The new waiver concepts aim to give states inspiration on how they might construct applications for waivers under the law with new flexibility the Trump administration announced last month.
Centers for Medicare & Medicaid Services Administrator Seema Verma strongly criticized the Affordable Care Act in a speech Thursday and invited states to sidestep provisions of the Obama-era law in four ways, outlining a policy path forward that critics worry could undermine the ACA's central protections.
The four waiver concepts CMS released Thursday stem from revisions to a guidance document the Trump administration released last month to grant states greater flexibility under the ACA's Section 1332 waivers, which the administration has renamed State Relief and Empowerment Waivers.
"With this guidance, states will be able to develop innovative approaches that break away from the otherwise inflexible federal approach and increase consumer control and expand choice and competition in their markets," Verma said.
Some have questioned the legality of the administration's revised guidance, based on the fact that it avoided formal notice-and-comment rulemaking.
"There are serious questions about whether the policy articulated in the guidance is a permissible interpretation of the underlying statute, but, at the very least, it is likely invalid for the agency to attempt to make this policy without a full rulemaking process," Christen Linke Young, a fellow with the USC-Brooking Schaeffer Initiative for Health Policy, wrote in analysis.
The changes to the guidance reinterpreted key terms in the ACA's statutory guardrails, which are designed to keep Section 1332 waivers from undermining the law's intent, as HealthLeaders reported last month.
Verma acknowledged during a call with reporters Thursday that states could propose to use federal subsidies to cover short-term limited-duration plans (which qualify as "coverage" under the guidance's revised definitions, even though they are not required to offer the full benefits and preexisting condition protections as ACA-compliant plans), but she offered reassurance that CMS would weigh each state's proposal against the ACA's guardrails.
"At the end of the day, we're going to look at the proposal that the state gives us against the four guardrails. So we'd look at it in terms of comprehensiveness, affordability, coverage, and deficit neutrality," she said.
"We're particularly interested in looking at the proposals on the impact [on patients] with complex healthcare needs because it has to be affordable for them, has to be comprehensive," she added. "We're going to look at the proposals that are delivered to us head-to-toe along those four guardrails."
4 Waiver Concepts
There have been eight waivers approved already under Section 1332, representing two types of waivers. Seven states have secured waivers for permission to establish state-run reinsurance program. The eighth, Hawaii, has had a waiver since 2016 that authorizes its Small Business Health Options Program.
Having experienced the waiver application process firsthand, Verma complained that the rules are too stringent, impeding innovation. So the Trump administration loosened the rules and outlined four waiver types as inspiration for state-led proposals:
Account-Based Subsidies: States could redirect federal subsidies to accounts consumers manage to cover insurance premiums or other healthcare expenses. "An account-based approach could give beneficiaries more choices and require them to take responsibility for managing their health care spending," the administration said in a fact sheet. "This approach could also allow a consumer greater ability to select a plan based on the individual’s or their family’s needs, including a higher deductible plan with lower premiums."
State-Specific Premium Assistance: States could devise novel subsidy programs of their own that uses federal pass-through dollars. "A state may design a subsidy structure that meets the unique needs of its population in order to provide more affordable health care options to a wider range of individuals, attract more young and healthy consumers into their market, or to address structural issues that create perverse incentives, such as the subsidy cliff," the administration said.
Adjusted Plan Options: States could offer financial assistance for consumers to buy plans that don't meet the definition of a Qualified Health Plan, opening the door to more affordable options that may provide less coverage. "Used in conjunction with the Account-based Subsidy waiver concept, states could provide subsidies in the form of contributions to accounts, allowing individuals to use the funds to purchase coverage that is right for them and use any remaining funds in the account to offset out-of-pocket health care expenses," the administration said.
Risk Stabilization Strategies: States could establish reinsurance programs or high-risk pools. State-run reinsurance programs vary from state to state and have already lowered premiums and improved market stability. "These models include a claims cost-based model, a conditions-based model, and a hybrid conditions and claims cost-based model," the administration said.
