The Centers for Medicare & Medicaid Services (CMS) has published its final rule that requires nursing homes enrolled in Medicare and Medicaid to disclose additional ownership and management information to CMS and state Medicaid agencies. The rule finalizes CMS’s proposed rule from February, with just two differences, as we describe further below.

The rule implements Section 1124(c) of the Social Security Act, which was added by the Affordable Care Act to require the disclosure of additional information about ownership and oversight of nursing facilities. Medicare-enrolled skilled nursing facilities (SNFs) and Medicaid-enrolled nursing facilities (NFs) will soon be required to report many detailed aspects of their ownership and management structure, including both the executive leadership and any members of the facilities’ governing bodies.

CMS plans to gather the information in 2024, beginning when the revisions to the Form CMS-855A is completed, regardless of where a facility is on its current five-year revalidation schedule. The information will then be made publicly available within one year.

Of note in the final rule is that CMS declined to finalize a broad definition of “real estate investment trust” (also known an “REIT”) from its February proposed rule and instead has finalized a definition that it finds more consistent with current federal law and industry practice.

Continue Reading CMS Finalizes Nursing Home Ownership Rule

On October 26, 2023, the Department of Justice (“DOJ”) announced that a Miami federal grand jury returned an indictment charging a Medicare Advantage Organization’s (“MAO”) former director of Medicare risk adjustment analytics with six counts of criminal fraud. DOJ alleged that the MAO received more than $53 million in overpayments from the Centers for Medicare & Medicaid Services (“CMS”) due to false diagnoses submitted on reimbursement claims for beneficiaries enrolled in the MAO’s plans.

What’s perhaps most notable about this matter is that DOJ declined to prosecute the MAO because of the MAO’s significant and timely self-disclosure, cooperation, and remediation efforts, in addition to the MAO’s agreement to repay CMS the full amount of the estimated overpayments.

Continue Reading No Criminal Charges for Cooperative Medicare Advantage Organization

New minimum wage requirements have been signed into law by Governor Gavin Newsom, establishing five comprehensive minimum wage schedules for “covered health care employees,” which includes both contracted and subcontracted employees. Effective June 1, 2024, “covered health care facilities” will be required to implement the applicable minimum wage schedule, as set forth by the law.

To learn more about the changes to the law and what health care employers, contractors, and subcontractors have to do to come in to compliance with the law by its June 1, 2024 effective date, visit our blog on Employment Law Watch.

As promised back in April in an announcement of its plans to modernize compliance program guidance, the Department of Health and Human Services Office of Inspector General (OIG) issued the first of its new guidance documents for the health care industry on November 6, 2023. The first release is a general compliance program guidance (GCPG) designed to serve as a resource to all segments of the health care industry, regardless of the particular items or services offered.

In its newest release, OIG reiterates its view that the GCPG is by its very nature a voluntary guidebook that can act as a roadmap for a compliance program to follow, but that it is not binding on any individual or entity in the health care industry. This updated GCPG includes the following information for health care compliance programs, which we summarize further below: (1) key Federal authorities for entities engaged in health care business; (2) the seven elements of a compliance program; (3) adaptations for small and large entities; (4) other compliance considerations; and (6) OIG processes and resources.

Additional industry specific compliance guidance documents will be forthcoming, according to OIG, with its first updated guidance setting the stage for those to follow.

Continue Reading HHS OIG Issues General Guidance as First Step in Effort to Modernize Compliance Guidance

On September 28, 2023, the Office of Inspector General of the Department of Health and Human Services (OIG) issued Advisory Opinion 23-06, involving a proposed services arrangement between a pathology laboratory (the Requestor) and third-party referring pathology laboratories. 

The OIG determined that, if the requisite intent were present, the proposed purchase of the technical component of anatomic pathology services from certain laboratories would generate prohibited remuneration under the federal Anti-Kickback Statute (AKS). In doing so, the OIG highlighted the proposal’s lack of commercial reasonableness and reaffirmed its longstanding suspicion over arrangements that “carve out” federal health care program business.

Continue Reading OIG Issues Unfavorable Advisory Opinion Concerning Pathology Lab’s Proposed Purchased Services Arrangements

In an advisory opinion released on October 13, the Department of Health and Human Services (HHS) Office of Inspector General (OIG) approved a plan by a muti-specialty practice to pay its employed physicians bonuses related to outpatient procedures performed by those physicians at ambulatory surgical centers (ASCs) operated by the physician practice entity requesting the opinion (the Requestor).

