RISE summarizes recent regulatory-related headlines.
DOJ: DaVita will pay $34M to settle allegations of illegal kickbacks
The Department of Justice (DOJ) on Thursday announced that DaVita Inc. has agreed to pay more than $34 million to resolve allegations that it violated the False Claims Act by paying kickbacks to induce referrals to DaVita Rx, a former subsidiary that provided pharmacy services for dialysis patients, and by paying kickbacks to nephrologists and vascular access physicians to encourage referrals of patients to DaVita’s dialysis centers.
The Anti-Kickback Statute prohibits anyone from offering or paying, directly or indirectly, any remuneration—which includes money or any other thing of value—to induce referrals of patients or of items or services covered by Medicare, Medicaid, and other federally funded programs.
DOJ alleges that the dialysis provider, which has headquarters in Denver, paid kickbacks to a competitor to make referrals to DaVita Rx to serve as a “central fill pharmacy,” or prescription fulfillment provider, for that competitor’s Medicare patients’ prescriptions. In exchange, DaVita paid to acquire certain European dialysis clinics and agreed to extend a prior commitment to purchase dialysis products from the competitor. DaVita would not have paid the price that it did for these deals without the competitor’s commitment to refer its Medicare patients’ prescriptions to DaVita Rx in return.
In addition, DOJ alleges that DaVita provided management services to vascular access centers owned by physicians who could refer patients to DaVita’s dialysis clinics. DaVita improperly paid these physician-owners uncollected management fees to encourage referrals to DaVita’s dialysis centers. The Justice Department also accused DaVita of making improper payments to a large nephrology practice in exchange for referrals to DaVita’s dialysis clinics. DaVita gave the practice a right of refusal to staff the medical director position at any new dialysis center that opened near the nephrology practice and paid the practice $50,000 despite the practice’s decision not to staff the medical director position for those clinics.
“Medicare patients should be able to trust their health care providers not to pay illegal kickbacks to induce referrals,” said Acting U.S. Attorney Matthew Kirsch for the District of Colorado in the announcement. “This resolution reflects the seriousness of the government’s determination to restore integrity to the health care marketplace.”
The civil settlement includes the resolution of claims brought under the qui tam or whistleblower provisions of the False Claims Act by Dennis Kogod, a former chief operating officer of DaVita Kidney Care. He will receive $6,370,000 of the proceeds from the settlement.
Kindred to pay $19.4M over fraud allegations
DOJ also announced this week that Gentiva, successor to Kindred at Home, has agreed to pay more than $19.4 million to resolve allegations that Kindred at Home and its related entities knowingly submitted false claims and knowingly retained overpayments for hospice services provided to patients who were ineligible to receive hospice benefits under various federal health care programs.
Gentiva’s hospice operations, headquartered in Atlanta, include entities that previously operated Kindred at Home hospice locations under the names Avalon, Kindred, SouthernCare, and SouthernCare New Beacon.
“The hospice benefit under Medicare and other federal health care programs provides critical services to some of the most vulnerable patients,” said Principal Deputy Assistant Attorney General Brian M. Boynton, head of the Justice Department’s Civil Division, in the announcement. “The department will ensure that this important benefit is used to assist those who need it, and not as an opportunity to line the pockets of those who seek to abuse it.”
The settlement resolves allegations made by the United States and the State of Tennessee in a consolidated complaint filed in 2021 against certain Kindred related entities alleging that, from 2010 until February 2020, the defendants knowingly submitted or caused to be submitted false claims for hospice services provided to Avalon hospice patients in Tennessee who were ineligible for the Medicare or Medicaid hospice benefit because they were not terminally ill. The settlement also resolves the complaint’s allegations that the defendants improperly concealed or avoided Avalon’s obligation to repay those hospice claims. In addition, the settlement resolves allegations that certain Kindred, SouthernCare, and SouthernCare New Beacon hospice locations knowingly submitted, or caused to be submitted, false claims for hospice services provided to patients who were ineligible for hospice benefits under Medicare and other federal health care programs because the patients were not terminally ill. Those hospice locations were Kindred’s locations in Warwick, R.I.; Beaumont, Texas; and Independence, Mo.; SouthernCare New Beacon’s location in Demopolis, Ala.; and SouthernCare’s locations in Daphne, Ala.; Mobile, Ala.; South Bend, Ind.; and Youngstown, Ohio. It also resolves allegations that those Kindred, SouthernCare, and SouthernCare New Beacon locations knowingly and improperly concealed or avoided obligations to repay the foregoing hospice claims.