Editor's note: This story was updated Friday with an additional comment from Seema Verma explaining how CMS will review state waiver applications against the four guardrails of the ACA's Section 1332.
Editor's note: An earlier version of this story said short-term limited-duration plans "qualify as 'health insurance coverage' under the guidance's revised definitions." The story has been updated to state more precisely that short-term plans "qualify as 'coverage' under the guidance's revised definitions." (The revised guidance document expanded an earlier version's interpretation of "coverage" by incorporating the definitions of both "minimum essential coverage," from 26 USC 5000A(f) and 26 CFR 1.5000A-2, and "health insurance coverage," from 45 CFR 144.103.)
The chief medical officer for HCA Healthcare testified about the ways his company has sought to employ innovations driven by science and technology in a way that improves U.S. healthcare more broadly.
Senators listened Wednesday to testimony on how U.S. healthcare leaders can use innovation as a tactic to reduce healthcare spending.
The hearing before the Committee on Health, Education, Labor, and Pensions was the fifth this year in a series exploring a variety of cost-reduction strategies.
"We sometimes find we do as much good by putting the spotlight on issues as we do by passing laws, and this is an example of putting the spotlight," Chairman Lamar Alexander, R-Tennessee, said before reading his opening remarks.
Jonathan B. Perlin, MD, PhD, MSHA, MACP, FACMI, president of clinical services and chief medical officer for HCA Healthcare, based in Nashville, was among the healthcare leaders to testify in Wednesday's hearing. He shared three stories of how HCA had used scientific research to inform quality-improvement projects that benefited not only the company itself but other organizations as well.
Perlin said hospitals and physicians hadn't fully recognized the benefits of delivering babies at 39 weeks, instead of 38 or 37 weeks, leading obstetricians to perform medical interventions that led to earlier deliveries for decades. After HCA partnered with March of Dimes on a study that showed the risk for complications was twice as high at 38 weeks than 39 weeks and four-times greater at 37 weeks than 39 weeks, however, the organization defined a 39-week "hard stop" that punishes obstetricians who conduct elective deliveries earlier and which has since become industry standard, he said.
"This fundamental change in practice is estimated to save the Medicaid program over a billion dollars annually," he added.
In follow-up questions, Alexander asked how health systems can reap the benefits of technology-driven innovation without their electronic health record (EHR) systems becoming more of a burden than an asset.
One of the keys to correctly conduct a cost/benefit analysis around EHRs, Perlin replied, is thinking in terms of "data liquidity."
"Rather than the EHR being both the beginning and the end of health information, it's a piece of it," he said. "Once you have that health information, we can really use the tools of data science and artificial intelligence to improve healthcare, make it more efficient."
Previous Hearings in the Series
The Senate HELP Committee has held five hearings this year dedicated to healthcare cost-reduction tactics:
Health plans, meanwhile, suggest the changes could empower them to reduce drug spending while continuing to meet beneficiary needs.
Patient advocacy groups have objected swiftly to a proposal that would grant Medicare Part D health plans new liberty to reject or restrict certain protected-class drugs, which the plans have been required for more than a decade to cover.
The proposal—which the Centers for Medicare & Medicaid Services announced Monday, with the stated objective of giving Part D plans greater negotiating power to control rising drug costs—would allow insurers to erect new barriers to care that could impede progress in treating serious conditions, such as cancer and HIV, advocates warned.
"What is the point of having protected therapeutic classes if they are not truly protected?" Jeff Vacirca, MD, FACP, president of the Community Oncology Alliance, said in a statement.
"In oncology there are few therapeutic and generic-to-brand equivalents that can be substituted when formularies are restricted, so patients need uninhibited access to the therapies their oncologists prescribe," Vacirca added.
"Although CMS claims this proposal includes patient safeguards, navigating those hurdles while dealing with cancer is cumbersome, agonizing, and an unnecessary burden," he said. "Additionally, delays in starting cancer treatment can have grave consequences and are inexcusable."
Chris Hansen, president of the American Cancer Society Cancer Action Network, said the proposal "could have life or death consequences" for Medicare beneficiaries with cancer, noting that cancer disproportionately affects older populations, who are covered by this program.
