Healthcare Provider/Provider & Provider/Payer (Reimbursement) Disputes

At the Law Office of Kevin O’Mahony, we represent healthcare providers and businesses in both provider/provider and provider/payer or reimbursement disputes. Providers are the hospital or health system, physician or physician group, laboratory services provider, ambulatory care center, dentist, chiropractor, optometrist, therapist, nurse or other party that provides healthcare services and seeks payment for one or more claims from a payer.

Payers or “payors” (both spellings are often used) are the health insurance companies or other parties responsible for: (1) paying all or part of a claim relating to the rendering of healthcare services; or (2) administering the payment of such a claim for another entity. Included as payers are third parties who administer self-funded plans on the plan sponsor’s behalf. Not included are employers who sponsor benefit plans.

Disputes between providers themselves (not involving payers) can arise in multiple contexts. They include physician disputes with hospitals, health systems, medical staffs, and their own physician groups. We also handle provider/vendor disputes. Many, if not all, of those contexts are discussed on the other individual Practice Area pages of this website. We invite you to review those pages, and contact us if you wish to discuss a dispute in any of those areas. But provider/payer or provider/plan disputes, which are discussed here, have some distinct characteristics, including:

• The provider sector and the payer sector have ongoing, intertwined relationships with disputes that resurface.
• These parties must interact with each other more than most other sectors of the healthcare industry. For example, there are patients who are members of payer plans who need ongoing services from providers such as hospitals and physicians.
• And there are details unique to claims for payment dealing with, for instance, physician reimbursement and treatment coding, that lend themselves to more efficient and less costly handling.

Third-Party Payer & Managed Care Contracting

The United States’ third-party payer healthcare system drives most healthcare providers to enter into contracts with health insurers and managed care organizations. “Managed care” generally describes methods that are intended to lower healthcare costs and improve patient care. Theoretically, managed care delivery systems lower costs and enhance quality of care by providing financial incentives to physicians, other healthcare providers and patients to choose less expensive care options, reduce in-patient hospital stays, increase outpatient surgeries, closely monitor utilization and high-cost patient situations, and share in costs. Unfortunately, managed care also has complicated and created some new problems in our healthcare system, which make it difficult for some physicians and other providers to deliver healthcare profitably without what many consider to be unreasonable (if not unbearable) administrative burdens.

There are multiple types of managed care organizations with varying components, business structures and compensation methods. Some managed care organizations are comprised of only physicians, while others are a combination of hospitals, physicians and other healthcare providers. Specific examples are Independent Practice Associations (“IPAs”), Physician Hospital Organizations (“PHOs”), and Preferred Provider Organizations (“PPOs”) (which also include an insurer or third-party administrator).

Typically, physicians or medical groups enter into a series of contracts (directly or indirectly) with managed care organizations that require the doctors to agree to discounted fees for their services. In exchange for the physicians’ agreement to provide services at lower rates, the managed care entities are responsible for “steering” patients to the physicians or group. A physician or medical group may contract with an IPA or PHO that contracts with a PPO, health insurer or large employer in an arrangement that allows for a third-party payer (an insurer or employer health plan who pays for healthcare) to pay the provider when claims are submitted for patient care. The PPO organizes “networks” of providers that may be included in a health insurance plan pursuant to contracts called “network agreements.”

A hospital, medical group or physician may have multiple contracts in order to participate in a particular network. And a hospital, medical group or physician may participate in multiple networks to obtain additional insured patients. Hospitals, physicians and other healthcare providers may also form “alliances,” as another method of managing and (hopefully) improving care, monitoring utilization, and reducing costs.

While managed care contracts can significantly increase a healthcare provider’s patient volume, participating in networks and other managed care arrangements can be complex and pose risks for providers. Indeed, there are both business and legal risks associated with these contracts.

Providers are in the business of keeping their patients healthy. But confusing contracts filled with complicated provisions and legalese can distract providers from their core mission of improving patient outcomes. Consequently, a provider should obtain the assistance of a qualified healthcare attorney with relevant experience before signing any third-party payer or managed care contract.

Key Terms & Components of Payer Contracts Providers Should Know

Payer contracts define and explain a provider’s reimbursement arrangement for delivering healthcare services to patients covered by a specific health plan. The contracts cover everything from reimbursement rates and provider networks to medical necessity and provider credentialing.

Understanding the terms and provisions in a payer contract is essential to ensure correct and timely reimbursement, prevent claim denials, achieve a smooth revenue cycle, and keep a practice running. Knowing the ins and outs of each contract is crucial to drawing patients to the practice or facility, and being able to offer comprehensive and reimbursable healthcare services to those patients.

Despite the importance of payer contract knowledge, providers (and even their practice administrators and financial advisors) often feel less than confident going up against payer organizations with legal departments, financial analysts and advanced computer software systems. The entire process of contracting and renegotiating with payers is complex, lengthy and time-consuming. And this often causes providers to feel they are at a disadvantage.

However, knowledge is power. And the more providers and their practice administrators know about the terms used in payer contracts, the more effectively they can negotiate and renegotiate contracts to maximize reimbursement and avoid disputes.

But when disputes do arise (as they sometimes unavoidably do), our healthcare, business and litigation law firm can help. Below are some of the key terms and issues involved in contracting and resolving disputes with payers – both private and governmental.

National Provider Identifier

The National Provider Identifier (“NPI”) is a Health Insurance Portability and Accountability Act (“HIPAA”) Administrative Simplification Standard. The NPI is a unique, 10-digit identification number for covered healthcare providers created to help send health information electronically more quickly and effectively. Covered healthcare providers, all health plans, and healthcare clearinghouses must use NPIs in their administrative and financial transactions. As outlined in federal regulations, HIPAA covered providers must share their NPI with other providers, health plans, clearinghouses, and any entity that may need it for billing purposes. The numbers do not carry other information about healthcare providers, such as the state in which they live or their medical specialty.

Allowed Amount

According to the Department of Health & Human Services (“HHS”), the “allowed amount” on a payer contract is the maximum amount that a payer will reimburse a provider for a covered healthcare service. Some contracts also refer to the allowed amount as an “eligible expense,” “payment allowance,” or “negotiated rate.”

The allowed amount is what the payer will reimburse for services defined as covered or in-network. This rate may not fully cover provider charges. And patients may be responsible for covering the balance between the allowed amount and the provider charges.

Medicare, for example, sets its allowed amounts for specific services in prospective payment systems by care setting and the Physician Fee Schedule (“PFS”). Private payers tend to use Medicare’s rates as the basis for building their own allowed amounts.

Fee Schedule

A “fee schedule” is a list of fees or payments for specific provider services or supplies, according to the Healthcare Financial Management Association (“HFMA”). Each payer contract should have a fee schedule attached, and providers should push payers to provide a complete fee schedule. The list contained in that schedule should define all covered services and the negotiated rates for each service.

The Centers for Medicare & Medicaid Services (“CMS”) manages the Physician Fee Schedule (“PFS”) for Medicare. Using the PFS, CMS reimburses for physician services under Medicare Part B. Medicare Part A, on the other hand, reimburses for hospital, skilled nursing facility, hospice and home healthcare services provided to Medicare beneficiaries.

Each Current Procedural Terminology (“CPT”) code receives a relative value unit (“RVU”), which then is adjusted for the Geographical Practice Cost Index and the national conversion factor. The result is the Medicare allowed amount for a specific covered service. And other payers (health insurers, etc.) use similar processes to determine the allowed amount for each covered service listed on their fee schedules.

Clean Claim

A “clean” claim is a claim that payers can process without needing additional information, according to HFMA. Incomplete clinical documentation and coding, incorrect patient information, missing physician approvals, and other claim errors result in reimbursement delays and claim denials. Failing to ensure a claim is complete and correct, otherwise known as “clean,” can seriously impact provider revenue.

Payer contracts define what a payer needs to ensure timely reimbursement of claims. So, to ensure financial survival and (hopefully) success, providers need to pay close attention to the terms of those contracts to ensure that their claims are clean.

Providers should also track their clean claim rate to evaluate their revenue cycle performance. Higher clean claim rates indicate that medical billing, coding and claim creation processes are running properly and revenue is being collected efficiently.

Medical Necessity

Payers only reimburse providers for services that are deemed “medically necessary.” Payers define medical necessity in their contracts. So, again, in order to ensure financial survival, providers must pay close attention to and understand what types of services will be covered under their payer agreements.

According to HHS, healthcare services or supplies that are needed to diagnose or treat a condition, illness, disease, injury or related symptoms are considered “medically necessary.” Medically necessary services also must meet generally accepted standards of medicine, according to HHS.

Medical necessity clauses may also limit the number of times providers can perform a procedure or deliver specific care in a specified time period. And for Medicare and Medicaid, the National Coverage Determinations and Local Coverage Determinations impose limits on how many times a provider can deliver a medically necessary service within a certain period.

Providers should be sure they understand each payer’s definition of medical necessity, because definitions may vary (at least slightly) by contract. And the provider’s own definition or understanding may be different than the payer’s. Being on the same page is important not only to receive reimbursement for services. It is also crucial to avoid civil liability and even criminal penalties. That is because billing payers for services that are known to be medically unnecessary can result in healthcare fraud investigations and punishment.

Providers need to keep in mind that what they may consider to be an “innocent mistake” or mere “billing error” may be characterized by the government or a private payer as “fraud.” So, careful attention to submitting clean claims for only medically necessary and appropriately delivered medical services is crucial for providers to survive financially and legally.

It is also important to bear in mind that federal regulations have long barred the routine waiver of coinsurance and copayments for federal healthcare program beneficiaries. Providers who routinely discount or waive patients’ copayments or deductibles (collectively referred to as coinsurance or copayment obligations) can, for example, violate the federal anti-kickback statute (42 U.S.C. § 1320a-7b), or be accused of false billing by private insurers not receiving the discount. Consequently, providers must be careful and take certain steps before offering or allowing any such discount or waiver to a patient.

Although CMS and HHS’ Office of Inspector General (“OIG”) may not react to an occasional waiver of copayment obligations due to financial hardship or uncollectibility, routine waivers of copayment obligations under Medicare is clearly problematic. The federal anti-kickback statute prohibits the offering of any remuneration to induce a person to purchase or order any service for which payment may be made under Medicare. The routine waiver of a patient’s copayment obligations implicates this prohibition because it reduces the amount that the patient pays for services, and may therefore induce the patient to seek more services that are payable by Medicare.

The OIG has promulgated regulations defining and further specifying those payment practices which will not subject providers to penalties under the anti-kickback statute in what are known as “safe harbors.” But when discussing the propriety of discounts, the OIG stated unequivocally that safe harbor protection does not apply to any discount offered to beneficiaries in the form of “a reduction in price offered to a beneficiary (such as a routine reduction or waiver of any coinsurance or deductible amount owed by a program beneficiary).” (See 42 C.F.R. § 1001.952(h)(5)(iv).)

Moreover, private health insurers often take the same position with regard to their beneficiaries, believing that such routine waivers indicate or lead to provision of unnecessary services or services in excess of patients’ needs. Like CMS and the OIG, private insurers and courts are generally not alarmed by occasional waivers, discounts or write-offs for individual patients with documented financial difficulties. But health insurers have successfully challenged routine waivers of copayment obligations in the courts on numerous occasions.

Courts dealing with challenges to discounts of copayment obligations have been concerned with two basic issues. First, a provider who discounts established fees for some patients but not others, without a valid distinction for the differing treatment, can be subject to claims of false billing by a party not receiving the discount or consideration, including claims by insurance carriers. Second, the routine waiver of patient copayment amounts can be viewed as a breach of contract.

Almost without exception, insurers impose a contractual duty on providers to make a reasonable effort to collect applicable copayment amounts from patients, and benefits are only available when the charge for the service submitted by the provider is the actual, and the usual, reasonable and customary charge. The reasoning in these cases is that frequent discounting or waiver of patients’ copayment portion of a provider’s fee shows that the provider really only intends to collect that portion of the fee which is not discounted, making it improper to claim that the fee is the full undiscounted fee.

Therefore, routinely offering discounts to patients is extremely risky and not advised. It can implicate multiple federal and state laws, and may attract the scrutiny of government investigators, as well as private insurance audits. Under certain limited circumstances, providers may occasionally waive or discount patient co-pays, based on legitimate financial need, hardship or uncollectibility. But the individualized circumstances warranting such a discount or waiver must be well documented. And the the provider’s billing practices should be consistent, reasonable and set forth in a written policy.

On January 12, 2021, CMS codified how it defines “reasonable and necessary” coverage for items and services that may be covered under Medicare Parts A and B in a new final rule. The rule updated CMS’s prior definition and applies the definition to National Coverage Determinations and other coverage decisions.

According to the final rule, which took effect on March 15, 2021, the definition has three main elements, including that an item or service (1) be safe and effective, (2) not experimental or investigational, and (3) appropriate for Medicare patients.

The codified definition is similar to one currently published in the Medicare Program Integrity Manual, CMS stated in an announcement. The agency believes the codification of the definition will “bring clarity and consistency” to the coverage determination processes for items and services covered by Parts A and B.

CMS and Medicare Administrative Contractors (“MACs”) have traditionally determined whether items and services are reasonable and necessary on a case-by-case basis, accounting for clinical appropriateness of claims, or through local and national coverage policies, such as Local Coverage Determinations and National Coverage Determinations.

The final rule also stated that CMS will consider coverage for items and services that have insufficient evidence to meet the appropriateness criteria “to the extent the items or services are covered by a majority of commercial insurers.” CMS plans to issue draft sub-regulatory guidance on how it will determine what commercial insurers to consider for national and local coverage determinations in these situations. The agency said it will base its decision on the “measurement of majority of covered lives.”

The American Hospital Association (“AHA”) voiced concern with CMS’ push to consider coverage in the commercial health insurance market when making Medicare coverage determinations. In comments on the proposed rule in November 2020, the AHA said the approach could reduce coverage in Medicare and transparency in coverage determinations. At the time, the rule proposed to codify the Medicare Program Integrity Manual’s definition of “reasonable and necessary” with a modification to the appropriateness factor to allow CMS to refer to commercial coverage.

The rule stated that for an item or service to meet the appropriate criteria, it would need to be:

• Furnished in accordance with accepted standards of medical practice for the diagnosis or treatment of the patient’s condition or to improve the function of a malformed body member;
• Furnished in a setting appropriate to the patient’s medical needs and condition;
• Ordered and furnished by qualified personnel;
• One that meets, but does not exceed, the patient’s medical need; and
• At least as beneficial as an existing and available medically appropriate alternative; OR
• Covered by commercial insurers, unless evidence supports that differences between Medicare beneficiaries and commercially insured individuals are clinically relevant.

In the final rule, CMS did not replace the appropriateness criteria completely and addressed the concern by offering to release guidance later regarding how it will determine when and how commercial coverage will be relevant to an item or service’s coverage in Medicare. The complete definition and final rule can be viewed here.

Network Requirements

Network requirements are another key component of payer contracts. Such provisions detail the networks in which provider organizations can participate, as well as the credentialing requirements providers must meet in order to join a network.

Providers should ensure that they join appropriate networks for their practice to generate revenue and increase patient volume. Network requirements in payer contracts are becoming even more important as the number of value-based contracts increases.

“Value-based care” (reimbursement that ties payments for care delivery to the quality of care provided and rewards efficiency and effectiveness, as opposed to fee-for-service reimbursement, which pays providers retrospectively for services delivered based on bill charges or annual fee schedules) is producing different networks for different products. And there almost always is language in contracts that pertains to credentialing criteria that providers have to meet in order to be included in a network.

However, a contract may also have language that enables the payer to pick and choose which physicians or individual providers can participate in which networks. From the provider’s perspective, a payer contract should not contain language that allows the payer to select a provider organization’s network. And network changes should be tied to legitimate credentialing criteria only and not arbitrary selection of physicians.

Unilateral Amendments

Payer contracts that contain unilateral amendments mean that payers can change contract provisions without the consent of (and sometimes without even notifying) the provider. If a contract contains unilateral amendment language, payers can change anything from reimbursement rates to clean claim definitions, and even network participation.

Most payer contracts state that the payer can amend the contract at any time. In the worst cases, they state that no approval is required from the provider at all. In even the best cases, they usually indicate that a provider has only a limited period of time, typically 10 to 30 days, to object to a proposed amendment in writing.

Otherwise, the amendment automatically goes into effect. Providers should therefore be aware of unilateral amendment language in their contracts, and attempt to negotiate with payers to exclude (or at least improve) such language in future contracts, to the extent possible.

Termination

Payer contracts should clearly define the contract’s period and the circumstances under which the provider and payer can terminate the agreement. There can be an initial “term” (typically one year) before the contract automatically expires. Or, it may automatically renew unless specifically terminated. And there usually are both termination “for cause” and termination “without cause” provisions.

With regard to terminations for cause, there normally is a “right to cure” provision, providing a limited time to remedy or fix a material breach or violation of the contract. But for serious enough breaches (such as license suspension or revocation, conviction of a crime, etc.), the termination can be automatic and immediate. Termination without cause provisions normally specify a set number of days (typically anywhere from 15 to 180 days) in which a contract can be terminated for any or no reason at all, by simply providing written notice of termination to the other party. Post-termination duties for both parties should also be specified in the contract, including obligations for the payer to pay any outstanding compensation to the physician or true-up based on a pro rata portion of the performance year, etc.

Dispute Resolution

Statistical analyses have shown that a significant percentage (up to 10% or more) of both hospital and physician charges initially result in claim denials by payers. Therefore, providers need to ensure that their payer contracts have clear dispute resolution processes. Dispute resolution language can include anything from informal resolution processes to formal litigation.

In a payer contract, dispute resolution language normally sets out at least some of the terms for mediating, arbitrating, or (if necessary) litigating in court, provider-payer disputes. In the event of a claim denial or a disputed claim, dispute resolution provisions in the payer contract will direct a provider on how to try to resolve the claim(s) in question, and (hopefully) receive reimbursement if it is owed.

Once again, as the number of value-based contracts increases, dispute resolution language is becoming even more important, because value-based reimbursement criteria often present even more opportunities for claim denials and disputes over claims. In general, providers should try to avoid or negotiate away as much as possible language in a contract that legally binds them to a specific dispute resolution process to the exclusion of others. That is because providers (more than payers) may need the leverage of litigation to get a fair resolution of a dispute.

