Health Care

In 2023, DOJ announced significant updates to the Criminal Division’s Corporate Enforcement Policy, the agency’s Voluntary Self-Disclosure Policy for corporate criminal enforcement, and a new safe harbor for voluntary self-disclosures made in connection with M&A deals, all aimed at incentivizing companies to self-disclose their misconduct.

Since May 2023, federal legislators have introduced more than 50 bills focused on issues related to AI technologies, with patient privacy, the role of clinicians, and health equity emerging as areas of focus. In addition, the Biden administration released an Executive Order focused on promoting AI safety in October 2023.

In the past year, DOJ obtained some of its largest recoveries in cases where violations of the Stark Law, which bars physicians from profiting from self-referrals for certain services payable by Medicare or Medicaid, served as a predicate offense for FCA claims. These included cases against Community Health Network, Covenant Healthcare System, Cardiac Imaging, and Steward Health entities.

An uptick in DOJ cybersecurity enforcement in 2023, includes two FCA settlements, an unsealed qui tam complaint, and significant regulatory activity that could pose future enforcement risk.

The government continued to dedicate enormous resources to investigating and prosecuting fraud against COVID-19 pandemic relief programs in 2023. In addition to civil False Claims Act settlements, there were a number of criminal enforcement matters, including some involving politicians, government employees, and those with connections to gangs and transnational crime networks.

Several case dispositions from this past year, both criminal and civil, reaffirm DOJ’s policy of ensuring individual accountability in resolving allegations of wrongdoing and underscore the importance of considering that issue in the resolution of any FCA case.

Health care companies using algorithms and AI applications face increased compliance risks. Previous technology-related enforcement suggests how relators and enforcement agencies might use AI to detect potential fraud and develop allegations based on how the technology is being used.

In 2023, the Supreme Court and the US Courts of Appeals published a number of significant decisions involving FCA issues with implications for health care and life science entities, including a deepening circuit split on the causation standard applicable to FCA cases based on theories under the Anti-Kickback Statute.

After growing significantly over the last decade, private equity health care deal activity nevertheless remained robust last year, with an estimated deal volume of about $29 billion in North America.

In 2023, the DOJ amplified compliance-related incentives for companies under criminal investigation (including health care companies), while the OIG has substantially revised and modernized previously issued compliance guidance and resources applicable to health care companies and providers.

Despite the DOJ Criminal Division’s January 2023 revisions to its Corporate Enforcement Policy defining the criteria for declining to prosecute a criminal case, based on the two case examples from this past year, it is unclear how often the DOJ will actually put that policy into practice and decline or defer prosecution.

This Q&A with John Koss, Managing Director of Mintz’s E-Data Consulting Group, delves into the work of the group along with the benefits, challenges, and emerging issues related to using AI in e-discovery.

Enforcement against Medicare Advantage Organizations continues to be a top priority for the DOJ and HHS’s Office of Inspector General as the number of Medicare Advantage enrollees continued to rise in 2023.

Government enforcement activities focused on tele-fraudsters remained active in 2023, with most enforcement actions focusing on fraud schemes involving medically unnecessary durable medical equipment or genetic testing, or both.

With the goal of enhancing health care quality and outcomes for individuals with moderate to severe behavioral health conditions and substance use disorders (SUD), the Centers for Medicare & Medicaid Services (CMS) recently announced it will launch the state-based, voluntary Innovation in Behavioral Health (IBH) Model in fall of 2024.

CMS will circulate a Notice of Funding Opportunity (NOFO) in spring of 2024 and select up to eight states to participate in the IBH Model, which is expected to last for eight years. Selected states will align with their respective state Medicaid agencies (SMAs) on clinical policies for integrated care and work with Medicaid Managed Care Organizations (MCOs) or other partners for model development and implementation. 

On January 11, 2024, the Office of Civil Rights (OCR) issued its highly anticipated Final Rule regarding conscience protections. The Final Rule clarifies the religious beliefs and moral convictions protections practitioners and entities may assert in their health care practices. The Final Rule, entitled Safeguarding the Rights of Conscience as Protected by Federal Statutes, becomes effective March 11, 2024. 

As we reflect on the flurry of activity in the health care data privacy and security space in 2023 and look ahead to what will continue to be a busy 2024, we are seeing the early stages of federal agency movement to align the regulatory environment with modern health care delivery, cutting-edge technologies, and innovative data-sharing techniques. Some of this work has been done in the form of federal agency guidance in which health care organizations will be looking for additional updates and there are also a handful of pending U.S. Department of Health and Human Services (HHS) Office for Civil Rights (OCR) proposals that call for substantial changes to the HIPAA Privacy Rule.

A Virginia Federal Judge recently rejected a challenge to a negative Advisory Opinion issued by the Department of Health & Human Services’ Office of Inspector General (OIG) that disapproved of a proposal where certain pharmaceutical manufacturers would fund financial assistance for the manufacturers’ Part D oncology drugs. The Advisory Opinion was requested by the Pharmaceutical Coalition for Patient Access (PCPA), which is a charitable organization formed and fully funded by pharmaceutical manufacturers of oncology drugs. Subsequently, PCPA brought the lawsuit alleging that the negative Advisory Opinion violated the Administrative Procedure Act (APA). 

The Department of Health and Human Services (HHS) was tasked with formalizing and coordinating efforts to regulate artificial intelligence (AI) in health care under the November 2023 Executive Order on the Safe, Secure, and Trustworthy Development and Use of Artificial Intelligence (AI EO) and has already begun its regulation of AI within certain certified health IT.  HHS and Office of the National Coordinator for Health Information Technology (ONC) recently published the Health Data, Technology, and Interoperability: Certification Program Updates, Algorithm Transparency, and Information Sharing (HTI-1) Final Rule.

The Office of Inspector General (OIG) started 2024 with a flurry of activity by issuing four new Advisory Opinions on January 3, 2024. In one of these Advisory Opinions, the OIG approved a vendor’s referral program that offered gift cards to physician practices that are existing customers in exchange for recommending the vendor’s services to prospective physician customers.  In doing so, the OIG adopts a position that directly contradicts the position that the Department of Justice (DOJ) espoused in multiple False Claims Act (FCA) settlements involving similar referral programs offered by electronic health record (EHR) vendors in which the DOJ alleged these programs violated the federal Anti-Kickback Statute (AKS).