Health Care Compliance, Fraud and Abuse, & Regulatory Counseling

Earlier this month, the Department of Health and Human Services Office of the Inspector General (OIG) issued an advisory opinion (Advisory Opinion No. 19-03) (Opinion) concluding that a program consisting of free, in-home follow-up care to patients at a higher risk of admission or readmission (the Arrangement) was “low risk” under the civil monetary penalties prohibition on beneficiary inducement (the Beneficiary Inducement CMP). This comes as good news to hospitals and other providers who are focused on care coordination and value-based programs.

Last week, a U.S. district court judge in the Southern District of Florida upheld a magistrate judge’s decision to dismiss False Claims Act (FCA) allegations against a compounding pharmacy, its private equity firm owner, and two individuals. DOJ filed its complaint in intervention last February against the pharmacy, Patient Care America (PCA); its private equity backer, Riordan Lewis & Haden, Inc.; and two individual executives. The government alleged that the parties engaged in an illegal kickback scheme that resulted in the submission of false claims to TRICARE for expensive compounded drugs. This case is reportedly the first in which the federal government intervened against a private equity firm owner.

AltaMed Health Services (AltaMed) and California Physicians Services (doing business as Blue Shield of California (BSC)) recently received notice from their business associate, Sharecare Health Data Services (SHDS), of a hack of SHDS’s network that stores patients’ medical records.  The hacker was able to acquire and/or access patients’ protected health information (PHI) contained in the medical records kept by SHDS on behalf of AltaMed and BSC. The breach of AltaMed’s data was discovered on June 22, 2018, and the breach for BSC was discovered a few days later on June 26, 2018. Upon investigation, however, officials determined that both breaches went undetected for over a month and actually began on May 21, 2018.

On February 26, 2019, the Senate Finance Committee heard testimony from top executives representing seven high-profile drug manufacturers.  This hearing was the second to examine drug pricing in America. The Committee’s questions to executives from Pfizer, Merck & Co., Johnson & Johnson, AbbVie, Bristol-Myers Squibb, Sanofi, and AstraZeneca were aimed at identifying why already-high drug prices continue to climb and what can be done to stop the trend. The hearing comes during a period of increasing pressure on pharmaceutical manufacturers and others in the drug supply chain to improve patient access to drugs, increase transparency in drug pricing, and stop the trend of significant price increases.  This type of high profile hearing just confirms that these pressures will continue, and as a number of proposals to address drug prices work their way through Congress and multiple federal agencies, the discussion around drug pricing reforms will undoubtedly continue.  Following on ML Strategies’ coverage of the Senate hearing, below are a handful of key takeaways from the hearing.

What might 2019 mean for the 340B program? This post addresses the on-going litigation over the OPPS Medicare payment reduction for 340B drugs, ceiling price validation, and state initiatives related to the 340B program.

On Tuesday, executives from seven of the largest pharmaceutical companies testified before the Senate Finance Committee on rising prescription drug prices. While the hearing was expected to be packed with fireworks as Senators of both parties grilled the nation's top pharmaceutical executives, it was largely uneventful.

Last month, we highlighted a few of the changes CMS proposes in Parts I and II of the Advance Notice and Draft Call Letter. Here, we take a look at CMS’s next steps to combat opioid misuse. CMS is rolling out several new initiatives in this space this year and next.

Read about health care qui tam litigation trends for the 12 months that ended on January 31 and significant cases, including two involving the issue of medical necessity.

The Department of Justice (DOJ) recently announced a $1.99 million False Claims Act (FCA) settlement with GenomeDx Biosciences Corp. (“GenomeDx”), a laboratory headquartered in Vancouver, British Columbia with operations in San Diego. The matter arose as the result of a qui tam case brought by two former employees in September 2017.

Federal regulators are flexing their regulatory muscle to accelerate a long-desired but often elusive goal: the interoperability of health information technology (health IT) systems. Interoperability refers to the ability of different health IT systems, including electronic health record (EHR) systems, to meaningfully communicate with one another.

Last week the Department of Justice (DOJ) announced a $57 million settlement with electronic health record (EHR) software vendor Greenway Health LLC (Greenway).  According to DOJ, Greenway violated the False Claims Act (FCA) by fraudulently obtaining certification of its software and misrepresenting its software’s capabilities to customers, thereby causing its customers to submit false attestations of “meaningful use” of EHR technology when seeking to qualify for incentive payments available through the Medicare and Medicaid EHR Incentive Program.  The complaint also alleged that Greenway illegally paid kickbacks to customer in exchange for recommendations to prospective new customers.

