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Health Headlines – March 6, 2017

06 Mar 2017


Republican Governors Propose New Funding Model Keeping Medicaid Expansion – In an effort to align State leaders on Medicaid expansion, a group of Republican governors have drafted a proposal, available here, to allow States to obtain additional Medicaid expansion funding, even if those States did not expand Medicaid under the current method under the Patient Protection and Affordable Care Act (ACA).  The proposal – initiated by Ohio Governor John Kasich, Wisconsin Governor Scott Walker, and others – is aimed at satisfying the Republican goal of repealing the ACA’s Medicaid expansion program while simultaneously preserving Medicaid coverage for childless adults and low-income individuals just above the poverty level.  Under the plan, Federal funding would be capped for the first time in Medicaid program history, based on a new baseline of funding that attempts to level the playing field for non-expansion States.

Under the ACA, 31 States elected to expand Medicaid coverage.  Expansion States extended Medicaid eligibility to individuals with incomes of 138 percent of the Federal Poverty Level and included coverage for childless adults.  State expansion costs were fully funded by the Federal government for the first three years, phasing down to 90 percent by 2020.  The governors’ proposal provides non-expansion States the opportunity to receive Federal funding without expanding coverage to 138 percent of the poverty level that the ACA required.  Additionally, the 31 States that previously expanded coverage could increase eligibility to any income level while still receiving ACA funding.

The proposal also advances a new funding model for the Medicaid program.  Republicans in Congress have recently endorsed “block grants” and per-capita caps as alternative Medicaid funding mechanisms.  Under a block grant, the Federal government would set aside a fixed amount of money to each State for operating the Medicaid program.  Per-capita caps limit Federal funding per Medicaid enrollee.  The governors’ proposal, however, provides for limitations on the funding caps.  Specifically, block grants and per-capita caps would be limited to the modified ACA expansion population and not indexed to future enrollees – although States could apply the grants more broadly.  However, the proposal exempts certain Medicaid populations – children, the disabled, pregnant women, and the elderly – from the funding cap.  If a State does not opt for block grant or per-capita funding, Medicaid expansion with Federal funding would be frozen and the State would receive its regular match rate for new Medicaid enrollees.

In exchange for Federal funding caps, the governors outline certain Medicaid program changes including work requirements, asset tests, and enrollment limits for low-income adults.  The proposal also eliminates the requirement that Medicaid cover every FDA-approved drug, and allows States to move all Medicaid populations into managed care.

Please click here for a copy of the proposal.

Reporter, Catherine Silas, Washington, D.C., +1 202 626 8976,  

AMA Speaks Out Against Possible Settlement in Anthem/Cigna Antitrust Merger Litigation – In a February 28, 2017 letter to the Department of Justice (DOJ), the American Medical Association (AMA) expressed concern regarding Anthem’s recent statements about a potential settlement with DOJ that would allow the Anthem/Cigna merger to close despite an earlier court decision blocking the merger.

As previously reported, on February 8, 2017, the United States District Court for the District of Columbia granted the DOJ Antitrust Division’s request for an injunction blocking Anthem’s proposed $54 billion acquisition of Cigna.  Anthem is currently appealing that ruling and has suggested in statements in the Delaware Court of Chancery that Anthem still hopes to close the merger transaction either through its pending appeal or through a potential resolution with DOJ.  Specifically, Anthem indicated that there were reasons to believe the merger may be able to clear due to, among other things, the change in administration.  Anthem noted that Vice President Mike Pence, who previously served as Governor of Indiana (where Anthem’s headquarters are located), was supportive of the transaction as the Governor of Indiana.

In its letter titled The Anthem-CIGNA Merger: A Deal That Should Never Close, the AMA expresses its alarm regarding potential “politically-driven settlement negotiations.”   The AMA indicates that it “strongly believe[s] that political influence should play no role in the enforcement of the antitrust laws” and urges DOJ to vigorously defend the District Court’s ruling.

The AMA’s letter is available here.

