Law360 (April 13, 2020, 4:57 PM EDT) -- In this edition of Coronavirus Q&A, Sidley Austin's health practice leaders discuss how a federal watchdog could ease Anti-Kickback Statute enforcement during the pandemic, how COVID-19 might permanently alter health care delivery and how the U.S. Department of Justice will likely assess a tsunami of crisis-related fraud allegations from whistleblowers.
Datta's work includes strategic counsel and regulatory advice, while Jones specializes in enforcement actions. Both are Chicago-based partners whose clients include drug and device makers, health care providers and entities in the medical supply chain, which has entered the spotlight amid surging demand for protective gear and testing equipment.
This interview has been edited for length and clarity.
Meena, let's start with you. What are the top needs your clients have these days?
Datta: The needs are wide-ranging. Many drug companies are furiously working on vaccines or treatments, and their clinical trials for other types of research have potentially been disrupted. Supply chain parties are stepping up to address the intense medical needs in our health care system, delivering [personal protective equipment] and essential medicines and treatments. And providers are having to balance serving patients with efforts to protect front-line health care workers who are treating those patients.
One of the challenges I see, and I'm sure Jaime will speak to this as well, is that there are regulatory and legal hurdles that these stakeholders face as they work to help stem and eradicate the virus. One area where I have been advising is the Anti-Kickback Statute, which criminalizes the provision or receipt of remuneration in return for referrals for items or services paid for by Medicare and Medicaid.
The enforcement agency for this is the Office of Inspector General of the U.S. Department of Health and Human Services. OIG issued a helpful policy statement that says it won't impose administrative sanctions for certain health care provider activities during the pandemic. And that includes waiving enforcement requirements under certain statutes, including EMTALA [the Emergency Medical Treatment and Labor Act], which pertains to patients presenting at the emergency room.
They also say that they will not impose sanctions for certain physician self-referral and hospital financial arrangements in order to provide these stakeholders additional regulatory flexibility as they deal with the crisis. That's a positive development, and I think we need to see more in that regard.
I would like to see a policy statement that they will refrain from going after bona fide donation arrangements throughout the health care system and the supply chain. There's a lot of good Samaritan and charitable acts that could occur. But given the current regulatory framework, the lack of a policy statement can be a legal hurdle for stakeholders considering those types of arrangements.
Same question for you, Jaime. What are some top issues for your clients during the crisis?
Jones: Because my practice is an enforcement practice, I get questions every day about what this means for DOJ enforcement actions, both pending and anticipated. There's some variation among the different U.S. attorney offices, but I would say overall, for companies already facing enforcement actions, those actions are continuing — perhaps a bit slower than before the pandemic, but they're continuing.
But companies are already starting to turn their attention to what is going to come down the road when this crisis passes — what will the landscape of enforcement against providers and life sciences companies look like? And I think what everybody can expect is that it is going to be very robust.
There is billions of dollars in funding that has been set aside for the health care industry. At the same time, you're going to have a lot of people, unfortunately, who worked for these companies who are going to be out of work. So you're going to have a rich whistleblower environment coupled with this influx of even more federal dollars into the system, which everybody expects is going to give rise to more enforcement actions.
And so while these companies are trying to navigate this crisis, they also have to be thinking ahead about what they need to be putting in place in terms of their compliance program, so that they do not find themselves on the wrong end of that enforcement activity when we come out of this.
Is there any chance the DOJ will be a bit forgiving about allegedly improper billing in light of the crisis that companies are dealing with?
Jones: Quite to the contrary. I think what everyone should expect is that the government is going to act aggressively to protect the funding — both the funding that's going to be released under the [Coronavirus Aid, Relief and Economic Security] Act stimulus package and also just the spend of federal dollars right now.
You can look back to examples in the not-so-distant past, like what happened with enforcement after the stimulus funding went out in response to the 2008 financial crisis. There was a special [inspector general] charged with monitoring the use of those funds, and you saw something like 400 convictions come out of investigations brought by that IG. There's a similar oversight mechanism for the CARES Act stimulus package, and so I think people should expect similar enforcement activity following this crisis.
Now, to tie this back to Meena's point, I agree that we'd love to see a statement about the Anti-Kickback Statute — the more fulsome statement that Meena described. If there was really a good-faith situation of a provider giving something to somebody, or a manufacturer giving something to a hospital to help in this crisis, and there's a whistleblower complaint about it, I do think the government will exercise enforcement discretion not to bring those kinds of cases.
