Summary:

• Medicare has steadily expanded the services that Federally Qualified Health Centers can bill outside the Prospective Payment System, creating new reimbursement opportunities beyond traditional patient encounters.
• As Medicare continues to carve out exceptions to the Prospective Payment System methodology, FQHCs should reassess their billing, coding, and compliance strategies to capture available reimbursement for non-face-to-face services and care management programs.

Federally Qualified Health Centers (FQHCs) are primarily reimbursed by Medicare through the Prospective Payment System (PPS), which pays a per-visit rate to cover a typical bundle of medically necessary services provided during a patient encounter. Increasingly, however, FQHCs have opportunities to bill certain care management services to Medicare outside the PPS bundle. The steady expansion of these services over the last decade is one of the most significant changes to Medicare FQHC reimbursement since the Affordable Care Act (ACA).

The ACA reformed Medicare FQHC reimbursement by shifting from an individualized cost-based methodology to a national, encounter-based rate.

Before the ACA, Medicare paid for FQHC services using a cost-based system under which an FQHC鈥檚 all-inclusive rate (AIR) was calculated based on its own historical costs, subject to productivity standards and an upper payment limit.[1] In 2010, the ACA directed the Centers for Medicare & Medicaid Services (CMS) to develop the PPS methodology for FQHC services beginning October 1, 2014.[2] This represented a fundamental transformation of Medicare FQHC reimbursement.

Under the Medicare PPS methodology, an FQHC is paid based on the lesser of its actual charges or a national encounter-based rate, adjusted for the FQHC鈥檚 geography, but not based on its individual costs.[3] The national rate is set based on aggregate FQHC cost data, updated annually by an inflation factor. [4] Initially, there were only rare exceptions to reimbursement through the single PPS rate, such as separate rates for new patients and patients receiving yearly preventive services.

CMS has gradually authorized separate Medicare FQHC reimbursement for a range of care management services billed outside of the PPS.

The core Medicare PPS reimbursement covers face-to-face encounters between an FQHC patient and practitioner.[5] However, in the years following the development of the PPS methodology, CMS has gradually introduced billing codes for non-face-to-face care management services. Separate payment for these services is generally justified by the theory that while they are critical for patient care, they are not cleanly captured through the PPS rate. The brief timeline below details the history of these changes.

2016. The first non-face-to-face service added outside the PPS was chronic care management (CCM). Beginning January 1, 2016, FQHCs could receive separate payment for providing at least 20 minutes of qualifying care management services to Medicare beneficiaries with two or more chronic conditions that met certain criteria, such as placing the patient at significant risk of death or decline.[6]

2018. For 2018, CMS authorized separate Medicare FQHC payment for two additional non-face-to-face services: general behavioral health integration (BHI) and psychiatric collaborative care model (CoCM).[7]

• BHI is a team-based, collaborative approach to care that focuses on integrative treatment of patients with primary care or behavioral health conditions.[8] BHI services are appropriate for patients presenting with new or pre-existing behavioral health or psychiatric conditions.
• Psychiatric CoCM is a model of collaborative care provided by a care team that includes both a primary care provider and a health care manager who collaborates with a psychiatric consultant.[9]

In 2018, CMS also introduced HCPCS code G0511, which was used to standardize FQHC billing for a range of general care management services until CMS made further changes in the 2025 Physician Fee Schedule Final Rule.[10]

2019.  For 2019, CMS authorized FQHCs to be paid separately from PPS for virtualcommunication services, including communication technology-based services and remote evaluation services.[11] These services include brief communications (e.g., five minutes) with an FQHC practitioner to determine whether a visit is necessary.[12] Separate payment is unavailable when the service originates from a related billable visit or leads to a billable visit within the next 24 hours.[13]

2021.  For 2021, CMS authorized FQHCs to submit and receive Medicare payment under the separate codes for Principal Care Management (PCM) services, which are available for patients who have one high-risk chronic condition.[14] Patients who qualify for PCM services have a serious chronic condition expected to last between three months and one year, or until the death of the patient, and which may have led to a recent hospitalization or placed the patient at significant risk of death or functional decline.[15]

2023.  For 2023, CMS authorized FQHCs to receive separate Medicare payment for chronic pain management (CPM) services when, during a calendar month, at least 30 minutes of qualifying services are furnished for a beneficiary.[16] To qualify for CPM services, a beneficiary must have a diagnosis of pain that has lasted more than three months.[17]

2024.  CMS significantly expanded the monitoring and care coordination services for which FQHCs could receive separate Medicare payment in 2024, adding half a dozen new categories. At the time, payment for most of these services was made through the HCPCS G0511 general care management code.[18]

CMS authorized separate Medicare FQHC payment for Remote Physiologic Monitoring (RPM) and Remote Therapeutic Monitoring (RTM) under the general care management code.[19] These services involve the collection and transmission of data and the analysis and interpretation of data that occurs outside of a standard office visit. RPM is focused on digitally collected physiologic data, whereas RTM services focus on monitoring of respiratory system status, musculoskeletal system status, therapy adherence, and therapy response.

