Doubling Down on Prosecutorial Discretion

By Zack Buck

Health care entities should be “on high alert” following the Southern District of New York’s decision in Kane v. Continuum Health Partners that I blogged about here earlier this month.

The case, which serves as the first and most consequential interpretation of when an overpayment is “identified” for purposes of False Claims Act (FCA) liability, provides a measure of much-needed guidance for attorneys and compliance officers in an area that is rife with confusion. But not too much.

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Clarity for an “Unforgiving” and “Potentially Unworkable” Rule

By Zack Buck

In a case previously blogged about here, last week, the Southern District of New York denied Defendants’ motion to dismiss in U.S. ex rel. Kane v. Continuum Health Partners, No. 11-2325, in a major decision for health care entities unclear on the parameters of overpayment liability under the False Claims Act (FCA).

The case centers on Continuum Health Partners, Inc. (Continuum)—which operated three New York City area hospitals—and its erroneous receipt of overpayments from the New York Medicaid program based on a software glitch. The overpayments began in 2009; by September 2010, the New York State Comptroller had notified Continuum. Continuum tapped Robert Kane, an employee, to review the billing data and identify all claims that were incorrect. On February 4, 2011, Kane emailed a spreadsheet to superiors that contained 900 claims that may have been erroneously billed. The spreadsheet was “overly inclusive” and “approximately half of the claims listed therein were never actually overpaid.” On February 8, Kane was terminated.

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A Test For Overpayment Liability

By Zack Buck

The eyes of practitioners, compliance officers, and providers have been trained on the Southern District of New York as many await a decision on a motion to dismiss in Kane v. Continuum Health Partners, No. 11-2325. Kane has grabbed recent attention because of what it could represent: a new era in fraud enforcement.

The facts are straightforward. Throughout 2009 and 2010, three hospitals operating under the Continuum Health Partners umbrella (which is now Mount Sinai Health System) submitted erroneous Medicaid claims seeking reimbursement due to what has been described as a “computer glitch.” The New York Comptroller’s Office notified Continuum of the incorrect claims in the fall of 2010, and Continuum launched an internal investigation.

Relator Robert Kane was asked to investigate any erroneously submitted claims. By early 2011, he had created a spreadsheet containing around 900 claims he thought were erroneously submitted. He emailed the spreadsheet to superiors on February 4, 2011. On February 8, 2011, Kane’s employment was terminated.

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The Robust But Unsatisfying State Of Health Care Fraud Enforcement

By Zack Buck

Earlier this spring, the U.S. Department of Health and Human Services and Department of Justice reported they had recovered nearly $28 billion as a result of anti-health care fraud efforts in FY 2014. The federal False Claims Act played a substantial role in achieving these recoveries: the government recovered $2.3 billion in FCA settlements and judgments, and opened nearly 800 new civil health fraud investigations, in FY 2014 alone. Further, the agencies noted that these anti-fraud efforts—bolstered by increased funding and authority under the Affordable Care Act—are continuing to abandon the “pay and chase” method of fraud enforcement, relying instead on prevention and “real-time data analysis.”

Interestingly, it is no longer just the federal government driving the enforcement regime. Increasingly, facing Medicaid shortfalls, states are getting involved—and, according to practitioners, state enforcement is “exploding.” For example, in New York, its Office of Medicaid Inspector General recovered more than $1.7 billion from FY 2011 to 2013. States have also had success in litigating claims to trial, most recently illustrated by the notable South Carolina Supreme Court verdict against pharmaceutical giant Johnson and Johnson. Further, Vermont is likely to become the newest state to establish its own state false claims act, another wide-ranging and powerful statute that mirrors the federal FCA.

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New Discussion Draft of 21st Century Cures Act Released (Again)

Earlier today, the House Energy and Commerce Committee released the most recent draft of the 21st Century Cures Act, in time for it to be marked up by the Health Subcommittee tomorrow.  At 300 pages, the new draft adds back in a number of provisions that were excised from the previous, 200-page iteration of the draft.  I haven’t had time to uncover all of the new additions just yet, but given that this is my third blog post on the subject, I wanted to highlight some of the ways in which this version differs (and doesn’t differ) from the last draft.

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Exploring The Significant State-To-State Variation In Marketplace Enrollment

This new post by the Petrie-Flom Center’s Academic Fellow Matthew J. B. Lawrence appears on the Health Affairs Blog, as part of a series stemming from the Third Annual Health Law Year in P/Review event held at Harvard Law School on Friday, January 30, 2015.

