In addition to requiring HHS to implement AHA-backed interventions, the court should order HHS to maintain its own current efforts, the AHA filing argued.
Despite assurances that the government expects to clear its daunting backlog of Medicare appeals within about four years, the American Hospital Association has asked a federal judge to press forward with AHA-backed court-mandated interventions anyway.
The lobbying group accused Health and Human Services of dragging its feet in a dispute that hinders the ability of healthcare companies to do their work.
"Ending the backlog several years hence does not allow hospitals to upgrade equipment, repair aging facilities, or improve patient care now," AHA wrote in a federal court filing Friday.
Although the law requires HHS to resolve appeals at the administrative law judge (ALJ) level within three months, the average processing time has stretched to well over three years, according to data published by the HHS Office of Medicare Hearings and Appeals (OMHA). That means HHS has been in violation for years now, as the D.C. Circuit Court has confirmed, the AHA filing notes.
Citing a boost in appropriations and settlement activity, the government said this month that it expects to shovel its way out of this mess by the end of fiscal year 2022. In light of that progress, HHS argued, the court should refrain from requiring the AHA-backed solutions.
But that argument didn't fly in AHA's eyes. In addition to requiring HHS to implement the interventions proposed by AHA, D.C. District Court Judge James E. Boasberg should issue an order with a provision specifically requiring HHS to maintain its own current efforts to eliminate the backlog, AHA argued.
"Without it, HHS can alter its current programs at its whim, threatening to undo any current progress. And that possibility is not remote; even now, HHS signals that it might choose to alter its efforts based on unspecified 'other priorities,'" AHA wrote, quoting from HHS' earlier filing.
"If the Court is to ensure that its remedies stick until the backlog is eliminated, it should prevent HHS from unilaterally suspending its current backlog-reduction programs," AHA added.
The integration plan calls for three DeKalb Medical hospitals to be renamed effective September 1.
A plan to bring DeKalb Medical under the Emory Healthcare umbrella cleared its final regulatory hurdle on Friday, paving the way for the two Atlanta-area nonprofits to finalize their union in about three weeks.
In its 13-page report signing off on the plan, the Georgia Attorney General's Office said the parties took appropriate steps to protect the value of their charitable assets and ensure that any proceeds from the deal "are used for appropriate charitable health purposes."
The deal comes amid rapid consolidation in the state, including Piedmont Healthcare's acquisition of Columbus Regional Healthcare System earlier this year, which Piedmont President and CEO Kevin Brown described as part of a "hub-and-hub" strategy.
But mergers and acquisitions among other health systems in Georgia, and across the nation, didn't spur the Emory-DeKalb deal along, according to Emory Healthcare President and CEO Jonathan S. Lewin, MD, who has helmed the Emory University–affiliated health system about two-and-a-half years.
"When I first arrived, we did a strategic planning exercise and made a very conscious decision not to look at growth for growth's sake alone," Lewin told HealthLeaders on Friday. "So we actually have passed up a number of opportunities, including some of those that our friends and peers here in metro Atlanta have pursued. We looked at them and said, 'No, that does not fit with our strategic vision as an academic health center.'"
There's a simple reason why the DeKalb Medical opportunity was so attractive: geography. DeKalb sits just outside Atlanta, and about half of the university's employees live in DeKalb's primary service area, Lewin said.
"Whatever we can do to make sure that DeKalb becomes a strong contributor to the health of the community is something that's exactly aligned with our strategic vision for the future," he added.
DeKalb Medical has had some financial struggles as most of its peers in metro Atlanta have partnered up, as the Atlanta Business Chronicle reported. But Lewin said Emory Healthcare is up to the challenge.
"Everything worth doing isn't easy, and clearly turning around a struggling health system is a challenge that many others have dealt with before and many will deal with in the future," he said. "We are very confident that we'll be successful in helping DeKalb achieve its potential as a successful and thriving component of Emory Healthcare."
What makes him so confident? For starters, DeKalb Medical already has an excellent physician staff, Lewin said. What the organization needs is reinvestment in the institution, which Emory Healthcare is prepared to provide, he added.
Next 3 Weeks
If all goes according to plan, the combination will be finalized effective September 1. In the mean time, the two organizations will complete the final stage of due dilligence, checking off a list of legal to-do items ahead of the expected union, Lewin said.