"The proposals aim to save the Medicare program money, but in their current form could actually have the inverse effect, raising costs in other parts of the program and likely resulting in tremendous cost-shifting to patients," Hansen said in a statement.
Similarly, the AIDS Institute said the proposal—which would also permit plans to expand prior authorization and step therapy restrictions into protected-class drugs—will, if finalized, endanger efforts to treat those living with HIV.
"Step therapy is unheard of in the treatment of HIV due to the danger of developing resistance to an entire class of drugs and potential side effects," the institute said in a statement.
"Not all HIV medications are the same, and not very person living with HIV is the same," the institute added. "Providers are best able to prescribe the HIV drug that works best for the patient, who may have resistance to certain drugs, comorbidities, or side-effects that dictate the drug that they are able to take."
Business Implications
The proposal could hurt certain drug makers harder than others from a business perspective, but analysts are saying the impact will likely be modest, and the final version will look different from the current draft proposal, as Bloomberg's Cristin Flanagan reported.
But the proposal could bolster business for insurers and pharmacy benefit managers. UnitedHealth, Humana, and WellCare stand to gain the most, as Aetna, Anthem, and Cigna see more subdued impacts, Bloomberg reported, citing Leerink analyst Ana Gupte.
This could explain the rosier response the CMS proposal received from America's Health Insurance Plans (AHIP) President and CEO Matt Eyles, who commended the Trump administration's efforts.
"The problem is the price, driven by monopolies in a broken market that empower branded drug makers to raise prices on the same product year after year," Eyles said in a statement. "With more price hikes already announced for 2019—enough is enough."
With a nod to commercial payers, the Trump administration proposed giving Medicare Part D plans greater flexibility to exclude certain 'protected class' drugs from their formularies.
For the sake of fostering competition among drug makers, the Centers for Medicare & Medicaid Services proposedMonday to give Medicare Part D plans greater leeway to decline to cover certain protected-class drugs beginning in 2020.
These plans have been required to cover all protected-class drugs, with few exceptions, giving them a weaker hand than their commercial counterparts in negotiations with drug manufacturers, and that has deprived seniors of the cost-reducing benefits of robust competition, according to the Trump administration.
In a blog postpublished with the proposal, Health and Human Services Secretary Alex Azar and CMS Administrator Seema Verma said the number of drugs listed in protected classes has increased 63% since the policy was established 12 years ago, with several protected-class drugs imposing big price hikes in recent years. The transitional policy "was never intended to be permanent," they wrote.
This uneven leverage is why the private market enjoys drug discounts of 20-30% while Part D plans get a 6% average discount for protected-class drugs, Azar and Verma wrote.
"The protected class policy is in need of an update to ensure that beneficiaries who depend on these drugs are getting the same discounts that other beneficiaries get," they wrote.
Under the proposal—which will be up for public comments for the next two months—plans would be required to keep a minimum of two drugs in their formularies for each of the six protected classes. Beyond that, they would have permission to restrict drugs in three new scenarios:
Inflation-based price hike exclusion: Plans would be allowed to exclude protected-class drugs when the drug's price increases faster than the rate of inflation, based on the Consumer Price Index for all urban consumers, according to the CMS proposal. The agency acknowledged some concern that using CPI as a baseline could "just measure the existing increase in drug prices," undermining the purpose of the proposed exception, so the proposal seeks feedback on how best to measure an exclusion triggered by price hikes.
Inadequate innovation exclusion: Plans would be allowed to exclude new protected-class drug formulations "that are not a significant innovation over the original product," Azar and Verma wrote in their blog post. The proposal notes that plans would be allowed to exclude a new formulation of an older drug, even if the older version is no longer on the market.
Prior-authorization and step-therapy restrictions: Plans would be allowed to impose prior-authorization and step-therapy requirements on protected-class drugs, but such requirements would be subject to CMS review and approval on an annual basis. "Some say that allowing step therapy and prior authorization would restrict access to prescription drugs," Azar and Verma wrote. "However, these changes protect patient access, as the Part D program is embedded with strong patient protections." Those protections include an expedited appeals process through which physicians can recommend an exception.
