In this episode, we are joined by Brenna Jenny, Partner at Sidley Austin LLP, to discuss the healthcare enforcement priorities of the Biden administration.
Highlights of this episode include:
- Insights on the latest high-level DOJ enforcement trends, including False Claims Act recoveries and suits.
- Ways that the DOJ is using data to drive the selection of providers for enforcement scrutiny.
- Enforcement priorities the DOJ has related to COVID-19, such as pandemic billing flexibility.
- Three areas of enforcement that HHS is expected to prioritize.
- How HHS administrative enforcement actions may be changing in the Biden administration.
- Defensive tools that providers can leverage against healthcare enforcement.
- And more…
Mike Passanante: Hi, this is Mike Passanante and welcome back to the award-winning Hospital Finance Podcast®. All incoming presidential administrations have their own set of priorities, and the Biden administration is no different. To talk with us about healthcare enforcement priorities of the Biden administration, I’m joined by Brenna Jenny. Brenna is currently a partner in the Washington, DC office of Sidley Austin where she is a member of the healthcare practice. Before rejoining Sidley in February, Brenna served as the principal deputy general counsel at the Department of Health and Human Services as well as the chief legal officer for the Centers for Medicare & Medicaid Services. Prior to joining HHS, Brennan also worked at the Civil Division of the Department of Justice. Brenna, welcome back to the show.
Brenna Jenny: Thanks for having me back on, Mike.
Mike: It’s our pleasure. Let’s start with the high-level DOJ enforcement trends. DOJ’s False Claims Act recoveries were down last year. And in fact, it was the first time since 2009 that the annual recoveries in health care cases dipped below $2 billion. But the number of new healthcare False Claims Act suits filed by whistleblowers was up slightly, and the number of new DOJ initiated cases more than doubled. What do you make of these trends?
Brenna: First, the annual recoveries were almost certainly deflated due to the effects of the pandemic. I don’t think the dip reflects any disinterest by the government in healthcare fraud and abuse or a weaker inflow of cases. Just as many companies experienced operational disruptions due to COVID-19, for a period of time last year, the pace of government investigations, I think, did slow, but it has picked back up as DOJ has adjusted to a new normal. And I think we’ll see the resolution of a number of matters this year that have been stuck in the pipeline. Second, that spike in DOJ-initiated healthcare cases from 57 to 117 is quite notable. In public remarks, senior DOJ officials have recently acknowledged that the department has increasingly turned to running its own sophisticated data analytics on Medicare billing and claims data with the goal of identifying outliers or troubling patterns. In my mind, this is one of the most consequential developments in the enforcement space for healthcare providers in the past decade. Until recently, DOJ has used data, but it’s generally been in a way that’s been reactive. A whistleblower files a complaint, and DOJ crunches some numbers to see if the claims data are consistent with the allegations. Or a defendant during settlement negotiations presents an estimate of damages, and DOJ presents its own counter estimate. But this is a whole new frontier, and it really underscores the importance of providers having robust, data-driven compliance programs. Providers should be analyzing their own data for outliers and trends to try and resolve issues internally before they are resolved through a government investigation.
Mike: Yeah. Let’s talk about data. So what are some examples of how you see DOJ using data to drive the selection of providers for enforcement scrutiny?
Brenna: Not every theory of fraud will be amenable to affirmative assessment through data analytics, but a lot of it will be DOJ, partnering with Health and Human Services, could look across all providers and identify outliers on particular billing codes or claim modifiers. There are ways providers can try and survey the landscape in a similar manner to assess whether they are outliers as compared to their peers, but they’re going to have to work a little harder to do so. DOJ could also look at claims over time and see who has changed the most, for example, year over year, on a specific code. In particular, I think DOJ is going to employ data analytics to try and identify fraud relating to some of the temporary billing flexibilities that HHS has offered to providers during the pandemic.
Mike: What other areas relating to COVID-19 do you see as enforcement priorities for DOJ?
Brenna: For healthcare providers, I think pandemic billing regulatory flexibility is going to be a big one. For example, when I was the chief legal officer for the centers for Medicare and Medicaid Services last year, I oversaw CMS’s work to temporarily waive dozens of billing requirements. These waivers enabled everything from the Hospitals Without Walls initiative to a much broader set of payable telehealth services under Medicare. In the aggregate, there was an unprecedented amount of regulatory churn in the context of the pandemic. But as we’ve seen time and again, whenever there is regulatory churn and a significant change in billing rules, it creates a lot of enforcement scrutiny as DOJ tries to figure out who is taking advantage of the new rules in a way that’s abusive.
One area of pandemic billing flexibility that I think is going to be a particularly hot enforcement area is telehealth and communication technology-based services, which is the HHS term for things like remote patient monitoring and billing for patient portal communications. This, to me, is a really interesting area because lately, the government has been layering change over change. Separate billing for communication technology-based services opened up as a new billing option just over the past few years, and it was expanded during the pandemic. And it dovetails with significant new flexibility on the telehealth side. DOJ and the Office of Inspector General have both flagged this as an area they’re going to be monitoring very carefully.
