Fifth Circuit Hits Pause on ACA Lawsuit Over Government Shutdown

https://www.healthleadersmedia.com/strategy/fifth-circuit-hits-pause-aca-lawsuit-over-government-shutdown

At the urging of the Trump administration, an appellate judge put legal wrangling over the Obama-era law’s constitutionality on hold until the partial government shutdown ends.

The appeals process to review a ruling that declared the entire Affordable Care Act invalid will have to wait until attorneys for the federal government have funding to proceed.

Fifth Circuit Court Judge Leslie H. Southwick issued a stay in the case Friday, granting a request filed earlier in the week by the U.S. Department of Justice.

The pause comes three weeks into a partial government shutdown that’s poised to become this weekend the longest in U.S. history, as President Donald Trump insists that Congress authorize $5.7 billion for a wall along the U.S. border with Mexico and Democrats refuse to do so.


While most of the federal government was funded by earlier legislation, this shutdown affects about 800,000 federal workers and inhibits the work of several agencies that handle health-related tasks.

Both the plaintiffs and federal defendants agreed that a stay would be appropriate. But the California-led coalition of Democratic state attorneys general challenging the lower court’s decision and the U.S. House of Representatives—which, newly under Democratic control, is seeking to intervene in the case to defend the ACA—opposed the stay request.

 

 

 

 

Healthcare’s vertical mergers kick-started a massive industry shift in 2018. Will it pay off?

https://www.fiercehealthcare.com/payer/healthcare-s-vertical-mergers-kick-started-a-massive-industry-shift-2018-will-it-pay-off?mkt_tok=eyJpIjoiTnpBNE1HTmtObUl3WVRkayIsInQiOiJFOU1xMDRPMGtzMCtnWXU4MExUVFAzZ3Jrdm5cL2s3S1dMRkVldTRWS2QyNmJZU255UWRIWW14QmtXVkJ2T2VTeGpYTVBvQXZWWW1JVnB0S0crTXV3aFhDS0wrY3NzTmtEYmJEMHdvSG03bGkxS2ZlREdiaWZydFZkbkdlXC9tTHE1In0%3D&mrkid=959610&utm_medium=nl&utm_source=internal

Mergers and acquisitions deals consolidation

Two massive megamergers in CVS-Aetna and Cigna-Express Scripts dominated the conversation around mergers and acquisitions in healthcare.

Whether you think the mergers will help or hurt consumers, both deals have sparked a distinct shift across the industry as competitors search for ways to keep pace. It also frames 2019 as the year in which five big vertically integrated insurers in CVS, UnitedHealth, Cigna, Anthem and Humana begin to take shape.

Combined, the mergers totaled nearly $140 billion.

Both CVS and Cigna closed their transactions in the fourth quarter with promises that their new combined companies would “transform” the industry. Unquestionably, it’s already triggered some response from other players. Whether those companies can make good on their promises to improve care for consumers remains to be seen, and the payoff may not come for several years, as 2019 is likely to be a year of initial integration.

While CVS and Cigna hogged most of the spotlight, several other notable transactions across the payer sector could have smaller but similarly important consequences going forward.

WellCare acquires Meridian Health Plans for $2.5B

In May, WellCare picked up Illinois-based Meridian Health Plans for $2.5 billion, acquiring a company with an established Medicaid footprint with 1.1 million members. The deal boosted WellCare’s membership by 26%.

But the transaction also thrust WellCare back onto the ACA exchanges. Meridian has 6,000 marketplace members in Michigan.

Importantly, the acquisition gave WellCare a new pharmacy benefit manager in Meridian Rx. CEO Kenneth Burdick said it would provide “additional insight into changing pharmacy costs and improving quality through the integration of pharmacy and medical care.”

WellCare also makes out on CVS-Aetna transaction

WellCare was also a beneficiary of the CVS-Aetna deal after the Department of Justice required Aetna to sell off its Part D business in order to complete its merger.

The deal adds 2.2 million Part D members to WellCare, tripling its existing footprint of 1.1 million.

Humana goes after post-acute care

2018 was the year of post-acute care acquisitions for Humana. The insurer partnered with two private equity firms to buy Kindred Healthcare for $4.1 billion in a deal that was first announced last year. It used a similar purchase arrangement to invest in hospice provider Curo Health Service in a $1.4 billion deal.

