Category: Health Law Highlights

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Health Law Highlights

Advisory Opinion 23-7 OIG Issues Favorable Opinion Regarding Proposal to Pay Bonuses to Its Employed Physicians Based on Net Profits

From Health Law Diagnosis, by Nathaniel Arden & Michael Lisitano:

  • On October 13, 2023, the Office of Inspector General (OIG) published Advisory Opinion 23-07, in which the OIG issued a favorable opinion regarding a physician group employer’s proposal to pay bonuses to its employed physicians based on net profits derived from certain procedures performed by the physicians at ambulatory surgery centers.
  • Under the proposed arrangement, the Group would pay its physician employees a bonus in addition to the physicians’ base compensation. The bonus would be equal to 30% of the Group’s net profits derived from two ambulatory surgical centers’ facility fee collections attributable to that physician’s procedures.
  • The two ambulatory surgical centers in question would be operated as “divisions” of the Group and not as separate legal entities.
  • The OIG determined that the proposed bonus arrangement is protected by the bona fide employee statutory exception and regulatory safe harbor of the Anti-Kickback Statute and would therefore, not generate prohibited remuneration.
  • The OIG differentiated similar arrangements where the ACS is owned by a separate entity. In those cases, the bona fide employee exception and safe harbor would likely not apply.
  • OIG’s analysis in the Advisory Opinion demonstrates that when properly structured to comply with statutory exceptions and regulatory safe harbors, certain bonus compensation arrangements of this sort may be permissible.
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Health Law Highlights

UnitedHealth Defends Lucrative Billing Tactic in Appeals Court

From Bloomberg Law, by Jacklyn Wille:

  • “Cross-Plan Offsetting” is the practice by an insurer of clawing back benefits it says were overpaid to a provider under one plan by reducing future payments to the provider under a different plan that it administers.
  • This common insurance billing tactic has invited litigation over its legality and opposition from the Labor Department.
  • In one such case, the Eighth Circuit is being asked to decide whether Smith and Ghanim, who are covered by health plans funded by their employers and administered by United, have been harmed in a way that would give them standing to challenge the practice under ERISA.
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Health Law Highlights

Ozempic’s Success Treating Other Ailments Is Bad News for Rivals

From Bloomberg Law, by Madison Muller:

  • Ozempic, and other GLP-1 receptor agonists, are diabetes medications that have become popular for weight loss.
  • Now, there is evidence that they have other more far-reaching benefits too:
    • They may have a protective effect on the heart, liver and kidneys.
    • They may combat substance abuse or even Alzheimer’s disease.
    • Wegovy has been shown to reduce the risk of heart attacks and strokes by 20% in overweight people with a history of heart issues.
  • As a result, these medications may disrupt many different industries.
  • For example, when the manufacturer of Ozempic announced on Oct. 10 that its effectiveness in kidney disease was so conclusive that it was stopping a trial early, it sparked a $3.6 billion selloff in shares of dialysis providers Fresenius Medical Care AG and DaVita Inc.
  • These drugs may also disrupt the health insurance market. Even if approved for new uses, these drugs are very expensivThe list price for Ozempic is about $900 a month, and for Wegovy it’s more than $1,000.
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Health Law Highlights

False Claims Act Risks for Cyber Device Manufacturers Arising Under New Requirements Subject to FDA Enforcement Beginning October 1, 2023

From GibsonDunn, by Winston Chan, Jonathan Phillips, Gustav Eyler, John Partridge, Christopher Rosina, Carlo Felizardo, and Nicole Waddick:

  • The FDA approval process for digital health “cyber devices” requires that premarket submissions contain cybersecurity information, including the company’s plans to address cybersecurity vulnerabilities, processes to provide a reasonable assurance that the devices are cybersecure, a software bill of materials, and other information as the Secretary requires.
  • As of October 1, 2023, the FDA expects companies to comply with these new cybersecurity requirements.
  • False statements related to these disclosures could give rise to false statements and subsequent risk based on the “fraud-on-the-FDA” theory of liability.
  • Companies should take significant care in their statements in premarket submissions regarding their cybersecurity practices and procedures.
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Health Law Highlights

Woman’s Death After IV Therapy Leads to License Suspension for Frisco Anesthesiologist

From D Magazine, by Will Maddox:

  • The Texas Medical Board suspended Frisco anesthesiologist Dr. Michael Gallagher after a mother of four died in July at a med spa for which he was the medical director. 
  • She died after receiving an IV treatment administered by the non-licensed owner of the business. 
  • The med spa did not have protocols or policies for the staff’s IV therapy administration. 
  • There was only an unsigned agreement between Gallagher and the med spa. 
  • There were no licensed medical staff or experienced personnel onsite while IV therapy was being administered. 
  • The treatment the patient received before dying included vitamin B complex, vitamin B12, TPN electrolytes, and ascorbic acid. TPN electrolyte solution requires a prescription and is known to cause complications. 
  • IV therapy is a growing market, but complications can be deadly because it is often administered in medical spas with little medical supervision.
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Health Law Highlights

Congress Eyeing Broker Payments Behind Booming Medicare Sales

From Bloomberg Law, by John Tozzi:

