District Court Requires Specific Claim and ERISA Plan Allegations In ERISA Complaint

Recently, a federal district court dismissed a hospital’s complaint against an ERISA plan administrator as inadequately pled and outlined the minimum degree of specificity required in similar cases.  In Polk Med. Ctr., Inc. v. Blue Cross & Blue Shield of Ga., Inc., the plaintiff hospital alleged that the defendant administrator was employing various tactics to obstruct and/or reduce reimbursements for emergency treatment, such as refusing to honor assignments of benefits and refusing to pay claims based on supposed past overpayments.  Among its claims, the plaintiff asserted claims for ERISA benefits.

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CMS Announces New Bundled Payment Model

The Centers for Medicare & Medicaid Services (CMS) recently announced the launch of a new voluntary bundled payment model called Bundled Payments for Care Improvement Advanced (BPCI Advanced). Under the new BPCI Advanced model, participants can earn additional payment if all expenditures for a beneficiary’s episode of care are under a spending target that factors in quality. The Model Performance Period for BPCI Advanced begins on October 1, 2018, when the current Bundled Payments for Care Improvement initiative expires, and runs through December 31, 2023.

BPCI Advanced will qualify as an Advanced Alternative Payment Model (Advanced APM) under the Quality Payment Program (QPP) created by the Medicare Access and Chip Reauthorization Act (MACRA).   The QPP has two tracks: the Merit-Based Incentive Payment System (MIPS) and Advanced APMs. Under Advanced APMs, providers take on financial risk to earn the Advanced APM incentive payment. Continue Reading

DOJ Reveals Data Analytics Team To Fight Fraud

The 2017 Year in Review of the Department of Justice reveals a Data Analytics Team (the “Team”) for tracking healthcare fraud. The Healthcare Fraud Unit launched the Team in order to provide data mining expertise that efficiently detects healthcare fraud. Continue Reading

Update on Rejected C Plea for Pharma Company

Judge pronouncing sentence to manA recent blog post summarized an opinion in which a district court catalogued his reasons for rejecting a corporate “C” plea involving a pharmaceutical company.  Several developments have occurred since the court’s opinion including a plea and sentencing hearing scheduled for January 30, 2018. Please see the Anticorruption blog here for an update on this matter.

Reduced 340B Reimbursements? Nonprofit Institutions Act May Provide New Possibilities

A recent Centers for Medicare & Medicaid Services (CMS) final rule reduces some Medicare reimbursements to hospitals in 2018, paying 28 percent less for certain “specified covered outpatient drugs” (SCODs) purchased at a discount through the 340B Drug Pricing Program (340B). Although hospitals recently lost a challenge to the lower CMS rates in American Hospital Association v. Hargan, they may be able to offset a portion of the losses from a countervailing development in antitrust law. Regardless of 340B changes, the Robinson Patman Act (RPA) continues to apply to sales of discounted pharmaceuticals, while the scope of the Nonprofit Institutions Act (NPIA) exemption to RPA appears to have expanded. This suggests that hospitals may have new opportunities to arbitrage discounted products purchased outside of 340B. Continue Reading

HHS OCR Issues New Research Guidance

As part of its ongoing implementation of the 21st Century Cures Act (Public Law 114-255), the Department of Health and Human Services last month released a number of new HIPAA guidance tools, including additional information about research uses and disclosures.  The research guidance contains helpful tips for covered entities regarding authorizations, revocations, and “reviews preparatory to research” (including when researcher remote access is permissible).  For more information, please see our Data Privacy and Cybersecurity blog post, available here.

Will Antitrust Review of CVS/Aetna Shed Additional Light on Vertical Theories?

According to press reports, CVS/Caremark’s proposed $66 billion acquisition of Aetna is at the Department of Justice Antitrust Division (DOJ) for antitrust review, as opposed to the Federal Trade Commission (FTC). Under our bifurcated system of antitrust review, both agencies theoretically could have made a claim for the deal. The FTC historically has reviewed transactions involving retail pharmacies (such as the transactions last year involving Walgreens and Rite-Aid), as well as deals involving pharmacy benefit management, or PBM, firms. DOJ, by contrast, historically reviews health plan transactions, as demonstrated by its recent successful challenges to the proposed combinations of Anthem/Cigna and Aetna/Humana. The current deal involves CVS/Caremark, which operates both one of the nation’s two largest retail pharmacy chains and one of the two largest PBMs in the country, and Aetna, which is a major national health plan. Given that the deal touches on industries typically reviewed by both agencies, it was unclear which agency would prevail and get the opportunity to conduct the review. It appears DOJ won out.

