News & Insights


June 8, 2020

Health Headlines – June 8, 2020

HHS Releases New Frequently Asked Questions Regarding CARES Act Provider Relief Funds – Last week, HHS released new Frequently Asked Questions (FAQs) regarding payments distributed to providers via the CARES Act Provider Relief Fund.  Importantly, the CARES Act requires that providers attest that they meet certain Terms and Conditions to retain Provider Relief Funds.  Although the application process for the $20 billion General Distribution ended on June 3, 2020, the FAQs released by HHS still provide additional details that would be helpful to providers who applied by the deadline.

The new FAQs cover the following topics: (1) terms and conditions; (2) attestation; (3) general distribution; and (4) payment portal.  Importantly, the new FAQs explain that providers receiving payment from the $20 billion General Distribution have 90 days from receipt of payment to attest and agree to the Terms and Conditions.  For providers that have already affirmatively attested to payment but now wish to reject funds and retract attestation, they may do so by calling the provider support line at (866) 569-3522.  Additionally, providers that were unable to submit revenue information by June 3 are not precluded from applying for future Provider Relief Fund payments. 

As a reminder, all providers receiving Provider Relief Fund payments are required to comply with the reporting requirements outlined in the Terms and Conditions and any additional requirements set forth by the Secretary of HHS.  Providers that receive $150,000 or more from the CARES Act or any other Act related to addressing COVID-19 must submit quarterly reports outlining the use of the funding.  The specific reporting obligations imposed on providers begin for the calendar quarter ending June 30, 2020, but the Secretary of HHS may request additional reports before that date.  

The complete FAQ document is available on the HHS website here, and the Terms and Conditions are available here

Reporter, Ahsin Azim, Washington, D.C., +1 202 626 9262,

DOJ Updates Compliance Program Guidance - On June 1, 2020, the DOJ Criminal Division released an updated version of its guidance regarding the evaluation of corporate compliance programs (the 2020 DOJ Compliance Guidance).  DOJ originally issued this guidance in February 2017, and then updated and restructured the guidance in April 2019.

As with the prior versions of the guidance, the purpose of the 2020 DOJ Compliance Guidance is to “assist prosecutors in making informed decisions as to whether, and to what extent, the corporation’s compliance program was effective at the time of the offense, and is effective at the time of a charging decision or resolution, for purposes of determining the appropriate (1) form of any resolution or prosecution; (2) monetary penalty, if any; and (3) compliance obligations contained in any corporate criminal resolution (e.g., monitorship or reporting obligations).”  Although the guidance is primarily structured to provide guidance to federal prosecutors with respect to prosecutorial decisions involving organizations across all industries, the guidance offers valuable insights for healthcare organizations seeking to enhance their compliance program efforts and assess current expectations with respect to the design and sophistication of compliance programs.

Although the recent revisions are notable, the 2020 DOJ Compliance Guidance largely resembles the prior version released in April 2019.  DOJ continues to reiterate key themes from prior versions of its compliance program effectiveness guidance as well as other sources of DOJ guidance.  The 2020 DOJ Compliance Guidance, like the April 2019 version, is organized around three “fundamental questions.”  First, “Is the corporation’s compliance program well designed?”  Second, “Is the program being applied earnestly and in good faith?”  Third, “Does the corporation’s compliance program work in practice?”  Within each of these three areas, DOJ offers specific questions and topics for prosecutors to consider when evaluating the effectiveness of a compliance program under review.

Notably, the DOJ revised its terminology related to the second question to focus on whether the compliance program is “adequately resourced and empowered to function effectively” rather than on whether the program was being “implemented effectively.”  This change appears to highlight the DOJ’s continuing focus on identifying concrete compliance measures an organization can take and DOJ’s longstanding expectation that compliance programs have sufficient resources (including financial resources) and organizational support to function effectively. 

Other key changes in the 2020 DOJ Compliance Guidance include:

