In this episode of AHLA's monthly series on fraud and abuse issues, Matthew Wetzel, Associate General Counsel, Compliance Officer, GRAIL; Joe Wolfe, Hall Render Killian Heath & Lyman PC; Kristin Carter, Baker Donelson Bearman Caldwell & Berkowitz PC; Jackie Baratian, Ascension; Tony Maida, McDermott Will & Emery; Laura Morgan, Dorsey & Whitney LLP; Shuchi Parikh, Polsinelli PC; and Scott Gallisdorfer, Bass Berry & Sims PLC discuss key developments in fraud and abuse in 2020 and what to look for in 2021. From AHLA's Fraud and Abuse Practice Group. Sponsored by BRG.
To learn more about AHLA and the educational resources available to the health law community, visit americanhealthlaw.org.
In this episode of AHLA's monthly series on fraud and abuse issues, Matthew Wetzel, Associate General Counsel, Compliance Officer, GRAIL; Joe Wolfe, Hall Render Killian Heath & Lyman PC; Kristin Carter, Baker Donelson Bearman Caldwell & Berkowitz PC; Jackie Baratian, Ascension; Tony Maida, McDermott Will & Emery; Laura Morgan, Dorsey & Whitney LLP; Shuchi Parikh, Polsinelli PC; and Scott Gallisdorfer, Bass Berry & Sims PLC discuss key developments in fraud and abuse in 2020 and what to look for in 2021. From AHLA's Fraud and Abuse Practice Group. Sponsored by 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. BRG helps clients stay ahead of what's next. For more information, visit think brg.com.
Speaker 2:Welcome to this month's edition of the American Health Law Associations Fraud Abuse podcast. Today is Tuesday, January 19th, 2021. I'm your host, Matt Wetzel, chair of the HLAs Fraud and Abuse Practice Group. Today, a year in review and a look ahead as we kick off a new year, not to mention a new presidential administration and just near hours. What were the big events of 2020 that will shape the fraud and abuse landscape this year and in future years? What were the top issues that fraud and abuse lawyers faced in 2020? How did they play out? And looking into our crystal ball for 2021, what will be the impact of a new Biden administration? What predictions can we make? We've got a real treat today. Joining me are the true experts on all of these questions. ALA's, fraud and abuse practice group, leadership team. We have our vice chairs of educational programming. Joe Wolf of Paul Renderer, and Kristen Carter of Baker Donaldson. Also joining us is our Vice Chair of publishing, Jackie Barian from Ascension, and our vice chair of membership, Tony Maita from McDermott, will and Emory. Last, but certainly not least, to our 20 20 20 21 Leadership Development program participants. Laura Morgan from Dorsey Whitney, uh, CCHI Paari from Polsinelli, and Scott Galer from Bass. Barry and Sims, everyone. Welcome. Thanks so much for participating today.
Speaker 3:Thanks, Matt. Happy to be here. Thank you, Matt.
Speaker 2:Absolutely. Well, first I wanna set the scene quickly, not that I really need to, but, you know, 2020 saw us battling Covid 19. It cast a spotlight on health disparities among vulnerable patient populations. It required us to rethink telehealth, virtual medicine, uh, and of course our groundbreaking fraud and abuse rules that were issued at the end of last year, uh, to set the stage for value-based and care coordination arrangements. All of this set against the backdrop of an unprecedented pandemic political unrest and natural disasters, what a year we had and what a year ahead with the new administration set to take up shop in the White House. This week, we're looking at 2020s, uh, uh, uh, events and how they'll play out in 2020 one's priorities. So, you know, Kristen, I'd love to start with you. We ended last year with the release of the long awaited value-based and care coordination rules. I don't think we could have a 2020 year end review podcast, uh, without leading, uh, on the value-based roles. What can you tell us, um, can you start us off with an update? I know we've, we've all had a big over a lot of overviews and details thrown at us, but, you know, what were some of the high points?
