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New OIG Advisory Opinion Allows Waiver of Cost Sharing in Research Studies

The Office of Inspector General (OIG) recently issued Advisory Opinion 17-02, allowing waivers or reductions of cost-sharing amounts owed by financially needy Medicare beneficiaries in connection with certain clinical research studies conducted at a non-profit medical center.  In the advisory opinion, the OIG reiterated its longstanding concern about routine waivers of Medicare beneficiary cost-sharing amounts in the absence of financial hardship, and noted this can lead to liability under the anti-kickback statute (AKS).  The research studies were conducted utilizing protocols under the Medicare Coverage with Evidence Development (CED) framework …

Third Circuit Recognizes Escobar “Heightened Materiality Standard” in Dismissal of False Claims Act Case Tied to Avastin

In May 2017, the U.S. Court of Appeals for the Third Circuit relied on the “heightened materiality standard” endorsed by the U.S. Supreme Court in its 2016 Escobar decision in dismissing a False Claims Act (FCA) whistleblower suit filed against pharmaceutical giant Genentech related to its billion dollar cancer drug Avastin. In Escobar, the Supreme Court upheld the validity—“at least in some circumstances”—of the “implied false certification” theory of FCA liability, and provided that this theory can attach where at least two conditions are met: a defendant must (1) …

Senate Proposes Expanded Use of Telehealth

On May 18, 2017, the Senate Finance Committee voted to move forward a bill entitled the Creating High-Quality Results and Outcomes Necessary to Improve Chronic (CHRONIC) Care Act of 2017 (S870), which would increase access to telehealth services in the home.

Telehealth is the use of electronic information and telecommunications technology to support remote clinical healthcare, patient and professional health related education and other healthcare delivery functions. …

CMS Reverses Direction in Proposed Rule on Long Term Care Facility Arbitration Agreements

The Centers for Medicare & Medicaid Services (CMS) announced a Proposed Rule scheduled to be published in the Federal Register on June 8, 2017, revising its prior restrictions on binding arbitration provisions between long term care facilities and their residents set forth in a Final Rule published in October 2017.  Comments are due sixty days after publication of the Proposed Rule. In the Final Rule published last year, CMS had prohibited pre-dispute binding arbitration agreements and imposed requirements on facilities that asked residents to sign arbitration agreements.  The U.S. District …

OIG Publishes Prioritized Recommendations for HHS

The OIG has released the 2017 Compendium of Unimplemented Recommendations, summarizing prioritized recommendations relating to HHS programs and operations.   Topping the list are recommendations relating to hospitals, including:

  • Reimbursement rates for critical access hospital swing beds should be adjusted to the lower rates for similar services provided in skilled nursing facilities.
  • Reimbursement rates for hospital outpatient department procedures should be adjusted to the lower rates for similar procedures conducted in ambulatory surgical centers.
  • Medicare should adopt a hospital transfer payment policy to lower hospital reimbursement for beneficiaries who are

DOJ Settles Allegations of Fraudulent Loan Program Between Hospital System and FQHC

The U.S. Department of Justice (DOJ) recently announced a settlement with a hospital operated by Indiana University Health, Inc. and a federally qualified health center operated by HealthNet, Inc. to resolve claims that the parties violated the Anti-Kickback Statute, the Federal Claims Act and Indiana law. Each of the parties will pay over $5 million to the United States and approximately $3.9 million to the State of Indiana. The lawsuit was originally brought by a qui tam relator, a physician and former employee of the hospital and HealthNet, and later …

Federal Court Holds Online Medical Products Auction Contract Violates the AKS

The U.S. District Court for the District of Connecticut granted a motion for summary judgment in favor of Becton, Dickinson & Co. (BDC), a medical products provider, on the grounds that its contracts with MedPricer.com, Inc. (MedPricer), a company operating an online auction platform, violated the federal Anti-Kickback Statute (AKS), and were therefore unenforceable under Connecticut state law. MedPricer.com, Inc. v. Becton, Dickinson & Co., 2017 U.S. Dist. LEXIS 30854 (Memorandum opinion).

