Laws Affecting Health Care Entities in Connecticut Take Effect October 1, 2018

On October 1, 2018, a number of new laws affecting health care entities in Connecticut became effective. Below please find a brief description of some of the newly-effective provisions, as well as links to our analyses of the changes. Continue Reading

Congress Considering Legislation Aimed at Curbing Surprise Medical Bills

The United States Senate is currently considering bipartisan legislation that would establish statutory limits on the financial exposure of certain patients to so-called “surprise” medical bills. The proposed legislation would amend the federal Public Health Service Act (at 42 U.S.C. § 300gg-19a) to prohibit surprise balance billing of patients receiving health care services in the following three situations: (1) Emergency services provided by a nonparticipating (i.e., out of network) provider in a nonparticipating facility; (2) Non-Emergency services following an emergency service at a nonparticipating facility; and (3) Non-Emergency services performed by a nonparticipating provider at a participating (in-network) facility. The proposed legislation would take effect during health plan years that begin on or after January 1, 2020. Continue Reading

CMS Revises Hospital Inpatient Admission Order Documentation Requirements

On August 17, 2018, the Centers for Medicare & Medicaid Services (CMS) published its Hospital Inpatient Prospective Payment Systems final rule for Fiscal Year 2019 (Final Rule). The Final Rule contains a number of important updates to Medicare Part A that take effect October 1, 2018.

Among other provisions  in the Final Rule, CMS finalized its proposed update of the regulations that govern hospital admissions under Medicare Part A (42 C.F.R. § 412.3). Specifically, the Final Rule revises language in 42 C.F.R. § 412.3(a) to remove the current requirement that an inpatient admission order “must be present in the medical record and be supported by the physician admission and progress notes, in order for the hospital to be paid for hospital inpatient services under Medicare Part A.” As a result, starting October 1, 2018, CMS will “no longer require a written inpatient admission order to be present in the medical record as a specific condition of Medicare Part A payment.” Continue Reading

Ninth Circuit Issues Long-Awaited Interpretation of Escobar Two-Part Test

In late August, the U.S. Court of Appeals for the Ninth Circuit issued a long-awaited decision in U.S. ex rel. Rose v. Stephens Institute that interprets key aspects of the implied false certification theory of False Claims Act (FCA) liability under the Supreme Court’s 2016 Escobar decision. As the Ninth Circuit explains in its decision, Escobar “unsettled” Ninth Circuit law related to the standard for proving falsity and materiality in an FCA case. The Ninth Circuit therefore sought to reconcile its precedents with Escobar in Rose, which was before it on an interlocutory appeal from a denial of summary judgment sought by the defendant. Continue Reading

OIG Advisory Opinion Approves Surgical Device Warranty Program Intended to Reduce Readmissions

On September 17, 2018, the Office of Inspector General (OIG) of the Department of Health and Human Services published a favorable Advisory Opinion allowing a manufacturer of surgical devices and wound care products to offer a warranty program to hospital customers covering three joint replacement products (“Proposed Arrangement”).

Under the Proposed Arrangement, the manufacturer would refund hospitals for the combined purchase price of three of its products if a patient who received them as part of a joint replacement surgery was readmitted to the hospital within 90 days following the surgery, due to a failure of any of the products to perform as expected (“Warranty Program”). The products include: (1) a total knee or hip implant, (2) a wound therapy system, and (3) an antimicrobial dressing (collectively, the “Product Suite”). Continue Reading

HHS Issues Limited Waiver Following Hurricane Florence

As Hurricane Florence was making landfall, Department of Health and Human Services Secretary Alex Azar issued HIPAA guidance that outlined when hospitals in declared state of emergency areas can qualify for a waiver of certain provisions of the HIPAA Privacy Rule, including fines and penalties. Continue Reading

Medicare Proposes Revised Telehealth Services and Payments

The Centers for Medicare & Medicaid Services (CMS) recently published a Proposed Rule, primarily intended to modify certain Medicare payment policies.  The Proposed Rule contains several provisions that address the growing use of telehealth. CMS noted that it had received many suggestions regarding the expansion of access to telehealth as well as appropriate pay for the same, in response to its call for comments in the CY 2018 Medicare physician fee schedule (PFS) proposed rule. Continue Reading

OIG Advisory Opinion Allows PHO Network Hospitals to Give 100% Discount on Medigap-Covered Inpatient Deductibles, with Savings Shared as a Premium Credit to Patients

The Office of Inspector General (OIG), Health and Human Services, issued an Advisory Opinion allowing an arrangement between a licensed offeror of Medicare Supplemental Health Insurance policies (Medigap Offeror) and a preferred hospital organization (PHO) having network hospitals across the U.S. (the “Arrangement”).  Under the Arrangement, the PHO’s network hospitals would provide discounts of up to 100% on Medicare Part A inpatient deductibles incurred by patients who are Medigap policyholders (the “Arrangement”). Normally, these deductibles would have been covered by the Medigap Offeror. Each time a network hospital provides a discount, the Medigap Offeror would pay the PHO an administrative services fee. If a policyholder were admitted to a hospital not in the network, the Medigap Offeror would pay the full Part A hospital deductible to the hospital.

