Recently enacted federal law expanding criminal liability for kickbacks related to all payors, and increased government enforcement activity in behavioral health (see press release), has heightened the importance of clinical due diligence for private equity investors targeting deals and acquisitions in the emerging behavioral health space.  PE firms continue to target behavioral health opportunities as federal and commercial insurance coverage expands for mental health, including substance abuse treatment and telehealth services.  Such commercial coverage will only become more commonplace after a federal court this month found United Behavioral Health improperly denied benefits for treatment of mental health and substance use disorders to plan participants because United’s guidelines did not comply with the terms of its own insurance plans and state law.[1]  PE firms entering the behavioral health market, though, particularly opportunities related to substance abuse treatment and laboratory services, should carefully review a company’s compliance with the Eliminating Kickbacks in Recovery Act of 2018 (“EKRA”).
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Hospitals are not happy with CMS’ recent changes to hospital outpatient payments.  Two hospital associations and three hospitals claim in a federal lawsuit filed December 4, 2018, that CMS had no authority to change the payment scheme for off-campus provider-based departments (PBDs).  The change took effect January 1, 2019, and is estimated to reduce payments to hospitals by $380 million in the first year of a two-year phase-in period.

The plaintiffs, including the American Hospital Association and the Association of American Medical Colleges, are seeking judgment that the payment change is unenforceable as well as preliminary and permanent injunctive relief.  The complaint against US Department of Health and Human Services Secretary Alex Azar was filed in the U.S. District Court for the District of Columbia.

The plaintiffs’ assert that the reduced payments threaten patient access to care and harm the providers’ ability to meet the health care needs of their patients, including some of the most vulnerable populations. 
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