Craig Garthwaite, PhD, MPP, a health economist at Northwestern University's Kellogg School of Management, said a proposal of this sort would rebalance the negotiating relationship between Part D plans and drug makers.
"This is what 'Medicare' negotiating looks like," Garthwaite wrote in a tweet. "Protected classes in Part D shift bargaining power to pharma firms. This is a type of proposal that shifts it back to insurers and PBMs. The result, however, is seniors won't be able to easily access all drugs. Tradeoffs abound."
Promoting Price Transparency
In addition to provisions designed to boost competition by empowering plans to negotiate, the proposal contains items designed to increase price transparency, again drawing inspiration from tools available in the commercial market. The proposal calls for each plan to adopt a solution that offers real-time price data to its beneficiaries by January 1, 2020.
Furthermore, the agency is thinking about a possible future proposal to require pharmacies to charge Part D beneficiaries a price that reflects the lowest-possible cost for their drugs, accounting for the deals struck between pharmacies and drug manufacturers.
After a successful pilot saw lengths of stay decrease 39% or more, the health system is rolling out its tactics systemwide. Its program will be used in about 15,000 surgery cases annually across 42 surgical procedures.
Surgeons instruct patients to refrain from eating or drinking prior to surgery, as a safety precaution. A recently eaten morsel could easily become a choking hazard in the operating room. But there's also a risk that fasting could inhibit recovery by leaving patients undernourished.
That's one reason why Geisinger launched a quality-improvement project a year ago for its colorectal surgery patients. Rather than being told only what they couldn't eat or drink, patients were told what they should consume.
Pre-surgery instructions are now served with a supply of nutritional drinks.
"[W]e don't send patients starved and dehydrated into surgery, which is different from the traditional approach of fasting beginning the night before," Geisinger Chief Quality Officer Neil Martin, MD, told HealthLeaders in an email via a spokesperson.
Patients are told to consume the immune system–boosting drinks three times per day for the five days leading up to their surgeries. They are allowed to eat a light meal until six hours before surgery and drink clear fluids until two hours before surgery, at which point they are given a carbohydrate drink.
"The drink is absorbed into the body before surgery begins. Although the patient will not have anything in their stomach, they have the nutrients in their system," Martin said. "Having surgery is like entering a marathon. It's important to be fueled and hydrated prior to a race."
From Pilot to Program
This effort to ensure proper nutrition prior to surgery is one of the three key items in Geisinger's ProvenRecovery program, which aims to speed up the healing process and improve pain management while reducing opioid use.
Geisinger launched the program's pilot last year, incorporating colorectal patients in November 2017 then doubling down in April 2018 to include neurosurgery (craniotomy) cases as well. And the results seem to be paying off.
Length of stay for the average neurosurgery patient has dropped 39%, from 4.3 to 2.62 days, according to Martin. For the average colon surgery patient, that figure dropped 44%, from 4.5 days to 2.5 days. These earlier discharges saved more than $4,500 per case for colorectal surgery patients, Geisinger said.
In light of these strong numbers, Geisinger announced this month that it will make the pilot permanent and roll out the ProvenRecovery program systemwide across 42 surgical procedures affecting about 15,000 cases annually. The goal is to have 100 surgical specialties involved by the end of next year.
The Other 2 Prongs
In addition to its focus on pre-surgery nutrition, Geisinger's ProvenRecovery program includes two key post-surgery tactics to improve patient outcomes. One focuses on encouraging early mobility; the other focuses on appropriate pain management.
The mobility item is simple: When patients wake up after surgery, medical staff prompt and help them to move in and around the recovery room bed. The idea is that this accelerates the recovery process.
The pain management component is a bit more complex: Pain is controlled during surgery with a targeted multi-modal combination of non-opioid medications, which can include local anesthesia, over-the-counter drugs such as ibuprofen and acetaminophen, and more.
