April 25

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• Key Medicaid Initiatives Underway
• Senate Committee Approves False Claims Act Amendments
• U.S. House Passes Bill Extending Medicaid Moratorium
• Federal Advocacy Day Scheduled for May 7
• Important Dates
• Educational Opportunities
• Legal Update
• Texas Register Highlights
• Federal Register Highlights

Key Medicaid Initiatives Underway

In separate announcements made within the past week, the Texas Health and Human Services Commission launched two important Medicaid program initiatives that will have a lasting impact on Medicaid payments to hospitals. Late last week, THHSC submitted the Texas health care reform waiver request to the U.S. Department of Health and Human Services. Several days later, THHSC published the agenda and Medicaid hospital payment rule summaries for the May 1 Hospital Payment Advisory Committee meeting.

Medicaid Hospital Payments
THHSC's Hospital Payment Advisory Committee is scheduled to meet at 1:30 p.m. May 1 in the Public Hearing Room of the John H. Winters Building, located at 701 W. 51st St. in Austin.
The committee will debate a full agenda with seven Medicaid hospital payment rules up for discussion. Included on the HPAC agenda are the proposed rules:

• Establishing state fiscal year 2009 hospital inpatient rates for:
• • Acute-care hospitals;
  • Children's hospitals;
  • State-owned teaching hospitals; and
• Updating and revising SFY 2009 Medicaid disproportionate share payment rules for:
• • State-owned hospitals; and
  • Non-state-owned hospitals.

    The Texas Hospital Association's Policy Committee on Hospital Reimbursement will meet prior to the HPAC meeting to develop comments on the proposed Medicaid rules. A copy of the HPAC agenda is available for download on THHSC's Web site. A copy of the proposed rules likely will be available prior to May 1 at the same Web address. 

Waiver Request Submitted
    On April 16, THHSC submitted the agency's long-awaited waiver request on Medicaid reform. Authorized in Senate Bill 10, passed by the Legislature in 2007, the waiver will work to fundamentally restructure Medicaid funding through the creation of the Texas Health Opportunity Pool Trust Fund.
Funded from several sources of state and federal funds, the Health Opportunity Pool serves as the Medicaid funding source for a number of new programs outlined in the waiver, including:

• Rewarding hospitals for innovative efforts to reduce uncompensated care;
• Developing a catastrophic coverage program for parents and caretakers;
• Providing premium subsidies to low-income Texans;
• Increasing coverage to families by blending funds from several sources to enable families to buy into employer-sponsored coverage; and
• Awarding grants to improve patient care coordination and improving health care infrastructure.

     Other important provisions included in the waiver call for the development of new cost and financing reporting requirements to create a uniform, reliable and transparent system for collecting data on hospital uncompensated care. In addition, the waiver proposes new uncompensated care claims submission requirements for all hospitals receiving disproportionate share or Upper Payment Limit funds to allow state and regional analysis of uncompensated care charges and disease conditions in the uncompensated care population. (John Hawkins/John Berta)

In response to congressional concerns about the appropriateness of claims for payments by governmental contractors in support of the Iraq war, the Senate Judiciary Committee recently approved amendments to the federal False Claims Act that would expand substantially the applicability of the act and allow both governmental prosecutors and private parties to bring lawsuits against federal contractors for fraud. 
    These amendments would apply to all types of federal contractors, including hospitals and other providers that receive payments from the Medicare and Medicaid programs. The proposed amendments would allow payment disputes to be considered a false claim if the defendant was ever a recipient of federal funds and would extend the statute of limitations on false claims from six to 10 years. In addition, it would allow whistleblower lawsuits to be brought even if the suit was based on information that was publicly available. Potential penalties under the act also would be increased. 
    While the American Hospital Association and other organizations are working with the Bush administration and U.S. Department of Justice on needed changes in the legislation, these amendments to the False Claims Act are expected to move through the legislative process and action by the full Senate and House could take place later this year. (Charles Bailey, J.D.)

Important Dates 

May 1
Hospital Payment Advisory Committee meeting, Austin

May 1, June 24
AHA conference calls on never events policies

May 7
Federal Advocacy Day on physician self-referral, Washington, D.C.

June 1
Comments due on draft instructions for redesigned IRS Form 990

June 13
Deadline to comment on proposed IPPS rules

Audioconference: Hospital Billing & Collection Practices
(Part 1, Keeping Current on Compliance)
May 8
View details.

Webinar: Financing for Future Hospital Flexibility
May 13
View details.

Webinar: Adaptable Design: Building for Now and Later
May 20
View details.

Webinar: Improving Alignment for Strategy Execution
May 29
View details.

Audioconference: Establishing Fair Market Value in Hospital-Physician Arrangements
(Part 2, Keeping Current on Compliance)
June 12
View details.

Webinar Series: Managing Joint Commission Standards for Environment of Care
June 13
July 11
Aug. 22
Sept. 19
Oct. 17
Nov. 14

THA Psychiatric Services Conference
July 14-15, San Antonio
Save the date!

