Pennsylvania Could Enact Medical Marijuana Legislation In 2015

On January 26, 2015, in a bipartisan effort, Pennsylvania senators Mike Folmer (R) and Daylin Leach (D) reintroduced to the General Assembly of Pennsylvania a bill (Senate Bill No. 3) providing for the medical use of cannabis in the Commonwealth of Pennsylvania.   Senate Bill No. 3 comprises  a comprehensive set of regulations that include (1) licensing and administrative procedures for growers, processors, dispensers, patients and health care professionals; (2) enforcement and penalties; and (3) fees and surcharges.

Recent comments by Pennsylvania’s newly inaugurated Governor, Tom Wolf, and last year’s passage by the PA Senate of a similar bill (Senate Bill No. 1182) by a 43-7 vote, suggest that Pennsylvania may be one of the states (the recent trend suggests there will be others) that enacts Medical Marijuana legislation in 2015.  As Governor Wolf stated on the same day that Senate Bill No. 3 was introduced, “I commend the bipartisan effort to allow Pennsylvania doctors to prescribe medical marijuana… We should not deny a physician’s ability to recommend medical marijuana treatment for Pennsylvanians suffering from seizures, those affected by PTSD, cancer patients affected by chemotherapy, and Pennsylvanians suffering from many other ailments and conditions that could benefit from this effective, doctor-prescribed treatment.” Continue reading Pennsylvania Could Enact Medical Marijuana Legislation In 2015

ACOs are More Important Than Ever for LTC Facilities

On January 26, 2015, the United States Department of Health & Human Services (HHS) announced its timeline for shifting Medicare reimbursements from volume-based criteria to value-based criteria. HHS has adopted a framework that categorizes health care payments according to how providers receive payment to provide care:

•  Category 1—fee-for-service with no link of payment to quality
•  Category 2—fee-for-service with a link of payment to quality
•  Category 3—alternative payment models built on fee-for-service architecture
•  Category 4—population-based payment

In Monday’s announcement, HHS disclosed its initiative to drive more of the Medicare payments to categories 3 and 4. This is the first time in history that HHS has set explicit goals for alternative payment models and value-based payments.  HHS declared: “Improving the quality and affordability of care for all Americans has always been a pillar of the Affordable Care Act, alongside expanding access to such care. The law gives us the opportunity to shape the way health care is delivered to patients and to improve the quality of care system-wide while helping to reduce the growth of health care costs.”

By the end of 2016, HHS has set a goal of tying 30 percent of traditional, fee-for-service, Medicare payments to quality or value through alternative payment models, such as Accountable Care Organizations (ACOs) or bundled payment arrangements. By the end of 2018, the goal is 50 percent of these payments.

An ACO is an organization of health care providers that agree to be accountable for the quality, cost, and overall care of a group of Medicare beneficiaries. Reimbursement is tied to quality metrics to reduce the total cost of care for the assigned population of patients. Hospitals and physicians have been forming ACOs, and HHS’s most recent initiative should drive even more dollars in this direction.

However, in our experience, long-term care facilities (LTC Facilities) have been slow to adopt the ACO model. Refusal to join an ACO could result in fewer referrals from hospitals and other providers, since ACO members will refer to the facility (or facilities) within the ACO. LTC Facilities with high ratings for their Quality Measures (on Nursing Home Compare) and low re-hospitalization rates will be more attractive to ACOs.  Now is the time to join an ACO, before it is too late.

Top Three Problems with Text Messaging in Health Care Settings

1. Since most text messaging is not a secure form of communication, it raises HIPAA concerns if any protected health information is included in the text message. There is the possibility of a data breach in the transmission of the text message, as well as in the event of a lost or stolen phone.

2. Relevant information about a patient may be omitted from the patient’s medical chart if it is communicated via text message. Text messages are difficult to print or archive, resulting in the information being lost or deleted. This can have adverse consequences in the patient’s care due failure to communicate important information regarding the patient to everyone who needs the information.

3. Important evidence may be lost, resulting in adverse consequences in the event of a lawsuit. Any time a lawsuit is anticipated, all relevant evidence must be preserved, including text messages. However, since the messages reside on individual employees’ phones, they may be omitted from the document preservation efforts, or accidentally (or intentionally) deleted by the employee. Such loss of evidence could result in the court’s imposition of an “adverse inference,” meaning that the jury must determine that lost evidence would have been adverse to the health care facility (even if that is not true).