CMS also authorized separate Medicare FQHC payment through the general care management code for Community Health Integration (CHI) and Principal Illness Navigation (PIN) services to help patients with serious illnesses navigate the health care system.[20] CHI services, including coordination of care, facilitation of access to services, and communication between settings, are typically performed by auxiliary personnel, such as a community health worker, and help address a patient鈥檚 social determinants of health.[21] PIN services involve non-face-to-face services, including the creation of a treatment plan, for a serious, high-risk disease expected to last at least three months that places the patient at significant risk of hospitalization or nursing home placement, acute exacerbation or decompensation, functional decline, or death.[22] CMS confirmed that FQHCs could also receive payment for related PIN-Peer Support (PIN-PS) services.

FQHCs became eligible for separate Medicare payment for intensive outpatient program (IOP) services for individuals with acute mental illness.[23] These services are intended to improve or maintain the patient鈥檚 condition and prevent relapse or hospitalization. FQHCs may be paid for IOP services at the hospital IOP rate.[24]

2025.  CMS increased the complexity of Medicare care management coding and billing for FQHCs in 2025 by sunsetting the use of G0511, which had been a general-purpose care management code. It began requiring FQHCs to bill for a wide variety of care management services through the more nuanced code set used by other physician practices.[25]

CMS also introduced coding and payment policies for Advanced Primary Care Management (APCM) services, which combine elements of several existing care management and communication technology-based services into a per-calendar-month bundle.[26]

2026. The CY 2026 Medicare Physician Fee Schedule Final Rule gives FQHCs additional opportunities to bill and receive payment for care coordination and communication technology-based services that historically were paid through FQHC-specific bundled codes.

Starting January 1, 2026, FQHCs may use three HCPCS codes 鈥� G0568, G0569, and G0570 鈥� as APCM add-on codes for BHI or CoCM.[27] FQHCs must bill the specific CPT/HCPCS codes for CoCM services rather than use an all-in-one code. For communication technology-based and remote evaluation services, CMS discontinued G0071.[28] Instead, FQHCs must bill the specific code for the service furnished:

• HCPCS G2010 鈥� remote evaluation of patient images or video.
• HCPCS G2250 鈥� remote assessment of recorded patient information.
• CPT 98016 鈥� a 鈥渧irtual check-in鈥� code for a brief communication technology-based service.

CMS also finalized a policy under which care management services established and paid under the Medicare Physician Fee Schedule will typically also be reimbursable to FQHCs separately from the PPS, subject to CMS guidance.[29]

Takeaways

The ACA promoted a streamlined vision for Medicare FQHC reimbursement: a uniform per-visit rate set based on national data with minimal adjustments. Over the last decade, CMS has deviated from that vision in ways that complicate Medicare FQHC billing and reimbursement, particularly for non-face-to-face care management and care coordination services. FQHCs now must understand the range of Medicare billing options available outside the PPS rate.

麻豆直播 is here to help you navigate the complexities of FQHC reimbursement. Please reach out to the authors, your 麻豆直播 relationship partner, or our Health Care Practice Group with any questions.

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[1] Ctrs. for Medicare & Medicaid Servs., Final Policy and Payment Changes for the New Medicare Prospective Payment System (PPS) for Federally Qualified Health Centers Beginning October 1, 2014, available at .

[2] Medicare Claims Processing Manual, Ch. 9, 搂 30.1.

[3] Id.

[4] 89 Fed. Reg. 61,596, 61,780 (proposed July 31, 2024).

[5] 42 C.F.R. 搂 405.2463(b)(1).

[6] 80 Fed. Reg. 70,886, 70,918, 71,080-81 (Nov. 16, 2015).

[7] 82 Fed. Reg. 52,976, 53,169鈥�80 (Nov. 15, 2017).

[8] Id.

[9] Id. at 53,171-72.

[10] See 89 Fed. Reg. 97710, 97998-99 (Dec. 9, 2024).

[11] 83 Fed. Reg. 59,452, 59,685 (Nov. 23, 2018). 

[12]Id.

[13] Medicare Benefit Policy Manual, Ch. 13, 搂 240; 90 Fed. Reg. 49,266, 49,555鈥�56 (Nov. 5, 2025).

[14] 84 Fed. Reg. 62,568, 62,692 (Nov. 15, 2019).

[15] Id.

