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Health Headlines – June 19, 2017

19 Jun 2017

Seventh Circuit Affirms Grant of Summary Judgment in Hospital Antitrust Case – On June 9, 2017, the United States Court of Appeals for the Seventh Circuit affirmed the lower court’s grant of summary judgment in Methodist Health Services Corp. v. OSF Healthcare System d/b/a Saint Francis Medical Center, a case involving exclusive contracts between Saint Francis and health insurance companies that required Saint Francis to be an “in-network” hospital and Methodist to be an “out-of-network” hospital.  Methodist had argued that Saint Francis, allegedly the dominant hospital in the markets served by both hospitals, violated the Sherman Act by entering into exclusive contracts with insurance companies that prevented the insurance companies from contracting with Methodist.  In an opinion authored by Judge Posner, the Seventh Circuit rejected Methodist’s argument and affirmed the lower court’s grant of summary judgment in favor of Saint Francis.

The court noted that given the more extensive healthcare services offered by Saint Francis in the tri-county area, it was not a surprise that Saint Francis was a “must have” hospital among insurance companies and attracted more insurance companies than Methodist did.  The court also stated that there is nothing illegal about deals that require companies to limit the network of providers from which they obtain the healthcare.  Because the contracts between Saint Francis and insurance companies were of fixed duration, and because Methodist did not present evidence that the contracts had a significant exclusionary effect, the contracts were not in violation of antitrust laws.  The court noted that Methodist could outbid Saint Francis during the next round of contracts, and if it could not, then the logical inference is that Saint Francis offers a better deal because it provides a broader and deeper range of healthcare services than Methodist does.

The Seventh Circuit opinion is attached here.

Reporter, Jennifer S. Lewin, Atlanta, +1 404 572 3569,

CMS Actuary Predicts an Additional 13 Million Uninsured Under the ACA Repeal Legislation –  In a report published on June 13, 2017, the independent chief actuary of CMS estimated that an additional 13 million people will be uninsured in ten years if the American Health Care Act of 2017 (ACHA), the latest ACA repeal act passed by the House on May 4, is enacted.  Although the CMS report may present a less grim outcome of the repeal bill than did earlier reports published by the Congressional Budget Office (CBO), both reports reveal the high levels of uncertainty as it relates to what will actually unfold in a decade given the challenges involved in predicting such a complex framework. 

One explanation for the varying estimates between the CMS and CBO reports may be the different starting points that each government agency worked from.  For example, CBO initiated its analysis by predicting additional States would expand Medicaid under the existing ACA while CMS did not make such assumption.  The CMS report breaks down the 13 million uninsured figures as follows – 8 million fewer Medicaid enrollees, 3 million fewer individuals with employer coverage, and 2 million fewer individuals purchasing insurance through individual markets.  Meanwhile, CBO predicts a total of 23 million fewer insured, divided as follows – 14 million fewer Medicaid enrollees, 3 million fewer individuals with employer coverage, and 6 million fewer people purchasing insurance through individual markets.

Both reports seem to project that healthcare for older and less healthy people will be more costly and that higher premiums could force people with high healthcare costs to find insurance through an employer or to become uninsured.

The CBO report on the AHCA budget can be found here, and the CMS report on the AHCA budget can be found here.

Reporter, Juliet M. McBride, Houston, +1 713 276 7448,

Genesis Healthcare Enters $53.6 Million Settlement –  On June 16, 2017, the Department of Justice announced that Genesis Healthcare paid $53.6 million to resolve six False Claims Act whistleblower lawsuits filed by seven of Genesis’ former employees.  The lawsuits alleged that hospice, rehabilitation, and skilled nursing companies and facilities acquired by Genesis violated the False Claims Act.