THT Conference
July 24-26, San Antonio
Save the date!

Audioconference: Observation Services: Coding, Billing and Compliance
July 31
View details.

Rural Health Trifecta
Aug. 5-7, Austin 
Save the date!

THA also offers
audioconferences and webinars on a wide range of topics. Viewa complete listing of webinars. For information on all of THA's upcoming educational events, visit THA's online Education Calendar.

Legal Update

By Fulbright & Jaworski, of counsel to THA

CMS Withdraws Request to Send Mandatory Financial Disclosure Survey. On April 10, the Centers for Medicare & Medicaid Services formally withdrew from the Office of Management and Budget its request to send a new mandatory survey, entitled the Disclosure of Financial Relationships Report, to 500 selected hospitals. The hospital industry had challenged CMS' estimates that it would take hospitals approximately six hours to complete the forms. The new disclosure report was a product of a CMS updated regulatory notice issued in September 2007 that stated that CMS was conducting a review of investment/ownership and compensation arrangements between physicians and hospitals to determine whether they were in compliance with the physician self-referral statute and implementing regulations. CMS was required to obtain OMB's approval before sending out the forms. OMB's delay in issuing a decision on CMS' request was seen widely as an indication that OMB had serious doubts about the estimates presented by CMS. View CMS' notice of withdrawal.

OIG Issues New Guidance on Self-Disclosure Protocol. On April 15, the Office of Inspector General for the U.S. Department and Health and Human Services posted an open letter to health care providers “refining” the requirements of the OIG Provider Self-Disclosure Protocol. With the initial implementation of the 1998 Self-Disclosure Program, the OIG sought to encourage providers to self-report evidence of potential fraud by stating that providers that complied with the requirements of the SDP would pay lower civil damages and face lessened ongoing compliance obligations. In its letter of April 15, the OIG establishes four additional submission requirements which must be included in the initial report, including (1) a complete description of the conduct being disclosed; (2) a description of the provider's internal investigation or a commitment regarding when it will be completed; (3) an estimate of the damages to the federal health care programs and the methodology used to calculate that figure or a commitment when the provider will complete such an estimate; and (4) a statement of the laws potentially violated by the conduct. In addition, the OIG states that the provider must be in a position to complete the investigation and damages assessment within three months after acceptance into the self-disclosure program. The letter also states that providers that disclose in good faith, fully cooperate with OIG, and provide requested information in a timely manner, generally will not be required to enter into Corporate Integrity or Certification of Compliance Agreements with OIG.

Court Rejects Suit Alleging Academic Medical Center Violated Stark Law. A federal trial court ruled April 8 that a qui tam relator pursuing a False Claims Act lawsuit against an academic medical center in Kentucky failed to show that the defendants did not qualify for the AMC exception under the Stark Law. The case is believed to be the first instance that a court has examined the Stark Law's exception for AMCs. The litigation involved a challenge to the financial arrangement between Norton Hospitals Inc. d/b/a Kosair Children's Hospital, the University of Louisville Medical School Fund Inc., the University of Louisville Research Foundation Inc., and four members of the medical school faculty and their practice groups. The court concluded that the indirect flow of funds from Kosair to the faculty members did not violate the Stark Law, finding that the AMC exception applied because: (1) the named physicians were faculty members; (2) the named physicians received reasonable compensation unrelated to the amount of their referrals; and (3) there was no evidence of illegal kickbacks.The court dismissed the contention that the named defendants were not “faculty” covered by the exemption, noting that they had faculty appointments and provided “substantial” amounts of clinical and academic services. It also rejected the notion that the defendants were required to adopt a rigid timekeeping methodology to document the amount of time they spent on faculty-related matters, and found the compensation paid to the physicians was reasonable, did not vary in relation to referrals and was set at fair market value. Claims that the relationship violated the anti-kickback law and, therefore, brought the arrangement outside the safe harbor, also failed. The citation for the court's opinion is United States ex rel. Villafane v. Solinger, No. 3:03-cv-519, (W.D. Ky. Apr. 8, 2008).

Texas Appeals Court Allows Nurse to Pursue Negligent Misrepresentation Claim against Hospital Employer. A Texas appeals court held on April 10 that a nurse was entitled to pursue her negligent misrepresentation claim against her health system employer after she was investigated and ultimately reassigned for following the system's alleged unwritten policy allowing physicians to delegate certain duties to nurses. According to the nurse, the hospital's unwritten policy permitted nurses, without the presence of a physician, to sedate patients, and with the assistance of a technician, observe the insertion of a colonoscope.
    On Jan. 17, 2002, the nurse in charge of a colonoscopy and following a physician's orders via telephone, sedated a patient and observed a technician insert a colonoscope and remove a polyp. The entire procedure was performed without a physician's presence or supervision. Subsequently, the nurse was placed on administrative leave, reviewed by the nursing board and reassigned to a different position.
    The nurse sued the hospital system alleging fraud, negligent misrepresentation, violation of procedural due process rights and intentional infliction of emotional distress. The hospital system was granted summary judgment and the nurse appealed. The appellate court upheld the trial court's summary judgment for the health system on the nurse's fraud, procedural due process rights and intentional infliction of emotional distress claims. However, the appeals court found evidence “that the [hospital] was aware that some physicians were ordering nurses to start procedures without the physician being present, knew there were no clear and precise policies and procedures within the unit as to what duties could be delegated, and did not attempt to clarify the delegation policy until after it began investigating the incident.” The appeals court held, “the evidence raises a fact issue regarding whether the [hospital] negligently communicated its delegation policy because there was no clear policy.”

