HHS Proposes to Amend AKS Safe Harbors to Exclude PBM Rebates and Incentivize Consumer Drug Discounts

On February 6, 2019, the Department of Health and Human Services (HHS) Office of Inspector General (OIG) published a proposed rule (Proposed Rule) that would amend the safe harbor regulations under the Federal Anti-Kickback Statute. The Proposed Rule is intended to “address the modern prescription drug distribution model” and make sure that the safe harbors “extend only to arrangements that present a low risk of harm to the Federal health care programs and beneficiaries.” Specifically, in the Proposed Rule OIG proposes to alter the definition of  “discounts” under the so-called “discounts safe harbor” at 42 C.F.R. § 1001.952(h) to exclude from protection any reductions in price or other remuneration offered by pharmaceutical drug manufacturers to pharmacy benefit managers (PBMs), Part D plan sponsors, or Medicaid managed care organizations. Additionally, the Proposed Rule proposes and solicits comment on two new safe harbor provisions: one aimed at reducing the price of pharmaceuticals where reductions in price are reflected at the point of sale to a beneficiary, and a second that would protect certain fixed fee services arrangements between manufacturers and PBMs. Continue Reading

OIG Advisory Opinion No. 19-02 Allows Pharmaceutical Manufacturer to Temporarily Loan Smartphones to Financially Needy Patients to Receive Data from a Digestible Medication Sensor

On January 24, 2019, the Office of Inspector General (“OIG”) issued a favorable advisory opinion allowing a pharmaceutical manufacturer (“Manufacturer”) to temporarily loan limited-functionality smartphones to financially needy patients who lack the required technology to receive adherence data from a sensor embedded in a prescribed antipsychotic medication (“the Arrangement”). The OIG concluded that the Arrangement did not constitute grounds for penalties under the Civil Monetary Penalties law (“CMP”) and that although the Arrangement could potentially cause remuneration under the Anti-Kickback Statute (“AKS”), the OIG would not impose sanctions on the Manufacturer as related to the Arrangement based on the low-risk nature of the Arrangement. Continue Reading

CMS Finalizes Overhaul of the Medicare Shared Savings Program in “Pathways to Success” Final Rule

On December 31, 2018, the Centers for Medicare and Medicaid Services (CMS) published a final rule (Final Rule) establishing the “Pathways to Success” program that overhauls the Medicare Shared Savings Program (MSSP). The Final Rule largely mirrors CMS’ proposed rule (see our summary here), but with several modifications in response to public comments. Accountable care organizations (ACOs) may participate in the Pathways to Success program beginning July 1, 2019, and those ACOs interested in beginning participation in July must submit to CMS a notice of intent to apply by January 18, 2019. CMS guidance on submission of the NOIA is available here. CMS expects to release application deadlines in the near future.

Significant features of the Pathways to Success program, which are described in detail below, include:

  • Replacement of Track 1, Track 2 and Track 3 with two participation options: the BASIC track (consisting of five levels) and ENHANCED track (similar to the current Track 3),
  • Creation of a “glide path” that requires ACOs to incrementally accept performance-based downside risk over the agreement period,
  • Requiring ACOs experienced with downside risk to assume downside risk, while allowing inexperienced ACOs an option to begin participation with no downside risk before advancing to riskier models,
  • Replacement of the previous three-year participation agreement period with a five-year period,
  • Creation of a six-month performance year from July 1, 2019 through December 31, 2019 to coincide with the one-time mid-year start date,
  • Revisions to the benchmarking methodology to incorporate regional trends from the beginning of an ACO’s participation in the MSSP,
  • Expansion of ACOs’ use of telehealth and availability of the SNF Three-Day Rule Waiver, and
  • Ability for ACOs to provide monetary incentives to encourage beneficiaries to receive certain primary care services.

