negotiated charges for service packages that hospitals are already required to publicize under the Hospital Price Transparency Final Rule.

 

Works Cited:

Tennessee COVID-19 Recovery Act

 

Jacob Freeland, Class of 2021, Belmont Law

Tennessee Governor Bill Lee signed into law the Tennessee COVID-19 Recovery Act on August 17, 2020. By doing this, Tennessee joins a growing list of states that have enacted state laws that provide expansive protections to various individuals and organizations from actions arising from loss, damages, injuries, or death that has arisen from the COVID-19 pandemic.

Under this act, Tennessee will provide these protections to all applicable “persons”, unless there is clear and convincing evidence of gross negligence or willful misconduct. According to the legislation, “person” covers a wide variety of entities including individuals, healthcare providers, sole proprietorships, corporations, limited liability companies, partnerships, trusts, religious organizations, associations, nonprofit organizations, and any other legal entity regardless if formed as a for-profit or not-for-profit entity.

According to the law firm of Waller, Lansden, Dortch and Davis, who’s government relations team worked very closely with the Tennessee Chamber of Commerce in passing this legislation, the Act requires a heightened pleading standard. Under this heightened standard, any claimant in any action alleging injury arising from COVID-19 is required to do the following:

    1. File a verified complaint pleading specific facts with particularity from which a finder of fact could reasonably conclude that the injury was caused by the defendant’s gross negligence or willful misconduct; and
    2. File a certificate of good faith stating that the claimant or claimant’s counsel has obtained a signed, written statement from a physician duly licensed to practice in the state or a contiguous bordering state and competent to express an opinion on exposure to or contraction of COVID-19, which confirms the physician’s belief that the alleged injury was caused by an alleged act or omission of the defendant or defendants. A claimant’s failure to comply with the above described pleading requirements will, upon motion, make the claim subject to dismissal with prejudice. In addition, the Act provides specific civil liability protection for governmental entities and public colleges and universities for any injury arising from COVID-19, unless the claimant successfully proves and complies with the pleading standards described above. The Act applies to all prospectively filed claims arising from COVID-19. In response to concerns raised about pending COVID-19 related lawsuits, legislators negotiated the addition of a “grandfather clause” that excludes claims occurring before August 3, 2020 in which:
    3. A complaint or civil warrant was filed;
    4. A notice of claim was filed with the Tennessee Claims Commission; or
    5. Notice was satisfied under state law pertaining to healthcare liability claims.

According to Governor Lee, the goal of the law is to protect businesses by preventing further economic consequences to businesses that have already been hit hard by the COVID-19 crisis, while still providing an avenue to hold bad actors accountable. Additionally, because of these expansive protections and heightened pleading standards, businesses and individuals that conform to applicable reopening guidelines stand a far better chance of being protected from liability under claims arising from COVID-19, which will hopefully provide businesses with more confidence in re-opening and helping to stimulate the Tennessee economy.

This Act is an example of the many challenges that state governments are facing in regard to the many difficulties and competing interests that have presented themselves during this pandemic. The Tennessee government feels that this Act provides a delicate balance which both ensures justice for individuals who have wrongly been injured as a result of the pandemic, while also providing business with confidence to attempt to continue operating without fear of being bombarded with lawsuits due to liability concerns.

 

Works Cited

Shani Rivaux, Ian Wahrenbrock, Tennessee Passes Broad COVID-19 Liability Shield Legislation, Pillsbury (Aug. 20, 2020), https://www.pillsburylaw.com/en/news-and-insights/tennessee-passes-broad-covid-19-liability-shield-legislation.html.

Wendy Keegan, Tennessee Governor Bill Lee signed the Tennessee COVID-19 Recovery Act, Husch Blackwell (Aug. 21, 2020), https://www.healthcarelawinsights.com/2020/08/tennessee-governor-bill-lee-signed-the-tennessee-covid-19-recovery-act/.

Nicole Watson, Tennessee Enacts COVID-19 Recovery Act, Waller (Aug. 19, 2020), https://www.wallerlaw.com/news-insights/3738/Tennessee-enacts-COVID-19-Recovery-Act.

Covid-19 Response – Temporary Altering of Nurse Practitioner Scope of Practice Requirements

David Brust, Class of 2022, Belmont Law

In response to the COVID-19 pandemic, twenty-three states made temporary changes to their scope of practice requirements for nurse practitioners (twenty-two of the states are classified as reduced or restrictive practice states). One of the most common changes states made was suspending or modifying physician supervision or collaboration requirements. These changes ranged from simply allowing physicians to supervise more nurse practitioners than normal to completely suspending the requirement that a nurse practitioner have a supervising physician. One noticeable trend is that states with larger rural areas, such as Kansas, Louisiana, West Virginia, and Wisconsin, took the more drastic step of suspending collaboration agreement requirements. Likewise, states where COVID-19 cases were initially very high, such as New York, New Jersey, and Massachusetts, also chose to suspend collaboration agreement requirements.

Other popular changes included modifications to licensure renewal or prescribing authority. For example, Kentucky temporarily waived its requirement that nurse practitioners have a supervising physician in order to prescribe controlled substances. A move that is largely unrelated to COVID-19 but allows other medical services to continue uninterrupted during unprecedented times. Moreover, South Carolina issued an emergency order that allowed nurse practitioners licensed in neighboring states North Carolina and Georgia to practice in South Carolina, so long as they continue the collaborative agreements within their home state. This change was made to allow South Carolina citizens to continue seeing their providers who live in North Carolina or Georgia by utilizing telemedicine.

Here in Tennessee, nurse practitioners authorized to prescribe medication were temporarily able to do so without a supervising physician. Additionally, Tennessee suspended notice requirements related to collaboration agreements and waived the requirement for chart reviews and monthly supervising physician visits. However, Governor Bill Lee allowed said changes to expire with Executive Orders 15 and 28 on May 12, 2020 and they have not been renewed.

Works Cited:

https://www.aanp.org/advocacy/state/covid-19-state-emergency-response-temporarily-suspended-and-waived-practice-agreement-requirements

https://llr.sc.gov/nurse/pdf/PUBLIC%20HEALTH%20STATE%20OF%20EMERGENCY%20ORDER%202020_BON_PH_2.pdf