The United States District Court for the Northern District of Indiana recently dismissed a case involving allegations of fraudulent Medicaid claims and self-referrals.  The case, United States of America and State of Indiana ex rel. Bradley A. Stephens v. Nuclear Cardiology Associates (“NCA”), serves as a critical reminder of the stringent requirements for pleading fraud under the False Claims Act (FCA) and the Stark Law.

Continue Reading General Allegations Without Representative Examples Are Insufficient to Survive a Motion to Dismiss

On October 9, the Centers for Medicare & Medicaid Services (CMS) Innovation Center, issued a Request for Information (RFI) about the Innovation Center’s proposed Medicare $2 Drug List Model (the M2DL Model), which aims to test whether offering low-cost, clinically important generic drugs can improve medication adherence, lead to better health outcomes, and improve satisfaction with the Medicare Part D prescription drug benefit. The RFI includes a sample list of prescription drugs that it intends to include and seeks input from healthcare stakeholders on the sample list of drugs and other features (i.e., outreach efforts and maximizing stakeholder participation) of the model. Comments in response to the RFI may be submitted through the Innovation Center’s online survey portal by December 9, 2024.

Continue Reading CMS Innovation Center Seeks Feedback on Medicare $2 Drug List Model

The FDA recently provided its opinion on a pharmaceutical television ad that should help other pharmaceutical companies in their own advertisements.  The Office of Prescription Drug Promotion (OPDP) of the U.S. Food and Drug Administration (FDA) informed pharmaceutical company AbbVie that their television ad for migraine medication, Ubrelvy, featuring Serena Williams “…makes false or misleading representations and suggestions about the efficacy of Ubrelvy.” The letter focused on efficacy claims made in the advertisement.  The 30-second ad shows Serena Williams experiencing symptoms of a migraine while getting ready to go on stage. The ad then goes on to show how one dose of Ubrelvy helped Serena feel better, and she is later shown smiling and laughing as she walks onto a talk show stage. The FDA’s letter explains that in the original storyboard for the ad, Serena experiences migraine pain in the afternoon and feels better before her talk show appearance in the evening. The FDA contends that the televised ad does not accurately portray the time lapse that was in the storyboard version. The FDA stated that, “This compelling before-and-after presentation in conjunction with claims such as, “One dose works fast to eliminate migraine pain” and “UBRELVY QUICKLY ELIMINATES MIGRAINE PAIN” (emphasis added) misleadingly suggests that Ubrelvy eliminates migraine pain and symptoms more quickly than was demonstrated in the clinical trials.” The letter also claims that the ad “…misleadingly suggests that Ubrelvy will provide a greater treatment benefit to patients suffering from migraine headache than has been demonstrated.” 

Continue Reading FDA Calls Out a Migraine TV Ad for Misleading Viewers

In the world of False Claims Act (“FCA”) litigation, the recent case United States ex rel. Robert C. O’Laughlin, M.D. v. Radiation Therapy Services, P.S.C., et al. serves as an important reminder of the need for concrete evidence when asserting qui tam FCA claims.

Continue Reading The Anatomy of a Failed Qui Tam Case: Lessons from U.S v. Radiation Therapy Services

The United States District Court for the Eastern District of Michigan recently dismissed a False Claims Act (“FCA”) lawsuit brought against the City of Detroit.  The core issue in United States ex rel. Lynn v. City of Detroit revolved around Detroit’s annual certifications and assurances to comply with federal laws and regulations as a condition for receiving federal funds.  The relators argued that these certifications were false, thus constituting fraudulent claims under the FCA.

The court’s decision to grant summary judgment in favor of Detroit was based on the distinction between future promises and fraud.  The court noted that the certifications in question were forward-looking statements about future compliance, not assertions about past or present compliance.  This distinction was crucial because, under established legal principles, fraud claims must relate to misrepresentations about past or existing facts.  Future promises, on the other hand, are considered contractual and do not constitute fraud.

While some courts have recognized a “promissory fraud” exception, allowing fraud claims based on future promises if the plaintiff can prove that the defendant had no intention of complying at the time the promise was made, the Sixth Circuit has not endorsed this exception in the FCA context.  Though even if it had, the outcome here would not change.  The court explained that relators in this case failed to allege or provide evidence that the City officials who signed the certifications had no intention of complying with federal laws and regulations at the time they made the certifications.

This dismissal underscores the critical distinction between future promises and fraud, as well as the stringent requirements for invoking the promissory fraud exception.  In the end, the court’s ruling provides a clear message: future promises of compliance, without more, cannot form the basis of a fraud claim under the FCA.  

