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

3 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

4 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? 5

6 Alternative Benefit Plans Mental Health Parity and Addiction Equity Act applies to ABPs CMS applies Medicaid IMD exclusion to ABPs

7 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

8 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 9

MHPAEA Final Rule Six “classifications”: (1) inpatient, in-network; (2) inpatient, out- of-network; (3) outpatient, in-network; (4) outpatient, out-of- network; (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 10

Brief Litigation Update

12 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

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 14

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 15

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 16

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 17

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 19

Certification of Psychiatric Hospitals: Special Medicare CoP Staffing –42 C.F.R Recordkeeping –42 C.F.R

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 –Notice in FR modifies for Feb 25, 2011 through Feb 25,

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. 22

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. 23

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 24

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 26

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 27

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 28

D.C. Circuit Ruling on IMD Under 21 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” 30

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 31

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 32

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”). 33

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 May be operated under multiple federal authorities as approved by CMS –1915(a), 1915(b), Section 1115 –Can be paired with HCBS 35

CMS Required Elements for MLTSS Adequate planning Stakeholder engagement Enhanced provision of HCBS –Consistent with Olmstead Alignment of payment structure and goals Beneficiary support and education Person-centered process Comprehensive, integrated service package Adequate network of Qualified Providers Participant Protections Quality 36

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, person- centered approaches, coordination of services and active treatment plan, quality assessment and improvement 38

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 39

Questions?