  • Lessons Learned and Importance of Compliance Program Evolution – Several of DOJ’s revisions place additional emphasis on the concept that a compliance program should be constantly evolving and should incorporate feedback from both internal and external sources.  This concept is not new, but DOJ’s revisions further emphasize its importance.  DOJ’s discussion of the organization’s risk assessment process adds a section on “Lessons Learned” and instructs prosecutors to probe whether the company has “a process for tracking and incorporating into its periodic risk assessment lessons learned either from the company’s own prior issues or from those of other companies operating in the same industry and/or geographical region.”  Also, with respect to reporting mechanisms, DOJ has added a question regarding whether the company “periodically test[s] the effectiveness of the hotline, for example by tracking a report from start to finish.”  This question underscores that it is not sufficient to simply implement compliance program functions; instead, the compliance program should take the next step to test and evaluate those functions.
  • Relevant Time Periods for Evaluation – The 2020 DOJ Compliance Guidance clarifies that prosecutors should evaluate the “fundamental questions” for the compliance program “both at the time of the offense and the time of the charging decision and resolution.”  This revision reflects the common theme that a compliance program should be constantly evolving based on lessons learned and evolving risk profiles and that a snapshot in time of a compliance program does not necessarily capture all metrics that are important to DOJ’s evaluation. 
  • Integration of Compliance Program – DOJ’s revisions also build upon the longstanding emphasis on the need for a compliance program to be more than a “paper program” and that compliance efforts cannot be merely a “check the box” exercise.  The 2020 DOJ Compliance Guidance highlights the need to integrate compliance program efforts into the company’s operations in a useful and relevant manner in two key areas: (1) policies and procedures and (2) training.  With respect to policies and procedures, the 2020 DOJ Compliance Guidance probes the accessibility and usability of policies and procedures.  Prosecutors are instructed to evaluate whether the “policies and procedures have been published in a searchable format for easy reference” and whether the company “track[s] access to various policies and procedures to understand what policies are attracting more attention from relevant employees.”  For training, DOJ has added questions regarding whether there is “a process by which employees can ask questions arising out of the trainings” and whether the company has “evaluated the extent to which the training has an impact on employee behavior or operations.”  Again, these changes underscore that merely having written policies and providing training is not the end of the analysis and additional efforts are needed to assess whether the policies and training are effective.
  • Continuing Compliance Efforts for Third Parties and Acquisition Targets – DOJ also added several questions relating to third party management and mergers and acquisitions.  Several of these revisions are designed to evaluate the extent to which compliance efforts for third parties and acquisition targets are limited to the beginning of the relationship, versus continuing throughout the duration of the relationship.  For third party vendors, prosecutors are now instructed to consider whether the company “engage[s] in risk management of third parties throughout the lifespan of the relation, or primarily during the onboarding process.”  For mergers and acquisitions, the 2020 DOJ Compliance Guidance explicitly recognizes that there may be circumstances where a company is unable to complete pre-acquisition due diligence but places additional emphasis on the need for post-acquisition due diligence and integration efforts.  For example, DOJ added a question relating to post-acquisition audits at newly acquired entities.

The 2020 DOJ Compliance Guidance is available here.

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

HHS Announces New COVID-19 Testing Laboratory Data Reporting Guidance – On June 4, 2020, HHS released new guidance detailing what additional data laboratories must report to HHS along with COVID-19 test results.  HHS explained that the new guidance standardizes reporting requirements in an effort to ensure that public health officials have timely access to comprehensive data to inform decision making related to COVID-19.

The HHS guidance specifies that demographic data including patient age, race, ethnicity, sex, and patient zip code must be collected and reported to the CDC.  HHS states that such demographic data will enable the agency to ensure that all groups have access to testing, better monitor disease incidence and trends, and assess availability of resources, among other benefits.  The guidance also specifies that additional patient demographic data elements, such as name, date of birth and complete address, should also be collected and reported to state or local public health departments, but will not be collected by CDC.  Additionally, the guidance addresses methods for submission of required data, as well as data reporting and transmission requirements.

The HHS press release is available here.  The full guidance document is available here and the frequently asked questions document about laboratory data reporting is available here

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

CMS Adjusts Center for Medicare and Medicaid Innovation Value-Based Payment Models in Response to COVID-19 – On June 3, 2020, CMS announced changes to the Center for Medicare and Medicaid Innovation (CMMI) value-based care payment models.  Notably, the changes include delaying the start date for new models that would test government payments to providers based on patients’ health and coordination of care.  Deadlines for existing models are also postponed.  In addition, CMS is delaying certain quality and financial reporting deadlines and or modifying benchmarks.

The changes focus on value-based care model adjustments related to financial methodologies, quality reporting, and model timelines. With respect to timeline changes, the Comprehensive ESRD Care (CEC) Model, Comprehensive Care for Joint Replacement (CJR) Model, Next Generation ACO Model and Oncology Care Model have been extended.  In addition, the start date of the following models has been delayed:  Direct Contracting Model (Global and Professional), Emergency Triage, Treat and Transport Model, Kidney Care Choices Model, Maternal Opioid Misuse Model and the Serious Illness Component of the Primary Care First Model.  In addition to other flexibilities set forth in CMS’s chart, CMS is reducing or removing downside risk for 2020, or a portion of the year, for a few models, such as the CEC Model, the CJR Model and the Next Generation ACO Model.  CMS is also granting participants in the Bundled Payments for Care Improvement Advanced Model the option to eliminate upside and downside risk by excluding clinical episodes from reconciliation for 2020. 

