Outpatient Surgery Center Avoids Dismissal of Antitrust Action Through an Assist from the DOJ

Posted in Antitrust, Healthcare Law, Healthcare Litigation, Hospitals & Health Systems

In 2012, Marion Healthcare, an outpatient surgery center in southern Illinois, commenced an antitrust action against Southern Illinois Healthcare (“SIH”), a multi-hospital system operating in the same market. Marion alleged that SIH had negotiated exclusive dealing relationships with several area health insurers, and that these agreements made it difficult, if not impossible, for Marion to compete for surgical patients in southern Illinois. While Marion’s first and second attempts to state an actionable antitrust claim were unsuccessful, it appears that its third amended complaint was the proverbial “charm,” as Magistrate Judge Stephen Williams (S.D. Illinois) ruled on March 14, 2018 that Marion’s allegations that the alleged exclusive dealing contracts violated Sections 1 and 2 of the Sherman Act were sufficient to state a claim. Continue Reading

Class III Hospital Permits – Efficient Drug Management May Become a Reality

Posted in Healthcare Law, Hospitals & Health Systems, Pharmacy, Drugs, Medical Devices & Equipment

At the close of the 2018 session, the Florida Legislature passed Senate Bill (SB) 675, which if allowed to become law by the Governor, will help hospitals and their facilities that are under common control manage their patients’ drugs much more efficiently. Under prior law, the hospitals had to obtain a restricted drug distributor-health care entity permit to allow the hospitals to distribute manufactured drugs throughout the facility. SB 675 shifts the regulation of internal hospital drug distribution from the Department of Business and Professional Regulation, Division of Drugs, Devices and Cosmetics (“DDC”) to the Board of Pharmacy and eliminates the requirement for at least one permit in the process. It also allows the hospitals to deal with only one agency’s requirements, fees and inspectors.  Continue Reading

New Jersey Congressman Calls for a Hearing on the Proposed Cigna/Express Scripts Merger

Posted in Antitrust, Health Insurers & Managed Care Organizations, Healthcare Law, Healthcare M&A, Joint Ventures, Transactions & Health Ventures

Recently, Cigna announced its plan to purchase pharmacy benefit manager (“PBM”) Express Scripts. In a March 14, 2018 letter to the chair of the House Committee on Energy and Commerce, Gregory Walden (R-Oregon), Congressman Frank Pallone (D-New Jersey) called for a hearing on the proposed merger. In the letter, Congressman Pallone notes that the combination would combine the nation’s largest PBM with one of the nation’s largest health insurers, and that the deal would be “just one of many recent mergers and acquisitions in American health care delivery.”

Indeed, as Congressman Pallone states, the proposed Cigna/Express Scripts transaction is only the latest in a recent string of significant proposed “vertical mergers” that would combine a health insurer with a PBM; other recently announced transactions include the pending CVS/Aetna and Centene/RxAdvance deals. In addition, all of these proposed deals follow UnitedHealth’s previously completed acquisition of a PBM, Catamaran, in 2015, and the creation of Prime Therapeutics – another PBM – by a group of Blue Cross Blue Shield entities over the last ten years.

While “vertical mergers” — transactions in which the merging parties do not currently compete with one another — have not typically been a significant cause for concern for antitrust regulators, such mergers have become an increasingly significant area of interest under the Trump administration. Continue Reading

Florida Clinic License Exemptions Subject to Change

Posted in Hospitals & Health Systems, Physicians

Holders of Florida healthcare clinic license exemptions take note. Exemption certificates, which currently bear no expiration date, will expire every two years if a bill recently passed by the Florida Legislature becomes law. Senate Bill 622 will require exemption holders to renew their clinic license exemption biennially.

The bill is silent as to treatment of existing certificate holders, but businesses that have current exemptions should not be surprised if they receive a renewal notice from the Florida Agency for Health Care Administration as early as this summer. Governor Rick Scott has until March 27, 2018 to sign the bill into law, veto it in full or in part, or allow it to become law without his signature. If the bill becomes law, it takes effect July 1, 2018.

Clinic licenses (rather than exemptions) are required for entities that provide paid healthcare services to individuals and that are not already licensed as another facility type. A host of exemptions to the license requirement apply, including an exemption for practices owned by licensed providers such as physicians and their spouse, parents, children, or siblings. Payors often require either a clinic license or proof of exemption from licensure, leading many exempt entities to apply for an exemption certificate from AHCA. A lapse in a needed exemption certificate could lead to interruptions in reimbursement.

Providers that are unsure whether they need – or need to maintain – an exemption certificate should contact legal counsel.

Cigna Announces Proposed Acquisition of Express Scripts, Quickening the Pace of Vertical Mergers in the Healthcare Industry

Posted in Antitrust, Health Insurers & Managed Care Organizations, Healthcare Law, Healthcare M&A, Joint Ventures, Transactions & Health Ventures

Late last year, CVS and Aetna announced a merger, combining one of the nation’s largest health insurance companies and a large pharmacy benefits management company (a “PBM”), that being CVS’ Caremark division. The trend continues, as on March 8, Cigna announced its intention to acquire Express Scripts, another PBM, in a deal reportedly valued at $67 billion. Both transactions, if approved by antitrust regulators, would create “vertically integrated” entities that combine the services of a health insurer with those provided by a PBM, potentially reshaping the way in which healthcare is delivered to consumers.

