SCOTUS Review of Rule 9(b) in False Claims Act cases may be on the way

By James Segroves and Matthew Loughran on 25 May 2022 Posted in Fraud and Abuse Developments

Supreme Court review of Rule 9(b)’s application in False Claims Act cases may finally be coming whether the Executive Branch likes it or not.

In January, the Supreme Court, which is considering a certiorari petition in Johnson v. Bethany Hospice and Palliative Care, LLC, asked the Solicitor General to weigh in on whether the Court should accept the case. The case presents the question of what Rule 9(b) requires in cases arising under the False Claims Act, which is an important threshold question in many False Claims Act cases resulting in significant motions practice.

As past Solicitors General have done before her, the current Solicitor General’s brief filed late on May 24 argued that the Supreme Court should not grant plenary review because there really isn’t a meaningful circuit split on the issue. The brief also argues that the case is not a good vehicle for Supreme Court review because the district court dismissed the relator’s case on the alternative ground that the relator had not adequately pleaded violations of the federal anti-kickback statute, an issue the U.S. Court of Appeals for the Eleventh Circuit did not reach on appeal.

FDA issues draft guidance for use in product quality assessments

By John D. Kendzior on 20 May 2022 Posted in Other FDA Developments

On May 10, 2022, FDA published draft guidance entitled, “Benefit-Risk Considerations for Product Quality Assessments”, which describes the benefit-risk principles applied by FDA when conducting product quality-related assessments of chemistry, manufacturing, and controls (CMC) information submitted for FDA’s review as part of original new drug applications (NDAs), original biologics license applications (BLAs), or supplements to such applications.

In the draft guidance, FDA reiterates its risk-based regulatory approach and applies it in the product quality assessment context. Specifically, the draft guidance states that FDA continues to identify potential risks to product quality associated with the formulation, manufacturing process, and packaging components when conducting a product quality assessment as well as the proposed control strategy for mitigating those risks.

CMS Issues Updated Open Payments FAQs

By Sarah Cummings Stewart, Katie Pawlitz, Vicki Tankle and Ryan Pate on 13 April 2022 Posted in Centers for Medicare & Medicaid Services Regulations

CMS recently issued updated Open Payments Frequently Asked Questions (FAQs). The FAQs are revised periodically to reflect the most up to date program requirements. This latest revision both added and removed FAQs, and also included some general edits.

The following FAQs were added: #2014, #2015, #2016, #2017, #2018, #2019, #2020, #2021 and #2022. Each new FAQ is reproduced in full below. They provide additional guidance regarding topics such as archived reporting years, salaries paid to covered recipients, reporting of device identifiers, valuing long-term device loans, debt forgiveness, and the definition of Nurse Practitioner.

Additionally, the following FAQs have been removed from the FAQ document “due to being no longer applicable, redundant with another FAQ, or of low utility” (according to CMS): Continue Reading

Biden administration announces efforts to combat “Long COVID”

By Megan K. Ali on 12 April 2022 Posted in COVID-19

On April 8, 2022, President Biden issued a memorandum ordering his executive departments to take steps to combat the long term effects of COVID-19.

In particular, the memorandum focused on efforts to address the effects of “Long COVID.” The memorandum noted that “Long COVID” symptoms “can include anxiety and depression, fatigue, shortness of breath, difficulty concentrating, heart palpitations, disordered sleep, chest and joint pain, headaches, and other symptoms.” Further, the memorandum also acknowledged that “Long COVID” can affect a wide-range of people regardless of race, ethnicity, underlying conditions, or even severity of original infection.

The memorandum requires the Secretary of Health and Human Services to work with the heads of agencies as well private experts, organizations, and stakeholders to coordinate a government-wide response to “Long COVID.” Further, the Secretary must publish a public report within 120 days regarding government support services available or that will be available to those experiencing “Long COVID,” those experiencing loss because of COVID-19, and those who are experiencing mental health and substance use issues due to the pandemic. The report must also directly address disparities in these services available to underserved communities. Continue Reading

HRSA asks for comment on provider relief fund and ARP rural reporting requirements

By Nicole Aiken-Shaban and Sebnem Dugmeoglu on 8 April 2022 Posted in COVID-19

In a notice published on April 7, 2022, the Health Resources and Services Administration (HRSA), the division of HHS that manages the distribution and oversight of CARES Act Provider Relief Funds (PRFs), requested comments from stakeholders on proposed changes to its Information Collection Request (ICR) Form that it will be submitting to the Office of Management and Budget (OMB).

