NJ Appellate Court Case Sheds Light on Codey Law “In House” Exception
May 14, 2020
Posted by Anjali Baxi
On May 12, 2020, in an unpublished opinion, the Superior Court Appellate Division upheld a Board of Pharmacy (“Board”) decision to deny a specialty pharmacy application submitted by Summit Medical Group (“SMG”), In the Matter of the Application of Summit Medical Group, d/b/a SMG Pharmacy to Operate a Pharmacy in the State of New Jersey. The three judge panel unanimously upheld the Board’s determination that the proposed structure of the specialty pharmacy would violate the Codey Law, and therefore would be an impermissible structure. The Appellate Court noted that because pharmacy is a prohibited “health care service” under the Codey Law, an exception must apply. The Appellate Court deferred to the Board’s decision and concluded that the “in house” exception would not be applicable for the proposed structure since dispensing of medication by a pharmacist is neither a “medical treatment” nor a “medical procedure”. Accordingly, the Appellate Court found that the Board’s record contained evidence to support the Board’s decision that the proposed pharmacy structure would violate the Codey Law. The Codey Law prohibits physicians from referring patients to health care services in which they maintain a financial interest. (N.J.S.A. 45:9-22.4-22.9).
This Appellate Court case sheds light on the “in house” exception” of the Codey Law, which exempts “a medical treatment or procedure that is provided at the practitioner’s medical office and for which a bill is issued directly in the name of the practitioner or the practitioner’s office” from the Codey Law referral prohibition. (N.J.S.A. 45:9-22.5).
SMG had filed an application to establish a pharmacy practice located in the same building where SMG conducts its oncology practice. The pharmacy would be wholly owned by the physicians who owned the SMG medical practice and would have exclusively filled prescriptions needed by SMG patients according to oncologic treatment protocols. Since the pharmacy is a “health care service” under the Codey Law, the Board requested SMG to address whether the proposed structure would violate the Codey Law. SMG had submitted that the proposed structure would fall under the “in house” exception of the Codey Law, which exempts “a medical treatment or procedure that is provided at the practitioner’s medical office and for which a bill is issued directly in the name of the practitioner or the practitioner’s office” since the pharmacy would bill under the same tax ID as the medical practice, and that for all purposes, the pharmacy would be fully owned and operated within the medical practice. The Board denied the application and SMG filed the appeal. Ultimately, the Appellate Court deferred to the Board’s decision.
The takeaway from this case is that despite the pharmacy operation being fully owned by the medical practice, operating under the same Tax ID, having the pharmacists being employed by the medical practice, and having all of the billing under the medical practice’s Tax ID number, the pharmacy services are prohibited “health care services” under the Codey Law. They are not eligible to be exempted under the “in house exception” on the grounds that dispensing pharmaceuticals is neither a “medical treatment” nor a “medical procedure,” and that pharmacies and pharmacists do not provide “medical treatments.”
This case also is a reminder that the “in house” exception may not be available for every proposed structure and that practice structures and restrictions of the Codey Law should be reviewed by counsel.
Department of Banking and Insurance Mandates Insurance Premium Refunds
May 13, 2020
Posted by Beth Christian
On May 12, 2020, the New Jersey Department of Banking and Insurance issued Bulletin No. 20-22. As a result of the COVID-19 pandemic and the resulting reduction in loss exposure for insurers, the Department has ordered insurers to make an initial premium refund or other adjustment for certain specified lines of insurance. Premium refunds are required for the following types of insurance: (1) medical malpractice insurance; (2) commercial liability insurance; (3) commercial multiple-peril insurance; (4) workers compensation insurance; (5) commercial automobile insurance; (6) private passenger automobile insurance; and (7) any other line of coverage where the measures of risk have become substantially overstated as a result of the COVID-19 pandemic.
The premium refund may be provided as a premium credit, a reduction in premium, a return of premium, dividend, or other appropriate premium adjustment. The premium refunds must be implemented “as quickly as practicable,” but in no event later than June 15, 2020.
Insurers may also provide additional premium relief to individual policyholders on a case-by-case basis for recent, current, and upcoming policy periods or any portion thereof. Examples of reclassifications set forth in the Bulletin include, but are not limited to: (1) reclassifying a personal automobile exposure from “commute use” to “pleasure use”; (2) reclassifying a physician practice to part-time status; or (3) excluding payroll for employees who are being paid but not actively working.
