Overview
This issue of McDermott’s Healthcare Regulatory Check-Up highlights regulatory activity for April 2025, including Centers for Medicare & Medicaid Services (CMS) updates to Medicare Advantage (MA) and other Medicare programs. This month features a landmark US Court of Appeals for the Seventh Circuit decision reversing a conviction in a marketing case under the Anti-Kickback Statute (AKS). We also discuss several enforcement actions focusing on allegations under the AKS, the False Claims Act (FCA), and other fraud and abuse laws, including familiar themes such as kickbacks related to durable medical equipment (DME) prescribing via telemedicine and billing federal healthcare programs for medically unnecessary services. This issue also examines a favorable advisory opinion issued by the Office of Inspector General (OIG) regarding a community health center’s proposed arrangement to connect members of its community with primary care services. Finally, we discuss a new bill that proposes to repeal certain elements of the Affordable Care Act (ACA) that prohibit the expansion and creation of new physician-owned hospitals.
Read below an overview of this month’s regulatory and enforcement activity roundup. For a deeper dive, subscribe to the newsletter to get our detailed analysis of all updates.
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Notable Cases, Settlements, and Related Agency Activity
Seventh Circuit Reverses DME Distributor Conviction in AKS Marketing Case
On April 14, 2025, the US Court of Appeals for the Seventh Circuit in United States v. Sorensen reversed the conviction of Mark Sorensen, owner of a Medicare-registered distributor of DME, in an opinion that redefines the boundaries of permissible marketing practices under the AKS.
Medical Practice, Physician Owner Agree to Pay $152,000+ to Resolve Telehealth Billing FCA Allegations
A West Virginia-based medical practice and its physician owner agreed to pay the United States more than $152,000 to resolve civil allegations that they violated the FCA by submitting false claims to the Medicare and Medicaid programs and falsely certifying compliance with program requirements related in part to the practice’s telehealth billing patterns.
Rehabilitation Facility Will Pay $19.75M to Resolve FCA Allegations Related to Unlicensed Care
A New Jersey drug and alcohol rehabilitation facility agreed to pay nearly $20 million to resolve allegations that it violated the FCA by allegedly submitting claims to the Community Care Program of Veterans Health Administration and New Jersey’s Medicaid program for short-term residential treatment and partial hospitalization care.
Florida Man Pleads Guilty to Medicare Fraud Scheme Involving $8.4+M in COVID-19 Test Kit False Claims
A Florida man pleaded guilty to causing more than $8.4 million in false and fraudulent claims to be submitted to Medicare using Medicare identification numbers that the man had unlawfully purchased.
Sales Director Pleads Guilty in Transcranial Doppler Kickback Scheme
A New York-based national sales director pleaded guilty to conspiring to offer and pay kickbacks to doctors in exchange for ordering medically unnecessary brain scans.
Marketing Company Operators Sentenced for Roles in Telemedicine DME Kickback Scheme
Two operators of a New Jersey marketing company were sentenced to 51 months and 80 months in prison, respectively, and ordered to pay more than $127 million in restitution for their roles in a fraud and kickback scheme.
CMS Regulatory Updates
CMS Releases Final Rule Regarding Contract Year 2026 Policy and Technical Changes to the MA Program, Medicare Prescription Drug Benefit Program, Medicare Cost Plan Program, PACE
On April 15, 2025, CMS issued a final rule revising the MA, Medicare Prescription Drug Benefit (Part D), Medicare cost plan, and Programs of All-Inclusive Care for the Elderly (PACE) regulations.
CMS Announces CY 2026 MA Capitation Rates, Part C and Part D Payment Policies
On April 7, 2025, CMS released its Announcement of Calendar Year (CY) 2026 MA Capitation Rates and Part C and Part D Payment Policies.
Office of Inspector General Updates
OIG Issues Favorable Advisory Opinion on Community Health Center’s Primary Care Proposal
OIG issued a favorable advisory opinion regarding a community health center’s proposal to connect individuals in the community with primary care services.
Other Notable Developments
Texas District Court Strikes Down CMS Nursing Home Staffing Rule
On April 7, 2025, the US District Court for the Northern District of Texas struck down a CMS rule mandating certain staffing requirements for nursing homes participating in Medicare and Medicaid.
Senate Republicans Introduce Physician Led and Rural Access to Quality Care Act
On April 9, 2025, Senator James Lankford (R-OK) and eight other Republican senators introduced S. 1390 to enact the Physician Led and Rural Access to Quality Care Act, which would repeal certain elements of the ACA’s prohibition on the expansion and creation of new physician-owned hospitals.
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