The New Capitation – What Goes Around, Comes Around!

On April 23, 2018, CMS issued a request for information on direct provider contracting models.  In that request, (attached hereto as a PDF), CMS stated as follows:

“Under a primary care-focused DPC model, CMS could enter into arrangements with primary care practices under which CMS would pay these participating practices a fixed per beneficiary per month (PBPM) payment to cover the primary care services the practice would be expected to furnish under the model…”

I believe this used to be called capitation, although way back then it was called PMPM (per member per month).  Comments are due by May 25, 2018.  I wonder if Helen Hunt’s character in “As Good As It Gets” would still like to submit a comment?


Employment Performance Review Excluded from Peer Review Confidentiality

The Pennsylvania Supreme Court ruled, on March 27, 2018, in Regenelli v. Boggs, Monogahela Valley Hospital and UPMC/ERMI that physician performance reviews of an ER physician, who was provided by ERMI to Mon Valley Hospital, performed by a management physician within ERMI, were not protected peer review activities, and therefore the performance reviews were not protected from discovery by a third party malpractice plaintiff for a variety of reasons:

  1. Peer review conducted by the director of the Mon Valley Emergency Department, employed by ERMI, was not part of the peer review process of Mon Valley Hospital;
  2. ERMI was not a healthcare provider covered by the Pennsylvania Peer Review Protection Act.
  3. The contractual agreement between ERMI and Mon Valley Hospital did not create a collaborative peer review organization whose activities would have been protected by the Pennsylvania Peer Review Protection Act.

Although this is only a decision in one state, this decision highlights an issue that Robert Harrison and I presented to a conference of the American Health Lawyers Association in New Orleans in February, 2018, entitled “Peer Review Re-Engineered:  The New Paradyn of Employed Physicians and Peer Review”, regarding the protection of performance reviews arising from pay for performance reimbursement programs.

In that presentation, we posit that continuing “economic evaluation” of physicians under pay for performance and value based purchasing arrangements by individuals or entities not covered by a recognized peer review or confidentiality statute risks potential disclosure in third party litigation regarding malpractice, reimbursement, audit, compliance, etc.

The AHLA medical staff credentialing and peer review practice group recently raised this same issue online, to which I submitted the following response:

This question presents several distinct issues, and the answers also depend upon the context of the evaluation.

First, is this for an employed physician, a physician under contract under a payment arrangement such as an ACO, or an independent medical staff member?

Second, is this a quality assessment, a utilization or efficiency assessment or a compensation assessment, i.e., is the employee or the contracted physician receiving a bonus or being penalized for hitting or failing to hit quality marks or targets?

Third, is this assessment being conducted in a quality/peer review context or an HR or financial context?

Fourth, is it the intent of the evaluator to maintain the confidentiality of this evaluation?

In reverse order, if maintaining confidentiality is the significant issue, then only the quality/peer review evaluation will be confidential and then only from outside third parties (but not from the physician). An HR evaluation will presumably be part of the physician’s employee file and accessible under state law and any other type of context provides no confidentiality.

If confidentiality is one of the fundamental requirements, then the evaluation must be done as part of the peer review process as defined by the state peer review confidentiality law, and the peer review process must be modified so that it encompasses these P4P or performance evaluations which would presumably, without some advance planning, not be part of the peer review process.

If it is simply an incentive or compensation-based evaluation for an employed physician, none of the confidentiality rules would otherwise apply, but you must ask yourself whether you want the failure to hit certain quality targets to be public information.

Pennsylvania Expands Allowable Procedures for Ambulatory Surgery Center

Pennsylvania Act 70 of 2017, a copy of which is attached, changes the definition of an ambulatory surgical facility by redefining the duration of the “services” to be 24 hours, rather than a 4 hour procedure and 4 hours of supervised recovery imposed by 28 Pa. Code Section 551.21, a copy of which is also attached.

It takes effect in 60 days.  Since it was passed on December 22, 2017, it is effective now.

Click here to read Pennsylvania Act 70 of 2017

Click here to read 28 Pa. Code Section 551.21

OIG Gainsharing Opinion Facilitates P4P

Although it has been almost a decade since the OIG has issued a gainsharing opinion, OIG Advisory Opinion No. 17-09 confirms the federal government’s support of the pay for performance concept.

OIG 17-09 is the first gainsharing opinion issued since the 2015 amendment of the Civil Money Penalty statute (42 U.S.C. § 1328-7a(b)(1)).  As you may recall, the CMP previously prohibited payments to induce a reward withholding medical care, but the 2015 amendment changed that to specifically limit the statute to “medically unnecessary” care.  Obviously, that is a judgment call, but the intent is clearly to encourage gain sharing/pay for performance/value based purchasing.

OIG 17-09 provides a current guideline for how to implement this concept.

In a recent presentation I made at the AHLA Hospital and Physician Institute with a colleague, Robert Harrison, we noted this type of payment arrangement could well benefit from being included in the peer review process in order to maintain the confidentiality of what we might describe as the low outliers on the pay for performance spectrum.  You should think twice about processes that identify deficient performance, if you define deficient performers as those that don’t quality for any performance payments or incentives.

