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
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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”
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Alternative Benefit Plans
• “Secretary-approved” Section 1937 plan
• Alignment with state plan? Access to home
and community based services?
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Alternative Benefit Plans
• Mental Health Parity and Addiction Equity Act
applies to ABPs
• CMS applies Medicaid IMD exclusion to
ABPs
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Alternative Benefit Plans
• Other ABP requirements: family planning
services, EPSDT, non-emergency
transportation
• 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
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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”
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Mental Health Parity and Addiction
Equity Act (MHPAEA) Final Rule
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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
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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
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DSH Allotments
DSH Allotments
• Will see reductions beginning in FY 2014
• ACA
–
–
–
–
$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
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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
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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
care
– Impose smaller percentage on low DSH States
• Based on percentage of State’s total plan expenditures
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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
implemented.
• Thus, DSH funds for IMDs will have a
corresponding reduction to overall reductions
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Certification of Psychiatric
Hospitals
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
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Certification of Psychiatric Hospitals:
Special Medicare CoP
• Staffing
– 42 C.F.R. 482.60
• Recordkeeping
– 42 C.F.R. 482.61
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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
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Certification of Psychiatric Hospitals:
OIG Audits
• States paid DSH funding to psychiatric
hospitals that did not satisfy special Medicare
CoPs
– 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.
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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.
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Status
• 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
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New Omnibus Health Privacy Rule
(HIPAA)
HITECH Omnibus Privacy Rule
• Business Associates now liable
– And subcontractors
• More stringent standard for deciding what is a
breach
– Presumption that unauthorized disclosure is a
breach unless “low probability” that PHI has been
compromised.
– No more risk of harm test
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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
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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
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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”
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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
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Inpatient Psychiatric Services for
Individuals Under 21
– Included in child’s inpatient psychiatric plan of
care
– 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
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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”).
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Medicaid Managed Long Term
Services and Supports (MLTSS)
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
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CMS Required Elements for MLTSS
• Adequate planning
• Person-centered
process
• Stakeholder
engagement
• Comprehensive,
integrated service
• Enhanced provision of
package
HCBS
– Consistent with Olmstead • Adequate network of
Qualified Providers
• Alignment of payment
structure and goals
• Participant Protections
• Beneficiary support and • Quality
education
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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
improvement
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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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Questions?