Month: January 2021

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Hospice, home health agency and owners pay over $1.8M to resolve claims concerning physician payments

The founders of an Edinburg hospice and related home health agency have paid to resolve allegations they submitted claims to Medicare that resulted from unlawful referrals.

Onder Ari, 49, Edinburg, and Sedat Necipoglu, 48, McAllen, founded Allstate Hospice LLC and Verge Home Care LLC. They and their companies have now paid $1,847,279.36 following an investigation into improper payments to physicians for referrals.

Ari and Necipoglu offered compensation to physicians who were responsible for a significant majority of their patient referrals. Specifically, they provided physicians with monthly payments pursuant to medical directorship agreements with Allstate and Verge. Those payments were in excess of fair market value for the services the physicians actually provided. They also sold interests in Allstate to five different physicians which ultimately netted them substantial quarterly dividends. They also provided physicians other gifts and benefits, such as travel and tickets to sporting events.

Source: Hospice, home health agency and owners pay over $1.8M to resolve claims concerning physician payments

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2020 Health Antitrust Year in Review

The federal antitrust enforcement agencies brought three hospital merger challenges and three criminal antitrust enforcement actions in health care in the past year. Combined with the incoming Democratic administration, healthcare antitrust enforcement is likely to remain strong in 2021.

Hospitals & Health Systems. The Federal Trade Commission (FTC) challenged three hospital and health system transactions in 2020. While the outcome of the most recent challenged transaction is pending, in one of the other two transactions, the merging parties abandoned the deal after the complaint was filed, and in the other transaction the district court refused to grant a preliminary injunction to cease consummation of the transaction pending an administrative trial. Other than various strategic, cost, timing, and business reasons for why parties choose to defend a transaction or not, and the difference in case development, what lessons can be drawn from these recent enforcement actions? First, payor views—and the substantiation thereof—remain key. Parties to proposed in-market transactions should carefully analyze their historical contracting practices and network configuration. Second, geographic market definition has always been and remains critical to the antitrust analysis of these transactions, particularly in urban areas. Relevant geographic markets are analyzed first by the impact a merger may have on insurers, and second by the merger’s potential impact on patients. Detailed economic analysis is part of antitrust due diligence in preparation for proposed transactions.

Payors. If finally approved by the court, the proposed Blues plans’ subscriber settlement may change the competitive dynamic in the healthcare services insurance markets. Employers would be able to request bids from and providers may negotiate rates with multiple insurance providers even under the same umbrella. Insurance licensees may be able to make inroads into new markets and offer new products.

Criminal Enforcement. The Department of Justice (DOJ) has brought several criminal charges against healthcare companies in the past couple of months, including for wage-fixing, nonsolicitation/nopoach agreements and market allocation. General counsels (GCs) and human resources (HR) professionals should emphasize company-wide training and familiarity on how the sharing of nonpublic wage and employment term information with competitors can lead to antitrust violations for individuals as well as the company. Enforcement agencies, as well as private plaintiffs, can challenge agreements as anticompetitive irrespective of whether they challenge any underlying transaction. The federal government and state AGs are ramping up criminal enforcement in healthcare markets. Healthcare organizations should consider their internal corporate compliance programs and education.

Vertical Mergers. In analyzing the potential harm of a vertical transaction, the antitrust enforcement agencies will ask whether the parties, after they have merged, will have the ability or incentive to foreclose rivals. For example, if a hospital system acquires an ambulatory care provider in the same geographic area, a key inquiry would be whether the merged entity will have the ability to force payors into an exclusive arrangement that limits the payors’ ability to contract with other hospitals or ambulatory care providers. Another relevant question is whether the merged entity would have the ability to cherry-pick profitable cases and refer less profitable cases to other entities. In a vertical merger between an insurer and a pharmacy, a key concern would be whether insurer enrollees could use only the payor’s pharmacy, or have to pay higher fees to use a different pharmacy. Parties to vertical transactions should engage in antitrust planning to assess potential competitive effects.