CMS Announces Bundled Payments Care Improvement Model

On January 11, 2018, CMS announced a new voluntary episode payment model (bundled payments for care improvement advanced–BPCI Advanced) that will test a new iteration of bundled payment for the following thirty-two (32) clinical episodes:

29 Inpatient Clinical Episodes

Acute myocardial infarction

Back & neck except spinal fusion

Cardiac arrhythmia

Cardiac defibrillator

Cardiac valve


Cervical spinal fusion

COPD, bronchitis, asthma

Combined anterior posterior spinal fusion

Congestive heart failure

Coronary artery bypass graft

Disorders of the liver excluding malignancy, cirrhosis, alcoholic hepatitis *
*(New episode added to BPCI Advanced)

Double joint replacement of the lower extremity

Fractures of the femur and hip or pelvis

Gastrointestinal hemorrhage

Gastrointestinal obstruction

Hip & femur procedures except major joint

Lower extremity/humerus procedure except hip, foot, femur

Major bowel procedure

Major joint replacement of the lower extremity

Major joint replacement of the upper extremity


Percutaneous coronary intervention

Renal failure


Simple pneumonia and respiratory infections

Spinal fusion (non-cervical)


Urinary tract infection

3 Outpatient Clinical Episodes

Percutaneous Coronary Intervention (PCI)

Cardiac Defibrillator

Back & Neck except Spinal Fusion

A further explanation of the program can be accessed at the attached link:

CMS Issues Billing Guidance for Major Joint Replacement (Hip or Knee)

In the January 11, 2018 issue of MLN Connects, CMS has now widely publicized that it issued billing guidance for major joint replacements (hip or knee) in May 2017 at ICN909065.

CMS reports that major joint replacement is one of Medicare’s top volume DRGs and, that due to the high volume of these claims, CMS has had multiple auditing entities (RAC, CERT, and other recovery auditors) review claims for these DRGs.  That guidance is attached or available as follows:


CMS Major Joint Replacement (Hip or Knee)

Telehealth, Net Neutrality and the Tipping Point

Telehealth is apparently reaching a critical mass where people are starting to review the potential problems of telehealth, rather than the potential opportunities.

In a MedLaw Blog post on December 6, 2017 and my related LinkedIn post, I referenced and included the link to the OIG’s audit plan, indicating OIG will begin to audit telehealth claims.  I mentioned this was a tipping point, because now obviously OIG is concerned that telehealth is being utilized too often and inappropriately.

In the December 11, 2017 edition of Modern Healthcare, Rachel Arndt mentioned that the pending repeal by FCC of the Net Neutrality Rules could generate considerable uncertainty about the telehealth industry, because throttling internet speeds with telehealth content would “deteriorate the overall quality of care, particularly in rural health areas”.

Conversely, the American Telemedicine Association recently stated:  “The truth is, nobody knows what the future will hold in the post net-neutrality world.”

Finally, I am attaching a link to an article I did for the Allegheny County Medical Society on the evolution of telehealth law, to provide some historical perspective regarding the growth of telehealth in the last 20 years.

Click this link to read the article on the Evolution of Telehealth Law.

Telehealth Reaches Tipping Point – Now Included in OIG Audit Plan

Telehealth has apparently reached the tipping point in its significance to the Medicare budget, because OIG has now announced that it will “review Medicare claims for telehealth services provided at distant sites that do not have corresponding claims from originating sites to determine whether those services met Medicare requirements.”

The expected issue date of the report is 2018, but you would expect the report to describe the impact or volume that Medicare payments for telehealth now have in the system.

Click this link to read the attachment.

West Virginia Doctor Secures Temporary Restraining Order Against Medicare Exclusion

In Robie v. Price, Dr. Robie successfully obtained a temporary restraining order prohibiting CMS from terminating his Medicare billing privileges prior to the exhaustion of his administrative remedies by the U.S. District Court for the Sothern District of West Virginia.

As most realize, exhaustion of administrative remedies is usually a prerequisite to further litigation for damages.  In this case, Dr. Robie had clearly not completed the administrative appeals process provided by the Medicare rules, but successfully, albeit temporarily, prevented his exclusion based upon denial of constitutional due process.  There are several key takeaways in this decision:

First, the Court concluded that the constitutional due process argument was entirely collateral to the Medicare administrative process and therefore conferred subject matter jurisdiction on the Court.

Second, although the Medicare program is usually construed as a benefit to Medicare beneficiaries, rather than to providing physicians a source of business or a private interest, the Court concluded that the damage to Dr. Robie’s practice and reputation would be so severe if he was excluded from Medicare, without due process, the TRO was appropriate.  As a corollary to this damages holding, the Court also concluded that, due to the medically underserved nature of the geographic area, the patients would also be damaged by this potential denial of care.

Third, the Court concluded that these damages would be potentially irreparable, and that there was a threat of more harm to the physician and the patients than there would be to the government and the Medicare program if the TRO was granted.

It is important to note CMS had not alleged any significant wrong doing on behalf of the physician, certainly not any allegations involving quality of care or threat to patient safety.  The underlying dispute centered around the sufficient production of Medicare records for CMS’ investigation.  Without the allegations of significant potential patient harm, I believe the court was much more willing to grant the injunctive relief.

This is a well reasoned opinion and I commend it to you.