According to the facts as presented by the Requestor, the practice employs a group of physicians across a range of specialties. The Requestor also operates two ASCs as corporate divisions of the practice’s legal entity and not as subsidiaries or affiliates. The Requestor plans to pay each employed physician who performs a procedure at either of the ASCs a quarterly bonus equal to 30% of the net profits generated by the facility fees that are directly attributed to that physician’s procedures performed at the ASCs during the preceding quarter.

Notably, there is no indication in the request that the bonus payments would be based solely on the professional component of services personally performed by the physicians; the measurement of profit per physician would be expected to include the technical component of the procedures.

Continue Reading OIG Permits Multi-Specialty Practice to Pay Doctors Bonuses for Outpatient Procedures


On October 31, FDA will be offering a webinar on its proposed rule ”Medical Devices; Laboratory Developed Tests.”

This webinar comes about a month after FDA issued a proposed rule revising 21 C.F.R. Part 809 (specifically, 21 C.F.R, § 809.3) to state, explicitly, that in vitro diagnostics (IVDs) are medical devices, even if they are developed and manufactured in a laboratory setting.

This category of tests is generally referred to as “laboratory developed tests” (LDTs) and FDA has historically extended enforcement discretion, accepting the availability of certain LDTs outside of the FDA device clearance and approval pathway.

Of course this has not been a straightforward situation: we have seen decades of debate among FDA and industry stakeholders about the exact boundaries of FDA’s expressed enforcement discretion—where those boundaries should lie, and even interpretation (gleaned from enforcement action) of more precisely where they do, in FDA practice, actually lie.

Continue Reading The Latest Episode of the LDT Drama: FDA Issues Long-Awaited Proposed Rule for Laboratory Developed Tests

On September 15, 2023, FDA published an update to the guidance document – “Breakthrough Devices Program, Guidance for Industry and Food and Drug Administration Staff.” Notably, FDA states that it may consider a medical device’s ability to improve health and healthcare disparities when deciding whether to designate a medical device as a breakthrough device. The agency may use this information to determine whether a candidate device provides more effective treatment or diagnosis when compared to the current standard of care. Below, we provide additional information regarding the breakthrough device program and the updated guidance.

Continue Reading FDA Updates Breakthrough Device Guidance

UPDATE: Late in the evening of September 28, the House defeated H.R. 4368 by a vote of 191-237, with 27 Republicans voting against the bill. It was the only one of the four appropriations bills to fail.

Editor’s Note: This post was originally published at 11:15 PM EST on September 27, 2023 while the House of Representatives was still voting on amendments to other appropriations bills.

A group of conservative Republicans in the House of Representatives’ proposed Agriculture, Rural Development, Food and Drug Administration, and Related Agencies Appropriations Act, 2024 (H.R. 4368) would rescind the Food and Drug Administration (FDA)’s January 2023 change to the Risk Evaluation and Mitigation Strategy (REMS) program to allow certified retail pharmacies to dispense mifepristone as part of a medication abortion regimen. The proposal would effectively limit retail pharmacy dispensing of the only medication that is labeled for medication abortion.

Continue Reading GOP House Bill Proposes Repeal of Retail Pharmacy Dispensing of Mifepristone

Good news for Medicare-eligible patients: the Centers for Medicare & Medicaid Services (CMS) is making it easier for individuals with limited income to apply and reenroll in Medicare Savings Programs (MSPs).

On Sept. 21, CMS issued a final rule that will streamline the enrollment and eligibility processes for the MSPs and align them with the requirements and processes for other public programs. The rule will also serve to reduce the complexity of the application and reenrollment process for eligible individuals. 

Continue Reading CMS Final Rule Streamlines Medicare Savings Program Eligibility and Enrollment

On April 27, 2023, Washington Governor Jay Inslee signed into law House Bill 1155, otherwise known as the My Health My Data Act.  Certain “geofencing” portions of the law became effective July 23, 2023.  Other provisions will become effective for “small businesses” on June 30, 2024, and for all other regulated entities on March 31, 2024. Below is a brief summary of the law’s following core components: (1) covered individuals and entities, (2) covered data, and (3) data collection and sharing requirements.

Continue Reading Implementation Underway for Washington’s New Wide-Reaching Consumer Health Data Law

Shortly after Connecticut’s 2023 legislative session kicked off, Governor Ned Lamont announced a series of policy initiatives aimed at reducing health care costs and undertaken in collaboration with the Connecticut Hospital Association. “An Act Protecting Patients and Prohibiting Unnecessary Health Care Costs” (“the Act”), which was passed by the Connecticut Legislature in early June and signed into law by Governor Lamont in late June, implements some of those initiatives. Among other things, the Act targets pharmaceutical marketing practices and imposes extensive reporting requirements. These provisions apply to “pharmaceutical manufacturers” and come into effect on October 1, 2023.

