This issue of McDermott’s Healthcare Regulatory Check-Up highlights regulatory activity for February 2025, including long-awaited proposed and final rules regarding the Health Insurance Portability and Accountability Act (HIPAA) and controlled-substance prescribing via telemedicine. Active False Claims Act (FCA) cases include two hospitals defending against criminal and civil charges related to their alleged complicity in medically unnecessary surgeries. Settlements from this month include allegations related to the Anti-Kickback Statute (AKS), such as a dental pay-per-referral marketing arrangement, and allegations concerning fraudulent durable medical equipment (DME) prescribing via telemedicine. The Office of Inspector General (OIG) issued a favorable advisory opinion on a pharmaceutical manufacturer’s program to provide free infusion drugs to patients with financial need, and the new Trump administration issued a flurry of executive orders and regulatory freezes.
Read below an overview for this month’s regulatory and enforcement activity roundup. For a deeper dive, subscribe to the newsletter to get our detailed analysis of all updates.
Notable cases and settlements
Health System Agrees to $29 Million Settlement Related to Military Care Overpayments
On February 18, 2025, a healthcare system and the US Department of Justice agreed to a $29 million settlement to resolve allegations that the system retained erroneous overpayments for medical services provided to retired military members by a healthcare plan participating in the US Family Health Plan.
DME Executive Pleads Guilty in Conspiracy Scheme Related to $1 Billion in False Charges
On February 20, 2025, a vice president of a DME company pleaded guilty to operating an internet-based platform that generated false doctors’ orders for orthotic braces, pain cream, and other DME supplies.
SNF Fraudulent Billing Suit Alleges Upcoding Complexity of Services Rendered
On February 19, 2025, the US Attorney’s Office filed a complaint with the Massachusetts Attorney General’s Office under the federal and Massachusetts FCA against 19 skilled nursing facilities (SNFs) in Massachusetts and Connecticut and their present and former managers.
OIG REGULATORY UPDATES
OIG Modifies Advisory Opinion 21-13m
OIG issued a modification to Advisory Opinion No. 21-13 regarding a proposal to subsidize Medicare cost-sharing obligations for a clinical study involving positron emission tomography (PET) scans of patients with mild cognitive impairment or dementia for the presence of beta amyloid plaque – a core feature of patients diagnosed with Alzheimer’s disease.
PROPOSED STATE BILLS
California SB 351 Proposes Changes to Corporate Practice Prohibitions
The California legislature introduced Senate Bill (SB) 351, which targets private equity groups and hedge funds managing physician or dental practices in California. This bill follows Assembly Bill (AB) 3129, passed in 2024 and vetoed by Governor Gavin Newsom.
Illinois SB 1998 Would Add Notification Requirements to Certain Healthcare Transactions
The Illinois state legislature introduced SB 1998, aiming to amend the Illinois Antitrust Act by adding a layer of scrutiny to covered transactions that are financed by private equity groups or hedge funds.
Healthcare Transaction Notification Proposed as Part of Wisconsin Appropriations Bill
The Wisconsin state legislature introduced AB 50, a comprehensive 2,000-page budget bill for Wisconsin’s 2025 – 2027 fiscal term. Among myriad other appropriations proposals, the bill would establish procedures for review, oversight, and transparency when healthcare entities propose to undergo material change transactions.
OTHER NOTABLE DEVELOPMENTS
Litigation Over Executive Orders 14168 and 14187
In January 2025, US President Donald Trump signed executive orders (EOs) directing federal agencies to define “sex” as an immutable binary biological classification and remove recognition of the concept of gender identity (EO 14168) and targeting the provision of gender-affirming care to minors (EO 14187).
EO 14192: Unleashing Prosperity Through Deregulation
EO 14192 was signed by President Trump on January 31, 2025, and published in the Federal Register on February 6, 2025. This EO establishes an executive branch policy to be prudent and financially responsible in the expenditure of public and private funds and to alleviate unnecessary regulatory burdens.
EO 14212: Establishing the President’s Make America Healthy Again Commission
EO 14212 was signed by President Trump on February 13, 2025, and published in the Federal Register on February 13, 2025. This order establishes as federal policy an obligation to combat chronic disease challenges facing US citizens, including mental health disorders, obesity, and diabetes.
EO 14214: Keeping Education Accessible and Ending COVID-19 Vaccine Mandates in Schools
EO 14214 was signed by President Trump on February 14, 2025, and published in the Federal Register on February 20, 2025. This order states that discretionary federal funds should not be used to directly or indirectly support or subsidize educational institutions that require students to have received a COVID-19 vaccine in order to attend in-person programs.
EO 14221: Making America Healthy Again by Empowering Patients With Clear, Accurate, and Actionable Healthcare Pricing Information
EO 14221 was signed by President Trump on February 25, 2025, and published in the Federal Register on February 28, 2025. This order establishes a US policy to put patients first and ensure that they have the information necessary to make well-informed healthcare decisions.
Policy Statement From HHS Regarding Richardson Waiver
In 1971, the US Department of Health, Education and Welfare (now HHS) issued a notice stating that any rulemaking issued by the agency would go through the notice-and-comment process. On February 28, 2025, HHS issued a policy statement that rescinded this long-standing agency policy.
District Court Enjoins NIH 15% Indirect Cost Rate
On February 7, 2025, the National Institutes of Health (NIH) circulated an official notice (NOT-OD-25-068) titled Supplemental Guidance to the 2024 NIH Grants Policy Statement: Indirect Cost Rates.
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