As the American Medical Association has observed, “in contractual disagreements between physicians and payers, the aggrieved party is often the physician.” “And the absence of language stating that these [alternative dispute resolution proceedings, such as mediation and arbitration] provisions are binding [or mandatory] may give some wiggle room for this leverage. This isn’t the place, therefore, to argue for hard-nosed [mandatory] language.”

Resolving Provider-Payer Disputes & Denied Claims Litigation

In the healthcare industry, providers and payers often have claims for both underpayment and overpayment arising from ongoing contracts or other healthcare services rendered. When claims arise between a provider and a payer, they often are aggregated and combined for purposes of litigation, sometimes totaling thousands of claims in a single action. When the parties are unable to resolve the claims informally, they often become the subject of either a civil action or arbitration proceeding. In either case, the parties usually try to settle those claims and do so often in mediation. But at least occasionally, a trial and even appeals are required to resolve a dispute.

One of the more notable cases occurred in 2021. On Dec. 7, Modern Healthcare (Tepper, Subscription Publication) reported that a Las Vegas jury decided that “UnitedHealthcare must pay $62.65 million in total damages for shortchanging TeamHealth clinicians.” The article said, “The jury unanimously found the nation’s largest insurer guilty of fraud and unjust enrichment, saying it had formed and violated an implied contract with TeamHealth and engaged in unjust and oppressive claims practices.” The article noted, however, that “In this case and others, UnitedHealthcare counters that TeamHealth’s unreasonably high charges led to its removal from the insurer’s provider networks.”

UnitedHealthcare said it plans to appeal the decision on several grounds. For example, the health insurer argues that the jury wasn’t allowed to hear critical pieces of evidence in the case that may have impacted their verdict, including that TeamHealth allegedly sought payment of more than five times the market rate in Nevada, and more than seven times its costs.

More often, cases are brought by payers against providers for alleged overbilling and overpayments. A notable case example in 2021 involved Sutter Health, a California-based healthcare services provider, and several affiliated entities including Sutter Bay Medical Foundation (dba Palo Alto Medical Foundation, Sutter East Bay Medical Foundation, and Sutter Pacific Medical Foundation) and Sutter Valley Medical Foundation (dba Sutter Gould Medical Foundation and Sutter Medical Foundation) (collectively, “Sutter Health”).

In that case, Sutter Health agreed to pay $90 million to resolve allegations that it violated the False Claims Act by knowingly submitting inaccurate information about the health status of beneficiaries enrolled in Medicare Advantage Plans. Specifically, the government alleged that Sutter Health knowingly submitted unsupported diagnosis codes for certain patient encounters for beneficiaries under its care. These unsupported diagnosis codes caused inflated payments to be made to the plans and to Sutter Health. The lawsuit further alleged that, once Sutter Health became aware of these unsupported diagnosis codes, it failed to take sufficient corrective action to identify and delete additional unsupported diagnosis codes.

What makes provider-payer disputes unique is that there often are multiple issues or categories of issues involving decision makers from different departments within the same organization (i.e., claims people vs. contracts people vs. case administrators, etc.). Moreover, each issue group may contain hundreds or thousands of separate claims which arise under the same contractual relationship. Because the claims are individually small, the provider usually waits until it has gathered a sufficient number of claims to make filing a legal action or mediating a case pre-litigation worthwhile.

These types of claims fall into several categories, such as lack of authorization, medical necessity, usual and customary rates, and the like. Typically, they span a range of dates of service. Then during the pendency of an action, there may accrue additional claims for additional dates of service or claims that were not part of the original claim(s), but which arose under the same contractual or non-contractual relationship as the original claim(s).

At the same time, the existing contract may be expiring, may have expired, or may be in the process of being renegotiated during the pending action. So by the time of a mediation, arbitration or trial, there are “original” claims, “accrued” claims, “future” claims certain to arise from the relationship, and often contract issues that need to be addressed since the relationship between the parties is ongoing. So the sooner a dispute can be resolved, the better for both parties from a financial and risk management standpoint.

Recoupment Demands by Health Insurers

(This section is adapted from an article titled “When the Insurance Emperor Has No Common Law Clothes: Provider Recoupment Demands, State Contract Law, and the Voluntary Payment Doctrine” by Greg Heller, Esq. of Young Ricchiuti Caldwell & Heller, LLC, which appears in the Feb. 2021 ABA Health Law eSource.)

Practically every day, health insurance companies send recoupment demands to healthcare providers. Insurers generally base their recoupment demands on a contention that payments previously made should not have been paid after all. Recoupment demands are often based on a provider’s alleged failure to comply with the insurer’s documentation rules, and on rules about how claims are to be coded and submitted. The demands come after the providers have already performed or provided healthcare services, paid for the support and professional staff and materials needed to provide the services, and after the insured patient already received the services – in other words, after the insurer’s insured subscriber/member/patient received what the insurance company promised it would cover (pay for) in exchange for premium payments it already received.

The frequency and size of recoupment claims by commercial insurers appear to have increased in recent years. Likely drivers of this increase include the proliferation of technology tools that automate large parts of the audit or review process (which allow, for example, the application of unbundling rules across a wide set of claim records) and widespread use of sampling and extrapolation methodologies within the Medicare and Medicaid programs, which has built out expertise that can also be carried over to commercial health plans and insurers. Another likely driver is the proliferation of narrow provider networks. Narrow networks in the aggregate put more power in the hands of payers because there are more providers than network spots, and providers need to be in-network more than the network needs any particular provider. This dynamic encourages or at least accommodates a more aggressive payer approach to reimbursement. Whatever the reason, recoupment demands are here to stay.

ERISA is Often the Default Framework for Provider-Payer Disputes

When recoupment demands get litigated (either by providers resisting recoupment demands, or by payers pursuing them), that litigation often centers around the Employee Retirement Income Security Act of 1974 (“ERISA”) (29 U.S.C. § 1131, et seq.), a federal law that governs employer-sponsored health coverage and applies to roughly half of all Americans with health insurance coverage. Under ERISA, it is by and large the ERISA plan document (in other words, usually, the insurance policy) that ultimately determines what is and is not covered, and therefore it is (with a few exceptions not relevant here) the plan document that determines whether or not a particular payment from the insurer to a provider was appropriate.

From the insurer’s perspective, litigating provider disputes as ERISA disputes has a lot to recommend it. Plan documents are written by insurers. Those documents generally place considerable discretion in the hands of the insurer, and the insurer’s decisions are reviewed under an abuse of discretion standard. Plan documents also often incorporate (at least by reference) the insurer’s own reimbursement policies and the insurer’s standards for provider audits and reviews, and purport to make those standards a condition of payment under the plan. Under ERISA the fact that a particular provider or insured never saw or agreed to these policies and standards is irrelevant. This places enormous power in the hands of insurers.

ERISA also offers some help to providers. While the discretion granted to insurers is considerable, ERISA does impose some outer boundaries on the substantive standards that insurers apply when they make benefit decisions. There is an extensive body of well-reasoned case law addressing benefit decisions under  ERISA, and ERISA is familiar terrain for lawyers who litigate benefit disputes. ERISA also has a statutory fee-shifting provision (29 U.S.C. §1132(g)). The ERISA framework is, therefore, a comfortable one for those who frequently work within it.

For these reasons and others, providers that are either defending against a recoupment demand or affirmatively seeking reimbursement have often sought to pursue their claims as ERISA claims in federal court, generally seeking to pursue claims under ERISA section 502(a)(1)(B), which grants every ERISA plan participant and beneficiary a statutory cause of action “to recover benefits due to him under the terms of his plan, [or] to enforce his rights under the terms of the plan.” (See 29 U.S.C. §1132(a)(1)(B).)

In recent years, courts have often dismissed these claims on the ground that providers are not participants or beneficiaries, and therefore lack standing. Faced with these rulings, providers seeking to proceed under ERISA often claim standing by virtue of assignments received from patients. Managed care companies, in turn, rely on provisions in plan documents that ban such assignments. And providers, again in turn, often assert that plans are estopped from raising anti-assignment provisions, usually because the provider relied on preauthorization communications from the plan. There is an extensive and growing body of case law on these issues. For present purposes, it is sufficient to note that there are opportunities for advocacy and significant rewards for careful analysis on both sides of these issues. A provider seeking to litigate a recoupment claim as an ERISA 502(a)(1)(B) case has a shot at doing so.

But even if providers survive a motion to dismiss on their statutory ERISA claim, they can still face headwinds because the ERISA playing field is often, as a practical matter, tilted in favor of the insurer, as noted above. The insurer’s interpretation of a document written by the insurer will be addressed under a standard that affords substantial deference to the insurer. Consequently, it is fair to ask whether this is the best place for providers to fight.

For Providers, a State Common-Law Framework is Sometimes Better

ERISA, for all its charms, is not the only legal route to challenge a demand for recoupment. The common law also merits consideration. Providers may do better pursuing these cases as state contract claims, because in that framework these cases are analogous to a building owner trying to keep building repairs or improvements, long after receiving and enjoying the benefits of those repairs or improvements, without paying for them.

In other words, imagine a carpenter builds a new deck on a house. The carpenter buys the wood and does all the work, and the owner pays for the deck. The owner has the deck, and the carpenter (at least for the time being) has the money (net of whatever he paid for materials). A year later, the owner comes back to the carpenter and says the carpenter didn’t submit daily progress photographs as required by the owner, and demands a full refund of all the money paid for the deck. That sounds crazy. But that is essentially what happens in many cases in which a health insurer imposes a recoupment demand on a healthcare provider. And that presents some opportunities for providers not necessarily available in ERISA cases. The following are some examples.

Common Law Damages

It is blackletter law that the damages in a contract case are those damages caused by the breach. This means that immaterial, trivial breaches of a contract usually result in immaterial, trivial contract damages, at least in the absence of an express agreement to impose a penalty-style remedy for breaches. For out-of-network providers, such provisions are rarely if ever present in their agreements with health plans. Even for in-network providers, it is the rare contract that would justify a complete forfeiture of payment for a trivial breach of an agreed-upon condition.

This is important, because many recoupment claims are based on documentation and claim submission errors. Managed care plans generally take the position that compliance with documentation and claims-submission standards is a necessary precondition to payment because such compliance is (arguably) a requirement for the payment of benefits under the plan document. But these plan documents have invariably never been seen by the provider, let alone expressly agreed to. It is the rare patient indeed who shows up at the hospital, doctor’s office or other healthcare facility with a copy of his or her insurance policy or plan document. These provisions might be important reference points in a traditional ERISA benefit dispute between an insured and the insurer. But in a contract case between the provider and the payer, any payer arguing that a documentation or claim submission shortcoming is a material breach that essentially forfeits any right to payment has an uphill battle.

Common Law Contract Formation

In actual practice, the requirements that form the basis for a recoupment demand are often not part of the contract between a provider and the insurance company. Even if the provider is in-network, the precise reimbursement policies and other standards are often available only through the internet, if at all, and even then are often so vague that they cannot possibly be part of any contractual agreement.

One national health insurer, for example, purports to make its reimbursement policies available online. But a provider can only see them if the provider clicks on a lengthy disclaimer, which essentially obscures any clarity those reimbursement policies might otherwise provide. The language refers to “provider contract documents” as separate from the “reimbursement policies,” and the provider is forced to agree that the reimbursement policies are not necessarily part of the contract before the provider can even get permission to see the reimbursement policies. A litigant seeking to find an enforceable contract term in the reimbursement policies, therefore, has considerable work to do.

The disclaimer language often refer to other documents not generally available to providers, in-network or otherwise. This means the insurer is attempting to enforce, as a material term of the contract, a set of secret requirements that one party to the contract was not allowed to see. That is generally a heavy lift for an insurer in court. In other words, the basic rudiments of contract formation present significant opportunities for providers defending against recoupment claims in court.

The Insurer’s Failure to Involve the Insured

When insurers seek recoupment from providers, they rarely provide notice to the insured patient. The patient obviously has an interest in the dispute, because a provider with an unpaid bill—including a bill that becomes unpaid after the insurer recovers it by recoupment—often has recourse against the patient. Some of these disputes involve amounts that could bankrupt patients and their families in an instant. From the patient’s standpoint, making these decisions without giving the patient notice or an opportunity to be heard runs counter to basic notions of due process and fair play.

In a traditional ERISA dispute about health insurance benefits, ERISA grants significant procedural protections to insureds. Section 503 of ERISA (29 U.S.C. § 1133(1), (2)) requires insurers to provide notice and “a reasonable opportunity to any participant whose claim has been denied for a full and fair review . . . .” Regulations clarify that these standards apply to any “adverse benefit determination,” a term that includes any “denial, reduction, termination, or failure to provide or make payment.” (See 29 C.F.R. § 2560.503-1.) The regulations mandate that insurers making an adverse benefit determination set forth or make available the bases for their decisions; require insurers to make an appeal available; establish timelines for appeals and decisions on appeal; and establish other procedural requirements.

Federal courts have uniformly held that these procedural requirements do not apply to disputes between providers and insurers because the providers are not participants or beneficiaries under ERISA. Thus, if an insurer’s obligations are defined as consisting only of what is required under ERISA, it is entirely permissible for an insurer to raise and pursue recoupment demands without providing the insured patient an opportunity to be heard, and without affording the provider the procedural protections that otherwise apply to benefit disputes under ERISA.

The common law, however, is a somewhat broader canvas. The insured might or might not be an indispensable party to any recoupment dispute; this is a fact-specific issue that is beyond the scope of this section. Whatever the mandatory procedural requirements, however, the procedural unfairness of an insurer’s intentional decision to disenfranchise the insured and its intentional decision to simply ignore the superstructure already in place for benefit disputes are both issues that can fairly be brought to the attention of the court. These arguments are more likely to find traction in a court deciding a common law contract dispute than a court whose task is limited to interpreting ERISA and its regulations.

The Voluntary Payment Doctrine

A common law doctrine known as the volunteer doctrine or voluntary payment doctrine can also play an important part in these cases when they are presented as simple contract disputes. The voluntary payment doctrine is a long-standing doctrine of law, which provides that one who makes a payment voluntarily cannot recover it on the ground that he was under no legal obligation to make the payment.

A voluntary payment within the meaning of this rule is a payment made without compulsion, fraud, mistake of fact or agreement to repay a demand which the payer does not owe, and which is not enforceable against him, instead of invoking the remedy or defense which the law affords against such demand. This latter component is crucial: the voluntary payment doctrine applies even if a payment should not have been made, provided there is some mechanism to determine whether or not the payment is proper, and the payer decided not to invoke or pursue it. This precisely describes the insurer that has available an ERISA mechanism for raising and resolving benefit determinations with its insureds but has decided not to use it.

Under the voluntary payment doctrine, if an insurer or health plan makes a payment to a provider, it cannot later seek repayment on the grounds that the payment was improper. The insurer is pinioned on the horns of a dilemma of its own making, because the payment was either proper under the applicable policy, or it was not. The common law can recognize that the pay-the-provider decision is the same as the cover-the-benefit-for-the-member decision, even if ERISA’s precise statutory scheme does not treat the two decisions identically. If the payment sought to be recouped was a proper payment in the first place, the recoupment demand vanishes. If the payment was not a proper payment, that means its payment was not required under the applicable policy or plan document. And the insurer runs squarely into the voluntary payment doctrine, because the insurer was under no obligation to make the payment, which makes the insurer a volunteer precluded from seeking repayment.

An insurer that has been deceived can demand repayment, but such deception is rarely present, at least in any material sense that would be recognized under common law or equitable principles. The provider promised to provide services, and the insurer promised to pay for them. If a retrospective audit of hundreds of thousands of claims identifies some documentation discrepancies when measured against the exacting, often inscrutable standards of a multi-state insurer’s computer auditing tool, that is not evidence that the provider misled the insurer unless the provider had expressly agreed to comply with those standards, and that is, as noted above, very often not the case.

It is also helpful to consider the slightly broader context of restitution claims. There is a robust body of case law around an insurer’s right to recover claims paid by mistake. There is some variability in how different states have addressed the issue. For present purposes, it is sufficient to note that the common law of restitution leaves considerable space for equitable and quasi-equitable considerations, which would include the provider’s reliance on payments, and the fact that health insurers have vastly greater access to information about whether or not a particular claim should be paid under any particular insurance policy. One might fairly add to this list the presence, in ERISA, of an express, mandatory scheme for raising and resolving coverage disputes directly with insureds. When an insurer decides to pursue a recoupment claim against a provider instead of a direct restitution claim against its insured, it is choosing to not use this mechanism. Indeed, as noted above, insurers very often oppose any efforts by providers to pursue recoupment claims as ERISA benefit disputes. If a health plan or insurer got the claims-payment decision wrong, that can hardly be the fault of the provider. And the broader truth remains — the insurer got its deck, and can’t fairly keep both the deck and the money.

Procedural Considerations

For a provider who decides to proceed under this common-law approach, the most efficient way might be through a simple declaratory judgment complaint, assuming that option is available under applicable state law. As to adding additional claims and causes of action, note that the theoretical availability of a claim is never the only consideration. When litigating, attorneys endeavor to distill sometimes complicated factual and legal scenarios down to simple, unshakable verities. It’s never too early to begin that work, and sometimes the complaint or answer is the best place to start. It can be hard to convince a court that a case is a simple contract dispute if the complaint includes ERISA and other complex federal claims.

There are also jurisdictional implications. In the absence of diversity jurisdiction, a declaratory judgment action can be filed in, and should remain in, state court, particularly if the applicable plan document has an anti-assignment provision (which would make assignment-based provider standing unavailable). That may well be a more hospitable forum for the provider.

Conclusion

When insurers pursue recoupment claims without engaging the patients they insure through the ERISA process and without following the procedural rules that usually apply to ERISA benefit disputes, they are making an affirmative choice to proceed outside of ERISA. Having made that bed, it is hardly unfair to make them lie in it. Fundamentally it boils down to this: if the insurer refuses to dispute the benefit payment in a benefit dispute, then it can’t dispute the benefit payment in a recoupment dispute. By embracing longstanding common law and contract principles, providers can reframe the conversation in a way that leaves the greatest room possible for substantial justice and common sense, two terms that sometimes do not figure prominently in the stated rationales for ERISA decisions. This approach can also serve the common interest, shared by all, in a functioning healthcare system that provides fair and predictable payment for honest work.

