Sunday, March 20, 2016

Supreme Court Rejects Private Suits
to Challenge Medicaid Rate Reductions

One of the areas of healthcare affected heavily by the Great Recession beginning in 2007 was Medicaid reimbursement. Cash-strapped states, in an attempt to alleviate budgetary issues, reduced Medicaid provider reimbursement rates. These rates often fell below the actual cost of care to the providers themselves, which in turn limited the ability of providers to provide care and Medicaid beneficiaries to access care. In response, healthcare providers challenged these rate cuts using a provision of federal law that requires states that accept Medicaid funds to “assure that payments . . . are sufficient to enlist enough providers so that care and services are available under the plan at least to the extent that such care and services are available to the general population of the geographic area.” [1]

Over the years, providers have mounted challenges to rates using this provision – referred to colloquially as Section 30(a) – with varied results as the law itself change over the years. With the decision in Armstrong v. Exceptional Child Center, Inc.,[2]  in March of 2015, however, the U.S. Supreme Court effectively ended the use of Section 30(a) as a viable means to challenge reduced reimbursement rates.

The central question in Section 30(a) jurisprudence is whether private suits by providers can be brought, and under what legal theory. A brief discussion of the background of Section 30(a) cases is warranted, therefore.

In 1981, Congress changed the applicable language in the Medicaid Act in what became known as the “Boren Amendment” to provide states with flexibility in setting reimbursement rates. Congress later amended Section 30(a) further to include the language quoted in the first paragraph, which, along with the Boren Amendment, became the basis for a multitude of rate challenges. In the case of Wilder v. Virginia Hospital Association,[3]  the U.S. Supreme Court determined that the Boren Amendment conferred on providers a private cause of action under Section 1983 of the Civil Rights Act. Congress later repealed the Boren Amendment, and a further Supreme Court case, Gonzaga v. Doe,[4]  laid the foundation for circuits to reject Section 1983 suits predicated on Section 30(a) challenges. Providers then began searching for a way to continue challenges, settling on the Supremacy Clause as a means.

In March of 2015, the Supreme Court finally settled the question of enforceability of Section 30(a) in Exceptional Child Center.  A plurality of the court held that providers may not use Section 30(a) as the basis for a private right of action. A majority of the court held that the Supremacy Clause does not give plaintiffs a private right of action and that providers cannot sue in equity to enforce the provisions of Section 30(a). The majority held that the Supremacy Clause is more of a rule or decision as to which law prevails, not a way for individuals to sue states that do not comply with federal law. The majority also found that Congress intended to preclude suits based on private enforcement of Section 30(a), rather than merely fail to provide a means to sue under the law.

The essence of the opinion is that private providers are now essentially foreclosed from challenging rate reductions using Section 30(a) directly, but that does not necessarily mean that providers are out of options in challenging state actions that defy the provisions of the Medicaid Act. There are a handful of other legal theories that may still bear fruit, even if the Supreme Court has removed a powerful weapon from a provider’s arsenal.

Provisions of the Medicaid Act that grant providers a right of action under Section 1983 allow for some private enforcement. State changes to Medicaid programs prior to CMS approval of a State Plan Amendment are also ripe for challenge. State laws may also restrict how state Medicaid agencies can reduce rates, allowing providers to use methods such as state writs of mandate to compel officials to comply with the Medicaid Act. Finally, providers may be able to challenge arbitrary and capricious actions of CMS under the Administrative Procedures Act, but courts give great deference to the agency under this law.

For its part, CMS, in issuing its final rule implementing Section 30(a) in November of 2015, signaled that it understands how the ruling in Exceptional Child Center can affect providers and beneficiaries, and that this highlights a need to strengthen access to Medicaid programs.

Molly Nicol Lewis
Lexington, Kentucky

[1]  42 U.S.C. §1396a(a)(30)(A).
[2]  Armstrong v. Exceptional Child Center, Inc., 135 S.Ct. 1378 (2015).
[3]  Wilder v. Virginia Hosp. Ass’n, 496 U.S. 498 (1990).
[4]  Gonzaga University v. Doe, 536 U.S. 273 (2002)

Monday, October 12, 2015

Primary Care Providers: Are You Feeling the Pinch?

It was nice while it lasted. Due to a provision of the Patient Protection and Affordable Care Act, services furnished by certain primary care providers were subject to an enhanced payment rate for calendar years 2013 and 2014. These PCPs had to have been (a) Board-certified in the specialty designation of family medicine, general internal medicine or pediatric medicine or have a subspecialty designation recognized by specific boards or associations, or (b) furnished more than 60% of claims in specific evaluation and management or vaccine administration services under certain codes to have been eligible for these enhanced payments [1].  The payments were raised to the level of the Medicare Part B fee schedule rate (unless the actual billed charge for the service was lower), and providers had until April 1, 2013 to self-attest to being eligible [2].  The increase applied to both fee-for-service and managed care Medicaid plans.