The approved ICR uses an OMB form that is set to expire on January 1, 2023, so HRSA is requesting comments before submitting revisions to OMB. This is the first opportunity for providers who were subject to the first two PRF reporting periods (Period 1 and Period 2) to comment on the reporting program and provide feedback on requirements related to those reports. In addition to revising the PRF reporting form, HRSA is looking to add reporting for the American Rescue Plan (ARP) rural provider program to the ICR.

The ARP rural provider program was put in place by Congress to provide payments to providers and suppliers who served rural Medicaid, CHIP and Medicare beneficiaries from January 1, 2019 through September 30, 2020. The ARP Rural plan is distinct from the PRF, but it has similar reporting requirements and uses the PRF reporting portal for applications. Continue Reading

Provider relief fund reporting: HRSA to recoup funds from providers who didn’t meet deadlines

By Nicole Aiken-Shaban and Sebnem Dugmeoglu on 4 April 2022 Posted in COVID-19

The Department of Health and Human Services (HHS), through its Health Resources and Services Administration (HRSA) office, is taking action to recoup CARES Act funding from health care providers who received relief funding but did not meet the reporting requirements set by HRSA.

To receive COVID-19 relief funding from HRSA pursuant to the CARES Act, providers had to attest to compliance with the terms and conditions promulgated by HRSA. Recipients of the funds must agree to the terms and conditions specific to the Phase in which they received funding distribution. Those terms and conditions evolved over time, with different reporting periods for each wave of funding. Under all waves, failure to report to HRSA regarding the use or allocation of received funds constitutes noncompliance with HRSA’s terms and conditions and requires repayment of the funds.

Providers who completed reporting, but reported unused funds, will have 30 days from the end of their specific reporting deadline to return all unused funds. Continue Reading

OIG blesses digital health substance use disorder treatment program paid for by providers and suppliers

By Nancy Halstead, Vicki Tankle and Ellen Pighini on 29 March 2022 Posted in Fraud and Abuse Developments

The Department of Health and Human Services’ Office of Inspector General (“OIG”) recently issued a favorable advisory opinion to a digital health company that offers direct monetary incentives to patients as part of a technology-enabled contingency management program for patients with substance use disorders.

Contingency management, also known as motivational incentives, is a treatment approach that utilizes tangible rewards to reinforce positive behaviors (e.g., abstinence from opioids) and to motivate and sustain behavioral health efforts (e.g., treatment adherence) in patients who suffer from substance use disorders. Because these monetary incentives are an integral part of the protocol-driven and evidenced-based program, the OIG concluded that it would not impose sanctions under the federal Anti-Kickback Statute (“AKS”) or the Beneficiary Inducements Civil Monetary Penalty (“CMP”) provision, notwithstanding the involvement of federal health care program beneficiaries, providers/suppliers, and reimbursable services.

Nevertheless, the mitigating facts that motivated the OIG’s favorable treatment of the program here—namely, the clinical nature and independence of the program—could likely trigger compliance with other federal and state regulatory frameworks. Continue Reading

OSHA reopens comments on COVID-19 Healthcare Emergency Temporary Standard

By Nicole Aiken-Shaban, James A. Holt, Brittney Cafero, Whitney Petrie and Matthew Loughran on 28 March 2022 Posted in COVID-19

The Occupational Safety and Health Administration (“OSHA”) has reopened the comment period on its June 2021 interim final rule establishing an Emergency Temporary Standard governing occupational exposure to COVID-19 in healthcare settings, codified at 29 C.F.R. § 1910 Subpart U (“Healthcare ETS”).