The changes are intended to address challenges to value-based care models that have arisen from the pandemic.  Namely, the new models cannot operate without provider participation and the existing models require providers to sign new contracts, but providers face clear obstacles to taking on new obligations and extending existing commitments during the pandemic.  Therefore, the delay is intended to give providers additional time to transition to value-based care.  In addition, CMS aims to give providers more time to focus on patient care, rather than paperwork, and to mitigate providers’ financial risk. 

CMS will provide additional information to model participants regarding the changes. CMS indicated that the changes may involve amendments to participation agreements and other CMS model documents.  CMS also noted that the implementation date of new models may be further delayed due to the pandemic and that further changes are possible.  King & Spalding will continue tracking this issue.

CMS’s chart describing the specific COVID-19 flexibilities is available here.  Details about additional model-specific flexibilities will be released on a rolling basis on CMS’s CMMI webpage here.  Also available on CMMI’s website is a link to CMS Administrator Verma’s announcement of the various program changes in a Health Affairs blog.

Reporter, Rebecca Gittelson, Atlanta, +1 404 572 4679,

CMS Issues New Nursing Home Survey Requirements and Penalties in Light of COVID-19 Pandemic – On June 1, CMS issued guidance to states on new requirements for nursing homes in light of the COVID-19 pandemic.  Since March 6, 2020, CMS has relied on State Survey Agencies to perform Focused Infection Control surveys of nursing homes across the country.  Based on the results of these surveys, CMS initiated a “performance-based funding requirement” for nursing homes.  The requirement is tied to the Coronavirus Aid, Relief, and Economic Security (CARES) Act supplemental grants for State Survey Agencies.

CMS also announced enhanced penalties for noncompliance with infection control requirements to provide greater accountability and consequences for such noncompliance.  These penalties are most significant for nursing homes that have a history of infection control deficiencies or of causing actual harm to residents.

On March 4, 2020, CMS called for states to focus surveys on infection control.  Based on COVID-19 nursing home data being reported to the CDC, CMS determined that nursing homes need further direction to prioritize focused infection control surveys.  Thus, states that have not completed 100% of their focused infection control nursing home surveys by July 31, 2020 will be required to submit a corrective action plan to their CMS location. The plan must outline the state’s strategy for completing these surveys within 30 days. If a state still has not completed surveys in 100% of its nursing homes after 30 days, its CARES Act Fiscal Year (FY) 2021 allocation may be reduced by up to 10%. Subsequent 30-day extensions could result in additional reductions. These funds would then be redistributed to states that have completed their surveys by July 31.

CMS is also requiring states to take the following COVID-19 survey measures:

  • Perform on-site surveys of nursing homes with previous COVID-19 outbreaks;
  • Perform on-site surveys of any nursing home with 3 or more new COVID-19 suspected and confirmed cases since the last National Healthcare Safety Network COVID-19 report, or 1 confirmed resident case in a facility that was previously COVID-free; and
  • Starting in FY 2021, perform annual Focused Infection Control surveys of 20 % of nursing homes based on state discretion.

The CMS memo to State Survey Agency Directors is available here.

Reporter, Elizabeth Han, Houston, +1 713 276 7319,


King & Spalding Webinar: Healthcare M&A in a Post-Pandemic Environment

On June 25, 2020, from 12:00 PM ET to 1:00 PM ET, please join King & Spalding for a webinar titled, “Healthcare M&A in a Post-Pandemic Environment.” Paul Ferninands, Tom Hawk, Torrey McClary, Craig Smith and Phillip Street from King & Spalding, together with Steven Shaefer from Tenet Health, will host a discussion regarding how the COVID-19 pandemic and government lockdown orders will impact mergers and acquisition activity and deal structure for healthcare providers and suppliers. Panelists will focus on:

  • How the pandemic has affected pending transactions;
  • New diligence areas driven by increased oversight by the OIG, CMS, and the SBA;
  • Increased FTC scrutiny of M&A activity in healthcare;
  • Distressed M&A;
  • How transaction documents will need to change to reflect pervasive uncertainty of this environment; and
  • Challenges in post-closing integration processes.

For more information and to register, please click here.

King & Spalding Business Recovery Task Force

Healthcare organizations now must navigate the challenge of both resuming and continuing work in the context of the ever-changing “new normal.”  To help our healthcare clients address this challenge, the King & Spalding Coronavirus Business Recovery Task Force has created a tool for healthcare organizations to assess and strengthen their recovery response.  Access the COVID-19 Recovery Response Assessment for Healthcare Organizations here.  Access the Coronavirus Business Recovery – Return to Work Hub here.