As described in the opinion, MedPricer enters into service agreements with hospitals and other health care providers to …

CMS Issues Proposed IPPS Rule

On April 14, 2017, the Centers for Medicare & Medicaid Services (CMS) released the FY 2018 Medicare Hospital Inpatient Prospective Payment System (IPPS) and Long Term Care Hospital (LTCH) Prospective Payment System (PPS) Proposed Rule, and Request for Information (Proposed Rule). The Proposed Rule outlines proposed updates to Medicare payment rates under the Inpatient Prospective Payment System (IPPS) and policies for hospital admissions. The goals of the Proposed Rule include relieving regulatory burdens on providers, supporting the doctor-patient relationship, and promoting transparency, flexibility, and innovation in the delivery of care.…

Massachusetts’ Health Policy Commission Further Limits Health Care Cost Growth

On March 29, 2017, the Massachusetts Health Policy Commission voted to decrease its annual health care cost growth benchmark from 3.6 percent to a 3.1 percent, effective in 2018. The benchmark applies to hospitals, certain physician groups and individual health insurers. The Commission also voted to finalize regulations to require those entities that fail to comply with the benchmark to file and follow performance improvement plans. Non-compliant entities will be subject to oversight by the Commission, during which they will be required to file monthly progress reports and demonstrate that …

CMS Proposes Delay of Home Health Agency Conditions of Participation

The Centers for Medicare & Medicaid Services (CMS) is proposing to delay the effective date for the revised Conditions of Participation (CoPs) for Home Health Agencies (HHAs).  The original effective date was July 13, 2017.  The proposed delay would extend the effective date for an additional six months, until January 13, 2018.  In a previously published post, we discussed the HHA CoPs.…

CMS Revises Process for Reporting Stark Law Violations and Posts New SRDP Forms

On March 28, the Centers for Medicare & Medicaid Services (CMS) revised the procedures and posted new forms for its Voluntary Self-Referral Disclosure Protocol (SRDP).  The SRDP is a mechanism established pursuant to the Affordable Care Act for health care providers and suppliers to facilitate settlement of violations of the physician self-referral law (Stark Law).

Under the Stark Law, physicians (or their immediate family members) who have a financial relationship with an entity are prohibited from making referrals to that entity for certain designated health services (DHS) that are payable …

DOJ Increases Range of Per-Claim Penalties under False Claims Act for 2017

In a little-noticed development, on February 3, 2017, the Department of Justice (DOJ) increased the per-claim range of penalties under the federal False Claims Act (FCA) (31 U.S.C. § 3729 et seq.) for the second successive year, in accordance with a statutory requirement issued under the Bipartisan Budget Act of 2015. As a result, FCA defendants are now subject to monetary penalties ranging from $10,957 to $21,916 per claim submitted in violation of the FCA.

Section 701 of the Bipartisan Budget Act of 2015 revised federal requirements for determination …

OIG Applies The Access To Care Exception In Favorable Advisory Opinion For Hospital Meal And Lodging Assistance Program

The Office of the Inspector General (OIG) recently issued Advisory Opinion 17-01 to a health system (Requestor) for an arrangement to provide free and reduced-cost lodging and meals to financially disadvantaged patients (Proposed Arrangement). In issuing this positive opinion, the OIG applied the Access to Care exception to the prohibition on beneficiary inducements under the Civil Monetary Penalties (Beneficiary Inducement CMP).

One of the hospitals operated by the Requestor provides services to a rural and medically underserved patient population. Under the Proposed Arrangement, the Requestor would offer financially needy patients …

Fourth Circuit Upholds DOJ’s Absolute Veto Power but Declines to Address Validity of Statistical Sampling in FCA Case

The U.S. Court of Appeals for the Fourth Circuit recently declined to rule on the validity of statistical sampling as a method to establish liability and damages in a False Claims Act (FCA) whistleblower case that was closely watched within the FCA bar, U.S. ex rel. Michaels v. Agape Senior Community, Inc. et al. (Nos. 15-2145, 15-2147). In a victory for the government, however, the Court did hold that the FCA grants the Department of Justice (DOJ) an “unreviewable veto” over proposed settlements of FCA cases – even cases in …

HHS Delays Effective Date of Key Provisions in CMS Final Rule “Advancing Care Coordination through Episode Payment Models”

On February 17, 2017, the U.S. Department of Health & Human Services (HHS) announced that it had delayed the effective date of provisions of a Centers for Medicare & Medicaid Services (CMS) Final Rule that were scheduled to take effect February 18, 2017.  The Final Rule – titled “Advancing Care Coordination through Episode Payment Models” – was issued January 3, 2017 (see our previous analysis here) and in pertinent part implements:

  • Three new Medicare episode payment models (EPMs) surrounding 90-day episodes of care arising from (a) an acute myocardial

DOJ Announces $23 Million in Settlements Related to Implantation of ICD Cardiac Devices

On February 17, 2017, the U.S. Department of Justice (DOJ) announced settlements with 51 hospitals related to implantable cardioverter defibrillators (ICD), totaling over $23 million.  Combined with previously announced settlements, the DOJ has now reached agreements with more than 500 hospitals totaling more than $280 million relating to ICDs.   According to the DOJ, most of the 51 settling defendants were named in a False Claims Act qui tam lawsuit filed by a health care reimbursement consultant and a cardiac nurse.  U.S. ex rel. Ford et al. v. Abbott Northwestern

Joint Commission Bans Secure Text Messaging for Patient Care Orders

The Joint Commission recently clarified that patient care orders may not be transmitted by secure text message.  The Joint Commission initially prohibited the practice in 2011 but subsequently allowed practitioners to send orders through a secure text messaging system if certain conditions were met.   In this most recent clarification, The Joint Commission states that concerns remain even when using secure messaging platforms.