Speaker 4:Sure, sure. And it, it's a good day to be talking about these since it became effective today. And with respect to the value-based exceptions, um, it created, CMS created three primary new exceptions to the Stark Law. And there's also multiple slave Harbors that were created by the OIG related to the anti-kickback statute paving way for value-based and care coordination agreements. Um, these exceptions, as they've talked that the agencies and the government have talked about it, is really creating sort of a platform of, for innovation rather than being very prescriptive on what these arrangements should look like. They provide sort of the definitions, the tools, um, and, and build in the safeguards, but, you know, aren't very prescriptive on what these have to look like and provide a lot of flexibility within, within the rules. Um, and they also, from a Stark law perspective, are interesting because they don't include some of the traditional safeguards that we see in, um, other exceptions requiring that the compensation be set in advance fair market value, not based on the volume or value of referrals, which they, you know, explain. Um, they viewed as potential, um, roadblocks to some of these arrangements. So there's other safeguards in place, but, but really allowing for flexibility. Um, I think as we turn into 2021 and these have become effective, some of the things that, um, you know, I I'll be looking at is how hospitals and health systems and other providers work to utilize these exceptions in safe harbors to protect arrangements involving care coordination and communica community-based providers. You know, will they be using this for telehealth type arrangements? Um, are providers gonna be more willing to accept the risk for the full cost of care from payers, or use these for, um, episodic payment methodologies and how it might impact sort of game sharing type arrangements and clinically integrated networks? Um, a couple of the things that I think will be interesting to see as, as providers for, to use these exceptions and safe harbors, is the rules aren't entirely consistent with one another. There might be times where an arrangement fits into a CMS exception, um, but might not fit squarely into an anti-kickback statute safe harbor, because while the, the exceptions in state harbors are parallel and used, similar definitions, um, the, the requirements on under each of the, the statutory and regulatory, um, rules here are, are dis distinct. Um, also what'll be interesting is to see if some of those entities that are allowed to participate in value-based arrangements, but won't have safe harbor protection, such as laboratories, DME suppliers, pharmaceutical manufacturers, um, pushed to get more protection under these arrangements, um, in the coming years. So that's a, that's a broad overview.
Speaker 2:<laugh>, it's enough to, it's enough to keep, uh, all of us busy, uh, for this upcoming year. And then some, and certainly as part of those exciting value-based changes and care coordinated changes that, that we're just so long awaited. And, you know, I think we are all kind of on the edge of our seats to see, uh, how the government would come out on these issues. There were some issues in particular that sparked, um, you know, particular attention among, among those of us that are, uh, real specialists in the area. And Joe, uh, you know, every time we talk, uh, uh, I hear about the big three under Stark, and I know that was a, a, a huge area of change under these new rules. So, uh, would love, uh, to hear what some of that change was, uh, in 20, and where do you think that's gonna go in 21?
Speaker 5:Great. Thanks. Thanks, Matt. And, um, excited to be able to talk about this today. And as Kristen said, you know, the final rules going to affect today. So, you know, as of today, the big three standards of fair market value, commercial reasonableness, and volume, our value are, are in effect already here on January 19th. And so, you know, that was part of the, the, the new regulations, the big three are so important because all of the recent Stark Enforcement as focused on the big three and allegations related to fair market value, commercial reasonableness and volume or value, these new rules do, um, overhaul the, the standards around big three. Um, with, with respect to fair market value, when we look at what the government, uh, did it, it essentially restructured the definition. Um, and I don't think the healthcare industry is gonna so much feel that change, but the government provided some examples and illustrations of, of situations where, um, you know, normal maybe percentile ranges that we think about being fair market value. You, there could be situations where you could justify paying outside of, of those ranges. And I think this is gonna be very interesting in today's environment because, uh, some of the survey is, is going to be messy. Uh, in the aftermath of covid, we've seen, um, variation in productivity dur due to the pandemic. Uh, now we're seeing, uh, in 2021, the changes to the physician fee schedule, uh, leading to some, some tweaking of, of, uh, RVU productivity. I think that's gonna impact the survey data. So we could see a situation, um, after this where as the industry reacts that, um, we're gonna have to give some thought, um, to how we, we document fair market value and, and how facts and circumstances, uh, may, may justify, uh, compensation that maybe is outside of those normal ranges. The government gave some examples of, uh, arrangements that, uh, could satisfy, uh, the fair market value standards, uh, that in, in situations where there are unique facts and circumstances, uh, they mentioned a rockstar, uh, physician. They also mentioned a SI situation where there's a, a health system had a cardiovascular surgeon, but no cardiothoracic surgeon, and how that situation may drive, um, compensation, um, outside of, of normal, uh, ranges. So I think moving forward, the government's not giving us a safe harbor approach for determining and documenting fair market value. Uh, and the healthcare industry will appreciate some of the flexibility on commercial reasonableness. We finally have a definition of, of commercial reasonableness under the big three. Um, historically we've had to look to CMS commentary. Uh, the new de definition, uh, does, uh, speak to, uh, practice losses and financial losses. And, um, and, and now, uh, we do have the clarification that an arrangement commercial reasonableness will not turn on whether the arrangement is profitable. And I think that's a significant, uh, change we're seeing under the regulations. Uh, the government pointed out, um, arrangements that could generate losses, um, and the be be supportable if there is community need or, uh, the need to fulfill licensure or regulatory obligations under EMTALA and so on. So there is a, a bit of, uh, some flexibility around that standard. Um, I think moving forward, much like fair market value under the commercial reasonableness standard, healthcare organizations are gonna start thinking about their internal process. They're gonna wanna make sure their policies reference these new definitions. The appraisal community is gonna want to do the