While this reopening reaches certain questions and issues presented by OSHA and not the entire rule, the reopening of the comment period signals the beginning of the effort to finalize a permanent standard by OSHA only three months after the agency withdrew the Healthcare ETS. The Healthcare ETS required healthcare organizations to develop a COVID-19 plan for its workplace that included health screening and management, masking, distancing, and support for vaccination. The Healthcare ETS was withdrawn in December 2021 because OSHA determined that its efforts to establish a permanent standard would exceed the six-month time period allowed under the Occupational Safety and Health Act.

The notice reopening the comment period gives stakeholders both an early view into potential regulatory outcomes of the final rule as well as a series of information requests. Continue Reading

AdvaMed announces revisions to code of ethics for interactions with health care professionals

By Sarah Cummings Stewart and Katie Pawlitz on 22 March 2022 Posted in Odds & Ends

On March 18, 2022, the Advanced Medical Technology Association (AdvaMed) – the world’s largest trade organization representing medical technology manufacturers – announced revisions to its Code of Ethics on Interactions with Health Care Professionals (AdvaMed Code). The effective date of the revised AdvaMed Code is June 1, 2022.

The AdvaMed Code was updated to address arrangements to advance value-based care, consistent with the recent Anti-Kickback Statute (AKS) value-based safe harbor rules, as well as the U.S. Department of Health & Human Services, Office of Inspector General’s (OIG) November 2020 Special Fraud Alert on Speaker Programs. AdvaMed issued a revised Code, FAQs, and a standalone guidance document.

Key updates in the AdvaMed Code include guidance with respect to:

Providing alcohol at Company-conducted programs and meetings;
Virtual meetings and programs;
Interactions and arrangements with HCPs relating to value-based care (e.g., results-based, outcomes-based, or performance-based arrangements); and
Leveraging data and technology to provide innovative solutions and cost-effective care.

AdvaMed’s newest guidance follows shortly behind an August 2021 announcement by the Pharmaceutical Research and Manufacturers of America (PhRMA) – which represents the nation’s leading biopharmaceutical research companies – that it updated its Code on Interactions with Health Care Professionals, to address many of the same topics. The updated PhRMA Code took effect January 1, 2022.

Medical technology companies would be well-served to review the revised AdvaMed Code and guidance and consider adjustments to their current compliance operations in light of the updates.

Reed Smith is honored to serve as outside counsel to AdvaMed and we are pleased and available to provide additional information on and assistance with implementing the revised AdvaMed Code. Please reach out to the authors of this post or the Reed Smith attorneys with whom you regularly work for more information or guidance on these changes.

Competing bills propose amendments to FDA’s accelerated approval program

By Brittney Cafero and Taber Rueter on 18 March 2022 Posted in Legislative Developments

The House Energy and Commerce Committee seems poised to make substantial changes to the Food and Drug Administration’s (“FDA’s”) Accelerated Approval Program. The committee’s Democratic chairman, Frank Pallone, Jr. (D-NJ) and Republican ranking member, Cathy McMorris Rodgers (R-WA) have proposed competing bills that were featured prominently in the Health Subcommittee’s legislative hearing on March 17, 2022.

The Accelerated Approval Program was developed in 1982, largely in response to the HIV/AIDs epidemic, to expedite approval of novel drugs that treat serious conditions with unmet medical needs based on a surrogate endpoint. Drugs that receive accelerated approval must undergo post-approval (Phase IV) studies to confirm the intended clinical benefit. If the clinical testing does not demonstrate the intended clinical benefit, FDA has mechanisms to remove the drug from the market.

However, concerns have mounted regarding FDA’s ability to remove ineffective drugs from the market, and those concerns were punctuated during a February 3, 2022 Health Subcommittee hearing on the reauthorization of FDA User Fees. Dr. Patrizia Cavazzoni, the Director of the Center for Drug Evaluation and Research at the FDA testified that the program’s existing mechanism to withdraw accelerated approvals is cumbersome, resource intensive, and seldom used.

Portion of No Surprises Act IDR rule procedures set aside by federal district court

By Nicole Aiken-Shaban, Megan K. Ali, Whitney Petrie and Matthew Loughran on 2 March 2022 Posted in Regulatory Developments

On February 23, 2022, a federal district court judge in Texas agreed with the Texas Medical Association that some provisions of the interim final rules implementing the No Surprises Act were promulgated in violation of the provisions of the Administrative Procedures Act (“APA”). As a remedy, the court ordered those provisions vacated and remanded the affected rules back to the federal agencies for further consideration.

