Health Law & Policy Matters

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HHS Officials Explain Risk Adjustment Methodology

By Karen S. Lovitch on Posted in Health Care Reform, Payors & PBMs

Written by Gary Bacher and Josh Booth

On May 7th and 8th, the Center for Consumer Information and Insurance Oversight (CCIIO) held a public meeting on risk adjustment, the process through which, under the Affordable Care Act (ACA), funds are transferred from health plans that attract relatively low-risk enrollees to plans that attract relatively high-risk enrollees, such as individuals with chronic health conditions. The risk adjustment program was created to promote greater stability and to reduce the potential for adverse selection in the individual and small-group markets. 

Senior officials from the Department of Health and Human Services (HHS) provided details regarding the approach that HHS intends to take toward risk adjustment when acting on behalf of states as well as the procedures and standards by which states that choose to administer their own risk adjustment programs can obtain certification for alternate methodologies.  Officials provided important information, including the following: 

  • HHS intends to use a concurrent model (as opposed to a prospective model) when it runs a state’s risk adjustment program.  Under this model, each individual’s risk score for a given year will be determined based on that individual’s diagnoses during that same year, rather than previous years’ diagnoses. 
  • HHS does not intend to adjust its risk adjustment calculations to account for payments that insurers might receive under the ACA’s temporary reinsurance program. 
  • HHS is considering the plan liability (as opposed to a total medical expenditure) approach to risk adjustment.  This approach attempts to take into account the different cost-sharing models that plans can have.
  • HHS is considering using a risk pool average premium (as opposed to using a plan’s own premium) for establishing the baseline premium necessary to calculate and balance payments and charges.

Data collection issues received considerable attention from both presenters and audience members.  Under a final rule released on March 16th, HHS will use a “distributed data collection” approach when it operates a risk-adjustment program in a state, which means that each individual’s claims data remains with the insurance issuer.  A state that runs its own program can use an alternate methodology, but the rule establishes standards that limit a state’s ability to collect individually identifiable information.  Many commenters expressed concern that these restrictions could preclude states from leveraging existing data systems and from collecting enough long-term data to accurately perform risk adjustment.  While the presenters provided little detail in response, they did indicate their belief that both the use of claims databases and the tracking of an individual’s claims information are feasible under the final rule.

The PowerPoint slides for the presentations can be found at:

ML Strategies Posts Weekly Health Care Reform Update on May 14, 2012

By M. Daria Niewenhous on Posted in Health Care Reform, Uncategorized

ML Strategies has posted its weekly Health Care Reform Update.  This publication provides timely and concise information on  implementation of the Affordable Care Act, and other state and federal administrative and legislative activities related to health care reform.

First Quarter 2012 Update on Industry Trends in Health Care Fraud Enforcement

By Stephanie D. Willis on Posted in Fraud & Abuse, State & Federal Audits, Investigations & Litigation

In this first installment of Mintz Levin’s Health Care Fraud Enforcement Defense Group’s periodic updates on health care enforcement activities in 2012,Brian Dunphy, Hope Foster, Samantha Kingsbury, Tracy Miner, and Stephanie Willis focus on significant civil settlements, criminal prosecutions, and regulatory developments that occurred in the first quarter of 2012.  This update follows our Year in Review series focusing on 2011 enforcement activities.

In the past quarter, settlements pursuant to state and federal civil false claims acts accounted for substantial health care fraud recoveries.   Additionally, the federal government continued to pursue prosecutions and settlements in its traditional industries of focus, including pharmaceutical and device companies, home health, and hospice care, and analysis of claims data is becoming an increasingly important government tool for health care fraud enforcement. 

Health care providers and pharmaceutical and medical device manufacturers should continue to monitor enforcement trends, evaluate their risks, and take appropriate preventive steps.

ML Strategies Posts Weekly Health Care Reform Update on May 7, 2012

By M. Daria Niewenhous on Posted in Health Care Reform, Uncategorized

ML Strategies has posted its weekly Health Care Reform Update.  This publication provides timely and concise information on  implementation of the Affordable Care Act, and other state and federal administrative and legislative activities related to health care reform.