“Vertical” mergers like these proposed transactions, where the merging parties are not currently competitors, are becoming increasingly common since the passage of the Affordable Care Act, as healthcare entities at all levels of the distribution chain – providers, payors, PBMs and others – have been exploring ways to create more efficient delivery models, designed to try to reduce the ever-escalating cost of healthcare.  These efforts have included major hospital systems creating their own payors, proposed combinations between payors and PBMs (including the CVS/Aetna and Cigna/Express Scripts) and the recently announced RiteAid/Albertson’s transaction. Notably, if the CVS/Aeta and Cigna/Express Scripts deals are approved, it would presumably put them on more equal footing with another payor, UnitedHealth, which acquired the PBM, Catamaran, in 2015 and merged it into its existing entity, Optum Rx. Continue Reading

House Judiciary Subcommittee Holds Hearing on Proposed CVS/Aetna Merger

Posted in Antitrust

On February 27, the House Judiciary Subcommittee on Regulatory Reform, Commercial and Antitrust Law held a hearing to consider the implications of the proposed CVS/Aetna merger.  The transaction, valued at approximately $69 billion, was announced in December and is currently under regulatory review by the United States Department of Justice Antitrust Division and antitrust and insurance regulators in a number of states.

If consummated, the transaction would combine one of the nation’s largest pharmacy benefits manager (PBM) entities, CVS’s Caremark subsidiary, with one of the nation’s largest health insurers, Aetna. However, unlike some of the recently proposed insurance industry mergers (such as Anthem/Cigna and Aetna/Humana), the proposed CVS/Aetna merger is largely a “vertical” merger between two entities that currently do not compete with one another in any significant way. In assessing the competitive consequences of a vertical merger, antitrust regulators typically focus on whether the combined entity would have the ability to increase barriers to entry in any of the markets in which the combined entity would operate and/or whether the combined entity could effectively foreclose competitors in those markets from competing effectively. These principles are based upon guidance in the DOJ/FTC 1984 Merger Guidelines.  Continue Reading

CMS Expands Reimbursement for Telehealth Services

Posted in Healthcare Law, Healthcare M&A, Joint Ventures, Transactions & Health Ventures, Medicare & Medicaid

Despite telehealth’s significant expansion over the past ten years, it has been plagued by a historically unstable regulatory and reimbursement landscape. While the reimbursement environment may still have room for improvement, the Centers for Medicare & Medicaid Services (CMS) Medicare physician fee schedule (PFS) Final Rule for CY 2018 (Final Rule) marked some significant victories for those advocating for a more comprehensive reimbursement regime and for telehealth investors.

Beginning in CY 2018, CMS has both: (1) expanded the list of telehealth services that are reimbursed as “Medicare services”; and (2) decreased the burdens for physicians in billing the government for telehealth services. Continue Reading

New Consequences for Unpaid Medicare Overpayments

Posted in Fraud & Abuse & False Claims Act, Healthcare Law, Healthcare Litigation

For years, CMS has had the authority to refuse to enroll new Medicare providers if they or their owners have an unpaid Medicare overpayment, but CMS was not exercising this authority. Now, it appears that CMS is going to start. In January, CMS published Transmittal 1998 announcing that it intends to begin denying provider enrollment applications, or change-of-ownership applications, where the provider, supplier or owner has an unpaid Medicare overpayment. The term “owner” includes any individual or entity that has a partnership interest in, or that has a 5% or more direct or indirect ownership interest in the enrolling provider. It is possible to foresee situations where an enrolling provider’s organization has an owner who previously owned another company that has an unpaid overpayment. This situation can create real headaches for companies and individuals who are actively involved in the acquisition of existing health care providers or the creation of new ones. Continue Reading

Has the DOJ Signaled a More Critical Approach to FCA Cases?

Posted in Fraud & Abuse & False Claims Act, Healthcare Law, Healthcare Litigation

Defendants have faced an ever increasing number of qui tam actions, yet the government has historically declined to seek dismissal of those actions where it declined to intervene. On January 10, 2018, the Director of the DOJ Civil Division Commercial Litigation Branch’s Fraud Section issued a memorandum to all DOJ attorneys, including AUSAs, advising them that when declining to intervene in a qui tam action, they should also consider whether to seek dismissal under 31 U.S.C. § 3730(c)(2)(A), which provides that “…[T]he government may dismiss the action notwithstanding the objections of the person initiating the action if the person has been notified by the Government of the filing of the motion and the court has provided the person with an opportunity for a hearing on the motion.” (“Memorandum”). Continue Reading

DEA Implements CARA, Enlisting Mid-Level Practitioners in the War on Opioid Addiction

Posted in Government Affairs, Licensure & Regulatory, Healthcare Law, Pharmacy, Drugs, Medical Devices & Equipment

Prior to the Comprehensive Addiction and Recovery Act of 2016 (CARA) only “physicians” could dispense and prescribe narcotic drugs for maintenance and detoxification treatment. CARA expanded who may prescribe for maintenance and detoxification treatment to “qualifying practitioners” (temporarily through October 1, 2021), a broader term than “physicians” that allows for a wider array of practitioners to prescribe. This change opened the door for advanced registered nurse practitioners (ARNPs) and physician assistants (PAs) to provide these needed services to patients battling opioid addiction, once they obtain a Drug Enforcement Administration (DEA) mid-level practitioner registration and meet the CARA requirements below.

The DEA adopted its Final Rule, effective January 22, 2018, that recognizes ARNPs and PAs to be “other qualifying practitioners” if they meet the CARA criteria which generally provides: Continue Reading