[16] 87 Fed. Reg. 69,404, 69,737 (Nov. 18, 2022).

[17] Id. at 69,737.

[18] 89 Fed. Reg. 97999 (Dec. 9, 2024).

[19] 88 Fed. Reg. 78,818, 79,073 (Nov. 16, 2023).

[20] 88 Fed. Reg. 78,818, 79,073 (Nov. 16, 2023).

[21] Medicare Benefit Policy Manual, Ch. 13, 搂 230.2.7.

[22] 88 Fed. Reg. 78,818, 79,073-74.

[23] 88 Fed. Reg. 81,540, 81,838 (Nov. 22, 2023).

[24] Medicare Benefit Policy Manual, Ch. 13, 搂 250; 42 C.F.R. 搂搂 405.2462(j), 405.2468(g)(2).

[25] 89 Fed. Reg. 98000-98010 (Dec. 9, 2024).

[26] 89 Fed. Reg. 98012 (Dec. 9, 2024).

[27] Ctrs. for Medicare & Medicaid Servs., FQHC/RHC News & Announcements, CMS.GOV, available at .

[28] 90 Fed. Reg. 49,266, 49,554 (Nov. 5, 2025).

[29] See id. at 49,558.

The Centers for Medicare & Medicaid (CMS) issued proposed implementing 听of the Consolidated Appropriations Act, 2026 (CAA), codified at 42 U.S.C. 搂听1395l(t)(23), as part of the proposed Calendar Year (CY) 2027 Hospital Outpatient Prospective Payment (OPPS) rule. As previously discussed in our earlier blog post 鈥�Medicare鈥檚 New NPI and Attestation Rules for Hospital Off-Campus Departments: Preparation Starts Now,鈥� beginning January 1, 2028,听Medicare will not pay under the OPPS for services furnished by an off鈥慶ampus hospital outpatient provider-based departments (PBDs) unless: (1) each off-campus PBD has its own National Provider Identifier (NPI), separate from the NPI of the main provider, (2) within two years before services are billed, the main provider provides an initial attestation that the off-campus PBD meets existing provider-based requirements as described in 42 C.F.R. 搂听413.65, and (3)听the main provider submits subsequent attestations. The proposed rule, if finalized, will standardize the attestation and documentation submission process for off-campus PBDs.

Hospitals and other interested parties have until August 31, 2026, to submit comments.

The Proposals

CMS plans to implement Section 6225鈥檚 attestation requirements in the following ways:

• Addition of a New Regulation: CMS proposes to add Section 419.23 to codify the requirements prohibiting Medicare payment for items and services furnished by an off-campus outpatient department of a provider that does not meet the criteria specified in Section 6225.
• Attestation Timeline: For initial attestations, CMS proposes that main providers with off-campus PBDs furnishing services on or before January 1, 2028, must submit the required information between January 1, 2026, and December 31, 2027. CMS further proposes that the main provider must receive the new location-specific NPI for the off-campus PBD prior to submitting an attestation. An off-campus PBD that begins providing services after January 1, 2028, must have an initial attestation submitted within the two years before billed services are furnished. CMS also proposes that main providers submit subsequent attestations at an interval to be specified by CMS, but not to exceed every five years thereafter.
• Potential Abbreviated Treatment of Prior Approved PBDs: CMS is considering an abbreviated process for PBDs that previously received a CMS determination of provider-based status, with a simple letter from an authorized hospital official attesting to continued compliance and attaching documentation of the prior determination.听
• Effect of Submission of an Initial Attestation: Addressing a provider concern that CMS may not be able to process and respond to all initial attestations submitted within this two-year period, CMS proposes that timely submission of the initial attestation would meet the attestation requirements of Section 6225 of the CAA even if the main provider has not received a provider-based status determination from CMS by January 1, 2028. This interpretation is consistent with the language of the CAA and provides welcome relief for both providers and agency staff and contractors.
• Standardized Attestation Form: CMS proposes a standardized attestation form that main providers would submit, with the goal of ensuring consistency. CMS published a sample , the terms of which are available for comment. CMS anticipates a substantial influx in the number of attestations submitted, and this streamlined attestation form may simplify at least part of this process.
• Centralized Documentation Submission Process: CMS proposes that attestations be submitted via a centralized electronic system. Until the new centralized process is operational, providers may continue to submit attestations through the current Medicare Administrative Contractor (MAC) process. Under the proposed rules, main providers would have to acquire an NPI for each applicable off-campus PBD before submitting an attestation. They would also have to update the Provider Enrollment, Chain, and Ownership System (PECOS). In the initial attestation, a main provider would need to submit identifying information for itself and for each applicable off-campus PBD. Main providers may submit supporting documentation along with the attestations. Following submission, CMS and its contractors may identify attestations requiring additional information. A main provider would have up to 60 days to produce requested supporting documentation.
• Documentation Requirements: CMS anticipates that it will employ risk-based screening to request additional documentation in support of an attestation of provider-based status. CMS indicates that not all attestations will receive a detailed review, with initial submissions receiving an automated review for an initial determination. Under the proposed rule, main providers will not be required to provide evidence of compliance with the provider-based status rules when the attestation is submitted, but must maintain documentation demonstrating compliance and, upon request, furnish that documentation to CMS and its contractors. We note that more recent MAC PBD attestation processes have often resulted in significant information requests following submission. CMS signals that this process will continue and identifies categories of documents that may be requested under the new risk-based review process that are similar to the categories often requested by the MACs.
• Review and Determination Process; 鈥淓xtended Review鈥� Risk: CMS proposes to introduce a standardized review process and validation activities for CMS鈥檚 contractors to use in making an initial determination of compliance with Section 413.65. Such activities may include data analysis, risk-based screening methodologies, and targeted documentation review, among others. As noted above, initial attestations are proposed to be processed in an automated fashion, but attestations 鈥渢hat present indicators of incompleteness, inconsistency, or elevated compliance risk鈥� would be flagged for additional review, including documentation requests and potential site visits. The Proposed Rule identifies seven sections of the provider-based regulations that are likely to be targets of additional review. These include: (1) location; (2) licensure; (3) clinical services integration; (4) financial integration; (5) public awareness; (6) obligations of hospital outpatient departments; and (7) ownership, control, administration, and supervision. Failure to submit requested documentation within the applicable timeframe, which may be as short as 60 days, 鈥渕ay result in a determination of non-compliance and recovery鈥� of prior OPPS payments. CMS may also use site visits, remote audits, investigations, or additional documentation to evaluate compliance.
• Clarification of Definition: CMS proposes to add a definition of an 鈥渙ff-campus outpatient department of a provider鈥� to Section 413.65 to distinguish off-campus requirements from those for hospital outpatient departments located near a remote location of the main provider. An 鈥渙ff-campus outpatient department of a provider鈥� would be defined as a department of a provider that is not located on the campus of the main provider or within 250 yards of a remote location of a hospital.
• CMS Verification and Oversight: CMS proposes that, during the initial review stage, it would review and screen submitted attestations to verify completeness and consistency, along with the presence of all elements required for attestation. Potentially incomplete or inconsistent attestations would be targeted for further review. CMS would then use risk-based methodologies to identify attestations presenting a higher risk of non-compliance for more extensive review.

CMS has requested public comment on subsequent attestation deadlines, initial mandatory attestations for PBDs that received a determination of provider-based status before 2026, the appropriate scope of documentation requirements, and the proposed attestation form.

What You Can Do

We encourage hospitals and other interested parties to submit comments on the proposed rule prior to August 31. Some of the proposals, particularly the documentation requirements, could increase the administrative burden that hospitals face when submitting attestations. Sharing concerns with CMS now may help shape the scope of documentation required by the final rule.

In parallel, we encourage hospitals to review and maintain their records in anticipation of the proposed documentation requirements. There are no proposed material changes to the underlying provider-based requirements. Consequently, hospitals should now be assessing their current inventory of off-campus PBDs to ensure that each PBD complies with Section 413.65 and that documentation supports that compliance 鈥� particularly in the seven areas of special interest to CMS noted above. This information should be readily available so that a hospital can submit requested documentation within the 60-day timeframe. In addition to obtaining a separate NPI for each applicable off-campus PBD, hospitals will also need to update PECOS accordingly. Finally, hospitals should anticipate potential extended review, including site visits and remote audits, if selected during the extended review stage.

麻豆直播 is here to help you address the short and long-term impacts in the wake of regulatory changes. We have the resources to help you navigate these and other important legal considerations related to business operations and industry-specific issues. Please reach out to the authors, your 麻豆直播 relationship partner, or to our Health Care Practice Group and Health Care & Life Sciences Sector with any questions.

麻豆直播 & Lardner LLP (麻豆直播) represented a modern technology-driven health care provider (Company) in negotiating a  with the California Attorney General (AG) to resolve alleged corporate practice of medicine (CPOM) violations against Company. The resolution occurred at the same time the Company was emerging from Chapter 11 bankruptcy

Although litigation in the courts may have yielded a different result, the California AG settlement with Company is part of a broader trend of increased regulatory scrutiny of PC-MSO structures and further signals that the California AG has focused its crosshairs on health care arrangements that may implicate California鈥檚 corporate practice restrictions, including arrangements used by private equity-backed, venture-backed, and digital health companies operating in California.