Note: Our lawyers leveraged AI in creating this blog post.  As we explore the potential of generative AI in the legal space, it is our intention and our practice to be transparent with our readers and to showcase the results we are achieving using generative AI with publicly available resources. Crowell’s AI group is comprised of lawyers and professionals across our global offices, including from Crowell & Moring International (CMI), our international public policy entity, with decades of sector-specific experience. We intend to lead by example in our own responsible use of AI, as it pertains to both the risks and benefits. Should you have questions about the use of generative AI in the legal sector or Crowell’s use of AI, please contact inovation@crowell.com. 

United States of America v. Sutter Health is exemplary of the delicate balance courts must strike when dealing with attorney-client privilege.  Here, the United States District Court for the Northern District of California denied the relator’s motion for determination as to waiver of privilege, but granted alternative relief.  

This case involves alleged violations of the False Claims Act (“FCA”) and the Anti-Kickback Statute (“AKS”) by Sutter Health (“Sutter”), and at the core of this case is the relator’s motion arguing that Sutter waived attorney-client privilege over communications related to its internal review of the fair market value and commercial reasonableness of certain financial arrangements.  Specifically, the relator contended that Sutter’s references to legal consultations in their summary judgment motion constituted a waiver of this privilege.

The court instead found that Sutter’s references were merely “background facts” and not detailed disclosures that would necessitate a waiver of privilege.  The court’s ruling also emphasized that Sutter did not assert an advice of counsel defense, which would have put the content of the legal advice directly at issue.  This distinction is crucial for legal practitioners, as it highlights the importance of how and when legal advice is referenced in litigation. 

While the court denied the motion for a wholesale waiver of privilege, it nevertheless recognized the potential unfairness to the relator if Sutter were allowed to reference its legal consultations without providing access to the underlying communications.  To address this, the court precluded Sutter from introducing any evidence at trial that its “rigorous process” of ensuring its arrangements were supported by a third-party fair market value appraisal included consultations with its legal team. 

The court’s decision in this case offers strategic insights for legal practitioners involved in FCA and AKS litigation:

  • When referencing legal consultations in litigation, it is essential to avoid detailed disclosures that could be construed as waiving attorney-client privilege.  Background references should be carefully crafted to provide necessary context without delving into the substance of legal advice.
  • Parties should be prepared for the possibility that references to legal consultations may lead to the preclusion of related evidence at trial.  This requires a strategic approach to presenting defenses and ensuring that non-privileged evidence is robust enough to support the case.

Note: Our lawyers leveraged AI in creating this blog post, including using a transcript summary created by generative AI.  As we explore the potential of generative AI in the legal space, it is our intention and our practice to be transparent with our readers and to showcase the results we are achieving using generative AI with publicly available resources.  Crowell’s AI group is comprised of lawyers and professionals across our global offices, including from Crowell & Moring International (CMI), our international public policy entity, with decades of sector-specific experience.  We intend to lead by example in our own responsible use of AI, as it pertains to both the risks and benefits.  Should you have questions about the use of generative AI in the legal sector or Crowell’s use of AI, please contact innovation@crowell.com.

On July 10, the Centers for Medicare & Medicaid Services (CMS) released the Calendar Year (CY) 2025 Medicare Physician Fee Schedule Proposed Rule (2025 PFS Proposed Rule), which contains proposals to update PFS payment rates, improve payment for and access to behavioral health services, extended telehealth flexibilities, establish ways to enhance access to primary care services, and strengthen the Medicare Shared Savings Program (MSSP).

Key Takeaways

  • The CY 2025 PFS Proposed Rule continues efforts by the Biden-Harris Administration to strengthen access to primary and behavioral health care by establishing new codes and payments and adding services to help beneficiaries and practitioners to safely administer and receive care in their own home.
  • CMS put out several press releases and fact sheets to inform the public on these changes. The complete proposed rule can be found in the Federal Register here.

