As of October 3, 2019, the Office of Management and Budget completed its review of the proposed rules for “modernizing and clarifying” the Physician Self-Referral Regulations and revising the safe harbors under the Anti-Kickback Statute and rules regarding the Beneficiary Inducement Civil Monetary Penalties Law.

These regulations were the subject of two Requests for Information

In a long-awaited opinion, on September 9, 2019, the U.S. Court of Appeals for the Eleventh Circuit in United States v. Aseracare, Inc., et al, unanimously vacated AseraCare’s False Claims Act (FCA) victory and remanded the case for further proceedings.[1] While this might seem a victory only for the Government at first blush, the opinion contains key takeaways for defendants that will likely reach far beyond just this case.

Importantly, even though the Eleventh Circuit vacated the district court’s grant of summary judgment to AseraCare, it affirmed the district court’s conclusion that a clinical judgment of terminal illness warranting hospice benefits under Medicare cannot be deemed false, for purposes of the FCA, when there is only a reasonable disagreement between medical experts as to the accuracy of that conclusion, with no other evidence to prove the falsity of the assessment. The Eleventh Circuit also concluded, however, that the Government should have been allowed to rely on the entire record, not just the trial record, to prove otherwise. The Government was precluded from doing so, the Court found, due to an earlier decision by the district court to bifurcate proceedings into two phases: one on falsity, and the other on the remaining elements of the FCA.

In affirming the district court’s holding regarding clinical judgment, the Eleventh Circuit remarked that it appears to be the “first circuit court to consider the precise question at issue here,”[2] and is an extraordinary move that provides hospice facilities, hospitals, and providers more generally with a degree of assurance that a reasonable disagreement between clinicians in a courtroom, without other evidence of objective falsehood, does not create a jury question and cannot serve as the basis for an action under the FCA: “While there is no question that clinical judgments must be tethered to a patient’s valid medical records, it is equally clear that the law is designed to give physicians meaningful latitude to make informed judgments without fear that those judgments will be second-guessed after the fact by laymen in a liability proceeding.”[3]


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In the latest episode of Payers, Providers, and Patients – Oh My!, Troy Barsky and Alice Hall-Partyka talk with Joe Records and Payal Nanavati about how recent litigation challenging the constitutionality of the Affordable Care Act may impact providers and payers. The discussion focuses on the authority for innovative health care models and

The Centers for Medicare and Medicaid Services (“CMS”) has included proposed changes to the implementing regulations for the Physician Payments Sunshine Act (“Sunshine Act”) as part of its proposed 2020 Physician Fee Schedule. The proposed regulatory changes fundamentally expand the scope of the Sunshine Act and will require reporting entities to make substantial updates to their payment tracking policies and procedures. Entities that are required to report payment data under the Sunshine Act should review the proposed rules, submit comments, and evaluate how these proposals will affect future financial relationships with health care providers on a going-forward basis.

CMS is accepting comments on the proposed rule until September 27, 2019. If finalized, the regulatory changes to be promulgated in 42 C.F.R. Part 403 would be effective for data collected during calendar year 2021 that must be reported by March 31, 2022 .


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Nearly 20,000 comments have been submitted in response to the Department of Health and Human Services January 31, 2019 notice of proposed rulemaking eliminating discount safe harbor protection for reductions in price to prescription pharmaceutical products (or rebates) provided by manufacturers to plan sponsors under Medicare Part D and Medicaid managed care organizations (MCOs), whether negotiated by the plan or by pharmacy benefit managers (PBM) or paid through a PBM to the plan or Medicaid MCO. Most of the comments appear to be relatively short, text box comments submitted by individuals through patient or business advocacy groups.  The following is a very high level summary of the several hundred comments posted (so far) from health plans, manufacturers, pharmacies, their respective associations, and policy oriented groups:
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On Nov. 29, 2018, Deputy Attorney General Rod J. Rosenstein announced several amendments to policies on individual accountability set forth in the 2015 Yates Memo. As a result, companies facing FCA actions—especially defendants in health care cases—should consider following three strategy tips:  (1) Establish clear benchmarks for cooperation.  (2) Advocate for individual releases.  And (3)

In its recent notice of proposed rulemaking setting policy for Medicare Advantage (MA) and the Prescription Drug Program (PDP) for calendar year 2020, CMS announced that it would establish extrapolation as a method to be used in risk adjustment validation (RADV) audits, and further, that it would not make any adjustments to account for errors in Medicare fee for service data in determining recovery amounts.

CMS uses a risk adjustment process to modify MA plan payments to better reflect the relative risk of each plan’s enrollees. Payments to each MA plan are adjusted based on risk scores that reflect enrollees’ health status (categorized into Hierarchical Condition Categories (HCCs)) and demographic characteristics derived from member claims data. To counteract incentives that a plan might have to over-report enrollee diagnoses, CMS emphasizes that all diagnoses submitted to enhance risk must be documented in a medical record, and uses RADV audits to ensure that medical record documentation exists, and thus, that payments to MAOs accurately reflect the level of risk assumed.
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On November 1, 2018, the Centers for Medicare & Medicaid Services (“CMS”) filed the pre-publication version of the CY 2019 Physician Fee Schedule Final Rule (“2019 PFS Final Rule”). Within this massive publication, CMS finalized two regulatory changes affecting the exceptions at 42 CFR § 411.357 to the Physician Self-Referral Law (also known as the “Stark Law”) for compensation arrangements. The 2019 PFS Final Rule reconciles the regulations with the statutory changes made to the Stark Law enacted by the Bipartisan Budget Act of 2018 (“2018 BBA”) with respect to (1) how arrangements may fulfill the “writing” requirement under the compensation exception and (2) how arrangements that initially proceed without a signed agreement may still meet the signature requirement of an applicable exception. Parties to financial arrangements in effect on or after February 9, 2018 that implicate the Stark Law may rely upon these new modifications.

The Stark Law generally prohibits a physician from making a referral of designated health services (“DHS”) to an entity with which he or she (or an immediate family member) has a financial relationship. Section 411.357 details several excepted compensation arrangements carved out from the “financial relationship” definition for the purposes of the Stark Law. These exceptions include arrangements for the rental of office space and equipment, bona fide employment relationships, group practice arrangements with hospitals, certain fair-market-value compensation arrangements, among others.
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