The safest course is to ban text messaging in a health care setting. Health care facilities which allow the use of text messaging should implement policies and procedures to ensure that they avoid these problems.

OIG – Medicare Hospices Have Financial Incentives to Provide Care in Assisted Living Facilities

On January 14, 2015, the U.S. DHHS Inspector General’s Office (the “OIG”) released a report (OEI-02-14-00070) entitled “Medicare Hospices Have Financial Incentives to Provide Care in Assisted Living Facilities.”

The report is significant as a road map to the issues the OIG has been concerned with relating to Medicare hospice services provided to beneficiaries in assisted living and other institutional settings.  The OIG continues to be concerned with long length of stay patients, patients with diagnoses of ill-defined conditions, such as failure to thrive or unspecified debility, and its perception of the inappropriate incentives that may exist with payments for services relating to these types of patients.

The OIG advises that the conclusions of the report raise concern about the financial incentives that might be created by the current Medicare hospice payment system and the potential for hospices to target beneficiaries in ALFs because they may offer the hospices the greatest financial gain.

The report discusses several significant findings, these findings include: Continue reading OIG – Medicare Hospices Have Financial Incentives to Provide Care in Assisted Living Facilities

Mayo Lawsuit Against Former Exec Raises Numerous Health Care and Business Litigation Issues

A recent settlement between Mayo Collaborative Services d/b/a Mayo Medical Laboratories (“MML”) and Mayo Clinic (together with MML,  “Mayo”) and a former Mayo executive, Dr. Franklin Cockerill, reveals the potential legal issues that may arise when health care executives seek new employment and the high stakes litigation that may ensue-regardless of which party may or may not be at fault.

As set forth in Mayo’s complaint, Dr. Cockerill was a former senior officer and director of MML and Chair of the Mayo Clinic Department of Laboratory Medicine and Pathology, where he managed several thousand medical professionals handling laboratory testing and intellectual property development for Mayo and MML.  According to Mayo’s complaint, as a result of Dr. Cockerill’s various positions he had first-hand knowledge of confidential strategic, business, marketing, sales, pricing, and data management information from MML and Mayo.  Eventually, Dr. Cockerill retired and obtained employment with a Mayo competitor.

Continue reading Mayo Lawsuit Against Former Exec Raises Numerous Health Care and Business Litigation Issues

Real Estate Tax Exemption Issue Muddied Again

On December 23, 2014, the Commonwealth Court of Pennsylvania logged another frustrating mile down the confused and confusing road of property tax exemption for purely public charities.  In Fayette Resources, Inc. v. Fayette County Board of Assessment Appeals, the Court overturned a lower court finding that an operator of group homes for intellectually disabled adults satisfied the requirements for tax exemption as a “purely public charity.”  The Commonwealth Court held that Fayette Resources failed to show that it satisfied the second requirement of the so-called HUP test (declared in Hospital Utilization Project v. Commonwealth, 487 A.2d 1306 (Pa. 1985))that it donate or render gratuitously a substantial portion of its services.

While this opinion may be viewed simply as Fayette Resources failing to make an adequate record below, the case also illustrates the confusion created by the Pennsylvania Supreme Court’s decision in the 2012 Mesivtah case, Mesivtah Eitz Chaim of Bobov, Inc. v. Pike County Board of Assessment Appeals, 44 A.3d 3 (Pa. 2012), which held that non-profit entities must satisfy both the statutory requirements of the Purely Public Charity Act (“Charity Act”), codified at 10 P.S. 371-385, and the court-established HUP test. Continue reading Real Estate Tax Exemption Issue Muddied Again

Investors watch your revenue assumptions!

It is all about revenue!

