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.

As we reported earlier this week, the U.S. Department of Health and Human Services (HHS) Office for Civil Rights described a phishing campaign that is attempting to convince recipients of their inclusion in OCR’s Phase 2 audit program. The email, which was disguised as an official communication, suggests that recipients click on a link. This link takes recipients to a non-governmental website marketing cybersecurity services.

On Wednesday, OCR followed up their alert with additional details about the phishing campaign. According to OCR, the phishing email originates from the email address OSOCRAudit@hhs-gov.us and directs individuals to a URL at http://www.hhs-gov.us. OCR points out the subtle difference from the official email address for its HIPAA audit program, OSOCRAudit@hhs.gov, noting that such subtlety is typical in phishing scams.

OCR also took the opportunity to confirm that it has notified select business associates of their inclusion in the Phase 2 HIPAA audits.  For more information about the Phase 2 audit program please visit our earlier post.

The U.S. Department of Health and Human Services (HHS) Office for Civil Rights (OCR) published an alert on Monday describing a phishing campaign disguised as an email from OCR. The email is being circulated on mock HHS letterhead under the signature of OCR’s Director Jocelyn Samuels and is being sent to HIPAA covered entities and their business associates.  The email prompts recipients to click a link regarding possible inclusion in the HIPAA Privacy, Security, and Breach Rules Audit Program. When clicked, the link takes the recipient to a non-governmental website marketing a firm’s cybersecurity services. In its alert, HHS clarified that it is in no way associated with the firm.

Covered Entities and Business Associates should be aware of this email and should make their workforces aware of it.  This can also serve as an important reminder of the importance of being vigilant about phishing campaigns and not clicking links in any email that seems suspicious or unexpected.

While the firm’s specific claims of inclusion in the audit program are not based in fact, OCR’s audit program is itself quite real. This past July we discussed the audit letters that were sent to health care providers and health care clearinghouses alerting them to their inclusion in the audit. We also described how OCR would be auditing businesses associates during the fall season. Given that fall is upon us, it is now more critical than ever for business associates to review their compliance efforts.

Republicans have been talking about remodeling the Medicaid program through block grants or per capita caps for years.  Both block grants and per capita caps are designed to limit federal spending by providing a state with a set amount of federal money to fund its Medicaid program.  With the sweeping Republican victory, Republicans are in a position to move forward with these policies, primarily focused on block grants.  But, there are three main questions to consider in designing a block grant program, each of which could prove controversial.

Which populations would be included in the block grant?

Any block grant proposal must determine which populations are included in the block grant.  While some proposals have included all Medicaid populations, others have specifically excluded the elderly and disabled, leaving them in the existing Medicaid program.

What services would be covered by Medicaid under the block grant?

Currently, states are required to provide a set of mandatory services in order to receive federal funds.  A block grant proposal must consider and address whether the current set of services would still need to be covered under the block grant funds, and if not, what services would be covered.  Any reduction in the coverage of mandatory services would likely be hotly debated.

What federal funds would be provided to the states?

A block grant proposal must also determine what federal funds will be provided to the states.  Funding includes two parts: (1) the initial amount provided, and (2) how much is providing moving forward. In any block grant proposal written with the express purpose of reducing federal spending on Medicaid, the funding choices will be extremely controversial and perhaps rejected by states, including those with Republican governors.

While the road to Medicaid block grants may be open for Republicans come January, there are still many questions as to how such a policy would be implemented and how it will fit with other health reform proposals.

Last week, the Centers for Medicare & Medicaid Services (“CMS”) released its 2018 Notice of Benefit and Payment setting out payment parameters for the Health Insurance Marketplace for upcoming years.  With several insurers withdrawing from the Marketplace and others still threatening their departure, CMS is releasing this proposed Notice nearly two months early with significant proposals seeking to strengthen the program.