But when it comes to overbilling for treatment of COVID-19 patients, or billing for products that were not approved by the FDA, I think those kinds of cases will be aggressively pursued.
Jaime, I know you've been following the expansion of reimbursement for telehealth services. What specifically are you watching there?
Jones: We've been helping a number of our provider clients rapidly expand their telehealth offerings across a variety of spaces, including basic primary care as well as behavioral health services, which are greatly in need at this time. With that comes having to navigate the overlapping web of regulations, including state-level licensing requirements and payment criteria under federal health care programs and private insurance plans.
We've seen a great deal of flexibility offered in many of those contexts to providers to begin offering telehealth services in a much broader way. And I do think you will see an expansion of telehealth that will persist after this crisis passes, even though some of the waivers that have been granted — both by [the Centers for Medicare & Medicaid Services] and some of the state agencies — for [expanded telehealth] are limited to the period of the declared crisis.
I think that providers, patients and payors through this experience are going to see the benefits of expanded telehealth offerings, both from a quality-of-care and patient access perspective, as well as from a cost perspective. And so I think the expanded telehealth is going to be here to stay. And while providers today are expanding to deal with the crisis, I think they are doing so with an eye toward being able to maintain levels of telehealth offerings when the crisis has passed.
Is there any other policymaking that could emerge from the crisis?
Datta: The OIG is beginning to post FAQs that are a form of policymaking in the sense that they're trying to put out helpful statements that clarify their position. They've also set up a portal through which stakeholders can submit individual requests for clarification on OIG's oversight authority and discretion during the pandemic.
And so this is a unique opportunity. It doesn't give ultimate regulatory flexibility like a broad policy statement might, but it is helpful that OIG has set up this portal to give another avenue for stakeholders to get more nimble feedback, as opposed to the traditional advisory opinion process, which is also still available, but is simply impractical in many situations at a time like this.
I think that stakeholders should consider whether they have questions to submit. Depending on the facts and circumstances, it may not be warranted, particularly for the good-faith, bona fide situations that we discussed. But in other situations, where it might be a more complex analysis, seeking clarification can also be a reflection of a party's intent to comply with the law, so that's something to consider.
Are there any policies you would change or clarify, if you could, to help with COVID-19 issues?
Datta: [I'd like to see] additional details from [the Federal Emergency Management Agency] or [the Centers for Disease Control and Prevention] on areas of need, areas of shortage. If there was a publicly available heatmap with the best information from federal agencies about where shortages are occurring, it would help hone donations and make them more effective.
And there's quite a bit that the federal government could do to encourage [donations of] PPE. Having more regulatory flexibility to [donate supplies] without fear of enforcement — in the absence of reckless disregard or willful misconduct — would be really helpful.
What about you Jaime — if you could realistically change one policy to help clients with COVID-19 issues, what would it be?
Jones: I'm going to echo what Meena said. What we have seen during this time is a really kind of wonderful rush across the health care and life sciences industries to help.
You've got manufacturers that have technology that maybe was created for one purpose and they want to throw it out there so that providers can use it right now. You've got providers that want to give away testing services or PPE to other providers that need it. And there is necessarily a lot of time and attention being paid to, "Well, do we have all of our documentation in place so we could defend this if there were ever questions raised under the Anti-Kickback Statute and False Claims Act?"
It speaks to the level at which the industry really does want to be compliant. But at the same time, it's unfortunate that solutions are not being deployed as quickly as they could be, because companies still have to be mindful of all of the rules that existed before this crisis started.
So it would be most helpful if there was a policy statement from OIG, or even better, a limited grant of immunity similar to [what we saw] under the [Public Readiness and Emergency Preparedness] Act declaration that would specifically cover donations of goods, services and time to the extent they are devoted to assistance with the current crisis.
So could it be a new grant of immunity from the HHS secretary?
Jones: There could be an acknowledgement by the secretary of nonenforcement, for example, of the Anti-Kickback Statute for a defined set of arrangements that might be in place.
The reality is that right now I think a lot of companies are going to the secretary and to CMS to have these discussions to try and get as comfortable as they can. But there could be a more public declaration of nonenforcement.
--Editing by Kelly Duncan and Jack Karp.
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