A few weeks ago, the U.S. Court of Appeals for the Fourth Circuit answered a critical inquiry in the False Claims Act (“FCA”) context: does a defendant violate the FCA when its reading of the regulation is objectively reasonable and there is no government guidance discouraging or rejecting that interpretation? Answering in the negative in a 2-1 decision, the court affirmed the dismissal of the case and injected into FCA cases the requisite state of mind (i.e., scienter) for violating a regulation as set out in Safeco Ins. Co. of Am. v. Burr, 551 U.S. 47, 127 S. Ct. 2201 (2007) by the U.S. Supreme Court. United States ex rel. Sheldon v. Allergan Sales, LLC, 24 F.4th 340, 347–48 (4th Cir. 2022). In doing so, the Fourth Circuit joined the ranks of five other circuit courts that had considered the issue. Disturbed by the exceedingly complex Medicaid rules at issue that were open to varying interpretations and the constitutional implications of “the veritable thicket of Medicaid regulations, “labyrinthine reporting requirements,” and “the most completely impenetrable texts within human experience,” the Fourth Circuit placed the onus on the government “to indicate a way through the maze.” Id. at 344, 350, 352 (internal quotations and citations omitted).
Continue reading…On Thursday, September 30, 2021, The United States departments of Health and Human Services (“HHS”), Labor and Treasury released an interim final rule (“Rule”) that completes most of the regulatory framework under the federal No Surprises Act (“Act”). The Act largely bars balance billing of patients who receive emergency services or hospital-based provider services (at an in-network facility) on an out-of-network basis. This is the second part of the agencies’ rulemaking under the Act. The first part was released in July 2021. This second part deals primarily with the independent dispute resolution (“IDR”) process, which will determine the “appropriate out of network rate” to be paid to the provider by the health plan for a particular emergency or hospital-based provider service and a portion of the provider price transparency requirements under the Act.
Continue reading…Two chambers of commerce, the Chamber of Commerce the United States of America and the Tyler (TX) Area Chamber of Commerce, filed a lawsuit on August 10, 2021, in the US District Court for the Eastern District of Texas against the United States departments of Health and Human Services, Labor and Treasury to block the implementation of two provisions contained in the federal regulations entitled Transparency in Coverage (“Rule”).
The first challenged provision requires health plans to post on a website internal pricing data, including allowed amounts, in-network rates, and the negotiated rates for all services and the “historical net price” of prescription drugs, in “machine-readable” (searchable) files. The second provision being challenged requires the inclusion of the “historical net price” of prescription drugs in the machine-readable files. The provisions are set to go into effect for “plan years” beginning after January 11, 2022. Another major provision of the Rule, the one requiring insurers to provide “cost-sharing information” to individuals upon request via a website or in paper form, is not being challenged in the lawsuit.
Continue reading…The United States Departments of Health and Human Services, Treasury and Labor released interim final rules (“Rules”) regarding the “No Surprises Act” (“Act”) yesterday. The Rules are effective beginning on January 1, 2022. They cover the requirements for the billing and payment of emergency and air ambulance services by non-participating providers and non-emergency services performed by non-participating providers at participating health care facilities. The Rules do not detail the independent dispute process between plans and providers (“IDR”), transparency requirements, or price comparison tools that are outlined in the Act. The agencies intend to issue rules covering those aspects of the Act later this year.
While we, along with the plans, providers and patient advocacy groups sift through over 400 pages of preamble and regulations in the coming days and weeks, there are a few items worth noting initially:
Continue reading…On December 28, 2020, the District Court for the Northern District of California granted a motion for a preliminary injunction enjoining the Centers for Medicare and Medicaid Services from implementing the Most Favored Nation Rule (the “Rule”, summarized in our December 23 post) until the notice and comment procedures required by the federal Administrative Procedures Act (“APA”) are completed. The opinion, penned by Judge Chhabria, largely adopts the reasoning of the District Court for the District of Maryland, which granted a temporary restraining order against the implementation of the Rule last week. Judge Chhabria notes that the plaintiffs are “virtually certain” to prevail on their claim that the government violated the APA, and concludes that vacating the Rule in its entirety pending completion of the notice and comment period is the only appropriate path, as enjoining its enforcement as to the plaintiffs only runs contrary to the underlying purposes of the Rule itself. We will continue to monitor pending suits and other developments related to the Rule’s implementation.
