Health Law & Policy Matters

Health Care Attorneys | Mintz Levin Law Firm

Congressional Developments: SGR Repeal and CHIP Reauthorization

Posted in Health Care Reform, Payors & PBMs, Physicians, Reimbursement

ML Strategies has posted its weekly Health Care Update.  This week’s Health Care Update focuses on the latest Congressional developments on the repeal of the Medicare Sustainable Growth Rate (“SGR”), commonly known as the “Doc-Fix” and the Children’s Health Insurance Program (“CHIP”) reauthorization. In a rare showing of bipartisanship, the House passed the SRG replacement and CHIP reauthorization bill, only to have it face contention in the Senate.  The Senate was unable to pass this bill before their Easter break. With the Senate planning to take up this legislation when they return in two weeks, the Centers for Medicare & Medicaid Services (“CMS”) indicated that it will hold Medicare claims for up to 10 business days.

Click here to read this week’s Update.

Antitrust Challenge to Hospital’s Exclusive Dealing Contracts with Payors Moves Forward

Posted in Antitrust, Health Care Reform, Home Health & Hospice, Hospitals & Health Systems, Payors & PBMs, Physicians, Uncategorized

A small regional hospital’s antitrust suit alleging illegal exclusive dealing and attempted monopolization against its largest competitor will move forward following a district court’s denial of the defendant hospital’s motion for judgment on the pleadings.  Methodist Health Svcs. Corp. v. OFS Healthcare System, d/b/a Saint Francis Med. Ctr., No. 1:13-cv-01054 (C.D. Ill. Mar. 25, 2015).  The complaint alleges that defendant is a “must have” for health insurers, and that defendant leverages that status to prevent health insurers from contracting with plaintiff and other competing hospitals.  Saint Francis filed a motion for judgment on the pleadings, arguing that the complaint failed to plead, and cannot adequately plead, plausible relevant product markets or substantial foreclosure in those markets.  The court disagreed.

In “Hospital Wins First Round Against Largest Rival” Mintz Levin antitrust attorneys explain the importance of this case, noting that it has the potential to create important precedent and guidance regarding the use of exclusive contracts, particularly when employed by parties with market power.  The case also serves as an important reminder that private antitrust litigation can often spark the interest of federal antitrust enforcers, as was the case in the FTC’s seminal St. Luke’s matter.  Beyond private litigants, the potential competitive harm from exclusive dealing has been and continues to be scrutinized by the federal antitrust enforcers.

OIG Finds Exclusive Lab Arrangement May Violate Anti-Kickback Statute

Posted in Clinical Laboratories, Fraud & Abuse, Physicians

Yesterday the Office of Inspector General for the Department of Health and Human Services  (the “OIG”) issued Advisory Opinion 15-04 (“Advisory Opinion”) in which it found that an exclusive arrangement between a laboratory and a physician practice could potentially generate prohibited remuneration under the Anti-Kickback Statute and also subject the laboratory to certain administrative sanctions.  Notably, the OIG also concluded that the proposed arrangement could constitute grounds for permissive exclusion under the federal prohibition against charging the Medicare and Medicaid programs “substantially in excess” of usual charges.

The Proposed Arrangement

The Requestor – a multi-regional medical laboratory – proposed entering into exclusive agreements with physician practices whereby the laboratory would provide all required laboratory services (unless the patient chose a different laboratory) to the physician practices.  According to the Requestor, some physician clients want this type of arrangement because they prefer to work with a single laboratory for ease of communication and consistency in the reporting of test results.  However, some commercial insurance plans require their enrollees to use a particular laboratory and do not pay for out-of-network laboratory services (“Exclusive Plans”).  The Requestor certified that approximately 70 percent of its physician practice clients had indicated that between 10 percent and 40 percent of their patients are enrolled in Exclusive Plans.  As part of the proposed arrangement, the Requestor would not bill the patient, the physician practice, the Exclusive Plan, or any secondary insurer for services furnished to patients enrolled in Exclusive Plans.  Nearly all other patients – whether covered by a federal health care program or a commercial insurance plan – would be billed in accordance with fee schedules or contracted rates.

Under the written agreement between the parties, each physician would be required to represent that neither the physician nor the practice would receive any financial benefit from the Requestor’s provision of free laboratory services to patients covered by Exclusive Plans, including any financial benefit received through an incentive program that would pay a bonus or impose a penalty based upon the utilization (or lack thereof) of laboratory services. The Requestor certified that it would not provide any items, services, or financial benefits, other than a limited-use electronic health records interface for submitting orders to and receiving results from the Requestor.  Physician practices would be eligible to enter into the proposed arrangement only if they did not draw the samples and thus did not bill for the blood draw or the testing.

