DOJ-Atrium Settlement Signals Possible Antitrust Risks From Common Provider Contract Terms

November 18, 2018

Hospitals and other health care providers, health care payers, health care providers, managed care and practice management service providers and others structuring or working with preferred provider or other managed health care contracts should weigh the potential implications on their health plan provider agreements and managed care practices of the antitrust lawsuit  jointly brought by the U.S. Department of Justice and the North Carolina Attorney General against North Carolina’s largest healthcare system, The Charlotte-Mecklenburg Hospital Authority d/b/a Atrium Health (“Atrium”) which challenges steering restrictions and other contractual protections of Atrium against competition from other contracted health care providers.

Court documents filed by the Justice Department with the U.S. District Court for the Western District of North Carolina on November 15, 2018, seek Court approval of a Joint Stipulation and Final Judgment (“Consent Decree”), which if approved by the Court, will resolve a civil antitrust lawsuit challenging Atrium’s practice of requiring and enforcing “steering restrictions” in its managed care provider agreements with commercial insurers, self-insured employer and union health plans and other private payer that prohibit the payers from steering patients to, or sharing information about other potentially more cost-effective competitor hospitals, physicians or other health care providers filed by the Justice Department in June, 2016.  While the emphasis by the Justice Department of the market dominance of Atrium in the factual allegations contained in its complaint raise questions about whether the Justice Department would undertake similar litigation against less market dominant providers, the charges made by the Justice Department in its complaint and the agreement by Atrium to cease the challenged conduct nevertheless raise a substantial basis for concern by other health care providers and payers about their own potential antitrust risks from negotiating to include, including or enforcing a wide range of provider steering and other contractual provisions commonly included in many preferred provider contracts between health plans, insurers and their managed care organizations and the health care providers that contract to be participating providers for their health plan narrow network or other managed care provider panels.

It should be noted that steering, and commitments to steer and not to steer patients to various providers are a longstanding and key component of the structure of most preferred provider contracts used in the managed care industry.  Steering refers to practices payers historically use to offer or encourage patients and other health care consumers to access care from health care providers that the payer perceives as a more cost effective provider.  Historically, insurers promised to steer patients to health care providers contracting to become “preferred providers” to health plan members in return for health care provider’s agreement to provide care a preferred rates or in accordance with other health plan rules.  With most health care providers now participating in provider networks, however, payers increasingly want to steer members to lower cost providers within the provider network to maximize savings and place pressure on higher cost participating providers to reduce rates.  If the higher cost providers have most favored nation or other contractual safeguards like those in Atrium’s provider contracts, however, contractual barriers obstruct these efforts by payers.  The insurers in Atrium used antitrust complaints filed with the Justice Department to attack these contractual barriers.

Formerly known as Carolinas HealthCare System, the dominant health care provider in the Charlotte, North Carolina area, and one of the largest not-for-profit healthcare systems in the United States, Atrium provides healthcare services throughout the Carolinas, including in hospitals, freestanding emergency departments, urgent care centers, physician practices, outpatient surgery centers, imaging centers, nursing homes, and laboratories.   Atrium’s flagship facility is Carolinas Medical Center, the largest hospital in North Carolina. Atrium also operates eight other general acute-care hospitals in the Charlotte area and owns, manages, or has strategic affiliations with more than 40 hospitals in the Carolinas.

The Justice Department complaint filed on June 9, 2016 charges that Atrium violated federal antitrust law by using its dominant market power to force commercial payers to agree to include various steering and transparency restrictions in their managed care contracts with Atrium in a manner that illegally restricts competition in violation of federal antitrust laws. The challenged provisions include a series of promises historically included in many provider agreements such as provisions requiring that the private payer:

  • To steer plan members to participating providers;
  • Not to steer plan members away from participating providers;
  • To include Atrium providers in any new networks or preferential treatment afforded to any other contracting provider in new or all plans, products, networks and preferred provider classifications; and
  • Not to exclude from and/or to provide the provider with the right to receive any new preferences or rewards for being a preferred provider.

Although provider contracts historically have included many of these same provisions, the Justice Department in its lawsuit against Atrium charged that Atrium illegally used its dominant market position to negotiate managed care contracts paying higher reimbursement rates than other less dominant contracted providers received and used the challenged contract provisions to insulate itself against competition from other network providers offer care at more cost effective rates.  The Justice Department contends the challenged provisions allow Atrium to continue to charge higher prices free from effective competition from other health care providers by prohibiting the private payers from steering patients to other health care providers and guaranteeing Atrium the most preferential treatment available even if its rates are not competitive with those of other providers enjoying the same status.  In its Atrium complaint, the Justice Department asserts that Atrium’s steering restrictions harm payers and consumers in violation of federal antitrust laws by obstructing the ability of insurers to design health benefit plans that give patients financial incentives to choose more cost-effective hospitals and physicians. The Justice Department contends these actions by Atrium force health insurers not to encourage consumers to choose other healthcare providers that offer better overall value and from providing consumers and employers with information regarding the cost and quality of alternative health benefit plan.

More than two years after the Justice Department commenced the lawsuit, court documents filed with the Court by the Justice Department on November 15, 2018 reflect the parties now have agreed to settle the lawsuit.  The Justice Department filed an unopposed motion that asks to enter a Consent Decree implementing the terms of a settlement which would preclude Atrium from seeking to negotiate or enforce a wide range of steering and transparency restrictions in existing or future preferred provider agreements. While Atrium would not pay any damages under the proposed Consent Degree, the proposed Consent Decree would:

  • Prohibit Atrium from seeking to negotiate, include or enforce steering or transparency restrictions in its provider agreements with private payers or otherwise seeking contract terms or taking actions that would prohibit, prevent, or penalize payers for steering or sharing information to promote transparency in the future in any Narrow Network Benefit Plan, Tiered Network Benefit Plan, or any Benefit Plan with Reference-Based Pricing or a Center of Excellence as a component in the Charlotte area; and
  • Void or restrict Atrium from enforcing certain specific existing steering and transparency restrictions in Atrium’s existing preferred provider agreements with various commercial insurers identified in exhibits to the Consent Decree except with respect to certain “carve out networks.”

If approved in its current form, the Consent Decree will both void a host of existing contractual safeguards currently included in Atrium’s existing provider contracts and affirmatively prohibit Atrium from seeking seek or enforce other safeguards insulating it from competition from other lower cost health care providers by defining “penalties” broadly to include any contract term or action with the likely effect of significantly restraining steering through steered plans or transparency under the facts and circumstances considering the contract provision or action; its economic impact; and the extent to which the contract provision or action has potential or actual procompetitive effects in the Charlotte Area.

Special rules applicable to Department of Justice antitrust settlements under the Tunney Act require the Justice Department to publish the proposed settlement to be implemented by the Consent Decree and the Department’s competitive impact statement in the Federal Register and allow a public comment period of 60 days before the court can approve the Consent Decree. Any person may submit written comments concerning the proposed settlement during a 60-day comment period to Peter J. Mucchetti, Chief, Healthcare and Consumer Products Section, Antitrust Division, U.S. Department of Justice, 450 Fifth Street, N.W., Suite 4100, Washington, D.C. 20530.  After the comment period closes, the Court will consider the motion taking into account the comments and other factors it determines appropriate.  Barring unforeseen circumstances, the U.S. District Court for the Western District of North Carolina likely will approve the proposed consent decree upon finding that it serves the public interest.

Because the contractual provisions challenged as anti-competitive in the Atrium litigation are of a nature widely used within the managed care industry, health care providers, health insurers, self-insured employer and union health plans and their sponsors and others involved in the managed care industry should weigh the potential implications of the Atrium litigation and its anticipated resolution on their own provider contracting strategies and practices as well as those of their competitors.