Geisinger said surgeries can, in many cases, be opioid-free. And it has data to show its care teams have put a dent in their patients' opioid use.
The system has reduced opioid usage by 24% overall since the second half of 2015, and 18% of that decrease is attributable to the ProvenRecovery program, Martin said.
The combined organization, CommonSpirit Health, will operate 140 hospitals, with 31 of them in California, where the attorney general's office gave its conditional approval.
A massive merger planned between two of the largest Catholic-affiliated health systems in the nation is on track to close by the end of the year after California's regulator gave its conditional approval Wednesday.
Among some common requirements, such as maintaining emergency and women's healthcare services for at least a decade, the California Attorney General's Office included a requirement that Dignity Health expand its charity care policy to offer 100% discounts to more patients.
Dignity Health, based in San Francisco, is merging with Catholic Health Initiatives (CHI), based in Englewood, Colorado, to form a new nonprofit under the name CommonSpirit Health, with 140 hospitals and annual revenues of $28 billion, making it one of the largest systems in the country.
Under the current financial assistance policy in effect at Dignity Health, patients whose families earn up to twice the federal poverty level qualify to have their entire bill discounted. Under the conditions outlined in California's 351-page conditional approval, that threshold will rise to two-and-a-half-times the federal poverty level, beginning next year.
The federal poverty level for a family of four in the contiguous U.S. is $25,100 this year. So the family income threshold to qualify for a 100% discount will rise from $50,200 this year to about $62,750 next year for a family of four. This policy must be posted online and in prominent locations frequented by patients.
The conditional approval also requires the organizations to create a homeless health initiative in California to support care for hospitalized homeless patients across the 30 communities in which Dignity Health currently operates. The initiative must have an allocation of $20 million over six fiscal years.
"Our office carefully reviewed this transaction to protect patients and our communities here in California, and our office will monitor compliance with the conditions," Sean McCluskie, chief deputy to the attorney general said in a statement.
In its own statement, Dignity Health described the review by the California Attorney General's Office as "the most extensive reviews of hospital services in California history," complete with a series of independent Health Care Impact Statements and 17 public meetings.
"This review process offered a chance to hear directly from people in our communities, and we heard over and over how important our services are to the areas we serve," Dignity Health President and CEO Lloyd Dean said in the statement. "Our alignment and the Attorney General's consent will help ensure we can continue providing care for many years to come."
The deal has been reviewed by the Federal Trade Commission, and the Catholic Church indicated that it will not block the deal.
The state revised its proposal, and the Trump administration collected additional comments on the policy before granting the reapproval.
The Centers for Medicare & Medicaid Services reapproved Kentucky's work requirements for certain Medicaid beneficiaries on Tuesday, five months after a judge blocked their prior approval as arbitrary and capricious.
The judge had reasoned that CMS failed to assess whether Kentucky's plan for the program would further Medicaid's central purpose, which is to provide for medical services. So CMS collected additional comments, and the state revised its plan.
The 136-page approval released Tuesday evening is 54 pages longer than the approval CMS released last January. It notes several differences between the two versions, including the following four changes:
An additional waiver regarding retroactive eligibility;
A revision to the premium requirement for those deemed eligible for transitional medical assistance;
Updated special terms and conditions (STCs) for monitoring and evaluation; and
A requirement for Kentucky to submit an implementation plan and a monitoring protocol, each of which must address the work requirements.
The implementation plan is due to CMS within 90 days, and the monitoring protocol is due to CMS within 150 days, according to the approval—which means the latter of the two deadlines falls after the approval's effective date of April 1, 2019.
A spokesperson for CMS could not immediately be reached Wednesday morning to answer HealthLeaders' questions about these deadlines and this timeline.
In Arkansas, where work requirements took effect in June, policymakers are still revising their evaluation frameworks for the program, with feedback CMS released earlier this month. More than 12,000 people have reportedly lost Medicaid coverage as a result of the policy change in Arkansas.