The OIG’s Analysis

The OIG found that the proposed arrangement could generate remuneration under the Anti-Kickback Statute.  The OIG pointed to two facts that, taken together, supported its conclusion that the proposed arrangement would “reduc[e] administrative and possibly financial burdens associated with using multiple laboratories.”  First, the OIG claimed that physician practices would gain certain efficiencies because they would receive test results with consistent reference ranges (which might not be the case if they used multiple laboratories).  Second, although a physician practice typically does not pay for the EHR interface itself, the OIG believed that the proposed arrangement would relieve physician practices from having to pay monthly maintenance fees charged in connection with any EHR interface that it currently maintained with one or more other laboratories.  The OIG thus concluded that it could not rule out with sufficient confidence the possibility that the Requestor would be offering remuneration to induce the referral of federal health care program beneficiaries.  The OIG also noted that the Requestor had failed to provide any evidence of quality or safety improvements that would justify the proposed arrangement, or of any safeguards that would make the remuneration low risk under the Anti-Kickback Statute.  In fact, the OIG noted that the Proposed Arrangement could be construed as causing the inappropriate steering of patients, including federal health care program beneficiaries.

In a footnote, the OIG acknowledged that any remuneration offered to patients through the proposed arrangement presents a low risk of fraud and abuse under the Anti-Kickback Statute due to the lack of connection to services payable by a federal health care program.

Finally, the OIG concluded that the proposed arrangement may justify use of the OIG’s permissive exclusion authority under Section 1128(b)(6)(A) of the Social Security Act, which is often referred to as the “substantially in excess” provision.  This statute authorizes permissive exclusion authority for the OIG in cases where a provider or supplier charges the Medicare and Medicaid programs amounts that are “substantially in excess of” their “usual charges to other payors for the same items or services.”  Although the OIG has stated previously that providing discounted or free services to uninsured or underinsured patients does not implicate the statute, it noted that the proposed arrangement involved the provision of free services to insured patients.  The OIG thus found that the proposed arrangement could potentially cause more than half of the laboratory’s non-Medicare and non-Medicaid patients to receive free services while Medicare and Medicaid would be charged at the regular rate.

Commentary

Notably, the OIG has only opined on this permissive exclusionary authority on only a handful of occasions, and the most recent was in 2013.  The last time the OIG concluded that an arrangement could trigger exclusion under this section was in Advisory Opinion 99-13, which concerned client billing arrangements between laboratories and their physician clients.  The OIG later issued clarifying letters on April 20, 2000 and April 26, 2000.  The OIG has tried and failed on multiple occasions to implement regulations interpreting the substantially in excess provision.   Its last attempt was on September 15, 2003, but it withdrew the proposed rule in 2007.

The reasoning applied in this negative OIG advisory opinion is difficult to comprehend.  The OIG’s conclusion that the proposed arrangement would amount to remuneration apparently is based only on the fact that the physician practices would receive intangible, non-quantified benefits from consistent reference ranges and an untested presumption that the physician practices had other interfaces that resulted in charges for monthly maintenance fees, which may or may not be the case.   We note that the OIG has long been critical of the relationships between laboratories and physician practices, as evidenced most recently by a June 2014 Special Fraud Alert addressing payments by laboratories to physicians.

Mintz Levin Attorneys to Discuss 340B Program, Overpayments and Stark Self-Disclosures at AHLA Medicare & Medicaid Institute

Posted in Fraud & Abuse, Hospitals & Health Systems, Pharma & Medical Devices, Physicians, Reimbursement, Uncategorized

This week, two of Mintz Levin’s health law attorneys will speak at the American Health Lawyers Association Institute on Medicare and Medicaid Payment Issues in Baltimore, Maryland.

Ellyn Sternfield from our DC office will be speaking about the 340B Drug Pricing Program, a topic she covers often on this blog. Ellyn will be joined by Barbara S. Williams to discuss the 340B Program, and their presentation promises to be informative. They will give an overview of 340B Program requirements, 340B compliance and audit issues (including lessons learned), the aftermath of PhRMA and HHS litigation, expectations from HRSA, and a look at advocacy efforts.

Thomas S. Crane from our Boston and DC offices will discuss overpayments and Stark self-disclosures – topics he writes and speaks on frequently – on a panel with Lisa Ohrin Wilson from CMS and Robert L. Roth. Their session will cover requirements and logistics to disclose and repay overpayments, along with updates on final and proposed regulations, distinctions between OIG and self-referral disclosures, and self-referral disclosure protocol hot topics.

Ellyn and Tom will each bring decades of experience and insight to these discussions. If you are in Baltimore for the AHLA Institute this week, take the opportunity to see them both.