Reporter, Isabella E. Wood, Atlanta, + 1 404 572 3527,

District Court Dismisses Antitrust Suit Against Palmetto Health -- On March 2, 2017, the U.S. District for the District of South Carolina dismissed all of Providence’s antitrust and State law claims against Palmetto Health stemming from Palmetto Health’s employment of more than 330 employees from a large orthopedic group, the Moore Clinic, previously owned by Providence.  Providence was a smaller hospital system serving the citizens residing in the midlands of South Carolina that in 2014 decided to sell all of its assets to LifePoint Health (LifePoint).  However, in July 2015, all but two employees of the Moore Clinic left Providence and became employees of Palmetto Health.  As a result, Providence’s discussions with LifePoint fell through and then, ten months later, Providence sold its assets to LifePoint for $50 million less than LifePoint’s original offer.  Providence subsequently filed a lawsuit against Palmetto Health alleging federal antitrust claims and other State law causes of action.  The District Court’s decision is available here.

Palmetto Health filed a motion to dismiss alleging that Providence lacked standing and an antitrust injury.  The District Court agreed with Palmetto Health and dismissed all of Providence’s Federal antitrust claims.  The District Court concluded that although Providence may have suffered an injury by losing the Moore Clinic, any injury was not an antitrust injury caused by Palmetto Health’s increased size and market presence and the monopolization of orthopedic services.  Moreover, the District Court concluded that Providence lacked “antitrust standing,” which it reasoned requires the court to consider five factors.  The first two factors address the injury and whether the laws were designed to protect against such injury.  As previously explained, the District Court found that Providence failed to show that it had suffered an antitrust injury.  According to the District Court, the last three factors used to show antitrust standing attempt to restrict the pool of persons who can bring antitrust claims.  The District Court concluded that even if Providence had suffered an antirust injury, it probably still would have lacked antitrust standing because more direct plaintiffs exist that could bring antitrust claims (such as patients, health plans, or employers).  

Accordingly, the District Court dismissed all of Providence’s Federal antitrust claims.  Given that the remaining claims were State law claims, the District Court declined to exercise supplemental jurisdiction over such claims and dismissed them without prejudice for refiling in State court.

Reporter, Kate Stern, Atlanta, +1 404 572 4661,


King & Spalding Client Alert: DOJ Issues New Corporate Compliance Guidelines –The Fraud Section of the Department of Justice recently posted a document on its website entitled “Evaluation of Corporate Compliance Programs.” The stated purpose of the document is to provide “sample questions that the Fraud Section has frequently found relevant in evaluating a corporate compliance program.” To view King & Spalding’s detailed Client Alert on the new guidelines, click here.

Please Join Us at UCLA’s Medical Device Partnering Conference – Join us on Tuesday, March 7, 2017, 9:00 a.m. – 5:00 p.m., at UCLA’s Fifth Annual Medical Device Partnering Conference at the UCLA campus. The conference will feature industry panels and showcase recent developments from some of Southern California’s leading research institutions. King & Spalding is sponsoring the Wine & Cheese reception afterward. Register here.

King & Spalding to Host 26th Annual Health Law & Policy Forum – Join us on Monday, March 20, 2017, 8:00 a.m. – 5:30 p.m. ET, for the 26th Annual Health & Law Policy Forum at the St. Regis Hotel, in Atlanta, Georgia. Our keynote speaker will be Fox News host Tucker Carlson. As in previous years, Forum sessions will cover a variety of health law and policy topics. Attendance is $95 per person (lunch included). Capacity is limited. Register here.

Save the Date: King & Spalding Reception at HCCA Compliance Institute – Please join Sara Kay Wheeler, Immediate Past President of the Health Care Compliance Association (HCCA), and the King & Spalding team at a reception during the 21st annual HCCA Compliance Institute. The reception will be held at the Gaylord National Resort & Convention Center in National Harbor, Maryland, on Sunday, March 26, 2017, from 6:00 p.m. - 8:30 p.m. ET Register here.

Save the Date: King & Spalding Reception at the AHLA Institute on Medicare and Medicaid Payment Issues – Please join King & Spalding at a reception during the AHLA Institute on Medicare and Medicaid Payment Issues. The reception will be held at the Baltimore Marriott Waterfront Laurel Room in Baltimore, Maryland, on Thursday, March 30, 2017, from 7:00 - 9:30 p.m. Register here.

Save the Date: 2017 Cybersecurity & Privacy Summit – On Monday, April 24, 2017, King & Spalding will host its 2017 Cybersecurity & Privacy Summit via webinar and in person in Atlanta, Georgia. The Summit will cover the latest developments and strategies for data protection. Additional details to follow.