Insurers are required to notify each affected policyholder no later than June 15, 2020 regarding the amount of the refund or adjustment. In addition, insurers are required to provide an explanation of the basis for the adjustment, including a description of the policy period that was the basis of the premium refund and any changes to the classification or exposure basis of the affected policyholder.
While the across the board initial premium refunds referenced above will not require any action by individual policyholders, businesses and individuals should review their current and projected activities and reach out to their insurer to see if there is an opportunity for an additional “case-by-case” premium reduction. For example, if a physician practice has reduced hours for its physicians so that all physicians are working part-time, this may provide the opportunity for a further reduction in medical malpractice premiums.
The text of the bulletin can be found here.
CMS Makes Initial Distribution from CARES Act Provider Relief Fund
April 17, 2020
Posted by Beth Christian
If you are a health care provider, you may have received a direct deposit identified as “HHSPAYMENT” into your business bank account in the past week. The funds are being disbursed in order to provide financial assistance to health care providers that have been impacted by the Covid-19 pandemic. The funds distributed to providers are grants, rather than loans. Therefore, providers who meet the conditions for receipt of these funds will not have to repay them. Payments are based on the amount of a provider’s share of total Medicare fee for service payments in 2019.
While CMS did not require providers to submit an application in order to receive a CARES Act Provider Relief Fund payment, providers who receive such funds are required to submit an attestation which: (1) confirms their receipt of the funds and (2) accepts the Terms and Conditions for the receipt of the funds.
The Terms and Conditions require provider recipients to certify that they: (1) billed Medicare in 2019; (2) after January 31, 2019, provided (or are providing) diagnoses, testing, or care for individuals with possible or actual cases of Covid-19; and (3) are not currently terminated or excluded from participating in Medicare, Medicaid, and other Federal health programs, and do not have their Medicare billing privileges revoked. Recipients must also certify that the payment will be only be used to prevent, prepare for, and respond to coronavirus, and must also certify that the payment will reimburse the recipient only for health care related expenses or lost revenues that are attributable to coronavirus. Recipients must certify that they will not use the funds to pay for expenses that have been reimbursed (or will be reimbursed) by other sources. In addition, recipients must certify that they will not balance bill patients for any out of pocket expenses greater than those that the patient would be required to pay if the care had been provided by an in-network recipient. The full list of Terms and Conditions can be found here. The attestation statement that recipients will need to submit can be found here. The Terms and Conditions also specify that recipients will be subject to reporting requirements.
CMS has indicated that eligibility for funding is not limited to providers who have treated confirmed cases of Covid-19. CMS indicated that it views every patient as a possible case of Covid-19. Therefore, if a recipient provided diagnoses, testing, or care for individuals with possible or actual cases of COVID-19 (whether or not the care provided was specific to treatment of a confirmed Covid-19 case), they are eligible for funding.
CMS has also announced that more funding is planned for those areas hardest-hit by the Covid-19 pandemic. If you are a provider who has received a CARES Act Provider Relief Fund payment, you will need to review the terms and conditions and submit an attestation confirming that you are in compliance with the Terms and Conditions within 30 days of the date that you received the payment. If a provider cannot comply with the terms and conditions, the funds must be returned.
Medicare and the 2020 Election
April 17, 2020
Posted by Frank Ciesla
Now that the campaign for President appears to be down to two candidates, we need to address the health care questions that both will face. In this blog, we will talk about Medicare and in a later blog, we will talk about the public option.
A question which has faced not just these two individuals, President Trump and Presidential Candidate Biden, but has faced the country for the last 10-15 years, is the projected deficit in the Medicare program as it is now configured. In an attempt to respond to and ameliorate this deficit, various steps have been taken in the past which have delayed the impact of the deficit but have not eliminated it. Past steps that have been taken include the elimination of the cap on W-2 earnings for purposes of calculating the Medicare tax, the application of the Medicare tax to non-W-2 earnings for individuals whose taxable income is above a certain level, calculation of Medicare Part B monthly premiums based upon income (the higher the income, the higher the premium that needs to be paid by the beneficiary), and the attempt to both explicitly and implicitly limit the payments being made by the Medicare program for services provided to Medicare beneficiaries. The explicit attempt was the development of the Sustainable Growth Rate (SGR), which was never effectively implemented and ultimately repealed. The implicit attempt is ongoing and has resulted in the necessity for beneficiaries with private insurance to subsidize the care being provided to the Medicare (that’s correct, not Medicaid, but Medicare) beneficiaries.