Both acquisitions give Humana equity stake in the companies, with room to make further investments down the road. Kindred, in particular, is expected to further Humana’s focus on data analytics, digital tools and information sharing and improve the continuity of care for patients even after they leave the hospital.

Not to be outdone, rival Anthem also closed its purchase of Aspire Health, one of the country’s largest community-based palliative care providers.

UnitedHealth keeps quietly buying up providers, pharmacies

With ample reserves, UnitedHealth is always in the mix when it comes to acquisitions. This year was no different. The insurance giant snapped up several provider organizations to add to its OptumHealth arm. In June, it was one of two buyers of hospital staffing company Sound Inpatient Physicians Holdings for $2.2 billion. It also bought out Seattle-based Polyclinic for an undisclosed sum. The physician practice has remained staunchly independent for more than a century.

Most notably, UnitedHealth is still in the process of closing its acquisition of DaVita Medical Group. DaVita recently dropped the price of that deal from $4.9 billion to $4.3 billion in an effort to speed up Federal Trade Commission approval.

The Minnesota-based insurer is also clearly interested in specialty pharmacies to supplement its PBM OptumRx. UnitedHealth bought Genoa Healthcare in September, adding 435 new pharmacies under its umbrella. Shortly after, it bought up Avella Specialty Pharmacy, a specialty pharmacy that also offers telepsychiatry services and medication management for behavioral health patients.

Centene invests in a tech-forward PBM

Perhaps in an effort to keep pace with Cigna and CVS, Centene has made smaller scale moves in the PBM space, investing in RxAdvance, a PBM launched by former Apple CEO John Sculley. Following an initial investment in March, Centene sunk another $50 million into the company in October and then announced plans to roll the solution out nationally. Notably, CEO Michael Neidorff has said he is pushing the PBM to move away from rebates and toward a model that relies on net pricing.

“You talk about ultimate transparency—that gets us there,” he said recently.

 

 

 

DOJ recovered $2.5 billion in 2018 healthcare false claim cases

https://medcitynews.com/2018/12/doj-recovered-2-5-billion-in-2018-healthcare-false-claim-cases/?utm_campaign=MCN%20Daily%20Top%20Stories&utm_source=hs_email&utm_medium=email&utm_content=68616131&_hsenc=p2ANqtz–fq1sdxIB88xY-ain-FJhljI6XCajKx4jjImF-6g7OJCDVEtx0Bo9c1pP788k3hLe6ehxSYBoP-w51DLgGo5izH2qh5g&_hsmi=68616131

 

 

 

 

 

 

 

 

 

 

According to the DOJ, this is the ninth consecutive year that the organizations’ civil healthcare fraud settlements and judgments have exceeded $2 billion.

As part of the federal government’s increasing focus on issues of healthcare fraud, particularly in the Medicare space, the U.S. Department of Justice recovered $2.5 billion in settlements and judgments from False Claims Act Cases over the past year.

According to the DOJ, this is the ninth consecutive year that the organizations’ civil health care fraud settlements and judgments have exceeded $2 billion.

While the $2.5 billion number represents federal losses, the DOJ also said it also helped recover significant funds for state Medicaid programs

“Every year, the submission of false claims to the government cheats the American taxpayer out of billions of dollars,” Principal Deputy Associate Attorney General Jesse Panuccio said in a statement.

“In some cases, unscrupulous actors undermine federal healthcare programs or circumvent safeguards meant to protect the public health … The nearly three billion dollars recovered by the Civil Division represents the Department’s continued commitment to fighting fraudsters and cheats on behalf of the American taxpayer.”

The False Claims Act has its roots in groups trying to defraud the military during and after the Civil War and was significantly strengthened since 1986 when Congress increased incentives for whistleblowers to file lawsuits alleging false claims.

In healthcare, organizations across the industry were hit with False Claims cases including drug companies, medical device manufacturers, payer organizations and healthcare providers.

The single largest recovery over the past year was a $625 million settlement paid by drug wholesaler AmerisourceBergen to resolve a number of claims including that the company illegally repackaged injectable cancer drugs into pre-filled syringes and billing multiple doctors for individual drug vials.

The DOJ also brought cases against drug companies who increased drug prices by funding Medicare co-payments meant to serve as a check on healthcare costs.