The CY 2025 PFS Proposed Rule includes the following proposals:

  • Updates to the PFS payment rates: CMS is proposing to lower PFS payment rates by 2.93% in 2025 compared to payment rates in 2024. In dollars, this change amounts to a conversion factor of $32.36 which is a decrease of $0.93 from the CY 2024 conversion factor of $33.29.
  • New codes for Caregiver Training Services (CTS): CMS would like to establish new coding and payment for caregiver training for direct care services and for caregiver behavior management and medication training. Topics of training can include techniques to prevent decubitus ulcer formation, wound dressing changes, infection control, special diet preparation, and medication administration. CMS is also proposing to allow the training services to be provided to caregivers via telehealth.
  • Services addressing Health-Related Social Needs (HRSNs): CMS is issuing a broad Request for Information (RFI) on the Community Health Integration (CHI) services, Principal Illness Navigation (PIN) services, and Social Determinants of Health (SDOH) Risk Assessment to engage the public on how the agency can refine the program for future rulemaking. CMS is specifically requesting comments on other types of auxiliary personnel (including clinical social workers); other certification/training requirements that are not captured in current coding and payment for these services; how codes are furnished in conjunction with community-based organizations; and how to improve utilization in rural areas.
  • Updates to Telehealth Services:  Starting in January 1, 2025, CMS is proposing a telecommunications system that can include two-way, real-time audio-only communication technology for any telehealth service provided to a beneficiary in their home if the beneficiary is incapable of or does not consent to using video. In addition, this proposed rule will continue to allow distant site practitioners to use their currently enrolled practice location instead of their home address when they provide telehealth services from their home. CMS is also proposing to permanently adopt a definition of “direct supervision” that allows physicians or supervising practitioners to provide said supervision through-real time audio and visual interactive telecommunications. Lastly, for billing purposes, CMS is proposing to continue their current policy that allows for teaching physicians to administer care virtually when residents are involved in all teaching settings. For example, a three-way telehealth visit with the patient, resident, and teaching physician all in separate locations.
  • New codes for Advanced Primary Care Management Services (APCM): The 2025 PFS Proposed Rule establishes three new HCPCS G-codes and payments for a new set of APCM services. These new services incorporate elements of existing care management and communication technology-based services into a bundle of services including Principal Care Management, Transitional Care Management, and Chronic Care Management. Beginning January 1, 2025, CMS is proposing that physicians and non-physician practitioners (NPPs) who use an advanced model of care delivery can bill for APCM services as long as they are responsible for their patient’s primary care needs. CMS is proposing a performance measurement requirement as a condition of payment for APCM services called the Value in Primary Care MIPS Value Pathway (MVP) which was developed to include clinical quality measures that are foundational to primary care.
  • Updates to Behavioral Health Services: CMS is proposing several updates for behavioral health services. To increase access to psychotherapy, the agency is proposing to use Medicare payment for digital mental health treatment devices used in both professional behavioral health services and ongoing behavioral health care treatment within a behavioral health treatment plan of care. CMS is also proposing to establish separate coding and payment for safety planning interventions for patients in crisis including those with suicidal ideation or at risk of suicide or overdose. More specifically, CMS will create an add-on G code that would be billed with an E/M visit or psychotherapy service when practitioners personally provide safety planning interventions. Additionally, CMS will create codes for the following services:
    • Three new HCPCS codes to monitor how digital mental health treatment devices are used as a part of overall behavioral health care;
    • Six G codes to mirror current interprofessional consultation CPT codes for practitioners in specialties whose covered services are limited by statute to services for the diagnosis and treatment of mental illness (including Clinical Psychologists, Clinical Social Workers, Marriage and Family Therapists, and Mental Health Counselors);
    • A monthly billing code that requires specific protocols in furnishing post-discharge follow-up contacts that are performed in conjunction with a discharge from the emergency department for a crisis encounter, as a bundled service describing four calls in a month.
  • Changes in coverage for Rural Health Clinics (RHCs) and Federally Qualified Health Centers (FQHCs): CMS is proposing to make a significant change for RHCs and FQHCs for primary care services. CMS will require that RHCs and FQHCs to explicitly provide primary care services instead of being “primarily engaged” in providing these services as indicated in sub-regulatory guidance. This new rule will not stop RHCs or FQHCs from continuing to provide specialty care, but it will encourage RHCs and FQHCs especially in rural areas to provide primary care services in those communities.
  • Changes to the Medicare Shared Savings Program (MSSP): CMS proposes establishing a new “prepaid shared savings” option which will help ACOs that have a history of earning shared savings an advance of savings which they use to make investments that would aid beneficiaries such as investments in direct beneficiary service, staffing, and investments to improve care coordination. CMS is also proposing a new quality measure set called the Alternative Payment Model (APM) Performance Pathway (APP) Plus Quality Measure Set to move towards the Universal Foundation of quality measures and to better align with the quality measures reported by Shared Savings Program ACOs with the Medicaid Core Sets, the Marketplace Quality Rating System, and Medicare Advantage and Part D Star Ratings. In the PFS proposed rule, CMS also proposes to further incentivize ACOs that serve members in rural and underserved communities by adopting a health equity benchmark adjustment similar to the one in the ACO REACH Model, which has been associated with increased safety net provider participation. Lastly to improve financial calculations within the program, CMS is proposing a calculation methodology to address the impact of improper payments in recalculating expenditures and payment amounts used in Shared Savings Program financial calculations upon reopening a payment determination.