Assuming the deal is in fact at DOJ, it will be interesting to see whether the Antitrust Division finds an issue with the transaction. The deal apparently presents some horizontal overlaps, as both parties offer Medicare Part D plans. But the core of the deal is vertical: Aetna’s health plan and CVS’s PBM. For most of the last 50 years, a deal presenting only (or predominantly) vertical issues would be extremely unlikely to draw much interest from DOJ, much less a challenge. There’s little reason to think that under the historical approach this deal would present an antitrust concern. But given the DOJ’s recent challenge to the vertical AT&T/Time Warner transaction, one could reasonably ask whether the parties in CVS/Aetna are in for a fight. Only time will tell if DOJ’s interest in vertical theories of harm extends beyond deals involving the entertainment industry, where in the past they have partnered with the FCC to impose regulatory conditions. At a minimum, DOJ’s response to the CVS/Aetna tie-up may help give the public clarification on its thinking on vertical mergers.

 

Safe Harbor Proposals Face Deadline in February

Suggestions for Safe Harbor proposals face a deadline of February 27, 2018, according to a Federal Register announcement. The same deadline applies to suggestions for practices that should be discussed in a Special Fraud Alert.

Safe Harbors

The Office of Inspector General (OIG) requests recommendations for Safe Harbors because the Anti-kickback statute “is so broad” that “relatively innocuous commercial arrangements” can violate the law. In order to promote effective healthcare practices, the OIG may designate certain “payment and business practices” will not be treated as criminal offenses under the Anti-kickback statute or the basis for administrative sanctions.

Factors for Safe Harbors

When evaluating whether to create a Safe Harbor, the OIG will consider how the proposal affects

  • access to health care services,
  • the quality of health care services,
  • patient freedom of choice among health care providers,
  • competition among health care providers,
  • the cost to Federal health care programs,
  • the potential overutilization of health care services, and
  • the ability of health care facilities to provide services in medically underserved areas or to medically underserved populations.

Special Fraud Alerts

The OIG also solicits recommendations of practices that should be discussed in a Special Fraud Alert. These Alerts allow the OIG to provide guidance to the healthcare industry about practices that could be considered fraudulent. The Alerts assist providers to be compliant with the law.

How to Submit

Recommendations for either Safe Harbors or Special Fraud Alerts may be submitted through the Federal eRulemaking Portal at http://www.regulations.gov

or

by regular, express, or overnight mail to Patrice Drew, Office of Inspector General, Regulatory Affairs, Department of Health and Human Services, Attention: OIG-125-N, Room 5541C, Cohen Building, 330 Independence Avenue SW., Washington, DC 20201.

Comment Dates Set For Federal Communications Commission Rulemaking On $400 Million Rural Health Care Program

Medical CostsThe FCC’s Notice of Proposed Rulemaking (NPRM) to consider changes to its Rural Health Care Program (RHCP), which provides $400 million in annual subsidies for telecommunications and broadband services to eligible rural healthcare providers (HCP), has now been published in the Federal Register.

Interested parties may submit initial comments on the FCC’s proposals by February 2, 2018. Reply comments are due no later than March 5, 2018. Comments, which may be in letter form, can be filed electronically in the Commission’s WC Docket No. 17-310 through the Commission’s Electronic Comment Filing System or the Federal eRulemaking Portal. Access instructions to each are found in the Addresses section of the Federal Register Notice.

 

OIG Allows Nursing Facility Discounts to Insurers

Nursing Facility ConsultationThe HHS Office of Inspector General allows nursing facilities to give discounts to private insurers. OIG Advisory Opinion 17-08 describes a startup company planning to develop a network of nursing facilities (the Network). The company wants nursing facilities in the Network to provide discounts on daily rates charged to a long-term care insurer (Participating Payor) and its Policyholders. Qualifying nursing facilities must 1) have a quality rank of 3-stars or higher and 2) offer discounts off the daily rates for semi-private rooms covered by a Participating Payor.

Elements of the Discount Program

The OIG lists important aspects of the discount program such as:

  • A Participating Payor must be a private long-term care insurer, although a Policyholder may also be a federal healthcare Beneficiary.
  • No discounts are offered for stays covered by federal healthcare programs.
  • The discount is split with 2/3 to the Participating Payor and 1/3 to the Policyholder.
  • The Network provides no benefits other than the discount to a Participating Payor or a Policyholder.
  • The Network pays an administrative fee to the Participating Payor.
  • A Policyholder remains free to select any nursing facility covered by the Participating Payor and is not penalized for choosing a non-participating facility.

Factors Favoring Approval

The OIG considered whether the Anti-Kickback Statute and Civil Monetary Penalties could apply but found “sufficiently low” likelihood of improper inducement of a federal healthcare Beneficiary for several reasons.

  • The Network has no control over whether a Policyholder who is also a Beneficiary may need care in the future that is federally reimbursable.
  • A discount is not contingent on whether items or services are received from the Network.
  • The arrangement does not affect competition. Any qualified nursing facility has access to the Network, and a Beneficiary is free to use a non-covered facility without increased cost.
  • Open access to the Network avoids steering.
  • A Beneficiary is likely to select a nursing facility based on many factors beyond the discount.

Physicians and Planners Not Compensated

The OIG also approvingly emphasizes that physicians, discharge planners, and others participating in site selection do not receive remuneration.

Usual Limitations Apply

Although the Advisory Opinion contains the standard list of limitations on its application, nursing facilities and insurers will want to analyze the opinion for guidance.

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