On February 27, 2023, a jury in Minnesota federal court rendered a verdict in favor of the United States and against a surgical product distributor following a False Claims Act jury trial that lasted six weeks.[1] The jury identified $43 million in Medicare payments flowing from 64,575 kickback-procured claims.
The Inspector General took an unprecedented step Tuesday, rescinding a favorable Advisory Opinion first issued in 2006 that had provided assurances to the patient assistance charity, Caring Voice Coalition, that its drug subsidy program would not expose the organization to liability under the Anti-Kickback Statute.
The Department of Health and Human Services Office of Inspector General (OIG) recently implemented a new safe harbor to the federal Anti-Kickback Statute and beneficiary inducement statute, which went into effect on January 6, 2017.1 The new safe harbor, which was published by the OIG in a final rule dated December 7, 2016,2 protects the provision of free or discounted local transportation by eligible entities to Medicare or Medicaid beneficiaries, provided that certain conditions are met. While non-compliance with the safe harbor does not necessarily mean that a transportation arrangement will violate the Anti-Kickback Statute, children’s hospitals should take note of the safe harbor requirements and assess whether any of their existing transportation arrangements should be restructured.
In the 2016 Physician Fee Schedule Final Rule published on Nov. 16, 2014, the Centers for Medicare & Medicaid Services (CMS) finalized the proposed exception for timeshare arrangements that we discussed in our earlier blog post [80 Fed. Reg. 70,886, 71,300 (Nov. 16, 2015)]. As we stated in our earlier post, a timeshare or part-time “space use” arrangement typically provides a physician with the use of office space during scheduled time periods. The space usually includes furnishings with basic medical office equipment, supplies and support personnel so that the physician is able to use the space, on a turn-key basis, to see patients during scheduled times. Prior to the implementation of the new timeshare exception, these types of arrangements needed to be structured to comply with the Rental of Office Space Exception, which includes “exclusive use” requirements that many hospitals and physicians found burdensome [42 C.F.R. § 411.357(a)].
The Office of Inspector General (OIG) for the U.S. Department of Health & Human Services (HHS) issued a fraud alert on June 9, 2015, targeting physician compensation agreements that potentially violate the federal Anti-Kickback Statute (42 U.S.C. § 1320a-7b). The Anti-Kickback Statute prohibits remuneration of payment in exchange for referrals of patients receiving aid from federally funded healthcare programs (i.e. Medicare and Medicaid). The OIG alert references 12 recent settlements with individual physicians who entered into “questionable” medical directorship and office staff arrangements. The key concern in those cases centered on individual physicians entering into arrangements where the compensation did not “reflect [the] fair market value for bona fide services the physicians actually provide[d].”
Proposed Stark exception could impact hospital and physicians timeshare/ part-time agreement arrangements
In July 2015, the Centers for Medicare & Medicaid Services (“CMS”) published a proposed rule pertaining to payment policies under the 2016 Medicare Physician Fee Schedule (“Proposed Rule”) (80 Fed. Reg. 41,685). In addition to changes to the Medicare Physician Fee Schedule and other Medicare Part B payment policies, the Proposed Rule addresses modifications to the Stark Law and provides guidance on CMS’s interpretation of existing Stark Law exceptions.
The U.S. Department of Health & Human Services Office of Inspector General (OIG) issued a special fraud alert on June 9, 2015, stating that physician compensation arrangements may result in significant liability. Hopefully this is not a surprise to any physician or entity that treats federal health plan beneficiaries. However, given that, historically, OIG regulatory actions largely (although not exclusively) focused on the entity from which a physician received compensation, such as hospitals, laboratories, durable medical equipment suppliers, pharmacies, etc., the June 9, 2015, fraud alert highlights the potential for physician liability in these arrangements.
Due diligence is often perceived as a mundane part of the mergers & acquisitions (M&A) process, but its importance in healthcare transactions is critical. Due diligence is one of the first steps of any transaction and involves a buyer undertaking an in-depth examination of the target to evaluate the business and uncover potential issues or liabilities. In the healthcare industry, diligence is especially important considering the heavy regulation of the industry, the unique areas of risk, and the significant liabilities that could be imposed upon a buyer if issues and liabilities are not identified before the transaction closes.
The U.S. Department of Health & Human Services Office of Inspector General (“OIG”) issued a proposed rule Oct. 2 that would add new safe harbors to the Anti-Kickback Statute (“AKS”) regulations and interpret existing, statutory safe harbors. The rule would also amend the Civil Monetary Penalties (“CMP”) regulations by adding statutory exceptions to the regulatory definition of “remuneration” and codifying the so-called “gainsharing CMP” found in the Social Security Act.