Health Care Compliance, Fraud and Abuse, & Regulatory Counseling

In response to the spread of COVID-19, on March 23, 2020, President Trump signed Executive Order 13910 (Order) to prevent the hoarding of health and medical resources necessary to respond to the spread of COVID-19 within the United States. Through the Order, the President delegated his authority under the Defense Production Act of 1950, 50 U.S.C. § 4512 (Act) to the Secretary of Health and Human Services (HHS). The Order authorizes HHS to protect scarce and threatened health care and medical items by designating particular items as protected under the Act (Designated Items). Once an item is designated, the Act makes it a crime for any person to accumulate Designated Items: (i) in excess of the reasonable demands of business, personal, or home consumption; or (ii) for the purpose of resale at prices in excess of prevailing market prices. In this post, we discuss four things to know in connection with the Order.

Last Tuesday, we blogged about the arrest of the owner of a Georgia-based marketing company who was charged with health care fraud and conspiracy to violate the Anti-Kickback Statute. The government has alleged that laboratories paid the company kickbacks for Coronavirus (COVID-19) testing leads.

The very next day, the United States Attorney’s Office in San Antonio, Texas charged 39 year-old Christopher Perez with allegedly perpetuating a COVID-19-related hoax by posting a false threat on Facebook in which he claimed to have paid someone to spread COVID-19 at grocery stores in Texas. These prompt actions to implement Attorney General William Barr’s March 16 call to prioritize the detection, investigation, and detection of all criminal conduct related to the COVID-19 pandemic caused us to wonder what the federal government is doing about enforcement. The answer is: a lot.

The Department of Justice recently filed suit against Anthem, Inc. (Anthem) alleging that the Medicare Advantage Organization (MAO) violated the False Claims Act when it knowingly failed to delete inaccurate diagnosis codes submitted to the Centers for Medicare and Medicaid Services (CMS) for risk adjustment purposes. As predicated in our 2020 outlook post, we continue to see enforcement activity and ongoing litigation against Medicare Advantage plans. Notably, this trend is referenced in SDNY’s complaint, alleging that the government has “sought to enforce” data accuracy in the risk adjustment system by “actively pursuing legal remedies against [] MAOs that have knowingly submitted inaccurate and untruthful diagnosis data to CMS[.]” The complaint provides four examples of settlements obtained from 2012-2019 against MAOs and healthcare providers who, purportedly like Anthem, submitted inaccurate diagnosis codes to CMS or allegedly failed to delete unsupported diagnosis codes.

The Ninth Circuit Court of Appeals recently allowed a False Claims Act (FCA) case based on an alleged lack of medical necessity to proceed, rejecting the lower court's decision that subjective medical opinions about the necessity of hospitalization cannot be "objectively false." The Ninth Circuit joins several other circuits (including the Third Circuit, which recently issued the Druding decision that we posted about a few weeks ago) in reaching this decision, which has been a rapidly evolving area of FCA law.

The Health Resources and Services Administration (HRSA) recently published guidance regarding the evolving impact of COVID-19 on 340B stakeholders. This new guidance is one part of the U.S. Department of Health and Human Services’ broader effort to maximize regulatory flexibility for health care providers scrambling to meet patient needs during the COVID-19 crisis. While HRSA’s new guidance begins by acknowledging “it is appropriate to take into account the realities of the COVID-19,” HRSA offers little in the way of substantive relief when it comes to 340B. Long on generalities and short on specifics, HRSA merely advises entities to ensure they “have policies and procedures in place to address the proper dispensing of 340B drugs.”

In response to the nationwide COVID-19 emergency, state boards of pharmacy across the country are authorizing waivers of specific provisions of pharmacy laws and implementing policies to address potential staffing shortages and emergency dispensing of pharmaceuticals. Here's a high-level overview of the various actions being taken by state boards of pharmacy.

Yesterday, we blogged on how scammers are trying to monetize on the COVID-19 health crisis for their personal gain. Though the U.S. Food & Drug Administration (FDA) issued a consumer update yesterday saying that there is still no approved vaccine or drug to prevent or treat this disease, companies have continued to market products that claim to prevent, treat, or even cure COVID-19 in an attempt to “help” or profit from distressed, vulnerable Americans. While the FDA is working tirelessly to review possible vaccines, treatments, and cures, Americans should avoid endangering their health or lives by self-medicating. Per the FDA, self-medicating with any new product on the shelf (real or virtual) could not only lead to adverse effects but also could interfere with crucial medications. We are closely monitoring whether Congress will take specific actions on these increasingly prevalent issues in the context of the COVID-19 pandemic.

