Health Care

The Office of Inspector General for the Department of Health and Human Services (OIG) recently issued yet another favorable Advisory Opinion on the use of gift cards to motivate patients to receive medically necessary or preventive care services. The proposed arrangement involves an in-home colorectal cancer screening company’s proposal to provide gift cards of up to $75 to encourage patients to return their samples for their colorectal cancer screening. Though the OIG noted that the gift cards implicate the federal Anti-Kickback Statute (AKS) and the Beneficiary Inducements CMP because they would influence patients to receive reimbursable services from the requestor, the OIG concluded that the arrangement presented a minimal level of risk.  

One of the new Food and Drug Omnibus Reform Act requirements is that developers of “cyber devices” design and implement plans to “monitor, identify and address” cybersecurity vulnerabilities of marketed devices and to submit those plans to FDA as part of every new product application for a cyber device. The amended law defines a “cyber device” as one that includes software, connects to the internet, and contains any technological features that could be vulnerable to cybersecurity threats.

On March 15, 2023, Massachusetts Governor Maura Healey and Lieutenant Governor Kim Driscoll announced that the state’s COVID-19 public health emergency would end on May 11, 2023, in conjunction with the federal government’s end date for the public health emergency. This announcement by the Healey-Driscoll administration puts state organizations on notice, as required by law, at least 45 days ahead of the changes. As part of this announcement, Governor Healey also announced that she will be (i) rescinding Executive Order 595 which required state employees to be vaccinated against COVID-19, and (ii) proposing new legislation that allows for further flexibility in health care settings.

On March 9, 2023, the Food and Drug Administration (FDA) published a final rule to update the Mammography Quality Standards Act (MQSA) to reflect advances in mammography technology and, among other requirements, standardize aspects of mammography reports patients receive. Most notably, the final rule requires informing patients about whether they have "dense" or "not dense" breast tissue and establishes a new mandatory timeframe for facilities to send those reports to the referring health care provider (i.e., within 30 days). The final rule, which takes effect on September 10, 2024, modernizes the MQSA by addressing changes in mammography technology and making improvements that enhance enforcement of quality standards as well as the way mammography results are provided to patients and health care providers.

The information age in which we live is reaching a new milestone with the development and ready access to conversational artificial intelligence based on advanced transformer algorithms, or AI chatbots, including their upcoming integration into multiple Internet search engines. This development creates exciting opportunities and potentially terrifying risks in the health care space. Inevitably, people will ask AI chatbot-enabled search engines for information on diseases, conditions, medicines, or medical devices and use the response in some way to make certain medical decisions. But what happens when the AI chatbot’s response is inaccurate or even provides advice that may lead to harm if the user follows it? Can AI chatbots be regulated by the U.S. Food and Drug Administration (FDA)? What are the liability implications if a user is harmed? We provide some initial thoughts on such legal issues in this post.

The Federal Trade Commission (FTC) recently kicked off enforcement of its Health Breach Notification Rule (Breach Rule) by taking aim at GoodRx’s use of tracking technologies (e.g. pixels) and the sharing of consumer health data for advertising purposes. According to Samuel Levine, director of the FTC's Bureau of Consumer Protection, the FTC “is serving notice that it will use all of its legal authority to protect American consumers' sensitive data from misuse and illegal exploitation." Bottom line, HIPAA applicability may no longer be as significant of a factor when it comes to the risk presented by collecting, using, disclosing, and maintaining identifiable health information (IHI).

With just over two months before the COVID-19 Public Health Emergency (PHE) expected expiration on May 11, 2023, the Drug Enforcement Agency (DEA) has finally announced its proposed rule on prescribing controlled substances via telehealth. This post provides continued coverage of telehealth updates and dissects what this DEA's proposed rule could entail. 

On February 1, 2023, New York Governor Kathy Hochul announced the Fiscal Year 2024 New York State Executive Budget (the Executive Budget). One component of the Executive Budget’s Health and Mental Hygiene Article VII Legislation is a proposal to require certain “health care entities” to obtain approval from the New York State Department of Health (DOH) prior to consummating a material transaction.

Private equity ownership of health care providers is unquestionably under scrutiny by federal and state regulators. States are passing laws that either directly or indirectly target PE health care transactions. This post highlights the top five takeaways related to the proposed regulations for private equity companies or real estate investment trust ownership.

Deal structure is the foundation of a health care transaction. This post offers practical tips and hypothetical case studies for laying the groundwork for a successful health care transaction.

