On Friday, September 15th, the United States Attorney’s Office for the District of Massachusetts (United States) and the Massachusetts Attorney General’s Office (Massachusetts) filed a joint complaint in the United States District Court for the District of Massachusetts against a Massachusetts-based substance abuse treatment provider. According to the complaint, the United States seeks to recover damages, restitution, and civil penalties against Bournewood Inc. d/b/a Bournewood Health Systems (Bournewood) and First Psychiatric Planners, Inc. d/b/a Bournewood Hospital (FPP) under the federal False Claims Act (FCA) and under the common law. Massachusetts seeks to similarly recover under the Massachusetts False Claims Act (MFCA), the Massachusetts Medicaid False Claims Act (MMFCA), common law. The case was initially filed as a qui tam whistleblower action in 2021 by the former operator of the group of sober homes, David Perry.
Continue reading…Prior authorizations, one of health insurers’ many “utilization management” techniques, is a hot topic amongst practicing physicians, patients, and regulators, to name a few. The prior-authorization process requires a health insurer to consent to a doctor’s proposed course of treatment for a patient before the insurer agrees to pay for any medical services the physician wishes to provide. The insurer’s consent is allegedly based on whether the prescribed treatment plan is considered “medically necessary” by the insurer.
Continue reading…On Friday, July 7, 2023, the Centers for Medicare & Medicaid Services (CMS) published their long-awaited proposed remedy to the unlawful 340B drug payment reductions.
Background: In 2018, CMS significantly reduced the Average Sales Price (ASP) plus six-percent (6%) formula for calculating 340B drug payments to ASP minus 22.5%. After conflicting decisions from the District of Columbia’s federal District and Appeals Courts, on June 15, 2022, a unanimous U.S. Supreme Court concluded that the ASP minus 22.5% formula was “unlawful” and violated a clear statutory mandate to reimburse 340B drugs at ASP plus 6%. American Hospital Assn. v. Becerra, 142 S. Ct. 1896, 1906 (2022). However, the U.S. Supreme Court did not address remedies and remanded the case to the U.S. District Court for the District of Columbia. On September 28, 2022, the District Court vacated the payment reduction and ruled that CMS had to stop paying the unlawful rate. However, it did not address the damages from January 1, 2018 – September 27, 2022.[1] On January 10, 2023, the District Court further remanded the case to CMS to provide a remedy for the underpayments dating back to January 1, 2018.[2]
Continue reading…At the end of last year, the Centers for Medicare & Medicaid Services (CMS) proposed changes to the so-called 60-day repayment rule. The proposed changes include eliminating the current “reasonable diligence” standard that applies to providers in connection with potential liability for overpayments and replacing it with “actual knowledge” or “acting with reckless disregard.” The proposed changes can be located here.
Continue reading…Healthcare, New Jersey Health Care, Protection for employees / No Comments
Health care entities, home health care agencies, and staffing registries considering a transaction in New Jersey will need to keep in mind new obligations to certain employees. On August 18, 2022, Governor Murphy signed into law New Jersey Senate Bill No. 315 (the “Act”), which created broad protections for many employees in the health care sector in the event of a change in control. The Act requires any change in control to be made pursuant to a contract or agreement between the parties that preserves the wages, benefits, and employment status of eligible employees.
Continue reading…We previously reported that the Fourth Circuit, via a 2-1 decision in United States ex rel. Sheldon v. Allergan Sales, LLC, 24 F.4th 340 (4th Cir. 2022), affirmed the dismissal of a False Claims Act (“FCA”) qui tam lawsuit against Forest Laboratories, LLC (“Forest”). The plaintiff alleged that Forest had underpaid states by over $680 million under the Medicaid Rebate Statute by failing to aggregate all the discounts it offered in a distribution channel for its drugs. Instead, Forest had indicated that the best price it offered was the largest discount provided among the entities in that same distribution channel. How a manufacturer calculates its best price is critical in determining what Medicaid rebates it sends to states, affecting how much the federal government sends in Medicaid payments to states. For a full breakdown of the calculation under the Statute, please see our prior post.
Continue reading…In a continuing wave of fraud and abuse civil enforcement actions brought by qui tam relators, big pharma giant, Biogen, is the latest corporate actor to reach a mega settlement with the U.S. Department of Justice (DOJ) for allegations of False Claims Act liability for paying bribes to physicians who participated in Biogen’s sales and marketing programs veiled as “physician training and education” seminars over a five year period from 2009 through 2014. DOJ did not intervene in the case.