Critics contend that the underlying goal of these policies is to cull Medicaid rolls. Some of the same groups that successfully challenged the original approval of Kentucky's work requirements are similarly challenging the program in Arkansas, and they argued Tuesday that the reapproval is illegal.
"Kentucky HEALTH runs directly counter to the purpose of the Medicaid Act, which is to furnish health care coverage to low-income individuals and families. Medicaid is a health care program, not a jobs-training program," Ben Carter, senior litigation and advocacy counsel for the Kentucky Equal Justice Center, which participated in representing Medicaid beneficiaries in a class action suit to block Kentucky's work requirements, said in a statement.
Southern Poverty Law Center Deputy Legal Director Samuel Brooke added in the statement that the plaintiffs "intend to pursue the next court challenge as vigorously as we have before when we won."
In addition to Kentucky and Arkansas, three other states have secured federal approvals to impose work requirements, though the details of their plans differ significantly: Indiana, New Hampshire, and Wisconsin.
Editor's note: This story has been updated to include information about a response from the organizations that sued to block the prior approval of Kentucky's work requirements.
The governor was never authorized unilaterially to represent Maine's interests in the Texas-led ACA challenge, according to a letter from the state's deputy attorney general.
Maine Gov. Paul LePage, a Republican who added his name to the list of plaintiffs challenging the constitutionality of the Affordable Care Act in a Texas-led federal lawsuit, will leave office in six weeks and take his involvement in the suit with him.
LePage, who was barred from pursuing a third consecutive term, will be succeeded as governor by the state's current attorney general, Janet Mills, a Democrat who declined to get the state itself involved in the ACA challenge and who beat LePage's favored candidate in this month's election.
Candidates to take over as Maine attorney general, meanwhile, are campaigning in a race that the state's legislators will decide December 5 by secret ballot, as The Portland Press Heraldreported.
Amid this political turnover, the Maine Attorney General's Office formally notified the court clerk handling the ACA challenge that LePage had been acting in his individual capacity when he retained the Texas attorney general as counsel in the case. That's because LePage, as governor, doesn't have the authority to retain counsel on Maine's behalf without the consent of the Maine attorney general and the Maine attorney general didn't consent, Deputy Attorney General Susan P. Herman wrote in a letter Friday.
"To the extent that Paul R. LePage seeks to represent the interests of the State of Maine in this lawsuit, such participation is not authorized by law," Herman wrote, noting that LePage's term ends January 2.
There are 20 states with Republican leaders who filed as plaintiffs in the lawsuit last February, led by Texas Attorney General Ken Paxton. But with LePage leaving office and Wisconsin Attorney General-elect Josh Kaul vowing to pull his state from the lawsuit, there will likely be no more than 18 such state leaders moving forward.
A police officer and the shooter were killed as well in an attack that sent the hospital's ER into chaos as the attacker and police exchanged gunfire inside the building.
A shooting left four people dead Monday at Mercy Hospital & Medical Center in Chicago, where a man shot a hospital employee outside the facility then charged into the emergency department, where he and police exchanged fire, sending patients and medical staff scrambling for safety.
A doctor, a pharmaceutical assistant, a police officer, and the shooter all died as a result of their injuries sustained in the attack, which began after a verbal domestic dispute between the shooter and his first victim, city officials said during a press conference.
"This tears at the soul of our city," Mayor Rahm Emanuel said. "It is the face and consequence of evil."
Witnesses described a chaotic scene as they sought cover from the crossfire.
"He was shooting in the back, and all the women started yelling and the kids started crying," said Steven White, one of more than 20 patients waiting for care in the emergency department when the attack began, as The New York Times' Mitch Smith reported from Chicago. "That's when the sarge came in, and said, 'Stay down.'"
The streets around the hospital campus in the city's Bronzeville neighborhood were closed off by hundreds of emergency responders, as at least four TV news helicopters circled above, as the Chicago Sun-Times reported.
Hospital employees told The Chicago Tribunethat they heard instructions over a public-address system to lock their doors. As authorities swept the building and evacuated those in hiding, people were moved to public transit buses, the Tribune reported.