The clarification includes several recommendations developed by The Joint Commission in cooperation with the Centers for Medicare & Medicaid Services (CMS).  In addition to the ban on secure …

CMS Final Rule Streamlines Appeals Process

The Centers for Medicare and Medicaid Services (CMS) recently issued a Final Rule to streamline and address the substantial backlog of Medicare administrative appeals at the Administrative Law Judge (ALJ) and Departmental Appeals Board (DAB)/Medicare Appeals Council levels.

Among other changes to the appeals process, the Final Rule:

  • Permits the designation of Medicare Appeals Council decisions as precedential, in order to provide clarity
  • Gives attorney adjudicators certain authority that had been previously reserved to the ALJs, including the authority to decide appeals that can be determined without a hearing, to

Appeal Filed in Case Ordering HHS to Reduce Backlog of ALJ Appeals

The Secretary of the U.S. Department of Health & Human Services (HHS) has appealed a ruling by United States District Court Judge James E. Boasberg that had required HHS to make substantial reductions in its current backlog of cases pending before Administrative Law Judges (ALJ) (Notice of Appeal, U.S. Court of Appeals, District of Columbia Circuit, Case No. 17-5018).  In his Memorandum Decision filed December 5, 2016, Judge Boasberg had ordered HHS to achieve a 30% reduction in the current backlog of cases pending at the ALJ level by December …

CMS Updates Home Health Agency Conditions of Participation

On January 13, 2017, the Centers for Medicare and Medicaid Services (CMS) published a Final Rule updating the home health agency (HHA) Conditions of Participation (CoPs).  HHAs only have until July 13, 2017 to implement these extensive changes. CMS revised the CoPs to focus on a “patient-centered, data-driven, outcome-oriented process that promotes high quality patient care at all times for all patients.”

Below are some of the most significant changes to the CoPs for home health agencies (HHAs) — the Final Rule:…

CMS Final Rule on Episode Payment Models and Revisions to CJR Model

In December, the Centers for Medicare & Medicaid Services (CMS) issued a final rule (Final Rule) implementing new and revised episode payment models (EPMs) developed by the CMS Innovation Center.  The Final Rule continues CMS’ transition of Medicare payment methodologies away from fee-for-service and towards value-based payments, including by incentivizing care coordination efforts and tying payments to quality improvement.

New EPMs:  The Final Rule implements three new EPMs for episodes of care surrounding (i) acute myocardial infarction (AMI); (ii) coronary artery bypass graft (CABG); and (iii) surgical hip/femur fracture treatment …

Medicare Shared Savings Program (MSSP) Track to Incentivize Assumption of Risk

On December 20, 2016, CMS announced the formation of a new participation track under the Medicare Shared Savings Program (MSSP) – the Medicare ACO Track 1+ Model – which will start in 2018. Accountable care organizations (ACOs) participating in this model will agree to accept more limited downside risk than ACOs participating in Track 2 or Track 3 of the MSSP, and will be eligible to share up to 50% of savings from care provided to a prospectively assigned beneficiary population. This model will qualify as an Advanced Alternative Payment …

New Anti-Kickback Safe Harbors and Exceptions to CMP Law

On December 7, 2016, the Department of Health and Human Services Office of Inspector General (OIG) issued a long-awaited final rule establishing new Anti-Kickback Statute (AKS) safe harbor protections and codifying regulatory exceptions to the Civil Monetary Penalties Law (CMP).

Local Transportation Safe Harbor

This safe harbor protects local transportation made available by an “Eligible Entity” as long as the following conditions are met.  An “Eligible Entity” is any individual or entity, except for individuals or entities (or family members or others acting on their behalf) that primarily supply health

OIG Recommends More Monitoring of Hospital Compliance With Two-Midnight Rule

The Office of Inspector General (OIG), Health & Human Services recently released a report detailing its analysis of hospital compliance with the Centers for Medicare & Medicaid (CMS) “two-midnight” rule during fiscal year 2014, which allows Medicare payment for inpatient claims only if the treating physician expects that the patient will require hospital services at least two midnights. The two-midnight policy was implemented by CMS to, in part, reduce inconsistent use of inpatient and outpatient hospital stays and address improper payment for short inpatient stays. The OIG found that hospitals …

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