麻豆直播鈥檚 representation of Company in the settlement with the California AG provided important insight into the operational arrangements and management functions that California enforcement agencies may view as presenting heightened CPOM risk in PC-MSO arrangements.

Settlement Terms

The complaint filed by the California AG includes allegations that Company violated California鈥檚 CPOM prohibition. Notably, the complaint does not allege any inappropriate medical care. Company denies wrongdoing of any kind but agreed to resolve the allegations by entering into the settlement agreement.

The settlement includes a total of $4.4M in civil penalties, most of which is identified in the stipulation for final judgment as a prepetition general unsecured claim under the Company鈥檚 bankruptcy. The settlement is conditioned on approval by both the federal bankruptcy court and state court. In an unusual departure from typical corporate practice-related enforcement, the California AG individually named and assessed a $100K civil penalty against the Co-Founder and Chairman of Company. California regulators鈥� willingness to look beyond the corporate entities and target individuals demonstrates that corporate executives, officers, directors, and founders may be exposed to personal liability in connection with PC-MSO structures.

Key Takeaways

The following highlights the top takeaways for private-equity backed, venture-backed, and digital health companies looking to minimize enforcement risk when navigating the evolving regulatory landscape:

• Review MSO Influence on PC Ownership: PC-MSO arrangements often include an agreement commonly referred to as an 鈥渁ssignable option agreement,鈥� 鈥渟tock transfer restriction agreement,鈥� or 鈥渟uccession agreement.鈥� Companies should reassess existing provisions in these agreements that could be viewed as granting control over physician ownership or clinical functions, including an MSO鈥檚 contractual right to trigger or select the identity of a physician replacement.

• Review MSO鈥檚 Role Under Management Services Agreement: Companies should evaluate whether management services agreements (MSA) between the management services organization (MSO) and professional corporation (PC) could be viewed as inappropriately giving the MSO control over advertising, payor negotiations, billing and coding, medical records, selection of medical equipment, or the hiring, firing, and compensation of health care professionals.

• Evaluate Opportunity for a Business Breakup: Companies should consider whether PC-MSO contracts create the perception that the PC is captive to the MSO. There is less enforcement risk when contracts allow PC owners to easily terminate the MSA without losing ownership of their practice.

• Review Lending Arrangements: CPOM risks associated with any deficit funding, line of credit, or other lending arrangement between an MSO and PC can be managed by ensuring such arrangements reflect market terms and do not require a PC to exclusively seek financing from the MSO.

• Evaluate Branding Agreements: Companies should be cautious of relying on the branding of the MSO in California. CPOM risk can be mitigated by ensuring patients are aware of the identity of the PC operating the clinical practice, such as through conspicuous disclosures at the point of care.

• Monitor the Trend of Increased Enforcement. The Company settlement follows other recent California AG activity involving corporate practice restrictions and MSO-PC structures, including the California AG鈥檚  filed on March 30, 2026, in Art Center Holdings, Inc., et al. v. WCE CA Art, et al., a case involving a physician medical practice owner and private equity-backed management services organization (MSO), and the California AG鈥檚 on May 7, 2026, with Aspen Dental involving alleged violations of California鈥檚 prohibition on the corporate practice of dentistry. We anticipate additional enforcement actions by the California AG will be forthcoming.

The recent enforcement in California presents compliance challenges for PC-MSO structures. Health care companies operating in multiple states, including through telemedicine and digital health platforms, should evaluate whether restructuring is needed to ensure compliant operations in California. We will continue to monitor California enforcement activity and any legislative changes that affect PC-MSO structures and related MSAs.

The 麻豆直播 team representing Company in the California AG action includes partners Thomas (T.J.) Ferrante, Jason Mehta, and Adam Hepworth, and associates Samantha Gerencir and Ashley Grabowski.

麻豆直播 is here to help you address the short- and long-term impacts in the wake of this enforcement action. We have the resources to help you navigate these and other important legal considerations related to PC-MSO structures and CPOM compliance. Please reach out to the authors, your 麻豆直播 relationship partner, or our Health Care Practice Group with any questions.

Special thanks to Pouyan Ahmadi, a summer associate in 麻豆直播鈥檚 Tampa office, for his contributions to this article.

Over the past six months, the Trump Administration has placed significant emphasis on combatting 鈥渨aste, fraud, and abuse鈥� in federally funded, state-administered benefits programs. The Medicaid program occupies center stage in those efforts. Among other things, the Trump Administration has released provider-level Medicaid spending data for the first time, restructured and reformed U.S. Department of Justice (DOJ) processes for fraud enforcement, and placed pressure on state regulators to ramp up their anti-fraud efforts.

