Health care services cost money.  Often times, a lot of money.  This fundamental truism captures the challenge facing Congressional Republicans as they consider coverage of low income populations as part of their so-called Repeal and Replace effort.

The Medicaid program covers more people than Medicare but spends less on health care services (MACPAC 2016a, MedPAC and MACPAC 2017). Additionally, Medicaid pays substantially less for health care services than private sector insurance plans (MACPAC 2016a). Recent growth in Medicaid spending is primarily due to growth in enrollment (MACPAC 2016b).  State Medicaid programs depend on the altruism of the medical profession to provide health care services at a lower rate, which can be below cost.  This leads to Medicaid beneficiaries often having less access than those covered by private insurance because financial pressures limit the ability of some providers to take Medicaid beneficiaries.

Republicans in Congress are contemplating moving coverage for the “able bodied” from Medicaid to private insurance.  There are many questions to be answered before such a policy change could be implemented, but the threshold question is simple: how could such a policy proposal not cost more than current law?

Medicaid beneficiaries have limited ability to pay for services.  An individual with an income of $15,800 is currently Medicaid eligible.  Assuming that the policy does not increase financial expectations from the beneficiary, it does not seem possible that Congressional Republicans could write a policy that moves coverage of Medicaid beneficiaries into subsidized private insurance coverage without spending more money. This leads us to the real question for Congressional Republicans: what would they have to do to ensure that this change would not result in spending more money?

Demography remains a constant pressure on payments to stakeholders.  While stakeholders might look at movement away from Medicaid to private insurance coverage for any population as positive, there is a very high probability that any shift from Medicaid to private insurance coverage will come with strings to limit provider payments.

 

In a closely watched False Claims Act (“FCA”) case, the Fourth Circuit Court of Appeals decided that the Department of Justice (“DOJ”) has an unreviewable right to object to a proposed settlement agreement between a relator and a defendant when the Government has declined to intervene in the case. United States ex rel. Michaels v. Agape Senior Community, Inc., No. 15-2145 (4th Cir. Feb 14, 2017).  In addition, as most expected, the court declined to decide the legal issue whether FCA plaintiffs may rely on statistical sampling of claims to prove FCA liability and damages, concluding that it had “improvidently granted” an interlocutory appeal of the lower court’s ruling on the use of statistical sampling.  This decision thus leaves intact the district court’s decision that rejected the relator’s proposed use of statistical sampling to prove FCA liability and damages.  The Fourth Circuit’s decision not to address the use of sampling in FCA cases leaves many open questions. Continue Reading Fourth Circuit Permits DOJ to Reject an FCA Settlement, But Punts Decision on Statistical Sampling

For several years now, the public outcry over the issue of drug pricing and reimbursement has increased in frequency and fervor.   At least one government agency wants you to know that it has been listening and wants to help provide the information necessary to forge a solution.

On Friday February 17, 2017, the U.S. Department of Health and Human Services (HHS) Office of Inspector General (OIG) issued an Online Portfolio on Drug Pricing and Reimbursement, pulling together OIG’s body of work related to drug pricing and reimbursement in HHS programs, including Medicaid and Medicare, since 2010.  Continue Reading OIG Publishes Online Portfolio Highlighting its Body of Work on Drug Pricing and Reimbursement

On February 16, 2017, the HHS Office for Civil Rights (OCR) disclosed a $5.5 million settlement with Memorial Healthcare Systems (MHS) for HIPAA violations affecting the protected health information (PHI) of 115,143 individuals. The Resolution Agreement, which can be found here, also contains a detailed corrective action plan (CAP).

The Florida-based health system reported to OCR that the PHI had been impermissibly accessed by MHS employees and impermissibly disclosed to affiliated physician office staff. The PHI consisted of names, dates of birth, and social security numbers.

Continue Reading $5.5 Million HIPAA Settlement Underscores Importance of Audit Controls

From 2015 to 2016, FDA appeared to open the door to loosening the standards around intended use and off-label use, but recent rule-making and public comments suggest that FDA is becoming more sclerotic instead of flexible. However, given the political climate in the federal government and the lack of an appointed FDA commissioner, it is unclear whether FDA will hold its ground or be forced to retreat.

