Healthcare Litigation

The Centers for Medicare & Medicaid Services (CMS) released an advanced copy of the final rule implementing the agency’s new dual-track Quality Payment Program created by the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA). The final rule made several significant changes to the proposed rule that was released earlier this year and offers eligible clinicians considerable flexibility for participation in 2017. By way of background, MACRA, which passed with broad bipartisan support, replaced Medicare’s much-maligned “Sustainable Growth Rate” formula with the new Quality Payment Program. The new Quality Payment Program continues CMS’s transition from paying for volume to paying for value and represents the most comprehensive Medicare payment reform since the creation of the hospital prospective payment systems.  Under MACRA, eligible clinicians, including physicians, physician assistants, nurse practitioners, clinical nurse specialists and certified nurse anesthetists, can participate in the Quality Payment Program through one of two tracks: the Merit-Based Incentive Payment System (MIPS) or Advanced Alternative Payment Models (Advanced APMs). CMS received over 4,000 comments in response to its proposed rule released on April 27, 2016. In a call with reporters following the release of the final rule, acting CMS Administrator Andy Slavitt said many of the comments could be summed up as a request from providers to make the transition as simple and flexible as possible.  At least initially, responses from providers and provider associations have been positive, particularly in response to CMS’s decision to treat 2017 as a transition year. Some of the key changes in the final rule include the following: Adoption of the pick your pace concept to allow clinicians to avoid negative payment adjustments. CMS established a number of policies for calendar year 2017, which CMS refers to as a transition year, in an effort to make the initial transition into the Quality Payment Program more flexible. The most significant of these policies was the formal adoption of the “pick your pace” concept that was originally announced as a possibility in September. Under the pick your pace concept, clinicians participating in the MIPS track (which CMS estimates will initially be over 90% of eligible clinicians) can choose from three levels of participation during the first performance year. By submitting only a minimum amount of data, eligible clinicians can avoid a downward payment adjustment in 2019 based on first year (2017) performance. Eligible clinicians may earn positive adjustments through higher levels of participation. Reduced year one goals to help alleviate reporting burden. CMS also reduced a number of the objectives required for participation in each of the four MIPS performance categories in 2017. For example, the final rule reduces the number of activities required to achieve full credit in the improvement activity performance category from six medium-weighted or three high-weighted activities to four medium-weighted or two high-weighted activities. New category weighting to address provider concerns about first year reporting. The final rule includes adjusted MIPS performance category weighting. Specifically, the quality performance category weight was increased from fifty percent to sixty percent for year one while the resource use performance category weighting was reduced from ten percent to zero for year one. The weighting will change in future performance years, with resource use eventually being worth thirty percent of the total composite performance score. Including more clinicians in the “low volume” exclusion; Support for small and independent practices. The final rule includes a number of revisions designed to make it easier for practices with 15 or fewer clinicians to participate in MIPS. In addition, the final rule modified the low volume threshold to exempt more clinicians from participation. Under the final rule, MIPS will not apply to practices with less than $30,000 in Medicare charges or fewer than 100 unique Medicare patients per year. The threshold was originally set at $10,000 in the proposed rule. New website. CMS launched a new website on the same day it released the final rule. The website (available here) includes a number of resources designed to help clinicians identify how best to participate in the Quality Payment Program based on practice size, specialty, location and patient population. The advanced copy of the final rule is available here.  An executive summary of the final rule prepared by CMS is available here.  The official version of the final rule is scheduled for publication in the Federal Register on November 4, 2016.

Shared post from the Dorsey FCA NOW blog, October 19, 2016.