What role did geography, advertising, community, Navigators, and the controversy surrounding the Affordable Care Act (ACA) play in consumers’ decisions whether to purchase health insurance in the individual marketplaces? The percentage of potential exchange marketplace enrollees who actually made use of the marketplace to purchase insurance varied widely from state to state for 2014 and 2015.

As of February 22, 2015, for example, there were eight states with enrollment at 50 percent or greater and eight states with enrollment at 25 percent or lower. (Per the Kaiser Family Foundation, the top eight were Vermont, Florida, Maine, DC, Delaware, Pennsylvania, New Hampshire, and North Carolina. The bottom eight were Colorado, Ohio, Alaska, Hawaii, North Dakota, Minnesota, South Dakota, and Iowa).

It would be an interesting and challenging task to explain this variation empirically. Generating reliable statistical inferences from inter-state comparisons is notoriously difficult, and the variables at play here range from the easily measured (percent of population eligible for subsidies, navigator grant amounts, number of participating insurers, premiums) to the not-so-easily measured (enthusiasm for Obamacare, efficacy of state or federal outreach efforts, geography, education, availability and usefulness of charity care and emergency Medicaid, functionality of state exchange website, population health, availability of health services). […]

Read the full post here.

Medicare’s Costly Drug Problem

By Zack Buck

Last week, Dr. Salomon Melgen, an ophthalmologist who practices in North Palm Beach, Florida, was indicted on Medicare fraud charges. Melgen was charged with a variety of crimes, with prosecutors alleging he falsely diagnosed patients and falsified their files. Melgen’s name may be familiar. Last year, he was reported to be the provider with the highest total of Medicare Part B reimbursements in 2012, reportedly reimbursed by Medicare for more than $20 million, a substantial percentage of which was directly based upon his prescriptions for, and administration of, the drug Lucentis.

But the allegations against Melgen highlight a deeper challenge facing Medicare.

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Monday 4/6: HLS Health Law Workshop with Thomas Greaney

HLS Health Law Workshop: Thomas Greaney

April 6, 2015 5:00 PM
Griswold Hall, Room 110 (Harvard Law School)
1525 Massachusetts Ave., Cambridge, MA [Map here.]

Download the paper: “Medicare Advantage, Accountable Care Organizations, and Traditional Medicare: Synchronization or Collision?”

Thomas L. Greaney is Chester A. Myers Professor of Law and Co-Director of the Center for Health Law Studies at St. Louis University School of Law. Greaney joined the faculty at SLU LAW in 1987 after completing two fellowships and a visiting professorship at Yale Law School. He became Chester A. Myers Professor of Law in 2004 and was named Health Law Teacher of the Year by the American Society of Law, Medicine and Ethics in 2007. His academic writing has been recognized six times by the Thompson Coburn Award for SLU Faculty scholarship.

Greaney’s extensive body of scholarly writing on health care and antitrust laws encompasses articles published in some of the country’s most prestigious legal and health policy journals. He has authored or co-authored several books, including the leading health care casebook, Health Law. A frequent speaker in academia and the media, Greaney has also offered expert testimony at hearings sponsored by the Federal Trade Commission on the issues of applying competition law and policy to health care, and submitted invited testimony to the U.S. Senate on competition policy and health care reform.

The Newest Twist in the State Regulation of Off-Label Marketing

By Zack Buck

The newest chapter in the legal drama involving Johnson & Johnson, Inc. (“J&J”) and its subsidiary Janssen Pharmaceutical, Inc. (and a subsidiary previously known as Ortho-McNeil-Janssen Pharmaceuticals, Inc.) (“Janssen”) was written late last month. Specifically at issue was whether or not the alleged off-label marketing of its blockbuster antipsychotic Risperdal violated state anti-fraud and consumer protection statutes. In late February, the South Carolina Supreme Court upheld a jury verdict finding for the state under the South Carolina Unfair Trade Practices Act (“SCUTPA”), but reduced the damages award from $327 million to $136 million. In a series of cases at the state level involving the marketing of Risperdal, this is the first time that a jury verdict against J&J/Janssen has been upheld by a state supreme court. Cases in Pennsylvania, Arkansas, West Virginia, and Louisiana have ended with verdicts for the pharmaceutical company.