Federal and State Policy & Enforcement. With Xavier Becerra nominated to Secretary of the Department of Health and Human Services (HHS), states pursuing antitrust enforcement in the provider marketplace will be likely to receive support (e.g., briefs, public statements, parallel federal enforcement actions) from the federal government. Moreover, the injunctive relief included in the settlement terms of a lawsuit Becerra joined as California Attorney General could very well lead states to pass tighter transparency regulations and price controls. Providers should examine their ordinary course and post-closing managed care contracting practices.

Source: 2020 Health Antitrust Year in Review – McDermott, Will and Emery.

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Improper Billing of “P-Stim” Devices is Focus of Recent FCA Settlements

Improper billing for electro-acupuncture using a “P-Stim” device (or peri-auricular stimulation device) has been the subject of two False Claims Act (FCA) settlements already in 2021, following a trend of such enforcement actions within the past year. And there are more to come.

These prosecutions involve providers billing federal healthcare programs for acupuncture using P-Stim devices under HCPCS Code L8649. Unlike P-Stim devices, though, which are attached to the ears of a patient using needles and adhesives without surgery or anesthesia, HCPSCS Code L8649 applies to a product that is surgically implanted into a patient using anesthesia. Medicare, TRICARE and the Federal Employees Health Benefit Program (FEHBP) do not reimburse for acupuncture devices like P-Stim, nor do they reimburse for P-Stim as a neurostimulator or an implantation of neurostimulator electrodes. In addition to P-Stim, the brand names for these devices include ANSiStim, E-pulse, Stivax and NeuroStim.

Source: Improper Billing of “P-Stim” Devices is Focus of Recent FCA Settlements

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Texas Company Agrees to Reimburse Medicare for Improper Billing Related to Neurostimulators

Spinal Decompression Clinic of Texas (“SDCT”) has agreed to pay $330,898.00 to resolve liability under the False Claims Act for the alleged improper billing of electro-acupuncture device neurostimulators.

SDCT received reimbursement from Medicare in the amount of $177,051.15 for these procedures. SDCT, however, did not perform these surgeries, and instead applied P-Stim devices in an office setting, without surgery or anesthesia. P-Stim is an electric acupuncture device that, pursuant to manufacturer’s instructions, is affixed behind a patient’s ear using an adhesive. Needles are inserted into the patient’s ear and affixed using another adhesive. Once activated, the device then provides intermittent stimulation by electrical pulses. It is a single use, battery-powered device designed to be worn for approximately four days until its battery runs out, at which time the device is thrown away.

Medicare does not reimburse for acupuncture or for acupuncture devices such as P-Stim, nor does Medicare reimburse for P-Stim as a neurostimulator or as implantation of neurostimulator electrodes.

Source: Texas Company Agrees to Reimburse Medicare for Improper Billing Related to Neurostimulators

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New HHS Advisory Opinion Confirms Complete Federal Preemption for PREP Act Cases and Applicability of the Act’s Defenses in Non-Use Situations

The US Department of Health and Human Services (“HHS”) issued an Advisory Opinion (“21-01”) Friday, reinforcing how the Public Readiness and Emergency Preparedness Act (“PREP Act” or the “Act”) (1) provides complete preemptive federal jurisdiction and invites jurisdictional discovery; and (2) applies to cases where the alleged harm results from failure to use (and even refusal to use) a covered countermeasure when that failure arises out of the conscious allocation and prioritization of the countermeasures.

Advisory Opinion 21-01 expands on the language of the amended Declaration to clarify that the PREP Act provides complete preemptive federal jurisdiction for cases in which it is a defense. Once invoked, the PREP Act provides complete preemptive federal jurisdiction, and the federal court retains the case to decide whether the immunity and preemption provisions apply; if they do not apply, then the court would try the case as it would a diversity case.

Advisory Opinion 21-01 further clarifies that the PREP Act protections apply in cases where the complainant alleges harm from the defendant’s complete failure—or even refusal—to use covered countermeasures, particularly in those cases where such a failure arises from the conscious allocation of scarce resources among potential countermeasure recipients.