In recent months, the Obama administration and many health and pharmaceutical players at the state and local levels have focused their attention on the national opioid epidemic. Based on recent findings from the National Center for Injury Prevention and Control, approximately 40 Americans die each day from overdoses involving prescription opioids. Additionally, according to the National Institute of Drug Abuse, in 2014 approximately 10,000 Americans died from heroin overdose. To shed light on the matter, the White House declared a week last month as Prescription Opioid and Heroin Epidemic Awareness Week. Additionally, forty-six governors have agreed to take steps to address the nation’s opioid addiction by signing the NGA Compact to Fight Opioid Addition which seeks to reduce inappropriate prescribing of opioids and changing the nation’s understanding of opioids and addition, and ensuring a path to recovery for individuals suffering from addiction. The DEA continues to expand its Prescription Take-Back programs, with the next one being held on October 22, 2016. However, many have recognized that in addition the need for awareness and policies to reduce the chances that an individual becomes addicted to opioids, there is also a need for the wider availability of the life-saving drug, naloxone, for those currently suffering from opioid addiction. As a result of this need, the FDA recently launched a 2016 Naloxone App competition aimed at developing a mobile phone application that can connect opioid users, family members, and bystanders with nearby carriers of naloxone in an emergency overdose situation. Likewise, at the state and local level, governments have been revising state laws to authorize the dispensing of naloxone without a prescription; such changes have allowed more and more pharmacies to dispense naloxone without a prescription, greatly increasing access to the lifesaving drug. Rite Aid, for example, recently announced that naloxone is now available without a prescription in its pharmacies in 17 states; CVS and Walgreens have implemented similar policies. Midwest states that have implemented regulations or policies regarding administration of naloxone by pharmacies include: Illinois, Missouri, Wisconsin, Nebraska, Minnesota and South Dakota (note: Minnesota and South Dakota allow dispensing of naloxone under a protocol or collaborative practice agreement). The effort to make naloxone available to those in need has expanded to some pharmacy manufacturers who have also been donating naloxone to state agencies, community pharmacies, treatment centers, and health care providers. For example, Mallinckrodt Pharmaceuticals recently announced the donation of 30,000 drug deactivation pouches in Hennepin County, Minnesota. Additionally, state officials have expanded their plans to distribute naloxone to a number of different agencies. Colorado, for example, recently accounted plans to distribute naloxone to first responders in seventeen counties with high rates of drug overdoses. Many other states have announced similar plans. Yet, even with so many industry players, lawmakers, and the public agreeing that greater action to curb opioid abuse and make naloxone more easily available to those in need, there continues to be disagreements and difficult questions that must be addressed. Recently, for example, a joint FDA advisory panel split on whether the injectable .4mg dose of naloxone should remain the current standard, or whether that dosage standard should be raised. For now, given the daily changes in policy and laws related to naloxone dispensing, the pharmacy industry should continue to monitor applicable state and federal law, and, if a pharmacy determines that it can, and will, dispense naloxone without a prescription, it should adopt appropriate protocols and policies at the corporate and store level to ensure any required record keeping, reporting, or counseling requirements are met. Additionally, retail pharmacies should consider adopting policies and procedures for emergency situations involving an individual presenting themselves at the store for naloxone while experiencing an overdose. The pharmacies’ legal counsel should be involved in drafting and reviewing these policies to ensure compliance with state and federal laws.