As of January 30, 2019, CMS lifted its temporary provider enrollment moratoria for home health agencies in Florida, Illinois, Michigan and Texas. The Enrollment Moratorium had prevented new home health agencies in these states from enrolling in Medicare and Medicaid.

Forty-five states and Puerto Rico have now enacted laws that permit or require pharmacists to dispense an interchangeable biological product in certain situations. The remaining states that have not yet passed legislation on the topic are: Alabama, Arkansas, Maine, Mississippi, Oklahoma, and the District of Columbia. We have been tracking and summarizing these laws over the past three years, and you can find our updated chart... 

On January 9, 2019, AdvaMed announced revisions to its Code of Ethics.  As any medical product business knows, compliance with the AdvaMed Code of Ethics (the “Code”) is essential.  While the Code is voluntary, many states require medical product manufacturers and companies to adopt compliance programs consistent with the Code.  The amendments will be effective January 1, 2020.

Mintz/ML Strategies’ 4th Annual Pharmacy & Pharmaceutical Industry Summit has been scheduled for Thursday, May 2, 2019 – mark your calendars! People from across the industry will gather for one day to share insights about issues that the players in this complex marketplace are tackling.

As many of our readers know, we have been closely following the Polukoff False Claims Act (FCA) qui tam case, which is based on allegations that certain heart procedures performed by a cardiologist were not medically necessary.  The latest development in this case came a few weeks ago, when defendants Intermountain Health Care, Inc. and IHC Health Services, Inc. d/b/a Intermountain Medical Center (Intermountain) filed a Petition for a Writ of Certiorari with the United States Supreme Court. The Petition raised two issues: (1) whether a court may create an exception to Federal Rule of Civil Procedure 9(b)’s particularity requirement when the plaintiff claims that only the defendant possesses the information needed to satisfy that requirement; and (2) whether the False Claims Act’s qui tam provisions violate the Appointments Clause of Article II of the Constitution.

Last week, the Office of the Inspector General for the Department of Health and Human Services (OIG) issued a favorable Advisory Opinion regarding a proposal by a pharmaceutical manufacturer (Manufacturer) to loan a limited-use smartphone to financially needy patients taking the digital version of an antipsychotic drug. The OIG concluded that the arrangement would not constitute grounds for the imposition of civil monetary penalties (CMPs) under the prohibition on beneficiary inducement (the “Beneficiary Inducement CMP”) or administrative sanctions under the Anti-Kickback Statute (AKS).

CMS recently proposed several important changes for the Medicare Advantage (MA) program that relate to payment, benefit design, and new actions to combat the opioid crisis. Here, we take a look at the proposed changes to risk adjustment payments, supplemental benefits, and a value-based insurance design model; all working toward CMS’s goal of maximizing coverage and competition. In a prior post we discussed CMS’s Part D Payment Modernization Model and stay tuned for our upcoming discussion of CMS’s next steps to combat opioid misuse.

On January 15, 2019, the Supreme Court heard oral arguments in Azar v. Allina Health Services, a prominent case involving a challenge by hospitals over when Medicare’s instructions to its contractors impact a “substantive legal standard” and thus must be issued through formal rulemaking. As discussed in our prior post, the Court is reviewing the U.S. Court of Appeals for the D.C. Circuit’s decision that threw out a Medicare rate calculation methodology for Disproportionate Share Payments (DSH) to hospitals adopted by the U.S. Department of Health and Human Services (HHS) for its failure to undergo notice and comment rulemaking. During oral arguments, the Court grappled with a broader question: what is the legal standard for when HHS must use formal rulemaking and not “interpretative” instructions to its contractors in the administration of the Medicare program?

On January 18, 2019, CMS announced the Part D Payment Modernization Model, aimed at incentivizing Part D sponsors to reduce catastrophic phase federal reinsurance subsidy spending.  The model, which will begin January 2020, is a voluntary, five-year model open to eligible standalone Prescription Drug Plans (PDPs) and Medicare Advantage-Prescription Drug Plans (MA-PDs) that are approved to participate.