Source: New HHS Advisory Opinion Confirms Complete Federal Preemption for PREP Act Cases and Applicability of the Act’s Defenses in Non-Use Situations

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HHS Issues Advisory Opinion on Contract Pharmacies Under the 340B Program

HHS/OIG released an advisory opinion concluding that drug manufacturers are obligated to deliver discounts under the 340B Drug Pricing Program on covered outpatient drugs when contract pharmacies are acting as agents of 340B covered entities.

Many covered entities enter into written agreements with pharmacies (contract pharmacies) to distribute their covered outpatient drugs to the entities’ patients. The covered entity orders and pays for the 340B drugs, which are then shipped from the manufacturer to the contract pharmacy. The contract pharmacy then sends the drug to the patient. The covered entity purchases the drug, and the contract pharmacy provides the pharmacy services to dispense the drug to a patient.

In the advisory opinion, the HHS Office of the General Counsel asserts that the plain meaning of Section 340B requires manufacturers to sell covered drugs to covered entities at or below the ceiling price.

Source: HHS Issues Advisory Opinion on Contract Pharmacies Under the 340B Program

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CMS finalizes “reasonable and necessary” definition, expedited breakthrough device coverage process

On January 14, 2021, the Centers for Medicare & Medicaid Services (CMS) published a final rule that, for the first time, adopts a regulatory standard for determining whether a particular item or service is “reasonable and necessary” under section 1862(a)(1)(A) of the Social Security Act (SSA) and sets the stage for commercial insurance coverage to be considered in assessing such coverage in prescribed circumstances. In addition, the final rule establishes a “Medicare Coverage of Innovative Technology” (MCIT) pathway, which is a voluntary and expedited mechanism to obtain national Medicare coverage for medical devices designated with “breakthrough” device status by the Food and Drug Administration (FDA).

Source: CMS finalizes “reasonable and necessary” definition, expedited breakthrough device coverage process

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Large Health System Agrees To Pay $200,000 as Part of OCR’s Fourteenth Right of Access Initiative Settlement

In its first enforcement action of 2021, on January 12th, the United States Department of Health and Human Services (“HHS”), Office for Civil Rights (“OCR”) announced it settled with Banner Health its fourteenth enforcement action as part of its HIPAA Right of Access Initiative (the “Initiative”). OCR announced the Initiative in 2019 to ensure individuals can easily and timely access their health information at a reasonable cost under the Health Insurance Portability and Accountability Act (“HIPAA”) Privacy Rule. In 2020, OCR announced eleven settlements as part of the Initiative including most recently against a primary care provider. The Initiative has resulted in settlements with all sizes of providers.

Source: Large Health System Agrees To Pay $200,000 as Part of OCR’s Fourteenth Right of Access Initiative Settlement

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HIPAA Safe Harbor Bill Becomes Law; Requires HHS to Incentivize Security

On January 5, the President signed the HR 7898, HIPAA Safe Harbor Bill, into law, which amends the HITECH Act to require HHS to incentivize best practice security.

The legislation directs HHS to take into account a covered entity’s or business associate’s use of industry-standard security practices within the course of 12 months, when investigating and undertaking HIPAA enforcement actions, or other regulatory purposes.

The law also expressly noted that the HITECH changes do not give HHS the authority to increase fines or the extent of an audit, when an entity is found to be out of compliance with the recognized security standards.

The law also corrected technical elements of the 21st Century Cures Act related to the information blocking enforcement authority of HHS’ OIG. Specifically, under the new law, OIG is authorized to obtain information, assistance, and other support from federal agencies when investigating claims of information blocking by the developers or entities that offer health information technologies.

Source: HIPAA Safe Harbor Bill Becomes Law; Requires HHS to Incentivize Security

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Texas, Pennsylvania hospitals lose lawsuit challenging Medicare payments

The lawsuit was brought by Moses Taylor Hospital in Scranton, Pa., and Tomball (Texas) Regional Center. The hospitals said HHS wrongly calculated their Medicare disproportionate share hospital payments for fiscal year 2015, using the wrong data. As a result, the hospitals appealed the DSH payment decision to the HHS provider reimbursement review board, where it was dismissed. In its dismissal, the review board said it lacked jurisdiction to consider the hospitals’ objections to their payments.

Source: Texas, Pennsylvania hospitals lose lawsuit challenging Medicare payments