Contractual provisions like those challenged in the Atrium litigation are widely used throughout the managed care industry.  Steerage of patients to the participating provider and associated competitive protections historically has been the primary inducements and considerations that providers receive in return for agreeing to accept payer rates and other rules for a health care provider to qualify for inclusion on the payer’s provider panel.  Consequently, provider contracts between payers and participating providers commonly include steering, transparency or other restrictions similar in function if not form to those contested in the Atrium litigation. Moreover, promises regarding steering are not limited to provider agreements between payers and providers.  Insurers, preferred provider organizations and other managed care organization typically require employer, union or other health plan sponsors of health plans with preferred provider or other managed care features contractually to commit to design their health plans to incorporate features that steer plan members to use preferred providers and prohibit plan members from taking advantage of potentially lower cash or other rates that a participating provider might offer to patients choosing to circumvent the provider network to access care.  Since the Atrium litigation raises questions about potential challenges to the enforceability and legality of similar steering and contractual provisions insulating contracted providers from competition health care providers and payers with or negotiating preferred provider contracts that contain anti-steering or other contractual provisions like those challenged in the Atrium litigation and the self-insured group health plans that contract to access provider networks using these contracts should weigh carefully the potential risks of participating in contractors or seeking to negotiate or enforce these provisions taking into account their own specific facts and circumstances and the current guidance within qualified legal counsel within the scope of attorney-client privilege.

While some might be tempted to assume from Atrium’s market dominance that the Atrium challenge and litigation challenges apply only to provider agreements involving providers with substantial market dominance in their region, this is not necessarily the case.  Broader existing antitrust precedent concerning restraints on competition arguably provide some grounds for concern that the Justice Department or private litigants might seek to leverage the antitrust challenges raised in the Atrium litigation to challenge Atrium-like steering restrictions, most favored nation status and other similar clauses in preferred provider and other managed care agreements involving health care providers or others with a much smaller market share.  Likewise, it remains whether evidence showing the insurer, rather than the provider, originally proposed the questioned provision could impact the risk or render the contracts more defensible.

Despite these and other questions about the extent to which the challenges raised to the Atrium contracts will be asserted, much less successfully litigated with respect to provider protections contained in other preferred provider agreements, those negotiating or involved in preferred provider agreements containing similar provisions should consider and monitor the potential risks and weigh their options for mitigating these risks.  Among other things, it is important to keep in mind that antitrust violations carry potential civil and in some cases, even criminal violations, for participating or conspiring to participate in prohibited anticompetitive arrangements.  Thus both payers and providers participating or contemplating participating in contracts or negotiation to interject the challenged provisions into their own provider agreements should weigh their actions carefully.  Moreover, even when only civilly prosecuted, potential civil damages and defense costs often are substantial.  Accordingly, while the Justice Department prosecution of Atrium was civil, rather than criminal in nature and the agreed upon Judgement presented to the Court to end the litigation does not require Atrium to pay any monetary damages, future plaintiffs should not assume that they would similarly avoid such damages in the event their own practices are successfully challenged.  Consequently, health care providers, as well as health insurers, employer and union health plans and other private sector payers, and others participating in the negotiation or administration of, or competing in market regions with preferred provider agreements containing steering restrictions or other contractual provisions similar in form or function to those challenged in the Atrium litigation should seek specific legal advice about the potential implications of antitrust challenges raised in the Atrium Judgement on their practices and market situation and options for mitigating those risks.

About the Author

Recognized by her peers as a Martindale-Hubble “AV-Preeminent” (Top 1%) and “Top Rated Lawyer” with special recognition LexisNexis® Martindale-Hubbell® as “LEGAL LEADER™ Texas Top Rated Lawyer” in Health Care Law and Labor and Employment Law; as among the “Best Lawyers In Dallas” for her work in the fields of “Labor & Employment,” “Tax: Erisa & Employee Benefits,” “Health Care” and “Business and Commercial Law” by D Magazine, Cynthia Marcotte Stamer is a practicing attorney board certified in labor and employment law by the Texas Board of Legal Specialization and management consultant, author, public policy advocate and lecturer widely known for 30+ years of managed care and other health industry, health and other benefit and insurance, workforce and other management work, public policy leadership and advocacy, coaching, teachings, and publications.

Past Chair of the ABA Managed Care & Insurance Interest Group and, a Fellow in the American College of Employee Benefit Counsel, the American Bar Foundation and the Texas Bar Foundation, Ms. Stamer has been continuously involved the design, regulation, administration and defense of managed care and other health care and health benefit arrangements, contracts, systems, and processes throughout her career.  In addition to her extensive provider and payer contracting work, Ms. Stamer also is recognized for her knowledge, experience and leadership on health benefit, health care, health, financial and other information technology, data and related process and systems development, policy and operations throughout her career, and scribe of the ABA JCEB annual Office of Civil Rights agency meeting, Ms. Stamer also is widely recognized for her extensive work and leadership on leading edge health care and benefit policy and operational issues. Highly valued for her rare ability to find pragmatic client-centric solutions by combining her detailed legal and operational knowledge and experience with her talent for creative problem-solving, Ms. Stamer’s clients include employers and other workforce management organizations; employer, union, association, government and other insured and self-insured health and other employee benefit plan sponsors, benefit plans, fiduciaries, administrators, and other plan vendors;  managed care organizations, insurers, self-insured health plans and other payers and their management; public and private, domestic and international hospitals, health care systems, clinics, skilled nursing, long term care, rehabilitation and other health care providers and facilities; medical staff, health care accreditation, peer review and quality committees and organizations; managed care organizations, insurers, third party administrative services organizations and other payer organizations; billing, utilization management, management services organizations; group purchasing organizations; pharmaceutical, pharmacy, and prescription benefit management and organizations; claims, billing and other health care and insurance technology and data service organizations; other health, employee benefit, insurance and financial services product and solutions consultants, developers and vendors; and other health, employee benefit, insurance, technology, government and other management clients.

A former lead consultant to the Government of Bolivia on its Pension Privatization Project with extensive domestic and international public policy concerns in pensions, healthcare, workforce, immigration, tax, education and other areas, Ms. Stamer has been extensively involved in U.S. federal, state and local health care and other legislative and regulatory reform impacting these concerns throughout her career. Her public policy and regulatory affairs experience encompassess advising and representing domestic and multinational private sector health, insurance, employee benefit, employer, staffing and other outsourced service providers, and other clients in dealings with Congress, state legislatures, and federal, state and local regulators and government entities, as well as providing advice and input to U.S. and foreign government leaders on these and other policy concerns.

Beyond her public policy and regulatory affairs involvement, Ms. Stamer also has extensive experience helping these and other clients to design, implement, document, administer and defend workforce, employee benefit, insurance and risk management, health and safety, and other programs, products and solutions, and practices; establish and administer compliance and risk management policies; comply with requirements, investigate and respond to government; accreditation and quality organizations; private litigation and other federal and state health care industry investigations and enforcement actions; evaluate and influence legislative and regulatory reforms and other regulatory and public policy advocacy; training and discipline; enforcement, and a host of other related concerns. Ms. Stamer’s experience in these matters includes supporting these organizations and their leaders on both a real-time, “on demand” basis with crisis preparedness, intervention and response as well as consulting and representing clients on ongoing compliance and risk management; plan and program design; vendor and employee credentialing, selection, contracting, performance management and other dealings; strategic planning; policy, program, product and services development and innovation; mergers, acquisitions, and change management; workforce and operations management, and other opportunities and challenges arising in the course of their operations.

As a key part of this work, Ms. Stamer throughout her career regularly has worked with health care providers and payers, employer and other health benefit plan sponsors and vendors, health industry, insurers, health IT, life sciences and other health and insurance industry clients design, document and enforce managed care and other contracts, benefit plans and insurance arrangements, practices, policies, systems and solutions; manage regulatory, contractual and other legal and operational compliance; vendors, supplier, and patient and member relations and requirements; deal with Medicare, Medicaid, CHIP, Medicare/Medicaid Advantage, ERISA, state insurance law and other private payer rules and requirements; contracting; licensing; terms of participation; medical billing, reimbursement, claims administration and coordination, and other provider-payer relations; reporting and disclosure, government investigations and enforcement, privacy and data security; and other compliance and enforcement; Form 990 and other nonprofit and tax-exemption; fundraising, investors, joint venture, and other business partners; quality and other performance measurement, management, discipline and reporting; physician and other workforce recruiting, performance management, peer review and other investigations and discipline, wage and hour, payroll, gain-sharing and other pay-for performance and other compensation, training, outsourcing and other human resources and workforce matters; board, medical staff and other governance; strategic planning, process and quality improvement; HIPAA administrative simplification, meaningful use, EMR, HIPAA and other technology, data security and breach and other health IT and data; STARK, antikickback, insurance, and other fraud prevention, investigation, defense and enforcement; audits, investigations, and enforcement actions; trade secrets and other intellectual property; crisis preparedness and response; internal, government and third-party licensure, credentialing, accreditation, HCQIA, HEDIS and other peer review and quality reporting, audits, investigations, enforcement and defense; patient relations and care; internal controls and regulatory compliance; payer-provider, provider-provider, vendor, patient, governmental and community relations; facilities, practice, products and other sales, mergers, acquisitions and other business and commercial transactions; government procurement and contracting; grants; tax-exemption and not-for-profit; 1557 and other Civil Rights; privacy and data security; training; risk and change management; regulatory affairs and public policy; process, product and service improvement, development and innovation, and other legal and operational compliance and risk management, government and regulatory affairs and operations concerns.