Abbott Labs to Pay $1.6 Billion to Settle Consumer Protection and Misbranding Claims

By Stephanie D. Willis on Posted in Fraud & Abuse, Pharma & Medical Devices, State & Federal Audits, Investigations & Litigation

Abbott Laboratories (Abbott), an Illinois company, will pay over $1.6 billion in penalties to the federal government and several states related to its alleged illegal promotion of the prescription drug Depakote for off-label uses, as announced by the settling parties on May 7, 2012.  Specifically, the government has alleged that the Company:

  • marketed Depakote,  in nursing homes for the control of agitation and aggression in elderly dementia patients between 1998 and 2006, a use not approved by the the Food and Drug Administration,  
  • unlawfully promoted Depakote for a broader set of unapproved, non-medically accepted uses for which Medicare and Medicaid could not reimburse providers between 1998 and 2008, and
  • made false and misleading statements about the safety, efficacy, dosing and cost-effectiveness of Depakote for some of these unapproved uses.

The proposed settlement includes the following terms:

Civil False Claims Act (FCA) violations: $800 million

  •    Five-year Corporate Integrity Agreement
  •    Medicare and other federal health care programs: $291 million
  •    Medicaid: $239 million to the states and $270 million to the federal government

 Criminal Food, Drug and Cosmetic Act (FDCA) violations: $700 million

  • Five-year term of probation for pleading guilty to misbranding
  • Federal Fine: $500 million
  • Criminal Asset Forfeiture Penalties: $198.5 million
  • Investigative Costs to the Virginia Medicaid Fraud Control Unit (MFCU): $1.5 million

 State Consumer Protection Laws: $100 million

The civil FCA component of the settlement resolves allegations presented in four whistleblower qui tam actions filed in the Western District of Virginia in late 2007; the whistleblowers who filed the suits will share an award of $84 million out of the settlement proceeds.  Forty-four states and the District of Columbia will share the proceeds of the state consumer protection settlement. 

The settlement is significant for at least two reasons.  First, according to the Virginia Attorney General and the Department of Justice, the FDCA component of the settlement is the second largest payment by a drug company for such conduct.  Second, the $100 million state consumer protection settlement is the largest settlement paid by a drug company under those laws.  This settlement is the latest in a trend toward use of state consumer protection laws to increase recoveries to states, as evidenced most recently by the $1.1 billion judge’s award after a jury trial against a Johnson & Johnson subsidiary for violating the Arkansas Deceptive Trade Practices Act.  Moreover, this settlement – specifically, the large number of states that will share in the monetary proceeds – demonstrates that federal and state governments continue to cooperate with each other to pursue health care enforcement cases.

Press Coverage Triggers HIPAA-Related Inquiry

By Karen S. Lovitch on Posted in Hospitals & Health Systems, Privacy & Security/HIPAA/HITECH, State & Federal Audits, Investigations & Litigation

Written by Kimberly Gold

Most state and federal health care investigations are prompted by audits or claims brought by whistleblowers.   But a recent newspaper article about a debt collection company’s tactics has prompted Congressional ire and potentially a federal investigation. 

On April 24th, a New York Times article highlighted Accretive Health’s alleged debt collection practices after Minnesota Attorney General Lori Swanson released company documents detailing the company’s activities.  Accretive Health purportedly placed debt collectors, who were indistinguishible from hospital employees, in emergency rooms to require patients to make overdue payments before they could receive treatment.  Attorney General Swanson claimed that such tactics violated the Emergency Medical Treatment and Active Labor Act (EMTALA) by conditioning care upon payment; the Health Insurance Portability and Accountability Act (HIPAA) by giving the company’s debt collectors access to health records; and state collections laws by failing to properly identify the debt collectors.