  • The 340B Program: Overview, Compliance, and What to Expect in the Year Ahead
    • Speakers: Ellyn Sternfield & Barbara S. Williams
    • Wednesday, March 25 at 3:30pm & Thursday, March 26 at 11:15am
  • Hot Topics in Overpayments and Stark Self-Disclosures
    • Speakers: Thomas S. Crane, Lisa Ohrin Wilson & Robert L. Roth
    • Thursday, March 26 at 10:00am and 1:45pm

$12.6 Million Sandoz ASP Reporting Settlement Raises More Questions Than It Answers

Posted in Fraud & Abuse, Payors & PBMs, Pharma & Medical Devices, Pharmacies, Physicians, State & Federal Audits, Investigations & Litigation

Recently, HHS-OIG announced a first-of-its-kind settlement over pharmaceutical manufacturer reporting of Average Sales Price (ASP).  Sandoz, Inc. agreed to pay a civil monetary penalty of $12.64 million for alleged failure to submit accurate ASP data to CMS.

ASP reporting was adopted in large part to create a mechanism whereby government drug reimbursement rates for biologics and physician-administered drugs are tied to the actual purchase price of those drugs.  ASP is used by Medicare, and some Medicaid programs, to reimburse biologics and physician-administered drugs, such as chemotherapy drugs.  Federal law requires pharmaceutical manufacturers to submit ASP information for each of these drugs to CMS on a quarterly basis.  The statute authorizes imposition of a maximum civil penalty of $100,000 for each item of false information that is knowingly provided in the ASP reporting to CMS.  Additional statutory authority provides that:

If the Secretary determines that a manufacturer has made a misrepresentation in the reporting of the manufacturer’s average sales price for a drug or biological, the Secretary may apply a civil money penalty in an amount of up to $10,000 for each such price misrepresentation and for each day in which such price misrepresentation was applied.

So we know the legal authority that is the basis for HHS-OIG’s sanction.  But we don’t know much more than that.  In fact, the settlement itself raises more questions than it answers. Continue Reading

Proposed Replacement of Sustainable Growth Rate Addresses Telehealth

Posted in Accountable Care Organizations, Reimbursement, Telemedicine

On March 19th, Representative Michael C. Burgess, M.D. (R-TX) and Senate Finance Committee Chairman Orrin Hatch (R-UT) unveiled a bipartisan plan to repeal and replace the sustainable growth rate (SGR) physician payment system for physician reimbursement under Medicare. Without reform or another patch, physicians would face a close to 25 percent cut in payments when the current patch expires at the end of this month.

The SGR replacement plan repeals the SGR and institutes a 0.5 percent payment update each year for five years following repeal while also seeking to incentivize the use of alterative payment models (AMPs) and tweaking the fee-for-service (FFS) system. In addition to addressing meaningful use, remote monitoring, and interoperability, the SGR replacement plan deals with telehealth in several ways.

Continue Reading

ML Strategies Posts Weekly Health Care Update on March 16, 2015

Posted in Accountable Care Organizations, Health Care Reform, Physicians, Reimbursement, Uncategorized

ML Strategies has posted its weekly Health Care Update. This publication provides timely information on implementation of the Affordable Care Act, Congressional initiatives affecting the health care industry, and federal and state health regulatory developments.

This week’s Health Care Update focuses on bipartisan Congressional efforts to permanently replace the Medicare Sustainable Growth Rate (“SGR”), commonly known as the “Doc-Fix.” A deal to replace the SGR will likely include a reauthorization of the Children’s Health Insurance Program (CHIP). The Health Care Update also highlights the recently updated health insurance marketplace enrollment numbers and the announcement by the Centers for Medicare & Medicaid Services (“CMS”) of the Next Generation ACO  model. The announcement of the Next Generation ACO model was also recently highlighted in a blog post by my colleague at ML Strategies, Andy Shin.

Click here to read this week’s Update.

 

Mintz Levin’s Health Care Qui Tam Update

Posted in Fraud & Abuse, Long-term Care/Skilled Nursing Facilities, Payors & PBMs, State & Federal Audits, Investigations & Litigation, Uncategorized

Mintz Levin’s Health Care Enforcement Defense Practice has published its most recent Qui Tam Update, highlighting two qui tam cases unsealed in November and December of 2014 and giving an overview of the other 17 cases unsealed during the same time period. Mintz Levin’s analysis of the 19 total unsealed cases revealed that almost half included both state and federal claims and that nearly 70% of the relators in the cases were current or former employees of the defendants. The two featured cases are:

  • United States ex rel. Fox Rx, Inc. v. Managed Health Care Associates, Inc., No. 2:14-cv-00073-JLR (W.D. Wash.), regarding allegations that Managed Health Care Associates, Inc. (“MHA”), a pharmacy services provider, submitted claims for Schedule II controlled substances that were dispensed without a proper prescription. The relator, Fox Rx, Inc., a Medicare Part D plan sponsor, had brought two previous cases against MHA, which were highlighted in Mintz Levin’s October 2104 Health Care Qui Tam Update. Notably, the government has declined to intervene in all three cases.
  • United States ex rel. Rew v. Mission Health of Georgia, LLC, 8:14-cv-00648-JSM-MAP (M.D. Fla.), regarding allegations that Mission Health’s nursing homes and assisted living facilities failed to obtain physician certification of patients’ need for skilled nursing care. The realtor in this case was formerly the Vice President of Clinical Reimbursement for one of Mission Health of Georgia.

