| | | | |  | | By Ben Leonard and Chelsea Cirruzzo | With Robert King Programming note: We’ll be off this Thursday and Friday for the Fourth of July but will be back in your inboxes on Monday.
| | |  A Supreme Court ruling last week weakens health agencies’ power to impose penalties for rule violations. | Francis Chung/POLITICO | Francis Chung/E&E News | A LESS-NOTICED RULING — Lost in the wake of the Supreme Court’s decision to end the Chevron doctrine, a lower-profile case has the potential to shake up health policy. The high court’s conservative supermajority ruled in SEC v. Jarkesy that those facing civil penalties from the Securities and Exchange Commission have the right to a jury trial in a 6-3 decision, casting doubt on whether other agencies can use a similar in-house process. Although Chief Justice John Roberts argued the ruling’s impact would be relatively narrow, liberal justices and experts argue that it could have a broader impact, including on health care. “It will encourage conservative litigants and the industry to litigate against these kinds of enforcement actions and require HHS to go through lengthy jury trials in order to try to enforce its actions,” said Lawrence Gostin, faculty director of the O’Neill Institute for National and Global Health Law at Georgetown University. “That could really damage our ability to prevent and punish fraud and abuse and other wrongdoing.” The authority: HHS has the power to enact a slew of civil monetary penalties, allowing the agency to fine those who violate the landmark privacy law HIPAA, transparency laws, information blocking rules and the No Surprises Act, among others. HHS’ Office of the Inspector General has similar authority over health care fraud, and the FDA has authority for violations of tobacco sales rules. How often agencies use enforcement powers has varied, but HHS has issued HIPAA fines and recently laid out potential fines of up to $1 million for providers that refuse to share patient information upon a patient’s request. In a six-month period in 2023, the HHS inspector general took civil actions against 422 individuals and entities and excluded 750 individuals and entities from participating in federal programs like Medicare. Looking forward: Those hit with civil fines could contest an agency’s authority because the procedures don’t have the same protections as other trials. “The Court’s decision in Jarkesy casts significant doubt on HHS’ ability to continue its historical reliance on these administrative procedures,” Sidley Austin attorneys wrote Monday. Brian Bewley, partner at Reed Smith and former senior counsel at HHS OIG, told POLITICO that the decision will enable entities and individuals subject to penalties to challenge the constitutionality of administrative proceedings and the fines themselves. “The government’s resources are limited, so this will have a chilling effect,” Bewley said. WELCOME TO WEDNESDAY PULSE. We hope you have a great 4th of July. Reach us and send us your tips, news and scoops at bleonard@politico.com or ccirruzzo@politico.com. Follow along @_BenLeonard_ and @ChelseaCirruzzo.
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A surge in spending for wound care treatments have some doctor groups suspecting Medicare fraud. | Jenny Kane/AP | DOCS FIGHT SPIRALING WOUND CARE FRAUD — Several physician groups across the country have seen spikes in the millions of dollars for pricey wound care treatments, sparking concerns that fraud is afoot, Robert reports. At least six physician groups across the country told Robert that, since late 2022, they have seen a huge increase in spending on skin substitutes designed to mimic skin. The treatments, typically applied for burn victims or those with diabetic ulcers, have been used unnecessarily, some doctors say. “None of the standards of care are being followed, which is what makes us concerned [that] this is a fraud, waste and abuse issue,” said Andrea Osborne, senior vice president of accountable care organization operations for the large doctor group VillageMD. The numbers: In January 2022, Medicare spent roughly $10 million a month on skin substitutes. However, in November, that figure shot past $80 million, according to an analysis from the University of Pennsylvania. Accountable care organizations are physician groups responsible for a Medicare patient’s full cost of care. They can spot anomalous spikes in spending since the groups have to meet spending targets set by CMS. ACOs often inform CMS and HHS’ Office of the Inspector General once they detect suspicious spending. They can also file whistleblower lawsuits with the Department of Justice. The DOJ, however, must conduct its own investigation, which could take months. The agency’s response: CMS said it is aware of the reports of skin substitute spending. DOJ recently charged four individuals for allegedly filing $900 million in fraudulent Medicare claims for similar treatments.
| | MA GROSS MARGINS DWARF OTHER PLANS’ — Gross margins, or the premium income minus total claims costs per person, for Medicare Advantage plans was well above that of other plans in 2023, according to a new KFF analysis.
|  | | KFF said that changes in gross margins can reflect changes in profitability and be indicators of financial performance. However, the health policy research group noted that gross margins aren’t the same as profitability since they don’t include administrative expenses or tax liabilities. Since 2015, gross margins for MA plans have gone from $1,425 per enrollee to $1,982, not far from inflation. Moody's has found that MA is more profitable per member than other types of plans but has found its profitability might be diminishing. Insurer lobbying group AHIP called the focus on gross margins “misleading.” “MA covers an older, sicker population, which means gross margins are built on a higher cost and premium structure,” AHIP told Pulse. The bigger picture: The data comes as more than half of Medicare beneficiaries are on MA plans.
| | BIOSECURE IMPACTS — The potential passage of the BIOSECURE Act, which would effectively ban Chinese biotech firms from doing business in the U.S., is causing biotech firms to mull their options for new non-Chinese partners, according to a survey from LEK Consulting released Tuesday. Just 16 percent of U.S. respondents in the survey of dozens of biotech firms said they don’t work with Chinese partners, and a third of U.S. respondents said they’re beginning to weigh options to move away from Chinese firms. But only 4 percent said they’ve begun ending those relationships. The path forward: The legislation was dealt a blow last month when the act didn’t get a vote as an amendment to be added to the House’s version of the National Defense Authorization Act. Rep. Brad Wenstrup (R-Ohio), the Republican lead on the bill, told POLITICO last month he hopes for a standalone vote on the measure. He said for the bill to be germane to the NDAA, its scope would have to be limited to the Department of Defense, which he didn’t want to do.
| | | CMS RE-EVALUATES DATA AVAILABILITY — CMS plans to take a second stab at a proposed change to how researchers can access CMS data this fall, Chelsea reports. How we got here: In March, CMS posted a request for information on a proposal to limit physical access to CMS data amid concerns over the increasing number of health care data breaches. But in April, the agency said it would delay changes until next year after researchers fretted the changes would be costly and delay their ability to do research. Speaking at the AcademyHealth Annual Research Meeting in Baltimore, Andrew Shatto, deputy director of the Office of Enterprise Data and Analytics at CMS, said the agency was concerned about becoming overwhelmed with feedback and urged continued patience as the agency works through concerns. “We’re not interested in interrupting research,” he said. He added that CMS will focus on the pricing model for CMS data, how data is linked to external sources, such as electronic health records, and timing for ongoing research funded by grants. Shatto said CMS hopes to release a second proposal later this year.
| | | | Understand 2024’s big impacts with Pro’s extensive Campaign Races Dashboard, exclusive insights, and key coverage of federal- and state-level debates. Focus on policy. Learn more. | | | | | | | | | Charlotte Pineda has been named vice president of health policy and advocacy at the American Association of Neurological Surgeons and the Congress of Neurological Surgeons. She was previously health policy director for Sen. Roger Marshall (R-Kan.).
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