The Medicare Secondary Payer Act

Medicare Secondary Payer (“MSP”) is the term generally used when the Medicare program does not have primary payment responsibility – that is, when another entity (i.e., a health insurer or other payer) has the responsibility for paying before Medicare. When Medicare began in 1966, it was the primary payer for all beneficiaries’ claims except for those covered by Workers’ Compensation, Federal Black Lung benefits, and Veteran’s Administration benefits.

In 1980, Congress passed legislation that made Medicare the “secondary payer” to certain primary plans in an effort to shift costs from Medicare to the appropriate private sources of payment. The MSP provisions have protected Medicare Trust Funds by ensuring that Medicare does not pay for items and services that certain health insurance or coverage is primarily responsible for paying. The MSP provisions apply to situations when Medicare is not the beneficiary’s primary health insurance coverage. The Medicare statute and regulations require that all entities that bill Medicare for items or services rendered to beneficiaries must determine whether Medicare is the primary payer for those items or services.

“Primary payers” are those that have the first responsibility for paying a claim. Medicare remains the primary payer for beneficiaries who are not covered by other types of health insurance or coverage. Medicare is also the primary payer in certain instances, provided several conditions are met. CMS develops Conditions of Participation (“CoPs”) and Conditions for Coverage (“CfCs”) that healthcare organizations must meet in order to begin and continue participating in the Medicare and Medicaid programs. These health and safety standards are the foundation for improving quality and protecting the health and safety of beneficiaries. They are a core set of patient health and safety requirements that often represent congressional prerogatives and/or the informed judgment of public health and other policy experts. CMS also ensures that the standards of accrediting organizations recognized by CMS (through a process called “deeming”) meet or exceed the Medicare standards set forth in the CoPs/CfCs.

When there is more than one payer potentially responsible to pay a claim, coordination of benefits (“CoB”) rules decide which one pays first. The “primary payer” pays what it owes on patient bills first, and then sends the rest to the “secondary payer” to pay. In some cases, there may also be a third or “tertiary” payer. The insurance that pays first (the primary payer) pays up to the limits of its coverage. The one that pays second (the secondary payer) only pays if there are costs the primary insurer did not cover. The secondary payer (which may be Medicare) may not pay all the uncovered costs. If the insurance company does not pay the claim promptly (usually within 120 days), a provider may bill Medicare. Medicare may then make a “conditional” payment to pay the bill, but will seek to recover any payments the primary payer should have made.

In providing services to Medicare beneficiaries, providers need to keep these Medicare Secondary Payer rules in mind, to the extent the patient may have other coverage, which may be primary. And disputes over such issues are another area where we, as healthcare counsel, may be of assistance.

Medicare Fee for Service Recovery Audit Program

The Recovery Audit Contractor (“RAC”) program was created through the Medicare Modernization Act of 2003 to identify and recover improper Medicare payments paid to healthcare providers under fee-for-service Medicare plans. Recovery Audit Contractors (“RACs”) are private companies contracted by CMS to identify Medicare overpayments and underpayments and return Medicare overpayments to the Medicare Trust Funds.

RACs do not create payment policies. The payment policies RACs use are determined by Medicare regulations, Medicare billing instructions, National Coverage Determinations and Local Coverage Determinations. RACs detect and correct past improper payments so that CMS, carriers and MACs can implement actions that will prevent future improper payments. RACs attempt to identify improper payments resulting primarily from:

• Non-covered services (including services that are not reasonable and necessary);
• Incorrectly coded services;
• Claims for services provided by unlicensed individuals (even if the individuals are working toward licensure and supervised by a licensed individual); and
• Duplicate services

RACs review claims submitted by hospitals, health systems, physicians, home health agencies and other healthcare providers on a post-payment basis. RACs use proprietary software to identify claims that are likely to contain improper payments. RACs concentrate their reviews on areas identified by the Comprehensive Error Rate Testing as having a high propensity for error. Because they are compensated based upon amounts collected from and/or returned to Medicare by providers or suppliers as a result of improper payments, RACs are highly motivated to identify overpayments and other improper payments.

The RAC process usually proceeds as follows. First, the RAC identifies a risk pool of claims. Second, the RAC requests medical records from the provider. Once the records are received by the RAC, it reviews the claims and medical records. Based on the review, the RAC will make a determination — either overpayment, underpayment or correct payment. If it is determined that an overpayment exists, the RAC sends the file to the MAC to adjust the claim and recoup the payment. The MAC will notify the provider via an overpayment notification letter.

If an overpayment is owed back to the Medicare program, the healthcare provider has several options. The provider can pay by a check, allow recoupment from future payments, request an extended payment plan, or appeal the determination. The Medicare appeals process applies.

After a physician or healthcare provider receives notice of overpayment determination by a RAC, the provider generally has three options: (1) discuss the determination with the RAC, (2) attempt to rebut the determination, and/or (3) request a redetermination. These options are not mutually exclusive.

First, the provider has an opportunity to “discuss” the determination with the RAC. The provider can provide additional information to the RAC, indicating why it contends recoupment should not be initiated. The RAC can also further explain the rationale for the overpayment decision. The provider should contact the RAC directly and supply the additional information within 30 days of the receipt of the Initial Findings Letter (when there has been an Automated Review) or the Review Results Letter (when there has been a Complex Review). Otherwise, offset begins on day 41.

Second, the provider may attempt to “rebut” the RAC determination. What this actually means is the provider can offer a statement and accompanying evidence indicating why the overpayment action will cause significant financial hardship and should not take place. The rebuttal process is not to be used to submit or request review of supporting medical documentation or disagree with the overpayment decision. A rebuttal should also not to be used to duplicate or preview a redetermination request or process. Providers that wish to exercise the rebuttal option must contact the MAC or Claim Processing Contractor directly. The rebuttal must be filed within 15 days of the date of the Demand Letter.

Third, the provider can request a redetermination. A redetermination is the first level of appeals. The redetermination request should be filed within 30 days from receipt of the Demand Letter to avoid an offset. (It can be submitted up to 120 days afterwards, but to avoid an offset, it should be filed within 30 days). The redetermination request must be submitted to the MAC or Claim Processing Contractor.

It is critical for physicians or other healthcare providers to respond in a timely manner to a demand letter based on a RAC determination that a Medicare overpayment exists. If the time filing requirements are exceeded, the provider’s options and prospects for relief will be limited.

At a minimum, preparation for possible RAC audits should include:

• Establishing and implementing proper coding and billing compliance policies and procedures;
• Monitoring areas that may be subject to RAC review;
• Conducting internal claim reviews and audits;
• Establishing systems to timely respond to RAC record requests within required timeframes; and
• Monitoring and appealing claim denials through the Medicare appeals process.

It is crucial to carefully review any and all claims that have been determined to be overpaid. If an actual overpayment exists, a provider should try to determine how and why the overpayment occurred. In addition to healthcare law firms such as ours, various consulting experts can assist physicians and other healthcare providers in analyzing their claims and determining causes for a RAC audit or Medicare overpayment determination.

It is generally unwise to attempt to defend yourself or your practice without experienced assistance, since the stakes and potential for adverse outcomes are high. Depending on the reason(s) for overpayment, penalties and legal exposure may include not only recoupment of sums improperly paid, but also civil monetary penalties, being placed on OIG’s integrity watch list for Medicare fraud, exclusion from the Medicare program, and criminal charges.

Medicare’s 60-Day Repayment Rule

Hospitals, medical groups, and individual physician practices have long been subject to refunding Medicare payments in response to demand letters from Part A and Part B administrative contractors, and more recently from Medicare Recovery Audit Contractors. Such demands typically resulted from claims reviews or audits, and providers’ refund exposure was generally limited to amounts paid in connection with the disputed claims. Providers also voluntarily work credit balances for Medicare, other payers and patients, and generally reconcile minor over and under payments through routine claims processing adjustments. In certain instances, however, providers face more serious claims under the False Claims Act (“FCA”), initiated by either the government or qui tam “whistleblowers.”

When Congress enacted the Affordable Care Act (“ACA”) in 2010, it increased the obligations and liability exposure for physicians and other Medicare providers and suppliers by including what is generally referred to as the “60-day repayment rule.” That provision requires timely refund of any overpayment which has been identified by the provider. In some circumstances, failure to identify the overpayment or make a timely refund can become grounds for a False Claims Act charge. (42 U.S.C. § 1320a-7k(d)(2).)

Overpayments are typically identified by providers when an employee, staff member, department or service area has systematically made a mistake in billing or documenting a service. Identified errors often span across payer types and normally include both Medicare and Medicaid, as well as possibly other governmental programs.

The ACA requires any person who has received an overpayment from certain defined government health programs to report and return the overpayment within 60 days after the overpayment is identified. If an overpayment is not repaid, or if a self-disclosure is not made before the expiration of the 60-day period, the overpayment amount becomes subject to penalties under the FCA. The FCA imposes damages based on 3 times the actual overpayment, plus a per claim amount of between approximately $11,000 and $22,000.

The damage provisions of the FCA create very strong incentives for providers to self-disclose and/or repay identified overpayments. (See our Stark, Anti-Kickback, Civil Monetary Penalty and FCA Issues webpage for additional information.) The FCA also creates a strong incentive for providers to operate effective compliance programs in order to avoid the imputation of liability based on a “should know” standard. (See the Compliance Plans & Agreements section of our Healthcare & Physician Contracts webpage for additional information.) The “should know” standard assumes that a provider operates an effective compliance program including proactive efforts to identify and audit potential risk areas.

In order to avoid imposition of FCA penalties, repayment must be made within 60 days after the overpayment is identified or a corresponding cost report is due. Regulations provide some assistance for defining when a provider is deemed to have “identified” an overpayment and when the 60-day clock begins to tick. But ambiguities and questions remain. And the stakes are high. So, caution and careful attention are advised.

The statute and corresponding repayment obligation have very broad application. The repayment rules apply to Part A of Medicare, Part B of Medicare, Medicare Advantage, Medicaid Fee-for-Service, and Medicaid Managed Care.

CMS considers the ACA’s statutory requirement to be effective on its face, without implementing regulations. However, CMS published a proposed implementing rule in 2012, and that rule, somewhat revised, was later published as a final regulation on February 12, 2016 (the “Final Rule”). (See 81 Fed. Reg. 7654-7684 (Feb. 12, 2016). CMS issued a separate Final Rule on the 60-day repayment requirement for Medicare Parts C and D overpayments in 2014. See 79 Fed. Reg. 29844 (May 23, 2014). As of this writing, CMS has not issued rules with respect to Medicaid overpayments.)

The Final Rule provided greater clarity to providers on how the repayment requirement is to be interpreted and applied. Key aspects of the Final Rule include the following:

• An overpayment is any Medicare payment received or retained by the provider to which it is not entitled, regardless of the cause. An erroneous payment by the Medicare contractor, through no fault of the provider, is still an overpayment.
• The 60-day repayment clock will begin to run only after the provider has identified the overpayment and quantified the amount, so long as the provider exercises reasonable diligence in doing both.
• Reasonable diligence includes both proactive compliance activities designed to detect overpayments and reactive investigations designed to quantify overpayments in response to credible information.
• Whether a provider had credible information of an overpayment triggering an obligation to investigate, and whether it exercised reasonable diligence in investigating, are both fact specific. They may also be, at least to some extent, resource specific. CMS is not likely to expect the same sophistication, particularly in terms of proactive compliance activities, from a three-person primary care practice as compared to a 20-person single-specialty or 100-person multi-specialty group.
• In nearly all circumstances, investigation and repayment should be completed within eight months—six months to investigate and quantify, and the ACA’s 60 days to refund and report.
• Failure to exercise reasonable diligence causes the 60-day repayment clock to revert back to the date the provider received credible information. For example, if a medical group gets credible evidence and ignores it, or drags its feet in quantifying the repayment, it will be deemed in violation after 60 days, not eight months.
• The obligation to refund, particularly when the overpayment problem is systemic, can go back 6 years. (CMS originally proposed this “lookback” period to be 10 years, so the Final Rule was somewhat of an improvement. But RAC audits have only looked back 3 years, and routine contractor demand letters typically only go back one year, or four for “good cause.”)
• Reporting and refund forms and procedures are determined by the Medicare contractor from whom the overpayment was received.

Overpayments can occur for a variety of reasons. And not all of them are because a provider did anything wrong or was negligent in any way. But the 60-day repayment rule puts the burden on providers to timely identify and refund governmental overpayments, or face increased penalties.

Medicare Provider Reimbursement Review

The Provider Reimbursement Review Board (“PRRB”) is an independent panel to which a certified Medicare provider of services may appeal if it is dissatisfied with a final determination by its Medicare contractor or by CMS. See regulations at 42 C.F.R. § 405, Subpart R.

In February of 1990, the United States General Accountability Office (“GAO”) issued a Briefing Report to the U.S. Senate titled “Medicare Part A Reimbursements Processing of Appeals is Slow,” assessing the inefficiency of the PRRB. The GAO Report concluded that the PRRB’s “processing of cases was slow.” Unfortunately, over three decades later, review of the PRRB’s current caseload, procedure, and productivity indicates that conclusion remains accurate.

Nonetheless, if you have questions about filing an appeal or the status of a current appeal, you can contact the PRRB via its main telephone line at 410-786-2671 or by e-mail at PRRB@cms.hhs.gov. Or, we would be happy to assist you.

Accountable Care Organizations

Hospitals and health systems continue to test and adopt alternative payment and delivery models besides fees-for-service, such as Accountable Care Organizations. Accountable Care Organizations (“ACOs”) are groups of clinicians, hospitals and other healthcare providers who come together voluntarily to give coordinated high-quality care to a designated group of patients. While some private insurance plans have contracted with ACOs, this section refers mainly to Medicare ACOs.

Coordinated care seeks to ensure that patients, especially the chronically ill, get the right care at the right time, while avoiding unnecessary duplication of services and preventing medical errors. Under Medicare, when an ACO succeeds both in delivering high-quality care and spending healthcare dollars more wisely, it will share in the savings it achieves for the Medicare program.

The ACO model was included in national healthcare reform legislation as one of several demonstration programs to be administered by CMS. Participating ACOs assume accountability for improving the quality and cost of care for a defined patient population of Medicare beneficiaries. ACOs in turn receive part of any savings generated from care coordination as long as quality was also maintained.

Medicare offers several different types of ACO programs, including:

• Medicare Shared Savings Program (cms.gov) – works to achieve better health for individuals, better population health, and lowering growth in expenditures for fee-for-service beneficiaries
• ACO Investment Model – for ACOs to test pre-paid savings approaches to support Medicare Shared Savings Program in rural and underserved areas
• Advance Payment ACO Model – for certain eligible providers already in or interested in the Medicare Shared Savings Program
• Next Generation ACO Model – for ACOs experienced in managing care for populations of patients; allows providers to assume more financial risk than other ACO programs
• Pioneer ACO Model – for healthcare organizations and providers already experienced in coordinating care for patients across care settings
• Comprehensive ESRD Care Initiative – for beneficiaries receiving dialysis services

Under the Medicare Shared Savings Program (“MSSP”), ACOs are held accountable for the total cost of care and quality outcomes for an assigned beneficiary population. In the one-sided model, ACOs receive a share of any savings, but don’t take on any financial risk if spending exceeds their benchmark. ACOs in the two-sided model have downside financial risk, meaning they must pay Medicare for any losses. At the same time, these ACOs share a larger portion of any savings.

In December 2018, CMS issued a final rule  that redesigned the MSSP, including accelerating the pace for participating ACOs to take on financial risk. The final rule lowered shared savings rates from 50% to 40% for one-sided models in the basic track. For all two-sided models in the basic track, the savings rate was set at a maximum of 50%.

In July 2020, CMS announced the release of a new toolkit highlighting strategies used by ACOs to engage providers. Specifically, the toolkit explores how ACOs:

• Communicate with providers about the ACO as a value-based care organization;
• Use data to identify and address opportunities for improving care;
• Offer customized support to primary care providers and specialists; and
• Implement financial incentives.

The provider engagement toolkit is the third in a broader series designed to educate the public about the strategies ACOs use to provide value-based care while also providing actionable ideas to current and prospective ACOs to help them improve or begin operations. CMS released the first toolkit on care coordination in April 2019 and the second toolkit on beneficiary engagement in November 2019. More information on the toolkits, including the previously-released care coordination toolkit and beneficiary engagement toolkit, can obtained by visiting the ACO General Information web page.

On July 24, 2020, House lawmakers introduced a bipartisan bill that would make “commonsense changes” to requirements for Medicare’s Alternative Payment Models (“APMs”) and ACOs in an effort to increase participation in these value-based payment programs. According to a summary of the legislation, the “Value in Health Care Act” would increase the percent of shared savings that new ACOs in the MSSP receive.

“The vast majority of ACOs begin in shared savings-only models before advancing on the path to risk-bearing models, and models need to remain attractive enough to create a pipeline for ACOs to assume risk,” the legislative summary states. The bill would raise the MSSP basic track shared saving rates for one-sided models back to 50% and for two-sided models to between 55% and 60%. It also would modify risk adjustment to “better reflect factors participants encounter like health and other risk variables in their communities”; remove barriers to ACO participation; modify performance metrics so participants aren’t competing against their own successes in improving care; and extend the annual 5% participation bonus for Advanced APMs for an additional six years.

Thirteen national health care groups announced their support of the measure, including the National Association of ACOs, American College of Physicians, the American Medical Association and the American Hospital Association. According to its supporters, the Value in Health Care Act would make sensible modifications to the existing APM parameters and encourage more providers to participate. This ultimately would help patients by improving the quality of care and outcomes.

On May 24, 2021, RevCycle Intelligence (LaPointe) reported that the Next Generation ACO Model “will come to an end at the end of this year as planned despite several calls for an extension, according to an email to model participants.” According to the email, “CMS doesn’t expect to ‘extend or expand’ the model since the model has ‘net-spending increase of $117.5 Million and no net savings for CMS.’”