Just two days after the New York Times article was published, Rep. Pete Stark (D-CA) sent identical letters to the Acting Adminstrator of the Centers of Medicare & Medicaid Services Acting Administrator Marilyn Tavenner and the Inspector General for the Department of Health and Human Services  Daniel Levinson, urging the agencies to launch an investigation of the company’s potential violation of federal laws.  Rep. Stark also requested a report on federal enforcement measures and a warning to all hospitals that participate in Medicare, if Accretive Health’s activities are found to violate federal law.

In a press release, Rep. Stark commented: “The debt collection tactics apparently being used by Accretive Health to get money from patients waiting to be seen by an ER doctor or recuperating in a hospital bed are abominable.  This is corporate greed at its worst, abuse of patients’ rights to dignity and privacy, and, I believe, a possible violation of several laws.  Such disgusting practices must be stopped and I’ll do everything in my power to ensure that happens.”

As if the traditional modes of enforcement were not reason enough, these events should provide even more motivation for health care providers and their business associates to diligently ensure full compliance with state and federal health care laws.  And to stay out of the newspaper!

CMS, CCIO, and IRS Release Guidance Proposals on Employer Health Insurance Coverage

By Stephanie D. Willis on Posted in Health Care Reform, Payors & PBMs, Uncategorized

Written by: Gary Bacher and Joshua Booth

The Centers for Medicare & Medicaid Services Center for Consumer Information and Insurance Oversight (CCIIO) and the Internal Revenue Service (IRS) recently released four important documents related to the implementation of the Affordable Care Act (ACA) that address employer-provided health insurance plan reporting requirements and the availability of premium tax credits to individuals and families.  The ACA makes tax credits available to help individuals pay insurance premiums, but these credits do not apply if the individual is eligible for employer-provided coverage that is both affordable (in terms of required employee contribution to premium payments) and provides “minimum value” (in terms of overall cost-sharing). 

CCIIO issued a Bulletin that describes the procedures it intends to use to verify whether an employee is eligible for employer-provided coverage, and thus precluded from claiming premium tax credits.  To help determine eligibility and availability of employer-provided coverage to an individual, the IRS issued a Notice and Request for Comment that solicits responses to how the IRS intends to determine whether coverage offered by an employer provides “minimum value,” as well as two Requests for Comment (RFC), Notice 2012-32 and Notice 2012-33, on how insurers, government agencies, and employers should be required to report insurance coverage data to implement sections 6055 and 6056 of the Internal Revenue Code, respectively.  The IRS will accept comments related to the above three issuances until June 11, 2012. 

Together, all four issuances provide the government’s initial proposals of how to determine an individual’s eligibility for premium tax credits and when employers will be subject to penalties for failing to offer health care coverage. 

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Sunshine Act Implementation Delayed Until 2013

By Brian P. Dunphy on Posted in Health Care Reform, Pharma & Medical Devices

With little fanfare, the Centers for Medicare & Medicaid Services (CMS) announced today on the CMS Blog that it is delaying data collection under the Sunshine Act until 2013.  Pharmaceutical and medical device manufacturers and group purchasing organizations covered by the Sunshine Act thus will not have to begin collecting data before January 1, 2013.  In its announcement, CMS said that the delay is designed to ”provide time for organizations to prepare for data submission and to sufficiently address the important input we received during the rulemaking process.”

CMS intends to issue final regulations implementing the Sunshine Act later this year, but was not clear when it plans to do so.  CMS stated that the additional time will permit it “to address operational and implementation issues in a thoughtful manner, and the ability to ensure the accuracy of the data that is collected.”  We will continue to monitor developments in this area.

Medicare Fraud Strike Force Bust Involves Highest Amount of False Billings in a Single Takedown

By Samantha P. Kingsbury on Posted in Fraud & Abuse, State & Federal Audits, Investigations & Litigation

2012 is already a record-breaking year in health care fraud enforcement.  This week Attorney General Eric Holder and Secretary of the Department of Health and Human Services (HHS) Kathleen Sebelius announced the biggest takedown in the history of the Medicare Fraud Strike Force (Strike Force) in terms of Medicare dollars at stake.  The Strike Force executed this takedown in seven cities across the country, including Tampa, Houston, Baton Rouge and Los Angeles.  Charges were filed against 107 individuals for schemes involving $452 million in false Medicare billing, and 59 of those individuals were in South Florida and were responsible for $137 million of the fraudulent billing alleged.

