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Health Care and FDA: Hospitals and Health Systems

Hospital services represent the foundational core of the global, health care delivery system. In the United States, approximately one-third of all health care expenditures is for hospital care, with 60 percent of the cost of care covered by Medicare and Medicaid. Changes in payment models, the shift to outpatient services, the advent of managed care, advances in medical technology, the emphasis on population health, and other market pressures have driven both horizontal and vertical integration among providers and along the care continuum.

This consolidation into health systems, driven mainly by hospitals, necessarily gives rise to a myriad of legal and regulatory issues. Our health care and FDA practice has a long and deep history in assisting hospital and health systems in successfully navigating these challenges. We represent academic medical centers, multihospital systems, major tertiary care hospitals, local community hospitals, critical access hospitals, micro-hospitals, specialty hospitals, and ambulatory surgery centers. Our practice understands the unique and different challenges facing providers operating in both urban or rural settings. If the legal issue impacts a hospital or health system whether—regulatory, transactional, operational, or litigation—we can help.

We assist hospital and health system clients in the following areas:

REGULATORY

Fraud and Abuse, Stark, and Self-Disclosure Solutions

Our nationally recognized health care practice has extensive experience advising hospitals and health systems on all aspects of fraud and abuse compliance. We are particularly adept in the application of the Stark law, the Medicare Anti-Kickback Statute and related state laws as well as the increasing risk of exposure under the federal False Claims Act (FCA). Within our health care practice, we have a dedicated group of lawyers who focus on billing audits and other compliance matters, and internal investigations. We have significant experience in Stark compliance reviews and the preparation of Stark Self-Referral Disclosure Protocol submissions. Given the breadth of federal and state regulation, the complexities of these fraud and abuse laws, and the increasing appetite for government and private qui tam plaintiffs, issues will arise in even the most vigilant of health systems. Our broad knowledge of industry best practices, combined with our working relationships with federal and state enforcement agencies, gives our hospital clients insight into enforcement priorities and trends to help anticipate and reduce regulatory risk, while at the same time remaining competitive.

FDA

Our FDA practice, focusing on food, drug, device, cosmetic, and tobacco regulatory and compliance matters, is an experienced and integrated team with a proven track record in all areas the Food and Drug Administration (FDA) regulates. We help clients navigate the regulatory process throughout the life cycle of their products—from planning and development, to approval and marketing, to enforcement and ongoing compliance. In addition to addressing regulatory issues after companies have funding and patents in hand, we assist with regulatory due diligence and other transactional needs. We offer clients multidisciplinary, global, regulatory, and transactional advice to help address FDA, Federal Trade Commission, Environmental Protection Agency, Consumer Product Safety Commission, Drug Enforcement Administration (DEA) and other agency hurdles. We have excellent working relationships across the government agencies that regulate life science companies.

Medicare Certification, Reimbursement, and Provider Enrollment

Hospitals and health systems are subject to countless rules and regulations related to their participation in and billing of the Medicare and Medicaid programs. We assist with helping clients in obtaining and maintaining Medicare certification and billing privileges at initial enrollment, changes in ownership, or as the result of internal organizations. We also advise on complex reimbursement matters, such as the conversion of a provider-based clinic to freestanding status or vice versa, the acquisition of, or expansion into, a new service-line, and strategic counseling to maximize reimbursement or at a minimum avoid gaps in payment in conjunction with transactions. Given the increasingly complex process and scrutiny being placed by Medicare administrative contractors and Medicaid state agencies on provider enrollment and billing compliance issues, experienced counsel that can navigate reimbursement compliance, certification, and licensure requirements is essential to adapting to a changing reimbursement landscape.

Pharmacy and 340B Compliance

Our health care lawyers address all facets of the purchasing of, dispensing of, and payment for prescription drugs and medical devices. In addition to addressing the core health care regulatory issues, we help retail, specialty, and mail order pharmacies—whether independent or associated with an institutional provider—with licensure and DEA certification, as well as such operational issues as provider network contracting with prescription benefits managers (PBMs) and Medicare Prescription Drug Plans, developing policies and procedures to ensure compliance with Medicare Part D regulations, establishing a compliant electronic prescription system, complying with state drug substitution and mail order pharmacy requirements, and responding to inquiries, audits, and investigations by licensing authorities, PBMs, and payors. We also help 340B covered entities acquire drugs at reduced prices through participation in the federal 340B Drug Pricing Program. 

Population Health, Clinically Integrated Networks, and Accountable Care

Initially, with the enactment of the Affordable Care Act (ACA) and with the continued advancement of new payment models, provider collaboration and integration by necessity is at an all-time high, surpassing that previously seen with the advent of managed care. Our practice has substantial knowledge and experience in the establishment of accountable care organizations, Medicare shared saving plan arrangements, provider network contracting, and risk-sharing models, and can assist clients in successfully building an efficient and sustainable clinically integrated network. Our lawyers also represent hospitals and other provider entities taking on insurance risk through provider led insurance plans, including Medicare Advantage and Medicaid Managed Care Organizations. Our health care lawyers have published and presented nationwide on these networks and have represented a number of academic medical centers, hospital and health systems, and other provider network clients at all stages along the clinical integration continuum. 

