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March 9, 2020

Health Headlines – March 9, 2020


President Signs Coronavirus Spending Legislation that Includes Telehealth Expansion – On March 6, 2020, President Trump signed H.R. 6074, the Coronavirus Preparedness and Response Supplemental Appropriations Act (the Act) into law (Public Law 116-123). The legislation, which was introduced on March 4 and swiftly passed both the House and Senate, provides $8.3 billion in emergency funding for federal agencies as well as state and local authorities to respond to the coronavirus outbreak. A portion of the funding in this Act will be used to reimburse HHS programs that the Trump Administration drew upon for the initial coronavirus response.

Specifically, the Act provides $6.5 billion to HHS.  Over $3 billion of HHS’ allocation is directed to the Public Health and Social Services Emergency Fund “to prevent, prepare for, and respond to coronavirus, domestically or internationally, including the development of necessary countermeasures and vaccines, prioritizing platform-based technologies with U.S.-based manufacturing capabilities, and the purchase of vaccines, therapeutics, diagnostics, necessary medical supplies, medical surge capacity, and related administrative activities.”

Further, the Act allocates $2.2 billion to the Centers for Disease Control and Prevention, including nearly $1 billion for state and local preparedness grants, half of which must be disbursed within 30 days of enactment. Each state will receive no less than $4 million. The Act also contains appropriations to the National Institutes of Health, Food and Drug Administration, USAID, the Department of State and the Small Business Association.

In addition to spending provisions, the legislation also contains a section temporarily waiving Medicare rules with regard to telehealth services so that more beneficiaries can receive in-home care without incurring significant out-of-pocket expenses. To expand the availability of telemedicine to seniors, the Act grants certain powers to HHS to waive certain telehealth limitations. These limitations include the requirement that a telemedicine patient be located in a rural area and receive the telemedicine advice or treatment in an approved, specified location, like a hospital or physician’s office, rather than in the patient’s home. Waiving this requirement is particularly appropriate for contagious conditions; permitting seniors to receive advice in their homes may help avoid the potential for further spreading the virus.

Beneficiaries who take advantage of any temporary waiver must use a “qualified provider,” meaning a physician or practitioner who provided some covered services to the individual during the last three years or is in the same practice (as determined by tax identification number) of such a physician or practitioner.  The requirement is designed to ensure that providers have a prior physician-patient relationship with beneficiaries, apparently to preclude telehealth entities from taking unfair financial advantage of the expansion (although to obtain reimbursement, providers would still need to be Medicare approved).

Perhaps as another protective measure, the Act does not permit the Secretary to waive the requirement that telehealth services be provided via asynchronous transmission. The Secretary may lift the limitation on telephone use, but only if “such telephone has audio and video capabilities that are used for two-way, real-time interactive communications.” In other words, the Secretary may not waive the requirement that the telehealth visit be through synchronous interactive video communications.

The Act only addresses the telehealth barriers that are largely unique to Medicare and only benefits Medicare beneficiaries. States will need to consider expanding coverage of telehealth to Medicaid and commercial plan members.  For example, while most states have laws requiring Medicaid to reimburse for services rendered via telehealth, some do not reimburse unless the telehealth services are provided at an eligible originating site. 

The full text of the Coronavirus Preparedness and Response Supplemental Appropriations Act is available here.

Reporters,  Marcia L. Augsburger, Sacramento, + 1 916 321 4803, maugsburger@kslaw.com, Allison Kassir, Washington, D.C., +1 202 626 5600, akassir@kslaw.com and Lauren S. Gennett, Atlanta, + 1 404 572 3592, lgennett@kslaw.com

Third Circuit Rules that Clinical Judgments Are Falsifiable; Can Trigger FCA Liability – Last week, the United States Court of Appeals for the Third Circuit held that prognoses of terminal illness submitted in support of hospice claims for reimbursement could be actionable false statements under the False Claims Act (FCA).  United States ex rel. Druding v. Care Alternatives, No. 18-3298 (3d Cir. 2020).  In so holding, the court rejected the reasoning embraced by the Care Alternatives district court, and recently by the Eleventh Circuit, that clinical judgments are subjective and cannot implicate the FCA.

To claim reimbursement from Medicare, a hospice provider must certify that a patient is terminally ill.  The certification must be accompanied by documentation that supports the prognosis of terminal illness based on the medical record. 

The plaintiffs in Care Alternatives alleged that the defendant, a hospice provider and their former employer, submitted false certifications to Medicare.  In discovery, an expert for the plaintiffs found that the documentation the defendant submitted in support of its certifications did not support a prognosis of terminal illness in thirty-five percent of the cases sampled. 

In granting summary judgment for the defendant, the district court held that an FCA claim cannot survive a motion for summary judgment absent evidence of an objective falsehood.  The court ruled that the plaintiffs’ expert opinion, without more, was insufficient to show falsity because medical opinions are inherently subjective and cannot be objectively false.

On appeal, the Third Circuit declined to adopt the “objective falsehood” test, holding instead that the FCA adheres to the common-law definition of fraud, which allows subjective opinions to be considered false when made in bad faith.  In the court’s view, whether a clinical judgment was made in bad faith is an appropriate question of fact for the jury. 

The Third Circuit also ruled that the objective falsehood standard is inconsistent with the FCA’s legal falsity precedent, which asks whether the claim was reimbursable under the conditions for payment set by the government.  Applying this standard, the Third Circuit found that the opinion of the plaintiffs’ expert could be evidence that the documentation the defendant submitted in support of its claim for reimbursement did not support its prognosis of terminal illness. 

The Third Circuit’s decision in Care Alternatives stands in stark contrast to the Eleventh Circuit’s decision in United States v. Aseracare, Inc., decided last year.  938 F.3d 1278 (11th Cir. 2019).  Aseracare was another FCA case alleging that a hospice provider had submitted false certifications to Medicare.  Like the district court in Care Alternatives, the Eleventh Circuit in Aseracare ruled that clinical judgments cannot be false under the objective falsehood standard.  The Third Circuit acknowledged but declined to follow Aseracare

A copy of the Third Circuit’s Care Alternatives decision is available here.  A copy of the Eleventh Circuit’s Aseracare decision is available here

Reporter, Alek Pivec, Washington, D.C., +1 202 626 2914, apivec@kslaw.com.

King & Spalding to Host Reception at the American Health Lawyers Association (AHLA) Institute on Medicare and Medicaid Payment Issues

Please join us on March 26, 2020, for a reception hosted by King & Spalding at AHLA’s Institute on Medicare and Medicaid Payment Issues in Baltimore.  The reception will be held in the Laurel Room on the 4th Floor of the Baltimore Marriott Waterfront from 7:00 p.m. to 9:00 p.m. ET.  To register for our reception, please click here.

King & Spalding to Host Reception at the Health Care Compliance Association (HCCA) Annual Compliance Institute

Please join us on March 29, 2020, for a reception hosted by King & Spalding at HCCA’s Annual Compliance Institute in Nashville.  The reception will be held at Ravello in the Gaylord Opryland Resort from 6:30 p.m. to 8:30 p.m. ET.  To register for our reception, please click here.