same, um, and organizations are gonna have to think about how they line up and develop a record that supports, uh, these two standards. Um, the third of the big three, the, the volume or value test, uh, we now have a new objective test. Um, and that new objective test, um, is, uh, laying out a, a, a situation where if, if you have a compensation model that includes the, the variable, um, referrals by a physician as a variable within the compensation model, um, it, and, and if that amount of compensation correlates with the number of value of the physician's referrals, you could have a cha uh, uh, uh, a, a compliance issue under the Stark regulations. Uh, the government gave some examples scenarios, um, under, uh, that standard and, and healthcare organizations are gonna need to think about this new objective standard when they develop new compensation models. Um, the government also in that same area did validate and say that paying physicians based on, on, um, productivity is, is viable. You can pay a, a productivity based model, even if there are shadow and corresponding technical component referrals. And I think in the last part of that new guidance, um, the government, uh, spoke to directed referrals. And this is, I would say a bit of a surprise. Um, the, the government, uh, took on a directed referral requirement. They said that if you have a directed referral requirement, um, you can't make the existence of the arrangement or the termination or renewal of that arrangement or the compensation itself driven by compliance with a directed referral requirements. So healthcare organizations are gonna have to look at those requirements. They also built in a car vote that said you could design a directed referral requirement that requires an established percentage or ratio of a physician's referrals. The bottom line is, healthcare organizations are going to be t grasp or grappling with this standard and, and looking to test their arrangements going forward. So that, that's the lay of the land with these changes looking forward. The healthcare industry's gonna have to look at these big three and this new guidance and definition, incorporate it into their processes and, and, um, in order to ensure going forward. Matt,
Speaker 2:Joe, thanks so much for the overview. And, you know, when it comes to Stark, uh, and, uh, the kickback statute, I think what we've seen a lot, uh, over the past few years, uh, is, uh, you know, sort of a move away from, uh, uh, you know, the focus on guidance and sort of informal, uh, information, informal guardrails to more formalized guidance, more formal information, um, clearer instructions, uh, for the industry. And I think, uh, we can see that with the, you know, more, the greater definition around the big three, uh, especially when it came last year to covid, uh, and how it would impact the use of telemedicine, telehealth, and, uh, other innovative ways of approaching care. Um, government guidance, I think is, is pretty critical. And we saw last year some movement on a few fronts we'll talk about today when it comes to guidance. Laura, I want to turn it over to you quickly. When we talked about, um, top issues for 2020, you raised, um, the issue of Stark advisory opinions. Tell us about that. Uh, what changes did we see in 2020 and, and, and how will that impact, uh, the way we get guidance from C M S and other agencies moving forward?
Speaker 4:Sure. Absolutely. Thanks, Matt. Yeah, so this was another change to this, to regulations in 2020, which garnered a lot less attention. Uh, and the, the final rules under the regulatory sprint. Uh, but the Stark Advisory opinion regulations were revised as of January 1st, 2020. Um, and as background on this, um, there've been very few stark advisory opinions published by CMS historically, uh, particularly in comparison to the number of advisor opinions published by the oig. Um, and the final changes to the Stark Advisor opinion regulations, really, it seemed like these changes would really make the process more meaningful and accessible. And CMS stated that, you know, they intended to make, um, a more robust advisor opinion process as they saw that this could help facilitate the shift to value-based care, uh, by providing more guidance for parties, trying to understand, in particular how Stark applies in an innovative marketplace. And, you know, the, the proposed rules on this came out at the same, around the same time as the, uh, proposed rules under the regulatory sprint came out. Um, so kind of related to this, this shift in value-based care, um, that CMS is, is moving towards. Um, so the changes under the advisor opinion regulations, um, most notably, um, the opinions, a favorable advisor opinion can be relied upon by not only the requester, but also, um, parties to the arrangement upon which the opinion was issued. Um, and, uh, which I, I found the most notable was that, um, the secretary will not pursue sanctions under the Stark logins. Any party to an arrangement that CMS determines is indistinguishable in all its material aspects from an arrangement with respect to which CMS issued a favorable advisor opinion. Um, which means that this, um, you know, once there's, and hopefully more a favorable advisor opinion, that CMS issues that are publicly available parties can really use this as meaningful guidance to, to structure, uh, their arrangements in compliance with Stark. And parties can also submit advi an advisor opinion request to determine whether CMS would view the arrangement as indistinguishable in all material aspects from another arrangement that received a favorable opinion. And CMS will issue, um, an opinion on that on, uh, they're supposed to issue it on an expedited basis of 30 days. Um, uh, also the timeline generally for advisor opinions change from 90 days to 60 working days, um, from when CMS needs to, uh, issue the opinion. And looking back in terms of like how this has actually changed over the past year, there's only been two advisor opinions that were issued by CMS in 2020, so really not a noticeable increase from prior years. Um, so it doesn't really seem like this, the process is, is yet more meaningful and accessible, but I, I, uh, I'm hoping that, um, in the coming year, particularly as stakeholders, seek to understand, um, what the, these, these new final rules that go into effect today. Um, where, uh, where especially where there's, there's gray areas in determining, for example, when the, uh, the volume value special rule is implicated when you know, the, um, volume or value referrals with maybe just, uh, an implicit variable, not an explicit variable in, in, in the formula, um, you know, we can hopefully get more guidance on cms, perhaps in an advisor opinion context. Um, and also, uh, in terms of understanding what types of innovative arrangements are going to be able to take advantage of the new, uh, value-based exceptions. Um, the, the advisor opinion process might be a good way to, to do that, um, where there's gray area in figuring out what these, uh, new exceptions mean. Um, so, so hopefully this will help provide some, some helpful guidance, uh, in that process to the extent parties, um, start taking an advantage of it further in the coming year.
