backU.S. Supreme Court Agrees to Review False Claims Act Case Involving Scope of DOJ’s Ability to Dismiss Qui Tams – On June 21, 2022, the United States Supreme Court granted certiorari in United States, ex rel. Polansky v. Executive Health Resources, Inc., et al. The Supreme Court will review the Third Circuit’s October 2021 opinion in which the Third Circuit decided that the government is required to intervene before moving to dismiss a qui tam and that its motion must meet the standard of Federal Rule of Civil Procedure 41(a).
The relator filed the qui tam at issue in 2012. His complaint remained under seal for two years while the government investigated and eventually decided not to intervene. The relator continued to pursue the case. Following several years of litigation, in 2019, the government filed a motion to dismiss after, among other things, the District Court ordered the government to produce withheld documents in response to Executive Health Resources’ discovery requests. The District Court granted the government’s motion to dismiss, and the relator appealed to the Third Circuit.
The Third Circuit’s opinion addressed a circuit split as to whether the government must intervene to be able to move to dismiss a qui tam. See Polansky v. Executive Health Resources, Inc., 17 F.4th 376 (3d Cir. 2021). On one side of the circuit split are the D.C., Ninth, and Tenth Circuits, which interpreted 31 U.S.C. § 3730(c) as allowing the government to move for dismissal at any point in the litigation regardless of whether it has intervened. The Third Circuit sided with Sixth and Seventh Circuits in deciding the government must move to intervene before moving to dismiss but it can seek leave to intervene at any point in the litigation upon a showing of good cause. The opinion also addressed another circuit split—what standard should apply to the government’s motion to dismiss. The Third Circuit adopted the Seventh Circuit’s approach, which is to apply the Federal Rules of Civil Procedure, specifically Rule 41(a) which governs voluntary dismissals. In adopting the Rule 41(a) standard, the Third Circuit stated it was deciding against the D.C. Circuit’s approach, which provides the government an “unfettered right” to dismiss, and against the “rational relation” standard adopted by the Ninth and Tenth Circuits.
The relator filed a petition for a writ of in January 2022 asking that the Supreme Court review the Third Circuit’s decision. In its brief in opposition to certiorari, the Department of Justice argued that the differences among the standards used by the various circuits are “modest” and should very rarely if ever be outcome determinative.
The Supreme Court docket and the parties’ briefs are available here.
Reporter, Isabella E. Wood, Atlanta, + 1 404 572 3527, iwood@kslaw.com.
U.S. Supreme Court Will Not Review D.C. Circuit Court’s Revival of False Claims Act Liability for Medicare Advantage Plans Failing to Return Overpayments Within 60 Days—On June 21, 2022, the Supreme Court denied certiorari in the case of UnitedHealthcare Co., et al v. Becerra et al., Case No. 21-1140, wherein UnitedHealthcare attempted to overturn the D.C. Circuit Court’s revival of CMS’s 2014 overpayment rule for Medicare Advantage insurers found at 79 Fed. Reg. 29,844, 29,918-25 (the 2014 Overpayment Rule). Accordingly, the 2014 Overpayment Rule for Medicare Advantage plans remains in effect. The U.S. Supreme Court’s Order denying certiorari can be found here.
The 2014 Overpayment Rule extended False Claims Act (FCA) liability to Medicare Advantage plans who fail to return overpayments to CMS within 60 days of identifying the overpayment. UnitedHealthcare argued, among other things, that CMS’s 2014 Overpayment Rule required a higher level of accuracy for Medicare Advantage than that which applied to traditional Medicare, thereby violating the statute’s requirement for “actuarial equivalence.” UnitedHealthcare filed litigation in 2016 challenging the 2014 Overpayment Rule. In 2018, United Healthcare achieved victory in the United States District Court for the District of Columbia when the court vacated the rule. More details on the specifics of this case and the District Court’s ruling can be found here. The verdict was appealed. In August 2021, the D.C. Circuit Court overturned UnitedHealthcare’s victory in the lower court, reviving the 2014 Overpayment Rule. Prior coverage of the D.C. Circuit’s decision and a copy of the D.C. Circuit’s ruling can be found here. UnitedHealthcare sought U.S. Supreme Court review. The denial of certiorari leaves the D.C. Circuit Court’s decision reviving the 2014 Overpayment Rule intact.
Reporter, Amy L. O’Neill, Sacramento, +1 916 321 4812, aoneill@kslaw.com.
CMS Proposes Prospective Payment Rules for Home Health, Home Infusion and End-Stage Renal Disease – Earlier this month, CMS issued a pair of proposed rules to update reimbursement for home health and end-stage renal disease services. The CY 2023 Home Health Prospective Payment System (HH PPS) rate update proposed rule (the HH Proposed Rule) was issued June 17, 2022. The CY 2023 End-Stage Renal Disease Prospective Payment System (ESRD PPS) proposed rule (ESRD Proposed Rule) was issued June 21, 2022. Below is a summary of notable proposed changes in the two proposed rules.
