In the inaugural episode of our monthly series on fraud and abuse issues, Matthew Wetzel, Senior Counsel, Akin Gump Strauss Hauer & Feld LLP, and Kevin Raphael, Partner, Pietragallo Gordon Alfano Bosick & Raspanti LLP, talked with Katherine (Katie) Norris, a Director in BRG’s Corporate Compliance and Risk Management practice, about hot topics and key developments in health care fraud and abuse, as well as recent trends in enforcement, and what to look out for in 2020. From AHLA's Fraud and Abuse Practice Group. Sponsored by Berkeley Research Group, LLC (BRG).
To learn more about AHLA and the educational resources available to the health law community, visit americanhealthlaw.org.
In the inaugural episode of our monthly series on fraud and abuse issues, Matthew Wetzel, Senior Counsel, Akin Gump Strauss Hauer & Feld LLP, and Kevin Raphael, Partner, Pietragallo Gordon Alfano Bosick & Raspanti LLP, talked with Katherine (Katie) Norris, a Director in BRG’s Corporate Compliance and Risk Management practice, about hot topics and key developments in health care fraud and abuse, as well as recent trends in enforcement, and what to look out for in 2020. From AHLA's Fraud and Abuse Practice Group. Sponsored by Berkeley Research Group, LLC (BRG).
To learn more about AHLA and the educational resources available to the health law community, visit americanhealthlaw.org.
The following message and support for A H L A is provided by Berkeley Research Group, a global consulting firm that helps organizations advance in the areas of disputes and investigations, corporate finance and strategy and operations. B R G helps clients stay ahead of what's next. For more information, visit think b r g.com.
Speaker 2:Welcome to the inaugural edition of the American Health Lawyers Association Fraud and Abuse Practice Group podcast. My name is Matt Wetzel, and along with my co-host Kevin Rayfield, we hope to provide you with a monthly update on hot topics and key stories about the most pressing healthcare fraud and abuse issues in the United States. Each month we'll discuss trends in enforcement, critical updates in the law and other important topics, and we hope to provide you with core insights on critical issues from how the government enforces the fraud and abuse laws to potential legislation that could impact how healthcare companies operate to regulatory developments that may have an impact on your business or your client's businesses. We also hope to share with you practical considerations for companies seeking to comply with the law. Before we start our first Pro podcast today, I want to extend a huge thank you to our sponsor, the Berkeley Research Group, and, uh, joining us from b r g today is Katie Norris, a director specializing in the pharmaceutical medical device, OTC consumer products and cosmetics industries. So, Kevin, Katie, welcome. Before we start, I thought we might take a quick moment to introduce myself or ourselves rather. As noted. I'm Matt Wetzel, a lawyer with the law firm of Aiken Gump in Washington DC where I specialize in assisting medical technology companies with their fraud abuse issues and compliance program development among other areas. Kevin, if you wanna introduce yourself. Sure. Thank you, Matt. My name is Kevin Rayfield. I'm a partner in the Philadelphia office of the Pet, Gordon Alfano, Baek Andi Firm. I'm co-chair of the Healthcare Litigation Practice Group, and I represent entities in individuals in the healthcare industry, in government civil investigations, false Claims Act litigation, and government criminal investigations. Great. And Katie, do you wanna introduce yourself?
Speaker 3:Sure. Thank you, Matt. My name is Katie Norris and I'm a director in the healthcare Advi Analytics practice at Berkeley Research Group at Washington dc. I predominantly work with outside council and manufacturers of medical devices and pharmaceuticals in supportive compliance program development and implementation, as well as compliance with complex enforcement decrease such as CIAs and DPAs.