Speaker 2:Laura, no, thank you for that and appreciate the insight into an area that's really not much discussed and, and perhaps should be. And, and perhaps we'll see even more discussion around, uh, advisory opinions from C M s, uh, over the coming years. I wanna switch gears here and talk about another huge area of development and change in 2020. And that was obviously the impact of covid, how, uh, we addressed covid, how we dealt with covid, uh, how it, uh, changed the nature of healthcare delivery, uh, and the impact on, uh, fraud abuse. And I think that, um, you know, given the increase in covid relief funding, the increase in availability of federal support under the CARES Act, um, it does certainly show us at our best, but it could also bring out the worst in others. Um, Laura, any color on developments and false Claims Act risks associated with covid funding in 2020? I'm certain that'll, that'll be a big topic, uh, over the next, uh, few years, but wonder if you have some insight for us on that.
Speaker 4:Yeah, certainly will be a hot topic. Um, so yeah, um, looking at the CARES Act, the Provider Relief Fund money for the healthcare industry, uh, as well as the paycheck protection program for some healthcare providers that qualified as small businesses and receive forgivable loans. Um, this does really present a new, uh, kind of a new frontier of, of False Claims Act, um, risk in addition to the traditional risks that healthcare providers have had, uh, on the False Claims Act, um, upfront. Um, and in terms of the Provider Relief Fund money, it's here. Um, you know, some of these funds were received automatically, um, some were applied for, um, but you know, even for those that are, were received automatically, there's terms and conditions that come along with them. Um, you know, providers are deemed to have accepted the terms and conditions merely by retaining the payment. Um, so there's a, a, a real important compliance obligation for providers in ensuring that they're monitoring their healthcare related expenses attributed to covid their patient care loss revenues. Um, and there are some recording requirements, um, on the, along those lines, and in some cases, providers are going be asked to return excess funds received. So it's very important that this becomes part of providers, um, and is part of providers, um, ongoing compliance practices. Um, and we also just, just in the last couple weeks, saw the first FCA settlement for, um, uh, P P P fraud, uh, which is not in the healthcare space, but certainly shows that, um, there may be more coming a along these lines,
Speaker 2:Certainly no. Laura, great overview and thanks so much. I think we'll certainly be, um, looking to see how the jurisprudence develops here, and, you know, when it comes to sort of the day-to-day impact of covid, Jackie as a fellow compliance officer, I'd love to hear your thoughts on how covid impacted compliance programs in the healthcare, uh, space, uh, last year and, and, and how they might have lasting, uh, impacts, uh, in the future.
Speaker 6:Great. Thanks, Matt. So, yep. As, as Matt just said, my topic is really to focus on Covid, it's impact on compliance, and I could talk about that for hours on end, but we'll try in a few quick minutes here to focus my brief comments on what I, on the rapid adoption of telemedicine, a few practical suggestions for chief compliance officers and compliance professionals and in-house counsel, and also comment on what to expect in 2021 concerning enforcement efforts and initiatives. So unsurprisingly, great compliance risk comes with any national healthcare crisis or pandemic in covid. 19 has been no exception. Certainly we've seen the adoption of telemedicine by healthcare providers accelerated throughout the COVID 19 pandemic and federal and state regulators to of course, ensure access to medical care have either relaxed or suspended prior telemedicine requirements, while also seeing the expansion of the scope of reimbursable telemedicine services. Medicare licensing requirements for out-of-state practitioners were essentially waived an increased flexibility regarding physician supervision was afforded. And as most of you know, HH s also announced a policy of enforcement discretion for Medicare telehealth services that were furnished pursuant to the section 1135 waivers and states followed suit right, simultaneously increasing their own state-specific telehealth coverage. So unsurprisingly, we've seen rapid adoption of telemedicine by medical providers in the United States. But with that being said, we also saw in late September of 2020 DOJs announcement of the largest healthcare fraud enforcement in its history, charging just shy of 350 defendants with submitting more than 6 billion in fraudulent claims. And those defendants were charged with participating in schemes where the telemedicine execs were allegedly paying doctors and nurse practitioners to order unnecessary D m E genetic and other diagnostic testing, pain meds, et cetera, either without any patient interaction or without only a brief tele, uh, or only a brief telephonic conversation with patients that they had never met or seen. Quick point there, I mean, I think for compliance efforts and monitoring efforts is a real distinction potentially between established patients and new patients. But that being said, this telemedicine takedown, which was coined Operation Rubber Stamp, really showed a similar pattern of telemedicine cases that were investigated prior to the pandemic. So