This is also a great example of an area where providers should be thinking about doing some internal data analysis. It’s very likely the government will be looking at your company’s billing data. So you should think about taking a look first. The second major COVID-related enforcement area for healthcare providers is the Cares Act Provider Relief Fund. DOJ has also made clear in public remarks that they will be making sure that taxpayer money that funded relief payments to the healthcare industry was used appropriately. When I was at HHS, I led the department’s coordination with DOJ and the Office of Inspector General on Cares Act fraud and abuse matters. And I do know that this is something they take very seriously.
Mike: What other priorities will DOJ have under the Biden administration?
Brenna: The Anti-Kickback Statute is perhaps the single most important enforcement tool for DOJ, and that is true across administrations and across the healthcare industry. In recent years, settlements involving the Anti-Kickback Statute have been the biggest driver of recoveries under the False Claims Act. And it’s not uncommon for DOJ to begin investigating a non-kickback theory of liability. And then during the course of the investigation and the document productions, DOJ sees a kickback issue that becomes part of a global settlement. I think DOJ will be cautiously observing how providers begin to use the new safe harbors to the Anti-Kickback Statute for care coordination and patient engagement. I was very involved with regulatory reform efforts while I was at HHS, including the development of these new value-based care safe harbors.
In some respects, these safe harbors really represent a new paradigm for DOJ. For example, most safe harbors to the Anti-Kickback Statute prohibit the exchange of remuneration that varies with the volume or value of patient referrals. But the New Care Coordination Safe Harbor does not because many of the value-based arrangements HHS is trying to encourage necessarily entail the exchange of something of value in a way that varies with the number of patients participating in the care coordination arrangement. Providers should absolutely be thinking about how they can take advantage of the protections in the new Safe Harbors, but they need to do so with the understanding that this is an area that DOJ will be closely scrutinizing
Mike: Brenna, we’ve talked a lot about DOJ enforcement. How do you think HHS administrative enforcement actions will change in the Biden administration?
Brenna: Assuming Xavier Becerra is confirmed, I think we’ll see HHS take on a more direct active enforcement role. Becerra is a lawyer who is currently serving as the California Attorney General. And in that role, he has been very active with enforcement relating to the health care industry. In particular, I think he is accustomed to strategically deploying enforcement actions to achieve policy goals on issues ranging from competition to data protection.
Mike: And what are some areas of enforcement that you think HHS will prioritize?
Brenna: Three areas to watch are hospital price transparency, surprise billing and information blocking. The HHS hospital price transparency rule went into effect on January 1 of this year, and it requires hospitals to display certain pricing information online. The rule was the subject of a legal challenge, but the DC Circuit Court of Appeals upheld the rule late last year. CMS announced that starting in January, it would audit a sample of hospitals for compliance. Third parties have done some compliance checks as well, and there have been some complaints that many hospitals are not currently complying with the rule. I think HHS especially wants the secretary receives nomination and clearance from the Senate. The department is going to rigorously enforce this rule. Second, the Consolidated Appropriations Act that was passed into law at the end of last year included a ban on surprise billing. The ban goes into effect on January 1 of next year, but HHS first needs to issue implementing regulations. So they are going to need to move quickly. Providers should consider engaging with AV Agency if they have views on what that implementing rulemaking should look like. In the meantime, the terms and conditions associated with the Cares Act provide a relief on payments did include a restriction on certain balance billing as well. And I expect that HHS may begin to engage in some enforcement of that clause. Finally, I think HHS will lean into enforcement of a new rule issued late last year relating to information blocking. Information blocking covers a range of activities deemed to make it harder for patients to access their personal health information. The prohibition does not go into effect until April, and HHS still needs to finalize the penalties that are associated with information blocking. But given Becerra’s background on consumer protection and data privacy issues, I think this rule is going to be of interest to him and a big priority for him.
Mike: Given your predictions for an increase in health care enforcement, what are some defensive tools that providers have?
Brenna: I think there are three primary defensive tools providers can leverage; a strong data driven compliance program, agency engagement, and if it comes to it, affirmative litigation. I touched on this earlier, but now more than ever, it is so important for providers to incorporate data analytics into their compliance programs. The government will be analyzing your data. And so providers need to get out in front of any potential compliance concerns. If there are issues, it is much better to be in the position of working with HHS to administratively resolve overpayments than it is to be negotiating with DOJ over a False Claims Act settlement. Second, it’s important to affirmatively engage with HHS if you think the department is not following the rules. There are very specific legal guardrails governing how agencies act and in particular, requirements that agencies use notice and comment rulemaking before imposing any binding new obligations on regulated entities. Over the past few years, HHS along with other federal agencies, have really tightened up their practices in this regard. But it is still a constant temptation for agencies to short circuit this process by using sub-regulatory guidance. If you think HHS did not follow the proper procedures, there can be real value to engaging with HHS on the matter. In particular, sometimes there are advantages to affirmatively raising issues with HHS rather than having to wait and invoke those arguments defensively and an enforcement action. Finally, particularly where agency engagement has failed, sometimes affirmative litigation is necessary, either to challenge the substance of a rule or the procedures around an HHS action.
Mike: Brenna, thank you for helping us understand more about the health care enforcement priorities of the Biden administration. If someone wanted to find out more about you or your firm, where can they go?
Brenna: You can go to Sidley Austin’s website or search my name, Brenna Jenny.
Mike: Brenna, thank you so much for joining us on the Hospital Finance Podcast.
Brenna: Thanks for having me, Mike.