The U.S. Department of Justice (DOJ) has joined a whistleblower lawsuit, United States of America ex rel Benjamin Poehling v. Unitedhealth Group Inc., No. 16-08697 (Cent. Dist. Cal. Sep. 17, 2010), ECF No. 79, against UnitedHealth Group (United) and its subsidiary, UnitedHealthcare Medicare & Retirement—the nation’s largest provider of Medicare Advantage (MA) plans. The suit accuses United of operating an “up-coding” scheme to receive higher payments under MA’s risk adjustment program called the HCC-RAF Program (see below). The complaint alleges that United fraudulently collected “hundreds of millions—and likely billions—of dollars” by claiming patients were sicker than they really were. The suit was originally filed in 2011 by a former United finance director under the False Claims Act (FCA), which allows private citizens to sue those that commit fraud against government programs. Pursuant to the FCA, the case was sealed for five years while the DOJ investigated the claims.
On January 30, 2017, the proposed 340B Drug Pricing Program (the “340B Program”) Omnibus Guidance (the “Guidance”) first issued by the Health Resources and Services Administration (HRSA) in August of 2015 was withdrawn from the Office of Management and Budget (OMB) review process. It is widely believed that the “cause of death” for the Guidance was the Trump Administration’s January 20, 2017 Memorandum (the “Memorandum”) directing agencies to immediately withdraw all unpublished regulations pending before OMB.
In Parts I-III of our blog series, Very Opaque to Slightly Transparent: Shedding Light on the Future of Healthcare, we considered the healthcare landscape before implementation of the Affordable Care Act (ACA), and explored potential market outcomes under partial repeal and potential “repeal and replace” scenarios. Although we are just a couple weeks into the Trump Presidency, we have already seen a number of ACA-related developments.
Covered entities have a long list of laws and regulations governing their conduct, including their communications with patients, customers, and members. Specifically, the Health Insurance Portability and Accountability Act (“HIPAA”) permits many such communications, including those about health care products and services, but precludes certain “marketing” communications absent written consent. Recently, however, healthcare providers and health plans have been subject to a spate of class actions alleging violations of the Telephone Consumer Protection Act (“TCPA”), which generally precludes autodialed (or “robo”) calls to residential and cellular phones. The TCPA was originally enacted to curtail pesky “telemarketers,” but has recently been used to go after a range of other business. The penalties under the TCPA can be substantial – at $500 to $1,500 per phone call, the statutory damages can quickly exceed $100 million.
Some interesting presentations on the last day of the JPMorgan Healthcare Conference that concentrated on common themes – the increasing importance of ancillary business line to bolster core business revenue and of filling in holes to achieve scale and full-service offerings.
Genesis Healthcare – The largest U.S. skilled nursing facility (SNF) provider, which also is the largest provider of contracted rehabilitation services, had an interesting story to tell. It reminded me of the endless road trip, where you are trying to appropriately fill the time on the way to your destination, while the kids in the back seat keep asking “Are we there yet?” For Genesis and, perhaps for the SNF sector, the rainbow at the end of the road is the U.S. demographic pot of golden age seniors. With Genesis average SNF bed occupancy at approximately 88% over the last 3 years (higher according to Genesis than two large competitors Ensign and Kindred), we continue to see less utilization of SNFs then existing capacity, and beds continue to be taken out of operation. BUT, wait until 2025, when the Baby Boom has fully actualized and when according to Genesis predictions, demand for U.S. SNF beds will outstrip existing capacity.
Traditionally, the cap accounting year has ended October 31, putting the cap accounting year one month off of the Federal government fiscal year. In May 2015, CMS proposed to adjust the cap accounting year to end September 30 to align with the Federal government fiscal year. This transition will occur in 2017.
To change the accounting year, CMS will cut short the 2017 cap year, assessing cap for the 2017 cap year across only 11 months from November 2016 through September 2017.
Day 3 of the JPMorgan healthcare conference was one of striking contrasts between the old and the new. (And, by the way, the rain finally stopped for a day, but it will be back tomorrow to finish off the last day of the conference).
The Old: Sitting in the Community Health Systems (CHS) presentation and listening to Wade Smith talk about the slimming down of CHS through the 20+ sales completed or in process, the audience could have heard this speech (with a few exceptions about the pending ACA changes) and not known if it was 2006 or 2016. Very traditional hospital system presentation – admissions and revenue growth (or, as appropriate, losses), hospital market share, number of surgeries, physician recruiting, management of debt and expenses, etc. All appropriate, but a marked contrast to many of the other hospital presentations this week with their emphasis on moving to risk, population health management, apps and patient engagement and brand.
Addressing the Social Determinants of Health: Is the healthcare industry pushing a rock up a hill? We collectively are trying to provide healthcare with improved quality and reduced cost, but the structure of the nation’s healthcare system remains heavily siloed with the social determinants of health often falling wholly or partly outside the mandate and reach of the healthcare delivery system. Bernard Tyson of Kaiser on Monday noted studies that health is determined approximately 30% by family history and genetics, with the majority of the healthcare impact coming approximately 40% from personal behavior, 20% from environmental factors and 10% from healthcare services. So, the playing field, if the above numbers are correct, is tilted much more toward nurture, rather than nature. While we are aware of some hospitals starting to provide housing or other limited services to address the needs of their community and therefore also to address healthcare cost containment, those examples are the exception to date, rather than the rule.
A large amount of wind, much discussion about the U.S healthcare, and the public getting soaked again – if you were thinking about Washington, DC and the new Congress, you’re 3,000 miles away from the action. This is the week of the annual JP Morgan Healthcare conference in San Francisco, with many thousands of healthcare operators and investors flooding Union Square again only to be greeted by one of the worst storms and floods in the recent history of the Bay Area. Can’t help thinking about the coincidence of nature providing us with a metaphor for the possible upcoming repeal of the Affordable Care Act.
Seema Verma’s nomination to head the Centers for Medicare and Medicaid Services (CMS) places Section 1115 Medicaid demonstration waivers into increasing spotlight. This article explores some of the current applications of waiver authority and the role it may play in the new administration.