point being really not a new theme. The alleged illegal conduct still falls under the anti-kickback statutes, general prohibition on, on payment for referrals, and we continue to see telemedicine being incorporated into traditional kickback schemes with the government pursuing egregious providers. More common forms of telemedicine fraud in include provider billing encoding errors, which could increase in volume as C M S continues to expand its list of reimbursable tele telehealth services. And of course, as utilization of telemedicine grows, the government will undoubtedly continue to pursue marketing schemes that employ telemedicine aimed at vulnerable patient populations as violative of the Kickback statute. So what does this mean, practically speaking, for compliance? First, I'd recommend a more agile approach to annual work plan efforts. It was ironic to think that in January of last year, we would not have even envisioned COVID 19, you know, the Healthcare Pandemic and obviously had not worked it into our risk assessment and, and annual compliance plan efforts. And so your current compliance audits and risk assessment processes should really be focused if they're not already on covid related issues. And all likelihood, your board and audit committee is inquiring and, and, and probing about such focused efforts. So have you thought about COVID 19 retention tax credits or covid 19 inpatient coding or COVID 19 Financial Integrity Controls, or covid 19 use of PCard controls? Have you looked at telehealth operations, billing and coding charge captures? And even more broadly, telehealth solutions and systems focused on security and privacy? Are you relying on data analytics to identify anomalies or outliers? We know that the OIG and the DOJ do OJ Covid fraud coordinators are data mining. Um, an easy example would be around licensing licens insurance scope of practice. If you have a physician license in Connecticut, but you've got a patient sitting in Maryland for a virtual visit, how are you monitoring that? Are you reviewing data analytics for patient utilization? Are you reviewing filed claims where the physician is licensed to avoid, you know, the submission, potential submission of false claims? Do you have pre-bill edits in place? And what are you doing to provide oversight for third party vendors with the increasing reliance on technology vendors and other revenue cycle vendors? Um, have you updated your training and your education and just your general communications? Um, many organizations have a largely remote workforce. Now. What are you doing to monitor not only the fraud and abuse risk, but also the privacy and security risk there? And are your compliance efforts really focused on ancillary services? We really see a focus there, D M E labs, et cetera, from a best practice perspective. Two quick comments. Just, um, I would stress the importance of supporting documentation in your decision making processes during this volatile time of change to reduce potential false claims Act exposure by documenting your understanding at that time of the rules and any communications with the government, documenting modifications or waiver requirements and potentially in other best practices, seeking internal certifications in the chain of command throughout your organization. And finally, what to expect? I think from my perspective, just a few quick takeaways. I think we will see a rise in whistleblower activity in light of significant layoffs that have been caused by the pandemic. Um, I think we'll continue to see scrutiny during an ongoing F c a investigation of the effectiveness of an organization's compliance program consistent with the DO OJ compliance program guidance updates from June of 2020, a real focus on third party vendor oversight, not only, um, at the initial onboarding, but throughout the lifespan. And just recognizing that the government doesn't, at this point have any new tools, right? It's still, the, the False Claims Act is one of its arsenals in the toolbox with cases predicated sometimes on the kickback statute of the Stark Law. And so I think the tools are, are the same, and likely the allegations even around telemedicine will be more or less of the same as those associated with the provision of in-person care, medically unnecessary services, upcoding, um, and FCA allegations based on star, the Stark Law and the Kickback statute. And as Laura pointed to just really just making sure that efforts are, are focused at your organization around the monitoring of your healthcare related expenses and how I do do believe, um, to underscore the, the prior points that we will continue to see, um, fraud investigations in that space as well. So that's what I would highlight, Matt.
Speaker 2:Wow. Jackie, thank you so much for that overview and, and, and what great perspective on, uh, how the covid response has practically and can practically impact what we're doing, uh, from a compliance perspective and an in-house perspective. Uh, and just thinking through the practical consequences. Really appreciate that. Um, I wanna turn it over, um, to, uh, CCHI Paari with Paulson Elli, um, cchi, one area of particular interest to life sciences companies and especially labs, is, uh, ecra the Eliminating Kickbacks and Recovery Act. And, you know, we can continue to await developments on the Ecra front, but I believe there was some movement on enforcement and, uh, would love for you to share with us what happened in 2020 and, and, and what are your predictions for 2021.