  • About 31 million people – more than half of Medicare enrollees – opt to get their coverage through private plans known as Medicare Advantage.
  • Lawmakers are examining the payments made by health insurers to brokers who sell their Medicare plans, concerned that the payments may be steering seniors to some plans over others.
  • Federal rules limit the commissions Medicare plans can pay brokers, but some companies may be skirting these rules by offering extra payments that can sometimes double brokers’ compensation, influencing them to push plans that pay the most.
  • A report from the Senate Finance Committee last year described deceptive marketing tactics, “fraudulent sales practices,” and instances of people being enrolled in Medicare Advantage plans without knowing it.
  • The large, publicly traded online brokers report revenue from both commissions and other sources, such as “volume-based bonuses” for meeting sales targets and “marketing development funds” for certain customers.
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Health Law Highlights

CMS Publishes Updated Data on Stark Law Voluntary Disclosures

From Policy & Medicine, by Thomas Sullivan:

  • 2022 was a stand-out year for Stark Law self-disclosures. It was the highest year in both the number of disclosures settled and the aggregate amount of all settlements for the year.
  • In 2020, a total of 36 settlements were reached, ranging from $33 to $952,300, for a total of $4,344,966.
  • In 2021, a total of 27 settlements were reached, ranging from $631 to $1,110,148, totaling $1,988,451.
  • In 2022, a total of 104 settlements were reached, ranging from $299 to $1,171,174, for a total of $9,287,866.
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Health Law Highlights

Labs Take Note New OIG Opinion Highlights That Fair Market Value Per Test Payments Can Still Violate the Anti-Kickback Statute Publications

From Bass, Berry & Sims, by Jennifer E. Michael & Danielle M. Sloane:

  • The U.S. Department of Health and Human Services Office of Inspector General (OIG) issued Advisory Opinion 23-06, wherein the OIG reiterated its longstanding position that carving out federal health care program (FHCP) business from an arrangement does not insulate the arrangement from Anti-Kickback Statute liability.
  • The arrangement would involve laboratories that conduct both the Technical Component (TC), preparing the slides, and the Professional Component (PC), interpreting the slides.
  • The Requestor would pay fair market value (FMV) for the TC services from other labs, provide the PC, and then bill commercial insurance for both the TC and PC services. The commercial insurance policies allowed this practice.
  • The arrangement would not involve any service reimbursable by FHCP, but the Requestor did expect the labs to refer FHCP services outside of this arrangement.
  • The Requestor admitted the arrangement was not commercially reasonable because it could provide TC services itself for less than FMV.
  • Despite the FMV payment and FHCP business carve-out, OIG determined that the arrangement could increase the likelihood that the labs or their referring physicians would order federally reimbursable services from Requestor.
  • Citing its Special Fraud Alert on Laboratory Payments to Referring Physicians, OIG reiterated that the Anti-Kickback Statute is violated if even one purpose of the payment is to induce referrals of FHCP business, regardless of whether that payment is FMV.
  • Finally, the proposed arrangement in Advisory Opinion 23-06 failed to meet a safe harbor only because Requestor effectively certified that the arrangement was not commercially reasonable.
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Health Law Highlights

HHS OIG Introduces Managed Care Strategic Plan

From Squire Patton Boggs, by Bevan Blake:

  • In response to the continued growth of managed care in government-sponsored health plans over the last several years, the Office of Inspector General (“OIG”) of the U.S. Department of Health and Human Services (“HHS”) introduced a new “Strategic Plan for Oversight of Managed Care for Medicare and Medicaid.”
    • A majority of Medicare beneficiaries are enrolled in a Medicare Advantage Plan.
    • It is estimated that the share of beneficiaries enrolled in Medicare Advantage Plans will increase to 60% in ten years.
    • For Medicaid, almost seventy-five percent (75%) of beneficiaries are now enrolled with comprehensive Managed Care Organizations.
  • The Strategic Plan identifies three areas of focus for OIG: (1) promoting access to care for enrollees, (2) providing comprehensive financial oversight, and (3) promoting data accuracy.
  • Promoting Access to Care: OIG will review plans and assess whether they meet network adequacy standards.
  • Financial Oversight: OIG will work with managed care plans to identify and prevent fraud within the plans and to ensure the accuracy of the risk-adjusted capitated payments provided to managed care plans.
  • Data Accuracy: OIG wants provider identifiers on Medicare Advantage encounter data so it can provide oversight of the program, and avoid losses caused by enrollees who are enrolled in two different states or managed care organizations.
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Health Law Highlights

Patient Privacy: Preventing Data Leakage in Healthcare

From Security Boulevard, by Chantel Rodrigues:

  • Tracking pixels are tiny, invisible images or code snippets embedded in web pages, emails, or mobile apps. They can be used for legitimate purposes, such as monitoring website traffic, measuring user engagement, and improving user experience.
  • They can also lead to data leakage and privacy breaches, which can constitute HIPAA violations if they compromise patient privacy or security.
  • Identify all pixels and trackers on your web pages and remove the ones that are unnecessary or could be reading sensitive data.
  • Implement JavaScript security controls throughout both the development and Application Security (AppSec) lifecycles.
  • If you do use tracking technologies, ensure they only use and share protected health information (PHI) following HIPAA Privacy Rule guidelines.
  • If you use technology vendors, establish a robust business associate agreement (BAA) to protect PHI.