The relators in the case alleged that Genesis’ subsidiaries engaged in various fraudulent Medicare and Medicaid billing practices before, and in some cases after, Genesis’ acquisition of the companies.  Specifically, the settlement resolves four sets of allegations:

  • First, the settlement resolves allegations that Skilled Healthcare Group Inc. (SKG) and its subsidiaries at the Creekside Hospice facility in Las Vegas, Nevada, submitted false claims to Medicare by: (1) billing for hospice services for patients who were not terminally ill and so were not eligible for the Medicare hospice benefit; and (2) billing inappropriately for certain physician evaluation and management services.
  • Second, the settlement resolves allegations that SKG and its subsidiaries submitted false claims to governmental payors at certain facilities by providing therapy to patients longer than medically necessary, billing for more therapy than patients received, and assigning certain patients a higher Resource Utilization Group level than necessary.
  • Third, the settlement resolves allegations that certain subsidiaries of Genesis submitted false claims to Medicare Part B by billing for outpatient therapy services that were not medically necessary or unskilled in nature.
  • Fourth, the settlement resolves allegations that a skilled nursing subsidiary of Genesis submitted false claims to governmental payors at certain nursing homes for services that were grossly substandard and/or worthless and therefore ineligible for payment.

Notably, the settlement, which was based on Genesis’ inability to pay, does not require Genesis to enter into a Corporate Integrity Agreement with HHS OIG.  Genesis did not admit to liability as part of the settlement.  The relators will receive a collective $9.67 million as the relators’ share of the settlement.

The DOJ press release is available here.

Reporter, Lauren Gennett, Atlanta, + 1 404 572 3592,

HHS Cannot Pause United’s Challenge to the Medicare C/D Overpayment Rule –  As previously reported, UnitedHealthcare Insurance Company (United) is challenging CMS’s Medicare C/D Overpayment Rule as it applies to Medicare Advantage (MA) organizations.  HHS sought to stay United’s lawsuit while it pursues the following two pending FCA cases against the insurer:  (1) United States ex rel. Swoben v. Secure Horizons, No. 09-5013 (C.D. Cal) (Swoben), and (2) United States ex rel. Poehling v. UnitedHealth Group, 11-cv-258 (W.D.N.Y) (Poehling).  On June 14, 2017, Judge Rosemary Collyer of the U.S. District Court for the District of Columbia issued an opinion and order (Order) denying the government’s motion to stay United’s lawsuit challenging the 2014 Overpayment Rule.  See UnitedHealthcare Insurance Company v. Price, No. 16-cv-00157 (D.D.C. June 14, 2017).

The Affordable Care Act requires that if a “person” receives a Medicare or Medicaid overpayment, the person must report and return the overpayment within 60 days of its identification or face potential FCA liability.  CMS issued its final Medicare Parts C/D Overpayment Rule in May 2014.  United argues “that the 2014 Overpayment Rule, which [United] says imposes a stricter standard on MA providers than on CMS itself when paying Medicare benefits, is inconsistent with the Medicare statute’s requirement that CMS ‘ensure actuarial equivalence’ between traditional Medicare and MA programs and thus violates the [Administrative Procedure Act].”

As outlined in the court’s Order, both pending FCA cases allege that United “knowingly misreported or knowingly caused other parties to misreport overpayments as part of a scheme to inflate its Medicare reimbursements.”  However, the court’s Order noted that “[a]ll parties agree that the allegedly fraudulent conduct in Poehling and Swoben predates the 2014 Overpayment Rule, and that the Rule is not at issue in either FCA [c]ase.”

In denying HHS’s motion to stay, the court reasoned, in part, that this “case is limited to whether CMS acted beyond its authority when promulgating its 2014 Overpayment Rule.  It does not concern the actions of United in any way, and any analysis by the Court would be limited to the administrative record behind the 2014 Overpayment Rule and the statute . . .”  The court granted the government additional time (until July 14) to answer United’s Complaint.

Reporter, Stephanie Johnson, Atlanta, GA, +1 404 572 4629,

OIG Claims Medicare Improperly Paid Over $700 Million Medicare and Medicaid EHR Incentive Payments –  On June 12, 2017, OIG released a report on Medicare and Medicaid electronic health record (EHR) incentive payments, claiming that between May 2011 and June 2014, CMS paid an estimated $729 million to eligible professionals (EPs) who OIG claims did not fully meet Federal requirements for EHR incentive payments.  This amount represents about 12 percent of the total amount of Medicare EHR incentives payments made during that time period.  The amount is based on extrapolation of alleged overpayments to a sample of EPs that were part of the OIG audit.

