Legal Insights and Perspectives for the Healthcare Industry

Further strengthening incentives for organizations to self-report potential FCPA violations, the US Department of Justice continued that trend with additional updates to the FCPA Corporate Enforcement Policy announced on November 20. In this LawFlash, our white collar litigation and government investigations team examines the latest updates, which appear modest on their face but could prove significant in practice.

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The US Department of Health and Human Services (HHS) Office of General Counsel (OGC) offered the healthcare industry the benefit of its legal analysis of the recent US Supreme Court opinion in Azar v. Allina Health Services (Allina) with respect to its impact on Medicare payment rules, sharing its Memorandum to the Principal Deputy Administrator & Director of the Center for Medicare dated October 31, 2019 (OGC Memo) with the public. The OGC recognized at the outset the primary directive of the decision –“The Supreme Court made clear that Congress has imposed more stringent procedural requirements for certain Medicare rules than the framework that otherwise would apply under the Administrative Procedure Act (APA).”

The OGC then offered its advice as to the legal implications associated with that directive. If HHS or CMS “issued guidance that, under Allina, should have been promulgated through notice-and-comment rulemaking, the Department's ability to bring enforcement actions predicated on violations of those payment policies is restricted.” This concept works in concert with elements of the Department of Justice's Brand memorandum, which was also referenced in the OGC Memo. The OGC Memo then attempted to draw a distinction between guidance documents that do not require notice-and-comment rulemaking versus those that do. According to the OGC Memo, the principal inquiry in distinguishing between the two is the closeness of the guidance to the relative statutory or regulatory terms.

In what has become the new “normal” in Washington, DC, these days, hospitals and their associations filed a lawsuit today against the US Secretary of Health and Human Services (Secretary) challenging the recent Final Rule issued by the Centers for Medicare and Medicaid Services (CMS) on November 27, 2019, addressing hospital pricing disclosures.

In its complaint, the American Hospital Association, joined by the Association of American Medical Colleges, the Federation of American Hospitals, the National Association of Children’s Hospitals, Inc. (d/b/a Children’s Hospital Association), and three representative hospitals in Missouri, California, and Nebraska (collectively, Plaintiffs), argue that the Secretary issued a Final Rule that (1) is unlawful and in excess of his statutory authority; (2) is a violation of the First Amendment by unlawfully compelling speech; and (3) is arbitrary and capricious, an abuse of discretion, and contrary to law, citing the Administrative Procedures Act (APA).

US government–funded academic medical centers and other research institutions are caught between traditional values of academic freedom, collaboration, and nondiscrimination and their obligations to comply with US law and enforcement authorities. So far, academic medical centers and other research institutions have avoided prosecution by cooperating with the US government, but they are well advised to review their vetting and disclosure policies with respect to visiting non-US or dual national scholars and students while not targeting specific ethnic groups. From a practical standpoint, US academic medical centers and other research institutions conducting federally funded research need to be careful to address both export and deemed export control issues, as well as potential conflicts of interest in applying for and using the results of US government–funded research. Academic medical centers and other research institutions should follow closely the increased enforcement activities of the US government and recent congressional recommendations for further changes to safeguard US government–funded research, which are detailed below.

The government watchdog agencies continue to focus their attention on Medicare oversight of hospice providers, with two recent reports from the US Government Accountability Office (GAO) and the HHS Office of Inspector General (OIG) focused in large part on ways to improve hospice surveys and nursing care oversight deficiencies. These reports, along with a portfolio of other OIG hospice reports, are giving way to renewed focus by the Centers for Medicare and Medicaid Services (CMS) on hospice surveys as well as by Congress, where legislation in the Senate (and soon the House) has focused on providing CMS with additional hospice survey tools. Proactive hospice providers will do more than take notice of these watchdog agency reports—they will also compare their practices with the critical findings in these OIG and GAO reports to prepare for what will likely be the future focus of Medicare hospice surveys, whether by state agency surveyors or accreditation organizations.

Law clerk Dani Elks contributed to this article.

Price transparency rules impacting hospitals, health plans and third-party payers released by the Trump administration promise to substantially change how health plans, consumers, and providers will interact over the coming years. In this LawFlash, our healthcare industry team unpacks the final rule requiring hospitals to make standard charges public and the proposed transparency in coverage rule requiring group health plans and health insurance issuers to disclose negotiated rates with providers and out-of-network estimates for consumers. Across the industry as a whole, plans and providers alike will have to undertake additional costs to update their current programs, technology, and web pages to comply with the price transparency rules and take on or train personnel to maintain that programming and technology.

>Read the LawFlash

Healthcare is the largest labor market in the United States, employing over 18 million workers. Our labor, employment, and benefits team has compiled a list of hot topics and trends in employee benefits to watch in 2020. Key takeaways addressed in this important presentation include health and welfare preventative care services, fringe benefits, taxpayer identity theft, part-timers and 401k plans, and more.

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Healthcare providers dedicate approximately $39 billion per year to administrative activities related to regulatory compliance, according to research conducted by the American Hospital Association, which found the pace of regulatory changes “has begun to exceed many providers’ ability to absorb them.” To that end, understanding the federal rulemaking process and knowing when and how to get involved is critical for the healthcare industry.

In a recent webinar, Susan Harthill, Jonathan Snare, and Timothy Lynch addressed the ins and outs of the federal rulemaking process, including:

  • The differences between rules, policy statements, and other types of guidance
  • Why submitting comments is more critical now than ever

CMS has released a pair of rules “that take historic steps to increase price transparency to empower patients and increase competition among all hospitals, group health plans and health insurance issuers in the individual and group markets.” To that end, health plans would be required to disclose their negotiated rates for in-network providers and allowed amounts paid for out-of-network providers on a public website, according to the proposed rule. CMS also finalized its proposed hospital price transparency program released as part of the CY 2020 proposed outpatient prospective payment system (OPPS) rule last August.

Morgan Lewis is reviewing these rules more fully and will provide additional analyses on the proposed health plan rule and the final hospital transparency rule in the coming days.

We invite you to join us on Wednesday, November 20, for our second installment of the Fast Break: Regulatory Sprint series. In a recent Health Law Scan post, we discussed the two proposed rules by the Office of the Inspector General (OIG) and the Centers for Medicare and Medicaid Services (CMS) that seek to alter the landscape of healthcare program integrity and fraud and abuse regulation, as part of what the US Department of Health and Human Services (HHS) calls the “Regulatory Sprint to Coordinated Care Initiative.”

Last month, we held Part 1 of the series, which highlighted CMS’s proposed rule on Stark Law Changes. This month, Katie McDermott, Matthew Hogan, and Jake Harper will discuss the OIG’s proposed rule on the Anti-kickback and beneficiary inducement Civil Money Penalty changes.

Register for the webinar now.

You can also check out a recent Bloomberg Law article the presenters wrote on “OIG Proposed AKS Safe Harbors For Patient Incentives – Getting Patients Involved.”