Providers, Medicaid managed care organizations, and other Medicaid fund recipients now operate under heightened scrutiny from federal and state regulators. These developments, as we explain below, create an increased risk of False Claims Act (FCA) actions by both the government and private qui tam relators.

The False Claims Act and the Medicaid Program

The FCA is the federal government鈥檚 primary civil fraud statute for recovering losses tied to allegedly false claims submitted to the government. In broad terms, the FCA prohibits knowingly submitting false claims for payment or improperly retaining obligations, including identified overpayments, from the government. The statute carries substantial consequences, including treble damages and per-claim civil penalties.

The FCA also allows private individuals, known as relators, to bring qui tam suits on the government鈥檚 behalf and share in any recovery. That means FCA exposure can arise not only from a government-initiated investigation, but also from insiders, data miners, and others who believe they have detected fraud. In addition to the federal FCA, most states have their own false claims statutes that apply to the Medicaid program. These statutes, like the federal FCA, tend to authorize relators to file suit on behalf of the state.

The FCA can apply broadly to any program that receives federal funds, including state-administered programs like Medicaid. FCA enforcement involving Medicaid is not new. FCA enforcement has long focused on federally funded health care programs, including Medicaid along with Medicare and TRICARE.[1] Common theories for enforcement have included alleged billing for services not rendered, medically unnecessary services, unsupported coding, false certifications of compliance with regulatory requirements, or failure to return overpayments. Often cases have involved allegations that a provider submitted false claims to all three of those programs, with Medicaid being just one of the affected payors.

Those traditional health care fraud cases will continue, and we expect increased focus on programs unique to states鈥� Medicaid programs. Medicaid programs are funded jointly by states and the federal government, with the federal share varying by state and services offered. The Medicaid statute mandates that states provide certain services and also allows states to provide additional, optional benefits that are matched with federal funds. Common optional services include pharmacy, hospice, and physical therapy. These programs, along with other state-administered federal benefits programs, are coming under particular scrutiny.

Recent Developments Place Increased Scrutiny on Medicaid Program Participants

Over the last six months, the Trump Administration has announced multiple initiatives that raise the FCA risk profile of companies that submit claims to the Medicaid program:

• Release of Medicaid Provider Data: In February 2026, for the first time, the U.S. Department of Health and Human Services (HHS) released 鈥減rovider-level Medicaid spending data鈥� covering 鈥渇ee-for-service, managed care, and Children鈥檚 Health Insurance Program (CHIP) claims from 2018-2024.鈥漑2] HHS and the Department of Government Efficiency (DOGE) released the data to support public review of Medicaid spending patterns and program integrity efforts. [3]
• Significant Deferrals of Federal Funding Claimed by States: In February 2026, the Centers for Medicare & Medicaid Services (CMS) deferred over $250 million of Minnesota鈥檚 quarterly federal Medicaid funding related to concerns about specific services and individuals lacking satisfactory immigration status, and threatened to defer more than $1 billion more if Minnesota did not improve its program integrity.[4] In May 2026, CMS deferred more than $1.1 billion of California鈥檚 quarterly federal Medicaid funding based on estimates of questionable claims and program integrity risks. [5]
• Executive Order and Task Force to Eliminate Fraud: In March 2026, by executive order, the White House established the Task Force to Eliminate Fraud.[6] This 鈥渨hole-of-government鈥� task force focuses on waste, fraud, and abuse in federal benefits programs, including Medicaid. The executive order instructs agencies to examine whether to withhold federal funds from jurisdictions with inadequate anti-fraud requirements. It also instructs the Attorney General to promote meritorious FCA actions involving federal benefits fraud.

