OIG Signs Up for Customer Loyalty Program

In Advisory Opinion 17-05, posted by the U.S. Department of Health and Human Services Office of Inspector General (OIG) on September 7, 2017, the OIG approved a pharmacy’s customer loyalty/discount program (Benefit Program). Under the arrangement, members of the Benefit Program pay a fixed annual fee for access to the following benefits:

  • Discounts on generic drugs, other prescription drugs listed on the Benefit Program’s formulary, pet prescriptions, nebulizer devices and related supplies, blood glucose testing meters and related supplies, and immunizations paid for by members entirely out-of-pocket (i.e., products for which no insurer, including any federal healthcare program, would be billed).
  • A 10 percent discount on any in-store clinic service when the member pays for the service entirely out-of-pocket (e.g., physicals, immunizations, and health screenings and testing, such as lipid panel testing).
  • A 10 percent credit toward future eligible retail purchases of certain pharmacy-branded products, including over-the-counter medications that may be reimbursed by certain Medicare Advantage plans and in-store photo-finishing. Members cannot, however, redeem earned credits to purchase prescriptions, immunizations, clinic services, alcohol, gift cards, postage stamps, prepaid cards, milk products, or tobacco products, nor can they redeem earned credits for retail pharmacy or clinic cost-sharing amounts.

The OIG analyzed the Benefit Program under the Civil Monetary Penalties Law (CMPL), SSA §1128A(i)(6)(G) and 42 C.F.R. §1003.110, and the Anti-Kickback Statute. The arrangement, according to the OIG, would implicate both the Anti-Kickback Statute and the CMPL, because the discounted items and services and earned credits could induce a beneficiary to select the pharmacy for federally reimbursable items or services (e.g., pull-through). Continue Reading

Capitol Hill Healthcare Update

Graham, Cassidy Push Last-Ditch Effort on ACA Repeal

Republican senators pushing a last-ditch effort to overhaul the Affordable Care Act (ACA) say they are within one vote of having the support needed to pass their bill.

Sens. Bill Cassidy (R-La.) and Lindsey Graham (R-S.C.) said they would continue to push for a vote this month before the expiration of fast-track reconciliation legislation that allows Republicans to pass the bill on a party-line vote. The senators’ bill would repeal the ACA’s individual and employer mandate penalties and transform the law’s Medicaid expansion into a trillion-dollar block grant for states, mostly by redirecting funding from states that expanded their Medicaid programs to those that did not.

Although not all of the 52 Senate Republicans have publicly announced their position on the bill, Cassidy said he has 49 commitments to back his legislation. Republicans would need only one more vote before Vice President Mike Pence could cast the tie-breaking vote. Continue Reading

Capitol Hill Healthcare Update

ACA Stabilization Effort Continues Amid Uncertain Senate Fate

The chairman of a Senate healthcare committee outlined a key test for stabilizing the Affordable Care Act’s (ACA) shaky individual marketplace: Both Republicans and Democrats will have to give a little.

That formula has been wildly unsuccessful not only this year but also in recent years as the two parties have been at loggerheads over the GOP’s efforts to repeal the ACA. But in the wake of Senate Republicans’ failed efforts this summer to replace the healthcare law, HELP Committee Chairman Lamar Alexander (R-Tenn.) said last week there is a bipartisan path forward.

He said Republicans would need to guarantee future cost-sharing payments to insurers in an effort to stabilize the law’s individual insurance marketplace. In return, Democrats would need to permit new regulatory flexibility for states to design their own coverage within the confines of the ACA. Continue Reading

Capitol Hill Healthcare Update

While Some Republicans Press For New ACA Repeal, Vote This Month Unlikely

Some Republican lawmakers, led by Sen. Lindsey Graham (R-S.C.), are pushing new plans to overhaul the Affordable Care Act (ACA), but other policy priorities and tight legislative deadlines this month are likely to thwart attempts to rekindle ACA repeal efforts.

Congress faces a daunting series of must-pass bills, including a funding measure to keep the government open and legislation to increase Washington’s borrowing authority. Funding for other key programs – from the Children’s Health Insurance Program (CHIP) to the Federal Aviation Administration – expires September 30 unless renewed. Moreover, lawmakers will likely face multiple votes this month to approve tens of billions of dollars in emergency funding for Hurricane Harvey relief. Continue Reading

Is the Dam Breaking? Over-the-Counter Hearing Aids

The FDA Reauthorization Act (H.R. 2430), recently signed into law by President Donald Trump, included the Over-the-Counter (OTC) Hearing Aid Act, which requires the Food and Drug Administration (FDA) to develop regulations within three years for hearing aids to be sold over-the-counter to individuals with mild to moderate hearing loss.

The Senate passed the legislation 94-1, over the objections of several industry associations, including the Hearing Industries Association, which argued that the legislation did not provide for “the devices [to] be safeguarded, the patient [to] be protected, and the hearing care professional [to] remain involved.” Continue Reading

Breaching Physician Doubles Down on His Debt

In drafting recruitment agreements, providers should separate the employment agreement from the other agreements to help diffuse breach of employment agreement arguments as a defense to the repayment of recruitment advances.