In a joint statementwith Lewin, Bob Wilson, president and CEO of DeKalb Medical—which has three hospital campuses totaling 627 licensed beds—expressed confidence in his organization's decision to become part of Emory Healthcare. Wilson was named CEO in late 2016 following the resignation of former CEO John Shelton and layoffs affecting about 60 employees, as the Atlanta Journal-Constitution reported at the time.
The integration plan calls for DeKalb Medical's hospital in Decatur to be renamed Emory Decatur Hospital. DeKalb Medical Hillandale will be called Emory Hillandale Hospital. And the DeKalb Medical Long Term Acute Care facility in downtown Decatur will become Emory Long Term Acute Care.
Prior to the acquisition, Emory Healthcare had seven hospitals and 200 provider locations in Atlanta and the surrounding area, with operations in more than 40 of the state's 159 counties. With the three additional hospitals from DeKalb, the health system associated with Emory University will have 10 hospitals in the state.
A proposed overhaul would require Medicare Shared Savings Program Accountable Care Organizations to move to two-sided risk models after two years.
A long-awaited update to the Medicare Shared Savings Program (MSSP) came Thursday, with a proposed rule from the Centers for Medicare & Medicaid Services.
The change would overhaul the way MSSP Accountable Care Organizations (ACO) share in the risks and rewards of their work, dramatically narrowing the time span and circumstances in which such organizations can qualify to participate without downside risk.
"It's time for the program to evolve," CMS Administrator Seema Verma said Thursday in a call with reporters.
Under the renovated program—which the administration has dubbed "Pathways to Success"—the number of tracks would be consolidated to two: one "basic," the other "enhanced."
The basic path would begin with up to two years of "upside-only" participation before three years of gradually increasing two-sided risk, as Verma explained in a Health Affairs blog. The fifth year in the basic track would meet the standard to qualify as an advanced alternative payment model (APM).
The enhanced track, meanwhile, would take on risk and qualify as an advanced APM immediately, offering consistent risk for the full five-year agreement, Verma added.
Some Dropouts Expected
Currently, MSSP ACOs are permitted to stay in the upside-only track for up to six years, so lowering that maximum down to two years is a significant change that could spook many organizations.
Survey results released last May by the National Association of ACOs (NAACOS) indicated that 71.4% of ACOs currently participating in the upside-only track would likely leave the program if they had to assume risk. (That figure includes 8.6% who said they were "completely likely" to leave, 20% who said they were "very likely" to leave, 11.4% who said they were "moderately likely" to leave, and 31.4% who said they were "slightly likely" to leave, NAACOS noted.)
Analysis conducted by the CMS Office of the Actuary suggests the policy changes being proposed could result in significantly fewer participating organizations. There are 561 MSSP ACOs participating this year, CMS said. There will be an estimated 20 fewer next year and 109 fewer a decade from now, according to projections released with the proposal.
If those projections hold, there will be 19.4% fewer MSSP ACOs in 2028 than there are today.
That drop can primarily be attributed to the fact that CMS expects the program to attract fewer ACOs in the future as a result of the current six-year upside-only window shrinking to two years, according to the proposed rule.
"However, the changes are expected to increase continued participation from existing ACOs, especially those currently facing mandated transition to risk in a third agreement period starting in 2019, 2020, or 2021 under the existing regulations, as well as certain other higher cost ACOs for which the capped regional adjustment would not reduce their benchmark as significantly as prescribed by current regulation," the proposal states.
The changes are projected to save Medicare more than $2.2 billion over the next decade, according to the proposed rule.
While praising some components of the administration's proposed ACO overhaul, industry groups expressed reservations as well, especially about the truncated timeline for upside-only models.
Blair Childs, senior vice president of public affairs for Premier, issued a statement saying CMS fails to appreciate how much investment and adjustment is required for an organization to move to two-sided risk.
"Forcing providers to accept risk too quickly will deter participation," Childs said.
Premier took issue also with the government's claim that physician-led ACOs outperform hospital-led ACOs.
"We, therefore, disagree with treating physicians and hospitals any differently," Childs added.
NAACOS President and CEO Clif Gaus, meanwhile, released a statement that bashed the proposal as "misguided," saying it would likely drive many ACOs from the program.