There has been a lot of discussion of the Food and Drug Omnibus Reform Act of 2022 (FDORA), which was enacted on December 29, 2022 as part of the larger Consolidated Appropriations Act for 2023, but we should also take a moment to review last year’s actions and policy updates on digital health from the Food and Drug Administration (FDA). The year 2022 marked the conclusion of the five-year Software Precertification Pilot Program and the release of the final Clinical Decision Support Software guidance, among other things (both described below); however, major digital health policy updates and announcements were few and far between. In this post, we summarize the agency’s key actions in the digital health space in 2022.

Record Settlement in a Declined Case Continued; Pursuit of EHR Technology Vendors; Slowdown in Qui Tam Cases Involving Private Equity Firms; First Settlement of a Civil Cyber-Fraud Case

Although DOJ and the Office of the Inspector General for the Department of Health and Human Services have joint authority to promulgate regulations implementing EKRA, we do not anticipate the publication of any such regulations. Based on the current enforcement activity and court decisions, we recommend recovery homes, clinical treatment facilities, and laboratories perform a risk assessment of employee compensation arrangements and update as necessary; conduct fair market value assessments of service arrangements; and train staff regarding the requirements of EKRA.

While the Biden Administration has indicated it will let the PHE expire on May 11, 2023 and not all telehealth flexibilities will remain in place, the expansion of telehealth is undoubtedly here to stay, given its continued popularity. Telehealth providers should continue to monitor state and federal developments closely to ensure ongoing compliance with applicable billing requirements, conduct auditing and monitoring activities, and evaluate compliance program effectiveness.

From an agency guidance and regulatory developments perspective, 2022 was fairly quiet until the latter part of the year. Consistent with past practice, the Office of Inspector General for the Department of Health and Human Services (HHS OIG) issued a number of Advisory Opinions throughout the course of 2022. But DOJ issued four guidance documents between September 2022 and January 2023, all of which related to criminal prosecution of both individuals and corporations and reiterated a theme we have seen from DOJ over the last several years when discussing the resolution of cases: individual accountability, cooperation, and self-disclosure (among others). At tail end the end of December, Centers for Medicare & Medicaid Services (CMS) also issued a new proposed rule setting forth potential amendments to regulations for Medicare Part A - D regarding overpayments. We highlight some key takeaways from these publications below.

Individuals and entities in the opioid supply chain continue to be a top enforcement priority for the Department of Justice (DOJ) and other enforcement agencies, and we expect this trend will continue in 2023. Federal enforcement efforts this past year were a mixed bag: DOJ suffered a significant setback at the Supreme Court, devoted new resources to curb opioid-related criminal conduct by individuals, and further expanded its civil enforcement toolkit to limit opioid overprescribing by pharmacies and pharmacists. DOJ’s civil enforcement efforts will continue unabated in 2023 as well, as evidenced by the government’s newest lawsuit against a major distributor filed in the final days of 2022. Additionally, state governments and private plaintiffs procured massive civil settlements in the national opioid litigation involving three major pharmacies in 2022.

Over the last year, a few important questions related to False Claims Act (FCA) cases have garnered significant attention. Two of those questions ultimately made their way to the Supreme Court. In one case, which has already been argued, the Court addresses whether the government has authority to dismiss an FCA case brought by a private citizen on the government’s behalf (a qui tam action) after originally declining to intervene and, if so, the applicable standard of judicial review. More recently, the Court has agreed to hear two cases that address whether a defendant’s “objectively reasonable” interpretation of ambiguous statutory language presents a cognizable defense to “knowledge” under the FCA. We cover both of these issues in more detail.

Based upon the increase in both financial and staffing resources, we expect to see an increase in COVID-19 related fraud prosecutions in 2023 as DOJ tries to recover additional funds and resolve cases in order to meet its stated Priority Goals. We anticipate that these cases will be a mixture of larger or more complex cases and cases that will bring heightened media scrutiny such as the recent charges brought in the Northern District of Florida against a controversial Florida state representative stemming from his applications for $150,000 in pandemic relief.

Medicare Advantage (Medicare Part C) remained a top enforcement priority in 2022, and Medicare Advantage Organizations (MAOs) are the subject of intense scrutiny by the Department of Justice (DOJ); the Office of Inspector General for the Department of Health and Human Services (HHS OIG); and the press. MAOs undoubtedly will continue to face considerable enforcement in 2023 and beyond, particularly as Medicare Advantage continues to grow in both number of enrollees and in federal spending. As of January 31, 2023, more than 30 million people are enrolled in MAOs—nearly half of all Medicare enrollees.

The U.S. Department of Health and Human Services Office of Inspector General (OIG) recently partnered with various law enforcement agencies in a multi-state enforcement action aimed at uncovering a nursing degree fraud scheme: Operation Nightingale. This blog post discusses the related enforcement actions surrounding the fraud scheme and the broader implication on healthcare.