National Litigation Trends by Phil Peisch, J.D., and Dena Feldman

National Litigation Trends and
Regulatory Update
Dena Feldman
Philip Peisch
Covington & Burling LLP
NASMHPD/NASDDDS Legal Divisions Meeting
November 12, 2013
The Medicaid Expansion and
Alternative Benefit Plans
Alternative Benefit Plans
• New low-income adult group will be covered
by “Alternative Benefit Plans” (ABP), not full
state plan benefits
• ABPs are what used to be called “benchmark”
coverage under Section 1937
• Enforcement flexibility in 2014
Alternative Benefit Plans
• ABPs must cover “Essential Health Benefits”
– Complex ABP design process: compare/combine
Section 1937 plan with commercial base
benchmark plan
– Essential Health Benefits include
• “rehabilitative and habilitative services and devices”
• “mental health and substance use disorder services,
including behavioral health treatment”
Alternative Benefit Plans
• “Secretary-approved” Section 1937 plan
• Alignment with state plan? Access to home
and community based services?
Alternative Benefit Plans
• Mental Health Parity and Addiction Equity Act
applies to ABPs
• CMS applies Medicaid IMD exclusion to
Alternative Benefit Plans
• Other ABP requirements: family planning
services, EPSDT, non-emergency
• Arkansas “Private Option”: State provides
premium assistance for purchase of qualified
health plans on the Exchange
– State provides wrap-around services to enrollees
have access to ABP coverage
Alternative Benefit Plans
• Certain populations exempt from mandatory
enrollment in an ABP and have a choice
between ABP and “State Plan ABP”
• “Medically frail or otherwise an individual with
special medical needs”
Mental Health Parity and Addiction
Equity Act (MHPAEA) Final Rule
MHPAEA Final Rule
• Six “classifications”: (1) inpatient, in-network; (2) inpatient, outof-network; (3) outpatient, in-network; (4) outpatient, out-ofnetwork; (5) emergency care; (6) prescription drugs
• Financial requirements and quantitative treatment limits for
mental health and substance use disorder (MH/SUD) benefits
must not be more restrictive than the “predominant” limits or
requirements of that type applied to “substantially all”
medical/surgical benefits within the classification
• Nonquantitative treatment limits: any “processes, strategies,
evidentiary standards, or other factors” for MH/SUD benefits
must be comparable to and applied no more stringently than
“processes, strategies, evidentiary standards, or other factors”
applied to medical/surgical benefits within the classification
Brief Litigation Update
Brief Litigation Update
• States required to cover Applied Behavior
Analysis therapy for children with autism
spectrum disorder?
– CMS: Applied Behavior Analysis is generally not
an EPSDT benefit
• Olmstead: many questions remain
DSH Allotments
DSH Allotments
• Will see reductions beginning in FY 2014
$500 million in 2014
Increase to $5 billion in reductions by 2019
Congress extended to 2022
President’s budget called for delay, but Congress
has not implemented
• In September, CMS finalized a DSH
Reduction Methodology for 2014 and 2015
– No accounting for Medicaid expansion
DSH Allotment: Impact on IMDs
• Section 1923(h) of the Social Security Act
imposes limit on DSH for IMDs
• Limit is the lowest of:
– The percentage of the State’s DSH payments paid
to IMDs in 1995
– Dollar amount of DSH payments made in 1995
– 33% of the State’s DSH allotment
DSH Reductions Specifics
• DSH Health Reform Methodology (DHRM)
– Impose largest percentage of reductions on States
with lowest percentage of insured based on most
recent data
– Impose larger reductions on States that do not
target DSH payments to high volume hospitals
– Impose larger reductions on States that do not
target DSH payments based on uncompensated
– Impose smaller percentage on low DSH States
• Based on percentage of State’s total plan expenditures
DSH Allotment: Impact on IMDs
• In preamble to the final rule, CMS states that
it will calculate the IMD DSH limit based on
the DSH allotment after reductions are
• Thus, DSH funds for IMDs will have a
corresponding reduction to overall reductions
Certification of Psychiatric
Certification of Psychiatric Hospitals
• Issue: Must psychiatric hospitals meet the
special Medicare Conditions of Participation
(CoP) in order to claim DSH funds?