"It's naïve to think that ACOs that aren’t ready can be forced to take on risk, given that the program is voluntary. The more likely outcome will be that many ACOs quit the program, divest their care coordination resources and return to payment models that emphasize volume over value," Gaus said. "This would be a significant setback for Medicare payment reform efforts and would undermine implementation of the overwhelmingly bipartisan Medicare Access and CHIP Reauthorization Act (MACRA), which is designed to move providers into alternative payment models such as ACOs."
Not all stakeholders, however, panned the proposal.
Progress Praised
Jeff Micklos, executive director of the Health Care Transformation Task Force—a collaboration of payers, providers, and other industry stakeholders—released a statement welcoming the "Pathways to Success" overhaul.
"This is an important step to promote value-based transformation and to push industry momentum forward. At first pass, the proposed rule presents novel ideas and careful thinking on how ACOs may better lower cost and improve patient outcomes," Micklos said. "Our members look forward to sharing their feedback and collaborating with CMS on advancing this leading value-based payment program."
And former acting CMS Administrator Andy Slavitt, who served under the Obama administration and has criticized some of the Trump administration's policies, tweeted his preliminary support: CMS is proposing changes to Medicare pay for value (ACO) models. They include patients more and push towards expanded incentives faster and add telehealth," Slavitt wrote. "At first look, they look positive to me."
Given the timing concerns associated with finalizing and implementing this rule, CMS proposed a six-month extension for current ACOs that have agreements set to expire at the end of this year. The proposal includes a special one-time start date on July 1, 2019, with an application period during the spring.
CMS recognizes the timing issues associated with the implementation of any final policies and the need for organizations to make decisions about participation in an ACO track. To that end, CMS proposes a 6-month extension for current ACOs whose agreements expire at the end of 2018, along with a special one-time July 1, 2019 start date that will have a spring 2019 application period for the new participation options.
The proposal reflects a similar technical clarification CMS made last month in its rule for the 2017 benefit year.
A month after haltingbillions of dollars in risk-adjustment payments to insurers, and two weeks after the payments were unfrozen, the Centers for Medicare & Medicaid Services proposed a fix Wednesday for the program's 2018 benefit year.
The fix looks an awful lot like the original.
The proposal includes a technical clarification on two items that had prompted a federal judge in New Mexico to declare the government's risk-adjustment payment calculation methodology illegal in February. It explains the use of statewide average premiums and clarifies that the program is budget-neutral by design.
"This rule does not propose to make any changes to the previously published HHS-operated risk adjustment methodology for the 2018 benefit year," the proposed rulemaking states.
The proposal, which is scheduled to publish in the Federal Register on Friday, will be subject to public comments through September 7. It reflects a similar technical clarification CMS made last month in its rule for the 2017 benefit year, when the risk-adjustment payments were unfrozen.
"Our goal has been, and will continue to be, to stabilize the market and provide American consumers with more affordable health coverage options," CMS Administrator Seems Verma said in a statement Wednesday.
But the government has faced criticism, from the risk-adjustment program's supporters and opponents alike, for its response to the New Mexico ruling.
When the payments were halted in early July, critics said CMS was using the court ruling as "an excuse" to inject uncertainty into an ACA programin a form of "aggressive and needless sabotage." When the payments were unfrozen in late July, the nonprofit health plan that had successfully challenged the methodology in court suggested the government's claim that the case would result in widespread disruption "was a purely self-inflicted wound."
Sally C. Pipes, president and CEO of the San Francisco–based pro-free-market policy think tank Pacific Research Institute, said in an op-ed for Forbes that the decision to reinstate the risk-adjustment program was both a "capitulation" and a "mistake."
"The Trump administration should have stuck to its guns—and ended its micromanagement of the insurance market," Pipes wrote.
The government's critics on both sides have contended that CMS had more options than it let on. When asked multiple times this week whether it could have used rulemaking to address the court's concerns in early July, rather than freezing the risk-adjustment payments, CMS spokespeople did not comment.
Editor's note: This story has been updated to include a comment from Pacific Research Institute President and CEO Sally Pipes' op-ed.
The association, with others, already found sympathetic ears on the state level. The same may not hold true for the federal government.
