Health Law & Business News

INSIGHT: Five Health-Care Fraud and Abuse Trends to Watch

Jan. 7, 2019, 11:30 AM

In 2019, we’ll see a push to simplify the regulatory environment for organizations serving the health care industry and fraud and abuse enforcement to increasingly recognize the importance of not creating a chilling effect on health-care innovation. Nevertheless, the federal government will also continue its focus on enforcement efforts, which continue to be quite lucrative for the federal government—bringing in about $2.5 billion in health-care related False Claims Act recoveries in fiscal year 2018.

Five top trends we will be watching.

Stark Law, Anti-Kickback Changes

In 2018, both the Centers for Medicare & Medicaid Services and the HHS Office of Inspector General published requests for information (“RFIs”) regarding potential reforms to the physician self-referral law (or the Stark Law), Anti-Kickback Statute (AKS) and Civil Monetary Penalties (CMP) provisions. The RFIs reflect HHS’s ongoing efforts to accelerate transformation from fee-for-service payment to a value-based system focused on care coordination (a/k/a the “Regulatory Sprint to Coordinated Care").

Watch for proposed rules in 2019 that may expand existing exceptions and safe harbor protection to allow for aligning incentive among all stakeholders to achieve innovation, quality and care coordination.

Granston Memo Fallout

We also will be watching the impact of the Granston Memo on the Department of Justice’s (DOJ’s) qui tam intervention and dismissal practices. While recent years have witnessed more relator-led qui tam litigation following government non-intervention, the DOJ is now seeking dismissal of cases that it believes are a poor use of government resources and may impede care coordination and other governmental objectives.

Using this approach, DOJ recently terminated 11 “cloned” False Claims Act cases alleging AKS violations for certain pharmaceutical product support services. In seeking dismissal, the DOJ cited “sweeping allegations lack[ing] adequate support” and “conflict[ing] with important policy and enforcement prerogatives of the federal government’s healthcare program,” in particular the government’s interest in patient access to pharmaceutical product support and education. See U.S. ex rel. Health Choice Group v. Bayer Corp, 5:17-cv-126 (Dec. 17, 2018).

Focus on Opioid Crisis

The opioid crisis will continue as a government focus, with DOJ committing significant resources to combatting the opioid crisis and the OIG identifying it as a priority area, especially as to the Medicare Part D population. We can expect the use of data analytics and algorithms to play an important role in identifying “egregious providers for further scrutiny or investigation by OIG and its partners.”

Fraud enforcement related to opioids is expected to go beyond federal healthcare payors. The Support for Patients and Communities Act (Support Act) includes the Opioid Addiction Recovery Fraud Prevention Act of 2018 and the Eliminating Kickbacks in Recovery Act of 2018 (EKRA) containing specific criminal provisions related to preventing fraud and kickbacks for referrals for substance abuse treatment payable by federal healthcare programs and commercial payors.

Despite EKRA’s purpose to “make it illegal to provide or receive kickbacks for referring patients to recovery homes and treatment facilities,” EKRA has a broad reach, potentially implicating all arrangements for laboratory services, not just those related to recovery from substance abuse.

One challenge for mental health and substance abuse recovery providers now coming into mainstream healthcare is the need to strengthen their compliance infrastructure. Compliance programs have evolved over the last twenty years consistent with the government’s increasing expectations. Opioid recovery providers are stepping into an existing regulatory landscape without the ability to take “baby steps,” and will be expected to adhere to robust compliance standards immediately.

More Criminal Sanctions/Individual Liability

We anticipate more criminal sanctions for healthcare fraud and individuals, particularly senior executives, being held criminally and civilly liable for corporate misconduct both in and beyond the substance abuse area. Recent policy changes suggest this trend including DOJ’s review of all civil qui tam complaints for corollary criminal actions and DOJ’s policy determination that absent extraordinary circumstances a settlement will not protect individuals from criminal liability.

In addition, pursuing individual liability in civil corporate investigations remains a focus of the DOJ. The DOJ is restoring some discretion for civil settlements, moving away from an “all or nothing” approach to cooperation credit. To earn maximum credit, a company must still identify every individual who was substantially involved or responsible for the misconduct. However, companies may now qualify for some credit even if it does not conduct an extensive investigation into individual culpability to find all potential wrongdoers, so long as culpable senior officials and board members are identified.

Managed Care Tensions

Finally, activity in the managed care fraud space is expected to continue into 2019. Litigation and policy determinations will continue to focus on the inherent tension between the existing fraud and abuse laws, designed to address fee-for-service issues, such as overutilization and claims overpayments, which arguably are not relevant to the Medicare Advantage payment methodology based on patient diagnosis and actuarial assessments of risk.

Challenges to the government’s managed care enforcement efforts have had differing results. One case, which the government is appealing, invalidated CMS’s managed care overpayment rule as it applies to risk adjustment documentation. United Healthcare Insurance Comp. et al., v. Azar, 16-157 (RMC) (Sept. 7, 2018).

Another case allowed an enforcement action related to unsupported risk adjustment diagnoses to proceed but dismissed allegations related to faulty attestations. United States ex rel. Poehling v. UnitedHealth Group Inc. et al., 2:16-cv-08697. This unsettled space relating to risk adjustment false claims act settlements and litigation and the challenge to the managed care overpayment rule bears watching.

Author Information

Anjali N.C. Downs is a member in Epstein Becker Green’s Health Care and Life Sciences Practice in the firm’s Washington, D.C., office. She practices in the firm’s healthcare fraud group focusing on a variety of federal and state fraud issues. She may be contacted at adowns@ebglaw.com.

Carrie Valiant is a member in Epstein Becker & Green’s Health Care and Life Sciences Practice in the Washington, D.C., office where she co-chairs the firm’s healthcare fraud group. Valiant has more than 30 years of experience concentrating in healthcare fraud and abuse and government healthcare program payment matters. You can contact her at cvaliant@ebglaw.com.

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