The Expiration of PHE and the Dramatic Effect of Terminations

There must be rules and appeal rights for terminations.

The pandemic rules/exceptions may be coming to an end on April 16, 2022. For example, as of that date, patients must have a three-day hospital stay in order for Medicare to cover rehabilitation in a skilled nursing facility (SNF); this rule had been suspended during the public health emergency (PHE).

The Centers for Medicare & Medicaid Services (CMS) issued a proposed rule last week for the inpatient rehabilitation facility (IRF) prospective payment system for 2023 that would increase reimbursement payments by 2.8 percent, which will amount to approximately a $170 million increase. This is after a 0.4-percentage point productivity adjustment and a 0.8 percentage-point cut for high-cost outliers. There are also proposed additional burdens for facilities to collect data on their patients, regardless of the payor. CMS will accept comments on this until May 31.

On another note, the end of the first quarter of 2022 has passed. The U.S. Department of Health and Human Services (HHS) announced that there has been an 88-percent reduction in Medicare provider appeals. A total of 52,641 appeals remain pending at the Office of Medicare Hearings and Appeals (OMHA), whereas in 2018, a whopping 426,594 appeals were stagnant and awaiting an administrative law judge (ALJ).

Lastly, for those of you participating in managed care, when was the last time you reviewed your contract? How many of you know whether you have a termination-at-will clause buried within its content?

A lot of employment contracts contain a termination-at-will clause. But with Medicare and Medicaid, we are talking about the use of and profit from our tax dollars, access to healthcare, and the freedom of choice of providers. More protection for providers exists. A managed care organization (MCO) cannot terminate providers from its network willy-nilly. There have to be rules and appeal rights for terminations. Otherwise, the MCOs could terminate all providers but a few, and gain profit by not paying providers. The MCOs exist to manage Medicare and Medicaid, not to profit off our tax dollars. The ultimate victims of a wrongful termination brought on by an inadequate appeals process are the patients themselves.

42 U.S.C. § 1395cc provides the statutory basis for CMS’s development of regulations for terminating provider agreements. Termination without cause is not enumerated in the regulation. MCOs argue that simple contract law should apply, but nothing is simple in Medicare. 42 CFR §424.545 lays out providers’ appeal rights for Medicare, and 42 CFR §498.5 covers Medicaid providers.

Any provider dissatisfied with an initial determination is entitled to a hearing before an ALJ.

The problem? Most providers are out of business before presenting to an ALJ, and its consumers by that point have lost their healthcare provider. Injunctions are needed to preserve the status quo. I propose an automatic stay of any adverse decision until legal adjudication has occurred.

Programming Note: Listen to Knicole Emanuel’s live RAC Reports every Monday on Monitor Mondays at 10 Eastern.


Knicole C. Emanuel Esq.

For more than 20 years, Knicole has maintained a health care litigation practice, concentrating on Medicare and Medicaid litigation, health care regulatory compliance, administrative law and regulatory law. Knicole has tried over 2,000 administrative cases in over 30 states and has appeared before multiple states’ medical boards. She has successfully obtained federal injunctions in numerous states, which allowed health care providers to remain in business despite the state or federal laws allegations of health care fraud, abhorrent billings, and data mining. Across the country, Knicole frequently lectures on health care law, the impact of the Affordable Care Act and regulatory compliance for providers, including physicians, home health and hospice, dentists, chiropractors, hospitals and durable medical equipment providers. Knicole is partner at Nelson Mullins and a member of the RACmonitor editorial board and a popular panelist on Monitor Monday.

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