Commercial Reasonableness and ACOs: Installment 1 of 3
In response to the advent of Accountable Care Organizations (ACOs) and value-based reimbursement models, which focus on achieving better health outcomes at lower cost, hospitals are increasingly seeking closer relationships with physicians, including direct employment, co-management arrangements, and joint ventures. Corresponding with this growing trend toward hospital-physician alignment, there has been increased federal and state regulatory oversight regarding the legal permissibility of these arrangements. Most notably, there has been more intense regulatory scrutiny related to the Anti-Kickback Statute and the Stark Law, especially as they relate to potential liability under the False Claims Act. As a result of this increased scrutiny, in fiscal year 2014, the U.S. Department of Justice opened 924 new criminal healthcare fraud investigations and 782 new civil healthcare fraud investigations, recovering $3.3 billion. This three-part Health Capital Topics series will address the components of a defensible commercial reasonableness analysis and the importance of this analysis in relation to ACOs. (Read more...)

Impact of the "Per-Click" Ruling on Valuing Diagnostic Outpatient Enterprises
On June 12, 2015, the D.C. Court of Appeals released its ruling in Council for Urological Interests v. Burwell, a case challenging the ban promulgated by the U.S. Department of Health and Human Services (HHS) on unit-of-service, or "per-click," fee payment systems for equipment or space leases between a hospital and a referring physician. As discussed in the first part of this two-part series, entitled "Court Strikes Down Per-Click Restrictions, or Does It?" the D.C. Court of Appeals voided the current ban on per-click payments as an improper exercise of agency authority by HHS. However, the D.C. Court of Appeals did not permanently overturn the ban; rather, the court allowed HHS the opportunity to "re-write" the ban on per-click arrangements to be in compliance with the guidelines of the original statute. Part two will conclude this series and will explore the potential impact that the Council for Urological Interests ruling may have on the valuation of diagnostic outpatient enterprises. (Read more...)

The Morristown Decision & its Potential Impact on Tax-Exempt Entities
If determining the non-profit status of a hospital was once a relatively straightforward exercise, a New Jersey court has now made it a significantly more complicated endeavor. On June 25, 2015, Judge Vito Bianco of the Tax Court for the State of New Jersey affirmed the denial of property tax-exempt status for Morristown Memorial Hospital (the "Hospital"), a 700 bed acute care hospital located in Morristown, New Jersey. Utilizing New Jersey statutes and case law, Judge Bianco examined multiple entities associated with the Hospital and found that, in the aggregate, the land and buildings on which the Hospital operates are "being used substantially for profit" in violation of New Jersey tax law. This Health Capital Topics article will discuss the Morristown case, the entities examined in the opinion, and how the reasoning utilized by the New Jersey Tax Court could apply to hospitals nationwide. (Read more...)

King v. Burwell: What's Next?
Now that the Supreme Court of the United States has validated the issuance of subsidies on the federally-run health insurance exchanges, the next question for the Patient Protection and Affordable Care Act (ACA) is now, quite simply, "what's next?" As discussed in the first installment of this two-part series, the King v. Burwell decision validated subsidies for millions of Americans who utilize federal exchanges to purchase health insurance. However, more broadly speaking, the decision further entrenched the ACA by validating a key tool in the effort to expand the number of insured persons, strengthening the law's position in the U.S. healthcare industry for years to come. While judicial challenges to the ACA are still pending in U.S. lower court systems, prominent legal experts believe that King v. Burwell served as the last major threat to the foundation of the ACA, and is likely to influence how lower courts adjudicate future ACA litigation. The second part of this two-part Health Capital Topics series on the King v. Burwell decision will address the implementation issues, as well as discuss notable remaining legal challenges to the ACA. (Read more...)