Speaker 3:Sure. I'd be happy to. Thank you. So, ECRA Enforcement, um, as Matt mentioned, really took off in 2020 last year. We saw the first two publicized convictions under the law, um, and ECRA was originally passed in October, 2018. For those who don't know at criminalizes kickbacks to or from recovery homes, clinical treatment facilities or labs in exchange for patient referrals. What's unique about ecra is that it's an all payer statute, so it applies to both private payers as well as federal healthcare program dollars. Um, there are seven statutory exceptions under ekra. And when the law was first passed in 2018, there were many open questions about how it would be enacted or enforced, um, as well as the meaning of various provisions and, and how the statutory exceptions would play out. So last year we saw the first set of enforcement actions under the law. And what's notable about these convictions is that they both involve substance abuse treatment facilities. So there hasn't yet been public charges brought against labs, but you'll see as we talk about these convictions, how labs, um, do play into the, uh, enforcement scheme. So the first non-con conviction occurred in January, 2020. It involved a substance abuse treatment clinic in Kentucky, which solicited kickbacks from a toxicology lab in exchange for urine drug test referrals. And the office manager of that substance abuse treatment clinic was ultimately sentenced to five months imprisonment, followed by five months home detention. And the$55,000 fine. The toxicology lab in that case, um, did not receive public charges. Uh, the second conviction occurred in September, 2020, and it involved really a classic patient brokering scheme where a California marketing company had bribed cer certain individuals that were addicted to heroin and other drugs to enter drug rehab facilities in various states. Um, in exchange, the marketing company received referral fees from the rehab facilities, and the, the company actually had a network of recruiters who would identify and target patients, um, that, particularly those that have private health insurance. So this is an example of ekra being applied in the private payer context and not just where federal healthcare program dollars are at stake. The owner of the drug treatment facility in California that, um, had paid referral fees to the marketing company was ultimately charged with conspiracy to violate ekra. And the individuals involved with the marketing company were charged with conspiracy to commit healthcare fraud. So these two convictions so far, um, reflect congressional commentary on the real impetus behind the law, which was focused on substance abuse and also patient brokers taking advantage of individuals with opioid use and other substance abuse disorders. What remains to be seen is how ECRA will be used against clinical labs in the future. The very first conviction that I talked about involved a toxicology lab, but charges were only brought against the treatment facility in that case. Um, however, it does show that the government is interested in prosecuting schemes involving clinical labs, especially as those that are operating in the toxicology and substance abuse markets. Uh, there has been an increased focus by the DOJ over the past year on prosecuting criminal conduct related to the COVID pandemic. So with labs ramping up their COVID testing over the past year, there's a potential for an increased enforcement focus under ekra on clinical labs in the current climate. I think in 2021, we can expect to see continued enforcement activity in this space, particularly against, uh, substance abuse treatment facilities and perhaps even clinical labs. These actions, um, should continue to shed light on how the law applies in practice to these facilities, especially given the backdrop of the pandemic
Speaker 2:Sushi. Thanks so much. I think it's a really pertinent point as well, that this remains, um, a new or novel, um, but still useful tool for the government in enforcing, uh, the various healthcare laws. And that, especially with the nexus to labs, uh, and the COVID 19, um, uh, impacts from 2020, uh, I think we could certainly, you know, be safe and, and, and betting on the governments, uh, using this as a tool in the future in 2021. Um, you know, this kind of brings up another point that we mentioned earlier, uh, uh, during the podcast today, which is, um, the need for guidance from the government and, uh, in, in different areas. Obviously, ecro we're still light on guidance from do oj, uh, and other agencies as to how this will, uh, or should be used. Um, but more broadly, uh, uh, Tony, nada, let me turn it over to you. Um, HH S'S Office of General Counsel very recently released an advisory opinion on relying on, uh, uh, uh, uh, subregulatory guidance. And I wonder if you, uh, wouldn't mind giving us an overview, uh, and sharing with us your thoughts on, on how this might play out in 2020, in 2021.
