Hospitals & Health Systems

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

Last week, the FBI issued guidance specifically applicable to medical and dental facilities regarding the cybersecurity risk of File Transfer Protocol (“FTP”) servers operating in “anonymous” mode.  FTPs are routinely used to transfer information between network hosts.  As further described in the guidance, when an FTP server can be configured to permit anonymous users (through the use of a common user name like “anonymous” and without the use of a password) to gain access to the information stored on the server, which might include sensitive information about patients.  In addition to potentially directly compromising the security of the stored information, a hacker could use the FTP server in anonymous mode to launch a cyber attack on the entity. Continue Reading FBI Warns of Cybersecurity Risk from FTPs

The Federal Trade Commission (“FTC”) and the State of Illinois successfully concluded their challenge to the proposed merger of Advocate Health Care and NorthShore University Health System earlier this month, when the U.S. District Court for the Northern District of Illinois granted the plaintiffs’ request for a preliminary injunction enjoining the health systems from consummating their proposed merger.  The parties subsequently abandoned the transaction without appealing the district court’s decision.

The district court had previously denied the motion for a preliminary injunction.  It believed that the geographic market proposed by the plaintiffs was too narrow and found the evidence “equivocal” regarding the importance of patients having access to hospitals close to their homes.  As such, it held that the plaintiffs had not met their burden of proving a relevant geographic market and thus, did not demonstrate a likelihood of success on the merits.  However, in October 2016, the U.S. Court of Appeals for the Seventh Circuit reversed and remanded for further proceedings on the issue of geographic market definition, holding that the lower court erred in its factual findings regarding critical aspects of the geographic market, as well as the remaining preliminary injunction elements that the district court did reach in its first decision.

This alert examines the court’s decision, which not only supports the FTC’s hospital merger enforcement program but continues to up the ante for merging parties attempting to persuade a court that the proposed efficiencies are sufficient to offset alleged anticompetitive effects.

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

Here we are in March 2017 and no one is sure where things stand with the 340B Drug Discount Program.   HRSA and its oversight of the 340B program are subject to the recent Executive Orders restricting issuance of federal regulations and the promised repeal of the Affordable Care Act (ACA) has the potential to impact 340B operations.  In fact, the only thing that appears certain for the 340B program is that nothing is certain.  So let’s review several recent 340B developments, and potential developments to come.

Omnibus Guidance

In June 2016, I predicted in this blog that the final version of the long-promised HRSA 340B Omnibus Guidance, which would have provided clarity on 340B program standards, would never actually be issued or implemented.  And in fact, at the end of January 2017, HRSA withdrew the final 340B Omnibus Guidance while it is was still pending at OMB.  Even if it had issued, the Guidance would have been subject to the terms of the regulatory freeze President Trump imposed by Executive Order immediately after his inauguration on January 20, 2017. Continue Reading The Uncertain Future of the 340B Drug Discount Program

On Wednesday, March 8, James B. Comey, Director of the FBI, was at Boston College to deliver the keynote address for the inaugural Boston Conference on Cyber Security (BCCS 2017).  Director Comey addressed various industry, cyber security, FBI, law enforcement and military experts in attendance regarding current cyber threats to both industry and government assets and the FBI’s approach to confronting them.   During his remarks, Director Comey was asked to opine on the biggest cyber threat to healthcare providers, to which Comey quickly responded, “ransomware.” Continue Reading Advice to Healthcare Providers on Ransomware from the Head of the FBI

The Massachusetts Department of Public Health (DPH) has promulgated final Hospital Licensure Regulations.  Approved by unanimous vote of the Massachusetts Public Health Council (PHC) on March 8, 2017, DPH anticipates that the Hospital Licensure Regulations (105 CMR 130.000, et seq.) will be published in the Massachusetts Register in April, 2017.  The regulations will become effective as of the date of such publication.