As many of our readers know, the AseraCare case was closely watched over the last several years because of its significance to efforts by the Department of Justice (DOJ) to allege that submission of claims for services lacking “medical necessity” violate the False Claims Act (FCA) as well as to efforts by providers to defend such cases. On Wednesday, we learned that the AseraCare case has reached its dramatic conclusion with an agreement to resolve $200 million in alleged damages for the agreed amount, as reported by AseraCare, of $1 million.

Like many states, Massachusetts is considering drug pricing transparency legislation. The legislation would require pharmaceutical manufacturers to disclose certain pricing information.  Governor Charlie Baker has proposed legislation which would expand upon current reporting requirements for drug manufacturers in Massachusetts, and the Massachusetts Senate passed legislation which includes drug price transparency requirements and increased regulatory oversight of the pharmaceutical industry in Massachusetts. 

This week, the U.S. Department for Health and Human Services (HHS) Centers for Medicare and Medicaid Services (CMS) released a proposed rule (the Medicare and Medicaid Programs: Contract Year 2021 and 2022 Policy and Technical Changes to the Medicare Advantage Program, Medicare Prescription Drug Benefit Program, Medicaid Program, Medicare Cost Plan Program and Programs of All-Inclusive Care for the Elderly), the 2021 Medicare Advantage and Part D Advance Notice of Methodological Changes for Medicare Advantage Capitation Rates and Part C and Part D Payment Policies (Part II), and multiple Health Plan Management System (HPMS) memos and notices covering topics including Medicare Advantage (MA) benefits, Medicare Part D bidding, and suspension of its Past Performance Review Methodology.  

The Office of Inspector General for the Department of Health and Human Services (OIG) recently issued a favorable Advisory Opinion regarding a proposal by a pharmaceutical manufacturer (Requestor) to provide financial assistance for travel, lodging, and other expenses to certain patients receiving a cell therapy that it offers (the Arrangement). The OIG concluded that the Arrangement could potentially violate the Anti-Kickback Statute as well as the prohibition on beneficiary inducement in the Civil Monetary Penalties Law (the Beneficiary Inducement CMP) but ultimately declined to impose administrative sanctions.

Drug prices continue to be a hot button issue in American politics.  While many of the Trump Administration’s efforts to curb increasing drug prices stalled in 2019, a number of state legislatures have adopted drug price transparency laws in recent years.  Since 2015, Vermont, Nevada, California, Maryland, Louisiana, New York, Oregon, Colorado, Connecticut, Maine, Texas, and Washington have all adopted drug pricing transparency laws.  These laws are designed to incentivize manufactures to lower drug prices by requiring them to report information about drug price increases and their justification for how drug prices are set.  We have been tracking and summarizing these laws, and you can find our summary here. 

On December 16, 2019, a nationwide coalition of hospitals sued HHS to block implementation of the 340B rate cuts contained in the 2020 Hospital Outpatient Prospective Payment System (“OPPS”) Final Rule. As detailed in our prior blog post, the 2020 OPPS Final Rule reduces by nearly 30% the Medicare Part B reimbursement for certain drugs provided by hospitals to outpatient beneficiaries that are acquired through the 340B Program. The final rule purports to continue the reimbursement cuts for 340B drugs first implemented in 2018, despite the fact that those cuts (and the 2019 OPPS rule continuing those cuts) are the subject of ongoing litigation in which the cuts were determined to be unlawful. For a detailed walk-through of the 2020 OPPS Final Rule and litigation up to this point, please see our prior three blog posts here, here, and here. 

At the end of July 2019, the U.S. Department of Health and Human Services (HHS) and the Food and Drug Administration (FDA) jointly published the Safe Importation Action Plan, which outlined the Trump Administration’s two-part plan to allow foreign prescription drugs to be imported into the United States in an effort to reduce drug prices. We wrote about the release of the Safe Importation Action Plan here, and the detailed proposals made public by the Administration on December 18, 2019, follow the framework that the agencies sketched out earlier this year. Specifically, HHS and FDA have proposed two different pathways: one that is being implemented via notice-and-comment rulemaking, and one that is being implemented via an FDA guidance document. HHS Secretary Alex Azar touted the two pathways together in a same-day FDA press release as “historic actions…[that] represent the bold nature of President Trump’s agenda for lowering drug costs.”

