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CMS Proposes to Cancel EPM and CR Bundled Payment Programs and to Reduce Mandatory Participation in CJR Model

The Centers for Medicare and Medicaid Services (CMS) recently published a proposed rule (Proposed Rule) to scale back its mandatory bundled payment programs. Under the Proposed Rule, CMS would cancel the episode payment models (EPMs) and cardiac rehabilitation incentive payment model (CR), and it would also reduce the mandatory participation in the comprehensive care for joint replacement model (CJR). CMS stated that it believed the proposed changes are necessary because the continued mandatory participation in bundled payment models may impede CMS’s ability to engage providers in future, voluntary initiatives. CMS …

House Bipartisan Act Would Amend Stark Law and Medicare Part B

On July 25, 2017, the U.S. House of Representatives passed by voice vote a bipartisan bill which is now in the Senate’s hands for consideration, the Medicare Part B Improvement Act of 2017. The bill would amend the Stark Law (Section 1877(h)(1) of the Social Security Act) and impact other provisions governing Medicare Part B.

The bill would amend the Stark Law:

  • to provide that the writing requirement for certain compensation arrangements may be satisfied by means determined by the HHS Secretary, including “a collection of documents, including contemporaneous

Ninth Circuit Relies on Escobar to Revive False Claims Act Suit Against Pharmaceutical Manufacturer

On July 7, 2017, the U.S. Court of Appeals for the Ninth Circuit reversed a federal district court’s dismissal of a False Claims Act (FCA) whistleblower suit in United States ex rel. Campie v. Gilead Sciences, explaining that the district court did not have “the benefit of” the Supreme Court’s 2016 decision in Escobar at the time the suit was dismissed for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6).…

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) …

FTC Intervenes in Physician Practice Acquisition in North Dakota

On June 22, 2017 the Federal Trade Commission (FTC) filed an administrative complaint and a request for a preliminary injunction in federal court to block a proposed physician practice acquisition in North Dakota (the Transaction), the agency’s latest intervention in opposition to consolidation at the physician practice level. In this case, the FTC (accompanied by the Attorney General of North Dakota) opposes a proposed acquisition of Mid Dakota Clinic, P.C. (MDC) by Sanford Bismarck (a subsidiary of multi-state health system Sanford Health, collectively Sanford) on the grounds that the Transaction, …

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. …

EHR Vendor Settles False Claims Act Suit for $155 Million

Electronic health record (EHR) vendor eClinicalWorks (eCW) recently entered into a settlement with the US Department of Justice (DOJ) and the Department of Health and Human Services’ Office of Inspector General (OIG) to resolve allegations under the federal False Claims Act (FCA) that eCW misrepresented its software and paid customers kickbacks to promote its products. The settlement imposes joint and several liability for payment on the EHR Vendor and three of its founders for $154.92 million, and liability for settlement payments individually by a developer ($50,000) and two project managers …

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 …

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

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 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 …

CMS’ Final MACRA Rule Continues Transition Toward Value-Based Payments

On November 4, 2016, the Centers for Medicare & Medicaid Services (CMS) published a final rule with comment period (Final Rule) implementing the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA). The Final Rule overhauls the methodology by which most physicians and certain other clinicians participating in Medicare will be reimbursed and marks a significant shift away from fee-for-service payments and toward value-based reimbursement. Under the Final Rule, CMS created the Quality Payment Program (QPP), which incorporates components of the Physician Quality Reporting System (PQRS), the Medicare Electronic Health …

OIG’s 2016 Report on Provider-Based Facilities

On June 16, 2016, the Office of Inspector General (OIG), Department of Health and Human Services, issued a report on the Centers for Medicare & Medicaid Services’ (CMS) oversight of provider-based facilities.  In the report, the OIG concluded that although CMS is taking steps to improve its oversight, vulnerabilities nevertheless remain.

As part of its Bipartisan Budget Act of 2015, Congress had eliminated provider-based status for new off-campus outpatient departments of a provider. The Centers for Medicare & Medicaid Services’ (CMS) provider-based rules currently allow a hospital or health system …

CMS’s Mandatory Bundled Payment Program for Lower Extremity Joint Procedures

In January 2016, the Centers for Medicare & Medicaid Services (CMS) finalized the somewhat controversial, mandatory Comprehensive Care for Joint Replacement Model (CJR Model), which is a bundled payment program covering certain orthopedic procedures reimbursed by Medicare. The final rule implementing the CJR Model is effective on January 15, 2016, and the first model performance period begins on April 1, 2016. With the CJR Model, CMS aims to align various providers’ financial incentives by establishing a bundled payment system for CJR Procedures conducted in acute care hospitals located in 67 …

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