In the most recent example of its continued effort to hold individuals accountable for corporate misconduct, the U.S. Department of Justice (“DOJ”) announced on September 27, 2016, that the former CEO of Tuomey Healthcare System has agreed to pay $1 million to settle claims arising from his involvement in the hospital’s violations of the Stark Law.  In addition to the $1 million civil fine, the CEO is also excluded for four years from participating in any federal health care programs, including providing management or administrative services that are paid in part by federal health care programs. The underlying corporate misconduct related to violations of the Stark law, which prohibits hospitals from billing Medicare for certain services that have been referred by physicians with whom the hospital has an improper financial relationship.  A whistleblower sued Tuomey in 2005 alleging that certain physician contracts and payments violated the Stark Law, causing the hospital to submit false claims for payment to Medicare in violation of the False Claims Act (“FCA”).  After years of litigation, a jury in a 2013 retrial found that Tuomey had violated both the FCA and the Stark Law. The jury also found that Tuomey had filed more than 21,000 false claims with Medicare.  The trial court entered an order requiring Tuomey to pay $237.4 million. That judgment was later affirmed by the United States Court of Appeals for the Fourth Circuit.  On October 16, 2015, Tuomey and the government agreed to a settlement for $72.4 million, and the hospital was sold to Palmetto Health, a multi-hospital health care system based in Columbia, SC. The government alleged that the CEO had caused Tuomey to enter into the contracts with 19 specialist physicians because he was concerned that Tuomey could lose lucrative outpatient procedure referrals to a new freestanding surgery center.  The government also argued that the CEO ignored and suppressed warnings from one of Tuomey’s attorneys that the contracts were “risky” and raised “red flags.” In 2013, the CEO was fired by Tuomey’s Board of Directors. The settlement reflects the government’s increased emphasis on holding individuals accountable for corporate behaviors, and comes just a little over a year after the DOJ Deputy General Sally Yates issued a memo that refocused government law enforcement inquiries on individual misconduct.  The Yates memo begins by proclaiming that “One of the most effective ways to combat corporate misconduct is by seeking accountability from the individuals who perpetrated the wrongdoing . . . [accountability] deters future illegal activity, incentivizes changes in corporate behavior . . . and promotes the public’s confidence in our justice system.”  That sentiment is reflected in the DOJ Press Release announcing the settlement, which states “Today’s settlement demonstrates that the Justice Department and its law enforcement partners will hold individual decision makers accountable for their involvement in causing the companies and facilities they run to engage in unlawful activities.”   A copy of the DOJ Press Release is available here: https://www.justice.gov/opa/pr/former-chief-executive-south-carolina-hospital-pays-1-million-and-agrees-exclusion-settle

On October 4, 2016, the Centers for Medicare and Medicaid Services (“CMS”) published a final rule comprehensively updating and revising federal regulations that apply to long-term care facilities (“LTC Facilities”) participating in Medicare and Medicaid. This is the first comprehensive update of these regulations (located at 42 C.F.R. part 483, subpart B) since 1991. CMS said the revisions were necessary in part because the LTC Facility patient population has changed, becoming more diverse and clinically complex. In addition, CMS noted that extensive, evidence-based research conducted over the past two to three decades has enhanced the industry’s knowledge about resident safety, health outcomes, individual choice, and quality assurance and performance improvement. The final regulations will be implemented in three phases. Regulations included in Phase 1 will be implemented by November 28, 2016.  Regulation included in Phase 2 will be implemented by November 28, 2017 and regulations included in Phase 3 will be implemented by November 28, 2019. The final rule revises regulations impacting a wide variety of areas, including: resident rights; abuse, neglect and exploitation; admissions and transfers; resident assessments; person-centered care planning; quality of care; physician services; laboratory, radiology, and other diagnostic services; administration; quality improvement; compliance and ethics programs; physical environment; infection control; and training requirements. Some key provisions include: Arbitration Agreements. A prohibition on the use of pre-dispute binding arbitration agreements. LTC Facilities that participate in Medicare or Medicaid can no longer enter into pre-dispute binding arbitration agreements with their residents or their representatives. Similarly, a LTC Facility cannot require a resident to sign a post-dispute arbitration agreement as a condition of the resident’s continuing to stay at the facility. After a dispute arises, the resident and the LTC Facility may voluntarily enter into a binding arbitration agreement if both parties agree. The final rule does not affect existing arbitration agreements or render them unenforceable. Person-Centered Care Planning. LTC Facilities are required to develop and implement a baseline care plan for each resident within 48 hours of their admission, which includes the instructions needed to provide effective and person-centered care that meets professional standards of quality care. The baseline interim care plan must include, at a minimum, the initial resident goals based on admission orders, physician orders, dietary orders, therapy and social services and pre-admission screening and resident review process recommendations. Discharge assessment and planning must be included in the comprehensive care plan. Compliance and Ethics Program. The final rules requires the operating organization for each facility to have a compliance and ethics program with written compliance and ethics standards, policies and procedures. The final rule included a set of requirements that all operating organizations must meet, regardless of size. Operating organizations that have five or more LTC Facilities must meet additional requirements. The final rule requires all operating organizations to have the required compliance and ethics program in place within one year of the effective date of the final rule. Training Requirements. LTC Facilities must develop, implement, and maintain an effective training program for all staff, independent contractors, and volunteers. The training topics include: communications training; resident rights training; abuse, neglect, and exploitation training; quality assurance and performance improvement training; compliance and ethics training; and nurse aide in-service training –dementia and abuse. A copy of the final rule is available here: https://www.gpo.gov/fdsys/pkg/FR-2016-10-04/pdf/2016-23503.pdf      