In one instance, United Therapeutics Corporation paid $210 million over allegations that it illegally used a foundation to funnel co-pay obligations for Medicare patients taking its drugs. Pfizer paid nearly $24 million in a similar case, with the government alleging that the company raised the price of a cardiac drug called Tikosy by 40 percent over three months

One major case against Massachusetts-based medical device company Alere resulted in a $33.2 million settlement over allegations that it sold unreliable diagnostic devices meant to detect acute coronary syndromes, heart failure, drug overdose and other serious conditions.

On the provider side, the DOJ recovered $270 million from DaVita subsidiary HealthCare Partners Holdings for upcoding and providing inaccurate information to inflate Medicare Advantage payments.

Another major case was against former health system Health Management Associates which allegedly engaged in major Medicare fraud including illegal kickbacks to physicians for referrals, incorrect billing for observation and outpatient services and inflated facility fees.

When it comes to health plans, the government’s case against UnitedHealth Group over allegations that it knowingly obtained inflated risk adjustment payments for its Medicare Advantage beneficiaries is still ongoing.

 

 

Court: Trump can’t let companies deny birth control coverage

https://www.apnews.com/15851f17cb164b89a4fa3d8be33e156b

Image result for Click to copyhttps://apnews.com/15851f17cb164b89a4fa3d8be33e156b RELATED TOPICS Health Birth control North America Courts U.S. News Barack Obama Court: Trump can’t let companies deny birth control coverage

A divided U.S. appeals court Thursday blocked rules by the Trump administration that allowed more employers to opt out of providing women with no-cost birth control.

The ruling, however, may be short lived because the administration has adopted new rules on contraceptive coverage that are set to take effect next month and will likely prompt renewed legal challenges.

Thursday’s ruling by a three-judge panel of the 9th U.S. Circuit Court of Appeals concerned changes to birth control coverage requirements under President Barack Obama’s health care law that the U.S. Department of Health and Human Services issued in October 2017.

States were likely to succeed on their claim that those changes were made without required notice and public comment, the appeals court panel said in a 2-1 decision.

The majority upheld a preliminary injunction against the rules issued by U.S. District Judge Haywood Gilliam last year. It, however, limited the scope of the injunction, applying it only to the five states in the lawsuit and not the entire country.

Another federal judge also blocked the rules, and her nationwide injunction remains in place.

An email to the Justice Department seeking comment was not immediately returned.

Obama’s health care law required most companies to cover birth control at no additional cost, though it included exemptions for religious organizations. The new policy allowed more categories of employers, including publicly traded companies, to opt out of providing free contraception to women by claiming religious objections. It also allowed any company that is not publicly traded to deny coverage on moral grounds.

The Department of Justice said in court documents that the rules were about protecting a small group of “sincere religious and moral objectors” from having to violate their beliefs. The changes were favored by social conservatives who are staunch supporters of President Donald Trump.

California filed a lawsuit to block the changes that was joined by Delaware, Maryland, New York and Virginia.

“Today’s decision is an important step to protect a woman’s right to access cost-free birth control and make independent decisions about her own reproductive health care,” California Attorney General Xavier Becerra said in a statement.

The states argued that the changes could result in millions of women losing free birth control services, forcing them to seek contraceptive care through state-run programs or programs that the states had to reimburse.

The states show with “reasonable probability” that the new rules will lead women to lose employer-sponsored contraceptive coverage, “which will then result in economic harm to the states,” 9th Circuit Judge J. Clifford Wallace, a nominee of Republican President Richard Nixon, wrote for the majority.

In a dissent, 9th Circuit Judge Andrew Kleinfeld said the economic harm to the states was “self-inflicted” because they chose to provide contraceptive coverage to women. The states, therefore, did not have the authority to bring the lawsuit, Kleinfeld, a nominee of Republican President George H.W. Bush, said.

The case became more complicated after the Trump administration last month issued new birth control coverage rules that are set to supersede those at issue in the lawsuit before the 9th Circuit. Under the new rules, large companies whose stock is sold to investors won’t be able to opt out of providing contraceptive coverage.

Wallace said the new rules did not make the case before the 9th Circuit moot because they are not set to take effect until January.

