HEALTH CARE BRIEFING: Providers Accused of Fraud Get Billions

Paying kickbacks to doctors for referrals. Surgically implanting unneeded heart monitors. Aggravating troubled teenagers during psychiatric sessions to worsen their mental health.

Health-care providers accused of bilking taxpayers by inflating Medicare or Medicaid expenses have paid billions of dollars in settlements with the federal government over the past decade for a variety of transgressions, some of which risked patients’ lives. Now the money is flowing the other way.

Companies that settled cases involving overbilling or fraud — among them Tenet Healthcare Corp., Universal Health Services Inc. and Beaumont Health — received more than $36 billion in interest-free loans from a U.S. Health and Human Services Department program to help providers handle cash-flow shortages caused by the pandemic, according to data compiled by Bloomberg and Good Jobs First, a watchdog group that has been monitoring federal relief payments.

That’s more than one-third of the $100 billion distributed through the loan program. In addition, companies accused of wrongdoing got more than $20 billion in grants issued by HHS to stave off coronavirus-related losses. In most of the cases, there was no determination of liability.

Health-care companies applied for the loans based on previous Medicare billings — the same metric many of them were accused of inflating. Grants were distributed automatically based on patient revenues.

The loans are structured as advances on future payments the companies expect to receive from the government. Borrowers have from seven months to a year to repay them without interest. The rate jumps to 10.25% afterward. Grants don’t have to be repaid. Read more from David Kocieniewski and Caleb Melby.

The Coronavirus Pandemic

Virus Cases Rise, Undermining Reopening Efforts: Covid-19 cases continued to climb in a number of U.S. states over the weekend, threatening recent efforts to relax restrictions and revive businesses after weeks of lockdowns. Texas and Florida, two of the most populous U.S. states, reported record numbers of new coronavirus infections Sunday. The recent spike in illnesses in those states and others, including Arizona and North Carolina, has stirred worries from public health officials that opening back up the nation’s economy has come at the cost of spreading the illness. Read more from Emma Court.

• President Donald Trump said the flare-ups are the result of broader testing for the disease, and Vice President Mike Pence said that additional health workers may be deployed to fight the surge. The U.S. has now conducted nearly 24 million coronavirus tests, including over 583,000 on Friday, according to the Covid Tracking Project, Justin Sink reports.
• Pence yesterday on a call also encouraged governors in states where coronavirus cases are increasing to provide updates on those situations, Ben Livesey reports.
• BGOV OnPoint: Covid-19 Liability Targeted by Lawmakers

Moderna Sees Vaccine Efficacy Data in Fall: Moderna CEO Stephane Bancel said efficacy data for its Covid-19 vaccine could be available by as soon as Thanksgiving if everything goes right. Moderna’s coronavirus vaccine is in second-stage trials, with final-stage trials set to begin next month on 30,000 people. In an interview on Bloomberg Television yesterday with David Rubenstein, Bancel said in a best-case scenario “we could have efficacy data by Thanksgiving. This is the best time line.”

While the FDA would decide what to do next, “they might decide to give us emergency use approval for people at very high risk,” while the agency more carefully reviews the data before granting approval for a broader population, Bancel said. He said he was cautiously optimistic that one or more of the vaccines in testing would work. Read more from Robert Langreth.

The First Covid Vaccines May Not Prevent Covid Infection: Desperation for a way to keep economies from collapsing under the weight of Covid-19 could mean settling for a vaccine that prevents people from getting really sick or dying but doesn’t stop them from catching the coronavirus. “We would potentially consider an indication related to prevention of severe disease, provided available data support the benefits of vaccination,” FDA spokesman Michael Felberbaum said. “For licensure we would not require that a vaccine protect against infection.” Read more from John Lauerman and James Paton.
Related: Germany Moves to Secure Stake in Virus Vaccine Developer

FDA Pulls Authorization of Trump-Touted Drugs: Federal regulators revoked emergency-use authorization for two malaria drugs touted by Trump as Covid-19 treatments after determining they were unlikely to work against the disease while also posing dangerous side effects. Chloroquine and hydroxychloroquine “are unlikely to be effective in treating Covid-19,” and “the known and potential benefits of CQ and HCQ no longer outweigh the known and potential risks” for their emergency use, the Food and Drug Administration said yesterday. Anna Edney reports.