Sunday, September 20, 2015

FCC Guidance on Cellphones Puts the
Squeeze on Medical Debt Collectors

In July, the FCC released an order it touted as strengthening “consumer protections against unwanted calls and texts.” It was a series of rulings based on the Telephone Consumer Protection Act meant to clarify the use of autodialers, procedures for wrong numbers and consent to call, mainly concerning cellphones.  Under these new regulations, healthcare providers must get express written consent to be able to contact patients on their mobile phones about medical debt and billing.

The problem for medical debt collectors is that they are required to confirm that they have received express consent before using an autodialer to contact a cellphone. If they call a cellphone number that has been reassigned, they have a one-call safe harbor to receive constructive notice that the number has been reassigned or is the wrong number.

Tuesday, August 11, 2015

Changes and Challenges for Mental and Behavioral Health Providers

As Kentucky’s Senate Bill 192 highlights, coverage and treatment of substance abuse problems is dramatically changing, as the current penal model is slowly being replaced with a treatment model. Even terminology for what has been called "drug addiction" is now referred to as a "substance disorder" problem. Behavioral health has become the new catchall name for both mental health and substance disorders.

As substance disorders become medical problems rather than drug abuse problems, the Federal Mental Health Parity Act and the Affordable Care Act now mandate that substance disorders and mental health problems, which often go hand in hand, must be covered by health insurance just as medical problems are covered. As of January 1, 2015, these illnesses must also covered by Medicare and Medicaid. Paving the road for coverage, however, has not been easy, as a wealth of new federal and state government regulations are creating a complicated framework with a host of changes for behavioral health providers. While Kentucky struggles to provide and pay for services for the 150,000+ new Medicaid beneficiaries, these new laws and regulations significantly affect not just behavioral health providers, but also employers as the struggle to treat individuals who suffer from these maladies is addressed.

Friday, July 31, 2015

CMS Proposes Sweeping Changes for Nursing Home Oversight

On July 16, 2015, the Center for Medicare and Medicaid Services published a Proposed Rule with new standards that will have a sweeping effect on the long-term care industry. This new Rule is the first comprehensive review and update to Medicare and Medicaid nursing home standards since 1991. Since the last update, the number of Medicare beneficiaries, excluding Medicare Advantage beneficiaries, residing in nursing homes has tripled to 1.8 million residents and the Medicaid Program has become the primary payer of long term care (64% of residents are on Medicaid)[1].

The 403 page Proposed Rule sets high standards for quality of care and patient safety in nursing homes and long term care facilities that participate in Medicare and Medicaid [2].  The U.S. Department of Health and Human Services summarizes the proposed changes as follows:

Friday, July 17, 2015

Think Twice About DEA Voluntary Surrender

It can be an intimidating experience, to be sure.

A DEA agent or Diversion Investigator, on an unscheduled visit to your office, confronts you with a KASPER, a KBML complaint or some other state regulatory action and alleges violations of the Controlled Substances Act. The DEA Agent then asks you to sign DEA Form 104.

This form, which is titled “Voluntary Surrender of Controlled Substances Privileges,” is placed in front of you while the agent explains why you should sign it immediately, rather than face potential action to revoke your DEA and other adverse consequences. The DEA Agent tells you that you are already in deep, deep trouble (of a vague and unspecified nature), and that the simple act of signing this form can make your troubles go away and prevent federal action. Also, he tells you that all you have to do to get the number back is to reapply!

Hold on. This is not the full story!

Friday, July 10, 2015

The Compounding Regulations
Surrounding Drug Compounding

Drug compounding as a practice has, until recently, been met with far looser regulation than the manufacture of drugs. This practice serves to meet the needs of individuals who require certain formulations not available in manufactured form, such as discontinued medications or forms of manufactured drugs that do not contain ingredients to which a patient might be sensitive.  Compounding may also change the form of the drug for patients who cannot take manufactured drugs in the manner in which they exist commercially.  As industrial-level compounding grows to provide larger amounts of compounded drugs, regulators are scrambling to ensure the quality and safety of these drugs.

The biggest difference between a manufacturer of drugs and a drug compounding facility is that drug manufacturers must receive FDA approval before selling drugs to the public. Drugs from compounding facilities are not tested in the same manner for safety, efficacy or quality.  After an outbreak of Aspergillus Meningitis between 2012 and 2013 due to tainted steroid injections from a compounding facility, Congress passed the Drug Quality and Security Act of 2013 in 2013, and a particular title called The Compounding Quality Act to regulate the compounding industry. The DQSA/CQA set up a new regulatory regime that applies to all compounding pharmacies, and those pharmacies, large or small, should take notice as the FDA will soon release final rules implementing the provisions of the acts.