On May 17, 2017 the American Bar Association convened its 27th National Institute on Health Care Fraud.  I have attended many of the past annual meetings, and always enjoy the presentations and the opportunity to network with colleagues from all sides of the aisle.  And I always come away with a few nuggets to share with those who did not attend.

Here are my seven top takeaways from this year’s Institute. Continue Reading Seven Takeaways from the ABA National Institute On Health Care Fraud

Last week, the Department of Justice (DOJ) entered into a $34 million settlement with Mercy Hospital Springfield (“Hospital”) of Springfield, Missouri, and its affiliate Mercy Clinic (“Clinic”). The settlement resolves an allegation that the Clinic violated the Stark Law by compensating twelve Clinic physicians in a manner that took into account the volume and value of the physicians’ referrals to the Hospital’s infusion center.  The U.S. contended that the defendants’ Stark Law violations caused their reimbursement claims to Medicare for infusion services to violate the False Claims Act. Continue Reading Hospital and its Clinic Agree to $34 Million Settlement to False Claims Act Allegation that Compensation to Oncologists Violated the Stark Law

Patient assistance programs have been a staple within the health care industry for over a decade.  These programs, operated by 503(c)(3) charities, may receive funding from pharmaceutical manufacturers or other providers to offer assistance to low-income patients in affording their medications, copayments, deductibles, premiums, or other related services.   The Office of the Inspector General (OIG) and the Centers of Medicare & Medicare Services (CMS) have acknowledged the role of provider- and manufacturer-supported charitable premium assistance and have established parameters for these charities to operate in compliance with the Anti-Kickback Statute.

Over the last two years, however, government scrutiny and enforcement related to charitable patient assistance programs has increased.   During this time, nearly a dozen pharmaceutical manufacturers and providers have publicly disclosed receipt of government subpoenas investigating their contributions to patient assistance charities.

These new investigations raise a number of questions when it comes to structuring relationships with patient assistance programs.  On May 16th, we will be holding a webinar to review these current investigations and outline what providers, payors, pharmacy benefit managers (PBMs), and pharmacies working with manufacturers and patient assistance programs need to know in light of these investigations.

We hope you join us!  For more information and to register for this webinar, please click here.

In July 2015, we posted about the N.Y. Attorney General’s False Claims Act (FCA) settlements with Trinity HomeCare and its related entities, and how the case provided insight into the future of FCA enforcement.  We identified five key trends based on the settlements:

  1. The FCA cases were based on qui tams and pursued by the State Attorney General after federal government declination.
  2. The FCA cases were based on a narrow, single state or regional arrangement, as opposed to allegations of a national scheme or program.
  3. One of the FCA cases was based on conduct about which Trinity had previously been warned.
  4. The FCA cases were based on government billings for specialty drugs.
  5. All parties to the arrangement were named as defendants in the qui tams.

Trinity was already under investigation by the N.Y. Attorney General’s office for its billing of hemophilia drugs (the basis of the first 2015 settlement) when a second qui tam alleged that Trinity submitted false claims in connection with a specialty drug used to treat premature infants at risk for lung disease.  That second qui tam led to the second settlement and now, almost 20 months later, has led to a new Complaint. Continue Reading Five Trends in False Claims Act Enforcement: Take Two

6350-Pharma-Summit-blog-buttonMintz Levin and ML Strategies will be hosting the 2nd Annual Pharmacy Industry Summit on April 5th and 6th! The Summit will bring together stakeholders and thought leaders from across the industry to discuss legal and policy challenges facing manufacturers, PBMs, payors, pharmacies, and providers.

With a new administration and state legislatures taking aim at the pharmacy industry, manufacturers, PBMs, payors, and pharmacies face a number of unknowns and questions:

  • What is the fate of FDA User Fees?
  • Will Senator Wyden’s Creating Transparency to Have Drug Rebates Unlocked (C-THRU) Act gain traction?
  • What are state legislatures proposing to address drug pricing?
  • Will the Republicans take another shot at the Affordable Care Act?
  • What is President Trump’s “new system” for competition in the drug industry referenced in his March 7th tweet?
  • What’s new in value-based contracting and what does the future hold for innovative contracting arrangements?

With sessions focusing on the Affordable Care Act developments, drug pricing, state law developments, value-based contracting, and the FDA impact on the supply chain, among others, we plan to discuss these and many other issues impacting the pharmacy industry.

For additional information on the Summit, including an agenda and registration information, please visit our event website.

The Stark Law has caused angst for many a physician and many a health care lawyer over the years. The Stark Law has also troubled hospital and health system CEOs looking for ways to align incentives with physicians. Some stakeholders say Congress should do away with the myriad statutes and regulations that comprise the strict liability federal law banning physician self-referral. Those stakeholders suggest either repealing it altogether and letting other fraud and abuse laws do the work, or – as its namesake former-Representative Pete Stark has suggested – replace it with a much simpler prohibition on soliciting referrals for kickbacks or other special treatment.