Speaker 2:Great. Well, we're really excited to kick off this podcast and this month we're celebrating the start of a new year, and so we're gonna offer our predictions for what lies ahead in the healthcare fraud and abuse space in 2020. What can we expect from HHS and other regulators? What shifts or trends may be emerging and, uh, what should we see this upcoming year? So I'm gonna kick it off here, and as many of you are keenly aware, uh, HH s's, uh, office of Inspector General and the Centers for Medicare and Medicaid Services, both issued key proposals at the end of 2019 that would add new Safe Harbor regulations and modify existing safe harbors under the anti-kickback statute and add and modify to the exceptions under the Stark Law to account for value-based care and value-based arrangements. Uh, these proposed regulations are potentially, uh, uh, potentially could dramatically change the way that the government enforces the fraud and abuse laws, but the agency's stated goal of moving the healthcare delivery system from one that pays on a, on a per service or fee for service basis to one that pays based on value, quality, outcomes, and cost efficiency. Some of OIGs and CMSs proposals have raised several questions. In particular, the proposal to prohibit durable medical equipment makers, drug manufacturers and labs from participating in value-based arrangements that are shielded from anti-kickback statute and Stark law liability. With comments due on December 31st, 2019, we can certainly or fairly predict to CF final rule from OIG and a final rule from c M S in the first half of 2020. Uh, given the broad and sweeping nature of the proposed rules, I think what we might see, uh, is voluminous responses, uh, sent to the, to the agency's recommendations, and especially criticisms from key stakeholders about the approaches that HHS is taking. So HHS is also indicated that in 2020 edic plans to address additional value-based arrangements involving makers of medical products like drugs, like medical devices, through some additional proposed rulemaking in 2020, this time addressing product purchases and potentially focusing on the discount safe harbor. But for purposes of the existing rules, the existing proposals issued by, uh, hhs, they're focused on patient care coordination and management, and how they can appropriately structure safe harbors that would permit remuneration and compensation exchange between the parties. That does not run afoul of the anti-kickback statute and the Stark Law. I think this will be one of the key, uh, developments over the course of 2020, uh, for all providers, suppliers, uh, manufacturers, everybody who is in the healthcare delivery space in the United States, uh, should pay attention to how HHS addresses value-based arrangements moving forward. Another key update, uh, from my perspective at least, uh, in 2020, will be the revisions to the US Physician Payment Sunshine Act. As many of you know, uh, the support act of 2018 expanded the list of covered recipients that, uh, drug and device makers must report on under the Sunshine Act and starting January 1st, 2021, uh, the Sunshine Act will require, uh, life sciences companies, uh, to track information about payments and transfers of value made to physician assistants, advanced practice, registered nurses, nurse practitioners, certified nurse anesthetists, and certified nurse nurse midwives. Uh, this is in addition to the existing disclosures required for physicians and for teaching hospitals. Uh, we had expected to hear from CMS this year in the 2020 physician fee schedule rule with significant guidance, although the agency did address, uh, the expansion, uh, and and expanded the, uh, nature of payment categories. Uh, uh, uh, we do expect to hear much additional guidance from the agency throughout the course of 2020. So therefore I would, uh, encourage life sciences companies to pay attention to CMS guidance on the issue. Uh, and as well as the additional, uh, covered recipients as well, uh, should be prepared, uh, for the additional public disclosures under their names, uh, and, uh, some additional potential public scrutiny for their relationships with industry. Matt, this is Kevin. I just had a question for you on, on one of the things you raised, which is value-based Sure rules. What are the beneficial, practical impacts of the value-based rules for those clients that you typically represent? Sure. Well, it's a great question and, uh, you know, I maybe a two-part answer. So first, I represent mostly medical technology companies, and so, uh, my clients are very closely watching the proposed rules and the final regulations that OIG G and C m s will issue primarily because of the agency's prohibition on certain entities from participating in value-based enterprises that receive protection under the kickback statute in the Stark laws. So understanding where HHS lands with that particular issue will be of utmost importance to my clients, and I'm sure to, uh, many of yours as well. I think from a practical standpoint, looking beyond medical technology, what HHS has done, which I think is quite laudable, is try to, uh, move away from a system of regulation that, uh, governs interactions among different providers based on a fee for service model and is focused more on a value-based model. So currently those laws might prohibit certain remuneration or certain compensation designed to produce better outpatient outcomes designed to result in cost efficiency and the like, uh, simply because under the current regime, they might, uh, be, uh, prohibited or subject to kickback or stark wall liability. So moving away from, uh, that, uh, regime to one that is focused on value and that really takes into account the practical consequences of value-based arrangements is, uh, really, uh, quite important and something that my clients are, are definitely paying attention to. It's a great question. Thank you. Thank you. In fact, let me turn it over to you, Kevin, and, and here are your updates and predictions for, uh, 2020. Thank you, Matt. So, as we, as a draw a year draws to a close one of the common questions I get from clients in healthcare spaces, what do we see 2020 bring as far as either criminal, uh, enforcement priorities or the False Claims Act litigation space? Um, thankfully the HHS publishes their, um, work plans so we can divine a little bit from the work plans and also from our experience where we see criminal