Health Law & Policy Matters

Health Care Attorneys | Mintz Levin Law Firm

Front End Changes and, Again, More DIR Columns

Posted in Payors & PBMs, Pharma & Medical Devices, Pharmacies, Reimbursement, State & Federal Audits, Investigations & Litigation

Since the beginning of the Medicare Part D program, CMS has introduced many reporting mechanisms for trying to understand drug pricing, price concessions, and the cost of providing services to Part D members.  The tool CMS has turned to most often is the direct and indirect remuneration (“DIR”) report.  The stated purpose of DIR reporting is for a plan sponsor to report all price concessions it received throughout the plan year that impacted how much it cost to provide Part D services to its members.  CMS then reconciles its payments to plan sponsors based on their DIR reports.  Over the last eight years, CMS has continuously expanded DIR reporting requirements trying to further understand the costs associated with the Part D program.  The DIR reports required to be filed this year for contract year 2013 included more than twice the number of DIR categories and columns as when the Part D program started in 2006.  The number of new columns and newly discovered or created categories of DIR or other remuneration that need to be reported on a DIR report (even though it is not DIR, for example, bona fide service fees) grow so quickly that at times it has been nearly impossible to obtain substantive guidance from CMS regarding what types of amounts go into what categories, often leaving plan sponsors in a frustrating and at times scary position. Continue Reading

Life Care Centers Seeks Sixth Circuit Review of Decision Allowing Statistical Sampling/Extrapolation in FCA Case

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

Written by Larry Freedman, Samantha Kingsbury, and Ellyn Sternfield

 Last week, we posted about U.S. District Court Judge Harry Mattice’s September 29th ruling that government attorneys could extrapolate from a small sample of patient admissions to over 50,000 patient admissions (and over 150,000 claims) by Life Care Centers of America, Inc. (a nursing home operator) to try to hold Life Care Centers liable under the False Claims Act (FCA).

Less than two weeks later, Life Care Centers submitted a motion to Judge Mattice asking him to certify for an interlocutory appeal his September ruling.  Life Care Centers seeks Sixth Circuit review of whether (1) the government can satisfy its burden of proof for liability under the FCA using statistical sampling and extrapolation; and (2) Life Care Centers’ constitutional Due Process rights would be violated if it did not know which claims were allegedly false and thus were unable to prepare a defense to each claim. Continue Reading

OIG Issues Long-Awaited Proposed Rule on AKS Safe Harbors, CMPs, and Gainsharing

Posted in Fraud & Abuse, Health Care Reform, Hospitals & Health Systems, Physicians, Reimbursement

Last Friday, the HHS Office of the Inspector General issued a highly anticipated proposed rule that provides new and modified regulatory safe harbors to the Anti-Kickback Statute, amends regulatory provisions related to enforcement of the Beneficiary Inducement Civil Monetary Penalty Law (CMP) provisions, and attempts to narrow the prohibitions covered by the Gainsharing CMP.   The proposed rule affects a wide range of increasingly common health care business arrangements, including referral services, cost-sharing waivers (including under Medicare Part D), free transportation services, coupons, rebates, and retailer reward programs.

A Health Care Alert authored by my colleagues Theresa Carnegie, Thomas Crane, Carrie Roll, and Stephanie Willis provides an in-depth summary and analysis of the OIG’s proposals and notes areas ripe for stakeholder input.  Comments to the Proposed Rule are due December 2, 2014.

ML Strategies Posts Weekly Health Care Update on October 13, 2014

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

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 past week, the Pioneer ACO quality and financial data was finally released with mixed results. The evolution of ACOs continues to be a leading issue for the Obama Administration heading into the end of the year. As policymakers continue to consider programmatic changes to the ACO programs, stakeholders from drug manufacturers to telehealth companies are all becoming heavily invested in the next iteration of the most high profile delivery system reform initiative created by the Affordable Care Act.

