As a result of an August 3, 2015 federal court decision, nursing homes and other health care providers that participate in Medicare or Medicaid are well-advised to pay careful attention to the law that requires report and return of any overpayment within 60 days of the date on which the overpayment is “identified.” In Kane v. Healthfirst, Inc. et al., the Southern District of New York found that the word “identified” means the date on which a provider is “put on notice” that a claim may have been overpaid. The court said that providers cannot delay commencement of the 60-day period until the overpayment amount has been definitively determined.
The defendants in the case had argued that simply being on notice of a potential overpayment was not enough to trigger the 60-day repayment rule, which was a provision in the 2010 Affordable Care Act. While recognizing the burden on providers to bring to conclusion a thorough and definitive investigation of a potential overpayment within 60 days, the court was firm in its finding, referring to the “demanding standard of compliance.” However, there was a suggestion that prosecutorial discretion could act to assist a provider that did not comply with the letter of the law but acted diligently to attempt to determine an overpayment amount within the required timeframe.
This case, triggered by a former employee of one of the provider defendants under the False Claims Act whistleblower provision, is important because it is the first time there has been a court opinion addressing the meaning of the term “identified” as used in the law. Draft regulations published in 2012 have not been finalized.
A district court in the Northern District of Illinois recently partially granted a motion to dismiss the Government’s False Claims Act (“FCA”) complaint filed against IPC The Hospitalist Company, Inc. (“IPC”) and its subsidiaries and affiliates. The district court dismissed IPC’s subsidiaries and affiliates because the Government simply “lumped” those subsidiaries and affiliates in with IPC, and did not plead facts tying the subsidiaries and affiliates to the alleged fraud. The decision underscores an important defense available to FCA defendants, and highlights the nuanced pleading requirements that the Government must meet in an FCA case. Continue reading Certain FCA Defendants Dismissed; “Lumping” Defendants Together Is Not Enough To State An FCA Claim
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.
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
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
One arrow in the quiver for healthcare providers sued for violations of false claims and anti-kickback statutes is pressing for discovery from the whistleblower/relator, including a deposition of the relator. The failure of the whistleblower to comply with the discovery obligations could result in meaningful sanctions, including dismissal.
In Guthrie v. A Plus Home Health Care, Inc. et al, 0:12-cv-60629-WPD (S.D. FL), the relator, William Guthrie, sued a home health care provider, its seven doctors, and their spouses, alleging that the doctors and their spouses implemented a fraudulent scheme of compensation and referral payments resulting in violations of the False Claims Act, the Stark Act, and the federal Anti-Kickback Statute. Continue reading False Claims and Anti-Kickback Defendants Should Insist on Discovery from the Whistleblower/Relator
Duane Morris special counsel Michael E. Clark of the firm’s Houston office, is quoted in “AHA Lawsuit over ‘Two-Midnight’ Rule Called Uphill Battle,” which appeared in Modern Healthcare on April 15, 2014.
No matter how strong their legal arguments, hospitals will have a tough time convincing judges to overturn Medicare’s controversial new rules on classifying inpatients, some legal experts say.
Continue reading Duane Morris’ Michael E. Clark Quoted in Modern Healthcare
Mobile health (“mHealth”, “telehealth” or any other terms for health care delivered wirelessly) is revolutionizing the health care industry. That message resounded at last week’s mHealth Summit, which gathered roughly 4,000 investors and angel-funders, telecom and software companies, and entrepreneurs and developers to share ideas and display new mHealth products. Hot mHealth areas include data analytics, texting and medical records. Home health and medical homes also stand to benefit with the introduction of products designed to submit protected health information (“PHI”) and other data between patient and provider. Continue reading mHealth/Telehealth Investors and Entrepreneurs: The Generational Divide
Last month, top health care investors and entrepreneurs came together with hospital, payor and government leaders at a conference sponsored by the University of Pennsylvania’s Wharton Healthcare Management Alumni Association to discuss the restructuring of the health care system. Jonathan Blum, CMS Deputy Administrator and Director of the Center of Medicare participated on a panel about about macro health care system changes and one of the key take aways was not surprisingly, that change in the health care system is all about the data. Continue reading Medicare and Health Care Reform: Why Isn’t Real Time Data a Priority?
On May 3, 2012, the Centers for Medicare and Medicaid Services (CMS) officially announced that it will delay data-collection and reporting requirements under the Patient Protection and Affordable Care Act’s (ACA) Physician Payments Sunshine Act (the “Sunshine Act”), due in part to the large number of comments received in response to CMS’s December 19, 2011, proposed rules. Data collection by CMS will not start until at least January 1, 2013.
Continue reading CMS Delays Data Collection Under ACA’s Physician Payments Sunshine Act to January 1, 2013