enforcement going in 2020. So the first priority, of course, continuing a trend over the last couple of years is gonna be opioid enforcement, but in 2020 it, the H S O I G and CMS are gonna be data mining at the physician level to isolate and identify physicians that are over or that are suspiciously over-prescribing opioids as part of the civil and criminal enforcement efforts. We would also anticipate that, uh, your intestine and other ancillary services related to pain management and other practice areas where opioids are prescribed regularly will be focused upon next year, um, as well as the continued focus on the distributors and manufacturers of opioids. I think another topic, another focus next year that will be large and will continue to grow, is the government's focus on compound pharmacies. Um, particularly in several areas, fraud related to the marketing of doctors, um, to, uh, the patients who would be prescribed these compound drugs and payments and kickbacks to both the patients and the physicians in order to secure patients' flow for prescriptions to those compound pharmacies. Another focus is not just gonna be Medicare, uh, billing of compound pharmacies, but state governed based insurance programs, uh, which usually reimburse compound pharmacies, uh, for compound drugs at a high rate and at high, uh, high dollar values. That'll be continued effort, uh, to drill down and, uh, fight compound pharmacy fraud. And lastly, there'll be both government and private health insurance, uh, focus on fraud related to the ownership of compound pharmacies by physicians and whether drugs are actually compounded pursuant to the FDA regs instead of manufactured. I think the next big topic for government enforcement will be the standard anti kickback statute, criminal civil violations and pharmacy and durable medical equipment, uh, lines of healthcare and a new area will be home health. Uh, there were a number of reports published in 2019 about home health compliance with Medicare requirements. A number of home healthcare agencies were reviewed and reports were issued about the compliance. And strikingly those reports found that a number of these companies were not compliant related to Medicare requirements for patients being home bound, and that the services that were prescribed in, uh, provided to these, uh, home healthcare patients were not medically necessary. These reports indicated over 50% error rate in home healthcare billing, uh, and compliance regarding home bound and medically necessary services. And given that the app approx, the Medicare pays approximately 18 million a year to home health, uh, the potential 9 billion over payments being made, if that error rate holds true across the industry, would be a substantial incentive for the government in 2020 to continue to review and make home health compliance a, uh, focus of enforcement. And this won't apply just to home healthcare agencies. We expect that laboratories and other service providers that provide services to home healthcare will be, uh, a focus. And one of the issues related, there will be documentation related to the home bound status of the patient. In 2020. HHS OIG will be publishing a final report on their findings from these various specific 2019 report findings, and that will be, uh, of keen, a keen interest to the home healthcare industry. I think the last area of focus will be investors in healthcare, particularly equity investors. We've seen a movement this year, particularly in the, uh, civil and criminal enforcement, uh, of investigating equity investors and how they manage the home health, the home, excuse me, the healthcare industry business, once they take it over, I think next in 2020 will be, uh, false Claim Act. Defendants will have a new area to explore for defense at the intersection of Alina a Sarah Care and the branding Grantson memos. We all know that, um, Lena, which is a US Supreme Court case decided, uh, seven one basically held that no rule requirement or other statement of policy other than the national coverage determination that establishes changes of substantive legal standard for payment of services, um, is, can be used as a basis for enforcement if it hasn't gone through the standard rulemaking notice in common period. Uh, LA uh, this year recently in Eastern District of Pennsylvania and polansky versus Executive Health Resources, uh, the, uh, the district court, uh, followed Alina and found that FCA claims premised on a CMS rule that did not go through the rulemaking and common period, uh, and which created a substantive standard could not form the basis of a false claims act enforcement case. Uh, we all know about the brand memo, which articulates the government's position on Aleena and the application of that case, uh, particularly that payment rules and guidance documents that don't go through the process of rulemaking and, and notice cannot form the base of enforcement actions. Then this includes local coverage determinations. Although those guidance documents can be used to establish, uh, materiality andie elements, they can't alone establish falsity. Um, so brands interpretation of Alina is gonna give the fertile grounds for, uh, defense attorneys in the False Claims Act space and will be a challenge the plaintiff's relaters counsel and the government pursuing those claims. Sarah cares finding that, uh, duly expert opinions isn't sufficient for falsity. Absent objective evidence that defendant's knowledge of falsely also provides fertile grounds for, um, defense. And those, the brand memo and a Sarah and Alina give defense counsel on a False Claims Act cases, a strong opportunity to argue that the Grantson memo should apply and lead to government dismissals in false Claims Act cases. Um, interesting would be how district courts continue to apply Alina to False Claims Act, uh, theories and, uh, how those parameters are further defined in 2020. And that would be the extent of my prognostication for 2020 in this field. Great. Well, thank you very much, Kevin. Really appreciate those, uh, important insights on, uh, the enforcement, uh, spectrum in 2020. And Katie, let me turn it over to you and, and ask, uh, for your thoughts. I know we've got a lot of upcoming, um, exciting, uh, events in Washington DC in 2020, including some elections and, uh, some new regulations that we can expect or we've seen recently. What are your thoughts on 20 and, and what are your predictions?