According to an investor relations statement released by Biogen on September 26, 2022, the Company reached a final agreement to pay $900 million to settle the qui tam action; however, Biogen insists that its intent and conduct were at all times lawful and, therefore, it denies all allegations raised in the qui tam law suit. Significantly, the Company stated in the release as a basis for the settlement that, “Biogen determined that now was the right time to resolve the litigation and allow the Company to remain focused on our patients and strategic priorities.”
In this case, the qui tam relator, Michael Bawduniak, who was also an employee at Biogen, alleged specifically that the Company routinely paid fees to physicians as inducements for ordering/prescribing three Biogen products (Avonex, Tysabri and Tecfidera) in the form of speaker honoraria, training fees, consulting fees and meals at speaker programs and training sessions. If true, these practices would be in violation of the federal Anti-Kickback Statute.
What is material about this settlement is that industry manufacturers (whether pharma or DME) need to take stock of their interactions with physicians and clinical institutions and they need to do this soon. While, in this case, DOJ did not intervene, there is now precedent. As a result, we can expect only greater enforcement activity and intervention by DOJ.
Those affected by this case, or similar fact patters, should pay close attention, and seek counsel if there are questions about their own industry conduct concurrently or retrospectively.
The Office of Civil Rights of the Department of Health and Human Services (“OCR”) announced the resolution of three more right of access cases, bringing the total to a whopping 41 since the start of its drive to increase compliance with this Health Insurance Portability and Accountability Act (“HIPAA”) requirement over two years ago. From small physician practices to nursing homes to health systems, OCR has spared no one in its quest to reduce patient complaints related to medical records request fulfillment. The three most recent actions all involved dental practices, with settlements ranging from $25,000 to $80,000. Each instance involved a failure to timely provide records (where the respective patient made multiple requests over a span of months to over a year), and one where the practice’s $170 copying fee exceeded HIPAA’s reasonable and cost-based standard.
Continue reading…In its recently published Special Fraud Alert, the Office of Inspector General (“OIG”) presented a list of suspect characteristics related to arrangements with telehealth and telemedicine companies, which may help determine the potential for fraud.
The OIG developed this list based on dozens of fraud investigations involving companies in the digital health space. The schemes investigated by the OIG varied in design and operations, as well as the types of entities and individuals involved. They implicated a whole slew of Federal laws, including, among others, violations of the Federal anti-kickback statute and the False Claims Act. These schemes raised significant fraud concerns because “of the potential for considerable harm to Federal health care programs and their beneficiaries.”
The list of suspect characteristics related to arrangements with telemedicine companies is as follows:
Continue reading…On August 19, 2022, the United States Departments of Health and Human Services, Labor and Treasury released final rules (“Final Rules”) revising certain provisions of their previously issued interim final rules regarding the No Surprises Act (“NSA”).
The revisions reflect some comments received on the interim final rules under the NSA that the department published in 2021, but they were made necessary because two separate federal trial courts vacated certain provisions of the department’s interim final rules regarding the use of the Qualified Payment Amount (“QPA”) in the Independent Dispute Resolution IDR process. Here are the four things you need to know about the Final Rules:
- The QPA, the plan’s median contract rate for a particular item or service, is a factor that the certified IDR entity must take into account in determining the payment that best represents the value of the item or service in dispute, along with the additional information, if any, submitted by the parties that is permissible under the NSA rules (“Additional Information”). This is a change to the interim final rules that were necessitated by the litigation challenging those rules. The vacated interim final rules established a “rebuttable presumption” that the QPA best represents the value of the item or service in dispute.
- The Final Rules do not require the certified IDR entity to select the offer closest to the QPA. Rather, they require certified IDR entities to select the offer that best represents the value of the item or service under dispute after considering the QPA and all Additional Information. This is another change to the interim final rules that were necessitated by the litigation challenging those rules.
- The Departments were clearly concerned that the certified IDR entities’ consideration of Additional Information might lead to “double counting” information that is already factored into the establishment of the QPA and provided several examples of how double counting can be avoided while still considering non-duplicative Additional Information.
- To increase transparency as to the plans’ initial payment determinations and the certified IDR entities’ ultimate payment determinations, the Final Rule added the following requirements:
- A plan must provide a statement that the service code or modifier billed by the provider was downcoded; an explanation of why the claim was downcoded, including a description of which service codes were altered, if any, and which modifiers were altered, added, or removed if any; and the amount that would have been the QPA had the service code or modifier not been downcoded.
- A certified IDR entity’s written decision must include an explanation of its determination, including what information the certified IDR entity determined demonstrated that the offer selected as the out-of-network rate is the offer that best represents the value of the item or service in dispute, including the weight given to the QPA and any Additional Information.
The Final Rules as well as the litigation that necessitated them, are generally seen as favorable to providers, but it remains to be seen whether they will have a material effect on what providers are paid by plans for out-of-network services that are subject to the NSA.