Affinity programs involving insurance companies and associations are on the rise as to all lines of insurance business. An affinity program is an arrangement in which a business offers discounts on products or services to an organization’s membership. In Friedman v. AARP, a federal court considered whether an affinity arrangement between United HealthCare (“UHC”) and AARP harmed AARP members because AARP received compensation related to insurance sales. The case demonstrates that insurance companies need to be careful in establishing affinity arrangements with associations. Continue Reading
On January 29, 2020, the comment period closed for the United States Department of Agriculture (USDA) interim final rule, published on October 31, 2019, to establish the Domestic Hemp Production Program. The comment period, which the USDA extended by 30 days, received over 4,000 comments from interested parties, including states, tribal governments, and hemp industry participants. Public comments questioned various facets of the rule, most notably the requirement that every hemp plot be sampled 15 days prior to the anticipated harvest, the creation of a “negligence threshold” for products that contain 0.5% delta-9 tetrahydrocannabinol (THC) or higher, and unclear guidelines for the destruction of non-compliant plants.
The government incentivizes whistleblowers in order to increase healthcare recoveries under the False Claims Act. See our analysis here of how the Act’s qui tam provisions work by Colin Jennings, Marisa Darden, and Ayako Hobbs.
Once again, healthcare leads other industries for recoveries by the government and whistleblowers under the False Claims Act. Enforcement actions span the entire health care supply chain. See our report here in the Anticorruption blog.
CMS said it plans to audit risk-adjustment payments that Medicare Advantage (MA) plans received based on having identified additional diagnoses in beneficiary medical chart reviews. CMS’s action was spurred by a recent report from the HHS Office of Inspector General (OIG) entitled, “Billions in Estimated Medicare Advantage Payments From Chart Reviews Raise Concerns.” (Click here for the report).
As the OIG’s report explains, MA insurers receive risk-adjustment payments, based in part on diagnoses, to account for the differing levels of the health of their beneficiaries. This process “levels the playing field for [MA insurers] that enroll sicker beneficiaries who need more costly care.” Doctors and other providers initially submit payment claims with diagnoses to the MA insurers, who submit that data to CMS’s encounter data system. MA insurers may also conduct after-the-fact chart reviews to improve accuracy by adding diagnoses that providers originally missed or deleting others submitted in error. Importantly, per CMS rules, added diagnoses are either supposed to be linked to previously accepted service records or, if unlinked, be supported by documentation from a face-to-face visit. Continue Reading
Recent years have seen significant vertical integration in the healthcare space, whether megamergers such as CVS-Aetna and Cigna-Express Scripts, or the numerous hospital and health system acquisitions of physician groups and other non-hospital healthcare providers. These vertical mergers—combining assets that are used at different levels of the supply chain—have largely escaped significant antitrust scrutiny since they do not reduce the number of competitors in the market and often have pro-competitive justifications that would result in lower prices and/or higher quality products and services for consumers.
Last week, the US Department of Justice (DOJ) and the Federal Trade Commission (FTC) published draft vertical merger guidelines (the Draft Guidelines), signaling that vertical merger enforcement is, and will continue to be, a priority for both agencies. The Draft Guidelines supersede the DOJ’s 1984 Non-Horizontal Merger Guidelines and are intended to be read “in conjunction with the Horizontal Merger Guidelines published by the DOJ and FTC in 2010.” Continue Reading
Suspicious of the practices of one of its cardiologists, a hospital hired an independent expert to investigate. The expert examined records of 12 patients but “could not find support in any of the twelve cases” to implant pacemakers. The hospital terminated the doctor, and the government indicted him for health care fraud. During trial the government deployed an array of evidence including data mining, expert testimony, and evidence of an expensive lifestyle. A report of the decision upholding conviction is available here, on the Sixth Circuit Appellate Blog.
In a unanimous decision, the United States Court of Appeals for the Tenth Circuit reversed a district court decision holding that HHS’ use of the statewide premium average to calculate Affordable Care Act (ACA) risk adjustment charges and payments from 2014 to 2018 was arbitrary and capricious. See N.M. Health Connections v. U.S. Dep’t of Health & Human Servs., Case No. 18-2186, 2019 U.S. App. LEXIS 38739 (10th Cir. Dec. 31, 2019). New Mexico Health Connections (NMHC) filed the original lawsuit claiming that the ACA risk adjustment methodology adopted by HHS unfairly penalized smaller insurers. The district court agreed and held that HHS failed to sufficiently explain its decision to use the statewide average premium versus other alternatives in the ACA risk adjustment program. In addition, the district court had held that HHS erroneously interpreted the ACA’s risk adjustment provision to require budget neutrality and that budget neutrality was a policy goal for the agency.
As we discussed last week, the Centers for Medicare and Medicaid Services (CMS) announced that it will start fixing calendar year 2019 underpayments made to hospitals for outpatient services at off-campus provider-based departments. CMS explained that it will be doing this in response to a court order invalidating CMS’s 30% payment cuts to such off-campus PBDs in CMS’s 2019 Outpatient Prospective Payment System (OPPS) rule. However, CMS has now appealed that court decision.
It may seem contradictory for CMS to throw in the towel on this issue for 2019 yet still appeal. But the hospital associations and hospitals challenging the 2019 decision also asked the court to extend its order to CMS’s 2020 OPPS rule, which doubles the payment cuts. So CMS’s appeal signals that the agency wants another shot at defending its site-neutral payment policy for 2020.
In fact, just yesterday, the court that invalidated the 2019 cuts said that by continuing with the even larger cuts in 2020 CMS has apparently “set the agency above the law.” The court opined that the 2020 cuts should suffer the same fate as the 2019 cuts, but that any invalidation must await another day after they go into effect.
CMS’s appeal of this OPPS provider-based pay-cut issue reinforces that affected hospitals should, as a precaution, consider taking measures to preserve their right to protest this payment issue.