backExecutive Order on Healthcare Price Disclosures
On February 25, 2025, President Trump issued an Executive Order (EO) directing the Departments of the Treasury, Labor, and HHS (the Departments) to implement and enforce existing price transparency regulations, including the Hospital Price Transparency Rule (the HPT rule) and the Transparency in Coverage Rule (the TiC Rule). The HPT Rule requires hospitals to make public the standard charges of the items and services they provide. The TiC Rule requires insurance issuers to disclose price and cost-sharing information to plan participants and enrollees.
The EO directs the Departments to:
- Ensure hospitals and insurance issuers disclose actual prices and not estimates;
- Take action to make prices comparable across hospitals and insurance issuers, including drug prices; and
- Update their enforcement policies.
Given the increased scrutiny of compliance with the HPT Rule and TiC Rule, hospitals and insurance issuers should remain mindful that CMS has published several helpful tools on its website to aid compliance. For example, CMS has created two tools that test a hospital’s machine-readable file against the required CMS template layouts and specifications.
- Online Validator: CMS recommends this tool for nontechnical users.
- Command-Line Interface Validator: CMS recommends this tool for technically-proficient users validating multiple files simultaneously or integrating the validator into a software pipeline.
CMS has confirmed that both tools use the same underlying code and will produce the same errors and/or warnings for a machine-readable file. Also, if a hospital comes under a compliance review by CMS, the agency will use the validator tool to assess compliance.
Resources for providers are available here. Resources for insurance issuers are available here.
Reporters, Ahsin Azim, Washington, D.C., + 1 202 626 5516 and Brittni Hamilton, Los Angeles, +1 213 218 4083, bhamilton@kslaw.com
HHS Rescinds Policy on Public Participation in Select HHS Decisions
On February 28, 2025, HHS announced it was rescinding its prior policy of following the Administrative Procedure Act’s notice-and-comment procedures for certain proposed rules, including those relating to “management or personnel or to public property, loans, grants, benefits, or contracts” and rules where the agency finds that the required procedures are “impracticable, unnecessary, or contrary to the public interest” (the Statement).
The Administrative Procedure Act (APA) requires federal agencies like HHS to follow specific procedures in curating proposed rules, including publishing a notice of proposed rulemaking and providing an opportunity for the public to comment on the proposed rule. However, the APA exempts from the notice-and-comment requirements matters which relate to “management or personnel or to public property, loans, grants, benefits, or contracts.”
In 1971, HHS adopted the so-called Richardson Waiver, a policy that waived this exemption. Thus, notwithstanding the APA’s exemption, the Richardson Waiver required HHS to follow the APA’s notice-and-comment procedures for proposed rules involving public property, loans, grants, benefits, and contracts. The APA also has a “good cause” exemption, which the Richardson Waiver instructed HHS to use “sparingly.” The “good cause” exemption applies where an agency finds that the required notice-and-comment procedures are “impracticable, unnecessary, or contrary to the public interest.”
The Statement rescinds the Richardson Waiver in its entirety, thereby eliminating the policy of HHS to follow the APA’s notice-and-comment procedures for “matters relating to agency management or personnel or to public property, loans, grants, benefits, or contracts, except as otherwise required by law.” It also reestablishes the use of the good cause exception in “appropriate circumstances in accordance with the requirements of the APA.”
The Statement can be found here. It is scheduled to be published in the Federal Register on March 3, 2025.
Reporter, Lindsay Greenblatt, Los Angeles, +1 213 218 4032, lgreenblatt@kslaw.com
First Circuit Adopts Defense-Friendly “But-For” Causation Requirement for Kickback-Based FCA Cases
On February 18, 2025, the First Circuit Court of Appeals issued a decision interpreting the level of causation necessary for certain False Claims Act (FCA) actions to be premised on the Anti-Kickback Statute (AKS). With this opinion in United States v. Regeneron Pharmaceuticals, the First Circuit joins the Sixth and Eighth Circuits in requiring the government to prove that an Anti-Kickback Statute violation actually caused a physician to provide different medical treatment than he or she would have provided absent the alleged kickback. This more stringent standard stands in contrast to the more lenient standard adopted by the Third Circuit.
Background
The AKS is a criminal statute that prohibits willfully offering, paying, soliciting or accepting remuneration to induce the referral, purchasing, leasing, ordering, furnishing or arranging for the furnishing of items or services reimbursable by a federal healthcare program. The FCA is a civil statute imposing liability on defendants that submit or cause the submission of false claims to the federal government. The government and qui tam relators have connected the two statutes, positing that if a defendant commits an AKS violation, it follows that all related claims to the government are also false under the FCA. Initially, courts disagreed on when and how AKS violations led to FCA liability, but in 2010, Congress amended the AKS to provide that a claim that includes items or services “resulting from” a violation of the AKS is a false claim under the FCA. The AKS, as amended, does not further define what is required to show a claim “results from” an AKS violation – this was the subject of the Regeneron appeal.