Continue Reading FDA Hardens Its Stance on Intended Use and Off-Label Use and Industry Responds

Earlier this month, the Centers for Medicare & Medicaid Services (CMS) released its 2018 Medicare Advantage and Part D Advance Notice and Draft Call Letter (“Draft Call Letter”).  For the majority of the letter’s provisions, CMS is proposing to continue its current course of action and is refraining from introducing new policies.  With that said, however, CMS is proposing several notable updates, including updates to the use of encounter data for risk adjustment and the 2018 Star Ratings.  This blog is to highlight some key provisions and changes as MA and Part D plans prepare and finalize comments.

Continue Reading CMS’s Draft 2018 Call Letter: Minor Updates, but Largely a Continuation of Current Policies

Last month, the U.S. District Court for the District of Utah joined the AseraCare court and others in finding that a relator cannot successfully allege violations of the False Claims Act (“FCA”) based on a purported lack of medical necessity unless there is an objective standard articulated by Medicare.  In fact, District Judge Jill Parrish cited the AseraCare case and many federal appellate decisions when granting dismissal – with prejudice – in United States ex rel. Polukoff v. St. Mark’s et al., No. 16-cv-00304 (D. Utah 2017)Continue Reading Another Court Agrees That A Difference Of Opinion On Medical Necessity Is Insufficient to Show Falsity Under the False Claims Act

Earlier this week, the U.S. Department of Homeland Security (DHS) updated a prior advisory revealing cybersecurity vulnerabilities in St. Jude Medical’s Merlin@home transmitter.

The Merlin@home transmitter is used by patients with St. Jude implantable cardiac devices to wirelessly transmit data from the patient’s cardiac device to the Merlin.net Patient Care Network. The uploaded data can then be monitored by a physician to determine whether the device is functioning properly.  This past January, DHS released an advisory detailing a vulnerability that could allow an unauthorized user to remotely access a patient’s RF-enabled implanted cardiac device by altering the Merlin@home Transmitter. The altered transmitter could then be used to modify the implanted device to rapidly deplete its battery and/or administer inappropriate pacing or shocks to the patient. St. Jude quickly made an update available to patch this vulnerability.

The updated advisory extends the vulnerability to Merlin transmitters that are used by providers. These transmitters contain the same hardware and software as the models used by patients in their home, but have an additional functionality called MerlinOnDemand that allows providers to use one transmitter in their office to obtain device data from multiple patients. According to the advisory, the endpoints between the implanted device and the Merlin.net website are not verified. This makes the transmission vulnerable to a “man-in-the-middle” that would allow an attacker to remotely access the device. St. Jude has said that the MerlinOnDemand-enabled devices will receive the same patch that was provided to the home-based models.

The new vulnerability comes on the heels of the U.S. Food and Drug Administration’s release of final guidance on the postmarket management of cybersecurity in medical devices.

Join us next Wednesday, February 15 from 1pm – 2pm Eastern for the final installment of our three-part webinar series on the 21st Century Cures Act (the “Cures Act”).  Part III of the series will focus on the Cures Act’s impact on the FDA and will have some great takeaways for anyone who interacts with the FDA or has an interest in the Cures Act.

In this presentation, our colleagues Bethany Hills and Joanne Hawana will discuss the following FDA-related provisions of the Cures Act and take a deep dive into the practical implications and implementation processes for each of:

  • Regenerative Medicine
  • Medical software/digital health
  • FDA restructuring/structural improvements
  • Health care economic info and off-label communications
  • Data source changes – patient experience, RWE and summary data

Click HERE to register!

Last week, our antitrust colleagues Bruce Sokler, Robert Kidwell, and Farrah Short, published a Health Care Antitrust Alert on the recent settlement with the Federal Trade Commission by a Puerto Rican ophthalmologist cooperative on charges that the cooperative orchestrated an illegal boycott of a health plan.

As noted in the alert, the case represents the risks of concerted action among competitors, even when that concerted action is facilitated by an otherwise lawful trade association or membership organization.

The full alert can be found here and additional details about the settlement are available on the FTC’s website.