This “subsidy” by private insurance to health care providers to cover the costs of providing care to the Medicare beneficiaries is slowly having an impact on the care delivery system. It has resulted in a few prior Medicare providers now refusing to render care to Medicare patients in the non-hospital setting. It is also encouraging physicians only to take Medicare patients who have previously been their private patients when that individual had private insurance so that the continuity of care to those individuals is not being disrupted.
As this subsidy increases, it becomes more and more likely that fewer providers will be providing care to Medicare beneficiaries, to the extent that they can legally opt out.
The next issue raised in the campaign is the extension of the Medicare program proposed by Presidential Candidate Biden to individuals from the ages of 60-65. Unlike the Social Security program, which attempted to resolve its deficit problems by extending the retirement age from age 65 over a period of time to age 67, the proposal by Presidential Candidate Biden is the opposite and that is to reduce the eligibility age for Medicare from 65 to 60.
The questions that need to be answered are:
- How much is it going to cost?
- The proposal recognizes that the current Medicare program (currently facing a shortfall) cannot pay for the services provided to these new Medicare beneficiaries and proposes that the government pay the costs–which means the taxpayer. The question then is what changes will be made to the tax code and whose taxes will be increased–of course this raises the questions always associated with tax increases.
- It appears that all aspects of the Medicare program – Parts A, B, C, and D – will be available to the age cohort 60 to 65. Will the copays, deductibles and premiums, as applied to current Medicare beneficiaries, be applicable to this cohort?
- Will the same payments be made to the providers for care rendered to this cohort of new Medicare beneficiaries? Will this adversely impact the willingness of some providers to continue to participate in providing care to Medicare beneficiaries?
When answers to these questions become clear, to the extent that it does become clear, we will analyze these questions in a subsequent blog. Otherwise at this point in time, it is speculation as to the impact.
Governor’s Executive Order 112 Gives Civil Immunity To Healthcare Facilities and Limited Group of Practitioners
April 3, 2020
Posted by Anjali Baxi
Below is a summary of the Executive Order 112, which was issued in an effort to expand the capacity of NJ’s healthcare by (i) waiving certain requirements to allow retired and foreign physicians to become temporarily licensed in NJ; (ii) removing certain limits on the scope of practice for Advanced Practice Nurses and Physician Assistants, for the duration of the longer of the State of Emergency or Public Health Emergency; and (iii) providing civil immunity for acts done in good faith in furtherance to the State’s COVID-19 response by the temporary licensees, APN/PAs and healthcare facilities, including hospitals and nursing homes. Notably, there is no civil immunity for private practitioners, who are not employees or agents of hospitals, to provide care outside of their scope of practice to COVID-19 patients. Read more
Governor Murphy Issues Executive Order Mandating Legal Immunity for Healthcare Workers
April 1, 2020
Posted by Anjali Baxi
Governor Murphy’s new executive order mandates legal immunity for healthcare workers providing services during COVID-19 crisis. Issued on Wednesday April, 1st, this is no April Fools’ joke, as Governor Murphy has provided for legal immunity for healthcare workers to provide medical services during this COVID-19 crisis that may be outside of the normal “scope of practice”. The order makes clear that those healthcare workers who are being called upon to respond to COVID-19 will be immune from civil liability for action taken in good faith. The order does not protect against gross negligence. The Executive Order should encourage more doctors, nurses and other professional not on the front lines to volunteer their time as the state prepares to open four temporary hospitals. Announcement of the Executive Order was published here.
The order has not been published on the Governor’s Website, but we will be providing a summary as it comes available.
New Jersey Implements Expedited Licensing for Out-of-State Health Care Licensees
March 30, 2020
Posted by Beth Christian
As we reported earlier, the State of New Jersey has enacted legislation providing for expedited New Jersey licensure for individuals who are licensed health care professionals. The link to the expedited licensure application can be found here. In addition, there is a separate expedited application for certified homemaker-home health aides. The application page for certified homemaker-home health aides can be found here.