More Headlines:

• U.S. Virus Cases Rise 0.9%, Lower Than Past Week’s 1.1% Average
• Nursing Homes Crave Medicare Cash Influx From Referrals
• Second U.K. Vaccine to Combat Covid-19 to Begin Human Testing
• Trademark Office Creates Fast Lane For Covid-Related Products
• Ten Countries Account for 75% of New Covid-19 Cases, WHO Says
• Top Tulsa Health Official Wants Trump Rally Postponed: Report
• Antibody Tests Are Everywhere Now and Confusing Everyone

Happening on the Hill

Watchdogs Sought to Monitor Reopenings: Rep. Gerry Connolly (D-Va.) sent letters to 24 federal offices of inspectors general requesting their plans to oversee agencies’ efforts to return their employees to federal office buildings. Connolly chairs the Oversight and Reform Committee’s government operations panel. He also recommended that IGs examine whether agencies have appropriate resources, such as personal protective equipment or hand sanitizer, Laura Curtis reports.

Republicans Eye WHO Changes Over Pullout: House Republicans suggested that the U.S. remain a member of the World Health Organization and push for reforms, House Foreign Affairs ranking member Michael McCaul (R-Texas) said in a report probing the origins of the virus. While the WHO failed to “uphold its mandate” and fulfill its obligations to its member states, “we do not believe the withdrawal” of the U.S. “is the correct path forward,” McCaul said in an interim report by panel Republicans, Ben Livesey reports.

Fauci to Appear at House Hearing June 23: The House Energy and Commerce Committee scheduled a hearing with Trump administration health officials June 23, Chelsea Mes reports. Director of the National Institute of Allergy and Infectious Diseases Anthony Fauci, HHS Assistant Secretary for Health Brett Giroir, the FDA’s Stephen Hahn and CDC Director Robert Redfield are slated to appear.

Grassley Seeks Racial, Ethnic Health Disparity Input: Senate Finance Chairman Chuck Grassley (R-Iowa) in a letter yesterday asked members for input on policy and suggestions to combat racial and ethnic health disparities, especially during the pandemic. Grassley said he was reaching out to lawmakers who have “publicly voiced displeasure that the Committee is not addressing the issue of racial and ethnic health disparities. I am disheartened by these public protestations as they discount Committee initiatives and are made without the courtesy of coming to me with specific concerns and ideas.”

Telehealth Extension Pushed by Both Parties: Sens. Roger Wicker (R-Miss.) and Brian Schatz (D-Hawaii) urged Senate leaders yesterday to permanently expand telehealth services after the Covid-19 pandemic ends. The lawmakers want provisions from Schatz’s “CONNECT for Health” bill to be made permanent, including letting Medicare recipients use telehealth services, as well as expanding telehealth to more care providers, Rebecca Kern reports.

Industry & Regulation

Preventative Services Seen Causing More Spending: About 80% of preventive medical services lead to higher health care spending, according to an analysis by the nonpartisan Congressional Budget Office. The finding is significant because lawmakers often argue that public health programs ought to pay for preventive services to lower spending and improve health. CBO said it determines whether services would be costly on a case-by-base basis.

The report also said the cost to the government of a coronavirus vaccine, once developed, “could be substantial.” Spending on treatment of patients infected with the coronavirus would decline, “but at the same time, spending for health care would increase because of the cost of the vaccine and its administration,” CBO said. Spending would also see an increases because people would use more health-care services, such as services that may have been deferred because of the pandemic, the report said, Alex Ruoff reports.

