Regulatory Roundup: New laws, regulations, cases, and enforcement actions affecting labs and the lab industry

New Federal Prosecutor to Target COVID-19 Fraud

The federal government has spent billions of dollars to help businesses and individuals survive the financial devastation of COVID-19. And as always happens whenever the government runs a big relief program, lots of that money wound up in the pockets of people who didn’t deserve it. With that in mind, the Department of Justice will soon appoint a chief prosecutor to find the fraudsters and bring them to justice. “We are going to go after the criminals who stole billions of relief money meant for small businesses and millions of Americans,” stated President Biden in his March 1 State of the Union address. This is far from a new policy. Almost from the moment Congress passed the COVID-19 relief programs, federal enforcement agents have been sounding the warning on relief fraud scams. Last June, the investigations and prosecutions began, including special fraud takedowns. Programs the new chief prosecutor is likely to target include those in which many labs and lab owners participated, including:

• The Accelerated and Advance Payment Program, which provides reimbursement funds in advance of service to help labs and other Medicare providers maintain cash flow during national emergencies;
• The $50 billion Provider Relief Fund for labs and other providers involved in coronavirus response; and
• The Paycheck Protection Program providing one percent loans to help small businesses meet their payroll, rent, mortgage, and utilities obligations.

Website Ad Doesn’t Bar Qui Tam Suit for Rewards Program Fraud, Says 9^th Circuit

Qui tam False Claims Act lawsuits are all well and good as long as the whistleblower knows something that the general public doesn’t. A rule called the “public disclosure bar” bans qui tam lawsuits based on public information. A new case from the US Court of Appeals for the Ninth Circuit tests how far the public disclosure bar goes. It began when a former account manager filed a qui tam suit against an optician for using its rewards program to pay kickbacks to ordering providers. Knowing that Medicare based reimbursement for lenses on the invoice price, the optician offered providers discounts and invoiced them for the full price, in effect shifting the costs of the discounts to the government. The California federal district court ruled that the allegations were “substantially similar” to promotional articles the optician published on its website and tossed the claim under the public disclosure bar. But the account manager had the last laugh (at least for now) when the Ninth Circuit reversed the ruling. The articles merely discussed the optician’s rewards programs and how they make lenses more affordable and didn’t specifically describe how the billing worked. And the court disagreed with the lower court’s finding that “[t]he only available conclusion” from the materials was that the rewards program discounts came at the government and not the optician’s expense. Courts shouldn’t allow generalized description of a program that could give rise to fraud in public documents to prevent the pursuit of legitimate fraud,” it concluded. [Mark v. Shamir United States, 2022 U.S. App. LEXIS 3090, 2022 WL 327475].

ONC Seeks Public Comments on Electronic Prior Authorization IT Products Standards

On Jan. 21, the U.S. Department of Health and Human Services’ (HHS) Office of the National Coordinator for Health Information Technology (ONC) published a Request for Information (RFI) seeking public comments on certification standards for the development and implementation of electronic prior authorization IT products. Context: Payors rely on the prior authorization process to guard against utilization of medically unnecessary services. While designed to reduce waste and optimize care, the need to get a payor’s permission to deliver treatment creates administrative hassles and treatment delays. In 2020, ONC published a report outlining the main problems posed by prior authorization, including difficulty in determining whether an item or service requires prior authorization, inefficient use of provider and staff time to navigate communications channels such as fax, telephone and various web portals, and unpredictable and lengthy waits for payor decisions. With that in mind, IT developers have created products to help providers utilize their electronic health record (EHR) to navigate the prior authorization process faster and more efficiently. The ONC has created a certification program for IT developers to seek certification of their products. The new RFI proposes criteria that preauthorization IT products would have to meet to receive ONC certification. The comment period will last until March 25 and the ONC will consider the feedback for future rulemaking.