On October 9, 2019 the Department of Health and Human Services Centers for Medicare and Medicaid Services (CMS) published a proposed rule making changes to the Physician Self-Referral Law (PSR Rule), also called the Stark Law. Among other revisions to the PSR Rule, the proposed rule would modify the group practice special rule that allows physician profit sharing in certain circumstances. Under the proposed rule, the “overall profits” group practice physicians can share must be a combination of all designated health services (DHS) profits, not just the DHS profits from the type of service the physician renders. The clarification is significant as it resolves lingering uncertainty regarding proper compensation arrangements for group practice physicians.
Continue Reading CMS Proposes Rule Clarifying Physician Self-Referral Law Rules for Group Practice Profit Sharing

On August 13, 2019, the D.C. Circuit Court of Appeals (the D.C. Circuit) issued an opinion in Children’s Hospital Association of Texas v. Azar (No. 18-5135), allowing the Department of Health and Human Services (HHS) to include payments from third parties, including Medicare and private insurers, in calculations of Disproportionate Share Hospital (DSH) payment caps. The D.C. Circuit had previously ruled against HHS’ implementation of its 2017 rule, which included third-party payments in the calculation of the hospital-specific caps on allowable DSH payments. 
Continue Reading D.C. Circuit Court of Appeals Allows HHS Rule that Includes Payments Received from Third Parties in DSH Payment Cap Calculation

On July 30, 2019, the Centers for Medicare & Medicaid Services (CMS) announced “Data at the Point of Care” (DPC), a pilot program that will provide clinicians with access to claims data. The pilot program follows on the heels of the recently proposed Interoperability and Patient Access Proposed Rule, which would require regulated health plans to make patient data available through an application programming interface (API). These actions are also part of the MyHealthEData initiative spearheaded by the White House Office of American Innovation.
Continue Reading CMS Announces Pilot Program for Clinicians to View Claims Data of Medicare Beneficiaries

In a complaint filed on July 22, 2019, the U.S. Attorney’s Office for the Southern District of New York (DOJ) intervened in a qui tam False Claims Act (FCA) suit against Life Spine Inc. (Life Spine), and senior executives of Life Spine. DOJ alleges that the company – a maker of spinal implants, devices and equipment – offered and paid kickbacks in the form of consulting fees, royalties, and intellectual property acquisition fees to surgeons to induce the use of its products in violation of the Anti-Kickback Statute (AKS). DOJ further alleges that Life Spine’s President and Chief Executive Officer (who is also its founder and majority shareholder), as well as its Vice President of Business Development, had knowledge of and participated in the alleged kickback arrangements, and named the individuals as co-defendants. DOJ claims that by paying the alleged kickbacks to physicians in order to induce the use of Life Spine products, Life Spine “caused false claims to be submitted to Medicare and Medicaid.”
Continue Reading DOJ Intervenes in FCA Suit Against Spinal Device Manufacturer and Senior Executives that Allegedly Paid Kickbacks to Surgeons

On July 18, 2019, the Centers for Medicare & Medicaid Services (CMS) published a Final Rule establishing requirements for arbitration agreements between long-term care (LTC) facilities and their residents. The Final Rule represents a revamping by CMS of a prior rule that had been published in October 2016 that prohibited pre-dispute binding arbitration agreements. CMS undertook to revise the 2016 rule after the U.S. District Court for the Northern District of Mississippi enjoined enforcement of the prohibition on pre-dispute binding arbitration agreements.

Continue Reading CMS Issues Final Rule Restricting Arbitration Agreements with Long Term Care Facilities

In a 7-1 decision released June 3, 2019, the U.S. Supreme Court vacated a proposal of the U.S. Department of Health and Human Services (HHS) that would have had the effect of significantly reducing Disproportionate Share Hospital (DSH) payments to thousands of hospitals for care furnished to low income patients in 2012.

In Azar v. Allina Health Services, Et Al., the Supreme Court held that HHS needed to comply with statutory notice and comment rulemaking procedures under the Social Security Act (Act) when making interpretive changes, because HHS sought to establish or change substantive legal standards.  As a result, HHS was required to publish its proposal to change the DSH payment calculations for 2012 for notice and comment, and its unilateral determination regarding the calculation of those payments was invalid.
Continue Reading Supreme Court Rejects HHS Proposal that Could Have Significantly Lowered Certain Medicare DSH Payments to Hospitals

On June 3, 2019, the U.S. Department of Health and Human Services Office of Inspector General (OIG) issued a fraud alert to notify consumers about genetic testing fraud schemes (the Alert). According to the OIG, fraudulent actors are using the provision of free genetic testing kits to obtain Medicare information from unwitting consumers, and then using the stolen information for purposes of fraudulent billing and/or identity theft.
Continue Reading OIG Issues Alert to Warn of ‘Free’ Genetic Testing Scams Seeking to Steal Information

On February 25, 2019, the U.S. Department of Justice (DOJ) announced a settlement with a urology group practice to settle allegations of False Claims Act (FCA) violations tied to the alleged submission of improperly unbundled Medicare claims. The pursuit and settlement of this FCA suit by the DOJ represents at least the second recent enforcement action targeting allegations of improper unbundled billing of services to Medicare, and may therefore indicate heightened governmental interest in those billing practices. See here for our analysis of the previous unbundled billing case.
Continue Reading Group Practice to Pay $1.85 Million Settlement Tied to Allegations of Improper Unbundled Billing

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 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 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.


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