Ms. Stamer also has extensive health care reimbursement and insurance experience advising and defending plan sponsors, administrators, insurance and managed care organizations, health care providers, payers, and others about Medicare, Medicaid, Medicare and Medicaid Advantage, Tri-Care, self-insured group, association, individual and employer and association group and other health benefit programs and coverages including but not limited to advising public and private payers about coverage and program design and documentation, advising and defending providers, payers and systems and billing services entities about systems and process design, audits, and other processes; provider credentialing, and contracting; providers and payer billing, reimbursement, claims audits, denials and appeals, coverage coordination, reporting, direct contracting, False Claims Act, Medicare & Medicaid, ERISA, state Prompt Pay, out-of-network and other nonpar insured, and other health care claims, prepayment, post-payment and other coverage, claims denials, appeals, billing and fraud investigations and actions and other reimbursement and payment related investigation, enforcement, litigation and actions. Scribe for the ABA JCEB annual agency meeting with HHS OCR, she also has worked extensively on health and health benefit coding, billing and claims, meaningful use and EMR, billing and reimbursement, quality measurement and reimbursement, HIPAA, FACTA, PCI, trade secret, physician and other medical, workforce, consumer financial and other data confidentiality and privacy, federal and state data security, data breach and mitigation, and other information privacy and data security concerns.

Author of leading works on a multitude of health care, health plan and other health industry matters, the American Bar Association (ABA) International Section Life Sciences Committee Vice Chair, a Scribe for the ABA Joint Committee on Employee Benefits (JCEB) Annual OCR Agency Meeting, former Vice President of the North Texas Health Care Compliance Professionals Association, past Chair of the ABA Health Law Section Managed Care & Insurance Section, past ABA JCEB Council Representative and CLE and Marketing Committee Chair, past Board President of Richardson Development Center (now Warren Center) for Children Early Childhood Intervention Agency, past North Texas United Way Long Range Planning Committee Member, and past Board Member and Compliance Chair of the National Kidney Foundation of North Texas, Ms. Stamer’s health industry clients include public health organizations; public and private hospitals, healthcare systems, clinics and other health care facilities; physicians, physician practices, medical staff, and other provider organizations; skilled nursing, long term care, assisted living, home health, ambulatory surgery, dialysis, telemedicine, DME, Pharma, clinics, and other health care providers; billing, management and other administrative services organizations; insured, self-insured, association and other health plans; PPOs, HMOs and other managed care organizations, insurance, claims administration, utilization management, and other health care payers; public and private peer review, quality assurance, accreditation and licensing; technology and other outsourcing; healthcare clearinghouse and other data; research; public and private social and community organizations; real estate, technology, clinical pathways, and other developers; investors, banks and financial institutions; audit, accounting, law firm; consulting; document management and recordkeeping, business associates, vendors, and service providers and other professional and other health industry organizations; academic medicine; trade associations; legislative and other law making bodies and others.

A popular lecturer and widely published author on health industry concerns, Ms. Stamer continuously advises health industry clients about contracting, credentialing and quality assurance,  compliance and internal controls, workforce and medical staff performance, quality, governance, reimbursement, privacy and data security, and other risk management and operational matters. Author of works on Payer and Provider Contracting and many other managed care concerns, Ms. Stamer also publishes and speaks extensively on health and managed care industry regulatory, staffing and human resources, compensation and benefits, technology, public policy, reimbursement and other operations and risk management concerns.

A Fellow in the American College of Employee Benefit Counsel, the American Bar Foundation and the Texas Bar Foundation, Ms. Stamer also shares her thought leadership, experience and advocacy on these and other related concerns by her service in the leadership of the Solutions Law Press, Inc. Coalition for Responsible Health Policy, its PROJECT COPE: Coalition on Patient Empowerment, and a broad range of other professional and civic organizations including North Texas Healthcare Compliance Association, a founding Board Member and past President of the Alliance for Healthcare Excellence, past Board Member and Board Compliance Committee Chair for the National Kidney Foundation of North Texas; former Board President of the early childhood development intervention agency, The Richardson Development Center for Children (now Warren Center For Children); current Vice Chair of the ABA Tort & Insurance Practice Section Employee Benefits Committee, current Vice Chair of Policy for the Life Sciences Committee of the ABA International Section, Past Chair of the ABA Health Law Section Managed Care & Insurance Section, a current Defined Contribution Plan Committee Co-Chair, former Group Chair and Co-Chair of the ABA RPTE Section Employee Benefits Group, past Representative and chair of various committees of ABA Joint Committee on Employee Benefits; a ABA Health Law Coordinating Council representative, former Coordinator and a Vice-Chair of the Gulf Coast TEGE Council TE Division, past Chair of the Dallas Bar Association Employee Benefits & Executive Compensation Committee, a former member of the Board of Directors of the Southwest Benefits Association and others.

For more information about Ms. Stamer or her health industry and other experience and involvements, see here or contact Ms. Stamer via telephone at (214) 452-8297 or via e-mail here.

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Key House Committee Votes To Advance HSA & Other Health Choice Reforms; Plans 7/17 Health Care Fraud Hearings

July 13, 2018

A flurry of activity in the House Ways & Means Committee and other Congressional committees over the past few weeks signals the advisability of keeping a close eye on health care and health benefit reform proposals this Summer in anticipation of both the Fall health benefit enrollment and renewal season and the mid-term November Congressional elections.

Certainly continued Congressional commitment to pursue reform is evident from the House Ways & Means Committee’s health care heavy agenda of hearings and votes that this week alone resulted in its voting in favor of 11 health care reform bills promising new flexibility for employers about how to design their health plans and American families more health care choices and choice about how to pay for it and what coverage to buy popular with many providers, patients and employer and other health plan sponsors. While it remains to be seen if the House and Senate can agree on any or all of these proposal, the bi-partisan sponsorship of many of these proposals and the intensity of the focus of the Committee and others in Congress reflects a strong interest in health care reform by both parties leading up to November that could impact health benefit and other health care choices for providers, employers and American families in the Fall annual enrollment season.

The legislation passed by the Ways & Means Committee this weeks include bills that would:

  • Provide relief for employers relief from the Obamacare’s employer mandate and delay for an additional year the effective date of the widely disliked “Cadillac Tax;”
  • Overrule the “Use it Or Lose It” requirement in current Internal Revenue Regulations for healthcare flexible spending arrangement plans (HFSAs) that currently forces employers sponsoring HFSAs to draft their plans to require employees to forfeit unused salary reduction contributions in their HFSA accounts at the end of the year;
  • Offer individuals and families eligible for Obamacare created health premium subsidies more choice about where to obtain that coverage using their subsidies; and
  • Expand expand the availability and usability of HSAs in a multitude of ways.

While the recurrent stalling of past reform efforts over the past few years calls into question whether any or all of these proposals can make it through the highly politicized and divided Congress, bi-partisian sponsorship of most of the bills reported out this week at least raises the possibility that some of these proposals enjoy sufficient bi-partisan support to potentially pass before the elections. With both parties viewing health care reform as a key issue in the upcoming elections, voter feedback on these proposals could play a big role in determining the prospects for passage this Summer.