In a memorandum issued February 28, the Centers for Medicare & Medicaid Services, one of the federal agencies that promulgated the rule (along with the Employee Benefits Security Administration and the Internal Revenue Service) indicated that it was still reviewing the court’s decision and considering next steps, which could include an appeal to the U.S. Court of Appeals for the Fifth Circuit. Additionally, CMS said that it was withdrawing any guidance documents based on the invalidated sections and will launch revised guidance and training for certified independent dispute resolution (“IDR”) entities and parties subject to the process. Those guidance documents will be edited to conform to the court’s decision and republished. Important to providers, CMS emphasized that the court’s order does not affect its other rulemaking related to the No Surprises Act. Continue Reading

OIG permits home health agency to pay nurse aide certification tuition costs

By Sebnem Dugmeoglu on 1 March 2022 Posted in Fraud and Abuse Developments

In its February 14, 2022 advisory opinion the Department of Health and Human Services Office of Inspector General (OIG) allowed a Home Health Agency (HHA), that predominantly serves Medicaid eligible children, to pay the nurse certification program tuition costs for new employees seeking to work as certified nurse aides (CNAs). According to OIG, the tuition payments are permissible under the bona fide employee safe harbor.

The Anti-Kickback statute prohibits a person from knowingly and willfully offering, soliciting or receiving any remuneration, directly or indirectly, overtly or covertly, in cash or in kind, in exchange for or to induce the referral of any item or services covered by a federal health care program. However, the statute includes exemptions for certain situations, one of which involves certain payments to bona fide employees.

In this case, the OIG stated that it would not seek enforcement under the federal Anti-Kickback Statute or the Beneficiary Inducements Civil Monetary Penalty Statute as the arrangement to pay the tuition costs would not be deemed prohibited remuneration under either law. However, the advisory opinion was warranted as the tuition program had the added wrinkle of potentially being a benefit to the relatives of medically fragile children using the HHA’s services and charging those services to Medicaid. Continue Reading

FBA’s 2022 Qui Tam Conference Puts Annual Spotlight on FCA Enforcement Trends and Developments

By Selina Coleman, Sara Brinkmann and Andrew Lu on 24 February 2022 Posted in Fraud and Abuse Developments

On February 23, 2022, the Federal Bar Association (FBA) kicked off its fifth annual Qui Tam Conference to highlight key areas for False Claims Act (FCA) enforcement in the coming year. The conference opened with a keynote address by Gregory E. Demske, Chief Counsel to the Inspector General, Department of Health and Human Services (HHS), Office of Inspector General (OIG). Then, a series of panels analyzed the FCA-related developments from the prior year, recent efforts by the U.S. Department of Justice (DOJ) to combat cybersecurity fraud, and some of the schemes promoting alleged telehealth fraud during the ongoing COVID-19 public health emergency. Based on the comments of government speakers, all speaking in their individual capacities, below are key takeaways of what we expect the government to prioritize in 2022:

Pandemic-related fraud and telehealth fraud are key targets

Reinforcing the DOJ’s current enforcement priorities, we expect the DOJ to continue to focus its resources and enforcement activity on where it stands to recover the most dollars swiftly: pandemic-related fraud (e.g., misuse of CARES Act relief funds) and telehealth fraud.

During his keynote address, Demske similarly acknowledged these two areas of focus and added Medicare Advantage, the opioid epidemic, and nursing homes as ongoing priorities for OIG enforcement. Notably, Demske cited OIG’s Data Analytics Group as a robust resource for the agency to identify anomalies in large data sets (e.g., outlier distributions of CARES Act provider relief funds) that may lead to targeted enforcement.