DOJ said the settlement will also resolve accusations that SouthernCare New Beacon allegedly violated the Anti-Kickback Statute by willfully paying a consulting physician, between Oct. 1, 2016, and Oct. 1, 2022, to make hospice referrals of Medicare beneficiaries to its Gadsden, Ala., location. The settlement of those allegations stems from a voluntary self-disclosure made by New Beacon Healthcare Group LLC doing business as SouthernCare New Beacon Hospice.
The Anti-Kickback Statute prohibits offering, paying, soliciting, or receiving remuneration to induce referrals of items or services covered by Medicare, Medicaid, and other federally funded health care programs. It is intended to ensure that medical providers’ judgments are not compromised by improper financial incentives and are instead based on the best interests of their patients.
“The integrity of hospice care is critical to the millions of patients receiving these services,” said Deputy Inspector General for Investigations Christian J. Schrank of the Department of Health and Human Services Office of Inspector General (HHS-OIG) in the announcement. “We, along with our law enforcement partners, will continue to ensure that providers who focus on personal financial gain rather than providing medically necessary, high-quality hospice care will be held accountable.”
The Medicaid program is funded jointly by the state and federal governments. As a result of the settlement, the federal government will receive $18.9 million, the state of Tennessee will receive $448,800, and the state of Ohio will receive $23,618. The settlement includes the resolution of claims in nine lawsuits brought under the qui tam or whistleblower provisions of the False Claims Act by various current and former Kindred employees. Under those provisions, a private party can file an action on behalf of the United States and receive a portion of any recovery. The share of the settlement to whistleblowers has not yet been determined.
CMS releases more guidance on Medicare prescription drug coverage
The Centers for Medicare & Medicaid Services (CMS) this week issued additional guidance for plan outreach and education for the Medicare Prescription Payment Plan. Beginning in 2025, people with Medicare prescription drug coverage will have the option to spread the costs of their prescription drugs over the calendar year rather than paying in full at the pharmacy counter each time they fill a prescription. The option will launch at the same time all individuals with Medicare prescription drug coverage will have their annual out-of-pocket drug costs capped at $2,000. The final part two guidance provides support and materials necessary to determine who may benefit from the program and guidance on how to educate them about this new payment option. This guidance updates and finalizes requirements proposed in the draft part two guidance, which was released in February 2024. For more information, download the fact sheet.
Gallup report: Nearly half of Americans can’t afford health care
Only 55 percent of Americans can afford and access prescription drugs and quality health care, according to West Health-Gallup Healthcare Affordability Index, which was developed in 2021 to track the percentage of Americans who say they have avoided medical or not filed prescription medications in the last three months due to costs. Analysts say the findings are a record low and affordability of health care has fallen six points since 2022.
The downturn is largely attributed to adults aged 50 to 64 (down eight points to 55 percent) and those aged 65 and older (down eight points to 71 percent). The percentage of adults under 50 who could readily afford health care was the lowest of any age group at 47 percent, a five-point decline since 2022. “After an uptick in 2022, health care affordability in America is headed in the wrong direction,” said Timothy Lash, president, West Health, a nonprofit focused on aging and health care research, policy and philanthropy, in the announcement. “The good news is that health care provisions in the Inflation Reduction Act—including empowering Medicare to negotiate lower drug prices, which has not yet taken effect—may help slow these negative trends and provide more stability. But much more must be done to rein in prices for Americans of all ages. High prices are one of the biggest impediments to a healthy aging population and a prosperous economy.”
CMS: No Surprise Act audit focuses on Aetna Health in Texas and air ambulance payments
CMS has released the results of its first Qualifying Payment Amount Audit under the No Surprises Act. The law requires the Secretary of Health and Human Services to conduct audits to ensure that group health plans and health insurance issuers offering group or individual health insurance coverage are in compliance with the requirements related to calculation of the quality payment amount.
The audit focused on Aetna Health in Texas and how it calculated reimbursement rates for air ambulance services. Auditors found the organization failed to properly calculate quality payment amounts instead of contracted rates, and counting each claim as its own contracted rates, even when the claims were for the same amounts for the same item or service and to the same provider of air ambulance services.