Passage of any or all of these proposed reforms between now and year end likely will fuel the need for last minute reconsideration and potential adjustments in plan design choices of employers and other health plan sponsors and administrators, reconsideration of health benefit enrollment choices of individual Americans and their families and a reconsideration of practice billing and health plan participation decisions of physicians and other health care providers. Accordingly, health care providers, employers and other health plan sponsors, American taxpayers and their families and others impacted by health care and health benefit policies will want to carefully monitor these reforms as the Summer progresses:

  • To provide timely input to Congress on proposed reforms of particular benefit or concern;
  • To help plan for and deal with rules changes that could impact their options and choices during the upcoming health plan renewal and enrollment season this Fall and going forward; and
  • To be prepared to make informed choices when voting in the upcoming mid-term Congressional elections in November.

To learn more details about this proposed legislation, its potential implications or other related concerns, see here or contact the author.

About the Author

After holding hearings on health savings account reforms and passing a flurry of health care reform bills intended to give employers relief from two key Obamacare mandates, to allow Obamacare subsidy-eligible Americans the choice to use the subsidies to purchase health care coverage not offered by the Obamacare exchanges,  and a host of bills that would expand availability and usability of health savings account (HSA) and health care flexible spending account (HFSA) programs this week, the House Ways and Means Committee will turn its attention to health care fraud oversight and reform next week by holding hearings Tuesday on those health concerns.  Health care providers, employer and other health plan sponsors, individual Americans and their families, and others interested in health benefit and health care reform will want to keep a close eye on these and other developments as Congress continues to debate health care reform in the runup to the upcoming 2018 health benefit plan renewal and annual enrollment season and November’s mid-term elections.

Committee Approved 11 Health Care Reform Bills This Week

As a part of its health reform efforts this week, the Committee voted to advance 11 health care reform bills offering new flexibility for employers about how to design their health plans and American families more health care choices and choice about how to pay for it and what coverage to buy popular with many providers, patients and employer and other health plan sponsors.

Among the approved legislation is a bill that would provide key relief for employers from certain key Obamacare mandates that have been widely unpopular with employers.  H.R. 4616, the “Employer Relief Act of 2018,” sponsored by Rep. Devin Nunes (R-CA) and Rep. Mike Kelly (R-PA), which would give employers sponsoring health plans for their employees retroactive relief from Obamacare’s onerous employer mandate and delay for an additional year the effective date of another Obamacare requirement that when effective, will forces employers to pay the 40 percent tax on amounts paid for employer sponsored health care coverage  that exceeds cost limits specified in the Obamacare legislation commonly known as the “Cadillac Tax.”  Relief from the Cadillac Tax is widely perceived as benefiting bother employers and their employees, as its provisions penalize employers for spending more for employee health coverage than limits specified in the Obamacare law.  These provisions also are particularly viewed by many as unfair because rising health plan costs since Obamacare’s passage make it likely that many employers will incur the tax penalty simply by sponsoring relatively basic health plans meeting the Obamacare mandates.

In addition to H.R. 4616,  the Committee also voted to approve H.R. 6313, the “Responsible Additions and Increases to Sustain Employee Health Benefits Act of 2018,” sponsored by Rep. Steve Stivers (R-OH), which would overrule the “Use it Or Lose It” requirement in current Internal Revenue Regulations for HFSAs.  Currently, this rule forces employers sponsoring HFSAs to draft their plans to require employees to forfeit unused salary reduction contributions in their HFSA accounts at the end of the year.  The bill would allow employers to eliminate this forfeiture requirement so that employees could carry over any remaining unused balances in their HFSAs at the end of the year to use in a later  year.

The Committee also voted to advance legislation to offer individuals and families eligible for Obamacare created health premium subsidies more choice about where to obtain that coverage.  H.R. 6311, the “Increasing Access to Lower Premium Plans Act of 2018,” sponsored by Chairman Peter Roskam (R-IL) and Rep. Michael C. Burgess, M.D. (R-TX), would provide individuals receiving subsidies to help purchase health care coverage through the Obamacare-created health insurance exchange the option to use their premium tax credit to purchase health care coverage from qualified plans offered outside of the exchanges.  Currently, subsidies may only be used to purchase coverage from health plans offered through the exchange, which often are much more costly and offer substantially fewer coverage options and less provider choice.  In addition, the bill would expand access to the lowest-premium plans available for all individuals purchasing coverage in the individual market and allows the premium tax credit to be used to offset the cost of such plans.

Along with these reforms, the Committee also voted to pass a host of bills that would expand the availability and usability of HSAs including:

  • H.R. 6301, the “Promoting High-Value Health Care Through Flexibility for High Deductible Health Plans Act of 2018,” co-sponsored by Health Subcommittee Chairman Peter Roskam (R-IL) and Rep. Mike Thompson (D-CA), which seeks to expand access and enhance  the utility of Health Savings Accounts (HSAs) by offering patients greater flexibility in designing their plan design while still being able to maintain their eligibility for HSA contributions.
  • H.R. 6305, the “Bipartisan HSA Improvement Act of 2018,” sponsored by Rep. Mike Kelly (R-PA) and Rep. Earl Blumenauer (D-OR), which also would expand HSA access and  utility by allowing spouses to also make contributions to HSAs is their spouse has an FSA and lets employers offer certain services to employees through on-site or retail clinics.
  • H.R. 6317, the “Primary Care Enhancement Act of 2018,” co-sponsored by Rep. Erik Paulsen (R-MN) and Rep. Earl Blumenauer (D-OR), which seeks to protect HSA-eligible individuals who participate in a direct primary care (DPC) arrangement from losing their HSA-eligibility merely because of their participation in a DPC. In addition, it allows DPC provider fees to be covered with HSAs.
  • H.R. 6312, the “Personal Health Investment Today (PHIT) Act,” sponsored by Rep. Jason Smith (R-MO) and Rep. Ron Kind (D-WI), which seeks to fight obesity and promote wellness by allowing taxpayers to use tax-preferred accounts to pay costs of gym membership or exercise classes, children’s school sports programs and certain other wellness programs and activities.
  • H.R. 6309, the “Allowing Working Seniors to Keep Their Health Savings Accounts Act of 2018,” sponsored by Rep. Erik Paulsen (R-MN), which would expand HSA eligibility to include Medicare eligible seniors who are still in the workforce.
  • H.R.6199, the “Restoring Access to Medication Act of 2018,” sponsored by Rep. Lynn Jenkins (R-KS) and Rep. Grace Meng (D-NY), which would reverse Obamacare’s prohibition on using tax-favored health accounts to purchase over-the-counter medical products and would add feminine products to the list of qualified medical expenses for the purposes of these tax-favored health accounts.
  • H.R. 6306, the “Improve the Rules with Respect to Health Savings Accounts,” sponsored by Rep. Erik Paulsen (R-MN), which would increase the contribution limits for HSAs and further enhances flexibility in plans by allowing both spouses to contribute to make catch-up contributions to the same account and creating a new grace period for medical expenses incurred before the HSA was established.
  • H.R. 6314, the “Health Savings Act of 2018,” sponsored by Rep. Burgess (R-TX) and Rep. Roskam (R-IL), would expand eligibility and access to HSAs by allowing plans categorized as “catastrophic” and “bronze” in the exchanges to qualify for HSA contributions.

Committee Considers Health Care Fraud Next Week 

The Committee next week will turn its attention to health care fraud by holding two hearings on Tuesday.

Both hearings are scheduled to take place in Room 1100 Longworth and their proceedings will be live streamed on YouTube.

The Committee’s health care reform focus this week and next are reflective of the continued emphasis of members of Congress in both parties on health care reform legislation as they prepare for the impending mid-term elections in November.  As a part of these efforts,  the House and Senate already over the past several months have held a wide range of hearings in various committees and key votes on a multitude of reform proposals.  Numerous other hearings and votes are planned over the next several months as Congressional leaders from both parties work to advance their health care agendas in anticipation of the upcoming elections.