Broadly, the provisions require “pharmaceutical manufacturers” that employ “pharmaceutical representatives” to register annually with the Department of Consumer Protection (“DCP”) as “pharmaceutical marketing firms” and provide annual reports to DCP containing various information about their employed “pharmaceutical representatives.” The provisions also require “pharmaceutical representatives” to disclose specific information to prescribing practitioners and pharmacists and provides DCP with the authority to impose penalties for non-compliance.

The nuance lives in the Act’s definitions, and several key questions remain open, including to what extent the Act applies to medical device and technology manufacturers.

Continue Reading New Connecticut Law Targets Drug and Device Manufacturers who Employ Sales Representatives for Additional Scrutiny

In a proposed rule sent to the federal register public inspection list on Sept. 1, the Centers for Medicare and Medicaid Services (CMS) announced a long-awaited minimum staffing requirement for Long Term Care (LTC) facilities that participate in the Medicare and Medicaid programs.

The proposed rule, set for publication in the Federal Register on Sept. 6, would create a floor for staffing in Medicare and Medicaid participating LTC facilities for both registered nurses (RN) and nurse aides (NA). Additionally, CMS is also seeking input on need to add on a minimum total nurse staffing requirement with the rule.

The staffing levels that the rule proposes exceed the current minimum staffing requirements of nearly every state. In the rule, CMS indicated that its proposed staffing requirement is merely a floor that could be adjusted upward based on acuity of resident need and that it may revisit the levels in later rulemaking with an eye toward increasing the staffing requirement even further.

Continue Reading CMS Proposes National Minimum Nursing Staff Requirements for LTC Facilities

On August 28, 2023, the Centers for Medicare and Medicaid Services (CMS) issued a final payment rule for inpatient and long-term care hospitals (“LTCH”) that builds on the Biden-Harris Administration’s priorities to provide support to historically underserved and under-resourced communities and to promote the highest quality outcomes and safest care for all individuals. 

The fiscal year 2024 Inpatient Prospective Payment System (FY 2024 IPPS) and LTCH Prospective Payment System (LTCH PPS) final rule updates Medicare payments and policies for hospitals as required by statute. The rule adopts hospital quality measures to foster safety, equity, and reduce preventable harm in the hospital setting.

Under the rule, acute care hospitals and long-term care hospitals will see total payment increases of $2.2 billion and $6 million respectively. Additionally, the rule focuses on health equity and rural hospital access by recognizing higher costs to treat underserved populations.

Continue Reading CMS Updates Medicare Rates and Policies for Inpatient and LTC Hospitals, Promoting Health Equity and Patient Safety

The Centers for Medicare and Medicaid Services (CMS) released the names of the top 10 drugs by Medicare spend on Aug. 29. The list is the first step in the new Medicare drug price negotiation system that was put into place by the Inflation Reduction Act in 2022. The new negotiated prices that will result from this process will take effect for the 2026 Medicare plan year.

The drug companies who manufacture the listed drugs now have until October 1 to sign the agreements to participate in the negotiation process for plan year 2026. The following day is the deadline for all manufacturer-specific data for CMS to consider and for any public comment on possible therapeutic alternatives.

After that point, CMS will conduct a series of listening sessions with the public and meetings with the manufacturers prior to submitting the maximum fair price initial offer on February 1, 2024. That offer will then begin the negotiation period which will end on August 1, 2024 with an announcement of the final negotiated price a month later.

Drugs chosen by gross Part D spend

The drugs chosen were single source drugs, which means that they have been approved or licensed for at least 7 years (11 years for biologics) and in that time there has been no generic or biosimilar competition. After eliminating some drugs as subject to exemptions (i.e. orphan drugs, small biotech drugs, plasma-derived products, etc.) CMS then ranked the drugs on the basis of gross spend from Medicare Part D over the course of the 12 months stretching from June 1, 2022 through May 31, 2023.

Due to the focus on gross spend as opposed to per patient cost, the top drugs on the list are also used by large numbers of the Medicare Part D population. The top drug, which has a gross spend of $16.4 billion was used by more than 3.7 million Medicare Part D enrollees.

After this initial negotiation period for the 2026 group is complete, CMS is expect to add an additional 15 drugs to the program in 2027 and then another 15 in 2028.

Reed Smith will continue to follow developments in the Medicare Prescription Drug Negotiation Program. If you have further questions on this process, please contact the health care lawyers at Reed Smith.