For more information about the fraud and abuse implications of CARES Act provider relief funds, as well as practical tips for navigating the evolving CARES Act regulatory environment, please check this Reed Smith client alert. Continue Reading

No Surprises Act Good Faith Estimates: What they are and when you need them

By Thomas W. Greeson, James F. Hennessy and Andrew Hayes on 8 February 2022 Posted in Department of Health and Human Services

The No Surprises Act, effective as of January 1, 2022, aims to provide patients with accurate information regarding their expected health care spending. In many cases, the new law prevents health care providers from charging patients for costs not reimbursed by insurance. We previously covered the impact of these “balance billing” prohibitions on hospital contracting. However, for the 28 million people in the United States without health insurance coverage or for those seeking care that requires initial self-payment, such as most psychological counseling, these balance billing prohibitions lack relevance because the entire balance is payable by the patient or their representative. The No Surprises Act also includes a potential solution for this group–a mandate that “Good Faith Estimates” (GFEs) be provided to all uninsured or self-pay patients.

Unlike the balance billing restrictions addressed in our prior blog, GFE requirements apply to all health care providers in all settings. Providers must now generate cost estimates when treating uninsured (including those with insurance who do not want a claim filed) and self-pay patients. Many providers will generate estimates using the same billing systems that existed prior to the No Surprises Act, but some changes may be necessary to meet new regulatory requirements. This post will highlight key provisions relating to GFE, including how to ensure that provider billing practices comply with the new mandate.

OIG permits retailer to use Medicaid enrollment as qualification for discount program

By Selina Coleman, Megan Engel and Matthew Loughran on 7 February 2022 Posted in Fraud and Abuse Developments

In the first advisory opinion of 2022, the Department of Health and Human Services’ Office of Inspector General (OIG) allowed Medicaid beneficiaries to qualify for a benefit available to low-income individuals, even though the arrangement would not qualify as a “retailer reward.”

The OIG stated it would not seek enforcement of the federal Anti-Kickback Statute or the Beneficiary Inducements Civil Monetary Penalty Statute (CMP Law) for an arrangement proposed by a web-based retailer that that sells a wide variety of consumer goods and services, and that offers fee-based membership programs with a number of benefits, including pharmacy-related benefits.

The retailer requested an advisory opinion from OIG to allow individuals to use Medicaid enrollment to qualify as eligible for participation in the discount programs that provided certain expedited free shipping, and discounts on food and grocery items. In issuing a favorable advisory opinion, OIG determined that allowing individuals to use their Medicaid enrollment status as a qualification presented a minimal risk of fraud and abuse to federal health programs.

CMS health care staff vaccination rule enforceable as challenges continue UPDATED

By Matthew Loughran on 21 January 2022 Posted in COVID-19

UPDATE 1/20/22:

At the request of the state of Texas, the federal court has dismissed that state’s challenge to the Omnibus Covid-19 Health Care Staff Vaccination Rule. As a result, facilities within that state will now be subject to the requirements of the Rule. The CMS has set the following deadlines for compliance within the state:

Phase 1: As of February 22, 2022, all covered individuals must have either completed the initial dose of a primary series of vaccine or applied for an exemption for religious or health reasons.

Phase 2: As of March 21, 2022, all covered individuals must have either completed the primary series of vaccine or been approved for an exemption for religious or health reasons. The employee need not have passed through the two-week post-vaccination period that generally defines complete vaccination; they need only have received their complete series of vaccines.

The CMS Omnibus COVID-19 Health Care Staff Vaccination Interim Final Rule survived its initial trip to the U.S. Supreme Court on January 13 with a per curiam decision that stayed injunctions placed on the rule by federal district courts in December.

The Supreme Court took the rare action of holding oral argument and then issuing a full opinion (with dissents) on the emergency stay application that had been brought by the Centers for Medicare & Medicaid Services, asking the Court to allow the agency to enforce the rule while challenges to its validity continue in the lower federal courts.

The Court was definitive that the rule as published falls within the authority of the Secretary of Health and Human Services to promulgate based on the statutory authority conferred by Congress through the Social Security Act (SSA). Specifically, the court found that the various statutory provisions within the SSA allow the Secretary to impose conditions of participation on the receipt of Medicare and Medicaid funds that are necessary in the interest of the health and safety of individuals who furnish services reimbursable under those programs and the federal program beneficiaries that they serve.

However, the Court’s opinion still leaves some questions unanswered about whether the rule will be enforceable in Texas and whether eventually some facilities may be exempted.