On October 20, 2021, RevCycle Intelligence (Bailey) reported that “A group of healthcare organizations, led by the National Association of ACOs (NAACOS), has asked CMS to provide” ACOs “with the option to use pre-pandemic years to set Medicare Shared Savings Program (MSSP) benchmarks.” Under CMS’ current policy, “ACOs that renew MSSP agreements and new ACOs that enter the MSSP in 2022 will receive benchmarks that are based on spending targets from 2019 to 2021,” but the group believes “using spending targets from 2020 to set benchmarks for 2022 would be unfair to ACOs” due to spending variations during the COVID-19 pandemic. The request was announced in a press release.

CMS is extending the Medicare Advantage (“MA”) Value-Based Insurance Design (“VBID”) model by five years from 2025 through 2030, according to a website notice posted March 23, 2023. The model, which was launched in 2017 under the authority of the CMS Center for Medicare and Medicaid Innovation, is designed to test whether certain MA health plan innovations help reduce program costs, enhance quality of care, and improve care coordination and efficiency.

Fifty-two MA organizations are participating in the VBID model for plan year 2023, with about 9.3 million enrollees, according to the website. The model was originally scheduled to run through 2024. With the five-year extension, CMS also said additional changes are in the works to better address health-related social needs, advance health equity, and improve care coordination for patients with serious illnesses. The Innovation Center will announce updates as they are available.

On August 15, 2023, Healthcare Finance News (Morse) reported that CMS “announced changes to the ACO Reach Model for 2024.” Changes made to “the Accountable Care Organization Realizing Equity, Access, and Community Health Model were in response to stakeholder feedback, CMS said.” These changes “are designed to improve the model test by increasing predictability for model participants, protecting against inappropriate risk score growth, maintaining consistency across CMS programs and Center for Medicare and Medicaid Innovation models, and further advancing health equity, CMS said.” Two days later, Modern Healthcare (Tepper) reported that Revisions to the Medicare Shared Savings Program were designed to “lure providers” into revamped Medicare ACOs and could prove crucial to achieving CMS’ goal to get all enrollees into value-based care by 2030.

On January 29, 2024, Modern Healthcare (Bennett) reported, “Medicare fee-for-service accountable care organizations are thriving,” according to CMS. Almost “half of fee-for-service Medicare beneficiaries, or 13.7 million people, are covered under ACOs” in 2024, a 3% increase, the agency said in a news release.” According to the article, “in 2021, the innovation center declared a goal to have all fee-for-service Medicare enrollees associated with accountable care arrangements by 2030. Since then, CMS has undertaken steps to attract more providers and encourage more ACOs to form.”

On March 19, 2024, RevCycle Intelligence reported, “CMS will test a new accountable care organization (ACO) model that focuses on primary care providers starting next year.” An agency statement states that “CMS will launch a five-year voluntary ACO model on January 1, 2025, as part of its flagship Medicare Shared Savings Program (MSSP).” The model “will target low-revenue MSSP participants, which are typically smaller ACOs primarily made up of physicians. The ACO PC Flex Model aims to support primary care providers like those in existing low-revenue ACOs as they implement ‘innovative, team-based, person-centered proactive care,’ according to the announcement.”

Transparency in Coverage and Prices

In October 2020, the Departments of HHS, Treasury and Labor issued the “transparency in coverage” final rule. This final rule imposes new transparency requirements on group health plans and health insurers in the individual and group markets. HHS also released an accompanying fact sheet and press release. The final rule requires insurers to disclose out-of-pocket cost information, and the underlying negotiated rates, for all covered healthcare items and services, including prescription drugs, through an internet-based self-service tool and in paper form upon request. This is the companion rule to a 2019 healthcare facility price transparency final rule that became effective on January 1, 2021.

On August 20, 2021, the Departments of Labor, HHS and Treasury issued FAQs regarding implementation of certain provisions of the Affordable Care Act, the No Surprises Act and the transparency rule. Like previously issued FAQs (available at, e.g., http://www.cms.gov/cciio/resources/fact-sheets-and-faqs/index.html), these FAQs answered questions from stakeholders to help people understand the law and promote compliance.

On December 29, 2020, the U.S. Court of Appeals for the District of Columbia Circuit upheld the White House-backed rule requiring hospitals to disclose the prices they negotiate with insurers for many tests and procedures. The American Hospital Association and other hospital groups had challenged the rule, which was issued in November 2019 and became effective on January 1, 2021. Generally, the rule requires hospitals to provide accessible pricing information online about the items and services they provide.

The AHA and other stakeholders argued that the rule violated section 2718(e) of the Public Health Service Act, the Administrative Procedures Act, and the First Amendment. However, the DC Circuit ruled that limiting hospital’s publication of charges to solely Medicare charges would be redundant of Medicare’s statute, and also conflict with section 2718(e), which requires a hospital to publish each of its charges, rather than just charges set by the Secretary of HHS. The DC Circuit also emphasized that the rule “does not require hospitals to disclose all possible permutations of costs based on hypothetical care,” but, rather, hospitals must disclose base rates for an item or service. The DC Circuit affirmed the District Court’s grant of summary judgment, meaning compliance with the rule is required as of the start of 2021. (The case is American Hospital Association, et al. v. Azar, No. 20-5193 (D.C. Cir. 2020)).

After the rule requiring the nation’s hospitals to reveal the rates they negotiate with insurers for various procedures took effect in January 2021, data from the country’s 6,000 hospitals showed that prices vary significantly depending upon who is paying. This, of course, came as no surprise to providers and other industry observers. But it highlights the wide disparity in rates negotiated by insurers, which many experts argue significantly contributes to the affordability crisis in American healthcare.

In March 2021, CMS issued guidance stating that healthcare pricing data must be posted online in a way that does not hide the information from web searches. The guidance followed news reports that found many hospitals used special codes to hide such information from search engines. CMS’ guideline basically requires that all files uploaded by health plans and health insurers must be in formats available to the public without restrictions that would impede the re-use of that information.

In April 2021, ranking members of the U.S. House Energy and Commerce Committee sent a letter to HHS urging it to enforce the rule requiring hospitals to post prices (including the hospital gross charge, discounted rate, and payer-specific negotiated rates) in two formats on their website: a machine-readable file for healthcare stakeholders and a consumer-facing tool that allows patients to search for lower priced care. The letter cited evidence of hospitals’ alleged non-compliance.

By the end of April 2021, after reviewing hospital websites, CMS had begun notifying hospitals it deems are not complying with requirements in the hospital price transparency rule. CMS sent notices, for example, when auditors said they were unable to locate the required machine-readable file on a hospital’s website.

CMS has said the hospital regulation requires the data to be “easily accessible and void of barriers” and that digital files “be digitally searchable.” HHS previously said it expects hospitals to comply with the price transparency guidelines, and it will enforce them. However, on April 27, 2021, CMS issued its proposed rule for the Inpatient Prospective Payment System for fiscal year 2022, which begins October 1. One proposed change would be to no longer require hospitals to report median payer-specific negotiated charges for Medicare Advantage insurers on their Medicare cost reports. If this change is finalized, it would be retroactive to Jan. 1, 2021, when the hospital price transparency rule went into effect despite providers’ efforts to block it.

According to a PatientRightsAdvocate.org study reported by the Washington Post on July 16, 2021, just 5.6% of all U.S. hospitals are fully compliant with CMS’ price disclosure rule. Other notable findings of the study were:

• 80% of hospitals did not publish payer-specific negotiated charges.
• 40% of hospitals published discounted cash prices.
• 52% of hospitals did not publish any negotiated rates.
• 19% of hospitals presented 300 shoppable services in a consumer-friendly format, but a significant number of these presented incomplete data fields, making them ultimately noncompliant.
• 76% of hospitals published a price estimator tool. Out of these hospitals, 11% of them did not allow users to see the discounted cash price.

An Atlanta Journal-Constitution investigation found that as of early July 2021, only one of 14 Georgia hospitals it studied made prices easy to find, and nearly half failed to meet key requirements of the pricing transparency mandate. The hospitals that were found to be fully compliant with the federal price transparency rule had a few strategies in common, including having a good technology partner and beginning their efforts early — in some cases before the rule was even proposed.

Perhaps not coincidentally, on July 19, 2021, CMS issued its Outpatient Prospective Payment System proposed rule for 2022. To improve price transparency compliance, CMS proposed increasing the minimum fine for violations to up to $2 million per year. Specifically, hospitals with more than 30 beds in violation of the rule would pay $10 per day for each bed, up to $5,500 per day. Hospitals with 30 beds or fewer would continue to pay up to $300 per day. This would make the annual penalty at least $109,500, or as high as $2 million a year for large hospitals that fail to make prices public. The proposed rule also would crack down on the use of special coding that prevents search engines from displaying pricing in search results.

The New York Times reported that as of August 22, 2021, many hospitals appeared to be ignoring the price transparency rule and posting nothing. But data from the hospitals that complied showed hospitals were charging patients vastly different amounts for the same basic services. And the data showed numerous examples of health insurers negotiating surprisingly unfavorable rates for their insureds. Indeed, in many cases, insured patients were being charged higher prices than they would be if they had no coverage at all – contrary to what most people expect when they pay for health insurance.

As of July 2021, CMS had sent nearly 170 warning letters to noncompliant hospitals but had not yet levied any fines. Hospitals that do not post prices within 90 days of a warning letter may be sent a second warning letter. And, as noted above, CMS plans to increase the fines in 2022 to as much as $2 million annually for large hospitals.

On November 2, 2021, RevCycle Intelligence (LaPointe) reported, “Starting January 1, CMS will increase penalties for noncompliance with hospital price transparency requirements under the newly released Calendar Year (CY) 2022 Hospital Outpatient Prospective Payment System (OPPS) and Ambulatory Surgical Center (ASC) Payment System Final Rule.” The rule “sets the minimum civil monetary penalty of $300 per day for smaller hospitals with a bed count of 30 or fewer, and a penalty of $10 per bed per day for hospitals with a bed count greater than 30.” Still, “the penalty is not to exceed a maximum daily dollar amount of $5,500.”

As of December 2021, CMS had issued noncompliance notices to approximately 335 hospitals and asked 98 hospitals to submit plans for how and when they would comply with the federal rules, according to The Wall Street Journal. As of January 1, 2022, some hospitals and health systems had posted incomplete data and others still had posted nothing at all. CMS is providing hospitals with technical help and information to boost compliance with the rules. CMS hasn’t said when it will begin penalizing hospitals. Please stay tuned for updates.

On April 19, 2022, CMS issued new FAQs regarding compliance with the machine-readable file requirements of the Transparency in Coverage regulations. The Transparency in Coverage final rule, which the Departments of Health and Human Services, Labor and Treasury issued in October 2020, requires most group health plans and health insurance issuers in the individual and group markets to disclose on a public website three separate machine-readable files of in-network provider rates for covered items and services, out-of-network allowed amounts and billed charges for covered items and services, and negotiated rates and historical net prices for covered prescription drugs by January 1, 2022.

In previous FAQs, the agencies postponed enforcement of the requirement to publish machine-readable files for in-network rates and out-of-network allowed amounts and billed charges until July 1, 2022. The agencies also deferred enforcement of the rule’s requirement that plans and issuers publish machine-readable files for prescription drug pricing pending future rulemaking.

In the latest FAQs, the agencies announced an enforcement safe harbor for satisfying the reporting requirements for plans and issuers that use alternative reimbursement arrangements that do not permit them to derive with accuracy specific dollar amounts contracted for covered items and services in advance—for example, if they contract with an in-network provider to pay a percentage of billed charges. Plans and issuers may instead disclose a description of the formula, variables, methodology, or other information necessary to understand the arrangement, the FAQs said.

The agencies will monitor the implementation of the machine-readable files requirements and may revisit the safe harbor in the future, the FAQs said. The safe harbor does not apply if the agencies determine that a particular arrangement can sufficiently disclose a dollar amount.

On June 7, 2022, CMS issued its first hospital price transparency fines to two Georgia hospitals for failing to make their standard charges available to the public. The first civil monetary penalty (“CMP”) was issued against Northside Hospital Atlanta in the amount of $883,180.

According to the notice posted by CMS, the hospital did not make public a machine-readable file containing a list of all standard charges for all items and services and failed to display shoppable services in a consumer-friendly manner. CMS said the hospital must notify the agency once it has come into compliance or the CMP will continue to accrue. According to CMS, a warning notice was issued to the hospital on April 19, 2021, but the hospital did not respond.

The other CMP was issued to Northside Hospital Cherokee for $214,320 after the hospital failed to make public a machine-readable file containing a list of all standard charges for all items and services and failed to display shoppable services in a consumer-friendly manner. CMS said the hospital received a warning letter dated May 18, 2021, but didn’t respond.

However, by the end of October 2022, RevCycle Intelligence (Bailey) reported that almost two-thirds of hospitals were complying with hospital price transparency rule requirements and had published machine-readable files with negotiated rates or cash rates, citing a Turquoise Health Price Transparency Impact Report. The report “found that 4,909 hospitals (76 percent) posted a machine-readable file in Q3 2022,” 65% “published machine-readable files that included negotiated rates and 63 percent posted machine-readable files with cash rates.” Additionally, “80 insurance carriers published rates.” So there has been progress.

Nonetheless, according to a Nov. 1, 2022 report by Modern Healthcare (Tepper, Subscription Publication), the “trillions of prices require sophisticated software to parse and insurers aren’t using standardized file formats, making comparisons of their reimbursement rates nearly impossible to make.” The “early difficulties with accessing and reviewing these data are hampering the potential for transparency to promote a more efficient healthcare system,” according to the report.

In November 2022, CMS published on its website hospital price transparency resources to help hospitals meet the federal requirement to make certain standard charges available to the public via a machine-readable format. The agency released three sample formats for posting standard charges, which include gross charges, discounted cash prices, payer-specific negotiated charges, and de-identified minimum and maximum negotiated charges.

On April 26, 2023, Modern Healthcare (Turner, Subscription Publication) reported that CMS “is strengthening enforcement of its hospital transparency rule by imposing stricter timelines and levying fines more quickly.” The agency is “eliminating flexibilities originally intended to promote compliance.” For example, CMS “will automatically issue civil monetary penalties against hospitals that fail to provide corrective action plans or remain out of compliance for more than 90 days after submitting such plans.” The agency “also will no longer offer warning notices to facilities that have made no efforts to comply, and instead will immediately demand corrective action plans.”

In November 2023, CMS launched a Hospital Price Transparency – Data Dictionary GitHub repository to help hospitals comply with its new Hospital Price Transparency requirements in the CY 2024 Hospital Outpatient Prospective Payment System and Ambulatory Surgical Center Payment System final rule. Starting July 1, 2024, hospitals must adopt a CMS template layout and encode their standard charge information using CMS’s technical specifications and data dictionary. In the repository, hospitals can access templates and technical instructions and receive technical support.

Coronavirus/COVID-19 Pandemic Reimbursement Updates

Provider Reimbursement Review Board Alert 19 Amends Procedures in Light of Coronavirus Pandemic

(This update came from the American Health Law Association’s Regulation, Accreditation & Payment Practice Group, and Kenneth R. Marcus of Honigman LLP.)

On March 25, 2020, in response to the COVID-19 pandemic, the Provider Reimbursement Review Board issued Alert 19 (the numbering is entirely coincidental), which suspends what the PRRB calls “Board Set Deadlines” and provides other special instructions regarding Board procedures during the pandemic. In issuing Alert 19 “[t]he Board recognizes that the immediate focus and priorities of Providers should be on caring for their patients. Likewise, the Board wants to ensure the health and safety of all relevant parties before the Board, while continuing to operate in the most efficient manner possible.” Recognizing the fluidity of the crisis, “the Board plans to continuously reassess its response and will issue additional updates through Board Alerts, as necessary.” Providers and their representatives are well advised to review Alert 19 and, as always, to remain vigilant regarding filing deadlines. Additional details are available here.

On June 16, 2021, the Provider Reimbursement Review Board issued Alert 21, titled “Mandatory Electronic Filing & Revised PRRB Rules, Effective November 1, 2021 and Change of Address, Effective Immediately.” Alert 21 serves public notice of “revisions to the Board Rules, which are effective November 1, 2021 and will supersede all previous rules and instructions.” The Board Order adopts mandatory electronic filing and the revised Board Rules implementing this mandate as well as other revisions. The proposed revisions to the Board Rules supersede Rules 2.0 (August 29, 2018). Comments may be submitted until July 30, 2021.

CMS Promotes Telehealth & Expands Accelerated & Advance Payment Program & Medicare Telehealth Services Benefit

In a March 24, 2020 FAQ, CMS stated that “[t]he widespread availability and usage of telehealth services is vital to combat COVID-19” and expressed support for the promotion of telehealth by issuers, saying: “We strongly encourage all issuers to promote the use of telehealth services, including by notifying policyholders and beneficiaries of their availability, by ensuring access to a robust suite of telehealth services, including mental health and substance use disorder services, and by covering telehealth services without cost sharing or other medical management requirements.“

In the individual and small group markets, CMS will permit “any service provided through telehealth that is reimbursable under applicable state law and otherwise meets applicable risk adjustment data submission standards” to be used for purposes of the risk adjustment program.” (See CMS’s Risk Adjustment FAQ on COVID-19, Apr. 27, 2020, here.) On March 28, 2020, CMS announced an expansion of its accelerated and advance payment program for Medicare participating healthcare providers and suppliers to ensure they have the resources needed to combat COVID-19. CMS’s fact sheet appears here. On April 2, 2020, CMS provided the AHA and hospitals additional details on the accelerated/advanced payment program. See the AHA advisory here for details.

On April 3, 2020, CMS released a video providing answers to common questions about the Medicare telehealth services benefit. CMS is expanding this benefit on a temporary and emergency basis under the 1135 waiver authority and Coronavirus Preparedness and Response Supplemental Appropriations Act. (See CMS’s News Alert, Apr. 6, 2020, here.) CMS provided technical guidance including the telehealth codes eligible for inclusion in risk adjustment, such as:

• HCPCS codes G0425, G0426, G0427, G0406, G0407, G0408, G0459, G0508, and G0509;
• Other services may be eligible for inclusion by using modifier codes such as 95, GQ, or GT, or with a place or service code “02”; and
• Six e-visit codes will be designated to expand the use of telehealth and virtual care and valid for risk adjustment purposes—CPT Codes 99421-00423 and HCPCS codes G2061–G2063.