I’ve been following these cases for years and have undertaken further analysis on the topic here. Of course, news headlines have been dominated by the startling penalty amounts states had sought—and, in some states, had been initially imposed. Most noteworthy, an Arkansas jury imposed a $1.2 billion fine before the Arkansas Supreme Court reversed the finding; in Louisiana, the fine was $330 million before its state supreme court did the same. Indeed, these litigated claims are in addition to settled claims—the largest of which were entered into by J&J with the federal government and various states for $2.2 billion in 2013.

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King v. Burwell: Appreciating the Stakes of the Case

Yesterday, the Supreme Court heard oral arguments in King v. Burwell, and the Justices seemed split on the central issue of whether the Affordable Care Act (ACA) permits health insurance subsidies to flow to citizens of states that have chosen not to establish their own insurance exchanges.  Trying to predict the outcome of a case like this is notoriously difficult, but I do want to highlight briefly an important difference between the Court three years ago, when it decided NFIB v. Sebelius, and the Court yesterday.

In NFIB, seven Justices declared that the ACA’s Medicaid expansion was unconstitutionally coercive, concluding that the Secretary of Health and Human Services could not condition existing Medicaid funds on a state’s failure to expand Medicaid.  However, the Secretary was instead permitted to offer additional funds to states choosing to expand Medicaid, effectively making the expansion optional.  The Court at the time understood that this outcome could result in a national patchwork, in which certain states would adopt the Medicaid expansion and others would not. Continue reading

Monday 2/9: HLS Health Law Workshop with Liran Einav

HLS Health Law Workshop: Liran Einav

February 9, 2015 5:00 PM
Griswold Hall, Room 110 (Harvard Law School)
1525 Massachusetts Ave., Cambridge, MA [Map here.]

Download the Presentation: “The Response of Drug Expenditure to Non-Linear Contract Design: Evidence from Medicare Part D” (co-authors, Amy Finkelstein and Paul Schrimpf)

Liran Einav is Professor in the Department of Economics at Stanford University. His current research focuses on empirical work in insurance and credit markets. Other interests include industrial organization, micro-economic theory, and applied econometrics.

“Volume to Value” Still Needs an Ethics Consult

By Kelsey Berry

Whereas “allocation of scarce resources” is a buzz phrase that inspires a great deal of distress and desire for good ethical argument, “waste avoidance” strikes us as a relatively uncontroversial method for containing health care spending. Perhaps this is because rationing implies a trade-off between two individuals, each of whom have the potential to benefit from a possible intervention, whereas waste avoidance, on the other hand, implies a trade-off between two services – one of which has the capacity to benefit an individual, and the other which does not. Surely the latter trade-off is preferable, and perhaps even imperative, to make before we take up the former. This week U.S. Secretary of Health and Human Services Sylvia Burwell signaled a commitment to making the latter trade-off in her announcement on a complex area of health care financing: Medicare payment & payment reform. Medicare payment is one of the few levers that the federal government has relatively direct control over when it comes to controlling health care spending, and Burwell’s announcement was a welcome change in the policy discourse from the oft-lamented “doc fix”/SGR debacle (a fix for which was just bypassed again).

In her announcement and this perspectives piece in NEJM, Burwell set goals to (1) move 50% of Medicare payments to alternative payment models such as Alternative Care Organizations (ACOs) and bundled payment arrangements by 2018, and (2) tie 90% of all Medicare payments made under the traditional fee-for-service model to quality or value, through programs such as the Hospital Value Based Purchasing and the Hospital Readmissions Reduction Programs, by 2018. Notably, these are the first explicit goals for transitioning to alternative payment models and value-based payments that have been set in the history of the Medicare program – though it remains to be seen how these goals will be pursued.

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Monday 2/2: HLS Health Law Workshop with Thomas Greaney

HLS Health Law Workshop: Thomas Greaney

February 2, 2015 5:00 PM
Griswold Hall, Room 110 (Harvard Law School)
1525 Massachusetts Ave., Cambridge, MA [Map here.]

Download the paper: “Medicare Advantage, Accountable Care Organizations, and Traditional Medicare: Synchronization or Collision?”

