Health care’s fraud and abuse laws are getting overhauled

https://www.axios.com/health-care-fraud-abuse-stark-law-antikickback-changes-fd354212-9583-44c7-85e4-86e4690cc56e.html

Doctors dressed in blue operate on a patient in a surgical suite.

The Trump administration is proposing to loosen regulations that prohibit doctors from steering patients insured by federal programs to facilities where they have a financial interest and that outlaw health care companies from offering bribes and kickbacks in exchange for patient referrals.

Why it matters: The industry has long clamored for an overhaul to these laws, which companies say obstruct their goals of providing “value-based care.” But critics worry the broad and vague changes could engender more fraud and abuse than there already is.

Driving the news: The Department of Health and Human Services would create new exemptions for the physician self-referral law and the federal anti-kickback statute — decades-old, complex laws that forbid payments that encourage unnecessary care and increase taxpayer costs.

  • Hospitals, doctors, nursing homes and other entities would be able to create “value-based arrangements,” and those deals could include exchanging bonuses or other types of “remuneration” without running afoul of referral laws.
  • For example, under these exemptions, a hospital could provide a nursing home with a behavioral health nurse for certain discharged patients, or a hospital could donate cybersecurity technology to a physician’s office.
  • Many exemptions already exist, including for organizations called “accountable care organizations” that try to keep a patient’s care within a narrow set of hospitals and doctors, but these changes would go much further.

Between the lines: The overarching concern is everyone’s definition of “value” is different. How will regulators know whether providers are acting in good faith to coordinate care, or if they are using “value-based care” as a cover to control patient referrals and enrich themselves?

A major exclusion: Pharmaceutical companies, medical device firms, labs and medical equipment makers are cut out from the changes because the federal government is afraid those companies would “misuse the proposed safe harbors.”

  • Pharma lobbyists, in particular, have pushed hard to change the law so drug companies could directly subsidize drug copays for Medicare and Medicaid patients, even though federal officials have said that practice “masks the high prices those companies charge for their drugs.”
  • HHS Secretary Alex Azar told reporters the government may consider separate regulations for value-based drug contracts, even though the evidence of those deals’ effectiveness is limited at best.

The bottom line: These changes come at the same time that hospitals, physicians, pharmaceutical companies and others are paying out billions of dollars every year in fraud settlements.

  • Public comments are due Dec. 31, and if this comment process is anything like the initial requests that asked for guidance, the industry will be heavily involved.

 

 

 

DOJ investigates Providence St. Joseph Health’s Swedish Health Services

https://www.modernhealthcare.com/providers/doj-investigates-providence-st-joseph-healths-swedish-health-services?utm_source=modern-healthcare-daily-finance-thursday&utm_medium=email&utm_campaign=20190829&utm_content=article1-readmore

The U.S. Department of Justice is probing Providence St. Joseph Health’s Swedish Health Services in a civil investigation, the not-for-profit integrated health system revealed in its recent quarterly earnings report.

The DOJ requested documents from Seattle-based Swedish related to certain arrangements, joint ventures and physician organizations, according to the report. Providence St. Joseph said that the investigation will not have a “material adverse effect” on its financials.

“Like all large institutions, Swedish is subject periodically to investigations and lawsuits,” Swedish said in a statement. “Per our policy, we are not able to discuss the specifics of any investigation. However, Swedish fully cooperates with all investigations.”

Renton, Wash.-based Providence St. Joseph also disclosed in the earnings report malpractice allegations against certain affiliates, although the “probable recoveries in these proceedings and the estimated costs and expenses of defense will be within applicable insurance limits or will not materially adversely affect the business or properties of the system,” the organization said.

The DOJ said in a statement that it does not confirm, deny or comment on investigations.

In 2014, HHS’ Office of Inspector General audited Swedish Health’s Swedish Medical Center–First Hill, an acute-care hospital in Seattle. It found that about two-thirds of 257 inpatient and outpatient claims from 2010 to 2012 did not fully comply with Medicare billing requirements, resulting in net overpayments of nearly $937,500.

Also, Swedish Health was accused in 2017 of asking neurosurgeons to increase patient volume and perform unnecessary surgeries.

The recent investigation involving Swedish may relate to a delicate balance providers must strike with their affiliates.

Health systems have been carefully navigating around the Stark law, which aims to curb Medicare and Medicaid spending by prohibiting physicians and hospitals from making referrals based on their financial self-interest. But the 1989 statutes conflict with outcome-oriented care, providers argue as the law dissuades them from incentive-based arrangements.

The Stark law offers little, if any, room for error and carries significant financial penalties, experts said. Maintaining compliance and abiding audits can drain resources.

Through six months of Providence St. Joseph Health’s 2019 fiscal year, it reported an operating income of $250 million on operating revenue of $12.6 billion, up from $30 million of operating income on $12 billion of operating revenue over the same period prior. The health system reported $41 million in restructuring costs, as it aims to streamline operations and boost productivity.

For 2018, the organization drew just $3 million in operating income last year on $24.4 billion in total operating revenue. Excluding asset impairment, severance and consulting costs related to restructuring, the system said its 2018 operating income would have been $165 million. The restructuring costs are being spread across 2018 and 2019.

As it restructures, Providence St. Joseph has been expanding its non-acute portfolio, forming a for-profit population health management company, launching its second, $150 million venture fund and buying a revenue-cycle management company based on blockchain technology.