The American Medical Association added itself Wednesday to the list of those urging the U.S. Department of Justice to block CVS Health's proposed $69 billion acquisition of Aetna, arguing that the combination would harm consumers by inhibiting competition.
While vowing to keep conversing with AMA as the merger progresses, CVS said in a statement that it disagrees with the group's assessment.
"We believe that competition within each of the business segments in which we operate—pharmacy benefit management, pharmacies and insurers—is fierce and will remain so," a CVS spokesperson said. "And this combination does not further concentrate the health care sector; instead it reconfigures it to bring together disparate parts of the health care system that today lead to inefficient, ineffective and more costly care."
The AMA had already made its opposition to the deal public during a hearing in June held by California Insurance Commissioner Dave Jones, who sent a letter of his own this month formally asking the DOJ to block the proposed acquisition on antitrust grounds.
The push for regulators to intervene in the CVS-Aetna deal comes as opponents of a similar acquisition plan involving Cigna and Express Scripts faces market-based criticisms from one influential shareholder.
But the complaints about CVS-Aetna may not be finding sympathetic ears in the Trump administration. Citing two unnamed sources, Bloomberg's David McLaughlin and Robert Langreth reported Tuesday that the DOJ's antitrust division hasn't seen any vertical-competition concerns in the proposed merger.
Analysts have long cited the deal's verticality as an asset that makes the deal more viable than horizontal mergers shot down in the past. Even so, Jones has successfully opposed major healthcare mergers in the past, so his criticism should not be given short shrift.
A spokesperson for the DOJ declined HealthLeaders' request for comment.
AMA President Barbara L McAneny, MD, said in a statement that the CVS-Aetna acquisition "is popularly described as a vertical merger" involving companies that operate in different markets.
"But in fact, CVS and Aetna do operate as rivals in some of the same markets, raising substantial concerns that are specific to horizontal mergers," McAneny said. "A merger of these two rivals would risk a substantial reduction of competition in the stand-alone Medicare Part D prescription drug plan market and the pharmacy benefit management (PBM) services market."
The association forwarded 29 pages of analysis to federal regulators, arguing that the merger would result in higher premiums by increasing concentration in most Medicare Part D regional markets. The AMA argued, further, that CVS-Aetna's vertical ramifications would violate federal law by increasing barriers to market entry in already-concentrated markets.
Editor's note: This story has been updated to note that a DOJ spokesperson declined to answer questions.
The pharmacy chain ultimately posted a $2.56 billion net loss for the quarter.
CVS Health reported second-quarter earnings Wednesday morning that outperformed expectations, as the pharmacy chain pushes to finalize a purchase of insurer Aetna.
Net revenues were $46.7 billion for second quarter ended June 30, up 2.2% from the same period last year. Adjusted earnings were $1.72 billion, or $1.69 per share, up 27% from $1.33 last year.
Analysts polled by Thomson Reuters expected revenue of $46.35 billion and adjusted earnings of $1.61 per share, as CNBC reported.
"Our solid performance both in the quarter and year-to-date demonstrates our ability to drive value," CVS President and CEO Larry Merlo said in a statement. "It also builds upon a strong foundation for a seamless integration of CVS and Aetna with one goal: to transform the consumer health care experience and, by doing so, deliver long-term profitable growth for shareholders."
Still posted a loss: Despite beating expectations, thanks in part to rising prescription sales, CVS ultimately posted a $2.56 billion net loss for the quarter. That accounted for a $3.9 billiongoodwill impairment charge pertaining to the company's long-term care business.
Forecast raised: Looking ahead to the full year, CVS raised the lower threshold of its earnings estimate to $6.98 per share, from $6.87. The upper bound remained at $7.08 per share.
CVS-Aetna: Merlo projected confidence as CVS looks to finalize its acquisition of Aetna, which the company said is expected to close during the third quarter or early part of the fourth quarter this year—this despite a possible roadblock from California Insurance Commissioner Dave Jones, who urged the Department of Justice to block the deal.
Digital expansion: All of this comes as CVS MinuteClinics made a move into telemedicine, announcing Wednesday a partnership with Teladoc Health, as CNBC reported.
Additional details on the earnings report are available on the CVS website.
The activist investor argued the insurer's proposed $54 billion PBM purchase 'may well rival the worst acquisitions in corporate history.'