Helpful information about telehealth for both healthcare providers and patients can be viewed at telehealth.hhs.gov. Other telehealth and virtual care guidelines can be accessed at https://www.hhs.gov/coronavirus/telehealth/index.html. The AMA also continues to update its Quick Guide to Telemedicine in Practice, a resource designed to help mobilize remote care with implementation tips, as well as a reference to CPT codes for reporting telemedicine and remote care services.

Georgia Emergency Waivers & Flexibilities to Help Fight COVID-19 Approved by CMS 

On March 28, 2020, Governor Kemp and the Department of Community Health (“DCH”) submitted a request to CMS for an 1135 Medicaid waiver. Concurrently, the Georgia Hospital Association (“GHA”) submitted a request to CMS for an 1135 Medicare waiver. These waivers are intended to increase healthcare providers’ ability to care for patients as they fight COVID-19 by reducing federal regulations.

The 1135 Medicaid and Medicare waivers are a significant step toward easing administrative burdens on Georgia hospitals and healthcare providers during the public health emergency without compromising quality of care or patient safety. “Additionally, these requests would make it easier for patients to be treated at home when possible, remove any red tape to allow for transferring patients to appropriate care settings, and expedite credentialing of providers to reinforce the healthcare workforce across the state,” according to Earl Rogers, GHA’s president.

“Pending CMS consideration and approval, Georgia’s 1135 waiver is designed to provide a number of flexibilities for Medicaid and PeachCare for Kids® providers and members. Some examples of requested flexibilities include modifying the Medicaid authorizations process to enhance fee-for-service prior authorization requirements by extending certain pre-existing authorizations; expediting long-term care services and supports process for pre-admission screening and annual resident review; extending fair hearings and appeal timelines for managed care and fee-for-service enrollees; streamlining provider enrollment, recredentialing, and revalidation processes, including for out-of-state providers; modifying reporting and oversight requirements in certain healthcare facilities; and expanding provider settings to help ensure our providers can deliver care in non-traditional settings. These waiver requests, in addition to a recent expansion of telehealth options for patients and providers, will help to promote access to care during this unprecedented public health emergency,” according to DCH Commissioner Frank Berry.

By March 30, 2020, CMS had approved Georgia’s 1135 Medicare waiver request. The list of approved waivers can be viewed here. On April 1, 2020, CMS approved Georgia’s section 1135 waiver request on the temporary checklist, granting the state a number of flexibilities for Medicaid and PeachCare for Kids® providers and members to combat the COVID-19 public health emergency. CMS’s “Coronavirus Waivers & Flexibilities” webpage can be accessed here. And CMS’s Medicaid Telehealth and Substance Use Disorder Prevention Guidance can be viewed here. CMS has also issued new guidance to states to allow temporary COVID-19-related modifications in provider payment methodologies and capitation rates under Medicaid managed care plans. States would be allowed to use directed payments to increase provider payments within managed care arrangements. (See the AHA bulletin.)

On May 20, 2020, CMS approved Georgia’s emergency Medicaid state plan amendment (“SPA”), which modifies certain policies and procedures under Georgia’s Medicaid state plan for the period of the national COVID-19 public health emergency (“PHE”). Among other things, the SPA suspends all copayments for individuals covered by Medicaid for the duration of the PHE; permits telehealth services that are provided via telephone to be reimbursable under Medicaid for the duration of the PHE; and provides for periodic interim payments to be made to skilled nursing facilities for the duration of the PHE.

However, on Dec. 23, 2021, the Biden administration rejected Georgia’s work or activity requirement. CMS only rejected the state’s work requirement and premiums; the coverage expansion to 100 percent of the poverty level was left in place. On January 21, 2022, Georgia filed suit against the Biden administration in the U.S. District Court for the Southern District of Georgia, Brunswick Division, demanding that the state be allowed to impose a work and activity requirement for some Georgians in order to qualify for Medicaid insurance. Courts have ruled that work requirements do not meet the objective of the Medicaid law, which was to provide health coverage. But the Kemp administration has argued that the engagement requirement is not a work requirement.

On August 19, 2022, a U.S. District Court Judge for the Southern District of Georgia reinstated the engagement or work requirement in the state’s plan to expand Medicaid coverage to more low-income residents. The judge said the Biden administration’s decision to revoke approval of the work requirement and a related Georgia proposal to charge some Medicaid recipients monthly premiums was “arbitrary and capricious” on numerous, independent grounds. The decision allows the state to move forward with its Georgia Pathways plan, which it says would add roughly 60,000 people to its Medicaid rolls. Please stay tuned for updates.

Coverage for COVID-19 Testing & Treatment/Health Insurers Temporarily Waive Treatment Cost-Sharing During Crisis

On March 30, 2020, health insurers Cigna and Humana announced that they would waive consumer costs associated with COVID-19 treatment. And just before that, CVS Health announced a more limited change — that Aetna would waive costs to patients for hospital admissions related to the coronavirus. So far, Aetna and Cigna are pledging to waive COVID-19 treatment costs through qualified medical bills that are incurred until June 1, 2020. As of this writing, Humana’s policy does not yet have an end date.

Anthem announced that effective April 1, 2020, plan members being treated for COVID-19 will have their cost sharing waived. The for-profit Blue Cross/Blue Shield insurer said the expanded coverage would continue through May 31, 2020, and it is encouraging self-funded employers to do the same. “During these challenging times, Anthem stands by our legacy and commitment to living our values and supporting those we serve,” said Anthem President and CEO Gail  Boudreaux, in a statement.

Shortly thereafter, UnitedHealthcare became the latest big-name insurer to waive members’ cost-sharing for COVID-19 treatments. UHC said it would waive the associated costs for members in its fully insured commercial, Medicare Advantage and Medicaid plans. The insurer added that it is working with interested self-funded employer plans to offer the same waivers. The UHC waivers will be available through May 31, 2020. UHC also announced that it will waive cost-sharing for in-network telehealth visits that are not for COVID-19-related needs through June 18, 2020. This is in addition to existing waivers for telehealth visits for COVID-19 testing and for virtual visits with the insurers’ preferred partners.

On April 1, 2020, Centene, the parent company of Peach State Health Plan’s Medicaid, Medicare and exchange plans, also announced that it is waiving cost shares for testing and treatment related to COVID-19. Centene also announced a number of efforts to support communities and safety net providers, including FQHCs, behavioral health and long-term care providers. And other health plans are taking similar steps.

On April 1, 2020, the American Hospital Association urged the nation’s five largest private health insurance companies – Aetna, Anthem, Humana, Cigna and UnitedHealthCare – and organizations that represent insurers to support stable cash flow, eliminate administrative processes that delay payment, provide adequate coverage and reimbursement, and expedite processing of outstanding claims. AHA’s letters to the insurers can be viewed here.

On April 11, 2020, it was reported that the Administration said “it will require health insurers to provide free antibody tests that could provide better insight into the scale of the U.S. coronavirus outbreak.” Congress has “required that all Americans, including people without health insurance, receive free diagnostic tests to determine whether they are sick with coronavirus.” The Administration “said it had authority from recent emergency rescue packages to mandate private insurers also provide antibody testing without out-of-pocket costs.”

Also on April 11, 2020, CMS, DOL and the Treasury Department issued guidance to health plans clarifying coverage requirements for private payers in the CARES Act and the FFCRA. Under the bills, commercial health plans are required to provide access to COVID-19 testing and visits for care related to the virus through doctors’ offices, urgent care centers, and emergency departments available at no cost. CMS also said that the mandates will extend to antibody testing once it is made more readily available. And in response to questions, on April 21, 2020, CMS encouraged health insurers to relax otherwise applicable utilization management processes, as permitted by state law, to ensure that staff at hospitals, clinics and pharmacies can focus their limited time and resources on care delivery.

On May 29, 2020, Bloomberg Law reported that “At least five insurers … have decided to lengthen the period for which they would waive out-of-pocket costs related to the coronavirus past the initial June 1 end date, according to America’s Health Insurance Plans (AHIP), an industry trade group.” The insurers’ decisions on whether to continue to waive patient costs came as the nation began to emerge from a months-long lockdown. But starting at the end of 2020 and continuing into the spring 2021, a growing number of insurers ended those fee waivers for COVID treatment on some or all policies. An AHIP summary of how health insurers are responding to the pandemic can be accessed here.

In the wake of large anti-racism demonstrations and increased group gatherings around the country, public health officials have been encouraging protesters and more people in general to get tested for the coronavirus. However, as such precautionary testing has become more common, some health insurers are arguing they cannot pay for everyone who is concerned about their risk to get tested. While the Families First Coronavirus Response Act passed by Congress and effective April 1, 2020, requires health plans to fully pay for testing deemed “medically necessary,” as testing continues to expand to allow people without symptoms to be tested, a “gray area” has emerged. CMS’s guidance says full coverage is required “when medically appropriate for the individual, as determined by the individual’s attending health care provider in accordance with accepted standards of current medical practice.” But that guidance leaves room for argument between payers on the one hand, and providers and patients on the other.

Moreover, according to guidance released by the Trump administration on June 23, 2020, “insurers are not required to cover COVID-19 tests that employers may mandate as they bring employees back to work.” While the Families First Coronavirus Response Act required insurers to cover COVID-19 tests without patient cost-sharing, the guidance clarified that “the law only applies to tests that are deemed ‘medically appropriate’ by a healthcare provider.”

On June 19, 2020, CMS instructed Medicare Administrative Contactors and notified Medicare Advantage plans to cover COVID-19 laboratory tests for nursing home residents and patients. This instruction follows the CDC’s recent update of COVID-19 testing guidelines for nursing homes that provides recommendations for testing of nursing home residents and patients with COVID-19 symptoms, as well as for asymptomatic residents and patients who have been exposed to COVID-19. Original Medicare and Medicare Advantage plans will cover COVID-19 lab tests consistent with CDC guidance.

As of August 2020, COVID care testing and treatment were covered by most payers with no cost sharing. Moreover, nearly all insurance payers continue to cover the costs of virtual visits, and many had no copay for primary care visits performed using synchronous audio-video devices. However, more than a third of people with individual and fully insured group coverage were in plans in which cost-sharing waivers for COVID-19 treatment were scheduled to expire by the end of September 2020. And as of Aug. 19, 2021, most of the country’s largest health plans were no longer waiving out-of-pocket costs for COVID-19 treatment, according to research released by the Peterson-KFF Health System Tracker. Although most private insurers waived cost-sharing for COVID-19 treatment early in the pandemic, some insurers started phasing out these waivers in November 2020. And even more did so after COVID-19 vaccines became widely available in the U.S.

Across the U.S., some physicians have been seeing reimbursement rates so low that they do not cover the cost of the test supplies, jeopardizing access to a tool experts see as essential to slowing the coronavirus’s spread. With new variants of the virus emerging, experts say testing is especially important. But, as the New York Times recently reported, low reimbursements have led some doctors to stop testing certain patients or to forgo testing altogether.

With other health services, physicians sometimes can recoup losses when insurer reimbursements are too low by billing patients directly for the remaining balance. But with coronavirus testing, federal law prohibits such balance billing. Although the law requires insurers to fully cover the cost of a coronavirus test, it does not define what constitutes a “complete” reimbursement. So some payers have been routinely paying test rates that do not even cover the cost of supplies. And, as of this writing, this is a problem that still requires a solution.

Additionally, in late October 2020, the American Hospital Association alleged in a letter to House Democrats that insurers “have been hoarding premium dollars during the COVID-19 pandemic and some have refused to cover emergency care if they ‘unilaterally’ find it isn’t warranted.” According to AHA, “insurers like Anthem are ‘denying coverage of emergency services if the health insurer unilaterally determines that the condition did not warrant emergency-level care.’” Further, “AHA targeted UnitedHealthcare, saying the insurer decided to stop paying back providers who have treated certain inpatient sepsis cases.”

The lack of experience with and knowledge about COVID-19 poses a problem for defining standard care and determining what is medically necessary. Insurers have also refused to pay for some treatments for COVID-19 or aftereffects, determining that they are “experimental” and therefore not covered.

While most health insurers voluntarily waived co-pays, deductibles and other cost-sharing in 2020, many stopped the waivers in early 2021. And, according to a University of Michigan analysis published on Oct. 18, 2021 in JAMA Network Open, Americans who are or were hospitalized with COVID-19 in 2021 may have to pay thousands of dollars in medical bills as insurers lifted waivers.

Without the waivers, patients could owe $3,800 if they have job-related or self-purchased private insurance, or $1,500 if they have Medicare Advantage plans. In total, each hospitalization of a person with private insurance costs about $42,200 on average, and each hospitalization with Medicare Advantage costs approximately $21,400 on average.

The study also found that cost-sharing waivers don’t always cover all hospitalization care. “Many insurers claim that it is justified to charge patients for COVID-19 hospitalizations now that COVID-19 vaccines are widely available,” lead author Kao-Ping Chua, MD, PhD said in an Oct. 18, 2021 statement. “However, some people hospitalized for COVID-19 aren’t eligible for vaccines, such as young children, while others are vaccinated patients who experienced a severe breakthrough infection. Our study suggests these patients could [owe] substantial bills.”

Beginning January 15, 2022, individuals with private health insurance coverage or covered by a group health plan who purchase an over-the-counter COVID-19 diagnostic test authorized, cleared, or approved by the FDA will be able to have those test costs covered by their plan or insurance. The new federal rules require private insurers to cover the at-home coronavirus tests that Americans buy in pharmacies and other retailers. The goal is to allow millions of Americans to pick up tests at thousands of locations without paying anything out-of-pocket.

However, some health insurers say it probably will take weeks to fully set up the system the federal government seeks. The process will be difficult because over-the-counter coronavirus tests are different from the medical visits and hospital admissions they typically cover. The tests do not, as of this writing, have the billing codes that insurers use to process claims. Moreover, health plans rarely process retail receipts. Instead, they have created digital claims systems with preset formats and long-established billing codes. Consequently, some insurers plan to process the rapid test claims manually, at least for some time.

Under the new rules, consumers who get tests at their health plan’s “preferred” location will have the costs covered upfront, meaning the patient will pay nothing out of pocket. What counts as a “preferred” location will vary from one plan to another, although many expect those facilities to be ones that are already in-network with a given insurer.

Consumers that go to an out-of-network store will need to submit receipts for reimbursement, and the plan will only have to pay $12 per test (or $24 for a kit with two tests). If the price is higher, the patient will be responsible for the additional charges. Health plans that do not designate a set of “preferred” locations will have to cover the full costs of test receipts that their members submit.

The new rules require private insurers to cover eight at-home coronavirus tests for each person, every month. The rules will not apply retroactively to at-home tests that Americans have already purchased, and do not cover patients with public insurance such as Medicare and Medicaid.

But State Medicaid and Children’s Health Insurance Program (“CHIP”) programs are currently required to cover FDA-authorized at-home COVID-19 tests without cost-sharing. In 2021, the Biden Administration issued guidance explaining that State Medicaid and CHIP programs must cover all types of FDA-authorized COVID-19 tests without cost sharing under CMS’s interpretation of the American Rescue Plan Act of 2019. Medicare pays for COVID-19 diagnostic tests performed by a laboratory, such as PCR and antigen tests, with no beneficiary cost sharing when the test is ordered by a physician, non-physician practitioner, pharmacist, or other authorized health care professional. Individuals enrolled in a Medicare Advantage plan should check with their plan to see if their plan offers coverage and payment for at-home over-the-counter COVID-19 tests.

These actions are in addition to multiple steps the Biden Administration has taken to expand access to testing for all Americans. HHS is providing up to 50 million free, at-home tests to community health centers and Medicare-certified health clinics for distribution at no cost to patients and community members. The program is intended to ensure COVID-19 tests are made available to populations and settings in need of testing. HHS also has established more than 10,000 free community-based pharmacy testing sites around the country. And to respond to the Omicron surge, HHS and FEMA are creating surge testing sites throughout the country. (For more information, see FAQs at: https://www.cms.gov/how-to-get-your-at-home-OTC-COVID-19-test-for-free.html. And for additional details, visit: https://www.cms.gov/files/document/faqs-part-51.pdf – PDF.

On January 13, 2022, President Biden announced he was directing his staff to purchase an additional 500 million COVID-19 tests for distribution to Americans, doubling the government’s previous purchase. The president also said the government was working on a plan to ensure that Americans have access to high-quality masks, such as the KN95 and N95 face coverings, so that they are widely available, online and in stores, in ample supply, at affordable prices.

On January 18, 2022, the federal government launched a website where Americans can order free coronavirus rapid tests to be shipped to their homes. The website, called covidtests.gov, requires that users provide their names and addresses to receive the tests. The government purchased 500 million rapid tests that will be available to every household. There is a limit of one order per residential address, and each order includes four individual rapid test kits. Orders will be shipped within seven to 12 days after being ordered and start shipping in late January 2022, the website says. As of Jan. 19 (the original projected launch date), the site appeared to be fully operational, allowing users to input their information and request a kit.

Also on January 19, 2022, the FDA issued an emergency use authorization for the MaximBio ClearDetect over-the-counter COVID-19 home test. The test is supposed to be able to deliver results in 15 minutes.

CMS Issues New Guidance for Providers Seeking Payment for Treating Medicare Patients with COVID-19

On August 17, 2020, CMS issued new guidance intended to update how providers get paid for treating COVID-19 starting in September 2020. According to several reports, “providers that want to get Medicare payments for treating a patient with COVID-19 must include a positive test in that patient’s medical record.” “The impetus for the new change is to combat fraud,” the agency said. According to the guidance, “The test must be performed either during the hospital admission or prior to the hospital admission.” The guidance indicates that if the “patient has been diagnosed with COVID-19 and needs to be admitted to a hospital, the payment to the hospital is increased by 20% to reflect the additional costs of treating a patient with COVID-19.” (See, e.g., 8/18/20 articles by R. King in FierceHealthcare and S. Morse in Healthcare Finance News.)