Research

We advise our hospitals, health system, and academic medical center clients on all aspects of federal and state regulation of pre-clinical and clinical research. Together with lawyers in our food, drugs, medical devices, and cosmetics practice, we advise clients on clinical trial agreements, protocols, policies and informed consent issues; compliance with FDA and Health and Human Services regulations; establishment of institutional review boards (IRBs) and other regulated activities; research misconduct matters; disclosures related to foreign influence considerations; and creation and structuring of genetic and research repositories and databanks. We represent our clients on FDA inspectional issues, including responding to, and developing corrective and preventive actions for, IRB and Good Clinical Practices inspectional observations. We also advise clients on all stages of government contracting, including preparation of RFPs, compliance with Federal Acquisition Regulations, establishment of facilities and administration rates, and drafting of subcontracts for pre-clinical and clinical research; National Institute of Health grants, Small Business Innovation Research and Small Business Technology Transfer grants; and genetic privacy issues. Our global footprint has facilitated our representation of clients in international research programs, global clinical trial drug and device studies, and data aggregation of transfer projects among United States, Europe, Africa, and Asia sites.

TRANSACTIONS

Corporate Affiliations, Acquisitions, and Transactions

Our firm has a long history of representing leading universities, hospitals, health systems, and other providers and health care companies in all aspects of their growth strategies, including strategic affiliations, joint ventures, and mergers and acquisitions. Our health care lawyers, with tax and corporate counsel assistance, have formed, developed, reorganized, and divested all types of hospital and health care businesses and bring an experienced perspective about how these transactions and new business lines are best organized within their overall structure and governance context. We routinely advise providers seeking to access capital markets or to invest in emerging companies. Our experience extends to assisting in a full range of financing vehicles designed to access the public finance market, venture capital, private equity, or strategic investment partnerships, as well as approaches to monetize key intellectual property. 

Digital Health

We assist clients with the development and implementation of information technology to improve clinical outcomes, to reduce health care costs, and to enhance health care operations. Our health care and intellectual property lawyers have experience with the unique combination of privacy, security, intellectual property, and health regulatory issues involved in the development, licensing, management, and deployment of electronic health or medical records and electronic prescription systems, as well as the legal and regulatory challenges to making those records available to physicians on a regional basis. We also provide proactive guidance that enables clients developing new proprietary technology and applications for existing technology to build legal compliance into their technology or service offering, where possible. The firm’s lawyers provide counseling and transactional representation in matters involving clinical decision support tools (including artificial intelligence applications), clinical data repositories and registries, telehealth and teleradiology applications, electronic health care claims processing and payment systems, consumer and patient health information portals, and health data mining applications. 

Supply Chain Contracting

Our health care team routinely represents hospitals and health systems in the health care supply chain in complex negotiations related to items and services. Whether contracting for access to groundbreaking therapies or multibillion-dollar wholesaler arrangements, we have worked with hospital providers, suppliers, wholesalers, and group purchasing organizations to effectuate these mission-critical agreements. In addition to bringing a wealth of industry knowledge on standard contracting terms, we bring an understanding of the regulatory parameters and operational challenges of working in both high profile or routine contracting matters.

OPERATIONS

Corporate Governance and System Oversight

Our health care lawyers regularly serve as counsel to health system governing boards and committees, as well as assist the office of general counsel in their governance responsibilities. We proactively counsel clients on sound corporate governance practices, the importance of which has been magnified by increasingly intense regulatory scrutiny. Our advice in particular includes code of conduct development; conflicts of interest management, corporate governance principles and guidelines, as well as committee charters; director qualification standards with expanded emphasis on director independence and audit committee qualifications; board education curriculum; and executive compensation issues. We are routinely called in to advise audit and compliance committees on internal investigations and resulting recommendations to the governing board. Robust system oversight through a well-defined and functioning governance structure is an imperative for fiduciaries serving on a board in the health care industry. Our lawyers have decades of experience in assisting management and boards on these matters.

Credentialing and Privileges

Our health care practice is involved in hospital physician recruitment, retention, and credentialing matters. We represent hospitals and physicians acting on behalf of hospitals (e.g., department chairpersons and committee members) in these matters, as well as credentialing verification organizations and other providers with delegated credentialing from health plans. The firm’s lawyers counsel hospitals and its medical staff members, in credentialing competency and behavioral matters, including disciplinary sanctions and reporting obligations to state licensing authorities or the national practitioner data bank. Our lawyers assist in drafting medical staff by-laws and assuring compliance with state licensing, antitrust, and anti-referral laws. We advise hospitals and health systems on exclusive contracts and formulate medical staff development plans. Our lawyers assist in the defense of professional peer review and other medical staff actions.