Further information about both cases and the trends we’ve observed in recently unsealed cases are available in the full Qui Tam Update. In our Qui Tam Update series, we monitor recently unsealed FCA cases, identify trends in health care enforcement, and discuss noteworthy cases and developments. To receive the Qui Tam Update by email, subscribe here.

Obama Administration Announces “Next Generation ACOs”

Posted in Accountable Care Organizations, Health Care Reform, Hospitals & Health Systems, Payors & PBMs, Physicians, Telemedicine

In a highly anticipated announcement on Tuesday, March 10, the Centers for Medicare and Medicaid Services (CMS) released details for a new Accountable Care Organization (ACO) program called the Next Generation ACO (NGACO).  The newest model comes amidst intense discussion from health policy experts and industry leaders on the future of the ACO program at CMS and expected changes to the Medicare Shared Savings Program (MSSP).

The NGACO model differs from the existing portfolio of ACOs in several important ways.  For one, the NGACO offers financial arrangements with higher levels of risk and reward.  In year 2, NGACOs would be able to select a full capitation payment mechanism that would prospectively pay for each attributed beneficiary on a monthly basis.  This is a significant development for some integrated health care systems that have largely stood on the sidelines of the CMS ACO programs due to the lack of incentives and ability to manage from a set amount of funding.

Other distinctions include refined benchmarking methods that ultimately transition away from comparisons to an ACO’s historical expenditures.  By making this change, high performing health systems will have a greater incentive to join/continue in the ACO program and avoid being penalized for past quality and cost containment successes.

Finally, what may be the most interesting additions to the ACO arsenal of tools, are several “benefit enhancements” that will give ACOs the ability to circumvent a series of Medicare rules that go beyond benefits that Medicare Advantage (MA) plans are able to offer.  For example, flexibility around Medicare telehealth rules would allow ACOs to utilize the technology regardless of a patient’s geographic location.  This would allow patients who are homebound or who require care from remote locations (outside of a physician’s office) to be able to receive care using a low-cost and efficient mechanism.

The new benefits include:

  1. Greater access to home visits, telehealth services, and skilled nursing facilities;
  2. Opportunities to receive a reward payment for receiving care from the ACO;
  3. A process that allows beneficiaries to confirm their care relationship with ACO providers; and,
  4. Greater collaboration between CMS and ACOs to improve communication with beneficiaries about the characteristics and potential benefits of ACOs in relation to their care.

One important difference to note between MA plans and the NGACOs is that beneficiaries in the NGACO retain their choice of providers, as opposed to being confined within a network.  Additionally, beneficiaries are not required to pay any additional out of pocket costs to NGACOs, as they do for premium payments in MA.

Continue Reading

Reported Compliance Problems: The Six Stages of Corporate Grief

Posted in Fraud & Abuse, Home Health & Hospice, Hospitals & Health Systems, Payors & PBMs, Pharma & Medical Devices, Pharmacies, Physicians, State & Federal Audits, Investigations & Litigation

Last week, I had the honor of participating in a panel discussion about how health care entities deal with reported compliance concerns at the ABA’s 16th Annual Conference on Emerging Issues in Healthcare Law. The panel was made up of experienced health care attorneys with broad and long-standing health care experience: Richard Westling, current First Assistant U.S. Attorney in the Eastern District of Louisiana; Lesley Ann Skillen, an experienced relator/whistleblower attorney with Getnick & Getnick LLP; Gabriel Imperato, a long-time health care defense attorney at Broad & Cassel; and me.

It became clear during our panel preparation sessions that we could have talked for hours. Richard, Gabe and I each have been on both sides of the equation: government and defense. Lesley has worked with potential qui tam whistleblowers for years. We all concurred that the advent of false claims acts, and resulting qui tam filings, has radically changed the compliance landscape: what may in the past have been perceived as a Medicare or Medicaid administrative issue could well be the subject of a qui tam and subject a company to civil or criminal investigation at a state and/or federal level.   The question is not whether a company has a compliance plan, it is how the company actually addresses a compliance issue when that issue is first raised internally that may dictate how the matter is ultimately viewed and treated by government enforcers.

Continue Reading