CMS’s updated guidance relates to the 20% add-on to the inpatient prospective payment system (“PPS”) diagnosis-related group (“DRG”) rate for patients diagnosed with COVID-19 for the duration of the public health emergency. In other words, for inpatient admissions occurring on or after September 1, 2020, claims eligible for the 20% add-on will be required to have a positive COVID-19 laboratory test documented in patients’ medical records. Positive tests must be demonstrated using only the results of viral testing. The inpatient PPS Pricer will continue to apply the 20% adjustment based on appropriate diagnosis codes; however, CMS may conduct post-payment medical review to confirm the presence of a positive COVID-19 test in the medical record. If no such test is present, the additional payment resulting from the 20% add-on may be recouped.

In late October 2020, CMS announced that Medicare will cover COVID-19 vaccines approved by the Food and Drug Administration at no cost to beneficiaries. The rule also boosts provider payments.

Federal Government Strengthens Requirements that Insurers Cover COVID-19 Diagnostic Testing & Vaccinations Without Cost Sharing and Ensures Providers are Reimbursed for Administering COVID-19 Vaccines to Uninsured & Underinsured

On February 26, 2021, in accordance with the Executive Order President Biden signed on January 21, 2021, CMS, the Department of Labor and the Department of Treasury issued new guidance removing barriers to COVID-19 diagnostic testing and vaccinations and strengthening requirements that plans and issuers cover diagnostic testing without cost sharing. The guidance makes clear that private group health plans and issuers generally cannot use medical screening criteria to deny coverage for COVID-19 diagnostic tests for individuals with health coverage who are asymptomatic, and who have no known or suspected exposure to COVID-19. Such testing must be covered without cost sharing, prior authorization, or other medical management requirements imposed by the plan or issuer. The guidance also includes information for providers on how to get reimbursed for COVID-19 diagnostic testing or for administering the COVID-19 vaccine to those who are uninsured.

On May 3, 2021, HHS announced that providers who administer COVID-19 vaccines to underinsured patients will be compensated through the new COVID-19 Coverage Assistance Fund. The program should ensure that providers get fully reimbursed for vaccinating patients with health plans that don’t cover vaccination fees or require patient cost-sharing. But as of May 2021, some hospitals and health systems were eliminating COVID test requirements for vaccinated patients as vaccination rates rise and positivity rates drop. And federal health officials’ new, more relaxed recommendations on masks have all but eclipsed another major change in guidance from the government: fully vaccinated Americans can largely skip getting tested for the coronavirus in most instances. (To view the CDC’s testing guidance, click here.)

COVID-19 Coding Guidance & Telehealth Toolkit

The American Medical Association released two CPT codes (86328 and 86769) for reporting antibody testing for COVID-19 and revised its CPT code for SARS-CoV-2 nucleic acid tests (86318). Providers can manually upload the code descriptors into their EHR systems. (See additional guidance on the CPT codes.) And on April 23, 2020, CMS announced that the Trump Administration released a new toolkit for states to help accelerate adoption of broader telehealth coverage policies in Medicaid and CHIP during the COVID-19 pandemic. The objective was “to make it easier for Medicaid and CHIP enrollees to receive health care at home rather than at a doctor’s office or emergency room, where they could become exposed to – or pass along – the virus.”

On April 27, 2020, HHS, through the Health Resources and Services Administration (“HRSA”), launched a new COVID-19 Uninsured Program Portal, allowing healthcare providers who have conducted COVID-19 testing or provided treatment for uninsured COVID-19 individuals on or after February 4, 2020 to submit claims for reimbursement. Providers can access the portal at COVIDUninsuredClaim.HRSA.gov. Providers can request reimbursement starting May 6, 2020 if they have treated or tested an uninsured patient for COVID-19, but only if they agree not to balance bill the patient. (For discussions of federal and state restrictions on balance billing as conditions for receiving or keeping COVID relief funds, see here and here.)

Providers can register on HRSA’s website. The program is being administered by United Health Group, so providers must have an Optum ID to register. (See Optum’s summary of key points for claims submission.) HRSA has a program to reimburse providers for COVID-19 testing, treatment and vaccination for uninsured patients. The list of billing codes that will be accepted is shown in the Billing Codes section of HRSA’s website. More information is available in the COVID-19 Uninsured Program FAQs.

Also, the American Health Information Management Association published an article explaining coding for COVID-19 testing and diagnoses that answers many questions about the codes that will be recognized as shown in the Billing Codes section of HRSA’s website. And CMS has developed two HCPCS codes that healthcare providers and laboratories can use to bill for certain COVID-19 diagnostic tests. (See more information and updates on these codes.)

CMS continued to amend and update its lengthy guidance on Medicare Fee for Service Billing as it relates to the COVID-19 pandemic. On May 27, 2020, CMS added language that addresses questions regarding the CARES Act and how it affects the Inpatient Prospective Payment System (“IPPS”). The update included information on how discharges for individuals with COVID-19 should be identified, including different diagnosis codes for discharges between January 27 and March 31, and for discharges occurring on or after April 1 through the duration of the public health emergency period. CMS also clarified that the CARES Act “directs the Secretary to increase the IPPS weighting factor of the assigned diagnosis-related group by 20 percent” for diagnosed COVID-19 patients discharged during the public health emergency period.

On June 1, 2020, CMS provided an update that clarifies when providers must use modifier CR (catastrophe/disaster related) and/or condition code DR (disaster related) when submitting claims to Medicare. The update includes a chart of blanket waivers and flexibilities that require the modifier or condition code.

In its June 2, 2020 update, CMS added or revised nine new provisions to the guidance contained in the FAQ. The revisions include clarifications regarding national coverage determinations and when telehealth may satisfy certain face-to-face requirements. CMS stated that as it continues to thoroughly assess the CARES Act, new and revised guidance will be released as implementation plans are announced. Therefore, additional updates from CMS are expected. Providers should carefully monitor the guidance contained on the COVID-19 FAQ page to evaluate the impact of new guidance on facility operations and finances.

Telehealth Coding Tips

Below are some tips healthcare reimbursement experts suggest for coding various types of telehealth services so as to help ensure compliance.

Telephone (Audio-Only) Services

When social distancing is needed, telephone (audio-only) services have become a practical way to improve patient access and prevent spread of COVID-19. Telephone services (which generally require a minimum of five minutes of medical discussion) can be ideal for minor health problems that don’t require visual examination by a healthcare provider, such as medication refills, etc. For audio-only services, consider the codes listed below that Medicare accepts during the current public health emergency. Commercial payers may accept these codes, as well. Once the PHE has concluded, Medicare may only accept G2012 (virtual check-in) for telephone services.

• Document verbal consent, including patient acknowledgement and acceptance of any copayments or coinsurance amounts due.
• Only count time spent on the phone engaging in medical discussion with the patient or caregiver. Do not report these codes for conversations lasting less than five minutes.
• Clearly document what was discussed, as well as the outcome of the conversation (e.g., medications prescribed, referrals to specialists, additional steps for the patient to take).
• Don’t report these codes when the telephone service ends with a decision to see the patient in 24 hours or the next available appointment.
• Don’t report these codes when the telephone service relates to a related E/M service performed within the previous seven days or within the postoperative period of a previously completed procedure. (“E/M” stands for “evaluation and management.” E/M coding is the process by which physician-patient encounters are translated into five digit CPT codes to facilitate billing.)
• Only use or provide 99441-99443 and 98966-98968 for established patients. During the PHE, Medicare permits providers to bill G2012 for new and established patients.
• To operationalize these codes, set up a process in your practice management system that flags or pends claims for manual reviews to determine whether and which services are ultimately billable.

Telehealth (Audio-Visual) Services

In the last few months, providers have adopted telehealth to improve patient access and generate revenue during COVID-19. Among the services physicians can render via telehealth to patients with Medicare during the current PHE are Medicare annual wellness visits, new and established patient office visits, prolonged services, smoking and tobacco cessation counseling, annual depression and alcohol screenings, advanced care planning and more. Medicare covers more than 200 services via telehealth, many of which were added for temporary coverage during the current PHE. Commercial payer coverage of these services may vary. So, providers should check individual payers’ policies and requirements.

Reimbursement experts advise the following steps for billing telehealth services:

• Check audio-only vs. audio-visual requirements. Medicare requires the use of audio-visual technology for certain telehealth services and permits audio-only for others. For example, physicians can render a telehealth visit for advanced care planning using audio only, but they must use audio-visual technology for a new patient telehealth office visit. Private commercial payers may also have their own specific requirements.
• Do not render Medicare’s Initial Preventive Physical Exam via telehealth. Medicare does not permit it.
• Document verbal consent for telehealth, including patient acceptance of any copayments or coinsurance amounts due.
• Use place of service (“POS”) code 11 and modifier -95 when billing Medicare. Note that commercial payers may require a different POS code (e.g., POS 2 or POS “other”) and modifier.
• Document, document, and document some more. Physicians and other providers need to be able to prove via proper and adequate documentation that they met all of the code requirements, even when rendering a service via telehealth. For example, experts counsel against ever submitting a problem list if you did not treat or manage all of the problems on the list, and say physicians need to link diagnoses with assessments and treatment plans. Another caveat is that during the current PHE, physicians can bill 99201-99215 rendered via telehealth based on time or medical decision-making. But documenting the total time spent in direct medical discussion with the patient is extremely important.

Online Digital E/M Services

Though online digital evaluation and management (“E/M”) services are relatively new, they also can help practices increase patient access during COVID-19 for non-urgent medical issues. Generally, such services are provided as follows: an established patient initiates a conversation through a HIPAA-compliant secure platform (e.g., electronic health record portals, secure email, secure texting, etc.). A physician or other qualified healthcare professional reviews the query, as well as any pertinent data and records. Then the healthcare provider(s) develop a management plan and subsequently communicate that plan to the patient or their caregiver through online, telephone, email or other digitally supported communication.

To maintain compliance in coding for such services, experts suggest the following:

• Use these codes when physicians or other qualified healthcare professionals make a clinical decision that would otherwise occur during an office visit. Do not use them for scheduling appointments or non-evaluative communication of test results.
• Use these codes only for established patients.
• Do not use these codes for fewer than five minutes of E/M services.
• Document verbal consent, including patient acknowledgement and acceptance of any copayments or coinsurance amounts due.
• Do not report these codes when the online digital E/M service ends with a decision to see the patient in 24 hours or the next available urgent visit appointment.
• Do not report these codes when the online digital E/M service relates to a related E/M service performed within the previous seven days or within the postoperative period of a previously completed procedure.

Effective January 1, 2021, the CPT Evaluation and Management (“E/M”) Office or Other Outpatient and Prolonged Services Code and Guidelines were overhauled for the first time in more than 25 years. E/M documentation guidelines for new and established office and outpatient services (99202 – 99215) have gone through substantial revisions. New guidelines include eliminating history and physical exam as elements for code selection, and allowing physicians to choose the code level based on medical decision-making or total time.

Practitioners have the choice to document office/outpatient E/M visits via medical decision making (“MDM”) or time. CMS is adopting the CPT’s revised guidance, including deletion of CPT code 99201. CMS has also finalized separate payment rates for the remaining nine E/M codes. (An AMA summary of the code and guideline changes appears here.) Additional information regarding the 2021 adjustments to the E/M CPT codes, and how to assess potential impacts on physician compensation and productivity, can be viewed here and here.

Remote Patient Monitoring

Remote patient monitoring (“RPM”) is a relatively easy way for providers to keep track of patients’ status or progress without requiring patients to come into the office. Medicare covers RPM for patients with one or more acute or chronic conditions, and private payer coverage may vary. Normally, Medicare permits RPM only for established patients (whom the provider has previously examined in person). But during the PHE, physicians can initiate RPM for not only established, but also new patients.

RPM consists of two forms: monitoring data through either a non-manual or manual data transfer. For example, physicians can remotely monitor a patient’s pulse oximetry, weight, blood pressure or respiratory flow rate using a device that transmits daily recordings or programmed alerts. Physicians can purchase them directly from manufacturers or patients can purchase the devices themselves. Patients are advised to use Bluetooth-enabled devices or devices that include a built-in Global System for Mobile Communications (“GSM”) transmitter. The former requires an Internet connection, while the latter automatically transmits data to an internet cloud service through an encrypted bandwidth. Physicians may be able to bill for the initial setup, cost of the device itself (when applicable) and data monitoring.

Another example is self-measured blood pressure monitoring. When patients supply their own blood pressure device that a physician calibrates, physicians may be able to bill for patient education, device calibration, reviewing the data that the patient provides, and communicating a treatment plan to the patient or caregiver.

Monitoring patients’ physiologic data remotely through such devices can substantially reduce exacerbations of patients’ chronic conditions, emergency room visits, and hospitalizations. It can also be a good source of revenue for providers, especially during a pandemic, when in-person patient visits are reduced.

Experts suggest the following for compliant RPM billing:

• Document patient consent. Patients must opt in for these services.
• Document total time spent rendering these services to support time-based requirements.
• Know when these codes are appropriate. It is unclear whether Medicare will pay physicians for monitoring physiologic data derived from internal devices (devices placed within the patient’s body) or data derived from wearable fitness devices.
• Only bill 99457 when the provider renders at least 20 minutes of live, interactive communication with the patient or caregiver.

CMS 2021 & 2022 Medicare Physician Fee Schedules Boost Telehealth, Use of Non-Physician Practitioners, Vaccines & Equity

In an article by Eric Wicklund dated August 14, 2020, mHealth Intelligence reported that CMS planned “to eliminate most of the temporary codes created during the coronavirus pandemic to expand connected health.” The proposed 2021 Physician Fee Schedule included “nine codes added during the COVID-19 crisis” and 13 new codes, but 74 codes were “slated to end when the public health emergency is over.” According to the article, “The 13 new codes proposed for inclusion in the Physician Fee Schedule are grouped in a new category, Category 3 (the Category 1 codes are slated to remain in place, and the Category 2 codes are scheduled for elimination).”

However, on December 1, 2020, CMS signed off on numerous proposed physician fee schedule changes. The final rule rule permanently expands telehealth services, reworks payments and coding for physicians, and expands the scope of practice for some clinicians. It adds a number of telehealth services to the PFS and creates a new category for temporary coverage for telehealth services. It also makes broad reimbursement policy changes concerning the use and supervision of non-physician practitioners and auxiliary personnel. With these changes, there will continue to be significant expansion in the use of telemedicine during the pandemic and afterwards, as well as greater use of non-physician practitioners when treating Medicare beneficiaries.

On January 5, 2021, it was reported that “after a lobbying frenzy that pitted primary care providers against specialty physicians, Congress decided to recalibrate the Medicare Physician Fee Schedule in its latest stimulus and government funding bill.” Ultimately, lawmakers “decided to give providers an across-the-board 3.75% pay increase for the 2021 calendar year.”

On March 12, 2021, CMS issued a notice correcting technical errors in its final rule updating physician fee schedule payments for calendar year 2021. Among other changes, the notice removed four codes from the newly created Category 3 list of approved telehealth services, which CMS says were inadvertently included on the list.

On November 2, 2021, CMS published the 2022 Physician Fee Schedule Final Rule (“Final Rule”), which includes a permanent expansion of telehealth services for behavioral health care beyond the duration of the public health emergency related to the COVID-19 pandemic. The Final Rule also extends CMS’s physician supervision requirements for telehealth so that direct supervision may continue to be provided via real-time audio-visual communications. Finally, the Final Rule extends reimbursement of Category 3 telehealth services (services that CMS deems to have clinical benefits on a temporary virtual basis) until the end of 2023.

As RevCycle Intelligence (LaPointe) reported on Nov. 2, 2021, “CMS has finalized the calendar year (CY) 2022 Medicare Physician Fee Schedule to promote greater telehealth utilization, boost reimbursement rates for vaccine administration, and improve health equity, among other initiatives,” according to the federal agency. The rule “will implement ‘a series of standard technical proposals’ as part of CY 2022 rate-setting, CMS said.” According to the article, “The conversion factor for next year will be $33.59, a decrease of $1.30 versus the CY 2021 conversion factor.”

Because coding rules for healthcare services change constantly, reimbursement and coding experts advise providers to check CMS’s and commercial payers’ websites on an almost daily basis for updates. Providers should also seek expert advice or legal counsel whenever they are uncertain about how to properly document, code or bill for a particular service – preferably before a dispute with a payer arises.

New Regulatory Waivers and Rule Changes to Support U.S. Healthcare System During COVID-19 Pandemic

On April 30, 2020, CMS issued another round of regulatory waivers and rule changes to support healthcare providers during the COVID-19 pandemic. Changes included increased access to telehealth for Medicare and Medicaid patients and expanding at-home and community-based testing to minimize COVID-19 transmission among Medicare and Medicaid beneficiaries. (See details of the new waivers and the interim final rule.)

Under the temporary waivers and rule changes, Medicare beneficiaries can be tested for COVID-19 without a physician’s order. Instead, Medicare will cover COVID-19 tests when ordered by any healthcare professional authorized to do so under state law.

CMS also is allowing pharmacists to perform certain COVID-19 tests if they are enrolled in Medicare as a laboratory. According to CMS, the changes will open the door for more “point-of-care” testing. Medicare and Medicaid also will cover antibody tests that are authorized by the Food and Drug Administration.

Beyond its efforts to expand testing, CMS is waiving limits on the types of practitioners who can provide telehealth services and is allowing hospitals to bill Medicare as the originating site for services furnished remotely by hospital-based practitioners to registered outpatients, including when the patient is at home. CMS will now also allow nurse practitioners, clinical nurse specialists, and physician assistants to provide home health services, as mandated by the CARES Act.

On May 19, 2020, CMS authorized local Medicare Administrative Contractors (“MACs”) to set the payment amount for COVID-19 testing, both diagnostic and serology, until Medicare establishes national payment rates. CMS noted that for dates of service on or after April 14, Medicare has established a $100 payment rate for laboratory tests using high throughput technologies for rapid results.

Many services for behavioral health and patient education may now be conducted by audio-only telephone between beneficiaries and clinicians, CMS said. The agency also is increasing payments for telephone visits from the current $14-$41 to $46-$110, in line with payments for similar office and outpatient visits. The payments are retroactive to March 1, 2020.

CMS Finalizes Changes for Medicare Advantage, Part D Plans

On May 22, 2020, CMS finalized changes to the Medicare Advantage (“MA”) and Part D programs aimed at expanding access to telehealth and increasing plan options for beneficiaries in rural communities. CMS finalized only certain provisions from the February proposed rule so they would be in place before MA and Part D 2021 plan year bids, which were due on June 1. The agency plans to issue subsequent rulemaking to address the remaining proposals—including policies to lower seniors’ out-of-pocket expenses for pricey prescription drugs—which will apply no earlier than January 1, 2022.