Thomas L. Greaney is Chester A. Myers Professor of Law and Co-Director of the Center for Health Law Studies at St. Louis University School of Law. Greaney joined the faculty at SLU LAW in 1987 after completing two fellowships and a visiting professorship at Yale Law School. He became Chester A. Myers Professor of Law in 2004 and was named Health Law Teacher of the Year by the American Society of Law, Medicine and Ethics in 2007. His academic writing has been recognized six times by the Thompson Coburn Award for SLU Faculty scholarship.

Greaney’s extensive body of scholarly writing on health care and antitrust laws encompasses articles published in some of the country’s most prestigious legal and health policy journals. He has authored or co-authored several books, including the leading health care casebook, Health Law. A frequent speaker in academia and the media, Greaney has also offered expert testimony at hearings sponsored by the Federal Trade Commission on the issues of applying competition law and policy to health care, and submitted invited testimony to the U.S. Senate on competition policy and health care reform.

Nonprofit Hospitals Sue Patients, and New IRS Rules Offer Limited Protection

[Cross-posted from the Center for Law, Health and Society Blog at Georgia State University]

By Guest Contributor Erin C. Fuse Brown

Last month, NPR and ProPublica reported a story that would be shocking if it weren’t sadly familiar about how nonprofit hospitals like Heartland Regional Medical Center in Missouri are suing their patients and garnishing their wages for unpaid bills.  A few days later, on December 31, 2014, the IRS issued final rules for tax-exempt hospitals that ostensibly will make these practices more difficult, if not illegal.

The IRS rules implement the requirements of Section 501(r) of the Internal Revenue Code added by the Affordable Care Act in 2010. Despite characterizations that these are “sweeping new rules” that protect financially vulnerable patients from excessive charges and aggressive debt collection by nonprofit hospitals, the rules provide fairly thin and spotty levels of protection for patients. Continue reading

Health Care Policy by Common Sense?

By David Orentlicher

[Cross-posted at HealthLawProfs]

In announcing the federal government’s approval of Indiana’s Medicaid expansion, Governor Mike Pence invoked common sense in defending his insistence that beneficiaries shoulder a share of their health care premiums. According to Pence, “It’s just common sense that when people take greater ownership of their health care, they make better choices.”

But relying on common sense is not a good way to make health policy. Common sense leads people to incorrectly believe that they are more likely to catch a cold by going out in cold weather or to take megadoses of vitamins that provide no additional health benefit and can be toxic. Common sense also leads physicians down the wrong path. Because lowering blood sugar has been good for the health of diabetics, medical experts recommended tight control of blood sugar levels. But that resulted in an increased risk of death for many patients. Continue reading

First Circuit Upholds ACA’s Medicaid Maintenance-of-Effort Provision Against Constitutional Challenge

By Rachel Sachs

Last week, the First Circuit Court of Appeals upheld the ACA’s maintenance-of-effort provision against a constitutional challenge brought by the Maine Department of Health and Human Services. The court’s opinion has received relatively little media attention, but it should be of interest to all in the health policy space. Its post-NFIB v. Sebelius Spending Clause analysis will be relevant to scholars who are interested in King v. Burwell, challenging the grant of subsidies on health insurance exchanges run by the federal government. Its procedural posture will fascinate those who are interested in plural executive systems. And its fulsome discussion of the Medicaid program and its history will be of broader interest to health policy scholars.

States participating in Medicaid must agree to cover certain groups of people up to certain income thresholds, but states may choose to expand these groups in various ways. Relevant to this case, most states have increased the income thresholds for covering children or pregnant women through the SCHIP program (sometimes quite substantially), and some have extended SCHIP to include low-income 19- and 20-year-olds. Maine had done both, providing coverage to 19- and 20-year-olds since 1991. The ACA subsequently included a maintenance-of-effort provision (42 U.S.C. § 1396a(gg)), requiring states participating in Medicaid to maintain their eligibility standards through 2019. As such, in 2012 HHS denied Maine’s request to stop providing coverage to 19- and 20-year-olds.

Maine’s Department of Health and Human Services sought review in federal court. Maine’s executive branch was not united in this choice: the Attorney General declined to represent the state and even intervened on the side of HHS Secretary Burwell. This mirrors a phenomenon that was often observed in the context of the Medicaid expansion, in which several states whose Attorneys General joined the legal fight against the expansion in NFIB subsequently expanded anyway, as that separate power was exercised by Governors and legislatures.  Continue reading

Risk and Reform of Long-Term Care

By Allison Hoffman
[Cross-posted from Health Affairs Blog]

The 50th Anniversary of Medicare and Medicaid offers an opportunity to reflect on how U.S. social policy has conceived of the problem of long-term care.