The MediGap Offeror would return a portion of its savings from the Arrangement directly to any policyholder who had an inpatient stay at a network hospital, in the form of a $100 credit toward the next renewal premium for the Medigap policy. Savings realized by the Medigap Offeror would also be reflected in annual loss ratios filed with state insurance departments, to be taken into account when rates are reviewed and approved by the states.

Although the OIG found that the Arrangement could potentially implicate the anti-kickback statute as well as the civil monetary penalty prohibition on beneficiary inducements, the OIG concluded that it would not impose administrative sanctions. The OIG reasoned that the Arrangement would present a sufficiently low risk of fraud or abuse, based on factors including:

  • neither the discounts nor the premium credits would increase or otherwise affect Medicare payments;
  • the Arrangement would be unlikely to increase utilization because it would only apply to the payment responsibilities that would normally be covered by the Medigap Offeror and, in addition – as the OIG pointed out – it has long held that the waiver of fees for inpatient services is unlikely to result in significant increases in utilization;
  • the Arrangement should not result in unfair competition because PHO’s hospital network would be open to any accredited, Medicare-certified hospital meeting state law requirements;
  • it would be unlikely to affect professional medical judgment because physicians and surgeons would not receive remuneration under the Arrangement;
  • patients would remain free to go to any hospital without incurring additional out-of-pocket expenses for their inpatient stay; and
  • the Arrangement would operate transparently, since policyholders would be clearly informed of their freedom to choose any hospital without incurring additional liability or penalties.


As the OIG has emphasized, Advisory Opinions are issued only to the requestors of the opinion, and have no application to, and cannot be relied upon by, any individual or entity, nor may they be introduced into evidence by anyone other than the requestors to prove the individual or entity did not violate the anti-kickback statute, or any other law.

CMS Identifies “Pathway to Success” for Accountable Care in Proposed Rule that Would Significantly Change Shared Savings Program

On August 17, 2018, the Centers for Medicare and Medicaid Services (CMS) published a proposed rule (Proposed Rule) that proposes a comprehensive overhaul of the Medicare Shared Savings Program (MSSP).  Among other changes, CMS proposes to:

  • replace the current three-track program with two options (Basic and Enhanced),
  • establish a ‘glide path’ that propels accountable care organizations (ACOs) towards acceptance of performance-based down-side risk,
  • update the benchmarking methodology to incorporate regional trends from the start of an ACO’s participation in the MSSP,
  • expand the use of telehealth services by ACOs, and
  • permit ACOs to provide monetary rewards to beneficiaries for the receipt of certain primary care services.

Continue Reading

One-Two Punch: On Consecutive Days, DOJ Announces High Dollar Fraud and Abuse Settlements with Hospitals

The Department of Justice (DOJ) announced two significant False Claims Act (FCA) settlements in recent days that signal continued close government scrutiny of billing, coding and referral practices at hospitals.

On August 2, DOJ announced an $84.5 million dollar settlement with Michigan-based health system William Beaumont Hospital. The settlement resolves allegations of non-compliance with the Anti-Kickback Statute (AKS) and Stark Law arising from “improper relationships with eight referring physicians” that led to the submission of false claims to government health care programs.

DOJ alleged that the defendant provided compensation substantially in excess of fair market value (FMV) to the referring physicians in the form of free or below-FMV office space, as well as the use of hospital employees to support the physicians’ practices, in order to secure referrals from the physicians. DOJ further alleged that claims submitted by the hospital for services provided to illegally-referred patients violated the FCA. Interestingly, the allegations resolved by this settlement arose from four separate whistleblower suits, and pertain to alleged conduct from 2004 to 2012. That timeframe indicates that health care providers can continue to be exposed to significant potential liability for non-compliant conduct long after the underlying conduct may have taken place.  In addition to the monetary payment, the defendant agreed to enter into a five year Corporate Integrity Agreement (CIA) with the Office of Inspector General (OIG).

The following day, on August 3, Prime Healthcare Services, Inc., two of its subsidiaries and fourteen of its hospitals (Prime), along with Prime’s Chief Executive Officer, entered into a $65 million dollar settlement with DOJ to resolve allegations of improper coding and billing practices at the hospitals. According to DOJ allegations, the hospitals knowingly violated the FCA by admitting patients to inpatient status who only required less costly outpatient care (such as observation care), and “up-coded” bills by coding more expensive diagnoses than patients actually had. DOJ claimed that this non-compliance was the product of a “corporate-driven scheme” to increase inpatient admissions of Medicare beneficiaries at certain Prime hospitals between 2006 and 2013. In addition to the monetary payment, Prime agreed to enter into a five year CIA with the OIG, which includes a requirement for independent review of claims for services provided to Medicare beneficiaries.