HHS issues Guidance on permitted HIPAA disclosures to prevent gun violence

By Brad Rostolsky, Catherine David and Whitney Petrie on 12 January 2022 Posted in Department of Health and Human Services

According to the Centers for Disease Control and Prevention, firearm injuries are a serious public health problem in the United States. To combat this problem, many states have passed extreme risk protection order (“ERPO”) laws, otherwise known as “red flag laws.”

ERPO laws allow various individuals, including family members, health care providers, and law enforcement officers, to petition for court orders to temporarily prevent people in crisis and who pose a danger to themselves or others from accessing firearms. ERPOs generally require affidavits from witnesses or the petitioner to support the application. In some instances, those affidavits could rely on protected health information (“PHI”) that is prohibited from unauthorized disclosure subject to the HIPAA Privacy Rule.

On December 20, 2021, the Department of Health and Human Services (“HHS”) issued non-binding guidance (“Guidance”) to clarify the extent to which the HIPAA Privacy Rule permits regulated entities to disclose PHI” to help prevent individuals in crisis from temporarily accessing firearms. The Guidance explains the three circumstances under which the Privacy Rule allows PHI to be disclosed by witnesses and petitioners in ERPO proceedings.

Those three circumstances are when the disclosure of PHI is:

Required by law (e.g., by state or federal statute or regulation, or by court order or subpoena) and complies with said law.
In response to a court or administrative tribunal order, subpoena, discovery request, or other lawful process in the course of a judicial or administrative proceeding. These disclosures can only be made within certain conditions as outlined in the Privacy Rule; for example:
- Where a court order compels a provider to release an individual’s PHI to support an ERPO, the provider may only disclose the PHI that is authorized by the court order.
- The Privacy Rule’s “minimum necessary” standard requires covered entities and business associates to make reasonable efforts to limit most uses, disclosures, and requests to the “minimum necessary” PHI to accomplish the intended purpose of the use, disclosure, or request.
Necessary to prevent or lessen a serious and imminent threat to the health or safety of a person or the public. As with responding to court/administrative orders, the health care provider must follow the “minimum necessary” standard.

In approving the guidance, HHS Secretary Xavier Becerra stated: “Too often, communities bear the weight of heartbreaking tragedies caused by the epidemic of gun violence in our country,” and that the guidance is an “important step . . . towards protecting communities from gun violence by allowing law enforcement, concerned family members, or others to prevent a person in crisis from accessing fire arms.”

Reed Smith will continue to track developments related to this guidance and other developments involving the HIPAA Privacy Rule. Please reach out to the health care attorneys at Reed Smith if you have any questions about this Guidance or any related inquiries.

Pending investigations/cases no longer prevent OIG advisory opinions

By Rick Robinson, Selina Coleman and Matthew Loughran on 11 January 2022 Posted in Office of Inspector General Regulations

The Department of Health and Human Services’ Office of Inspector General (OIG) will be lifting its long-standing refusal to accept requests for advisory opinions if the request describes a course of action that is “the same or substantially the same” as a course of action that is either under investigation by OIG, or is the subject of a proceeding involving a governmental agency. As of February 10, 2022, a new final rule issued by the OIG will do away with that restriction and allow entities to request an advisory opinion, even if the requested course of action is the same or substantially the same as one under investigation or is the subject of a proceeding involving a governmental agency. Previously, the OIG’s policy deliberately left unsettled many fraud-and-abuse issues implicated by pending investigations or litigation.

As the final rule points out, however, seeking clarity during a pending investigation or litigation will carry risk: the mere fact that a course of action is the subject of a qui tam case or under investigation “will weigh against the issuance of a favorable advisory opinion because such circumstances generally indicate that the arrangement does not present a sufficiently low risk of fraud and abuse.”

This warning seems to assume that all investigations and litigation have equal merit, which is certainly not the case with matters initiated by self-appointed whistle-blowers under the False Claims Act, who often bring cases with very little merit. Nevertheless, the new rule provides flexibility, and provides opportunities for the OIG to provide guidance to health care companies seeking to develop business opportunities that, for example, a long-pending and/or declined qui tam case may have stymied.