Conclusion

Public comments on the Medicare PFS Proposed Rule closes on September 9, 2024 and is expected to be finalized by November 1, 2024. If finalized, these rules will take effect on January 1, 2025. To learn more about recent federal proposed rules such as the CY 2025 Hospital Outpatient Prospective Payment System (OPPS) and Ambulatory Surgical Center (ASC) proposed rule (CY 2025 OPPS/ASC Proposed Rule), visit our blog or contact the professionals listed below.

The Centers for Medicare & Medicaid Services (CMS) Innovation Center (the Innovation Center) published its data-sharing strategy, which seeks to further enable data sharing while ensuring proper security, risk management, and privacy obligations. The strategy outlines the Innovation Center’s approach to identifying data sharing needs across Innovation Center models and highlights the importance of data in developing and testing innovative healthcare payment and service delivery models.

Continue Reading CMS Innovation Center Outlines Data Sharing Principles

In the world of legal battles, few are as complex and as fraught with procedural intricacies as qui tam actions brought under the False Claims Act (“FCA”).  The qui tam provision of the FCA allows private individuals, known as relators, to file lawsuits on behalf of the government and if successful, relators can receive a portion of the recovered damages.  A recent case, United States ex rel. John Doe v. Credit Suisse AG, offers a glimpse into the procedural labyrinth that governs these actions and underscores the delicate balance between private citizens’ rights to pursue fraud claims and the government’s overarching authority to control litigation brought on its behalf.

In this case, John Doe, a former employee of Credit Suisse, alleged that the bank continued its criminal conduct of helping U.S. taxpayers shield offshore assets even after pleading guilty to conspiracy charges in 2014.  Doe claimed that Credit Suisse’s failure to disclose this ongoing conduct allowed it to avoid paying additional penalties, thus violating the FCA’s “reverse false claims” provision.  The government moved to dismiss Doe’s action, arguing that his allegations did not state a viable claim under the FCA and that continued litigation would strain government resources and interfere with ongoing monitoring of Credit Suisse’s compliance with its plea agreement.  

The district court granted the government’s motion without holding an in-person hearing, relying instead on written submissions from both parties.  Doe appealed, arguing that the dismissal was improper because he was denied an actual “hearing” as required under the FCA.

The Fourth Circuit disagreed with Doe and affirmed the district court’s decision, holding that the “hearing” requirement can be satisfied through written submissions rather than an in-person hearing.

The Fourth Circuit’s decision underscores the flexibility courts have in interpreting the “hearing” requirement under the FCA as allowing for written submissions rather than an in-person proceeding, particularly when the government’s reasons for dismissal are clear and uncontroverted.  This interpretation aligns with the broader trend in federal litigation towards greater reliance on written briefs and submissions, which can streamline proceedings and reduce the burden on judicial resources. However, it also raises questions about the extent to which relators can effectively challenge government dismissals without the opportunity for oral argument.

The Fourth Circuit’s decision also aligns with the Supreme Court’s recent ruling in United States ex rel. Polansky v. Exec. Health Res., Inc., which emphasized the government’s broad authority to dismiss qui tam actions and the substantial deference courts must give to the government’s assessment of whether continued litigation serves the public interest.  The government’s authority to dismiss qui tam actions is a critical aspect of the FCA’s framework, ensuring that the government retains control over litigation conducted in its name and allowing it to prioritize resources and avoid cases that do not align with its enforcement strategies.

This case serves as a reminder of evolving landscape and complexities of FCA litigation.

In January 2024, the Centers for Medicare and Medicaid Services (CMS) announced a new innovation care delivery model that seeks to bridge the gap between behavioral and physical health. The Innovation in Behavioral Health (IBH) Model aims to improve the quality of care and behavioral and physical health outcomes for adults with moderate to severe mental health conditions and substance use disorders (SUDs). The IBH Model will service beneficiaries who are enrolled in Medicare and Medicaid, including those who are dual eligible.[1] These populations experience higher than average rates of mental health conditions or SUDs, or both, highlighting the importance of a model that integrates behavioral and physical healthcare as well as addressing health-related social needs (HRSN).[2]

Continue Reading CMS Notice of Funding Opportunity for the Innovation in Behavioral Health Model Open Until September 9, 2024