NJDOBI Mandates Insurance Carriers to Reimburse Providers for Telemedicine and Telehealth Encounters During State of Emergency and Public Health Emergency
March 23, 2020
Posted by Anjali Baxi
NJDOBI issued Bulletin 20-07 to mandate insurance carriers to reimburse providers for telemedicine and telehealth encounters. This applies to: (1) all health insurance companies; all HMOs; all health service corporations and any other entity issuing health benefits plans in New Jersey.
The mandate requires the insurance carriers to do the following:
- Review their telemedicine and telehealth networks for adequacy and grant any requested in-plan exception for individuals to access out of health telehealth providers if network providers are unavailable.
- Encourage their network providers to utilize telemedicine or telehealth services wherever possible and clinically appropriate in order to minimize exposure of provider staff and other patients to those who may have the COVID-19 virus
- Update their policies to include reimbursement for telehealth services that are provided by a provider in any manner that is practicable, including, if appropriate, and clinically appropriate, by telephone. The Bulletin suggests that this be done on the carrier’s website. This would include instruction on the use of telephone-only communications to establish a physician-patient relationship and the expanded use of telehealth for the diagnosis, treatment, ordering of tests, and prescribing for all conditions. Carriers are required to update telehealth policies to include telephone only services within the definition of telehealth.
- Reimburse providers that deliver covered services to members via telemedicine or telehealth. Carriers may establish requirements for such telemedicine and/or telehealth services, and guidance issued by the Department, including documentation and recordkeeping, but such requirements may not be more restrictive than those for in-person services. Carriers are not permitted to impose any specific requirements on the technologies used to deliver telemedicine and/or telehealth services (including any limitations on audio-only or live video technologies) during the state of emergency and public health emergency declared pursuant to EO 103.
- Ensure that the rates of payment to in-network providers for services delivered via telemedicine or telehealth are not lower than the rates of payment established by the carrier for services delivered via traditional (i.e., in-person) methods, and carriers must notify providers of any instructions that are necessary to facilitate billing for such telehealth services.
- May not impose any restriction on the reimbursement for telehealth or telemedicine that requires that the provider who is delivering the services be licensed in a particular state, so long as the provider is in compliance with P.L. 2020, c.3 and c.4 and this guidance.
- May not impose prior authorization requirements on medically-necessary treatment that is delivered via telemedicine or telehealth.
See the entire text of Bulletin 20-07.
Governor Murphy Signs Legislation to Expand Telehealth Access and Expedite Licensure of Out-of-State Professionals
March 20, 2020
Posted by Anjali Baxi
A3860 authorizes any health care practitioners to provide telemedicine and telehealth services for the duration of the public health emergency declared by Governor Murphy and directs the Commissioner of Health and the Director of Consumer Affairs to waive any requirements in law or regulation necessary to facilitate the provision of healthcare services using telemedicine and telehealth during the emergency. Click here for the Governor’s press release.
While A3860 authorizes any health care practitioner to provide telemedicine and telehealth services for the duration of the COVID-19 public health emergency, the bill limits non-NJ licensed practitioners to screening, diagnosis and treatment of COVID-19, unless they have a pre-existing relationship with the patient. Click here for the text of this bill.
CMS Relaxes Certain Telemedicine Requirements, but not New Jersey, yet
March 19, 2020
Posted by Anjali Baxi
CMS has relaxed certain telemedicine requirements, including the requirements pertaining to a provider needing to be licensed in the state where services are rendered, as it relates to reimbursement by Medicare, Medicaid and other federal healthcare programs. Notwithstanding the CMS waiver action, it is important for providers to be aware that CMS does not have jurisdiction over state licensure requirements. At this time, neither the New Jersey legislature nor the New Jersey Board of Medical Examiners have relaxed any of New Jersey’s current telemedicine requirements. However, on March 16, 2020, two bills were introduced in the Assembly and Senate that related to relaxing the telemedicine requirements as it relates to the screening, diagnosing and treatment of COVID-19. The texts of the pending legislation is can be found at: https://www.njleg.state.nj.us/2020/Bills/S2500/2289_I1.PDF; https://www.njleg.state.nj.us/2020/Bills/A4000/3860_I1.PDF. If you have questions related to the updated status of these bills, please contact us.
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