The Centers for Medicare and Medicaid Services (“CMS”) published a final rule for emergency preparedness requirements for Medicare- and Medicaid-participating providers and suppliers in the Federal Register on September 16, 2016. Noting the timeliness of the rule’s publication, which also happens to coincide with peak Atlantic hurricane season,  CMS Deputy Administrator and Chief Medical Officer Patrick Conway, M.D., MSc. stated, “Situations like the recent flooding in Baton Rouge, Louisiana, remind us that in the event of an emergency, the first priority of health care providers and suppliers is to protect the health and safety of their patients.” The rule, which applies to 17 categories of providers and suppliers (referred to in the rule as “facilities,” and listed in the table of contents of the rule at page 63861), establishes “a comprehensive, consistent, flexible, and dynamic regulatory approach to emergency preparedness and response,” according to the rule’s executive summary. The executive summary also notes that, until this time, facilities have generally been subject to insufficient emergency preparedness requirements or, in the case of some types of facilities, no requirements whatsoever. Facilities must implement the requirements established by the rule by November 15, 2017. The basic structure of the rule follows that described in the 2013 proposed rule for emergency preparedness requirements, which established four crucial elements for emergency preparedness programs by requiring facilities to: Perform a risk assessment using an “all-hazards” approach prior to establishing an emergency plan; Develop and implement policies and procedures effectively addressing risks identified in the risk assessment process; Develop and maintain a communication plan to coordinate patient care within the facility, across healthcare providers, and with state and local public health departments and emergency management agencies and systems; and Develop and maintain an effective training and testing program, which must include initial training as well as drills and exercises to identify gaps and areas of improvement. Among a number of changes from the 2013 proposed rule, the final rule adds a separate standard allowing separately certified healthcare facilities within a healthcare system to elect to be part of a unified emergency preparedness program, allows most facilities to choose the type of exercise they must conduct to meet their second annual testing requirement, and reduces certain staff and patient tracking requirements for certain (but not all) facilities.Responding to concerns from commentators regarding the financial burden these requirements will impose on facilities, CMS made clear that they do not plan to establish any additional payments to help ease the cost of implementation or to reward facilities for doing so, citing CMS authority to create and modify health and safety conditions of participation, a general expectation that all facilities have and develop policies and procedures for patient care, and the belief that emergency preparedness is a good business practice that will overall be beneficial to facilities in the long run. For the CMS announcement of the rule, see: https://www.cms.gov/Newsroom/MediaReleaseDatabase/Press-releases/2016-Press-releases-items/2016-09-08.html For the full text of the rule, see: https://www.federalregister.gov/documents/2016/09/16/2016-21404/medicare-and-medicaid-programs-emergency-preparedness-requirements-for-medicare-and-medicaid

https://dorseyfca.com/eighth-circuit-determines-that-compliance-with-reasonable-interpretation-of-government-regulation-sufficient-to-avoid-fca-liability-absent-a-government-warning-to-the-contrary/