The Texas Health and Human Services Commission proposes a rule concerning payment for hospital services and supplemental payments to certain rural public hospitals. The rules make changes to the non-state-owned rural public hospital supplemental payment program (also known as the upper payment limit program for rural public hospitals). Specifically, the rules propose to include outpatient services in the supplemental payment calculation for non-state-owned rural public hospitals and change the Medicaid charge deficit criteria from 1 percent to 0.5 percent for inpatient services for the rural public hospital UPL program.  (April 18)

The Texas Department of Aging and Disability Services proposes rules to implement changes necessitated by a project under the direction of the Texas Health and Human Services Commission that will replace the state case-mix system for provider payments, which is based on the Texas Index for Level of Effort model, with the federal case-mix system, which is based on the Resource Utilization Group model. Specifically, the rules address definitions; certification and recertification requirements in Medicaid-certified facilities; contents of the clinical record; Medicaid hospice services; requirements for a contracted Medicaid facility; the Medicaid swing bed program for rural hospitals; preadmission screening and resident review; payment of claims; general qualifications for medical necessity determinations; denied medical necessity; determination of payment rate based on the minimum data set assessment submission; retroactive vendor payments; and resident transaction notices. (April 18)

The Texas Department of Aging and Disability Services proposes rules concerning certification of terminal illness, Medicaid hospice payments and limitations, Medicaid hospice claims requirements and Texas Index for Level of Effort assessments in the Medicaid hospice program. The rules replace a requirement that a hospice provider retain copies of a current TILE assessment, if applicable, with a requirement that the hospice provider retain copies of the current minimum data set assessment. New language is added to provide the timeframes for submitting the MDS assessment based on whether a hospice recipient or applicant currently is residing in a nursing facility or is newly admitted to the nursing facility. (April 18)

The Texas Department of Aging and Disability Services proposes rules concerning the use of general revenue for services exceeding the individual cost limit of a waiver program. The rules implement provisions of the 2008-09 General Appropriations Act concerning the use of general revenue for services exceeding an individual's cost limit in certain TDADS programs operated in accordance with the Social Security Act. (April 18)

The Texas Health and Human Services Commission adopts rules, effective April 22, concerning Medicaid treatment of qualified long-term care partnership program insurance policies. The rules implement a long-term care partnership program, which will enable individuals who purchase certain approved private long-term care insurance policies to have a dollar-for-dollar exclusion of their resources in an amount equal to the insurance benefits paid on behalf of the individual in determining eligibility for medical assistance. (April 18)

The Texas State Board of Examiners of Professional Counselors adopts rules, effective April 27, concerning the licensing and regulation of professional counselors. The rules address authorized counseling methods and practices; code of ethics; application procedures; academic requirements for licensure; experience requirements for licensure; licensure examinations; licensing; regular license renewal; inactive and retirement status; continuing education requirements; complaints and violations; formal hearings; and schedule of sanctions. (April 18)

The Texas Department of Aging and Disability Services adopts a rule, effective May 1, concerning vendor payment. The rule allows a nursing facility to procure a customized power wheelchair for a Medicaid-eligible nursing facility resident. The nursing facility must purchase the CPWC if the need for the CPWC is identified and the nursing facility can receive reimbursement through a TDADS prior-approval reimbursement system. CPWCs have been available to a Medicaid-eligible nursing facility resident with personal funds as an incurred medical expense. The addition of CPWCs as a service in the nursing facility Medicaid program is a provision of the settlement agreement in the lawsuit filed in federal court against the Texas Health and Human Services Commission and TDADS entitled LeCompte, et al. v. Hawkins, et al., which was settled effective June 29, 2007. The Centers for Medicare & Medicaid Services has approved a Medicaid state plan amendment to add this service to the nursing facility Medicaid program. (April 18) (Sharon D. Johnson)

The U.S Department of Health and Human Services issues a notice of proposed rulemaking concerning designation of medically underserved populations and health professional shortage areas. On Feb. 29, HHS published a notice of proposed rulemaking, “Designation of Medically Underserved Populations and Health Professional Shortage Areas” to revise and consolidate the criteria and processes for designation. HHS has provided a 60-day public comment period, with written comments to be received on or before April 29. HHS and the Health Resources and Services Administration have received requests for an extension of the comment period. In consideration of these requests, HHS is extending the comment period an additional 30 days, with a new closing date of May 29. (April 21) (Sharon D. Johnson)