At the core of CMS’s proposals to strengthen the Marketplace are updates to the HHS risk adjustment model and methodology.  Specifically, CMS is proposing: (1) an adjustment for members who are only enrolled for part of the year; (2) the inclusion of select prescription drug utilization data in the risk adjustment model; and (3) modifications to establish transfers for costs associated with high-cost enrollees so a portion of the costs exceeding $2 million for an individual would be shared among all issuers. Continue Reading 2018 Notice of Benefits and Payment: Proposed Updates to the HHS Risk Adjustment Model

Last week, the Department of Health and Human Services (“HHS”) released new materials for covered entities to use to comply with Section 1557, the nondiscrimination provision of the Affordable Care Act. Section 1557 strengthens protections for populations that have been most vulnerable to discrimination in the health care setting by stating that individuals cannot be subject to discrimination based on race, color, national origin, sex, age, or disability.

Continue Reading New Materials Help Covered Entities Comply with Nondiscrimination Rules

We have now had more than 30 days to digest HRSA’s proposed 340B Drug Pricing Program Omnibus Guidance (“Proposed Guidance”), intended to clarify expectations and provide guidance on key issues in the 340B Program.  There are several weeks remaining in the comment period on the Proposed Guidance, and there has already been much handwringing over some of the specific provisions.  Does HRSA really intend to prohibit the use of 340B drugs to fill discharge prescriptions?   Will HRSA really stand by its position that employees of covered entities do not become eligible to receive 340B drugs solely by being employees? Will HRSA actually limit access to 340B drugs to individuals who meet all of the components of the definition of “patient?”

Given that the D.C. District Court has yet to rule on HRSA’s authority to issue interpretive rules in the pending 340B orphan drug litigation, whether certain provisions in the Proposed Guidance will even be enforceable is an open question.  But before the comment period closes, stakeholders may want to consider some of the clear winners, and just who is the biggest loser, under the Proposed Guidance. Continue Reading The Proposed 340B Guidance:  Who is the Biggest Loser?

The U.S. Department of Health and Human Services (“HHS”) and fifteen other Federal Departments and Agencies have announced a proposal to update the Federal Policy for the Protection of Human Subjects known as the “Common Rule,” originally promulgated in 1991.   A Notice of Proposed Rulemaking (“NPRM”), published on September 2, 2015, seeks comments on the proposal, which includes some dramatic changes for researchers. Continue Reading Drastic Changes Proposed for Clinical Research Rules

The 340B Drug Discount Program has operated for more than 20 years with just a few governing regulations codified in 42 CFR Part 10.  Through the Affordable Care Act (“ACA”), Congress adopted several amendments to the 340B Program.  One of those amendments required the Department of Health and Human Services (“HHS”) to impose a maximum $5000 civil monetary penalty on participating manufacturers for each instance in which the manufacturer knowingly and intentionally charged a participating 340B entity a purchase price for a 340B drug that exceeds the statutory ceiling price.  Congress specifically authorized the Health Resources and Services Administration (“HRSA”) to promulgate regulations implementing this requirement within 180 days of the ACA enactment, i.e. by September 2010.

And in fact, in September 2010 HRSA published an Advance Notice of Rulemaking on this requirement, seeking stakeholder input on the requirement.

Finally, on June 17, 2015, HRSA issued proposed rules to implement that requirement.  What took so long?  HRSA’s commentary to the proposed rules, combined with the recent history of the 340B Program, provide the answers.  These proposed rules may be the first steps, but not the last, in what may be major changes to the 340B Program. Continue Reading HRSA Takes its First Steps on 340B Rules

Earlier today, Attorney General Loretta Lynch announced the largest coordinated crackdown in the Medicare Fraud Strike Force’s eight-year history.  The government brought charges against 243 individuals for approximately $712 million in alleged Medicare fraud.

The government alleges a wide array of misconduct ranging from conspiracy to commit health-care fraud, violations of the Anti-Kickback Statute, money laundering, and aggravated identity theft. The individuals charged include doctors, nurses, patient recruiters, home health care providers, pharmacy owners, and other license medical professionals. Notably, almost 50 of these individuals were charged with fraud related to the Medicare prescription drug benefit program (“Part D”).

Continue Reading Government Announces Health Care Fraud “Takedown”