January 5, 2015

From Law 360

by Jeff Overly

A busy year of policymaking awaits the health care world, with Congress and regulators poised to tackle Affordable Care Act provisions, anti-fraud policies, Medicare's physician reimbursement system and a controversial drug-discount program.

Here's the legislative and regulatory action to watch in 2015.

OIG Eyes Anti-Fraud Overhaul

Lots of chatter has been directed at a proposed rule released in November by the Office of Inspector General for the U.S. Department of Health and Human Services, with commenters saying it could offer latitude for models of care that would normally incur anti-fraud wrath.

One of the revised safe harbors would affect so-called "gainsharing," in which hospitals give bonuses to doctors who cut costs without sacrificing quality. Some critics, particularly device makers, worry that the programs will encourage use of less-sophisticated equipment and thereby harm innovation, but it’s likely that the goal of taming health care spending will carry the day, Ropes & Gray LLP partner Thomas N. Bulleit said.

"The momentum for cost reduction is in that direction, so in the end, you'll see more gainsharing and not less gainsharing," Bulleit said.

Whether a final rule loosens restrictions as much as providers hope depends on the OIG's precise language, as a few words can make all the difference in determining whether certain practices are acceptable. For example, the inspector general is wrestling with how much leeway to allow for freebies and discounts that "promote access to care," which will decide which incentives providers can offer to patients who use their services.

"It's very technical," Polsinelli PC shareholder Brian D. Bewley said. "And so the language, and how certain things are described in the safe harbor, and the factors that the government enumerates in order to meet the safe harbor, are critically important."

Hospitals Await ACA 60-Day Overpayment Rule

It's been almost three years since regulators published a proposed regulation covering the ACA's requirement for health care providers to return overpayments within 60 days of identification, and attorneys are craving a final regulation to clarify numerous questions.

Uncertainty surrounds what it means to identify an overpayment as well as what steps must be taken to avoid "recklessly disregarding" the existence of overpayments that should have been identified.

A pending False Claims Act lawsuit — the first of its kind — accuses a hospital within New York's Mount Sinai Health System of flouting the 60-day rule, and experts say the emergence of litigation makes it even more imperative for regulators to finalize their expectations.

"There's a lot of ambiguity that's left in that proposed rule that really needs clarification, especially if the government is going to pursue False Claims Act cases against entities for failure to report and refund," Bewley said.

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