Carl Icahn left no question Tuesday as to where he stands on Cigna's proposed purchase of the pharmacy benefit manager Express Scripts.
The billionaire hedge fund manager, who owns a sliver of Cigna's outstanding stock, called on fellow shareholders to vote against the acquisition, arguing the PBM is too big and risky of a bet. Although presaged by a report in The Wall Street Journal, Icahn's move could rattle the blockbuster deal, as a similar tie-up between CVS Health and Aetna faces a major hurdle of its own.
Regulatory risks: Citing his own experience with "the highly flawed rebate system," Icahn argued that now is a precarious time for PBMs, especially in light of recent comments by Health and Human Services Secretary Alex Azar, who has put PBMs in his reform crosshairs.
Structural risks: Even without a radical policy change affecting PBMs, Express Scripts could face challenges when it ceases to be an independent company, Icahn said. Certain large managed care organizations, for example, may wish to avoid dealing with a company owned by a competitor, resulting in a loss of customers.
Competitive risks: In addition to healthcare-sector incumbents, Cigna should consider what Amazon could soon do to PBMs, Icahn added, calling the retail giant "arguably the strongest competitor in the world." Amazon could challenge the very existence of PBMs like Express Scripts, he said.
Although some argue Express Scripts reduces prices by forcing pharmaceutical companies to compete with one another, Icahn said he believes the opposite is true: "there is a perverse logic that as the drug company charges more, the rebate to Express Scripts is higher as well."
"When Amazon starts to compete as we believe they will, with their 100 million Prime users and scale distribution system, they will have no trouble breaking into the so called 'ecosystem,'" Icahn wrote. "With lower prices, the beneficiary will be American consumer, not the owners of Express Scripts."
Instead of proceeding with the acquisition, Icahn argued that Cigna should pursue a years-long partnership with Express Scripts or another existing PBM provider, while the shifting industry landscape settles into place.
Cigna Torches Icahn
In an eight-page response, Cigna expressed disagreement Tuesday with Icahn's positions, noting that he and his representatives had not contacted the insurer to offer their views since the deal was announced five months ago.
"Mr. Icahn's opposition is misguided and short-sighted," the insurer said. "Moreover, the assertions in Mr. Icahn’s letter are value destructive and demonstrate a clear lack of understanding of the dynamics of the healthcare industry."
Icahn—who has disclosed a 0.56% stake in Cigna and said has a short against Express Scripts, as Bloomberg reported—has "made a speculative financial bet against the transaction in the hopes that he can create a gain at the expense of Cigna and Express Scripts shareholders," Cigna said.
A special meeting of shareholders is scheduled for Friday, August 24.
That timeline may not be good enough, since the judge previously ordered HHS to clear the backlog by December 31, 2020.
For years the Health and Human Services Office of Medicare Hearings and Appeals (OMHA) has been unable to keep up with the number of cases it receives, leading to a mountainous backlog of pending appeals.
That backlog shrank, however, by more than 30% in the past year, dropping from more than 650,000 pending appeals last year to less than 445,000 late last month, according to documents HHS filed Friday in federal court. The decline is projected to continue, with the backlog to be eliminated entirely within about four years.
Thanks to a boost in appropriations from Congress, OMHA plans to hire about 80 more administrative law judges (ALJ), enabling the office to catch up ultimately during fiscal year 2022, HHS told U.S. District Court Judge James E. Boasberg in the D.C. District Court. But that timeline may not be good enough, especially since Boasberg previously ordered HHS to eliminate the backlog by December 31, 2020.
The American Hospital Association, which filed suit in 2014 to compel HHS to solve the problem, seems unsatisfied already. A spokesperson for the hospital lobbying group tells HealthLeaders that AHA plans to file a formal response this Friday.
The government, meanwhile, has asked the judge to hold off on granting AHA's pending motions, arguing that HHS should, at most, be required to provide periodic status reports to the court.
Boost in Appropriations
After years of HHS explaining that it needed more money to end the OMHA backlog, Congress boosted the office's appropriation by 70% last March, to more than $182 million, according to a declaration by OMHA Chief Administrative Law Judge Nancy J. Griswold included with last week's HHS filing.
