Health Law Daily Wrap Up, Strategic Perspectives: Top 10 stories from April 2017, (Jun. 6, 2017)
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Tuesday, June 6, 2017

Health Law Daily Wrap Up, Strategic Perspectives: Top 10 stories from April 2017, (Jun. 6, 2017)

Sometimes work gets busy and you don’t have time to read everything in your inbox. For those of you who looked up and suddenly realized we’re already in June, and who may have missed some Health Law Daily stories, we’ve cultivated a list of 10 stories you might want to read. Insurers were the subject of scrutiny, as the injunction barring Anthem’s acquisition of Cigna was upheld and the government intervened in a whistleblower suit alleging that UnitedHealth Group received at least $1 billion in overpayments from Medicare due to false claims. Wolters Kluwer also analyzed how the American Health Care Act (AHCA) changes significant portions of the Patient Protection and Affordable Care Act (ACA).

STRATEGIC PERSPECTIVES: Are ACOs ‘truly here to stay’ or ‘a passing fad’?

One of the many new patient care models being tested by the CMS Innovation Center are the various accountable care organizations (ACOs), stemming from Sec. 3022 of the ACA (P.L. 111-148), which established the Medicare Shared Savings Program (MSSP). The MSSP initiated a new approach patient care and payments. The aim of the MSSP is to (1) improve outcomes for beneficiaries; (2) improve the value of care by providing better care at the individual level; (3) provide better health for the populations; and (4) reduce growth in Medicare expenditures by encouraging coordination and cooperation among providers. Participating in the MSSP requires providers, hospitals, suppliers, etc., to organize into ACOs. Results have varied on the savings achieved by ACOs and the success of participants in these payment models. This Strategic Perspective looks at the practical experience of ACOs thus far and whether they have staying power.

STRATEGIC PERSPECTIVES: How the AHCA directly impacts significant parts of the ACA

Six weeks after pulling the AHCA (H.R. 1628) from consideration, the House of Representatives passed an amended version of the bill on May 4, 2017, by a vote of 217 to 213. The legislation makes significant changes to some parts of the ACA, in particular repealing the employer and individual mandates; scaling back Medicaid expansion; and repealing many of the taxes included in the ACA. The House also passed H.R. 2192, which would eliminate provisions that exempt members of Congress and congressional staff from state waiver provisions, in response to criticisms that the AHCA would affect all Americans except those voting on the bill. The Senate is now considering the legislation, and is likely to make substantial changes to the AHCA, or even start from scratch on new legislation

This White Paper compares provisions of the AHCA with the ACA. One thing to note at the outset is that the ACA as enacted in March 2010 included 10 titles, while the AHCA makes significant changes to only three of the titles. Much of the ACA, especially related to the Medicare program and the training of various types of medical practitioners, therefore, would remain intact if the AHCA passes in its current form.

HEALTH CARE COMPLIANCE NEWSGovernment intervenes in UnitedHealth fraud suit, alleges $1 billion in damages

A whistleblower’s suit under the False Claims Act (FCA) (31 U.S.C. §3729 et seq.) against UnitedHealth Group (UnitedHealth), its subsidiaries, and other insurers for their role in allegedly bilking Medicare out of at least one billion dollars was recently unsealed, revealing the massive fraud allegations. The complaint alleges that beginning in 2006, UnitedHealth and its subsidiaries made tens of thousands of false risk adjustment claims through the Medicare Advantage (MA) program to obtain inflated reimbursements. The complaint was unsealed after the Department of Justice (DOJ) decided to intervene in the case against two of the 15 defendants, UnitedHealth Group and WellMed Medical Management, a UnitedHealth subsidiary. On May 16, 2017, the federal government filed its intervenor complaint and the relator filed a second amended complaint.

HEALTH CARE REIMBURSEMENT NEWS‘Fatigued’ providers must concentrate on complying with two-midnight rule

Some providers may be experience two-midnight rule "compliance fatigue" due to the changing rules and current lack of traditional enforcement activity, said presenters at the Health Care Compliance Association webinar, "Two Midnight Rule: Where Are We Now?" The two-midnight rule has been a "moving target" and its evolution has been challenging for providers, with CMS having issued more than 40 items of sub-regulatory guidance over the past 3.5 years. Presenters Lauren Gennett and Isabella Wood of King & Spaulding LLP said, however, that it is important for compliance personnel to emphasize the importance of continued compliance.