Medicare makes payments to EPs and hospitals for demonstrating “meaningful use” of a certified EHR to incentivize widespread adoption of EHR technology as established by the HITECH Act.  The Government Accountability Office (GAO) previously identified improper incentive payments as the main risk to the EHR incentive program, noting that the program’s attestation-based payment system is vulnerable to making payments to EPs and hospitals that are not fully meeting requirements.  As of June 2014, CMS has paid about $6 billion in incentive payments.

OIG reviewed a random sample of 100 EPs from the total 250,470 EPs who received EHR incentive payments from May 2011 to June 2014 to determine whether their attestations to meaningful use were properly supported.  From its sample, OIG identified 14 EPs who did not maintain support for their attestations and therefore, in OIG’s view, received government payments they were not entitled to.  This conclusion does not state, however, that the EPs failed to successfully attest to any of the measures but simply did not have the necessary paper documentation to demonstrate that they achieved the measures to which they attested.

Generally, to meet stage one meaningful use requirements, EPs must meet all 15 core measures and select an additional five of ten menu measures to satisfy.  For example, one of the core measures requires EPs to conduct or review a security risk analysis.  In its review, OIG found that six EPs could not provide documentation of a security risk assessment, and other EPs could not provide support for menu measures.  Again, OIG did not show that the EPs did not actually conduct the analysis or satisfy the menu measures.

OIG recommended that CMS implement stronger program integrity safeguards to promote more consistency in verifying that EPs self-attestations are properly meeting Meaningful Use requirements.

The full report is available here.

Reporter, Caitlin Pardue, Atlanta, GA, + 1 404 572 4877,

Healthcare Spending Continues to Increase at a Slower Rate Post-Recession –  On June 14, 2017, representatives from CMS’s Office of the Actuary published an article in Health Affairs titled “Health Spending by State 1991-2014.”  Based on CMS’s analysis, the most recent economic recession (ending in 2009) had a sustained impact on health spending and health insurance coverage.  Specifically, from 2010 to 2013, per capita personal health spending grew at a rate of 2.8 percent per year on average, which is substantially slower than during the 2004 to 2009 time period, when spending averaged growth of 5.2 percent per year. 

The article also noted that total Medicaid spending increased 12.3 percent from 2013 to 2014 for States that expanded Medicaid, compared with 6.2 percent for States that did not expand Medicaid.  However, on a per-enrollee basis, Medicaid spending declined considerably for the expansion States (-5.1 percent) in 2014, whereas per-enrollee Medicaid spending in the non-expansion States increased 5.1 percent.  Additionally, aggregate private health insurance spending grew more rapidly in States that did not expand Medicaid eligibility by 2014 than in States that did.

To view the full article, click here.

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


OIG Announces It Will Update its Work Plan Website Monthly –  Effective June 15, 2017, OIG will update its Work Plan Website monthly in an effort to enhance transparency.  Previously, OIG updated the Work Plan once or twice each year.  The OIG announcement is available here.

CMS and the Office of Medicare Hearings and Appeals (OMHA) Announce Informational Call Regarding Improvements to the Medicare Claims Appeal Process and Statistical Sampling Initiative –  CMS and OMHA are hosting a call on Thursday, June 29, 2017, from 1:00 - 3:00 p.m. Eastern to discuss the HHS Medicare Appeals Final Rule published on January 17, 2017, and improvements to the appeals process.  Please click here to register.

King & Spalding Roundtable on Life Sciences Executives Under Fire: The Government’s Increasing Focus on Individual Liability –  Please join us for a King & Spalding roundtable webinar on Wednesday, June 21, 2017 from 1:00 – 2:30 pm EDT focusing on developments in Life Sciences executive liability as well measures that may be taken to avoid such liability.  For more information and to register, please click here.