With the added financial resources, OMHA plans to hire about 80 more ALJs and 600 new staffers over the next 14 months or so, bringing the office's total workforce to about 170 ALJ teams.
That expansion will double OMHA's annual case-processing capacity from 85,000 appeals to nearly 188,000 appeals, HHS told the judge.
But there's more at stake in this case than OMHA's years-long waiting room.
Beyond the Backlog
After an invitation from the judge, AHA made several recommendations in June for how the government might reduce its backlog. One of those recommendations called for HHS to penalize recovery audit contractors (RAC) that have a high number of their denials overturned.
In its filing Friday, the government argued that following AHA's recommendation on RACs would violate federal law and that the proposed solution would not solve the problem.
The number of RAC-related appeals has declined steadily in recent years, representing just 1.4% of the appeals OMHA has received in 2018, according to the HHS filing. Although RAC-related cases represented 58% of pending appeals in fiscal year 2015, they now represent only 12.6% of OMHA's pending appeals, the government said.
"The data show that AHA's fundamental premise underlying this litigation—that the RACs are the drivers of the backlog and that further changes to the RAC program are needed to solve the problem—is no longer valid," the HHS filing states.
"AHA’s latest RAC-related proposals thus would not help to reduce the backlog but likely threaten the economic viability of an already significantly curtailed program that Congress requires to exist," the filing adds.
The government explained, further, that it has imposed stricture controls on RACs,
"These changes include a number of procedural adjustments to the RAC program, including restricting the number of topics RACs can review, limiting their authority to request additional documents, and limiting the lookback period for inpatient-status appeals (a type of claim that was one of the short-term drivers of the backlog)," the HHS filing states.
Interest Groups Clash
Kristin Walter, spokesperson for The Council for Medicare Integrity, wrote an op-ed last month for The Hill criticizing AHA's proposals to solve the backlog, arguing that AHA "is more interested in sidelining the Recovery Audit Contractor (RAC) program than fixing the Medicare appeals backlog."
The AHA shot back with an op-ed of its own, pointing out that Walter speaks for a group run by RAC executives. The article insisted that RACs have been the major driver of the problem.
"Before these contractors began to deny huge numbers of Medicare claims, there simply was no backlog in appeals. Only after the contractors began their work did the backlog develop," AHA General Counsel Melinda Hatton wrote. "That is because hospitals appealed tens of thousands of claims that they concluded the Recovery Audit Contractors—who are paid on a contingency basis—had incorrectly denied."
"Because the Recovery Audit Contractors caused the problem in the first place, the AHA continues to focus on them as a means to fix the problem," Hatton added.
The government's decision to unfreeze ACA risk-adjustment payments with a new final rule demonstrates 'just how specious' its pending claims are, the plaintiff alleges.
A nonprofit health plan that challenged the government's methodology for calculating risk-adjustment payments under the Affordable Care Act has some blunt criticism for Health and Human Services in its latest court filing.
The issuance of the final rule "underscores just how specious" the government's pending claims in the case are, attorneys for NMHC wrote.
The health plan, which filed suit in 2016, persuaded U.S. District Court Judge James O. Browning to declare the methodology illegal last February on the basis that HHS had failed to justify its use of a statewide average premium in the calculation. The government asked Browning to alter his ruling, arguing that the ramifications of his decision to vacate relevant regulation for benefit years 2014 through 2018 would be "tremendously disruptive, not only for insurance companies nationwide, but also for policyholders and state insurance markets generally."
Toward the end of a hearing on the matter in June, Browning indicated he would aim to have a decision by the end of the summer, according to federal court records. That decision had not been issued as of Tuesday morning.
Rather than waiting for Browning's follow-up decision or issuing a final rule to address his concerns, the government announced Saturday, July 7, that the payments would be halted. The Wall Street Journal had reported the night before that CMS planned to suspend the program—this despite a contradictory opinion by another federal judge in Massachusetts.
Less than three weeks later, however, CMS announced a final rule to resume risk-adjustment payments for the 2017 benefit year. The rule adopts the previous methodology with an added explanation regarding the program's budget-neutral status and its use of statewide average premiums.
Some health plans praised HHS and CMS officials for the swift response to concerns that widespread uncertainty without the risk adjustments could result in higher premiums next year. But NMHC was not among them.
