Health Law Daily Wrap Up, STRATEGIC PERSPECTIVES—Top 10 stories from September 2017, (Oct. 6, 2017)
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Friday, October 6, 2017

Health Law Daily Wrap Up, STRATEGIC PERSPECTIVES—Top 10 stories from September 2017, (Oct. 6, 2017)

After the recent flurry of rules and reform, September was a quiet month on the health law front. The lull allowed the health team to dive into deeper analysis of certain topics, such as jurisdiction over the disproportionate share hospital (DSH) adjustment, mandatory compliance plans for long-term care facilities, and tax exemptions for hospitals. We hope you didn’t miss these stories the first time around, but here’s a list of our top 10 stories from September, just in case.

STRATEGIC PERSPECTIVES: Allina II decision: Too soon to declare a win for providers?

After years of challenging the calculation of Medicare’s DSH adjustment, Allina Health Services, Inc., won a small victory over CMS when Allina Health Services v. Price (Allina II) was decided on July 25, 2017, by the D.C. Circuit Court of Appeals. The court addressed two issues: (1) whether it could review the decision of the Provider Reimbursement Review Board (PRRB) to grant expedited judicial review (EJR); and (2) whether the interpretative rule exception available under the Administrative Procedure Act (APA) applies for purposes of the Medicare Act (42 U.S.C. §1395hh) so that notice-and-comment was not required (see Change in reimbursement adjustment formula without notice and comment violates Medicare, July 27, 2017). This Strategic Perspective discusses the history of Allina’s challenges of the calculation, what might happen now, and what that means for providers.

STRATEGIC PERSPECTIVES: Faced with developing mandatory compliance plans, LTCFs should consider all operations

When CMS creates new regulations in an area it has not overhauled in over 20 years, the rules can get complicated and compliance may not be straightforward or simple. CMS published a Final rule (81 FR 68688) amending the long term care facility (LTCF) conditions of participation (CoP) regulations on October 4, 2016. CMS estimated that facilities would spend $62,900 to come into compliance for the first phase of the three-phase program, and $55,000 in subsequent years. CMS has yet to provide guidance on compliance with the new regulations governing LTCF compliance and ethics program requirements, but this Strategic Perspective will offer some tips from an expert for facilities looking ahead to the implementation date of November 28, 2018.

STRATEGIC PERSPECTIVES: No good deed goes unpunished—charitable hospitals should watch Congress

Congress returns from its summer break with a far-reaching agenda that includes raising the debt ceiling, reforming the tax code, and potentially revisiting health reform. The health care industry as a whole faces economic and regulatory uncertainty as Congress tackles its to-do list. Charitable hospitals find themselves particularly vulnerable in this legislative season as questions resurface about whether these hospitals do enough to justify the tax breaks and other benefits they enjoy. Charitable hospitals should pay close attention to these questions, demonstrate their compliance with existing regulatory requirements, and advocate for the vital role they play in their communities. Ignoring these questions could make it easier for Congress, the Internal Revenue Service (IRS), or other agencies to change tax-exemption standards, restrict the 340B Drug Pricing Program, or cut Medicaid funding.

STRATEGIC PERSPECTIVES: Questioning the value of value-based purchasing

The Trump Administration appears to be moving away from the use of value-based purchasing (VBP) methods in the federal health care programs, despite evidence that bundling and VBP models save money and improve the quality of care. This Strategic Perspective examines the original goals of VBP, the rationale behind the shift, and the potential impact of moving away from VBP.

LABELING AND PACKAGING (FOOD, DRUGS & MEDICAL DEVICES)—9th Cir.: Advertisers score win against San Francisco’s sugar-sweetened beverage ordinance

The American Beverage Association, California Retailers Association, and the California State Outdoor Advertising Association won their appeal for a preliminary injunction seeking to enjoin the implementation of a San Francisco ordinance requiring a warning on certain advertisements for sugar-sweetened beverages. The Ninth Circuit found that San Francisco’s ordinance was unduly burdensome and the language contained in the warning was controversial and misleading (American Beverage Association v. City and County of San Francisco, September 19, 2017, Ikuta, S.).

MEDICARE OVERPAYMENTS AND UNDERPAYMENTS—6th Cir.: HHS’ mix adjustment survey reimbursement rate not an abuse of discretion

The Secretary of HHS’ creation of the occupational mix adjustment in order to arrive at the Medicare reimbursement rate for a Kentucky medical provider was not an abuse of discretion, a federal appeals court ruled in an unpublished opinion. Although the statute was largely silent as to the details of how to collect wage and occupation data, analyze it, and create the occupational mix adjustment, that ambiguity left CMS with discretion in the matter, and its interpretation was not arbitrary, capricious, nor manifestly contrary to the statutory language (Owensboro Health, Inc. v. Secretary of Health and Human Services, August 31, 2017, Stranch, J.).

LABELING AND PACKAGING (FOOD, DRUGS & MEDICAL DEVICES)—S.D.N.Y.: Standardized packaging size for different product types, volumes not materially misleading

Riviana Foods, Inc. won its motion to dismiss in the class action suit filed against Riviana for deceptive marketing practices. The Southern District of New York held that it was not misleading for Riviana to use boxes of the same size and shape across various product lines even though not all product lines sold the same netweight of pasta inside of those boxes. Further, it is not reasonable for a consumer to assume that boxes of similar size and shape would necessarily contain the same net-weight of pasta. (Stewart v. Riviana Foods Inc., September 11, 2017, Roman, N.).

PROVIDER AGREEMENTS—Me. Sup. Jud. Ct.: State agency, not district court, has exclusive jurisdiction over MaineCare provider termination

A state Superior Court erred when it entered summary judgment declaring that the Maine District Court, and not the Maine Department of Health and Human Services had exclusive original jurisdiction over the decision to terminate a physician’s provider participation in, and reimbursement from, MaineCare. The Maine Supreme Judicial Court found that a provider’s participation in the state’s Medicaid program does not constitute a "license," and therefore revocation does not invoke state district court jurisdiction (Doane v. Department of Health and Human Services, September 12, 2017, Saufley, L.).

INPATIENT REHABILITATION FACILITIES—PRRB DECISIONS: Appeals related to data accuracy for calculating payment rates not precluded

The Provider Reimbursement Review Board (PRRB) rejected a Medicare contractor’s argument that the PRRB did not have jurisdiction over a determination of a low-income patient (LIP) adjustment for a cost report filed by Santa Rosa Memorial Hospital in 2008. The PRRB found that the number of LIP Medicaid-eligible days was understated in Santa Rosa’s fiscal year (FY) 2008 cost report, and ordered the Medicare Contractor to recalculate the LIP adjustment (Santa Rosa Memorial Hospital v. Cabana Safeguard Administrators, LLC, PRRB Decision, Dec. No. 2017-D26, Case No. 13-3169, September 8, 2017).

ADMINISTRATION OF MEDICARE/MEDICAID PROGRAMS—CMS LETTERS: They’ve suffered enough; Hurricane Harvey facilities get reporting relief

Following Hurricane Harvey’s landfall and subsequent path through Texas and Louisiana, states of emergency and public health emergencies were declared in the two states; pursuant to those declarations, CMS issued a Soc. Sec. Act Sec. 1135 waiver for 32 Texas counties and five Louisiana parishes. The counties and parishes were all designated as major disaster counties by the Federal Emergency Management Agency (FEMA). The waiver grants providers in those counties and parishes an exception to reporting requirements for Medicare quality reporting and value-based purchasing programs (CMS Letter, No. 2017-121-IP, August 31, 2017).

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