Click here to read this week’s full Health Care Update.

The Supreme Court Continues to Punt on False Claims Cases

Posted in Clinical Trials & Research/FDA, Fraud & Abuse, Pharma & Medical Devices, State & Federal Audits, Investigations & Litigation

The first day of the Supreme Court term saw it decline, without comment, certiorari on two cases raising issues of liability and the sufficiency of pleading under the federal False Claims Act (FCA). 

I first wrote about the case of U.S. ex rel. Ge v. Takeda in August 2013, when the U.S. had appealed a federal court’s dismissal of the FCA case.  Ge’s qui tam Complaint had premised FCA liability on an assertion that the defendant company had violated FDA reporting regulations.  She contended that if the company had complied with FDA regulations, federal health care programs may not have paid for the drugs at issue.  The government did not quarrel with the court’s finding that Ge’s pleadings lacked the requisite specificity under Rule 9(b), but the U.S. did challenge the court’s finding that FCA liability could not be premised on failure to follow FDA requirements because compliance with those requirements was not a material condition to payment of the claims at issue. 

And as I wrote in December 2013, the First Circuit Court of Appeals gave the government the appearance of a victory in the Ge case, ruling that Ge’s Complaint in fact lacked the requisite specificity under Rule 9(b), but found that it did not need to reach the issue of whether the lower court was “overly restrictive” in finding FDA violations could not be the basis of FCA violations. The Supreme Court’s denial of certiorari left that ruling intact.

In the case of U.S. ex rel. Rostholder v. Omnicare, the  Fourth Circuit’s decision went where the First Circuit dared not tread, affirming the dismissal of Rostholder’s qui tam complaint on the grounds that allegations that the defendant company violated FDA regulations was not in and of itself sufficient to plead an actionable FCA violation because “(t)he correction of regulatory problems is a worthy goal, but not actionable under the FCA in the absence of actual fraudulent conduct.”  The Supreme Court’s denial of certiorari also leaves that decision intact.

Besides denial of certiorari and allegations regarding FDA violations, the two cases share another commonality:  the federal government declined to intervene in each qui tam case prior to the lower court’s dismissal on 9(b) grounds. 

Whether the government declinations of intervention played a role in the Supreme Court’s decision to decline certiorari, we do not know.  But as noted by my colleagues Tom Crane, Brian Dunphy, and Larry Freedman in a recent blog post, we do know that circuit courts around the country remain split on the degree of specificity required to plead FCA violations.  And the Supreme Court’s denial of certiorari in the Rostholder and Ge cases does nothing to resolve that split. 

Federal Judge Rules to Allow Extrapolation on More Than 50,000 Patient Admissions in FCA Case

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

Written by:  Ellyn L. Sternfield and Samantha P. Kingsbury

Last week, a Tennessee federal district court judge ruled that government attorneys can extrapolate from a small sample of billing statements to over 50,000 patient admissions by Life Care Centers of America, Inc. (a nursing home operator) to try to hold Life Care Centers liable under the False Claims Act (FCA).

Life Care Centers is accused of billing for unnecessary care between 2006 and 2012.  To prove its claims, the government wants to review a random sample of 400 patient admissions and then extrapolate its findings related to false billings to more than 50,000 additional patient admissions (comprising 154,621 total claims).  In ruling for the government and rejecting Life Care Centers’ motion for summary judgment, the judge noted that FCA cases often involve a high number of claims and it would be too burdensome to require government attorneys to build a discrete case for every allegedly false claim.  He further explained that “[t]he purpose of the FCA, as well as the development and expansion of government programs as to which it might be employed, support the use of statistical sampling in complex FCA actions where a claim-by-claim review is impracticable.” 

In rejecting Life Care Centers’ objections, the judge found that the defendants could still fight the government’s extrapolation by challenging the government’s methodology, cross-examining statistical experts and calling its own expert witnesses (thus curing any due process concerns).  He also acknowledged that while the FCA does not explicitly authorize the use of extrapolation, it does not bar the practice – a restriction that Congress could have easily imposed had it intended to preclude the use of statistical sampling.