As reported previously, the Department of Health and Human Services (HHS) Office of Inspector General (OIG) recently published two proposed rules that seek to implement wholesale changes to the Anti-Kickback Statute (AKS) and the Physician Self-Referral Law (commonly known as the Stark Law). This final post in our blog series focuses on a proposed new safe harbor that would protect patient engagement and support arrangements designed to improve quality, efficiency of care, and health outcomes. The OIG is also proposing modifications to the existing safe harbor for local transportation and a new safe harbor for remuneration provided in connection with certain payment and care delivery models developed by the Centers for Medicare & Medicaid Innovation Center or by the Medicare Shared Savings Program. Lastly, the OIG is codifying an existing statutory safe harbor for Accountable Care Organization (ACO) beneficiary incentives and an existing statutory exception to the Civil Monetary Penalty (CMP) rules on beneficiary inducement for telehealth technology related to in-home dialysis services.

The Federal Communications Commission (FCC) regulates wireless medical devices in conjunction with the Food and Drug Administration (FDA), with the FCC’s role related to certain technical concerns such as the successful sharing of wireless frequency bands. Another area that FCC regulates is radio frequency (RF) safety – the possible harmful effects to human health from RF energy created by wireless devices. The FCC looks to health and safety agencies such as the FDA, EPA, and OSHA, to provide guidance and recommendations on what level of RF emissions are deemed “safe,” and then sets rules for how responsible parties must evaluate compliance with these limits. These rules on safe emission levels apply generally to devices that produce RF signals. The FCC proposed modifications to its RF safety rules in 2013, and finally on December 4, 2019, issued a decision that adopts many of its proposals.

As we previously reported, the Department of Health & Human Services (HHS) recently issued two proposed rules intended to reduce the regulatory burden associated with the Anti-Kickback Statute (AKS) and the Physician Self-Referral Law (commonly known as the Stark Law). Although the rules’ main focus is on value-based arrangements, the proposed rule issued by the Centers for Medicare & Medicaid Services (CMS) also includes a number of provider-friendly changes and clarifications to the Stark Law. As discussed below, CMS is proposing several changes to key Stark Law requirements as well as modifications to existing Stark Law exceptions.

On November 15, 2019, the Centers for Medicare & Medicaid Services ("CMS") finalized changes to the Open Payments Program as part of the CY 2020 Physician Fee Schedule Final Rule. Perhaps most importantly, CMS broadened the list of Covered Recipients. Starting for data collection for CY 2021, manufacturers will be required to track and report payments and transfers of value made to physician assistants, nurse practitioners, clinical nurse specialists, certified registered nurse anesthetists, and certified nurse midwives. CMS also added three new nature of payment categories – debt forgiveness, long-term medical supply or device loan, and acquisitions. CMS also consolidated the two payment categories for continuing education programs – accredited/certified and unaccredited/non-certified – into one payment category for all continuing education programs. Lastly, in a move expected to impose a substantial burden on medical device manufacturers, CMS added a reporting requirement for the ‘device identifier’ component of the unique device identifier for devices and medical supplies.

The Centers for Medicare and Medicaid Services (CMS) recently published the 2020 Hospital Outpatient Prospective Payment System (OPPS) rule, which finalizes a proposed reduction in Medicare Part B reimbursement for certain drugs provided by hospitals to outpatient beneficiaries that are acquired through the 340B drug discount program. Through the final rule, CMS purports to continue Medicare reimbursement cuts for 340B drugs first implemented in 2018, despite the fact that those cuts (and the 2019 OPPS rule continuing those cuts) are the subject of ongoing litigation in which the cuts were determined to be unlawful. That ruling, and a Court-imposed stay of the cuts, are the subject of a just-argued appeal.  For a detailed walk-through of the litigation up to this point, please see our prior blog post.

This post is the fourth installment of our blog series on significant, proposed changes to the Anti-Kickback Statute (AKS) and the Physician Self-Referral Law (commonly known as the Stark Law) recently announced by the Department of Health & Human Services (HHS).  The proposed rule issued by the Centers for Medicare & Medicaid Services (CMS) offers new and revised definitions on key Stark Law terms, some of which CMS has previously neglected to define or provide significant guidance.  In addition, CMS proposes a new Stark Law exception for limited remuneration to a physician, which offers health care entities more flexibility for unwritten, short-term compensation arrangements with physicians.