After a banner year for health stocks and private equity investors, it is possible that the Republican controlled Congress could create problems for new emerging health care technologies and new health care delivery models.  The new Congress is looking at every turn to limit the impact of the Affordable Care Act (“the Act”).  While there is strong desire to repeal the act, the conventional wisdom is a strategy of “death by a thousand cuts” will be more successful.  However, every time there is a change in the law by regulation, executive order, legislation or the Supreme Court, the action by its very nature creates change and uncertainty in the healthcare marketplace.  Investors need be aware of the outcome of legal and legislative actions which would substantially reduce the number of people covered by health insurance.  These activities could negatively impact revenue projections for any new business dependent upon health insurance reimbursement or the volume of health care transactions.  For example,  the Republican Congress could change the definition of full time from 30 to 40 hours and eliminate a significant number of employees to be covered by private insurance.  Another activity  could be a decision in favor of the plaintiff by the U.S. Supreme Court in King v. Burwell invalidating the tax subsidies for enrollees in federal assisted exchanges.  More than half the states could be impacted.  The outcome of this case combined with the change in the full time definition could significantly impact providers’ revenue especially in those states where Medicaid has not been expanded.  The combination of the declining tax subsidies and reduced Medicaid coverage in states that did not opt for expanded Medicaid coverage could dampen profit projections and investors returns.  Investors need to be very careful about the revenue assumptions that entrepreneurs embed in their pro formas.  A few new actions could make the profits disappear.

Antipsychotic Drug Use Can Lower Nursing Home’s Five-Star Rating

The Centers for Medicare & Medicaid Services (CMS) is continuing its efforts to reduce the national prevalence of antipsychotic drug use in long-stay nursing home residents. Its initial goal of a 15.1% reduction in antipsychotic drug use was met, so CMS now seeks to reduce antipsychotic drugs by 25% by the end of 2015 and 30% by the end of 2016. The national average of antipsychotic drug prevalence was 19.8% in early 2014.

CMS has been publishing each facility’s antipsychotic drug use on the Nursing Home Compare web site. Now in 2015, as further incentive to nursing homes, CMS will use antipsychotic drug use as a factor in calculating each facility’s Five-Star Rating.  A low Five-Star Rating can have a direct impact on a facility’s census and profitability.

Nursing homes need to develop strategies to reduce antipsychotic drug use. They cannot depend upon physicians to change the drug orders; they need to partner with physicians to develop creative approaches for treatment. Each resident should be thoroughly evaluated to determine the root cause of behaviors that trigger the use of antipsychotic drugs. Frequently, the undesirable behaviors are caused by an unmet need. Once the need or cause is determined, individualized, person-centered approaches can be developed to prevent or respond to the behaviors. This is the beginning of a new year, now is the time to start some new interventions to reduce antipsychotic drug use and enhance your Five-Star Rating.

Fees and Costs Awarded to False Claims Act Defendant

A recent decision in the U.S. District Court for the Southern District of New York provides fair warning to qui tam relators who assert erroneous claims under the False Claims Act (“FCA”) that they could be hit with legal fees and expenses pursuant to 31 U.S.C. § 3730, which permits such an award “upon a finding that the . . . claims were objectively frivolous, irrespective of plaintiff’s subjective intent.”  Mikes v. Straus, 274 F.3d 687, 705 (2d Cir. 2001).

On December 1, 2014, in U.S.,  et al., ex  rel. Fox Rx, Inc., 1:12-cv-00275, defendant Managed Health Care Associates Long Term Care Network, Inc. (“MHA”), was awarded attorneys’ fees and expenses because the relator’s, Fox Rx, Inc.’ (“Fox”),  claim that MHA, which negotiates reimbursement rates, among other things, on behalf of a network of pharmacies, allegedly (i) failed to substitute generic drugs for named brand drugs, and (ii) dispensed drugs beyond their termination date, was objectively frivolous given that the plain language of the very agreement Fox attached to its second amended complaint demonstrated that MHA did not itself dispense drugs, and exercised no control or supervision of its network pharmacies’ dispensing. Continue reading Fees and Costs Awarded to False Claims Act Defendant

Another Win for a False Claims Act Defendant

On January 2, 2015, the U.S. District Court for the Central District of California threw out claims that Walgreens pharmacy violated the federal and California false claims acts on the basis that the plaintiff failed to meet the applicable stringent pleading requirements.

In Irwin v. Walgreens, 2:13-cv-08473, a whistleblower/Relator contended that Walgreens cheated Medicare and Medi-Cal out of millions of dollars by establishing schemes to bill those government healthcare programs for prescriptions that were never picked up by patients, rather than restocking the drugs and reversing any associated charges to the government payers.  Among other things, the complaint asserted that, as demonstrated by the fact that they were not picked up by the patients, the prescriptions were not medically necessary, and therefore should not have been billed.  The complaint sought money damages, including a penalty of up to $11,000 for each violation and treble damages.  In September 2014, the government declined to intervene in the qui tam action. Continue reading Another Win for a False Claims Act Defendant