Social insurance programs aim to create greater security—typically financial security—for American families (See Note 1). Programs for long-term care, however, have had mixed results. The most recent attempt at reform, which Ted Kennedy ushered through as a part of the Patient Protection and Affordable Care Act (ACA), called the CLASS Act, was actuarially unsound and later repealed. Medicare and especially Medicaid, the two primary government programs to address long-term care needs, are criticized for failing to meet the needs of people with a disability or illness, who need long-term services or supports. These critiques are valid.

Even more troublesome, however, long-term care policy, especially in its most recent evolution toward home-based care, has intensified a second type of insecurity for Americans. Continue reading

Against Hearings in Medicare?

As the backlog of Medicare appeals indicates, Medicare claimants are seeking many more hearings than we can currently provide. The mismatch makes a fundamental question particularly acute: Why do we hold hearings to review Medicare coverage decisions in the first place?

It’s a question worth asking. The Affordable Care Act mandated that denials of private health insurance coverage be reviewed by external, contract medical specialists, without a hearing. (See here.) If we are comfortable with private, sometimes profit-motivated coverage decisions obtaining external review review by someone other than an Administrative Law Judge (ALJ), without a hearing, why do we feel differently about Medicare coverage decisions? Continue reading

Problems with Medicare’s Settlement Methods

One option for dealing with the backlog of Medicare claims waiting for a hearing is to settle them. That’s up to the Centers for Medicare and Medicaid Services, not the Office of Medicare Hearings and Appeals that actually oversees the process, so it’s not an administrative fix that the Office of Medicare Hearings and Appeals could actually implement alone. But it is worth considering, and the CMS has shown an openness to it by going along with the proposal for facilitated settlement and by offering to settle a big chunk of pending inpatient hospital admission disputes for 68 cents on the dollar. (See Nick Bagley’s post at the incidental economist.)

These settlement efforts have received some high-level scrutiny, however. Last month Representative Brady, Chair of the House Ways and Means Committee, Subcommittee on Health, sent the HHS a strongly-worded letter after the inpatient hospital settlement was announced, arguing that the settlement may exceed CMS’s statutory authority, among other problems. (See the letter linked here (“I question whether HHS has statutory authority for this settlement process.”)

I tend to share Congressman Brady’s skepticism.  Continue reading

Upcoming Medicare Forum on Appeals Backlog, Posts

Next week (on October 29) Medicare’s Office of Medicare Hearings and Appeals (OMHA) is holding another appellant forum to discuss the ongoing backlog of Medicare claims waiting for a hearing.  In one sense, a lot has happened since the last forum in February (I covered that here): OMHA announced pilot projects to try statistical sampling and facilitated settlement in some cases (see here and here); CMS (effectively the “defendant” for settlement purposes in these appeals; functionally independent from OMHA) announced a willingness to settle a subset of pending inpatient hospital billing claims for 68 cents on the dollar (see Nick Bagley’s post at the incidental economist); the backlog came up at a couple congressional hearings; and two lawsuits were filed to challenge it, one by providers (see here) and another by beneficiaries (see here).

In another sense, not that much has happened. Unless Thursday’s forum brings big news—and I know that OMHA and CMS have been working hard on reforms so perhaps it will—there is still a big backlog of Medicare appeals, there is still not a resource fix in sight, and the influx of Medicare appeals seems to still far outstrip OMHA’s capacity to hold hearings.

In advance of the forum, I’m planning a series of posts offering my thoughts, such as they are, on where we are and where we are going. I invite anyone who disagrees or thinks I’ve gotten something wrong to post their own views in the comments. Or you can email me and I will look into sharing your thoughts as an independent posting. You can get all my posts on this subject, including new ones as they come in, by clicking here.

A caveat: I’m approaching these as blog posts—trying to get my educated thoughts based on everything I have read out in a timely way—but I might be missing something. If the upcoming forum or comments reveal that I am–I won’t be there in person but will be watching remotely–I will either post a general update or go add particular updates in the text of my posts as necessary.

And a disclosure: I’ve said this before but want to do it once more again before pontificating—I worked in government until a little over a year ago, so my views on these matters may be biased. (And of course I will not discuss anything I worked on.)  But I’ve done my best to be objective.