 

 

 

 

Pennsylvania health system, CEO will pay $12.5M to resolve billing probe

https://www.beckershospitalreview.com/legal-regulatory-issues/pennsylvania-health-system-ceo-will-pay-12-5m-to-resolve-billing-probe.html?origin=cfoe&utm_source=cfoe

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Allentown, Pa.-based Coordinated Health and its founder and CEO Emil DiIorio, MD, have entered into an agreement with the federal government to settle False Claims Act allegations, according to the Department of Justice.

The settlement resolves allegations that Coordinated Health inflated payments from federal payers by unbundling claims for reimbursement for orthopedic surgeries, including many for total joint replacement, from 2007 through mid-2014.

Instead of stopping the illegal unbundling, Dr. DiIorio changed how he wrote operative reports to enable Coordinated Health billers to maximize improperly unbundled reimbursements, according to the Justice Department.

Two outside coding consultants identified the improper unbundling during audits in 2011 and 2013 and told top Coordinated Health executives about the problem. “Motivated by its bottom line, Coordinated Health simply ignored the consultants’ recommendations and continued abusing Modifier 59 to improperly unbundle orthopedic surgery claims until mid-2014,” states a Justice Department press release.

Coordinated Health will pay $11.25 million and Dr. DiIorio will pay $1.25 million to settle the allegations. In addition to the monetary settlement, Coordinated Health entered into a corporate integrity agreement with HHS that will require monitoring of its billing practices for five years.

Regarding the settlement, Coordinated Health released the following statement: “We are pleased to have come to a resolution with the federal government regarding allegations of our past use of a specific Medicare billing modifier, involving a complex Centers for Medicare and Medicaid Services rule, which does not relate to the quality of patient care. We have already updated our billing practice to resolve the issue in question, and have taken a number of decisive actions to reduce the potential for issues in the future. Our focus has been and always will be providing the best possible patient care in the communities we serve.”

 

6 Michigan physicians charged in $464M billing fraud scheme

https://www.beckershospitalreview.com/legal-regulatory-issues/6-michigan-physicians-charged-in-464m-billing-fraud-scheme.html?origin=rcme&utm_source=rcme

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A grand jury in Michigan returned a 56-count indictment Dec. 4 that charges six physicians in a $464 million healthcare fraud scheme, according to the Department of Justice.

Rajendra Bothra, MD, owner and operator of a pain clinic in Warren, Mich., and five physicians who worked at the clinic are accused of prescribing patients opioid pain medication to get them to come in for office visits. During the office visits, the physicians allegedly subjected the patients to unnecessary treatment, including facet joint injections. The physicians “sought to bill insurance companies for the maximum number of services and procedures possible with no regard to the patients’ needs,” the Justice Department said in a press release.

The fraud scheme, which occurred between 2013 and November 2018, allegedly involved more than 13 million unlawfully prescribed opioid prescription drugs.

“The damage that opioid distribution has done to our community and to the United States as a whole has been devastating,” said U.S. Attorney Matthew Schneider. “Healthcare professionals who prey on patients who are addicted to opioids in order to line their pockets is particularly egregious. We will continue to prosecute such individuals who choose to violate federal law and their ethical oaths.

 

Hospital mergers and acquisitions: They keep happening but let’s face it, the big ones rarely work

https://www.healthcarefinancenews.com/news/hospital-mergers-and-acquisitions-they-keep-happening-lets-face-it-big-ones-rarely-work?mkt_tok=eyJpIjoiWlRsa05XRmlObVl4WVRReCIsInQiOiJ5bFRKWGVoSGdPZStLb3Y2TWc4NmNhRkwzaWo4UncxcUR2ZzUzQUpycWpOcTlDamxkRDFWano2YXI4bUlLVGRRWStZN1B6K21ZRTg3aENUaW02ZHVHak9SU3BYRnJDRXFWNFd3R05jaEY2R2FPMzdLWDIzRE1PYlRZVlcyOHJRMiJ9

 

The first installment of our two-part series looks at many of the things that can, and commonly do, go wrong.

Mergers and acquisitions have been a common occurrence in healthcare for years now, and of late, mega-mergers have become the norm — giant organizations that join forces, often in an attempt to leverage their newfound scale and keep dollars flowing in.

The problem is that these mega-mergers often don’t deliver on their promises. Organizations want more negotiating power when hashing out contracts with insurance companies, and they rarely get it. Credit ratings are being downgraded. Costs often rise, quality deteriorates, and some companies want out of these deals altogether six or seven years down the road.