The types of providers targeted in the takedown ranged widely, as did the industries in which they practiced.  In addition, the defendants were accused of various crimes, including conspiracy to commit health care fraud, health care fraud, violations of the anti-kickback statutes and money laundering.   Notably, many of the individuals charged provided services in industries that have received considerable government attention in recent years, including home health care and durable medical equipment (DME).  The defendants were also charged under statutes used by the government with increasing frequency in its prosecution of health care fraud.  (For more information about these particular trends, read the articles published by Mintz Levin’s Health Care Enforcement Defense Group on trends in health care fraud enforcement in 2011.)

In addition to the 107 individuals charged as a result of the Strike Force’s takedown, HHS reported that it suspended or took other administrative action against 52 health care providers following a data-driven analysis and credible allegations of fraud.  In her comments about the takedown and provider suspensions, Secretary Sebelius shed some light on the government’s new potential enforcement focus for 2012 and beyond.  She noted, “[t]oday’s arrests send a strong message to criminals that the consequences of committing Medicare fraud are serious… In addition to these arrests, we used new authority from the health care law to stop all future payments to 52 health care providers suspected of fraud before they are ever made.  Today’s actions are another example of how the Affordable Care Act is helping the Obama Administration fight fraud and strengthen the Medicare program.”

More specific information about the individuals charged and the conduct at issue can be found on the websites of the Office of Inspector General for HHS and the U.S. Attorney’s Office for the Southern District of Florida.  However, the general message of the government’s efforts seems clear: the government is steadfast in its aggressive pursuit of health care fraud and eager to use massive takedowns to send a message to would-be fraudsters about the breadth of the its enforcement resources.

Open Letter from Senate Finance Committee Seeks Fraud-Fighting Input

By Stephanie D. Willis on Posted in Fraud & Abuse, Health Care Reform, State & Federal Audits, Investigations & Litigation

Yesterday the Senate Finance Committee posted an open letter on its website to the health care sector soliciting industry stakeholder insights on ways to combat fraud, waste, and abuse in the Medicare and Medicaid programs.  This letter comes on the heels of an April 25th hearing at which the members questioned government officials from the Department of Health and Human Services’ Office of the Inspector General (HHS-OIG), the Centers for Medicare & Medicaid Services, and the Government Accountability Office about the effectiveness of fraud-fighting efforts.  The open letter now invites a broader audience, including the private sector, to opine on the best ways to prevent and detect unlawful conduct and waste involving government health care programs.

The Committee is requesting actors in the health care sector to submit “white papers” in PDF or Microsoft Word format that address potential improvements in the following categories:

  • Program Integrity Reforms to Protect Beneficiaries and Prevent Fraud and Abuse
  • Payment Integrity Reforms to Ensure Accuracy, Efficiency and Value
  • Fraud and Abuse Enforcement Reforms to Ensure Tougher Penalties Against Those Who Commit Fraud

The white papers should be submitted via email by June 29th to ProgramIntegrityWhitePapers@finance.senate.gov.  The Committee members plan to have their staff review the white papers and then compile a summary document highlighting key proposals later in 2012.

This letter is the most recent instance where the government has sought the expertise of the private sector in addressing fraud, waste, and abuse.  Another example came to light in February 2012, when HHS-OIG issued its report related to the Pharmacy Compliance Roundtable, where it convened compliance professionals in the pharmaceutical industry.  There, the private sector players discussed their experiences with Corporate Integrity Agreements (CIAs) and other compliance efforts initiated by the government with HHS-OIG representatives.  Prevention is becoming the new focus of fraud-fighting efforts, and the government needs private sector cooperation to achieve its goals in this area.