Rewarding Patient Care Seen as Vital to Medicare: Medicare “will remain on an unsustainable trajectory” unless it starts paying for patient outcomes instead of the volume of medical services provided, a government advisory panel said. A report posted yesterday by the Medicare Payment Advisory Commission offers a blueprint for moving the program from its fee-for-service payment design to a value-based care model that encourages providers to detect diseases early and provide care in the most appropriate setting. Read more from Tony Pugh.

More Headlines:

• FDA Pushes Play on Game to Treat Kids’ Attention Deficit Disorder
• FDA Grants Breakthrough Device Designation to Thermo Fisher
• Jazz Gets Upside Surprise With Zepzelca Approval, Evercore Says
• Blue Shield of California Tries to Fix ‘Dysfunctional’ Health System
• Nursing Homes Crave Medicare Cash Influx From Hospital Referrals

In the Courts

LGBT Decision Eases Path for Health Bias Battle: Civil rights advocacy groups planning to challenge the White House rule that eliminates anti-discrimination protections for LGBT people in health care just got a major boost from the U.S. Supreme Court. In a ruling yesterday, the justices said that anti-discrimination protections in the workplace extend to gay and trans people. While the verdict focused on the definition of the word “sex” under the Civil Rights Act, scholars and attorneys said it will likely to have a direct effect on how sex is defined in a myriad of other laws, including the Affordable Care Act.

Groups already planning to sue over the rule that was finalized June 12 said the court’s decision will be the backbone for their legal fight to keep the 2016 definition of sex under the Affordable Care Act. “We have a Supreme Court ruling to back up our arguments, one that has to be given weight and deference,” said Omar Gonzalez-Pagan, an attorney at Lambda Legal, a U.S. civil rights group planning to file a lawsuit in the coming days to fight the rule. Read more from Lydia Wheeler.

• Separately on LGBT issues, employer-backed health insurance plans would no longer have to comply with a federal health nondiscrimination law after the White House moved to curtail Obamacare protections for LGBT people and those who’ve had or are seeking abortions. The rule, which lets health-care workers, hospitals, and insurers that receive federal funding refuse to provide or cover any services to those people, has wider implications, such as for those with disabilities, living with HIV/AIDS and others with extensive health needs or chronic conditions. Read more from Shira Stein.

Generic Drugmakers Rejected by Top Court on Shielding Documents: The Supreme Court also rejected an appeal by dozens of generic drugmakers, leaving intact an order to turn over millions of documents in state price-fixing suits.Teva, Mylan, Novartis’s Sandoz and other companies had said the order, issued by a Pennsylvania federal judge handling pre-trial matters, improperly required sensitive documents to be turned over before their relevance was assess, reports Greg Stohr.

Chicago Sues Trump to Open ACA Exchanges: Chicago sued the White House yesterday over its refusal to open a “special enrollment period” that would allow people to purchase health insurance on federally operated exchanges amid the Covid-19 pandemic. Purchases on the Affordable Care Act marketplace usually take place during open enrollment periods, but the government can also open special enrollment periods due to “extraordinary circumstances,” the city said in a filing with the U.S. District Court for the District of Columbia. Read more from Mary Anne Pazanowski.

• Congressional Democrats urged HHS Secretary Alex Azar and Centers for Medicare & Medicaid Services Administrator Seema Verma to establish a special enrollment period during the pandemic. “According to estimates, more than 20 million Americans who recently lost their employer-based health insurance may be eligible for subsidized coverage” under the ACA, they said in a statement.

More Headlines:

• Medical-Device Maker Merit Facing U.S. Claims Over Doctor Bribes
• Indiana, States Denied Entry Into Abortion Pill Access Lawsuit
• Supreme Court Passes on Eli Lilly Patent Infringement Victory

To contact the reporter on this story: Brandon Lee in Washington at blee@bgov.com

To contact the editors responsible for this story: Giuseppe Macri at gmacri@bgov.com; Zachary Sherwood at zsherwood@bgov.com; Michaela Ross at mross@bgov.com