"To be sure, this new Rule is both procedurally and substantively improper," attorneys for NMHC wrote. "For one thing, the Administrative Procedures Act does not permit HHS to delay taking action for months and then use an alleged timing emergency of its own creation to avoid going through notice and comment."
The way the government handled this case makes clear they had more options than they had suggested, the NMHC attorneys alleged.
"To the extent that there was any doubt that HHS's cry of disruption was a purely self-inflicted wound, HHS's new Notice clearly demonstrates its ability to promulgate a new rule," the attorneys wrote, urging Browning to deny the government's pending motion for reconsideration.
Spokespeople for HHS and CMS could not be reached for comment.
The large hospital system was accused of 'up-coding' patient diagnoses to increase Medicare reimbursement in what the DOJ described as 'a deliberate corporate-driven scheme.'
One of the largest hospital systems in the country has agreed to a $65 million settlement to resolve allegations it systematically overcharged Medicare, the U.S. Department of Justice announced Friday afternoon.
Prime Healthcare Services, along with its consulting subsidiary, nonprofit arm, and top executive, agreed to the settlement after nearly seven years of litigation prompted by a whistleblower. Prime founder and CEO Prem Reddy, MD, FACC, FCCP, agreed to pay $3.25 million toward the settlement, according to the DOJ's announcement.
"We are very pleased with the ultimate resolution of this lawsuit," Prime Healthcare Deputy General Counsel Joel Richlin said in a statement that emphasized the fact that there was no admission of liability in the terms of the settlement.
"There was no finding of improper conduct or wrongdoing of any kind by Prime Healthcare," the organization's statement noted. "Prime Healthcare's exemplary record of clinical quality care was never in question. This matter dealt with the technical classification of the category under which patients were admitted and billed."
Karin Bernstein, a former director of performance improvement for Prime's Alvarado Hospital Medical Center in San Diego, filed the lawsuit in federal court under the False Claims Act. The government intervened in the case, but Bernstein will receive $17.2 million, more than a quarter of the settlement sum, the DOJ said.
The allegations: Prime was accused of knowingly "up-coding" Medicare claims, falsifying diagnosis information to increase reimbursement. The DOJ said the allegations included "a deliberate corporate-driven scheme" to boost inpatient admissions for Medicare beneficiaries who came to emergency departments in 14 of Prime's hospitals in California, even when an inpatient stay was medically unnecessary.
Integrity agreement: As part of the settlement, Prime also signed a five-year corporate integrity agreement with the Health and Human Services Office of Inspector General. That document, which places additional compliance duty's on Prime, had not been released publicly as of Friday afternoon.
Parties to the settlement: Prime Healthcare Services and its nonprofit counterpart, Prime Healthcare Foundation, based in Ontario, California, operate 45 acute-care hospitals across 14 states. The parties to this settlement agreement include the for-profit arm, the foundation, the consulting component Prime Healthcare Management, Reddy, and 14 hospital defendants (10 owned by Prime's for-profit arm and four hospital defendants owned by Prime's foundation).
Not the biggest: This high-dollar settlement is nowhere near the largest paid by a hospital operator. In 2016, for example, Tenet Healthcare Corp. agreed to pay $368 million to the federal government, Georgia, and South Carolina to settle False Claims Act allegations. The whistleblower's share in that case was more than $84.4 million.
Sending a message: "By reaching this settlement, the FBI and our partners are holding Prime Healthcare accountable for exaggerating patients' needs and inflating the severity of their symptoms while handsomely lining their pockets," said Paul D. Delacourt, assistant director in charge of the FBI's Los Angeles field office in a statement. "This case should send a clear message to others who intend to engage in similar schemes that rout the American healthcare system."
Questioning clinical judgment? Prime noted in its statement Friday that the American Hospital Association and California Hospital Association had filed briefs in Prime Healthcare's favor in 2016, arguing that the way these lawsuits pertaining to inpatient admissions are being carried out "inappropriately challenged the clinical decisions of physicians." Those briefs called for reforms, Prime said.
The HHS hotline accepts tips and complaints from anyone with concerns about possible fraud, waste, abuse, and mismanagement: 800-HHS-TIPS (800-447-8477).
The full statement released by Prime in response to the DOJ's announcement is below: