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June 7, 2017

Congress Returns from Recess to Tackle Health Care Reform; Obamacare Marketplace Insurer Participation Deadline Looms

The Senate has returned from recess to face a demanding June work session focused on crafting a passable health care reform bill before the Fourth of July break. Assuming a tie-breaking vote by Vice President Mike Pence, Senate Republicans cannot afford to lose more than two votes if they want to pass a filibuster-proof, 50-vote reconciliation bill. Yesterday, Senate Republicans held a policy meeting to discuss details of a draft bill. Although the details of that bill were not revealed, Senate Majority Leader Mitch McConnell told reporters that a proposal is close and the expects to bring a bill for a vote in the “near future.” With a looming June 21 deadline for insurers to decide if they will participate in the 2018 Obamacare Marketplace, market stabilization and rising insurance premiums are surely playing into the debate. In fact, while Republicans were in their policy meeting, Anthem, citing political and financial uncertainty, announced that it would be pulling out of Ohio’s health insurance exchanges next year, potentially leaving 20 counties in the state without any offerings on the exchanges available to them. If Senate Republicans are unable to agree on a health care reform bill before heading home for the Fourth of July, many political commenters predict that they may not return to it afterwards.

Hospitalist Group Pays $4.2 Million to Settle Upcoding Allegations

On June 2, the Department of Justice (“DOJ”) announced that Fredericksburg Hospitalist Group, P.C. (“FHG”), and 14 of its member shareholders had agreed to pay approximately $4.2 million to settle a federal False Claims Act (“FCA”) case brought under the qui tam whistleblower provisions of the FCA. The whistleblower complaint alleged that FHG and its member hospitalists knowingly and intentionally upcoded evaluation and management (“E&M”) codes to the highest code level in order to receive increased reimbursement from Medicare and other government payors. This is the second multi-million-dollar settlement with a hospitalist group this year relating to allegations of deliberate E&M upcoding (we reported on the first $60 million settlement with TeamHealth here). This settlement highlights the importance of carefully developed, documented, and routinely updated medical coding compliance programs for physician groups.  

$155 Million Settlement Demonstrates That Failure to Comply with Meaningful Use Certification Requirements May Expose IT Vendors to FCA “False Certification” Liability

On May 31, the Department of Justice announced that one of the nation's largest electronic health records (“EHR") software vendors, eClinicalWorks (“eCW”), will pay $155 million to resolve allegations that it violated the False Claims Act (“FCA”) by (1) falsely certifying that its EHR software met all criteria of the Medicare and Medicaid EHR Incentive Program (also known as the Meaningful Use Program), and (2) paying kickbacks to certain customers in exchange for promoting its product. As part of the settlement, eCW also entered into a Corporate Integrity Agreement with the Department of Health and Human Services’ Office of Inspector General, which requires, among other things, that eCW provide its customers with updated EHR software free of charge and the option to have eCW transfer their data to a competing EHR software provider without penalties or service charges. 

This settlement demonstrates that a failure to comply with federal program requirements can create significant “false certification” liability under the FCA for health IT vendors and other participants. Under the implied certification theory, a claim submitted to the government can be deemed false for purposes of FCA liability based on an implied representation that the claim is in compliance with all material technical requirements imposed by rules, regulations and contractual terms. The false certification theory may prove to be particularly significant for the EHR industry as the Meaningful Use Program — which provides incentive payments to health care providers that use certificated EHR technology — is packed with technical certification requirements, all of which have been deemed “material” by the government. EHR vendors should use this settlement as a reminder to carefully scrutinize their compliance with federal rules and Meaningful Use certification standards. More information on the Meaningful Use Program is available here.