Speaker 7:Absolutely, Matt. Um, yes, the, in last month, O G C issued a formal advisory opinion to the public that in some ways reflects what was issued, what was in the clearing memo as it's been called, uh, that was issued LA last year. And these memos talk about the department's response to the AZA versus Allina Health Services Supreme Court decision. Um, that essentially says, um, that guidance, uh, that agency guidance that creates a substantive legal standard, um, has to be submitted. You know, that relates to the Medicare program, has to be subject to a public notice and comment provision under the Social Security Act, section 1871. Um, and given, as we all know how much, uh, subregulatory guidance exists in the Medicare program, this decision had a big impact on how HHS is able to use guidance in the future, um, and has re resulted in them assessing their, you know, current guidance practices. And so the, the advisory opinion sort of formalizes OG C'S opinion about, um, the use of guidance that in compliance with the, uh, Supreme Court's decision, um, and also adds a couple of new concepts in terms of that, uh, preamble may actually become rulemaking in the future if H H s designates certain provisions of the preamble as its intention to be, uh, rulemaking as opposed to having all rulemaking in regulation form in the future. Um, the other potential thing for, for organizations to look for is HHS expressly incorporating guidance into contracts. Um, that is one area in which the OGC opinion and, and possibly the court's decision says that the agency can continue to enforce guidance if it is part of a contract, but it has to be expressly incorporated in the contract, as opposed to a general statement about that you, you know, you agree to comply with all applicable law and and rules. So, you know, organizations should be on the lookout for, um, potential contract revisions by H H s. Um, and this advisory opinion actually, uh, dovetails with two other final rules that were issued last in December and last week, uh, one about good guidance practices for HHS and, uh, creating a good guidance process for the department, which previously only existed for F D A. And now there is a rule at 45 C ffr part one, uh, outlining how the department is supposed to issue guidance in the future, um, and that they're supposed to be a repository, uh, for all currently active guidance online, uh, that organizations will wanna keep tabs on and make sure that they're referencing in their compliance efforts, um, as well as the fairness and transparency final rule, which was issued last week, which I think kind of dovetails into all of this in terms of how HHS can use guidance and enforcement actions, um, but also providing prior notice to organizations before taking an enforcement action so that organizations have an opportunity to respond, uh, to those enforcement actions. And, uh, I think that that'll impact how certain types of how HHS has instituted certain types of enforcement actions. Um, in the, in the past, I think we've seen Medicare suspensions and revocations be issued without, uh, prior notice to organizations, which causes significant disruption. And this rule that went into effect on January 12th, um, would appear to change H H S's, uh, uh, process for being able to institute those actions as well as the basis for what those actions can be brought upon, whether it's based on guidance, um, or, or based on a, a clear statutory or regulatory requirement.
Speaker 2:Tony, it's an important area, and I think as we noted when Laura brought up, um, the Stark advisory opinion process, uh, especially given all the unknowns that arose in 2020 and that we're going to start seeing in 2021 play out, um, you know, knowing where the government stands on its guidance, uh, is so critical. And so I think the details here are, are really important and appreciate you sharing those with us. Um, switching gears once again to another huge issue from 2020 that will have some downstream impact. Um, we saw a lot or talked a lot about social determinants of health and the impact, um, that, uh, that, uh, different, uh, uh, uh, that covid might have on varying populations, but also that just in general, uh, certain vulnerable populations may not have access to care. Um, but, but Tony, you know, when we saw the long way to value-based, uh, uh, rules come out, uh, at the end of last year, we saw the patient engagement safe harbor under the anti Kickback statute rules, uh, and we saw, uh, a lot of discussion at H H S about social determinants of health. What can you tell us about those conversations and, uh, how they might play out in 2021?
Speaker 7:Yeah, I do think this is another, you know, this area was trending prior to covid, but in, in terms of conversations with, with both within government and state Medicaid agencies in particular, a number of states have created, you know, new payment programs and other models to pay for addressing social determinants of health, recognizing that that o often can be the cause or contributing factor to, to health outcomes in, in that, in, in a population. Um, and Covid really highlighted that the disparities within our system, in fact, do cause disparate outcomes, right? We're seeing that different, uh, fatality rates and positivity rates among, uh, racial and ethnic minority and low income populations in a way that, you know, highlights tho those disparities. And so I think A H H S, uh, is continuing to, to speak about what the government is doing. Um, last week, h h s issued sort of a long, uh, uh, compilation of the different state Medicaid actions and, and programs that are available to address S D O H. Um, and in the final rule in particular, there is an avenue, uh, for, uh, under the patient engagement safe harbor for a new avenue, um, under the patient engagement safe harbor for a value-based enterprise to provide certain in-kind remuneration to, uh, members of the target patient population. So we have to remember to get out our dictionary and look up all of the terms for value based enterprises and arrangements. Um, because in order to fit within the safe harbor, you have to be a V B E, um, and you have to be engaged. The remuneration has to be, has a, has to have a direct connection to the coordination and management of care of the target patient population has to be given to the, the patient or their caregiver has to be recommended by the patient's licensed healthcare provider. Um, there's an aggregate retail value limit of$500 per patient per year per V B E participant. Um, so the, that$500 is not for the V B E itself. It's per V B E participant, which adds a bit more flexibility potentially to addressing some of these, uh, social determinants of health issues. But you do have to go through that threshold matter of offering this, of offering, um, this level of remuneration to patients through a value-based enterprise. Um, because as everyone knows otherwise, you know, there are some limited other exceptions in the beneficiary inducement statute for, um, remuneration that either is nominal value or promotes access to care has actually been probably the most useful exception for dealing with S D O H, but even that has some limitations as well. Um, and then of course, the kickback, um, statute N OIG has actually issued several advisory opinions in 2020, um, that address, uh, patient incentives and to some extent social deterrents of health or programs that we're trying to address, S D O H. Um, and so those are, I would recommend to look at for further guidance, at least from OIG in terms of how they are looking at, you know, providing things of value to patients in the context of those two statutes doesn't address the new rule yet, but, you know, as 21 progresses and new opinions are issued, we may see further guidance from OIG in terms of how they're interpreting that safe harbor.