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OIG Advisory Opinion Allows Charitable Pediatric Clinic to Provide Routine Cost-Sharing Waivers

On January 14, 2019, the Health and Human Services Office of Inspector General (OIG) published the favorable Advisory Opinion 19-01 allowing a charitable pediatric clinic (“Clinic”) to routinely waive cost-sharing amounts for patients in financial need (“Arrangement”). OIG noted that the Arrangement did not meet the regulatory exception for permitted waivers of cost sharing amounts under the Civil Monetary Penalties Law (CMP), but ultimately decided not to impose administrative sanctions in connection with the Arrangement. Continue Reading

Connecticut Superior Court Ruling Addresses 2016 Physician Non-Compete Law

Connecticut’s Superior Court Stamford recently ruled to modify four physician non-compete agreements into compliance with Connecticut’s physician non-compete statute (Conn. Gen. Stat. § 20-14p), which limits certain covenants not to complete involving physicians to one year after employment and in a 15-mile geographic radius from the physician’s primary practice site, among other restrictions. Importantly, the Connecticut non-compete statute applies to non-competes that are “entered into, amended, extended or renewed on or after July 1, 2016.” Continue Reading

HHS Issues Cybersecurity Practices for Health Care Industry

Just before the new year, the Department of Health and Human Resources (HHS) released voluntary cybersecurity practices for health care organizations, which consists of a main document, two technical volumes, and resources and templates that were compiled by more than 150 cybersecurity and health care experts. Continue Reading

DOJ Enters Into $12.5 Million Settlement with For-Profit Health System and its CEO in Connection with Improper Unbundled Billing

On December 11, 2018, the U.S. Attorney’s Office for the Eastern District of Pennsylvania (DOJ) announced that it had entered into a $12.5 million dollar settlement with Pennsylvania-based health system Coordinated Health Holding Company, LLC and its Chief Executive Officer (CEO), to resolve allegations of improper billing for orthopedic procedures. Under the terms of the settlement, the CEO (who is also the founder and principal owner of the for-profit system) agreed to pay $1.25 million dollars personally, and the health system entered into a five-year Corporate Integrity Agreement with DOJ requiring regular monitoring of its billing practices. Continue Reading

OCR Issues Request for Information Regarding Modification of HIPAA To Promote Care Coordination and Transition to Value-Based Care

On December 14, 2018 the Department of Health & Human Services Office for Civil Rights (OCR) published a Request for Information (RFI) soliciting public input on updates to regulations promulgated under the Health Insurance Portability and Accountability Act (HIPAA) with the goals of removing “regulatory obstacles” and decreasing “regulatory burdens” in furtherance of the health care industry’s transition to value-based care models.

In the RFI, OCR requests input on whether and how the HIPAA regulations (i) can be modified to remove regulatory obstacles and burdens to efficient care coordination and case management, (ii) may inhibit the transformation to a value-based health care system, and (iii) may be modified to facilitate efficient care coordination and case management, and promote the transformation to value-based care. OCR also solicits comment on four specific proposals for modifying the HIPAA regulations to accomplish some of its stated goals: Continue Reading

Advanced Care Hospitalists Settles with OCR for $500,000  for Alleged HIPAA Violations

The Office for Civil Rights has announced that it has settled with Lakeland, Florida based Advanced Care Hospitalists (ACH) for $500,000 for allegations of an impermissible disclosure of protected health information by one of its business associates. ACH provides contract internal medicine physicians to nursing homes and hospitals.

According to the press release, between November 2011 and June 2012, ACH engaged an individual who claimed to be a representative of Doctor’s First Choice Billings, Inc., which provides medical billing services. Although the individual used First Choice’s website and company affiliation, the owner of First Choice denied that the individual was employed by First Choice, and stated that the services were provided without the knowledge or permission of First Choice. Continue Reading

In Amicus Brief, Government Discourages Supreme Court Review of Pro-Relator Ninth Circuit FCA Decision, but Pledges to Seek Dismissal of Case Upon Remand

On November 30, 2018, the Solicitor General of the United States filed a long-awaited amicus brief in response to the U.S. Supreme Court’s request for the government’s view of the False Claims Act (FCA) case U.S. ex rel. Campie v. Gilead Sciences, Inc. (see here for previous analysis of the Ninth Circuit decision in the case, and here for discussion of the Supreme Court’s request).

In its brief, the Solicitor General states that the conclusion of the Ninth Circuit – that “the fact of continued government payments did not by itself require dismissal of [the relator’s FCA] claims at the pleading stage” – was “correct and consistent with decisions issued by other circuits in comparable circumstances” and as a result no further review is warranted. The Solicitor General’s brief appears to advocate for a more narrow reading of the Ninth Circuit decision than many commenters have undertaken, explaining that “the relevance of a governmental payment decision turns on whether the government had ‘actual knowledge’ of violations at the time of payment” but in this case it is disputed what the government knew about alleged violations and when it learned about such violations. Continue Reading

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