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Antitrust Article Examines FTC’s Recent Scrutiny of Quality of Care Efficiency Defenses in M&A Activity

Posted in Antitrust, Health Care Reform, Hospitals & Health Systems, Mergers, Acquisitions & Other Transactions, State & Federal Audits, Investigations & Litigation, Uncategorized

Written by: Stephanie D. Willis

Dionne Lomax and Helen Kim, our colleagues in the Antitrust Practice, have authored an article in Competition Policy International’s September 2014 edition of the Antitrust Chronicle observing that, even in the wake of the Affordable Care Act, which is intended to encourage efficiencies in health care delivery to improve health care quality overall, the antitrust enforcement agency has been limiting the ways that health care providers can assert these goals as a justification for consolidation.

The article profiles recent cases that we have featured on the blog and in the firm’s advisories, including the St. Luke’s case initially profiled here earlier this year by Bruce Sokler, Chair of Mintz Levin’s Antitrust Practice.  But more importantly, it provides a framework ”that parties can apply when presenting quality improvement claims that may help parties demonstrate that their efficiency claims are credible, merger-specific, and likely to occur.”  Read Dionne and Helen’s article here and reach out to them or to our other Antitrust Practice attorneys if you have questions.


A Brave New World of Transparency Reporting: CMS Launches Open Payments Website

Posted in Pharma & Medical Devices, Physicians

Written by: Thomas S. Crane and Kimberly J. Gold

September 30th marked the launch of transparency reports under the Sunshine Act through a new Open Payments website hosted by the Centers for Medicare & Medicaid Services (CMS).

Mandated by the Affordable Care Act, the Sunshine Act creates a regulatory scheme requiring drug and device manufacturers and group purchasing organizations (GPOs) to report a variety of information about payments and other transfers of value to physicians and academic medical centers.  The first data reporting period was for August 2013 through December 2013, and this data is now available on the Open Payments website.

Unlike last year’s launch of the federal health insurance exchange website, the Open Payemnts website appears to be working smoothly.  CMS reported that the payment information includes over 4.4 million payments valued at nearly $3.5 billion.  More than 26,000 physicians and 400 teaching hospitals registered through the Open Payments data system.

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Cliff Notes from the Joint OCR/NIST HIPAA Security Conference

Posted in Hospitals & Health Systems, Physicians, Privacy & Security/HIPAA/HITECH

Written by:  Dianne BourqueKimberly Gold, Kate Stewart, and Stephanie D. Willis

As a service to our readers, we have distilled last week’s joint HHS Office of Civil Rights (OCR) and National Institute of Standards in Technology (NIST) conference, “Safeguarding Health Information: Building Assurance through HIPAA Security” into three phrases:  (i) risk assessment, (ii) workforce training, and (iii) adequate encryption.  For those of you willing to read more than three phrases, we elaborate on them below and provide our view on the important takeaways from the conference. Continue Reading

A Cautionary Tale for Companies With Potential False Claims Act Exposure

Posted in Fraud & Abuse, State & Federal Audits, Investigations & Litigation

Written by: Heidi Lawson and Danny Harary

A False Claims Act suit can be a company’s worst nightmare, as it may potentially result in large settlements and awards on account of the statute’s trebled damages provision.  However, the nightmare for AmerisourceBergen was compounded by the fact that the company’s insurer, ACE, denied coverage for the claim based on the “prior or pending litigation exclusion.”  Even worse, a Pennsylvania appellate court upheld ACE’s disclaimer based upon the exclusion. The impact of this recent ruling is very unsettling for many companies who may not know about a qui tam suit for several years after it is filed, which is typically the case in the qui tam context, where the complaint is filed under seal to allow the government to investigate the relator’s claims.  Continue Reading