Health Law Diagnosis
Authored by Conor O. Duffy and Leslie J. Levinson
As part of its 2025 Physician Fee Schedule Final Rule (PFS Rule), the Centers for Medicare & Medicaid Services (CMS) finalized two crucial updates to federal Medicare overpayments regulations (sometimes referred to as the “60-Day Rule”) that (1) align the standard for when an overpayment is identified with the applicable standard under the False Claims Act (FCA), and (2) give health care providers up to 180 days to conduct good faith investigations to determine the existence of related overpayments after identifying an overpayment, respectively.
These two changes address areas of significant uncertainty for health care organizations in recent years. Previously, there was uncertainty concerning the standard for “reasonable diligence” for identifying overpayments and how that standard squared with the FCA’s knowledge (scienter) requirement for liability thereunder. In addition, the changes also indicate the expectation by the government that, upon identifying an overpayment, health care organizations conduct timely good faith investigations to determine the existence of related overpayments to fulfill their 60-Day Rule obligations.
Medicare Overpayments Rule & Reasonable Diligence Standard
As a reminder, the 60-Day Rule was established as part of the Affordable Care Act (ACA) and requires a health care provider that receives an overpayment to report and return the overpayment by the later of (i) 60 days after the provider identifies the overpayment or (ii) the date any corresponding cost report is due. Failure to report and return an overpayment in a timely manner subjects the provider to significant potential liability under the FCA for a so-called “reverse false claim” for wrongful retention of the overpayment. However, the ACA did not define when an overpayment has been “identified.” This issue was addressed in rulemaking by CMS in 2014 (for Medicare Parts C and D) and 2016 (for Medicare Parts A and B), wherein CMS indicated that a provider “identifies” an overpayment when it determines, or should have determined, that the provider received an overpayment (this exercise is referred to as the “reasonable diligence” standard).
In 2018, a federal court overturned the reasonable diligence standard for Medicare Parts C and D in response to litigation brought by Medicare Advantage organizations. The court held that the reasonable diligence standard impermissibly established FCA liability for “mere negligence” and noted that the FCA had a specifically-defined knowledge standard that does not encompass negligence. Read more.
OIG Audit Scrutinizes Hospital Compliance with Price Transparency Rule
Authored by Michael G. Lisitano and Paul Palma*
In November 2024, the Department of Health and Human Services Office of Inspector General (OIG) published the results of its audit assessing hospital compliance with the federal Hospital Price Transparency Rule (HPT Rule). OIG determined that 37 out of the 100 hospitals sampled failed to comply with some element of the HPT Rule’s publicly available charges requirements.
As a reminder, the HPT Rule requires hospitals to make certain pricing information publicly available and easily accessible on their websites as a means of increasing competition and reducing the cost of health care. The HPT Rule is enforced by the Centers for Medicare & Medicaid Services (CMS).
Under the HPT Rule, hospitals are obligated to (1) publish a comprehensive machine-readable file that includes a list of standard charges for all items and services, and (2) display a list of CMS-specified shoppable services in a consumer-friendly format; this requirement may be met by using an online price estimator tool allowing consumers to obtain free estimates for up to 300 shoppable services. The 37 noncompliant hospitals identified in the audit failed to comply with either one or both of the foregoing requirements. Read more.
*This post was co-authored by Paul Palma, legal intern at Robinson+Cole. Paul is not admitted to practice law.
Massachusetts Supreme Court Rules Online Tracking Technologies Do Not Violate State Wiretap Law
Authored by Conor O. Duffy
In a highly anticipated decision on an issue facing courts across the country, the Massachusetts Supreme Judicial Court held in late October that Massachusetts hospitals’ use of online tracking technologies that collect and transmit browsing activities of website visitors does not violate the Massachusetts Wiretap Law.
The Court determined that online interactions between visitors and the hospitals’ websites did not unambiguously qualify as a “wire communication” subject to the wiretap law, and therefore, the hospitals merited the benefit of the doubt under the “rule of lenity.” The Court accordingly reversed the trial court’s denial of the hospital-defendants’ motions to dismiss the complaints.
The case was brought as a class action alleging that two Massachusetts hospitals violated the Massachusetts Wiretap Law by “aiding… third-party software providers” in unlawfully intercepting communications involving the individuals. The communications in the complaint were the browsing activities of each individual on the hospitals’ websites, including obtaining information about specific doctors and conditions, as well as accessing medical records through a patient portal. The plaintiffs alleged that the hospitals’ collection of information on website users (such as URLs, IP addresses, and device characteristics) and third-party tracking software to monitor user activities on the websites constituted impermissible interceptions under the Massachusetts Wiretap Law. The plaintiffs sought civil remedies under that law. Notably, the allegations mirrored similar actions brought against other hospitals in Massachusetts (under the same state law) and hospitals in different states (often under those states’ analogous wiretap laws). Read more.