On December 23, 2020, The District Court for the District of Maryland granted a temporary restraining order temporarily ceasing the implementation of the Centers for Medicare and Medicaid Services’ (“CMS”) Most Favored Nations Rule (the “Rule”) for fourteen (14) days. The Rule, published on November 27, seeks to lower the amount paid for 50 high-cost Medicare Part B drugs to the lowest price that drug manufacturers receive in similar countries. The Rule was set to take effect on January 1, 2021. Several suits have been filed challenging the Rule’s validity and CMS’ authority in issuing the Rule, particularly since the Rule was issued without the usual notice and comment procedures. In granting the TRO, the Court found that the plaintiffs demonstrated a likelihood of success on the merits of their claim under the Administrative Procedures Act, which requires an agency to publish a general notice of proposed rulemaking in the Federal Register and allow stakeholders to comment. We will continue to monitor developments on this case and the other pending cases closely.
On Friday, November 20, 2020, the Centers for Medicare and Medicaid Services (“CMS”) released final regulations to remove certain barriers to the implementation of physician compensation arrangements under value-based payment arrangements posed by the “Stark” Physician Self-Referral law. The new regulations are the first substantive changes to the regulations in two years and the first attempt by CMS to update the regulations specifically to address value-based payment arrangements that have proliferated since the regulations were initially implemented in the early 2000s.
The new rules contain three new exceptions to the Stark law’s general prohibition on physician referrals for designated health services to entities with which the physician has a financial relationship that are specifically targeted at value-based arrangements; one for value-based arrangements involving full financial risk, one for value-based arrangements with meaningful downside risk for physicians, and one for value-based arrangements that involve neither full financial for physicians or meaningful downside risk.
Continue reading…On October 29, 2020, Governor Wolf signed House Bill 81 into law, creating new minimum education and certification requirements for central service technicians and surgical technicians working in the Commonwealth, and regulating the practice of surgical technology. The Act will take effect on December 28, 2020.
Central Service Technicians
The Act defines central service technicians (“Central Tech”) as “an individual who provides the services of inspecting, assembling, decontamination, preparation, packaging and sterilization of reusable medical instruments or devices.” Under the Act, a health care facility cannot employ or otherwise contract for the services of a Central Tech unless the individual has successfully passed a nationally accredited central service exam for central service technicians and holds and maintains either a certified registered central service technician or a certified sterile processing and distribution technician credential. Currently employed health care facility Central Techs and contracted Central Techs are grandfathered from the requirements, but any Central Tech that is considered a new employee must meet the minimum requirements within 18 months from the date of hire. Techs must complete 10 hours of annual continuing education. The Act directs the Department of Health (“DOH”) to promulgate regulations necessary to implement the Act’s requirements, and grants the DOH general oversight.
Continue reading…As we indicated in last week’s blog post , the D.C. Circuit Court’s refusal to uphold HHS’ pharmaceutical price disclosure rule (“RX Rule”) was not a predictor of how the trial court might rule in the closely watched challenge to HHS’ hospital price transparency rule (“Hospital Rule”). In a June 23, 2020 ruling on cross motions for summary judgment, American Hospital Association, et. al. v. Azar, D.C. District Court Judge, Carl Nichols, ruled that HHS did not overstep its authority under Section 2718 of the Public Health Services Act (“Section 2718”) by requiring hospitals to publish their “gross charges”, payer-specific negotiated rates, discounted cash prices, and de-identified minimum and maximum negotiated charges.
Continue reading…On June 16, the D.C. Circuit Court struck down the Centers for Medicare and Medicaid Services’ (“CMS”) rule issued in May 2019 requiring pharmaceutical companies to disclose the wholesale acquisition cost of drugs over $35 in their direct-to-consumer television advertisements (“RX Rule”). Similar to the RX Rule, the Hospital Price Transparency Rule, issued on November 27, 2019, requires hospitals to publish, among other information, payor-specific rates for certain services on their websites beginning on Jan 1, 2021 (“Hospital Rule”). Both rules stem from the Trump administration’s stated efforts to improve the nation’s health care quality and transparency, and both were met with swift legal opposition. The Hospital Rule litigation, American Hospital Association et al v. Azar, is currently before the U.S. District Court for the District of Columbia. While the D.C. Circuit Court’s RX Rule decision could be viewed as a predictor of the outcome of the Hospital Rule litigation, the alleged statutory authority underlying the Hospital Rule is different than the statutory authority underlying the RX Rule. Therefore, the Circuit Court’s ruling in the RX Rule litigation may not be an accurate barometer of the likely outcome in the Hospital Rule litigation.
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