A national survey last year found that healthcare professionals were significantly more likely than the general public to say the risk of an active-shooter incident in a hospital is "high" or "very high." They were also significantly less likely than the general public to say they believe hospitals are "somewhat" or "very" prepared for such an attack.
The nonprofit health system notified a District Court judge in Utah that it would ask the Supreme Court to review a decision by the 10th Circuit Court of Appeals.
After an unfavorable ruling at the appellate level, Intermountain Healthcare isn't ready to submit to discovery requests in a False Claims Act (FCA) case that could carry major implications for the way courts assess federal payments based on doctors' subjective medical decisions.
The Salt Lake City–based nonprofit said in a court filing Thursday that it would ask the Supreme Court to review a 10th Circuit Court of Appeals decision that Intermountain attorneys previously described as "unprecedented."
It's too soon, of course, to know how the dispute will shake out; regardless, these proceedings could influence the ways hospitals and health systems guard their organizations against these often-expensive fraud cases. And if Intermountain ultimately loses, the outcome could further strain the relationship between executives and physicians by prompting risk-averse organizations to implement stricter controls.
The appellate decision was controversial from Intermountain's perspective for two main reasons: First, it allowed the allegations brought against two hospitals by a whistleblower to proceed without the same level of particularity typically required by the federal rules of civil procedure. Second, it meant that a physician's determination of medical necessity can be deemed objectively false under the law, even without an established government standard.
The decision could enable more whistleblowers to reach at least the discovery stage of FCA litigation, Jason Mehta, a partner at Bradley Arant Boult Cummings LLP in Tampa Florida, told Bloomberg Law when the appellate decision was issued last July.
Intermountain said on Thursday that it will, no later than January 14, petition the Supreme Court to address each of the two points of contention, perhaps with additional questions. In the meantime, it has asked that further proceedings at the District Court level in Utah be put on hold.
Beware the Internal Crackdown
This case directly implicates the sensitive relationship between hospitals as institutions and their self-governing medical staffs, says Douglas A. Grimm, JD, MHA, FACHE, a healthcare regulatory lawyer with Arent Fox in Washington, D.C., who worked previously as a hospital administrator.
Hospitals want to deliver care to as many patients as possible to serve their communities and fulfill their missions, while ensuring that they're providing high-quality care and abiding by the law, Grimm says
"But they also have to be careful," Grimm tells HealthLeaders. "If they're second-guessing everything that their medical staff does out of a legitimate concern about False Claims Act liability, that relationship between the medical staff and the hospital is going to be fundamentally altered."
The defendants—including HCA's St. Mark's Hospital; Intermountain Healthcare; Intermountain Medical Center; Sherman Sorensen, MD; and Sorenson Cardiovascular Group—initially prevailed at the District Court level. The judge ruled last year that a physician's opinion about medical necessity cannot be objectively false under the FCA without a binding government standard. The judge ruled also that the whistleblower who brought the case in 2012, Gerald Polukoff, MD, had failed to plead his case against Intermountain with sufficient particularity.
But the 10th Circuit reversed that ruling earlier this year and sent the matter back to the District Court for further proceedings, finding that a doctor's opinion on medical necessity could be false and that Polukoff was not required to be more specific in his pleadings because Intermountain was the only entity with possession of the relevant information.
What It Means, Where It's Headed
The appellate decision means hospitals in Intermountain's position could be forced to mount subjective defenses of their doctors' subjective medical determinations to ward off allegations of fraud, Grimm says.
"You're now faced with a battle of the experts—which is one thing in a medical malpractice case, but it's entirely another thing when you're dealing with federal False Claims Act cases," he says.
"I think the False Claims Act is relatively broad as it is," he adds, "but this would continue to move it forward and open the aperture."
Polukoff asked the District Court to reject Intermountain's request for a stay and instead allow him to move forward with discovery.
"Intermountain's motion implicitly invites this Court not to follow the law of the case." Polukoff's attorneys wrote in a filing Friday. "The Court must decline this invitation and apply the law of the case regarding a stay to this subsequent stage of the proceeding."