Overview
This issue of McDermott’s Healthcare Regulatory Check-Up highlights regulatory activity for January 2025. This month features long-awaited proposed and final rules regarding the Health Insurance Portability and Accountability Act (HIPAA) and controlled-substance prescribing via telemedicine. Active False Claims Act (FCA) cases include two hospitals defending against criminal and civil charges related to their alleged complicity in medically unnecessary surgeries. Settlements from this month include familiar themes such as lavish physician speaker programs, a dental pay-per-referral marketing arrangement, and fraudulent durable medical equipment (DME) prescribing via telemedicine. The Office of Inspector General (OIG) issued a favorable advisory opinion on a pharmaceutical manufacturer’s program to provide free infusion drugs to patients with financial need. Finally, the change of presidential administration has resulted in a flurry of executive actions and regulatory freezes.
Read on an overview for this month’s regulatory and enforcement activity roundup. For a deeper dive, subscribe to the newsletter to get our detailed analysis of all updates.
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Notable Cases, Enforcement Resolutions, and Related Activity
Fourth Circuit Upholds District Court Ruling Against PCPA, Adopts Broad Interpretations of Key AKS Terms
On January 23, 2025, the US Court of Appeals for the Fourth Circuit ruled against Pharmaceutical Coalition for Patient Access’s (PCPA) challenge to an unfavorable OIG advisory opinion concerning a charitable patient assistance program.
Pharmaceutical Company Agrees to Pay $59.7 Million to Resolve AKS, FCA Allegations Related to Migraine Drug
A pharmaceutical company has agreed to pay $59.7 million to resolve allegations that its subsidiary violated the Anti-Kickback Statute (AKS) by providing kickbacks to healthcare providers to induce prescriptions of its migraine drug, resulting in false claims to Medicare.
Hospice Providers Challenge CMS’s Special Focus Program Methodology in Federal Court
A coalition of hospice providers filed suit in Texas federal court challenging the Biden administration’s Hospice Special Focus Program, which identifies and publicly lists facilities failing to meet Medicare requirements.
Health System to Pay $135 Million to Resolve Additional FCA Claims in Whistleblower Suit
A health system has agreed to pay $135 million to resolve remaining FCA allegations brought by its former chief financial officer (CFO) and chief operating officer in a qui tam action.
Medical Center Indicted for Healthcare Fraud Related to Unnecessary Surgical Procedures
A federal grand jury has indicted a medical center on criminal charges of healthcare fraud and conspiracy to defraud the United States for allegedly enabling and profiting from unnecessary surgeries performed by a surgeon.
CMS Will Not Pursue an Appeal in Medicare Advantage Ratings Case
CMS abandoned plans to appeal a health plan’s Medicare Advantage star ratings win.
The Supreme Court Will Hear Arguments Regarding the Constitutionality of the US Preventative Services Task Force
The Supreme Court of the United States will hear arguments in Braidwood v. Becerra, a case that could significantly impact health insurance coverage of preventive care.
Health Plan Settles FCA Allegations Involving the AKS
On January 17, 2025, a health plan reached a settlement resolving FCA allegations against a health maintenance organization (HMO) that the health plan acquired in 2022.
Laboratory Granted Summary Judgment on Independent Contractor Marketing Allegations
A laboratory that uses the services of independent contractor marketing agents successfully defended against allegations that its commission-based compensation structure violated the AKS and FCA.
Connecticut Dentist and Practices Pay $608,296 to Resolve FCA, AKS Allegations Involving Patient Referral Kickbacks
A Connecticut dentist and her former dental practices have agreed to pay $608,296 to resolve allegations that they violated the federal and state FCA and AKS.
Iowa Healthcare Practitioners Pay $164,326 to Resolve DME Telemedicine Scheme Allegations
Two Iowa healthcare practitioners have agreed to pay a combined $164,326 to resolve FCA allegations involving fraudulent Medicare billing through a telemedicine scheme.
CMS Regulatory Updates
CMS Adds New Product Category for Respiratory Devices to DMEPOS Enrollment Form
As of January 27, 2025, CMS has announced that it will now permit suppliers of durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS) to bill Medicare for supplying multifunction respiratory devices (excluding ventilators).
New Payment Bundle for Advanced Primary Care Management Services Available January 1, 2025
Starting January 1, 2025, primary care providers enrolled in Medicare may utilize a new payment bundle for advanced primary care management (ACPM) services.
Physician Nonmonetary Compensation Limits Updated for 2025
CMS made its annual inflation-adjusted updates to financial limits on physician nonmonetary compensation, medical staff incidental benefits, and the “limited remuneration” definition.
Office of Inspector General Updates
OIG Issues Favorable Advisory Opinion Regarding Manufacturer’s Free Medication Program
OIG issued a favorable advisory opinion regarding a pharmaceutical manufacturer’s program to provide free access to an infusion drug for patients with demonstrated financial needs. The drug in question targets dementia and cognitive impairment.
Other Notable Developments
New Massachusetts Law Impacts Healthcare Private Equity Investors
Healthcare private equity investors will now encounter increased oversight under a new Massachusetts law. The law expands the definition of “material change” to encompass additional transactions that require pre-closing notice to the Massachusetts Health Policy Commission.
HHS Chooses 15 Drugs for Medicare Drug Price Negotiations
On January 17, 2025, HHS announced price negotiations for 15 drugs that are covered under Medicare Part D. The drugs treat a wide range of conditions ranging from cancer to diabetes to asthma.
OCR Proposes Extensive Changes to HIPAA Security Rule
The HHS Office for Civil Rights (OCR) published a proposed rule on January 6, 2025, proposing extensive changes to the HIPAA Security Rule.
DEA, HHS Release Final Rules Expanding Controlled Substance Prescribing via Telemedicine
On January 17, 2025, the Drug Enforcement Administration (DEA) and HHS issued a final rule that allows practitioners to prescribe schedule III-V controlled substances for the treatment of opioid use disorder, including buprenorphine, via telemedicine (including audio-only encounters).
DEA Announces Long-Awaited Proposed Rule on Telehealth Special Registrations
DEA published a proposed rule on January 17, 2025, that would establish three special registrations that create a pathway for certain healthcare professionals to prescribe certain controlled substances via telemedicine once current telehealth flexibilities expire on December 31, 2025.
Trump Administration Halts Publishing of Regulations and Postpones Effective Dates
On January 20, 2025, US President Donald Trump issued an executive memorandum implementing a regulatory freeze.
Trump Administration Issues a Flurry of Executive Orders Impacting Healthcare
President Trump has released several executive orders impacting healthcare. These include orders withdrawing the US from the World Health Organization (EO 14155), directing federal agencies to define “sex” as a binary immutable biological classification and remove recognition of the concept of gender identity (EO 14168), and targeting the provision of gender-affirming care for minors (EO 14187), among others.
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