Others work out just fine, of course, but for every healthcare entity that sees success in these deals, there’s another which just bet the farm and lost it.

The mission then becomes: How to avoid that fate?

HARD LOOK AT REALITY

RIta Numerof, PhD, president of healthcare consulting firm Numerof and Associates, expects a rocky road going forward. Mergers are difficult to do well under normal circumstances, but a mega-merger is rarely a normal circumstance — it’s more complex, and more challenging to do well given that the healthcare industry is going through a fairly big transition.

In most of these scenarios, said Numerof, the intent was honorable. They wanted to lower costs and improve quality and do better by the consumers who depend on them. That’s the message that’s expressed publicly, anyway, and the Federal Trade Commission and the Department of Justice have generally been willing to accept these sentiments.

Numerof said regulators should be taking a closer look at whether these deals are sound from a financial perspective, and in fact will deliver on that promise.

“I am very skeptical of this,” she said. “The reality is that around 40 percent of M&A in general, across industries, fail to deliver on the financial performance that the parents coming together in the first place wanted to achieve. The fact that there is so much evidence against the likelihood of success should be a data point the Department of Justice takes into account.”

A lot of the healthcare mergers that have taken place over the past five to eight years have been a response to the Affordable Care Act, said Numerof, and were intended as a bulwark against negotiations with insurance companies, essentially giving the buyers more negotiating clout when coming to the table as contract rates are being revisited.

It has also, she said, become a mechanism for these delivery systems to put more pressure on independent physicians, something of a dying breed in the industry.

The issue for these merging organizations is that, while they feel there’s safety in numbers, the deals add another layer of complexity into their business models.

CHANGING BUSINESS MODELS

Even under the best circumstances, M&A often fails to live up to the promise that was established.

“It’s because merger and acquisition integration, which would allow these mergers to realize the potential behind them, requires an enormous amount of work, and most organizations don’t take into account the time that’s required, the focus that’s required, and some of the cultural dynamics that are going to be at play,” said Numerof. “And many don’t take these considerations into account when they evaluate potential partners.”

When these deals are completed, there’s often a “glow” that follows, with a general sentiment that the decision will be good for business. Then reality sets in.

As an example, there’s one very successful pharmaceutical company that has a set of products centered around a speciality disease. The company was acquired for a significant chunk of change by one of the major pharma companies, which promised the smaller company that, due to its success, it would be allowed to operate as independently as possible.

Less than a year later, the company is being broken apart, and the components are being integrated into the infrastructure of the larger company. That has led to some bureaucratic overlay, and defections from people who don’t want to work for a larger company.

In some cases, mergers occur and then the participating parties want to jump ship.

“You have companies coming together, healthcare systems that came together with a lot of fanfare, and after about five to seven years they all agree this was not a good situation, and the company divests all of the assets and individual units,” said Numerof. “So this is very expensive, and not necessarily very good for the community.”

Size is almost never protective, she said. Bond ratings are going down. Some deals, like CVS-Aetna, which was recently approved by the DOJ, will have to do things very different than they have historically in order to be successful — and that will be a struggle in a challenging market environment.

PROPOSAL

In order to avoid risk, there are certain elements companies should consider.

“One of the first tenets is you’ve got to be very clear when defining the joined vision of the company, and articulate how the separate histories of these companies is going to come together to create a different whole,” said Numerof.

“One of the key points here is the strength of each of the companies. When two companies are weak, it’s like entering into a marriage. With two weak people, it doesn’t work. If you have strong companies coming together strategically because they both see opportunities for growth, where they can leverage each others’ trends, that puts them in a much better position.”

There are always opportunities for cost reduction, but they’ve got to have a new business model. That model has to take into account a new go-to-market strategy, and take into account what’s going to happen in terms of the portfolio — how customers are going to be taken care of, are what the infrastructure requirements are going to be.

An important consideration is redefining core roles and competencies, and sorting out which core values will endure in the combined entity. That will essentially be the glue that holds the enterprise together, and it will require communication; management structure will be crucially important in making the endeavor work long-term.

They’re all factors to consider, especially given that Numerof expects more mega-mergers in the future.

“I think we’re going to see more mega-mergers until the DOJ says,’This is not in the best interest of consumers, the economy, and the ability to compete,'” she said.