The Department of Health and Human Services’ Office of Inspector General (“OIG”) issued an unfavorable advisory opinion (the “Opinion”) last Friday in which it refused to bless a proposed arrangement involving an intraoperative neuromonitoring (“IONM”) company (the “Requestor”) and various surgeons who perform procedures for which IONM is used, desiring to form a physician-owned entity (“Newco”) that would arrange to provide both the technical and professional components of IONM services (the “Proposed Arrangement”).

The Proposed Arrangement would essentially create a “turn-key” entity owned by the surgeons (the “Surgeon Owners”) that would subcontract to the Requestor and its affiliated physician practice (the “Practice”) “virtually all of the day-to-day requirements of an IONM business.” The Surgeon Owners would be responsible for forming Newco, preparing Newco’s internal governance documents, and determining the methodology for distribution of Newco’s profits amongst themselves. However, the Surgeon Owners would be passive investors, with limited involvement in Newco’s day-to-day operations.

Continue Reading OIG Issues Unfavorable Advisory Opinion, Upholding Longstanding Contractual Joint Venture Concerns

The health care industry seems to have so much potential for new technologies built on Artificial Intelligence (“AI”) technology, such as chatbots that assist patients and/or physicians in patient care and the adoption of tools that expedite the health claims approval process. We have also seen reports documenting some of the problems that can arise from developing and using a rapidly emerging technology like AI. Responsible and successful adoption of AI likely requires a multi-disciplinary AI governance team with the varied skillsets necessary to develop, maintain, and monitor compliance with appropriate guardrails that can mitigate risk now and prepare for a future with more regulation.

In our recent Reed Smith client alert, we highlight areas for AI governance teams to consider before organizations develop or adopt AI-based technology.

Reed Smith will continue to follow the developments in this area. If you have any questions about this or any other AI health care developments in the health care industry, please reach out to the health care lawyers at Reed Smith.

On August 1, 2023, the U.S. Food & Drug Administration (“FDA”) and the Drug Enforcement Administration (“DEA”) issued a joint letter to all Americans to provide a status update regarding the ongoing shortage of prescription stimulants. Stimulants fall under the purview of both FDA and DEA because they are controlled substance drugs. Both agencies recognize the important role of prescription stimulants when it comes to the treatment of conditions such as attention-deficit/hyperactivity disorder (“ADHD”), binge eating disorder, and narcolepsy.

According to the letter, the agencies are working closely with manufacturers and other members of the drug supply chain to address these shortages, which are the result of two main factors—manufacturing delays and an increased demand for the stimulants.

Continue Reading FDA and DEA seek to ameliorate the shortage and misuse of stimulants

The Department of Health and Human Services Office of the Inspector General (OIG) has released an advisory opinion permitting a technology company to charge health care providers “per booking” fees to participate in its online provider directory and to allow the same providers to bid on advertising that appears as specialized search results or banner ads within its digital “marketplace.” This is the second time that the OIG has opined on this particular arrangement, having approved an earlier, although slightly different, version of the arrangement by the same company in Advisory Opinion 19-04, which was issued in 2019.

In the most recent opinion, the OIG determined that, although the arrangement might violate the Federal Anti-Kickback Statute (AKS) and the Beneficiary Inducement Civil Monetary Penalty (CMP) law, the office would not enforce those statutes against the company because the nature of the revised fees and search functionality presents a sufficiently low risk of fraud and abuse. Important to the OIG’s decision was the requestor’s certification that the fees do not exceed fair market value of the requesting company’s services to providers related to its marketplace nor do they take into account the user’s insurance status or the volume or value of referrals to the providers.

The OIG’s opinion letter protects only the current arrangement described to it by the requestor, and the agency declined to opine on any continuing contracts under an older version of the program.

Continue Reading OIG again approves online health directory’s use of appointment and advertising fees

Three years after the Department of Health and Human Services’ (HHS) Office of the National Coordinator of Health Information Technology (ONC) issued a final rule that defined and clarified the scope of the information blocking provisions of the 21st Century Cures Act (the Information Blocking Rule), the HHS Office of Inspector General (OIG) has now published its own final rule implementing penalties for violations of the Information Blocking Rule by certain regulated actors (the OIG Final Rule). 

The OIG Final Rule (i) implements OIG’s authority to impose civil money penalties (CMP) related to violations of the Information Blocking Rule; (ii) explains OIG’s approach to enforcement of its information blocking CMP authority; and (iii) codifies the CMP amounts at 42 C.F.R. part 1003, conforming with the Civil Monetary Penalties Law as amended by the Bipartisan Budget Act of 2018.

The OIG Final Rule is effective August 2, 2023, however, enforcement of the information blocking penalties will begin on September 1, 2023. Importantly, OIG will not impose information blocking CMPs for conduct occurring prior to September 1, 2023.

Continue Reading OIG Finalizes Information Blocking Penalties