Speaker 3:Sure. Thank you, Matt. I, you know, I think that 2020 is going to be a really interesting year with a lot of, uh, activity within the, the federal bureaucracy. And I think that that is where we will see a lot of the traction gaining, uh, within respect to hhs, cms, and fda. As we look at the 20 work plan from HHS oig, I think they're gonna be focusing in on a couple of key issues that really echo some of the sentiments that we're hearing in the election cycle, such as, uh, pricing and price controls. You see in the work plan that there's a fair amount of emphasis placed on looking at some of the more, uh, particular facets of government pricing, such as comparisons, uh, between average manufacturer price and average sales price, um, through a couple of different lenses. And that indicates to me that the government is starting to get a little more serious about issues, uh, with respect to, uh, price controls and, uh, the, the internal controls that are driving price reporting in manufacturers, and to try to understand better how, uh, rebate calculations might be. Im impacting pricing overall. Uh, there seems to be a fair amount of appetite for this within the current Congress that, uh, does get some mixed credit for success depending on, on who you're talking to. Um, the house is actually passed some bills recently, uh, that, that emphasizes imperative for PBM transparency. And I think that this, this whole concept of price transparency is something that we can continue to see discussed, uh, within the campaign trails and, and similarly, uh, echoed at various, uh, agencies throughout the government and within the fda. Uh, f FDA really does seem to be quite busy these days. We've seen a number of, uh, headlines in the news relating to issues such as, uh, can oil, c b D products. Uh, they seem to be really cropping up everywhere. I travel a lot throughout the country, and I, I see these products really surfacing in, in various ways, both in MTC environment, uh, in some, you know, type dispensary like environments and also coming through what are seemingly, uh, legitimate pharmaceutical like manufacturers. And, uh, recently we saw about 15 wording letters that were, uh, advanced by cedar relating to unapproved new drugs that they identified in, uh, with through canid oil manufacturers. Excuse me. And I think that what we can expect to see in 2020 is some clarification around, uh, the FDA's thinking about these products where they've been somewhat silent for a while. I think that they're going to start really stepping up enforcement and sharpening their views on what is and is not, um, acceptable range of products in the marketplace, whereas before we've seen something of a nebulous environment. And in that vein, I think we'll also see a lot more communication and more, um, more firm communications coming from FDA relating to, uh, vapes and the use of vapes, especially with the, uh, flavor materials that seem to be, uh, creating some consternation in the public sphere that I think is also going to be a topic that we'll see on the stumps throughout the election cycle. But, uh, between Congress and the fda, I think that we'll see some action in that regard.
Speaker 2:Well, that's great, Katie, and I know you've already touched on it, but if you think, um, any, any thoughts on, uh, continued pressure and drug pricing transparency or the recent proposal to require hospitals to disclose their standard fees, do you think that will have an impact on fraud abuse enforcement and, and perhaps, um, thoughts on how that might have such an impact?
Speaker 3:I think that that is actually something that's really interesting. They've, uh, a couple of different proposals have surfaced, and, uh, I think that there is a, a real desire for creativity to try to, to, um, hammer down pricing transparency from various aspects of the supply chain. And I feel like if it is a successful initiative, what will ultimately happen is that, um, companies or hospitals are going to end up having to take a position on pricing. And to the extent that the controls that support, uh, the calculation of those prices and the disclosure of those prices are sound, uh, there, there should be some level of protection in the face of additional enforcement. If it's the case that those controls are, um, are weak or not well managed, then it could be the case that hospitals and manufacturers and others that support the ultimate, uh, pricing determinations fund themselves in a, a bit of a bind. Um, because the, the methods that are used to derive these calculations and any, uh, services or transfers of value that may support or undermine the disclosures could then, uh, be front and center in, in litigation matters, especially with respect to fraud and abuse litigation.
Speaker 2:Interesting. Interesting. That's great insight. Great insight. Thank you so much Katie. And, and thank you also Kevin, really appreciate your thoughts on enforcement and, and, uh, really appreciate the listeners, uh, tuning in to the podcast, our first podcast here from the PR Fraud Abuse Practice Group. Uh, if you have any questions, please check out the A H L A Fraud Abuse Practice Group page on a h l a's website for more information. And we look forward to next month's podcast. Again, thank you very much, b g for sponsoring our inaugural session here, and thank.