“We understand that the entire healthcare sector is focused on caring for patients and providing coverage related to coronavirus disease 2019 (COVID-19), and we believe this approach provides plans with adequate time and information to design the best coverage for Medicare beneficiaries,” CMS said in a fact sheet.

CMS expects the changes in the final rule to reduce Medicare spending over the next ten years by an estimated $3.65 billion. The final rule was published in the June 2, 2020 Federal Register. 

Network Adequacy, MLR

The final rule gives MA plans more flexibility to count telehealth providers in certain specialties towards network adequacy standards. The policy is aimed at encouraging use of telehealth services and increasing plan choices for beneficiaries, particularly in rural areas.

In rural areas, CMS is reducing the required percentage of beneficiaries that must reside within the maximum time and distance standards from 90% to 85%. CMS also is giving MA plans a 10% credit towards the percentage of beneficiaries that must reside within required time and distance standards for specialty areas such as Dermatology, Psychiatry, Cardiology, Ophthalmology, Nephrology, Primary Care, Gynecology, Endocrinology, and Infectious Diseases, the fact sheet said.

CMS also finalized its proposal to allow MA organizations to broaden the definition of “incurred claims” for purposes of the medical loss ratio (“MLR”). In addition, the final rule adds a deductible-based adjustment to the MLR calculation for MA medical savings account (MSA) contracts receiving a credibility adjustment. CMS said the adjustment “removes a potential deterrent to the offering of MSAs by MA organizations that may be concerned about their inability to meet the MLR requirement as a result of random variations in claims experience, the risk of which is greater under health insurance policies with higher deductibles.”

On June 10, 2020, the Centers for Disease Control and Prevention also issued guidance entitled “Using Telehealth to Expand Access to Essential Health Services During the COVID-19 Pandemic.” It describes the landscape of telehealth services and provides considerations for healthcare systems, practices, and providers using telehealth services to provide virtual care during and beyond the COVID-19 pandemic.

COVID-19 Public Health Emergency Extensions

On June 29, 2020, an HHS spokesperson indicated that HHS intended to extend the COVID-19 public health emergency that was set to expire on July 25. And on July 23, 2020, HHS officially extended it for another 90 days. Additional extensions have occurred since then. For example, on January 7, 2021, HHS announced another renewal of the COVID-19 national public health emergency declaration, effective Jan. 21, 2021. And, in a January 22, 2021 letter to governors, acting HHS Secretary Norris Cochran said that the public health emergency likely will remain in place through 2021. According to the letter, HHS will provide states with 60 days’ notice before terminating the PHE. (Links to HHS’s Public Health Emergency Declarations and extensions are here.)

On February 24, 2021, President Biden continued the national emergency for the COVID-19 pandemic beyond March 1, 2021. And on April 15, 2021, HHS Secretary Xavier Becerra renewed the nationwide public health emergency again as a result of the ongoing pandemic. The public health emergency that was originally declared Jan. 31, 2020 was then scheduled to remain in effect until at least July 20, 2021, at which time it could be renewed again. On July 19 and October 18, 2021, HHS renewed the COVID-19 public health emergency declaration for another 90 days. Administration officials previously told governors that the emergency declaration will last at least through December 2021.

On January 14, 2022, HHS Secretary Becerra extended the COVID-19 public health emergency again, continuing the declaration for another 90 days. An HHS spokesperson said that HHS will provide states with 60 days’ notice prior to any possible termination or expiration in the future. This was the eighth time the declaration was extended since it was announced Jan. 27, 2020.

On February 23, 2022, President Biden released a notice extending the national emergency declaration for the COVID-19 pandemic beyond March 1. The notice did not indicate an end date for the emergency declaration.

On April 12, 2022, the Federal Public Health Emergency was renewed, effective April 16. and The associated federal flexibilities, including current waivers issued by CMS, thus remained in place for three more months. But that renewal expired July 15, 2022.

Effective July 15, 2022, HHS Secretary Becerra renewed the COVID-19 public health emergency declaration again, extending it through October 13, 2022. This ensured healthcare providers and state and territorial health departments have continued flexibility to respond to the pandemic. These flexibilities support efforts such as rapid patient care during emergencies, including waivers from the CMS for certain requirements under section 1135 of the Social Security Act. Examples of such requirements include preapproval requirements and temporary reassignment of state, territorial, tribal or local staff who typically are funded by federal grants in order to respond to the emergency.

The renewed national emergency, along with the recently renewed public health emergency, allow HHS to continue Section 1135 waivers and other flexibilities to ensure sufficient healthcare services and items to respond to the pandemic. Significant funding and regulatory relief for hospitals and other healthcare providers are tied to the emergency, so the extensions are important for both health and financial reasons.

Several key policies linked to the public health emergency are the Medicare inpatient 20% add-on payment for COVID-19 patients, increased federal Medicaid matching rates, requirements that insurers cover COVID-19 testing without cost-sharing, and waivers of telehealth restrictions. Adjustments CMS made to the Medicare Shared Savings Program for accountable care organizations are also tied to the length of the public health emergency. The number of months the emergency lasts affects the amount of shared losses an ACO must pay back to CMS. (Links to HHS’s Public Health Emergency Declarations and extensions are here.)

In August 2022, CMS released fact sheets summarizing the status of Medicare COVID-19 blanket waivers and flexibilities by provider type, as well as flexibilities applicable to the Medicaid community. The fact sheets include information about which waivers and flexibilities have already been terminated, have been made permanent or will end at the end of the COVID-19 public health emergency.

On October 13, 2022, HHS renewed the COVID-19 public health emergency declaration for another 90 days. That extension ended on Jan. 11, 2023, but the agency said it would provide 60 days’ notice before it ends the public health emergency. And on January 11, 2023, HHS renewed the COVID-19 public health emergency declaration for another 90 days due to concerns about the highly transmissible Omicron subvariant.

Even with the public health emergency extensions, some changes the administration has made to help healthcare providers are also dependent on a separate Stafford Act national emergency declaration remaining active. These changes include CMS Medicaid waivers that allow bypassing some prior authorization requirements, temporarily enrolling out-of-state providers, delivering care in alternative settings, and pausing fair hearing requests and appeal times. But the renewals gave the healthcare industry at least some certainty through early 2023 to assist with the COVID-19 response.

On January 30, 2023, President Biden stated that his administration intended to end the COVID-19 public health emergency on May 11. The White House said the announcement aligns with its commitment to give at least 60 days’ notice prior to ending the PHE, the end of which means the expiration of waivers affecting nursing homes, home and community-based services, pharmacies, and telehealth prescribers of opioid-use disorder medication, among others.

OIG & Some FDA & CMS Flexibilities End on May 11, 2023

The HHS OIG announced that its flexibilities end when the federal public health emergency expires on May 11, 2023. In response to the PHE, the OIG had published two policy statements: one indicated that the OIG would not subject providers to administrative sanctions for reducing or waiving certain patient cost-sharing obligations in response to the PHE, and the other indicated that the OIG would exercise its enforcement discretion and not impose administrative sanctions for certain remuneration related to COVID-19 and covered by the CMS’s blanket waivers. The OIG also published FAQs on arrangements connected to COVID-19. Although the OIG indicated these flexibilities end on May 11, the OIG also highlighted its statement in the FAQs indicating that, “Given the unique circumstances surrounding the public health emergency, OIG may take a different position on arrangements that are the same or similar in nature that existed before the effective date of the COVID-19 Declaration or after the time such COVID-19 Declaration ends.”

The FDA announced it will end 22 COVID-19-related policies when the public health emergency ends May 11 and allow 22 to continue for 180 days, including temporary policies for outsourcing facilities compounding certain drugs for hospitalized patients and non-standard personal protective equipment practices for sterile compounders not registered as outsourcing facilities. FDA plans to retain 24 COVID-19-related policies with “appropriate changes” and four whose duration is not tied to the PHE.

On March 24, 2023, the FDA issued final guidance for transitioning medical device enforcement policies and emergency use authorizations established during the COVID-19 public health emergency to normal operations when the public health emergency ends as planned on May 11. The COVID-19 EUA declaration for COVID-19 diagnostics, personal protective equipment, other medical devices, and drug and biological products will remain in effect until there is no longer a potential for a COVID-19 PHE or the authorized devices or products have been approved.

On May 1, 2023, CMS announced plans to end the requirement that hospitals and other healthcare facilities establish COVID-19 vaccination policies and procedures for virtually all staff. CMS planned to share more details about the end of this requirement at the end of the federal COVID-19 public health emergency (“PHE”), which expires on May 11, 2023. Hospitals and other healthcare facilities may still voluntarily implement vaccination requirements. CMS’s memo also:

• Noted that hospitals and critical access hospitals (“CAHs”) need to report certain COVID-19 data, pursuant to a fiscal year 2023 final rule, until April 30, 2024.
• Explained how the end of the PHE will affect remaining CMS waivers for hospitals and other healthcare providers, including waivers related to:
  • The Hospital at Home program;
  • Emergency preparedness expectations; and
  • Specific facilities including CAHs, rural health clinics, long-term care facilities, and home health agencies.
• Provided timelines for when surveyors will begin assessing compliance with certain requirements.
• Clarified which previously issued CMS memos are superseded.

CMS Assessing Telehealth Reimbursement Rates to Potentially Make Medicare Telehealth Expansions Permanent

On July 21, 2020, in an article by Jacqueline LaPointe, RevCycle Intelligence reported that “Telehealth reimbursement rates is one area CMS is assessing in order to make Medicare telehealth expansions permanent after the COVID-19 pandemic, according to the agency’s administrator.” Recently, in a “Health Affairs blog post, CMS Administrator Seema Verma indicated that Medicare telehealth expansions implemented during the pandemic, including payment for telehealth services delivered to non-rural patients and the delivery of telehealth care in patient homes, may be made permanent.” However, three areas will need to be examined by CMS “before finalizing any permanent telehealth expansions, including telehealth reimbursement rates.”

“During the public health emergency, Medicare paid the same rate for a telehealth visit as it would have paid for an in-person visit, given the unique circumstances of the pandemic,” wrote Administrator Verma. “Outside the pandemic, by law Medicare usually pays for telehealth services at rates similar to what professionals are paid in the hospital setting for similar services.” “Further analysis could be done to determine the level of resources involved in telehealth visits outside of a public health emergency, and to inform the extent to which payment rate adjustments might need to be made,” Verma said.

For instance, CMS will need to determine supply costs for telehealth services in order to decide on telehealth reimbursement rates. Medicare reimbursement rates for in-person care take into account the costs for patient gowns, cleaning, disinfectants, and other supply expenses. Telehealth services do not have these costs.  But new processes and workflows created to facilitate telehealth visits do have associated costs. Those costs would need to be examined in order for CMS to reimburse providers appropriately for permanent Medicare telehealth expansions, Verma indicated in her blog post.

Other areas CMS would need to examine to make Medicare telehealth expansions permanent included patient safety and clinical appropriateness, as well as healthcare fraud and Medicare program integrity. “We are monitoring program integrity implications such as practitioners who may be offering shorter telehealth visits with patients to maximize payment, or billing more visits than are possible in a day,” Verma wrote. “We know the path forward to expanding telehealth relies on CMS addressing the potential for fraud and abuse in telehealth, as we do with all services.”

On August 3, 2020, the president signed an executive order, seeking to expand the use of telehealth visits, and make some of the changes made when the coronavirus pandemic struck permanent. The order directs HHS to issue rules within 60 days making some of the revisions permanent. The order also calls on HHS to propose a new model that can be tested for how Medicare will pay for some health services in rural areas, with the goal of improving care in rural areas. It is unclear when any of the changes proposed by the order will take effect, however, given that there are still regulatory processes that will take time to play out. (CMS’s announcement that it is proposing changes to expand telehealth permanently, consistent with the Executive Order, can be viewed here.) The agency is also simplifying billing and coding requirements for office and outpatient visits.

Telehealth has been a critical part of COVID-19 response strategies. Through telehealth and telephonic care, providers have been able to keep seeing patients without exposing them or their staff to the highly contagious novel coronavirus. Remote or virtual care has also been key to ensuring patient and provider safety within hospitals and other healthcare facilities. With the use of smartphones, tablets, and other mobile technology, hospitals and physician practices have been able to minimize contact with infected patients while still examining and rendering care to patients.

Temporary payment flexibilities enabled providers to deliver telehealth services in a short period of time. Early in the pandemic, Medicare implemented a wide range of payment flexibilities to spur greater telehealth utilization. The flexibilities included temporarily expanding the scope of Medicare telehealth to allow more beneficiaries to benefit from virtual care services and the scope of providers eligible to bill for telehealth services.

CMS also added 135 allowable services, more than doubling the number of services that providers could bill via telehealth. The services included telephonic care for beneficiaries with limited access to video capabilities. But Congress must sign off on any broader expansion of telehealth coverage, including expanding the types of providers who may bill Medicare for telehealth services and amending the originating and distant site requirements.  

Telehealth utilization among Medicare beneficiaries has surged during the pandemic. Over 9 million beneficiaries received a telehealth service between mid-March through mid-June, according to Medicare fee-for-service claims data. According to Verma, that number could grow, since providers have 12 months after they furnish a service to submit claims to CMS.

Telehealth utilization has similarly skyrocketed among the privately insured as private payers implemented similar telehealth expansions. A recent analysis of the privately insured population found that telehealth claim lines increased by 8,336 percent between April 2019 and April 2020, and the presence of telehealth claim lines nearly doubled the 4,347 percent increase observed from March 2019 to March 2020.

In light of such significant growth in utilization of telehealth services, CMS will consider making some temporary Medicare telehealth expansions permanent to encourage innovation while also ensuring “gold standard, in-person care.” “During these unprecedented times, telemedicine has proven to be a lifeline for health care providers and patients,” Verma said. “The rapid adoption of telemedicine among providers and patients has shown that telehealth is here to stay. CMS remains committed to ensuring that the government supports innovation in telehealth that leverages modern technology to enhance patient experience, providing more accessible care.”

In January 2021, a bipartisan group of U.S. representatives reintroduced a bill aimed at expanding access to telehealth beyond the COVID-19 pandemic. The Protecting Access to Post-COVID-19 Telehealth Act of 2021 legislation, which was first introduced in July 2020, would help safeguard access to virtual care after COVID-19 via four main provisions. According to a press statement, it would:

• Eliminate most geographic and originating site restrictions on the use of telehealth in Medicare and establishing the patient’s home as an eligible distant site.
• Authorize CMS to continue reimbursement for telehealth for 90 days beyond the end of the public health emergency.
• Make permanent the disaster waiver authority, enabling HHS to expand telehealth in Medicare during all future emergencies and disasters.
• Require a study on the use of telehealth during COVID, including its costs, uptake rates, measurable health outcomes, and racial and geographic disparities.

The bill avoids some of the key issues associated with telehealth, such as coverage parity and interstate licensing issues, while making permanent broadly popular policies such as eliminating geographic and originating site restrictions. The widely praised earlier version of this bill was endorsed by a wide range of industry groups, who applauded it as an effort to keep patients from falling off a telemedicine “cliff” after the pandemic. But despite the support, the bill lost momentum in July 2020 after being referred to committee. Similarly, the Telehealth Modernization Act  also failed to pass the Senate in 2020.

On March 18, 2021, the Senate confirmed Xavier Becerra as the next HHS secretary. During his Senate confirmation hearings, Secretary Becerra indicated his support for permanent telehealth expansions. Secretary Becerra said he wants to boost technology accessibility and is committed to permanently expanding payment policies that have increased virtual health during the COVID-19 pandemic.

On September 15, 2021, Psychiatric News reported that “The federal government is proposing to permanently allow payment under the Medicare program for ‘audio-only’ telehealth mental health services,” which have “been temporarily reimbursed as part of the government’s response to the COVID-19 public health emergency.” In addition, the government “would retain other temporarily reimbursed telehealth services through 2023 in order to evaluate whether those services should be permanently added to the list of covered Medicare services.” These “recommended changes are part of the proposed 2022 Physician Fee Schedule” by CMS and are seen as “a victory for psychiatrists and their patients.”

An HHS report issued on December 3, 2021 revealed that the number of Medicare visits conducted through telehealth surged 63-fold during the pandemic, from about 840,000 in 2019 to 52.7 million in 2020. Overall healthcare visits for Medicare beneficiaries declined in 2020; however, telehealth was particularly helpful in offsetting potential foregone behavioral health care, comprising a third of total visits to behavioral health specialists compared with 8% of visits to primary care providers and 3% of visits to specialists. Most beneficiaries (92%) received telehealth visits from their homes, which was not permissible in Medicare prior to the pandemic. And on Dec. 6, 2021, Modern Healthcare (Devereaux, Subscription Publication) reported that “Since the start of the pandemic, mental health conditions have remained the top diagnosis seen in telehealth nationwide, recently reaching 61.2% of all virtual care claims,” according to “FAIR Health’s Monthly Telehealth Regional Tracker.”

On Dec. 8, 2021, Kaiser Health News (Appleby) reported on the “increasingly heated debate” regarding coverage for audio-only telehealth visits, an issue that “has drawn outsize interest from physician groups.” “Cutting off or reducing audio-only payments could lead providers to sharply curtail telehealth services, warn some physician groups and other experts,” while “other stakeholders, including employers who pay for health coverage, fear payment parity for audio-only telehealth visits could lead to overbilling.”

Bipartisan bills introduced in Congress on Nov. 5 and Dec. 9, 2021 would extend waivers for telehealth services, as demand for such services has skyrocketed amid the pandemic. For instance:

• Before the pandemic, Medicare generally only reimbursed telehealth visits for rural patients, who were required to go to a healthcare setting to make the telehealth call. Under the legislation, patients would be able to make telehealth calls from home and would not be restricted to certain zip codes, even after the end of the public health emergency.
• The legislation also includes a two-year temporary extension of emergency telehealth waivers, such as allowing certain providers like speech language pathologists, occupational therapists and physical therapists to provide telehealth services.