HIPAA, Privacy, and Security

The Health Insurance Portability and Accountability Act (HIPAA) restricts the way entities such as health plans, health care clearinghouses, and health care providers may use or disclose individually identifiable health information. Our health care practice routinely counsels all types of clients who are business partners of, or who are themselves, covered entities regarding HIPAA’s requirements in developing and implementing the protocols, policies, procedures, safeguards, and agreements required to protect health information, regardless of whether it is in electronic or other forms. We also help our hospital and health system clients inform individuals about their rights regarding their health information by developing privacy practices that meet regulatory standards, and we assist in the analysis of privacy and security issues as they arise within the context of our clients’ health care operations, including in complex commercial and merger and acquisition transactions and in response to data sharing requests. We assist clients in investigating, assessing, and responding to privacy or security breaches, individual complaints, and investigations by the Office for Civil Rights, state Attorneys General, and other enforcement agencies. Our approach to helping clients protect the privacy and security of health information is comprehensive and includes advice regarding protections under federal and state laws for highly sensitive information such as mental health, substance abuse (including heightened requirements under 42 CFR Part 2), reproductive health, and genetic testing.

Labor and Employment, Immigration, and Employee Benefits

Our health care employment practice is adept at addressing the unique challenges that health system employers face. We regularly counsel health care organizations such as hospitals, clinics, senior care facilities, and research and higher learning institutions, among many others, on a complete spectrum of labor, employment and workplace safety, and employee benefits issues across the globe. We have assisted hospitals, medical research organizations, academia, and life sciences companies with a wide range of immigration matters including obtaining temporary visas, J-1 Conrad waivers, and permanent residence for foreign medical graduate physicians, nurses, therapists, pharmacists, and researchers. With regard to employee benefits, we advise health system and other provider clients on numerous retirement plan, health and welfare plan, and executive compensation issues, especially in relation to tax-exempt entities and nonprofits. We also have extensive experience in handling the numerous regulatory requirements affecting health care employers and their benefit plans in the United States under the Internal Revenue Code, ERISA, COBRA, HIPAA, and the ACA, particularly related to wellness plans established by health care employers for their own employees and contracting to provide health care services to their own plan. For more detail about our experience, click here 

Nonprofits and Tax Exemption

Working collaboratively with colleagues in the firm’s tax-exempt organizations and nonprofit institutions practice, we regularly assist hospitals and health systems and other clients that are nonprofit entities and tax-exempt organizations in navigating the often complex requirements of the tax code and applicable health care laws. Corporate matters range from forming a new entity and obtaining tax-exemption; to mergers and acquisitions, joint ventures, and strategic affiliations with both nonprofit and for-profit entities; to the creation of organizational and transactional structures to achieve complex fundraising and operational goals; to converting to for-profit status. Such matters include fundraising, applicable public support tests, permissible lobbying activities, avoiding excess benefit transactions, use of bond-financed facilities, political activities, investment of endowment funds, and other matters unique to exempt organizations.

LITIGATION

Administrative Litigation and Government Challenges

The firm represents hospital and health systems as well as health care trade associations and their members in connection with rulemaking and adjudications before state and federal administrative agencies and in connection with challenges to agency actions brought in state and federal courts. Our health care practice litigation team represent those clients when it becomes necessary to seek judicial review of agency actions such as rules, formal adjudications, licenses, permits, and other informal adjudications. Our administrative litigation practice extends to include significant experience in litigating certificate of need cases, as well as penalty, exclusion, de-certification, and other similar administrative or agency enforcement actions. By combining substantive knowledge with decades of experience appearing before and litigating against state and federal agencies, we provide value to our clients in the form of novel approaches to administrative law challenges.

False Claims Act Investigations and Defense

The firm represents hospitals and health systems, among numerous other providers, charged with or investigated for claims of fraud or abuse. Together with lawyers in our government enforcement practice, we defend claims initiated by the Department of Health and Human Services, United States Attorneys’ Offices, and the Medicaid Fraud Control Units. In addition to defense of a client through an investigation, trial, and appeal, we assist in settlement of matters, development of corporate integrity agreements, and CIA compliance monitoring. We also assist clients with questions regarding self-disclosure to government agencies and government contractors. We also routinely represent clients in proactively undertaking internal investigations triggered by external inquiries and internal compliance functions, and associated representation surrounding government proffers, disclosures, repayments, and revisions to internal policies and procedures. 

Payor - Provider Disputes

We have a significant number of lawyers, in numerous jurisdictions, who are experienced in representing health care providers in all types of payor disputes. Our representative clients include hospital providers, freestanding diagnostic and treatment facilities, nursing facilities, adult care facilities, continuing care retirement facilities, home health and hospice agencies, dialysis providers, clinical laboratories, and physician groups. We assist our clients with various types of payment disputes against commercial insurance payors, managed care organizations, out-of-network provider - payor disputes as well as disputes against state Medicaid agencies. We also help clients with appeals of Medicare and state Medicaid audits, FCA disputes and Medicare disputes before the Departmental Appeals Board, Medicare Administrative Contractors, the Medicare Appeals Council, and Federal Administrative Law Judges. 

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