HH Proposed Rule
CMS estimates the HH Proposed Rule would result in an aggregate decrease of 4.2% in home health payments in CY 2023 compared to CY 2022, representing a total decrease of $810 million. This would be the result of a 7.69% decrease (totaling -$1.33 billion) in the 30-day payment rate for CY 2023 to account for assumed behavior changes resulting from implementation of the Patient-Driven Groupings Model (PDGM), a proposed 2.9% home health payment update percentage (totaling $560 million), and an estimated 0.2% decrease (totaling -$40 million) resulting from an update to the fixed-dollar loss (FDL) ratio used for outlier payments.
The HH Proposed Rule would also apply a permanent 5% cap on decreases in the wage index, meaning a facility’s wage index for any future year would not be less than 95% of the final wage index for the preceding year. It would also recalibrate case-mix weights and Low Utilization Payment Adjustment (LUPA) thresholds using CY 2021 data.
Other changes in the HH Proposed Rule include implementing mandatory CPI-based inflation updates to home-infusion therapy services payment rates and updates to the Expanded Home Health Value Based Purchasing (HHVBP) Model. CMS is also including a Request for Information (RFI) seeking feedback on health equity measures for the Home Health Quality Reporting Program (QRP) and the potential future application of health equity measures in the Expanded HHVBP Model.
ESRD Proposed Rule
Under the ESRD Proposed Rule, the CY 2023 ESRD PPS base rate would increase by 3.1% to $264.09. CMS estimates that total payments under the ESRD PPS for CY 2023 would be $8.2 billion as a result of the increase.
The ESRD Proposed Rule would also rebase the ESRD bundled market basket for CY 2023 to a 2020 base year with a labor-related share of 55.2%. The wage index floor would increase from 0.5 to 0.6 and CMS would apply a permanent 5% cap on decreases in the wage index (similar to the cap under the HH Proposed Rule described above).
The ESRD Proposed Rule also includes RFIs seeking feedback on quality indicators for home dialysis patients and principles for measuring healthcare quality disparities.
A copy of the HH Proposed Rule is available here, and the accompanying CMS Fact Sheet is available here. A copy of the ESRD Proposed Rule is available here, and the accompanying CMS Fact Sheet is available here.
Reporter, J. Gardner Armsby, Atlanta, +1 404 572 2760, garmsby@kslaw.com.
OIG Issues Favorable Advisory Opinion Involving an Arrangement With 0% Financing Options for a DME Manufacturer’s Customers – On June 17, 2022, OIG issued a favorable advisory opinion allowing involving an arrangement in which a durable medical equipment (DME) manufacturer makes zero-interest financing available to its customers. The advisory opinion is OIG Advisory Opinion 22-13.
More specifically, the DME manufacturer entered into agreements with two third-party financial institutions that make zero-percent interest financing options available to qualified DME suppliers who are experiencing financial difficulty with respect to the DME purchased from the DME manufacturer. According to the DME manufacturer, the proposed arrangement would allow smaller DME manufacturers to compete with larger DME manufacturers that can self-finance or obtain their own third-party financing to purchase and sell DME that may be subject to a lengthy reimbursement timeline.
After careful consideration of the facts, OIG determined that although the arrangement would produce renumeration prohibited by the federal anti-kickback statute (the AKS) if the requisite intent were present, OIG would not impose sanctions on the DME manufacturer.
OIG considered the following factors in deciding that the arrangement ultimately provided a low risk of fraud and abuse under the AKS:
- Although the financing is beneficial to the customer, the customers do not receive a discount on the price of the DME. Approximately 97.5% of the customers repay the entire amount, but over a longer time period (the remainder default on the loans).
- The risk-bearing lenders that evaluate each customer using their own independent process reduce the risk of providers, suppliers and manufactures subsidizing or forgiving loans to encourage referrals.
- The DME manufacturer’s agreement to receive less than the total amount paid by the customer by paying a finance charge to the lenders does not increase the risk of fraud and abuse because the lender is not a health care provider, or otherwise in a position to make referrals to the DME manufacturer.
- The arrangement does not increase the cost to federal health care programs or encourage overutilization.
- The lender(s) and DME manufacturer share default liability in the arrangement. This shared liability minimizes the risk that the DME manufacturer will actively seek interest-free financing arrangements on a customer’s behalf.
The full text of Advisory Opinion 22-13 is available here.
Reporter, Kimberly Rai, New York, +1 212 556 2198, krai@kslaw.com.