Speaker 2:Tony, great overview and thanks so much for your insights. And of course, last but not least, I want to turn it over to Scott Galk for a Berry and Sims, um, who raised to me last week, uh, an issue that I think will be impactful for all of us on the enforcement front. And that is the future of the Grantson Me Grantson memo. Scott, uh, let me turn it over to you to round us out here. Tell us what happened in 2020 and what do you think will, uh, play out in 2021?
Speaker 8:Sure. Thanks Matt. Um, so just as background as I think a lot of listeners will know, the Grantson memo was a 2018 internal DOJ memo that was authored by the NA director of the Civil Fraud Section, Michael Grantson. Um, and that ended up becoming public. And basically what it did was encourage DOJ attorneys to consider using DOJs longstanding, um, but seldom used authority to affirmatively dismiss false Claims Act lawsuits brought by whistleblowers on the government's behalf, um, even in certain circumstances over a whistleblower's objection. Um, and it outlined several different factors that could warrant that kind of action, um, including things like deterring meritless lawsuits, um, avoiding adverse precedent, preserving government resources, particularly in cases that might impose significant discovery obligations on the government itself. Um, and so interesting. Interestingly, although the gov grantson memo didn't explicitly purport to be a change in policy, um, that has certainly seemed to be its effect. Um, at this point it's been three years since it was issued, and I think everyone would agree that we have definitely seen a meaningful uptick in the number of instances in which, um, DOJ is seeking to dismiss whistleblower lawsuits. Um, and from the defense perspective, I think that has obviously been a positive development, um, in that it provides kind of an extra tool, um, or layer of protection from the costs that are involved in litigating a meritless or potentially even a frivolous lawsuit. Um, on the other hand, you've heard, um, some concerns expressed from the whistleblower bar that DOJ may have been too quick to dismiss cases, at least in some instances, um, which they feel could kind of disincentivize whistleblowers from coming forward in the first place. Um, so I think there are a few related issues to watch, um, in the next year. Um, first with the administration turning over, you know, will there be any change in DOJs approach to its dismissal authority, um, or the frequency with which it, uh, is seeking to dismiss whistleblower cases. Um, and I think conventional wisdom would probably say that, you know, all things equal a democratic administration might be a bit more friendly to the whistleblowers bars such that you might not be, might not see this authority invoked quite as frequently. Um, you know, that said, even with the, the recent uptake uptick, I think it's still a pretty small number of cases where this authority is being invoked overall. Um, and probably any administration is still gonna have an interest in things like preserving government resources, um, avoiding adverse precedent. So it's certainly possible that we, we really might not see much change at all. Um, but I think that'll be an interesting thing to keep an eye on. Um, second, there's a growing circuit split related to how courts evaluate DOJ dismissal requests in FCA cases. Um, so there are a couple of circuits, the DC circuit, um, and then the seventh Circuit in a decision from this past year that have effectively said DOJ has absolute authority to dismiss a whistleblower case without really having to offer any reasons at all. Um, on the other hand, the Ninth Circuit has applied kind of a rational basis test, um, and there are a few district courts that have actually used that test, um, to deny DOJ requests to dismiss. Um, and there are a couple of appeals pending on this issue, um, in the Fifth Circuit and the first sec, first Circuit. Um, and so it'll be interesting to see where they come down and maybe even whether this is an issue the Supreme Court might eventually wanna weigh in on. Um, and then the last thing I'd point out is that there has been some chatter over the past year, um, including in remarks from over this past summer by Senator Chuck Grassley about possible new legislation that might, um, put in place some guardrails on DOJs authority to dismiss Kean lawsuits, um, or that at least would require some particular type of explanation, um, for exercising that kind of authority. So I think it'll be interesting to see if that gains any momentum, um, especially with the Democrats now controlling Congress, who you might think, um, you know, would be more inclined to, to, to take the whistleblower side or the whistleblower's view of this issue.
Speaker 2:Scott, thank you and really appreciate everybody's insights today. Wow. Uh, Scott, Tony, Joe, Kristen Ucci, Jackie, uh, Laura, really appreciate all the insight. I can't imagine that 2021 could be any more exciting than 2020 was, uh, but we do have quite a few developments to watch unfold this year. Uh, for our listeners, please join the Fraud Abuse Practice Group for our year in review webinar, which will cover these topics and much more scheduled for February 4th at 2:00 PM Eastern. Details and registration information are available on the A H L A website. Thanks as always to our sponsor, b r g to our esteemed panelists today. And of course to our listeners, we hope you'll join us next month for another edition of ALA's Fraud Abuse Podcast. If you're interested in subscribing to the podcast, you can find us on any major podcasting platform. Thanks so much.