Key health care and health benefit reform  proposals that the Republican Majority has designated for priority consideration include:

  • Prescription drug costs by checking perceived negative effects of health industry and health plan consolidations involving large health insurers, pharmacy benefit  management companies (PBMs), pharmacy companies and other health industry and health insurance organizations on health care costs and patient, plan sponsor and plan sponsor choice and health care quality;
  • Oversight and reform of existing STARK, anti-kickback and other federal health care rules and exemptions relied upon by PBMs and other health industry organizations;
  • Efforts to understand and address health care treatment, health care and coverage costs and related social concerns associated with mental health and opioid and other substance abuse conditions and their treatment;
  • Efforts promote health  benefit and health care choice, affordability and coverage;  improve patient and employer choice; promote broader health care access and quality; reduce counterproductive regulation; and other health insurance and care improvements through expanded availability of health savings accounts, direct primary care and other consumer directed health care options, association health plan and other program options, streamlining quality reporting and regulation, billing and coding, physician and other health care provider electronic billing and recordkeeping,  and other provider,  payer, employer, individual and other health insurance mandates and other federal health care and health plan rules; and
  • More.

Health care providers, employers and other health plan sponsors, American taxpayers and their families and others will want to carefully monitor these reforms as the Summer progresses:

  • To provide timely input to Congress on proposed reforms of particular benefit or concern;
  • To help plan for and deal with rules changes that could impact their options and choices during the upcoming health plan renewal and enrollment season this Fall and going forward; and
  • To be prepared to make informed choices when voting in the upcoming mid-term Congressional elections in November.

About the Author

Recognized repeatedly by her peers as a Martindale-Hubble “AV-Preeminent” (Top 1%) and “Top Rated Lawyer” with special recognition LexisNexis® Martindale-Hubbell® as “LEGAL LEADER™ Texas Top Rated Lawyer” in Health Care Law and Labor and Employment Law; as among the “Best Lawyers In Dallas” for her work in the fields of “Labor & Employment,” “Tax: Erisa & Employee Benefits,” “Health Care” and “Business and Commercial Law” by D Magazine, Cynthia Marcotte Stamer is a practicing attorney board certified in labor and employment law by the Texas Board of Legal Specialization and management consultant, author, public policy advocate and lecturer widely known for 30+ years of health industry, health and other benefit, workforce and other management work, public policy leadership and advocacy, coaching, teachings, and publications.

Highly valued for her rare ability to find pragmatic client-centric solutions by combining her detailed legal and operational knowledge and experience with her talent for creative problem-solving, Ms. Stamer’s clients include employer, associations, government and other health benefit sponsors and administrators, public and private, domestic and international hospitals, health care systems, clinics, skilled nursing, long term care, rehabilitation and other health care providers and facilities; medical staff, accreditation, peer review and quality committees and organizations; billing, utilization management, management services organizations, group purchasing organizations; pharmaceutical, pharmacy, and prescription benefit management and organizations; consultants; investors; technology, billing and reimbursement and other services and product vendors; products and solutions consultants and developers; investors; managed care organizations, insurers, self-insured health plans and other payers; and other health industry, insurance, technology, government and other management clients.

A former lead consultant to the Government of Bolivia on its Pension Privatization Project with extensive domestic and international public policy concerns in pensions, healthcare, workforce, immigration, tax, education and other areas, Ms. Stamer has been extensively involved in U.S. federal, state and local health care and other legislative and regulatory reform impacting these concerns throughout her career.

Beyond her public policy and regulatory affairs involvement, Ms. Stamer also has extensive experience helping these and other clients to design and reform programs and practices; establish and administer compliance and risk management policies; comply with requirements, investigate and respond to government; accreditation and quality organizations; private litigation and other federal and state health care industry investigations and enforcement actions; evaluate and influence legislative and regulatory reforms and other regulatory and public policy advocacy; training and discipline; enforcement, and a host of other related concerns. supports these organizations and their leaders on both a real-time, “on demand” basis as well as outsourced operations or special counsel on an interim, special project, or ongoing basis with strategic planning and product and services development and innovation; workforce and operations management, crisis preparedness and response as well as to prevent, stabilize and cleanup legal and operational crises large and small that arise in the course of operations.

Past Chair of the ABA Managed Care & Insurance Interest Group and, a Fellow in the American College of Employee Benefit Counsel, the American Bar Foundation and the Texas Bar Foundation, Ms. Stamer has extensive health care reimbursement and insurance experience advising and defending health care providers, payers, and others about Medicare, Medicaid, Medicare and Medicaid Advantage, Tri-Care, self-insured group, association, individual and employer and association group and other health benefit programs and coverages including but not limited to advising public and private payers about coverage and program design and documentation, advising and defending providers, payers and systems and billing services entities about systems and process design, audits, and other processes; provider credentialing, and contracting; providers and payer billing, reimbursement, claims audits, denials and appeals, coverage coordination, reporting, direct contracting, False Claims Act, Medicare & Medicaid, ERISA, state Prompt Pay, out-of-network and other nonpar insured, and other health care claims, prepayment, post-payment and other coverage, claims denials, appeals, billing and fraud investigations and actions and other reimbursement and payment related investigation, enforcement, litigation and actions.

Heavily involved in health care and health information technology, data and related process and systems development, policy and operations innovation and a Scribe for ABA JCEB annual agency meeting with OCR for many years who has authored numerous highly-regarded works and training programs on HIPAA and other data security, privacy and use, Ms. Stamer also is widely recognized for her extensive work and leadership on leading edge health care and benefit policy and operational issues including meaningful use and EMR, billing and reimbursement, quality measurement and reimbursement, HIPAA, FACTA, PCI, trade secret, physician and other medical confidentiality and privacy, federal and state data security and data breach and other information privacy and data security rules and many other concerns.

Ms. Stamer helps health industry, health plans and insurers, health IT, life sciences and other health industry clients design, document and enforce plans, practices, policies, systems and solutions; manage regulatory, contractual and other legal and operational compliance; vendors and suppliers; Medicare, Medicaid, CHIP, Medicare/Medicaid Advantage, ERISA and other private payer and other terms of participation, medical billing, reimbursement, claims administration and coordination, and other provider-payer relations, contracting, compliance and enforcement; Form 990 and other nonprofit and tax-exemption; fundraising, investors, joint venture, and other business partners; quality and other performance measurement, management, discipline and reporting; physician and other workforce recruiting, performance management, peer review and other investigations and discipline, wage and hour, payroll, gain-sharing and other pay-for performance and other compensation, training, outsourcing and other human resources and workforce matters; board, medical staff and other governance; strategic planning, process and quality improvement; meaningful use, EMR, HIPAA and other technology, data security and breach and other health IT and data; STARK, antikickback, insurance, and other fraud prevention, investigation, defense and enforcement; audits, investigations, and enforcement actions; trade secrets and other intellectual property; crisis preparedness and response; internal, government and third-party licensure, credentialing, accreditation, HCQIA and other peer review and quality reporting, audits, investigations, enforcement and defense; patient relations and care; internal controls and regulatory compliance; payer-provider, provider-provider, vendor, patient, governmental and community relations; facilities, practice, products and other sales, mergers, acquisitions and other business and commercial transactions; government procurement and contracting; grants; tax-exemption and not-for-profit; 1557 and other Civil Rights; privacy and data security; training; risk and change management; regulatory affairs and public policy; process, product and service improvement, development and innovation, and other legal and operational compliance and risk management, government and regulatory affairs and operations concerns.

Author of leading works on a multitude of health care, health plan and other health industry matters, the American Bar Association (ABA) International Section Life Sciences Committee Vice Chair, a Scribe for the ABA Joint Committee on Employee Benefits (JCEB) Annual OCR Agency Meeting, former Vice President of the North Texas Health Care Compliance Professionals Association, past Chair of the ABA Health Law Section Managed Care & Insurance Section, past ABA JCEB Council Representative and CLE and Marketing Committee Chair, past Board President of Richardson Development Center (now Warren Center) for Children Early Childhood Intervention Agency, past North Texas United Way Long Range Planning Committee Member, and past Board Member and Compliance Chair of the National Kidney Foundation of North Texas, Ms. Stamer’s health industry clients include public health organizations; public and private hospitals, healthcare systems, clinics and other health care facilities; physicians, physician practices, medical staff, and other provider organizations; skilled nursing, long term care, assisted living, home health, ambulatory surgery, dialysis, telemedicine, DME, Pharma, clinics, and other health care providers; billing, management and other administrative services organizations; insured, self-insured, association and other health plans; PPOs, HMOs and other managed care organizations, insurance, claims administration, utilization management, and other health care payers; public and private peer review, quality assurance, accreditation and licensing; technology and other outsourcing; healthcare clearinghouse and other data; research; public and private social and community organizations; real estate, technology, clinical pathways, and other developers; investors, banks and financial institutions; audit, accounting, law firm; consulting; document management and recordkeeping, business associates, vendors, and service providers and other professional and other health industry organizations; academic medicine; trade associations; legislative and other law making bodies and others.