My colleague, Tom Crane, suggests another approach – revamp the Stark Law’s advisory opinion process so the Centers for Medicare and Medicaid Services (“CMS”) can protect arrangements from sanctions, similar to the Office of the Attorney General’s (“OIG’s)  Anti-Kickback Statute (“AKS”) advisory opinion process. Continue Reading Changes Needed to Stark Law Advisory Opinion Process

A series of recoupment letters from the New York State Medicaid Fraud Control Unit (MFCU) to healthcare providers who have management or billing company arrangements based on a percentage of collections has prompted the Medical Society of the State of New York (MSSNY) to warn its members that such arrangements are fraudulent under Medicaid law.  The warning, posted on its blog on February 10, 2017, also urged members to review their billing arrangements to make sure the compensation is based either on time or a fixed, flat fee.

In a redacted MFCU recoupment letter linked to the post, MFCU states that as a result of an audit and investigation, it has determined that the percentage based contract violates state and federal Medicaid regulations, including Section 360.7.5(c), which permits Medicaid providers to contract with billing agents if the compensation paid to the agent is “reasonably related to the cost of the services” and “unrelated, directly or indirectly, to the dollar amounts billed and collected.”  The audit period was five years, and MFCU sought to collect the overpayment amount plus an additional nine percent (9%) interest. Continue Reading New York Medical Society Warns Providers to Avoid Percentage-Based Fees

The President has released a “budget blueprint” for fiscal year 2018. Although there are many aspects of the budget blueprint to digest, several budget items signal that government health care fraud enforcement remains a priority under the new administration.

  • Overall, the President’s 2018 budget requests $69.0 billion for the Department of Health and Human Services (“HHS”). According to the blueprint, this a $15.1 billion or 17.9% decrease from the FY 2017 annualized level.
  • However, the budget blueprint increases funding for the Health Care Fraud and Abuse Control (HCFAC) program, which is designed to coordinate federal, state and local health care fraud and abuse enforcement efforts.
  • Specifically, the blueprint proposes $751 million of discretionary funding for the HCFAC program, which exceeds FY 2017 funding by $70 million, according to the budget blueprint.
  • The budget blueprint explains that additional funding for the HCFAC program “has allowed the Centers for Medicare & Medicaid Services in recent years to shift away from a ‘pay-and-chase’ model toward identifying and preventing fraudulent or improper payments from being paid in the first place.”

In a proposed budget that cuts HHS funding by nearly 18%, the increase in HCFAC funding stands out. The President’s budget affirms a trend that we have observed away from “pay-and-chase” toward proactive data analysis. As discussed in a prior post, recent False Claims Act cases strongly suggest that growing experience with data mining has given enforcers greater confidence in their ability to identify potential fraud and abuse. As a result, proactive data analysis could lead to a greater number of FCA cases originating with government investigators instead of through qui tam FCA actions.

Earlier this month, Mintz Levin’s Health Care Enforcement Defense Group published its most recent Health Care Qui Tam Update that looks at 18 health care-related qui tam cases unsealed in October and November of 2016.

The Update presents two unique cases in-depth and covers some of the trends revealed in these recently unsealed cases:

  • The cases identified were filed in federal district courts in 12 states, including California (5), New York (3), Alabama (1), Arkansas (1), Florida (1), Hawaii (1), Kansas (1), New Jersey (1), New Mexico (1), North Carolina (1), Oklahoma (1), and Pennsylvania (1).
  • The federal government declined to intervene in nine of the 18 cases. Five more cases were voluntarily dismissed before any action was taken by the government. The federal government intervened, in whole or in part, in three cases. In the two remaining cases, the government’s intervention status could not be discerned from the unsealed filings.
  • Nature of the Claims
    • Nine of the recently unsealed cases included both state and federal claims.
    • Four involved allegations of unlawful kickbacks. Of these, two also alleged violations of the Stark Law (42 U.S.C. § 1395nn).
    • Claims for relief under state or federal anti-whistleblower retaliation provisions appeared in nine of the 18 recently unsealed cases.
    • The cases remained under seal for an average of just over two years (774 days). The median number of days cases remained under seal was 573.5. United States ex rel. DiBenedetto v. Vahedi, which was heard in the U.S. District Court for the Central District of California, was under seal for the shortest amount of time, at 104 days. United States ex rel. Harmsen v. Moore County Dental Care Center, which was filed in the U.S. District Court for the Middle District of North Carolina, was under seal the longest, at 2,075 days (over five and a half years)
  • In nearly three-quarters of the unsealed cases (13 of 18), relators were current or former employees of the defendant.

See HERE for the full Update and to find our key takeaways from the cases discussed.

 

As the healthcare industry moves towards value-based purchasing, pay-for-performance, and other payment reform models, industry leaders have identified federal fraud and abuse laws as a barrier to full implementation of such models.  Last month, the Health Care Leadership Council released a White Paper entitled “Health System Transformation: Revisiting the Federal Anti-Kickback Statute and Physician Self-Referral (“Stark”) Law to Foster Integrated Care Delivery and Payment Models” (“HCL White Paper”), identifying current fraud and abuse laws as impeding transformation of the healthcare system.  Pharmaceutical and device manufacturers have also taken advantage of the OIG’s Solicitation of New Safe Harbors and Special Fraud Alerts (“OIG Solicitation”) to advocate for more flexible fraud and abuse laws with respect to value-based arrangements. Continue Reading Pharmaceutical Manufacturers and Healthcare Leaders cite Fraud and Abuse Laws as Obstacle to Value-Based Arrangements