Three Circuit courts previously issued opinions on what this “resulting from” language requires. In 2018, the Third Circuit held that but-for causation is not required and that a claim for government reimbursement can “result from” an AKS violation if there is a lesser, arguably non-causal, link between the two. United States ex rel. Greenfield v. Medco Health Sols., Inc., 880 F.3d 89, 100 (3d Cir. 2018). In 2022 and 2023, the Eighth and Sixth Circuits, respectively, issued opinions departing from the Third Circuit’s analysis. See United States ex rel. Cairns v. D.S. Medical L.L.C., 42 F.4th 828 (8th Cir. 2022); United States ex rel. Martin v. Hathaway, 63 F.4th 1043 (6th Cir. 2023). Expressly rejecting the Third Circuit’s approach, both circuits held that an FCA plaintiff must prove that a defendant would not have included particular items or services in the claim to the government “but for” the alleged AKS violation. The Sixth Circuit explained that independent decisions of physicians may break any plausible chain of causation. Additionally, temporal proximity between an alleged kickback and a claim, without more, is not enough to show causation.
United States v. Regeneron Pharmaceuticals
Regeneron Pharmaceuticals (“Regeneron”) is a pharmaceutical company that manufactures Eylea, a drug used for treating eye disease. Eylea is a “buy and bill” drug, meaning physicians typically purchase the drug, prescribe it, administer it directly in their office, then submit claims for reimbursement to the patient’s insurer. Medicare Part B imposes a 20% cost-sharing requirement for Eylea.
In Regeneron, the government alleged that Regeneron improperly induced physicians to prescribe Eylea in violation of the AKS by donating millions of dollars to a co-pay assistance foundation to help patients pay the co-pays for the medication. The government alleged that physicians prescribed Eylea because they knew their patients would benefit from the co-pay assistance, and then submitted those claims to Medicare, such that the claims “resulted from” an AKS violation. The government argued that the claims can “result from” an AKS violation even if the claims would have been made anyway. Regeneron argued for the “but for” causation standard, meaning if the physician would have prescribed the medication regardless of the co-pay assistance, then the claim cannot “result from” the alleged AKS violation. The District Court for the District of Massachusetts sided with Regeneron, holding that the alleged AKS violation must be the but-for cause of a claim for the claim to violate the FCA. The government appealed.
The First Circuit affirmed the District Court’s holding, concluding that there was no need to deviate from the “ordinary course” in which “resulting from” requires but-for causation. Analyzing the plain text of the AKS, the court found “there is no language in the 2010 amendment that by itself runs counter to the presumption that ‘resulting from’ calls for proof of but-for causation.” The court expressly rejected the government’s arguments relying on context and the Act’s legislative history. The court also was not persuaded by the government’s attempts to draw parallels to the criminal AKS, which does not require but-for causation, because the civil FCA has a different focus—the claim, rather than the underlying conduct.
What Lies Ahead
The Regeneron opinion is a significant win for FCA defendants. However, as a result of this opinion, relators and the government may attempt to circumvent this increasingly well-settled “but-for” causation standard by relying on a purported “certification” theory of falsity under the FCA, rather than relying on the AKS provision containing the “resulting from” language. The Regeneron court limited the scope of its holding to construing the “resulting from” provision, and the government and relators may argue that a claim can be “false” under the FCA by virtue of an AKS violation if the claim contains a certification with respect to the AKS, even if the items or services in the claim do not result from an AKS violation. In particular, relators may argue that claims that are truthful on their face should be construed as if they contain an “implied certification” regarding the AKS whose terms go beyond a lack of but-for causation. Defendants will have multiple grounds to oppose such attempts to read nonexistent “certifications” into truthful claims.
The government may ask the Supreme Court to review the First Circuit’s opinion. However, in 2023, the Supreme Court denied certiorari to review the most recent “but-for” causation case, the Sixth Circuit’s decision in Martin v. Hathaway.
King & Spalding attorneys Jeffrey Bucholtz and Matthew Noller represented the Chamber of Commerce of the United States of America in submitting an amicus brief in support of Regeneron in the First Circuit.
The Regeneron opinion, No. 23-2086, (1st Cir. Feb. 18, 2025), is available here.
Reporter, Alana Broe, Atlanta, +1 404 572 2720, abroe@kslaw.com.
Register for the Health Law & Policy Forum
King & Spalding is hosting the 34th Annual Health Law & Policy Forum on Monday, March 17th from 8:00 am to 5:00 pm ET at the St. Regis Atlanta. Registration is available here.
Editors: Christopher P. Kenny and Catherine (Kate) S. Stern
Issue Editors: K. Tyler Dysart and Alek Pivec