As noted in our September 26, 2016 Blog Post, the amendments are part of DPH’s overall regulatory review process needed to comply with Governor Baker’s Executive Order 562, which directed all executive branch state agencies to review and, where possible, streamline, simplify and improve regulations.  At Wednesday’s PHC meeting, Commissioner Monica Bharel, M.D., MPH introduced the presentation of the final regulation by senior DPH staff, indicating that the regulation is part of DPH’s public health informed view of system transformation.  In its materials accompanying the presentation of the regulations, DPH noted that the regulation is intended to ensure a high quality of care, industry standardization, and strong consumer protection for persons receiving hospital care.

In response to comments received in response to the proposed revisions, DPH made a number of further revisions to clarify definitions and licensure requirements, streamline administrative and staffing requirements, and remove duplicative and unnecessary reporting requirements (aligning, when possible, reporting requirements of other state agencies).  A summary of comments received, and DPH’s responses to such comments, is contained in the Information Briefing provided to Dr. Bharel and the PHC. Continue Reading Massachusetts Department of Public Health – Final Hospital Licensure Regulations

As we’ve previously discussed on Health Law and Policy Matters, agencies within the Department of Health and Human Services (DHHS) pushed through several final rules towards the end of the Obama Administration (see here and here). However, since taking office, President Trump has followed through on his campaign promise to significantly roll back Federal regulations and has taken several actions aimed at slowing and reversing agency regulatory processes, including processes at the DHHS sub-agencies CMS and FDA. These executive actions are creating a climate of uncertainty for regulated industries and their stakeholders. Continue Reading Trump Executive Orders Create Uncertainty for Health Care & Pharmaceutical Industries

money_388130419Currently, state Medicaid programs have flexibility in developing payment policies, including utilizing supplemental payments and non-federal supplemental payment mechanisms. Supplemental payments pay providers above what they receive for an individual service through Medicaid provider rates.  Supplemental payments include disproportionate share hospital (DSH) and upper payment limit (UPL) payments and are a critical funding source for many safety net providers. States can fund the non-federal share of these payments through intergovernmental transfers, provider taxes, and certified public expenditures.

However, there is limited transparency and data available on supplemental payments. As a result, states can use these funding structures to increase their total federal Medicaid match. The total percentage of federal funding for each state’s Medicaid program is often referred to as the effective Federal Medical Assistance Percentage (FMAP). However, due to data limitations on supplemental payments, we do not know what any state’s effective FMAP actually is.

The American Health Care Act is the House Republican bill to repeal and replace the Affordable Care Act. Its details became available March 6th. This bill changes the structure of Medicaid supplemental payments, with the exception of DSH payments. States’ reaction to the bill will tell us more about Medicaid supplemental payments than we’ve ever known, and whether the financing system in the proposed bill will provide equivalent federal funding. Continue Reading Medicaid Supplemental Payments under The American Health Care Act

The Massachusetts health care industry is facing policy changes from state and federal decision makers. In a recent Alert, my ML Strategies colleagues Julie Cox, Steven Baddour, Dan Connelly, Caitlin Beresin and Max Fathy consider how state and federal government action will affect a wide variety of health care stakeholders.

In addition to certain health care aspects of Governor Baker’s proposed FY2018 budget, the Massachusetts legislature is expected to debate a number of health care issues during the 2017-2018 legislative session. And while Massachusetts is a national leader in health care, federal health care law and policy will always impact the Commonwealth, so ML Strategies is watching how the new presidential administration and Congress move forward with their plans to reshape the nation’s health care policy.

Two key Massachusetts budget items relating to health care are controversial amongst industry:

  1. A $2,000 per employee “fair share” assessment for certain Massachusetts employers that fail to meet certain enrollment or contribution thresholds for their employee health insurance plans.
  2. Permanent tiered caps on the rate of growth for all acute hospitals and most professional service providers.

My colleagues also highlight several bills that Massachusetts legislators have introduced relating to drug pricing transparency, recognizing that pharmaceutical spending is a key driver of total health care expenses. We can also expect recommendations from both the Health Policy Commission and the legislature’s Special Commission on Provider Price Variation this spring.

Read the full Alert, and stay tuned as ML Strategies continues to monitor health care in the Commonwealth.