A popular lecturer and widely published author on health industry concerns, Ms. Stamer continuously advises health industry clients about compliance and internal controls, workforce and medical staff performance, quality, governance, reimbursement, privacy and data security, and other risk management and operational matters. Ms. Stamer also publishes and speaks extensively on health and managed care industry regulatory, staffing and human resources, compensation and benefits, technology, public policy, reimbursement and other operations and risk management concerns.

A Fellow in the American College of Employee Benefit Counsel, the American Bar Foundation and the Texas Bar Foundation, Ms. Stamer also shares her thought leadership, experience and advocacy on these and other related concerns by her service in the leadership of the Solutions Law Press, Inc. Coalition for Responsible Health Policy, its PROJECT COPE: Coalition on Patient Empowerment, and a broad range of other professional and civic organizations including North Texas Healthcare Compliance Association, a founding Board Member and past President of the Alliance for Healthcare Excellence, past Board Member and Board Compliance Committee Chair for the National Kidney Foundation of North Texas; former Board President of the early childhood development intervention agency, The Richardson Development Center for Children (now Warren Center For Children); current Vice Chair of the ABA Tort & Insurance Practice Section Employee Benefits Committee, current Vice Chair of Policy for the Life Sciences Committee of the ABA International Section, Past Chair of the ABA Health Law Section Managed Care & Insurance Section, a current Defined Contribution Plan Committee Co-Chair, former Group Chair and Co-Chair of the ABA RPTE Section Employee Benefits Group, past Representative and chair of various committees of ABA Joint Committee on Employee Benefits; a ABA Health Law Coordinating Council representative, former Coordinator and a Vice-Chair of the Gulf Coast TEGE Council TE Division, past Chair of the Dallas Bar Association Employee Benefits & Executive Compensation Committee, a former member of the Board of Directors of the Southwest Benefits Association and others.

For more information about Ms. Stamer or her health industry and other experience and involvements, see here or contact Ms. Stamer via telephone at (469) 767-8872 or via e-mail here.

About Solutions Law Press, Inc.™

Solutions Law Press, Inc.™ provides human resources and employee benefit and other business risk management, legal compliance, management effectiveness and other coaching, tools and other resources, training and education on leadership, governance, human resources, employee benefits, data security and privacy, insurance, health care and other key compliance, risk management, internal controls and operational concerns. If you find this of interest, you also be interested reviewing some of our other Solutions Law Press, Inc.™ resources here.

If you or someone else you know would like to receive future updates about developments on these and other concerns, please be sure that we have your current contact information including your preferred e-mail by creating your profile here.

NOTICE: These statements and materials are for general informational and purposes only. They do not establish an attorney-client relationship, are not legal advice or an offer or commitment to provide legal advice, and do not serve as a substitute for legal advice. Readers are urged to engage competent legal counsel for consultation and representation in light of the specific facts and circumstances presented in their unique circumstance at any particular time. No comment or statement in this publication is to be construed as legal advise or an admission. The author reserves the right to qualify or retract any of these statements at any time. Likewise, the content is not tailored to any particular situation and does not necessarily address all relevant issues. Because the law is rapidly evolving and rapidly evolving rules makes it highly likely that subsequent developments could impact the currency and completeness of this discussion. The presenter and the program sponsor disclaim, and have no responsibility to provide any update or otherwise notify any participant of any such change, limitation, or other condition that might affect the suitability of reliance upon these materials or information otherwise conveyed in connection with this program. Readers may not rely upon, are solely responsible for, and assume the risk and all liabilities resulting from their use of this publication.

Circular 230 Compliance. The following disclaimer is included to ensure that we comply with U.S. Treasury Department Regulations. Any statements contained herein are not intended or written by the writer to be used, and nothing contained herein can be used by you or any other person, for the purpose of (1) avoiding penalties that may be imposed under federal tax law, or (2) promoting, marketing or recommending to another party any tax-related transaction or matter addressed herein.

©2018 Cynthia Marcotte Stamer. Non-exclusive right to republish granted to Solutions Law Press, Inc.™ For information about republication, please contact the author directly. All other rights reserved


NY AG Opens Antitrust Investigation Into EpiPen Maker Mylan Pharmaceuticals Inc.

September 6, 2016

The New York Attorney General is investigating whether leading EpiPen Manufacturer, Mylan Pharmaceuticals, violated New York antitrust laws by inserting anticompetitive terms into its EpiPen sales contracts with numerous local school systems. The scrutiny by New York Attorney General Eric T. Schneiderman comes as Mylan is part of the widening backlash against Mylan’s in response to its sharp increase in the price of the EpiPen, treatments for life-threatening anaphylactic shock.

Already facing class action lawsuits in Ohio and Michigan, Mylan has drawn criticism from parents, the media, Congress and regulators for increasing its standard price for the EpiPen from less than $100 in 2007 to more than $600 in 2016.

According to Attorney General Schneiderman, Mylan Pharmaceuticals may have inserted potentially anticompetitive terms into its EpiPen sales contracts with numerous local school systems.

In announcing the antitrust investigation, Attorney General Schneiderman said, “No child’s life should be put at risk because a parent, school, or healthcare provider cannot afford a simple, life-saving device because of a drug-maker’s anti-competitive practices.”  He also promised, “If Mylan engaged in anti-competitive business practices, or violated antitrust laws with the intent and effect of limiting lower cost competition, we will hold them accountable. Allergy sufferers have enough concerns to worry about—the availability of life-saving medical treatment should not be one of them. I will bring the full resources of my office to this critical investigation.”

About The Author

Foundation and the Texas Bar Foundation, current American Bar Association (ABA) International Section Life Sciences Committee Vice Chair, former scribe for the ABA Joint Committee on Employee Benefits (JCEB) Annual OCR Agency Meeting and JCEB Council Representative, former Vice President of the North Texas Health Care Compliance Professionals Association, Past Chair of the ABA Health Law Section Managed Care & Insurance Section,  the former Board President and Treasurer of the Richardson Development Center for Children Early Childhood Intervention Agency, and past  Board Compliance Chair of the National Kidney Foundation of North Texas, and Board Certified in Labor & Employment Law by the Texas Board of Legal Specialization, the author of this update, attorney Cynthia Marcotte Stamer, is AV-Preeminent (the highest) rated attorney repeatedly recognized for her nearly 30 years of experience and knowledge representing and advising healthcare, health plan and other health industry and others on these and other regulatory, workforce, risk management, technology, public policy and operations matters as a Martindale-Hubble as a “LEGAL LEADER™” and “Texas Top Rated Lawyer” in Health Care Law, Labor and Employment Law, and Business & Commercial Law and among the “Best Lawyers In Dallas” by D Magazine.

Ms. Stamer’s health industry experience includes advising hospitals, nursing home, home health, rehabilitation and other health care providers and health industry clients to establish and administer compliance and risk management policies; prevent, conduct and investigate, and respond to peer review and other quality concerns; and to respond to Board of Medicine, Department of Aging & Disability, Drug Enforcement Agency, OCR Privacy and Civil Rights, Department of Labor, IRS, HHS, DOD and other health care industry investigation, enforcement and other compliance, public policy, regulatory, staffing, and other operations and risk management concerns.

Ms. Stamer also is known for her experience in HIPAA and other privacy and data security and breach concerns.  The scribe for ABA JCEB annual agency meeting with OCR for many years, Ms. Stamer has worked extensively with health care providers, health plans, health care clearinghouses, their business associates, employers and other plan sponsors, banks and other financial institutions, and others on risk management and compliance with HIPAA, FACTA, trade secret and other information privacy and data security rules, including the establishment, documentation, implementation, audit and enforcement of policies, procedures, systems and safeguards, investigating and responding to known or suspected breaches, defending investigations or other actions by plaintiffs, OCR and other federal or state agencies, reporting known or suspected violations, business associate and other contracting, commenting or obtaining other clarification of guidance, training and enforcement, and a host of other related concerns. Her clients include public and private health care providers, health insurers, health plans, technology and other vendors, and others. In addition to representing and advising these organizations, she also has conducted training on Privacy & The Pandemic for the Association of State & Territorial Health Plans, as well as HIPAA, FACTA, PCI, medical confidentiality, insurance confidentiality and other privacy and data security compliance and risk management for Los Angeles County Health Department, ISSA, HIMMS, the ABA, SHRM, schools, medical societies, government and private health care and health plan organizations, their business associates, trade associations and others.

