The 2024 Consolidated Appropriations Act passed and signed on Saturday, March 23, 2024, increased of Medicare Conversion Factor from $32.7442 to $33.2875, an increase of slightly over $0.54.
U.S. Department of Justice (DOJ) Provides Corporate Fraud Enforcement Update
During the American Bar Association’s 39th National Institute on White Collar Crime, the most senior executives of the DOJ (Attorney General Merrick B. Garland and Deputy Attorney General Lisa Monaco) delivered remarks promoting the success of DOJ compliance and enforcement by:
- Emphasizing the DOJ’s top priority being the prosecution of “corner office bad actors”
- Publicizing the success of the voluntary disclosure program
- Emphasizing the important role of compensation clawbacks by audit/compliance and executive compensation committees with respect to receiving comparable credit against potential fines and restitution
- Continuing to emphasize and promote the opportunity for credit for cooperation during investigations and whistleblower cooperation, and announced that DOJ is initiating a new corporate fraud/misconduct whistleblower program focused on compliance opportunities not already impacted by existing whistleblower and quitam programs.
Here are links to the remarks of Attorney General Garland and Deputy Attorney General Monaco.
Change Healthcare Cyberattack Disrupts Physician Payments
“On February 21, 2024, Change Healthcare, a subsidiary of UnitedHealth Group was the victim of the most significant cyberattack on the US healthcare system in American history. Change Healthcare is the predominant source of more than 100 critical functions that keep the healthcare system operating.”
This hack was first reported by the Wall Street Journal on February 23, 2024, in an article entitled “Hospitals and Pharmacies Reeling After Change Healthcare Attack”.
The Wall Street Journal further reported on March 1, 2024 in an article titled “Medical Providers Fight to Survive After Change Healthcare Attack” that medical practices have gone without revenue for well over a week as a result of the ransom or attack on Change Healthcare.
On March 7, 2024, the Wall Street Journal reported that “UnitedHealth Aims to Restore Change Healthcare Systems Within Two Weeks”.
Penn State Health Agrees To Pay Over $11 Million Due To Violations Of Medicare Rules & Regulations
Penn State Health has agreed to pay $11,712,336 to settle allegations of civil liability from submitting improper claims to Medicare for Annual Wellness Visit services.
Penn State Health has voluntarily disclosed that between December 2015 and November 2022 claims were submitted to Medicare for Annual Wellness Visit services that were not supported by the medical record. Once the improper claims were discovered, Penn State Health promptly took corrective action and disclosed the matter to the United States Attorney’s Office.
HHS Healthcare Sector Cybersecurity
In furtherance of the National Cybersecurity Strategy announced March 2023, HHS has released an Introduction to the Strategy of the U.S. Department of Health and Human Services for Healthcare Sector Cybersecurity. Click here for the PDF.
False Claims Act (FCA) Liability for Physician Compensation Exceeding Fair Market Value (FMV)
When negotiating physician compensation issues, hospitals frequently rely upon the premise they must pay fair market value compensation in order to comply with the provisions of the Stark Act prohibiting referrals in exchange for compensation, and sometimes non-profit inurement issues.
Although the prohibitions are clear, determining what constitutes fair market value is often not. Provisions allegedly enforcing fair market value by limiting compensation to the 75th percentile of some national study are clearly inapplicable; obviously, somebody is legitimately being paid in the top quartile.
The issue is often not the amount of the compensation, but how it is determined.
The recent settlement by Indiana Health Network with DOJ, announced by DOJ in a Press Release on December 19, 2023 identifies some clear problems, or at least warning signs.
- A compensation system where bonuses were linked to referrals rather than productivity
- Compensation that was allegedly double what was being earned by the physician in private practice prior to the recruitment
- Allegedly falsifying or manipulating the data used by a consultant to determine fair market value
A lesson learned from this case is not new. Intentional disregard and even manipulation of the process can lead to significantly liability; in this case–$345 million.
2024 Medicare Physician Fee Schedule
CMS issued the Final Rule for the 2024 Medicare Physician Fee Schedule (PFS) on November 2, 2023, for payments to be effective on or after January 1, 2024.
The overall payment rates under the PFS will be reduced by 1.25% in calendar year 2024.
The final PFS conversion factor will be $32.74, which is a decrease of 1.15 of dollar and 15% (or 3.4%) from the 2023 conversion factor of $33.89.
Biden Administration to Appeal Surprise Billing Defeat
As reported earlier in the MedLaw Blog (August 9, 2023), a federal District Court vacated portions of the No Surprises Act federal regulations. Thereafter, CMS halted the arbitration process for resolving disputes regarding out-of-network surprise bills.
On October 20, 2023, HHS, Treasury, and the US Office Personnel Management submitted a notice indicating their attempt to file a consolidated appeal in the US Court of Appeals for the Fifth Circuit, challenging the August decision in the US District Court for the Eastern District of Texas.
FTC Sues Anesthesiology Provider and PE Firm Over Anticompetitive “Roll Up” Scheme
As Mike Cassidy and Adam Appleberry discussed during their presentation at PBI’s A Day in Health Law earlier this month, private equity’s involvement in healthcare will be an interesting item to watch over the next few years. Just last week, the FTC sued the U.S. Anesthesia Partners, Inc. and their private equity backer Welsh, Carson, Anderson & Stowe, alleging a “multi-year anticompetitive scheme to consolidate anesthesia practices in Texas, drive up the price of anesthesia services provided to Texas patients, and increase their own profits.” (Click here to read the article)
Private equity arrangements in health care can provide great rewards for physicians seeking to increase their capital for whatever reason, be it to grow their practice or simply develop an exit strategy for retirement, but these deals do not come without risk. There is a growing trend amongst courts and regulators to view these arrangements with increased scrutiny. Recent studies have suggested that private equity’s involvement in healthcare could result in an overall higher cost to patients and payers while possibly providing a worst patient outcome (read one of those studies here). As these deals continue, the best interest of the public will remain the top priority in the eyes of regulators.
In the situation surrounding U.S. Anesthesia Partners, Inc. and Welsh, Carson, Anderson, & Stowe, after each acquisition, patient prices increased for using the same physicians for the same services as before. The FTC determined that this was an attempt to “unlawfully undermine fair competition and harm the American Public.”
Allegheny County Medical Society Bulleting Article on Contracting Essentials for all Physicians, Especially Residents and Fellows
Michael A. Cassidy and Adam J. Appleberry co-wrote an article titled “Contracting Essentials for All Physicians, Especially Residents and Fellows”. This article will appear in the Legal Summary section of the August 2023 Allegheny County Medical Society (ACMS) Bulletin. The ACMS Bulletin is the Allegheny County Medical Society’s signature publication which reaches over 2,000 physicians in Southwestern Pennsylvania each month.
In summary, when negotiating a physician contract, it is important to pay attention to the restrictive covenants, contract term and termination, malpractice coverage, compensation, and plan for the worst-case scenario. It is necessary to take the time to carefully review and negotiate your physician contract. This is a critical document that will set the terms of your employment for years to come. To read the full article that appeared in the ACMS bulletin, click here.
For assistance with reviewing your physician contract, contact Mike Cassidy at mcassidy@tuckerlaw.com, (412) 594-5515 or Adam Appleberry at aappleberry@tuckerlaw.com, (412) 594-5532.
To keep apprised of the latest legal news in healthcare, subscribe to receive regular updates on the side of the page by simply entering your email address.