Dr. Robert Halterman entered into a recruitment agreement (Recruitment Agreement), a promissory note (Note) and a physician employment agreement (Employment Agreement) with Johnson Regional Medical Center (JRMC) to work as an OB/GYN. Upon execution of the agreements, JRMC advanced Dr. Halterman $50,000 as a “signing advance.” According to the terms of the Recruitment Agreement, the Note’s monthly payments would be forgiven as long as Dr. Halterman continued his employment at JRMC.

Within five months, however, Dr. Halterman had resigned from JRMC citing an injured shoulder as his reason for leaving. After accepting Dr. Halterman’s resignation letter, JRMC terminated his employment and demanded payment of the remaining balance due under the Note. Dr. Halterman failed to make any payments, and several months after his resignation, he began working elsewhere as a hospitalist.

JRMC filed suit against Dr. Halterman alleging that he had failed to pay the balance of the Note when due. In response, Dr. Halterman claimed that all three documents constituted a single contract, and that his performance under the contract was excused by JRMC’s breach of contract, JRMC’s fraudulent inducement related to a misrepresentation of Dr. Halterman’s on-call requirements, and/or the physician’s shoulder injury, which prevented him from fulfilling his duties. Continue Reading

Hurricane Harvey Special Alert

Hurricane Harvey has left our Houston and Texas communities with significant recovery and restoration needs. As attorneys, we struggle with how we can be most helpful. It is in this spirit, that we have compiled a Special Alert to help our clients, friends, family and community. In the days and weeks ahead, our work will become even more defined, but for now, we hope that this information may be of immediate assistance. Please do not hesitate to call upon us at BakerHostetler to help. We grieve alongside our friends and colleagues in Houston and its surrounding communities.

Important topics covered:

Hurricane Harvey Special Alert, presented by: Susan Feigin HarrisMichael J. PappertMatthew W. CaligurRachel Palmer HooperPaul S. Francis, and Christopher H. Marraro.

CMS Digging In on Medicaid DSH Payments

During the summer months, several developments have occurred concerning the Medicaid Disproportionate Share Hospital (DSH) policy that the Centers for Medicare & Medicaid Services (CMS) has implemented, to the detriment of a number of hospitals. These hospitals and state hospitals associations have challenged CMS in district courts all over the country and several courts ruled over the summer months, issuing decisions that enjoined the application of the Medicaid DSH policy.

The Offending Policy

The Medicaid Act provides for a supplemental payment to qualifying hospitals that provide care to a disproportionate share of Medicaid program and uninsured patients. Once qualified, the formula determines the hospital-specific limit (HSL) for each hospital, which determines the maximum DSH supplemental payment. The formula, defined in 42 USC § 1396r-4(g)(1)(A), specifically defines the HSL as the “costs incurred during the year of furnishing hospital services (as determined by the Secretary and net of payments under this subchapter, other than under this section, and by the uninsured patients) by the hospital to individuals who are eligible for medical assistance under the State plan or have no health insurance (or other source of third party coverage) for services provided during the year.” Continue Reading

Back to School Rules Recap: Hospital and Physician Cheat Sheet on What CMS Did This Summer

Summer was no vacation for the Centers for Medicare & Medicaid Services (CMS). The agency released a series of significant rules that signal the nature and pace of CMS Medicare payment and policy changes for hospitals and physicians under the Trump administration. For anyone who did take a vacation, this article provides a rulemaking cheat sheet, providing links to the rules you may have missed and highlighting a few of the notable provisions in this CMS guidance. Comments are due soon on a number of the proposed rules, and final rules are expected this fall.

Cancellation of New Mandatory Cardiac and Orthopedic Bundles and Changes to the CCJR Payment Model

On August 17, 2017, CMS published its proposal to cancel the Episode Payment Models and Cardiac Rehabilitation incentive payment models finalized in the waning days of the Obama administration’s CMS. Originally set to become effective this summer, these models were twice delayed after Tom Price took over as Secretary of the U.S. Department of Health and Human Services (DHHS). The proposed rule would also change the Comprehensive Care for Joint Replacement Model (CJR) by roughly cutting its geographic areas in half and making participation voluntary for low-volume and rural hospitals in the 33 remaining areas. CMS cited concern with the mandatory nature of the models and noted that it expects to continue to offer providers opportunities to participate in voluntary initiatives, including episode-based payment models. This change would impact the ability of affected physicians to qualify for the Advanced APM track of the QPP, described below.

CMS will accept comments on this proposed rule until October 16. Continue Reading

Capitol Hill Healthcare Update

Editor’s Note – The next Capitol Hill Healthcare Update will be published after Labor Day when Congress reconvenes following its August recess.

Republicans Contemplate Next Steps Amid ACA Flameout

Congressional Republicans and President Donald Trump face a series of key questions about how or whether to fortify the Affordable Care Act – particularly in the law’s beleaguered individual exchanges – after the Senate last week failed to advance legislation overhauling the healthcare law.

When Sen. John McCain (R-Ariz.) cast the deciding vote against a slimmed-down bill eliminating parts of the ACA, it marked an extraordinary political flameout for Republicans, who have singularly campaigned against the ACA for the past seven years. Deep ideological divides among congressional Republicans and Trump’s thorough inability to forge consensus between moderate and conservative lawmakers ultimately sank the GOP’s bill – and likely imperils future party-line efforts to make changes to the healthcare law. Continue Reading