• DOJ National Fraud Enforcement Division: In April 2026, DOJ created a new National Fraud Enforcement Division. This new Division consolidates operational control over several existing units within DOJ, including the Health Care Fraud Unit. DOJ announced that the National Fraud Enforcement Division will expand 鈥渋nto a robust litigating division capable of reaching any fraud.鈥漑7] DOJ鈥檚 Civil Division remains responsible for FCA enforcement, but the restructuring reflects the Administration鈥檚 prioritization of fraud involving taxpayer-funded programs.
• Pressure on State Medicaid Fraud Control Units: In late April and May 2026, CMS and the HHS Office of Inspector General (HHS-OIG) placed increased pressure on state regulators to scrutinize Medicaid funding recipients. HHS requested that all 50 states conduct a 鈥渟wift revalidation of Medicaid providers of services at high risk of waste, fraud, abuse, and corruption as part of [their] program integrity obligations under federal law.鈥漑8] In another set of letters, HHS-OIG announced its plans to 鈥渆ngage in a robust review鈥� of state Medicaid Fraud Control Units (MFCUs).[9] The letters describe MFCUs as 鈥渁 critical component of Medicaid fraud prevention鈥� and threaten corrective action plans, loss of funding, or decertification for MFCUs that do not meet statutory requirements.[10] On June 4, 2026, HHS-OIG announced it would decertify Hawaii鈥檚 MFCU due to a lack of prosecutions.[11]
• DOJ Strike Force Focus on Medicaid: In late May 2026, DOJ announced the expansion of the Health Care Fraud Midwest Strike Force and the hiring of 15 additional prosecutors dedicated to combatting Medicaid fraud nationwide.[12] DOJ has used strike forces to focus on health care fraud in certain regions for years, but this is the first time DOJ has deployed a group specifically to focus on Medicaid fraud.
• Expedited Review of Public Benefits Fraud Qui Tam Suits: Also in late May 2026, DOJ announced reforms to its review of FCA complaints by relators to prioritize 鈥渜ui tam complaints alleging fraud against public benefits programs.鈥漑13] DOJ will now conduct 鈥渋ts initial review within 60 to 120 days鈥� to determine whether to permit the relator to move forward with the action, decide to conduct additional investigation, or dismiss the relator鈥檚 action as deficient.[14]

Key Takeaways

These developments pose heightened risk of FCA enforcement for providers, Medicaid managed care organizations, and other companies that participate in Medicaid programs. These companies should take several steps to reduce risks.

• Know Your Own Data: DOJ is prioritizing data analytics more than ever. And because qui tam actions can be lucrative, private parties have a strong financial incentive to analyze the claims data for outlier billing patterns. Providers with billing patterns outside of the norm or raising red flags, such as rapid billing growth, per-claim averages far exceeding norms, and concentrated beneficiary payments, should expect increased scrutiny from regulators and relators alike. An effective compliance program should proactively engage in analysis of one鈥檚 own data to detect and investigate those red flags.  Public access to provider-level data (as discussed above) will facilitate data-driven assessments by providers and relators.    

• Address Internal Complaints Effectively: Even with the increase in data-driven relators, many qui tam suits continue to be filed by insiders. And in our experience, most relators first raise concerns within their organization before considering filing a suit. More than ever, companies that participate in Medicaid programs should have effective tools to receive, investigate, and remediate internal complaints as part of their compliance programs. Being responsive to employees who raise concerns goes a long way towards avoiding a qui tam suit.

• Improve Responses to Third-Party Audits and State Enforcement Efforts: The Trump Administration鈥檚 initiatives will likely lead to increased third-party audits contracted by Medicaid programs and state regulators. In addition, HHS and CMS鈥檚 scrutiny of state regulators and MFCUs may prompt them to become more aggressive. These efforts, in turn, increase the risks of referrals for FCA enforcement. Companies should ensure they have robust mechanisms to respond to these audits effectively and proactively explain issues that could appear serious enough to warrant referral for FCA enforcement. 

• Understand Your State鈥檚 Medicaid Program: Medicaid compliance is state-specific: the program鈥檚 rules and documentation standards vary by state and frequently differ from Medicare or other federal health care programs. Companies should ensure they know and follow the Medicaid requirements in the states where they operate. When there is an FCA action, it is critical to ensure the company is being held to the right standard and not inappropriately penalized based on authorities or guidance applicable only to other federal health care programs, such as Medicare.

Conclusion

The Trump Administration鈥檚 recent initiatives to combat waste, fraud, and abuse have increased scrutiny of the Medicaid program and created a heightened risk environment for participants.  Providers, Medicaid managed care organizations, and other Medicaid fund recipients should expect greater attention from federal and state regulators, as well as from relators pursuing FCA claims. Taking proactive steps now鈥攊ncluding the measures identified above鈥攃an help organizations prepare to avoid and meet these challenges.

We will continue to monitor developments in this area. Please do not hesitate to reach out to your 麻豆直播 relationship partner or to our Government Enforcement Defense & Investigations and Health Care teams with any questions about how these enforcement trends may affect your organization.