– Pending OIG audits in several States
– In past year, OIG has finalized several reports
recommending disallowances for DSH funds paid
to IMDs that don’t meet the special Medicare CoP
Certification of Psychiatric Hospitals:
Special Medicare CoP
• Staffing
– 42 C.F.R. 482.60
• Recordkeeping
– 42 C.F.R. 482.61
Certification of Psychiatric Hospitals:
The Joint Commission (TJC) Accreditation
• Formerly JCAHO
• Medicare law and regulations permit CMS to
deem hospitals accredited by TJC
• Medicaid certification can be established
through deemed status
• Until recently (2011), TJC “deeming authority”
did not extend to Medicare special CoP
– See 42 C.F.R. 488.5
– Notice in FR modifies for Feb 25, 2011 through
Feb 25, 2015
Certification of Psychiatric Hospitals:
OIG Audits
• States paid DSH funding to psychiatric
hospitals that did not satisfy special Medicare
– though they had TJC accreditation
• OIG position:
– Prior to Feb 2011, no Medicaid payments,
including DSH, may be made to psychiatric
hospitals that did not undergo separate survey for
two special CoPs.
Certification of Psychiatric Hospitals:
States Position
• There is no statute, regulation, or CMS
guidance advising that a facility must be
Medicare certified in order to be eligible for
DSH payments
• DSH statute allows for payments to
“institutions for mental diseases and other
mental health facilities.”
– Receipt of regular Medicaid payments is not
required for receiving a DSH payment.
• So far, CMS has been silent on whether it
agrees or disagrees with OIG
• Pending in several states – some with
potential disallowances of over $100 million
New Omnibus Health Privacy Rule
HITECH Omnibus Privacy Rule
• Business Associates now liable
– And subcontractors
• More stringent standard for deciding what is a
– Presumption that unauthorized disclosure is a
breach unless “low probability” that PHI has been
– No more risk of harm test
HIPAA: Implications for Mental
Health Providers and Health Plans
• Authorization required for disclosure of
psychotherapy notes
• Revisions of Notice of Privacy Practices
• Update Business Associate Agreements
• New provisions in individual rights
– Right to restrict disclosures
– Right of Access to PHI in electronic format
HIPAA: Compliance Date
• Compliance date was September 23, 2013
• Business associate agreements entered into
before January 25, 2013 have until
September 22, 2014
– Unless changed or amended
D.C. Circuit Ruling on IMD Under 21
Virginia v. HHS
Virginia v. HHS
• Case concerned the scope of services for
children (under 21) in IMDs.
• Court upheld HHS position that the statute
prohibits Medicaid from paying for any
services other than inpatient psychiatric
services provided to children in IMDs
– meaning of “inpatient psychiatric hospital services
for individuals under age 21”
Virginia v. HHS
• CMS has issued an Informational Bulletin on
allowed services on flexibility currently
available to states to ensure the provision of
medically necessary Medicaid services to
children in inpatient psychiatric facilities
Inpatient Psychiatric Services for
Individuals Under 21
– Included in child’s inpatient psychiatric plan of
– Must involve “active treatment” designed to
achieve child’s discharge from inpatient status
– Services must be provided by a qualified
psychiatric facility
• Facility must arrange for and oversee provision of all
services, maintain medical records, ensure services are
under care of a physician
• Furnished by a qualified provider that has entered into a
contract with the inpatient psychiatric facility to furnish
services to inpatients
Practical Effect of CMS Guidance
• Medicaid-eligible child in IMD breaks leg. Will
CMS reimburse?
– Is the care provided in the facility or individual
practitioner that has entered into a contract with
the facility?
– Is it included in plan of care? (“all necessary
medical services”).
Medicaid Managed Long Term
Services and Supports (MLTSS)
• Delivery of LTSS through capitated Medicaid
managed care
– More and more States --16 in 2012; CMS expects
26 in 2014.
• May be operated under multiple federal
authorities as approved by CMS
– 1915(a), 1915(b), Section 1115
– Can be paired with HCBS
CMS Required Elements for MLTSS
• Adequate planning
• Person-centered
• Stakeholder
• Comprehensive,
integrated service
• Enhanced provision of
– Consistent with Olmstead • Adequate network of
Qualified Providers
• Alignment of payment
structure and goals
• Participant Protections
• Beneficiary support and • Quality
CMHC Conditions of Participation
New Rule on CoPs for CMHCs
• Codified at 42 C.F.R. Part 485, Subpart J
• Effective October 29, 2014
• Areas of focus:
– Staffing, integrated care, client rights, personcentered approaches, coordination of services and
active treatment plan, quality assessment and
MQHC: Conditions of Participation
• Concern: CMHCs cease to provide services after
regional office determination; mistreatment of clients;
fragmented care; minimal options for termination from
Medicare program
• First time federal law has established requirements
for CMHCs to participate in the Medicare program

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