A popular lecturer and widely published author on health industry concerns, Ms. Stamer continuously advises health industry clients about compliance and internal controls, workforce and medical  staff performance, quality, governance, reimbursement, and other risk management and operational matters. Ms. Stamer also publishes and speaks extensively on health and managed care industry regulatory, staffing and human resources, compensation and benefits, technology, public policy, reimbursement and other operations and risk management concerns. Her insights on these and other related matters appear in the Health Care Compliance Association, Atlantic Information Service, Bureau of National Affairs, The Wall Street Journal, Business Insurance, the Dallas Morning News, Modern Health Care, Managed Healthcare, Health Leaders, and a many other national and local publications.

You can get more information about her health industry experience here or contact Ms. Stamer via telephone at (469) 767-8872 or via e-mail here.

About Solutions Law Press Inc.™

Solutions Law Press, Inc.™ provides business risk management, legal compliance, management effectiveness and other resources, training and education on human resources, employee benefits, compensation, data security and privacy, health care, insurance, and other key compliance, risk management, internal controls and other key operational concerns.

If you found these updates of interest, you may be interested in other recent Solutions Law Press, Inc. updates like the following:

Go here to register to receive other Solutions Law Press, Inc. updates and announcements about other upcoming briefings, training or other programs, products, services, and activities or to learn more about Solutions Law Press, Inc., its publications, programs and training, PROJECT COPE: Coalition on Patient Empowerment community service and education projects, event management and other resources and services.

For important information concerning this communication see here. THE FOLLOWING DISCLAIMER IS INCLUDED TO COMPLY WITH AND IN RESPONSE TO U.S. TREASURY DEPARTMENT CIRCULAR 230 REGULATIONS. ANY STATEMENTS CONTAINED HEREIN ARE NOT INTENDED OR WRITTEN BY THE WRITER TO BE USED, AND NOTHING CONTAINED HEREIN CAN BE USED BY YOU OR ANY OTHER PERSON, FOR THE PURPOSE OF (1) AVOIDING PENALTIES THAT MAY BE IMPOSED UNDER FEDERAL TAX LAW, OR (2) PROMOTING, MARKETING OR RECOMMENDING TO ANOTHER PARTY ANY TAX-RELATED TRANSACTION OR MATTER ADDRESSED HEREIN.

©2016 Cynthia Marcotte Stamer, P.C. Non-exclusive license to republish granted to Solutions Law Press, Inc. All other rights reserved.

 


FTC ABMG Antitrust Settlement Shows Risks For Health Care Providers Using “Messenger Model” To Negotiate Payor Contracts

June 15, 2009

July 6, 2009 is the deadline for interested persons to submit comments to the Federal Trade Commission (FTC) on its proposed consent order proposed a part of a settlement agreement announced June 9 with the multi-practice specialty group, Alta Bates Medical Group (ABMG).  The settlement agreement resolves price-fixing charges brought by the FTC against ABMG and certain Northern California health care providers for refusing to deal with payors except on a collectively determined basis with respect to fee-for-service (non-capitated).  The invitation to comment on the proposed settlement order appears here in today’s Federal Register.

The Consent Agreement would be implement as part of the June 9 settlement agreement between the FTC and ABMG to resolve FTC charges that ABMG violated Section 5 of the Federal Trade Commission Act, 15 U.S.C. Sec.  45, by fixing prices charged to those offering coverage for health care services (“payors”) in the Berkeley and Oakland, California area and refusing to deal with payors except on a collectively determined basis.

Interested parties may submit written comments electronically or in paper form. Comments should reference “Alta Bates, File No. 051 0260.” Comments along with the name and state of the party making the submission will appear in the public record of this proceeding including on the publicly accessible FTC website.   

FTC Price Fixing Charges Against Alta Bates Medical Group, Inc.

ABMG is a multi-specialty independent practice association (“IPA”) comprised of multiple, independent medical practices serving the Berkeley and Oakland, California area. It has approximately 600 physician members, including approximately 200 primary care physicians. The price-fixing charges challenge negotiation practices by ABMG with respect to fee-for-service contracts on behalf of physician members of the IPA. Under the fee-for service arrangements, the payor compensates physicians or group practices for services actually rendered pursuant to agreed-upon fee schedules.

The complaint challenges the conduct of ABMG while ABMG participated in negotiations relating to fee-for-service contracts as a “messenger” where ABMG claimed to act as a conduit facilitating negotiations between individual physician members and health plans.  The FTC complaint does not challenge ABMG’s activities concerning capitated contracts as it viewed the capitated agreements as providing sufficient financial integration among members to qualify the IPA and its member physicians as a single entity for antitrust purposes when engaging in negotiations relating to capitated contracts.

Since its formation, ABMG has negotiated group contracts with payors on behalf of IPA member physicians. The negotiations cover both contracts for fee-for-service and contracts for capitated (per member, per month) payment arrangements.  The charges related to the negotiation practices relating to fee-for-service contracts.

In the absence of financial risk-sharing or clinical integration on the part of providers, the FTC takes the position that IPA members are competitors for purposes of its price-fixing antitrust analysis. Federal antitrust laws generally prohibit collaboration or other joint action among competitors to fix or conspire to fix price. 

The FTC complaint charges that since at least 2001, ABMG, acting as a combination of its physician members and in conspiracy with its members, illegally acted to restrain competition in violation of federal antitrust laws with respect to fee-for-service contracts in Northern California.  The FTC complaint charges that ABMG and its members engaged in prohibited price-fixing by:

  • Facilitating, entering into, and implementing agreements,  express or implied, to fix the prices and other terms at which they would contract with payors;
  • To engage in collective negotiations over  terms and conditions of dealing with payors; and
  • To have ABMG members refrain from negotiating individually with payors or contracting on terms other than those approved by ABMG.

The FTC charged that although claiming to employ a lawful messenger arrangement, ABMG on behalf of its physician members instead orchestrated collective negotiations for fee-for-service contracts. The FTC alleges specifically prohibited acts by ABMG including the following in the absence of the required clinical or financial practice integration required to exempt the collective action from price-fixing prohibitions:

  • Making proposals and counter- proposals, as well as accepting or rejecting offers, without consulting  with its individual physician members regarding the prices they  unilaterally would accept, and without transmitting the payors’ offers  to its individual physician members until ABMG had approved the  negotiated prices;
  • Participation in a concerted refusal to deal intended to impede competition by one of ABMG’s major competitors, the Permanente Medical Group, which provides physician services to Kaiser Foundation Health Plan, Inc.

 According to the FTC, under a lawful messenger model, ABMG could only act as a messenger and was prohibited from collectively negotiating the terms of the contracts on the prices its members would accept for their services on behalf of providers that have not sufficiently clinically or financially integrated their practices to create efficiencies sufficient to justify their acts and practices.