Telehealth has become so popular that an increasing number of private insurers have launched “virtual-first” plans, requiring patients to consult with a primary care doctor virtually before they come in for an in-person visit. As incentives, such plans often do not require patients to pay co-pays to visit their virtual doctors, saving enrollees on healthcare costs. But while the rates Medicare pays for telehealth and in-person services are currently the same, that arrangement and other telehealth waivers expire at the end of the public health emergency absent Congressional action. Consequently, providers are urging Congress and CMS to maintain payment parity, or something close to it, even after the pandemic ends.

CMS has updated its COVID-19 webpage with toolkits for providers, partners and health plans/issuers. Reimbursement rules and guidance from regulators and payers continue to evolve as the situation develops. To the extent possible, providers should stay informed and monitor for updates. Please see our Medical & Professional Licensing Board Matters webpage for additional details regarding COVID-19 Emergency Practice, Telehealth & Teleprescribing Measures. See our HIPAA, Health Information Privacy & Security Compliance webpage for details regarding HIPAA Compliance & Waivers During the COVID-19 Pandemic. And see our Stark, Anti-Kickback, Civil Monetary Penalty & False Claims Act Issues webpage for details regarding COVID-19 Fraud Enforcement & Telehealth. (A summary of CMS’s blanket waivers of certain self-referral prohibitions contained in the federal Stark Law also appears here. And a summary of all of CMS’s COVID-19 Emergency Declaration Blanket Waivers for Health Care Providers is here.)

CMS issued a final regulation on November 2, 2023, that, among other things, changed the categorization of the codes for telehealth services and the billing of telehealth services. The final rule applies to all physicians and clinicians that choose to bill Medicare for telehealth services and requires them to continue billing Medicare using the permanent codes from the prior year. Although CMS rejected the request to add thirty temporary codes to the list, CMS created a mechanism to add, remove or otherwise change the codes on the list. Additionally, many of those temporary codes will remain until January 1, 2024, and physicians may continue the limited use of the COVID-19 PHE waivers that give physicians the flexibility to provide telehealth services from their home (as opposed to in a health facility or office) until December 31, 2024. 

CMS also finalized the policy whereby claims billed under POS 02 (Telehealth Provided Other than in Patient’s Home) will continue to be paid at the lower PFS facility rate and claims billed with POS 10 (Telehealth Provided in Patient’s Home) will be paid at the higher PFS non-facility rate. CMS anticipates that the telehealth policies introduced in the final rule will allow physicians to continue to properly bill Medicare for telehealth services based on the previous policies while providing a bridge for the new method of billing. The final rule was published in the Federal Register on November 16, 2023.

In Georgia, during the 2021 legislative session, HB 307 was enacted, revising the Georgia Telehealth Act (O.C.G.A. § 33-24-56.4). The bill authorized healthcare providers to provide telemedicine services from home and patients to receive telemedicine services from their home, workplace or school. Insurers are not allowed to require a deductible or an in-person consultation before providing coverage for telemedicine services. Additionally, the bill placed restrictions on utilization review and requires insurers to allow open access to telehealth and telemedicine services, including the provision of prescription medications. Governor Kemp signed HB 307 into law on May 4, 2021. Please see our Medical & Professional Licensing Board Matters webpage for additional details.

CMS Approves Plan to Streamline Prior Authorization & Improve Patient & Provider Medical Records Access

On January 15, 2021, CMS approved its plan to streamline prior authorization and improve patient and provider access to medical records. The “final rule requires payers – including Medicaid, the Children’s Health Insurance Program and exchange plans – to build application program interfaces to support data exchange and prior authorization.” According to CMS, “the changes would allow providers to know in advance what documentation each payer would require, streamline documentation processes, and make it easier for providers to send and receive prior authorization information requests and responses electronically.”

However, on February 17, 2021, FierceHealthcare (R. King) reported that the Biden Administration appeared to have withdrawn the rule finalized at the “last minute” by the Trump administration. CMS did not say why the rule appeared to be withdrawn, but the prior press release no longer appears on CMS’ website, and the rule does not appear in the Federal Register. An agency spokesperson is quoted as saying that “this matter is currently under CMS review and we look forward to sharing additional information about this program soon.” Shortly after President Biden was inaugurated on January 20^th, the White House issued a memo calling for a freeze on any last-minute regulations finalized by his predecessor. CMS did not say that the withdrawal was due to the memo and the rule could still survive, as any regulations affected by the freeze must be reviewed and approved by an agency or department head.

In Georgia, during the 2021 legislative session, SB 80 was enacted, amending O.C.G.A. § 33-46-1, et seq., the “Ensuring Transparency in Prior Authorization Act,” to provide new standards for prior authorizations by a utilization review entity. This bill establishes rules for the prior authorization process that include reporting and disclosure requirements, timeline guidance, and qualifications of decision-makers. SB 80 also requires prior authorization standards to be listed on an insurer’s website. Prior authorization approvals must be granted within 72 hours in urgent cases and 15 days for elective procedures. In 2023, the number of days for elective services drops to seven. And a peer-to-peer conversation must take place before a provider has to file an appeal. SB 80 was signed into law by Gov. Kemp on May 10, 2021.

Congress reportedly is also considering changes to Medicare Advantage that would crack down on prior authorization tactics insurers use to reduce healthcare costs but can affect how providers care for patients. As reported by Modern Healthcare (5/13/21, Hellmann and Tepper), Rep. Susan DelBene (D-WA), Mike Kelly (R-PA), Ami Bera (D-CA) and Larry Bucshon (R-IN) “reintroduced a bill…that aims to quicken the prior authorization process and require more transparency about how often plans deny providers’ requests.” Physician groups insist the requirements of prior authorization have become increasingly burdensome. But insurers claim they only use it for “a small percentage of medical services and products, which are considered experimental or at risk of overuse,” and argue that removing the system could put patients at risk.

As KFF Health News (Sausser) explained in an August 22, 2023 report, “Prior authorization is a common cost-cutting tool used by health insurers that requires patients and doctors to secure approval before moving forward with many tests, procedures, and prescription medications,” which “insurers say … helps them control costs by preventing medically unnecessary care.” Insurers contend that physicians frequently over-test and over-treat patients based on test results. However, “patients say the often time-consuming and frustrating rules create hurdles that delay or deny access to the treatments they need.” As a result, patients “— and even some physicians — say they have turned to publicly shaming insurance companies on social media to get tests, drugs, and treatments approved.” But how frequently this tactic works in reversing prior authorization denials is unclear, and time is often of the essence.

On April 5, 2023, CMS issued a final rule that revises the Medicare Advantage (or Part C), Medicare Prescription Drug Benefit (Part D), Medicare Cost Plan, and Programs of All-Inclusive Care for the Elderly (“PACE”) regulations to implement changes related to Star Ratings, marketing and communications, health equity, provider directories, coverage criteria, prior authorization, network adequacy, and other programmatic areas. And on November 6, 2023, CMS released a proposed rule that would revise the Medicare Advantage Program, Medicare Prescription Drug Benefit Program, Medicare Cost Plan Program, PACE, and Health Information Technology Standards and Implementation Specifications. The proposed policies build on existing administration policies to strengthen beneficiary protections and guardrails to promote healthy competition and ensure Medicare Advantage plans best meet the needs of beneficiaries. CMS’s regulations now basically require that Medicare Advantage plans cover the same services as traditional Medicare. In addition, the proposed policies would promote access to behavioral health care providers, promote equity in coverage, and improve supplemental benefits.

However, as the Washington Post reported on November 29, 2023, there is increasing scrutiny around the business practices of privately-run Medicare Advantage plans. Healthcare provider complaints about claim denials and unreasonable preapproval requirements by Advantage plans are increasing, with many hospitals and physician practices so frustrated that they are refusing to accept the plans.

On November 20, the American Hospital Association sent a letter to CMS, warning that some insurers seemed intent on circumventing the new rules put in place by the Biden administration to rein in unreasonable prior authorization and claim denials. This followed a study by the HHS OIG that found some Advantage plans have denied coverage for care that should have been provided under Medicare’s rules. The administration’s new rules, set to take effect in January 2024, were in part a response to the OIG’s report.

Prior approval requirements remain a big source of contention for providers. Virtually all Medicare Advantage enrollees are in plans that require insurers to approve in advance at least some types of care, according to KFF. Insurers contend that the prior approval process helps ensure that treatments are coordinated and appropriate. But according to KFF, in 2021, more than 35 million requests for prior approval were submitted for Medicare Advantage enrollees, and over 2 million of them were denied. For the small minority of patients who appealed (approximately 11%), approximately 82% won a full or partial overturning of the insurer’s decision. Job-based insurance plans covering employees or those who buy their own insurance through the Affordable Care Act also often require prior approval by insurers, and there are many complaints about them as well. But with traditional Medicare, prior approval and claim denials are much more limited. Hospitals and physicians have many complaints about how much traditional Medicare pays them, but the data seems to show that providers spend far less time fighting over medical decisions with traditional Medicare than with Medicare Advantage plans. Consequently, there is increasing scrutiny of Medicare Advantage plans in Congress.

And recently, lawsuits have been filed alleging that health insurers are improperly using flawed algorithms and artificial intelligence to wrongly deny legitimate claims. For example, on December 13, 2023, Modern Healthcare reported that “Humana has joined the list of health insurance companies facing accusations of using artificial intelligence tools to systematically deny care.” One day earlier, “the same plaintiffs law firms that sued Cigna and UnitedHealth Group on similar charges filed a complaint against Humana … and seeks to represent all affected Humana members in a class-action case.” The lawsuit alleges that “Humana’s use of AI to review claims constitutes a breach of contract that resulted in unjust enrichment under federal law and violated insurance laws in 22 states.”

On January 17, 2024, CMS issued a press release and published a final rule requiring Medicare Advantage, Medicaid, and federally facilitated Marketplace plans to streamline their prior authorization processes. This final rule will hopefully help improve patient access to care and ease administrative burdens. But even though the regulation is supposed to “take effect 60 days after it formally appears in the Federal Register,” CMS “said the rule will begin primarily in 2026.” The fact sheet for this final rule is here.

On February 6, 2024, CMS posted FAQs clarifying coverage criteria and utilization management requirements for Medicare Advantage plans under its final rule for 2024. The rule includes provisions intended to increase program oversight and create better alignment between MA and traditional Medicare. Topics addressed by the FAQs include medical necessity determinations; algorithms and artificial intelligence; internal coverage criteria; post-acute care; the two-midnight benchmark for inpatient admission criteria; prior authorization; and enforcement.

CMS is evaluating whether it needs to take further steps cracking down on health insurance companies’ prior authorization requirements. Provider and patient “annoyance with prior authorization has boiled over in recent years,” CMS Administrator Chiquita Brooks-LaSure noted at the American Hospital Association’s annual conference on April 15, 2024. Ms. Brooks-LaSure said, “The volume of frustration that I hear about prior authorization has just exploded, and I think it is really at a point where it is affecting care and our workforce in a way that is extremely problematic.” Brooks-LaSure “did not provide specifics on what might come next from CMS, but she made it clear the agency doesn’t see itself as done.” Please stay tuned for further developments.

Audits in the Wake of COVID-19

Most payer audits were suspended or postponed during the public health emergency. (OIG’s COVID-19 FAQs can be read here.) But according to its July 2020 FAQ document on provider burden relief, CMS was ending its suspension of Medicare claims audits effective August 3, 2020, regardless of the status of the federally declared COVID-19 national emergency. The department suspended most fee-for-service claims audits in March of 2020 due to the pandemic. The suspension applied to prepayment medical reviews conducted by MACs and post-payment reviews. CMS cited changes in states’ reopening policies and the importance of the reviews as reasons for resuming the audits.

CMS’s FAQ states that if providers impacted by the pandemic are selected for review, they should discuss with their MAC any COVID-19 related hardships that may affect the timeliness of their audit response. Since CMS permitted several exceptions to its regulatory compliance rules for healthcare providers during the pandemic, CMS will apply any waivers and flexibilities in place at the time of the dates of service.

Healthcare coding and reimbursement experts have been predicting that once the pandemic is no longer raging, “audits will be coming fast and furiously.” For one thing, with spending soaring and revenue plummeting during the emergency, the government and health insurers will need money more than ever once the pandemic abates. And both reimbursement consultants and government enforcers agree that virtually all providers will be in the cross hairs.

For example, one retired HHS-OIG Senior Special Agent warned online: “CMS put out an FAQ this month advising it will stop audits during the PHE. Understand that when that is lifted, audits will commence, and likely at a feverish pace. Are providers prepared for the audits to come, particularly with some of the ‘relaxed’ telemedicine and telehealth rules? Probably not. Be proactive and do internal probe reviews to ensure compliance, so in three years you do not see an overpayment letter for hundreds of thousands of dollars. Getting the education needed to stave off a large overpayment [allegation] is a basic compliance measure.”

In short, it is never too soon to assess your risks and determine how best to mitigate those that could lead to damages (civil or criminal). Do not assume your practice won’t be a target. Be proactive and audit both retrospectively and prospectively. If you have sufficient staff to conduct internal audits, do them. If not, hire a reputable firm to help. Be sure you can fully support with adequate documentation any claims you submit for reimbursement. Adequate documentation is crucial. Even when rules seem more relaxed, documenting properly now can save you in an audit down the road. Also be sure that your audit is conducted under the supervision of an attorney, so as to protect privileged communications and work product to the extent permitted by law.

The regulatory landscape continues to change rapidly. During the onset of the pandemic, agency enforcement discretion allowed for a more relaxed regulatory approach. However, the same enforcement discretion can shift quickly to the return of a more rigid regulatory framework. It now appears that pre-pandemic enforcement practices are resuming, even as variants of the coronavirus continue to circulate and long Covid continues to afflict patients. Providers therefore need to be prepared and continue to monitor legal developments.

Arbitration Rules & Mediation Procedures for Healthcare Provider-Payer Disputes

Providers must navigate multiple state and federal laws and payer policies in providing healthcare services, especially when those services are delivered virtually via telehealth. From a licensure perspective, the general rule is that a telehealth provider must be licensed in the state where the patient is located, though there are exceptions for temporary travel, public health emergencies, and telehealth registrations. From a payment perspective, however, payers have their own requirements for telehealth services, under which provider location can affect reimbursement.

And disputes about reimbursement arise regardless. If a negotiated settlement cannot be reached, those disputes can be litigated in the courts or the parties can seek to resolve the dispute through alternative dispute resolution – either mediation or arbitration.

The American Arbitration Association (“AAA”) released revised Commercial Arbitration Rules on September 1, 2022 and Healthcare Payor Provider Arbitration Rules and Mediation Procedures on October 1, 2022. The amended rules standardize important longstanding practices — confidentiality, consideration of consolidation/joinder motions, and civility — and further promote efficiency, reflect advances in technology, and address cybersecurity. AAA also provided a summary of the specific amendments to both the Payor Provider Arbitration Rules and the Commercial Arbitration Rules.

Since 1992, the American Health Law Association (“AHLA”) has maintained a premier national roster of arbitrators, mediators, and hearing officers with health law expertise. And they strive to resolve even the toughest cases fairly, quickly, and inexpensively. (Learn more about AHLA Mediation here. Learn more about AHLA Arbitration here.) There also are numerous other arbitration and mediation services in Georgia and every other state with qualified mediators and arbitrators ready and able to assist providers and payers resolve disputes outside the court system.

Additionally, on April 18, 2024, HHS finalized its rule to establish a 340B Administrative Dispute Resolution (“ADR”) process as required under the Affordable Care Act. The rule establishes an ADR process that allows all 340B covered entities, regardless of the size of the organization or monetary value of the claim, to avail themselves of the process to address claims at dispute with drug companies.

How We Can Help & Services We Provide

Certain provisions in third-party payer contracts and governmental rules can have a great impact upon a provider’s revenue stream and financial viability. Hospitals and physicians often write off tens of thousands – sometimes even millions — of dollars due to payers improperly denying or underpaying claims. Our healthcare and business law firm can help by:

• Negotiating and reviewing health insurer plan documents.
• Negotiating and reviewing IPA, PHO and PPO network agreements.
• Negotiating and reviewing provider contracts with third-party payers.
• Negotiating with plan sponsors regarding potentially unlawful plan terms.
• Representing providers in disputes that arise under documents such as those listed above.
• Representing providers in disputes with insurers, including terminations of provider agreements.
• Evaluating denied claims against the terms of provider-payer contracts and government regulations, and helping clients determine next steps in proceeding against payers’ improper denials.
• Reviewing and evaluating fact questions like prior authorizations and legal questions like potential violations and penalties.
• Enforcing insurer and payer compliance with preferred provider arrangements, third-party network contracts and treatment agreements.
• Challenging payers who violate the MSP Act and other coordination of benefits rules.
• Challenging audit findings, overpayment demands and recoupment actions issued by third-party administrators, insurers and health plans.
• Challenging plan fiduciaries for failing to follow proper claims and appeals procedures.
• Representing providers in investigations, audits, pre-suit claims, mediations, arbitrations and lawsuits.
• Helping providers recover damages caused by improperly denied or underpaid claims.

Claims denied improperly by managed care payers fall within the scope of the provider participation agreement signed by the provider and payer. Therefore, any wrongly denied claims are subject to the terms of the signed agreement, as well as applicable laws relating to contract breaches. A health plan’s breach of its own contract is subject to the dispute resolution terms of the signed contract, which allow for either an arbitration demand or a lawsuit to be filed against the payer.

Even if the contract or related provider manual contains specific terms not met by a provider, some denials may be unenforceable as illegal penalties. Therefore, healthcare providers who have rendered valuable services to a health plan’s members should not give up on improperly denied claims without first consulting legal counsel. (For discussion of Georgia and federal laws governing so-called “Surprise Billing” and disputes between providers and payers over proper out-of-network payment amounts, please see the Billing & Collection Agreements section of our Healthcare & Physician Contracts webpage.)

Our healthcare and business law firm helps healthcare providers by reviewing, negotiating and drafting contracts. We assist hospitals, physicians, physician groups and other providers in negotiating and contracting with health insurance payers, plans and managed care entities. And we represent healthcare providers in investigations, audits, administrative proceedings, mediations, arbitrations and lawsuits when disputes arise with payers, managed care plans or other entities over reimbursement or other matters. Please call or email us if you need assistance in any of these areas.