ANTI-KICKBACK PROHIBITION—7th Cir.: Convictions of two Chicago hospital administrators supported by evidence

The Seventh Circuit confirmed felony convictions of a Chicago hospital’s owner/CEO and its COO for violating the federal Anti-Kickback Statute (AKS) (42 U.S.C. §1320a-7b(b)) for their roles in devising various schemes to covertly pay kickbacks to physicians in return for patient referrals. The appellate court rejected the two hospital administrators’ contentions that insufficient evidence existed to support their convictions, that the trial court erroneously permitted statements made after one of the administrators withdrew from the conspiracy to be used against him, and that the AKS was rendered unconstitutionally vague by a poor jury instruction (U.S. v. Nagelvoort, May 12, 2017, Bauer, W.).

ANTITRUST—D.C. Cir.: Injunction barring Anthem’s $54 billion acquisition of Cigna upheld

Following an expedited appeal of a federal district court injunction barring Anthem, Inc.’s proposed $54 billion acquisition of Cigna Corp, the U.S. Court of Appeals in Washington, D.C. today affirmed the issuance of that permanent injunction on two alternative and independent grounds. First, the district court did not abuse its discretion in enjoining the merger based on Anthem’s failure to show the kind of extraordinary efficiencies necessary to offset the conceded anticompetitive effect of the merger in the 14 states in which Anthem currently operates: the loss of Cigna, an innovative competitor in a highly concentrated market. Second, the district court did not abuse its discretion in enjoining the merger based on its separate and independent determination that the merger would have a substantial anticompetitive effect in the Richmond, Virginia, large group employer market (U.S. v. Anthem, Inc., April 28, 2017, Rogers, J.).

FALSE CLAIMS ACT—D. Mass.: No causal link between premarket or off-label promotions, reimbursement claims

Allegations of fraud inducement for stents used to treat coronary and vascular disease, allegations of off-label promotion for diabetes treatment, and retaliation claims were denied and granted in part by a federal court in Massachusetts. Although a relator was unable to demonstrate that Abbott Laboratories’ pre-approval and off- label promotions of its stents established a causal link between any subsequent claims for reimbursement, the court found that the relator was able to show that Abbott had knowledge of her protected conduct prior to terminating her position with the company. The court granted her leave to file an amended complaint (ElliottLewis v. Abbott Laboratories, Inc., May 5, 2017, Talwani, I.).

MEDICAID—Ky. App.: Kentucky can’t choose Medicaid reimbursement rates, appeal court affirms

Kentucky’s recession-era plan to lower Medicaid reimbursement for certain hospitals goes against Federal law, a state appeals court unanimously affirmed Friday, May 19. The appeals court rejected the argument of the Kentucky Cabinet for Health and Family Services (CFHS)— the state Medicaid agency—that state law effectively allowed the state to choose among various CMS rules when reimbursing Critical Access Hospitals (CAHs). The court countered that the section of Kentucky law used by the state to make this argument was superseded by a section more narrowly defining reimbursement rates for CAHs (Commonwealth of Kentucky, Cabinet for Health and Family Services v. Saint Joseph Health System Inc., May 19, 2017, Shepherd, Phillip J.).

PRODUCTS LIABILITY (DRUGS)—10th Cir.: State failure to warn claim not pre-empted where FDA had proposed same warnings

The district court erred in granting summary judgment to a drug manufacturer based on federal preemption and an impossibility of compliance with both federal and state law, where the FDA had previously proposed the same warning regarding use during pregnancy, the U.S. Court of Appeals for the Tenth Circuit has ruled. The district court did not explain why a state claim based on the FDA’s own proposed language would be preempted by federal law; however, as to a warning regarding pre-pregnancy use of the drug, clear evidence established that the FDA would not have approved of the patient’s desired warnings (Cerveny v. Aventis, Inc., May 2, 2017, per curiam).

SKILLED NURSING FACILITIES—PROPOSED RULES: CMS proposes SNF PPS payment changes for 2018 and beyond

Proposed changes to the payment rates for Skilled Nursing Facilities (SNFs) would result in an aggregate payment increase of $390 million in Fiscal Year (FY) 2018, according to a CMS Proposed rule. CMS also released an Advance Notice of Proposed Rulemaking requesting public comments on potential revisions to the SNF prospective payment system (PPS) case-mix methodology for the FY 2019 payment update (ANPRM, 82 FR 20980, May 4, 2017). The Proposed rule also furthers CMS’ transition from volume to value with proposed updates to the SNF value-based purchasing (VBP) program and proposed changes the SNF quality reporting program (QRP) (Proposed rule, 82 FR 21014, May 4, 2017).

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