Proposed Consent Order

Among other things, the proposed Consent Order, if adopted as proposed would:

  • Require ABMG to terminate, without penalty, pre-existing payer contracts that it had entered into since 2001, within the time periods covered by the Consent Order;
  • Prohibit ABMG from entering into or facilitating any agreement between or among any health care providers, negotiating with any physician on behalf of any physician and/or refusing to deal, or threatening to refuse to deal with any payor regarding any term, condition, or requirement upon which any physician deals, or is willing to deal, including, but not  limited to price terms;
  • Prohibit AMBG (or encouraging any individual physician ) from refusing or threatening to refuse to deal individually with any payor, or not to deal with any payor other than through ABMG;
  • Require AMBG provide certain notifications about the settlement agreement and complaint order to its member physicians and others

As a means for monitoring and enforcing compliance with these commitments, the Consent Order also would:

  • Require that ABMG notify the FTC and file contracts and other documentation when it deals on behalf of providers with respect to pay-for-performance contracts
  • Prohibit ABMG from facilitating exchanges of information between health care providers concerning whether, or on what terms, to contract with a payor.
  • Bar attempts to engage in any action prohibited by the Consent Order
  • Proscribe ABMG from encouraging, suggesting, advising, pressuring, inducing, or attempting to induce any person to engage in any action that would be prohibited by the Consent Order
  • Require ABMG to notify the FTC before it acts as a messenger on fee-for-service contracts with payors on behalf of its member physicians

As in other FTC orders addressing health care providers’ collective bargaining with health care payors, the proposed Consent Order excludes from coverage by its bar against joint negotiations agreements involving sufficiently integrated groups, such as: 

  • Conduct “reasonably necessary” to form or participate in legitimate “qualified  risk-sharing” or “qualified clinically-integrated” joint  arrangements
  • Agreements that only involve physicians who are part of the same medical group practice

 Health Care Providers Must Manage Antitrust Risks

These and other recent FTC and Department of Justice actions reflect the willingness of the FTC and DOJ to investigate and prosecute non-integrated health care providers that try to band together to gain leverage when negotiating fee-for-service or other contracts with health plans or other payors for price-fixing, boycott and other antitrust violations. Antitrust violations can result in substantial civil and in some instances criminal liability risks for organizations and their representatives that participate in the prohibited conduct. Since the felony penalties associated with federal antitrust violations bring antitrust sanctions within the purview of the Federal Sentencing Guidelines, most health care organizations and their leadership will wish to consider including appropriate antitrust compliance policies and compliance strategies in their organizations corporate ethics and compliance programs. 

The action also makes clear that health care providers should not assume that representation by an entity claiming to act as a “messenger” and negotiating under the “messenger model” will escape scrutiny.  Rather, the action makes clear that federal regulators will look beyond the surface for anticompetitive collaboration hidden behind the activities of the claimed messenger.  Accordingly, to prevent and position themselves and their organizations to defend against potential antitrust complaints, health care providers and practice managers and others involved in negotiation of fee-for-service contracts for independent practitioners must exercise caution.

To effectively manage these exposures, health care providers and others involved in negotiations relating to fee-for-service contracts where other independent practitioners are involved or are represented by the same organization as the practice should take affirmative steps that their organization has in place appropriate procedures for preventing, investigating and redressing potential violations.  For example, most practices would want to be certain their practice and its consultants:

  • Can demonstrate it prohibits, and abstains from participation in prohibited collective action directly or through a messenger;
  • Includes written provisions in contracts with practice consultants and others prohibit involvement in prohibited anti-competitive activity
  • Has up to date policies in place and a process to monitor regulatory and enforcement developments for necessary updates;
  • Can demonstrate that it is appropriately administering well-documented audit, training and enforcement practices to prevent and redress potential violations as part of its corporate ethics and human resources practices;
  • Uses appropriate vendor selection, contracting, audit and oversight processes to promote compliance by business partners, agents and others with which it does business;
  • Has identified experienced counsel and developed a process for engaging counsel to assist in the audit of ongoing compliance efforts as well as the timely conduct of internal investigations of possible infractions within the scope of attorney-client privilege;
  • Designated an ethics or compliance officer, or other appropriate party to receive and investigate suspected compliance concerns and reports;
  • Has effective privacy, investigations, employment and other policies and procedures to enable the business to investigate, discipline and defend employment actions against employees or other workers for improper conduct;
  • Has appropriate processes and procedures for responding to government investigations and private compliance complaints;
  • Promptly investigates and responds to reports of infractions or other compliance concerns in an appropriate and well documented manner.

Curran Tomko Tarski LLP Attorneys Can Help

Curran Tomko and Tarski LLP Health Care Practice Chair Cynthia Marcotte Stamer has extensive experience advising and assisting health care practitioners and other businesses and business leaders to establish, administer, enforce and defend antitrust and other compliance and internal control policies and practices to reduce risk under federal and state antitrust and other laws covered by the Federal Sentencing Guidelines. You can get more information about her health industry experience here.  

If you need assistance with these or other compliance concerns, wish to inquire about arranging for compliance audit or training, or need legal representation on other matters please contact Cynthia Marcotte Stamer, CTT Health Care Practice Group Chair, at cstamer@cttlegal.com, 214.270.2402 or your other favorite Curran Tomko Tarski LLP attorney. 

Other Helpful Resources & Other Information

We hope that this information is useful to you.  Curran Tomko Tarski offers a variety of updates, publications, training and other resources to assist its business clients and their leaders meet their legal and operational challenges.  If you or someone else you know would like to receive future updates about developments on these and other concerns, please be sure that we have your current contact information – including your preferred e-mail- by creating or updating your profile at here. You can access other recent updates and other informative publications and resources provided by Curran Tomko Tarski LLP attorneys, get information about their briefings and speeches, and review highlights of their experience and credentials here.

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Connecticut Man Pleads Guilty To Multi-Million Dollar Tax Fraud Conspiracy Involving False Charges For Hospital Maintenance & Insulation Services

April 4, 2009

A Connecticut resident faces  five years in prison, three years of supervised release and a $250,000 fine after pleading guilty this week to conspiracy to aid another in filing false tax returns between approximately 2000 and February 2005 through a fraudulent check cashing scheme for the owner of a corporation that was engaged in the business of providing maintenance and insulation services to New York Presbyterian Hospital (NYPH).  The action reflects the risks to individuals and businesses that illegally claim tax deductions, bill for services or violate other federal criminal laws.

Krzysztof Koczon plead guilty in U.S. District Court in Manhattan to charges he provided false documentation to co-conspirators indicating that he had performed construction services and received more than $2.3 million in checks from the co-conspirators as payment for the construction services, the Department of Justice announced Thursday, April 2, 2009.   Koczon cashed the checks but returned the bulk of the money to the co-conspirators in exchange for a fee. The co-conspirators then took false deductions for those payments made to Koczon’s businesses.

The tax fraud conspiracy that Koczon is charged with carries a maximum penalty of five years in prison, three years of supervised release and a $250,000 fine. The maximum fine may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory maximum fine.

In April 2007, as part of the same investigation, Michael Theodorobeakos and two maintenance and insulation companies he co-owned–Monosis Inc. and STU Associates Inc. pleaded guilty to conspiring to rig bids on the supply of maintenance and insulation services to NYPH and Mount Sinai Medical Center (Mount Sinai). In addition, Michael Vignola and Mister AC Ltd. pleaded guilty in November 2007 to conspiring to rig bids on heating, ventilation and air conditioning (HVAC) services provided to NYPH and paying kickbacks to former NYPH purchasing officials. In April 2008, Aaron S. Weiner pleaded guilty to participating in a conspiracy wherein Weiner acted as a conduit in another million-dollar kickback scheme also involving one of the same former NYPH purchasing officials involved with the Vignola kickback schemes. On March 25, 2009, Mariusz Debowski pleaded guilty to participating in the same tax fraud conspiracy at NYPH.

These charges arose from an ongoing federal antitrust investigation of fraud, bribery, tax-related offenses and bidding irregularities relating to contracts administered by the Facilities Operations Department and the Engineering Department at NYPH and the Engineering Department at Mount Sinai conducted by the Antitrust Division’s New York Field Office, the FBI and the Internal Revenue Service Criminal Investigation’s New York Field Office.

Cynthia Marcotte Stamer, Ed Tomko and other members of Curren Tomko and Tarski LLP are experienced with assisting health industry and other clients establish and administer internal and external fraud and other controls, investigate potential fraud or other misconduct, defend Federal or state criminal or civil investigations, audits and prosecutions.  If your organization needs assistance with assessing or managing its compliance responsibilities or liabilities under health care, employment, environmental, antitrust, securities or other federal or state laws, wishes to inquire about compliance audit or training or other services; or would like to review or engage and experience of Ms. Stamer, Mr. Tomko or other Curren Tomko Tarski LLP attorneys, please contact Ms. Stamer at cstamer@cttlegal.com, (214) 270-2402;  or Mr. Tomko at etomko@cttlegal.com, (214) 270-1405, or see CTTLegal.com or CynthiaStamer.com.

 


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