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Health Law Highlights

Humana Can Challenge Medicare Clawback Rule

Summary of article from Reuters, by Brendan Pierson:

Humana can proceed with its lawsuit against a Biden administration rule that enables Medicare to reclaim overcharges from insurers. The rule, established in January 2023, permits the government to recoup payments to Medicare Advantage plans when audits reveal charges for diagnoses not present in patients’ medical records. The Biden administration believes this could help recover around $4.7 billion over a decade. Humana argues the rule is “arbitrary and capricious,” with potential unforeseen consequences for Medicare Advantage organizations and beneficiaries. The judge rejected the administration’s request to dismiss the case, stating that the perceived risk of future harm was enough to establish standing.

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Health Law Highlights

CMS Issues Hospice Proposed Payment Rule

From King & Spalding, by Kate Karpenko:

The CMS has issued a proposed rule for fiscal year 2025 to update Medicare hospice payments and aggregate cap amount, which includes a 2.6% increase in payments and an updated aggregate cap of $34,364.85. The proposal also introduces changes to the Hospice Quality Reporting Program (HQRP), including the addition of two new measures and the use of the Hospice Outcomes and Patient Evaluation (HOPE) tool for patient data collection. It also suggests changes to the Hospice Consumer Assessment of Healthcare Providers and Systems (CAHPS) Survey, including a web-mail mode and a simplified survey. Technical changes are proposed to the Conditions of Participation (CoPs) to clarify language around the roles of a medical director and physician designee. Stakeholders are encouraged to submit comments on the proposed rule by May 28, 2024.

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Health Law Highlights

Fair Market Value and Commercial Reasonableness Considerations Amid CMS Radiopharmaceutical Reimbursement Challenges

From VMG Health, by Carla Zarazua, Preston Edison, and James Tekippe, CFA:

Radiopharmaceutical drugs (RPs) are crucial for diagnosing and treating diseases. However, the current pricing structure by the Centers for Medicare and Medicaid Services (CMS) places a financial strain on hospitals and health systems and potentially restricts patient access to these vital resources. The existing CMS payment structure categorizes diagnostic RPs as supplies, bundling their cost into the overall procedure rate, causing a disconnect between the cost of acquiring RPs and the reimbursement received, particularly for high-cost drugs. 

The CMS encourages hospitals to use cost-effective resources while ensuring patient care. A temporary exception allows for separate pricing for new and high-cost drugs for two to three years, but this is a finite period. The current pricing model may force hospitals to limit the use of high-cost or newer RPs, potentially leading to suboptimal patient care and stifling innovation in drug development.

In response to these challenges, the CMS proposed five alternative payment models in 2024, including paying separately for diagnostic RPs with per-day costs above a certain threshold, restructuring the ambulatory payment classification (APC), and adopting codes that incorporate the disease state being diagnosed. Stakeholders, including the Medical Imaging & Technology Alliance (MITAS) and the American College of Radiology (ACR), advocate for separate payment for diagnostic RPs based on the average sales price (ASP) + 6% methodology.

However, the CMS has not yet decided on a new reimbursement structure for RPs, leaving hospitals to navigate the financial implications of using these drugs. To remain compliant with fair market value (FMV) and commercial reasonableness (CR), hospitals need to review and negotiate vendor agreements, document the necessity of higher-priced drugs, and establish a process for deciding which RPs to use.

In conclusion, while awaiting a resolution from the CMS, hospitals and health systems must proactively develop compliance protocols and negotiate agreements to minimize the financial impact and ensure optimal patient care. The proposed changes to the reimbursement structure for RPs represent a significant step towards addressing the economic challenges faced by healthcare providers and improving patient access to essential diagnostic and therapeutic resources.

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Health Law Highlights

UnitedHealth Defends Lucrative Billing Tactic in Appeals Court

From Bloomberg Law, by Jacklyn Wille:

  • “Cross-Plan Offsetting” is the practice by an insurer of clawing back benefits it says were overpaid to a provider under one plan by reducing future payments to the provider under a different plan that it administers.
  • This common insurance billing tactic has invited litigation over its legality and opposition from the Labor Department.
  • In one such case, the Eighth Circuit is being asked to decide whether Smith and Ghanim, who are covered by health plans funded by their employers and administered by United, have been harmed in a way that would give them standing to challenge the practice under ERISA.
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Texas, Pennsylvania hospitals lose lawsuit challenging Medicare payments

The lawsuit was brought by Moses Taylor Hospital in Scranton, Pa., and Tomball (Texas) Regional Center. The hospitals said HHS wrongly calculated their Medicare disproportionate share hospital payments for fiscal year 2015, using the wrong data. As a result, the hospitals appealed the DSH payment decision to the HHS provider reimbursement review board, where it was dismissed. In its dismissal, the review board said it lacked jurisdiction to consider the hospitals’ objections to their payments.

Source: Texas, Pennsylvania hospitals lose lawsuit challenging Medicare payments