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[1] Off. of Pub. Affs., U.S. Dep鈥檛 of Just., Fact Sheet 鈥� False Claims Act Settlements and Judgments FY 2025 (2026), .
[2] U.S. Dep鈥檛 of Health & Hum. Servs., Medicaid Provider Spending by HCPCS, HHS Open Data (Feb. 9, 2026), .
[3] DOGE HHS (@DOGE_HHS), X (Feb. 13, 2026 at 18:02 CT), .
[4] Ctrs. for Medicare & Medicaid Servs., Trump Administration Prioritizes Affordability by Announcing Major Crackdown on Health Care Fraud, CMS Newsroom (Feb. 25, 2026), .
[5] Letter from [redacted], Ctrs. for Medicare & Medicaid Servs., to Tyler Sadwith, State Medicaid Dir., (May 13, 2026), .
[6] Exec. Order No. 14396, 91 Fed. Reg. 13485 (Mar. 16, 2026). .
[7] Memorandum from Todd Blanche, Acting Att鈥檡 Gen., Creation of the National Fraud Enforcement Division (Apr. 7, 2026), https://www.justice.gov/ag/media/1435311/dl?inline.
[8] Letter from Dr. Mehmet Oz, Ctrs. for Medicare & Medicaid Servs., to the Honorable Kay Ivey, Governor of the State of Ala. (Apr. 23, 2026), .
[9] Letter from T. March Bell, Inspector Gen., Off. of Inspector Gen., to Rob Bonta, Att鈥檡 Gen., Cal. Dep鈥檛 of Just. Off. of the Att鈥檡 Gen., (Apr. 23, 2026), .
[10] Id. at 2.
[11] Letter from T. March Bell, Inspector Gen., Off. of Inspector Gen., to Anne Lopez, Att鈥檡 Gen., Haw. Dep鈥檛 of the Att鈥檡 Gen., and Landon Murata, Dir. of Medicare Fraud Control Unit, Haw. Dep鈥檛 of the Att鈥檡 Gen., (Jun. 4, 2026), .
[12] Press Release, Off. of Pub. Affs., U.S. Dep鈥檛 of Just., This Week in Fraud: The Fraud Division Announced Expansion of Midwest Task Force and Authorization to Hire 15 New Medicaid Prosecutors, an Unprecedented Minnesota Health Care Fraud Takedown, and a $2 Billion Telemedicine Health Care Fraud Scheme (May 22, 2026), .
[13] Press Release, Off. of Pub. Affs., U.S. Dep鈥檛 of Just., Civil Division Moves to Fast-Track Benefits Fraud Enforcement (May 27, 2026), .
[14] Id.

In this episode, Jana Kolarik, a partner in 麻豆直播鈥檚 Health Care Practice Group, and Angie Caldwell, principal and CFO of PYA, continue their discussion on the importance of work relative value units (wRVUs) and fair market value (FMV) under the Stark Law and what this can mean for how health care organizations pay their physicians.

For more information regarding the 鈥淟et鈥檚 Talk Compliance鈥� podcast series, please click here.

Please note that the interview copy below is not verbatim. We do our best to provide you with a summary of what is covered during the show. Thank you for your consideration, and enjoy the show!

Angie Caldwell

Hello and welcome to the Let’s Talk Compliance podcast series of Health Care Law Today, presented by 麻豆直播 & Lardner and PYA. I’m your co-host, Angie Caldwell, principal with PYA.

Jana Kolarik

Hi, and I’m your other co-host, Jana Kolarik, a partner in 麻豆直播’s health care practice group. We’re excited to have you join us today. Before we begin our show, we want to remind you to subscribe to Health Care Law Today on your preferred podcast app. Please visit healthcarelawtoday.com or pyapc.com. For today’s show, Angie and I are continuing our discussion on the importance of Work Relative Value Units, or wRVUs and fair market value, which we’ll refer to as FMV under the Stark Law and what this can mean for how health care organizations pay their physicians and we’re going to focus on best practices.

Great to see you, Angie, and thanks for doing this follow-up discussion of our favorite topics.

Angie Caldwell

Always great to be here with you. Thank you.

Jana Kolarik

So in our last, this is a two-parter, so in our last discussion, we talked a lot about productivity modeling in wRVU with some recommendations related to it. We had also, just to kind of orient the audience as well, we had talked about planning issues and transparency and some of this stuff we’re going to talk about related to best practices in one of our prior podcasts, I think podcast episode 35, which was in November of 2024, time flies. So I recommend our audience, if they’re interested in a deeper dive into some of those issues, they listen back at that. But today we’re going to be talking about that best practices and some of this modeling stuff related to that.

I just want to remind folks about the Stark Law. Not that anybody really forgets that’s probably listening to this, but that is a driver of a bunch of these concerns related to FMV and the compensation modeling that we get into. So really quickly, and you know I love to wax poetic on this, Angie, but I’ll try to be quick. The Stark Law provides that a physician who has a direct or indirect financial relationship with a designated health service entity or DHS entity or who as an immediate family member with that type of relationship may not make a referral for the furnishing of that DHS for which payment otherwise may be made under Medicare unless an exception applies. Further, an entity that furnishes that DHS pursuant to that prohibited referral may not present or cause to be presented a claim or bill to Medicare or any other individual third party payer or other entity for the DHS performed pursuant to the prohibited referral again, unless an exception applies.

So this means really at its base that when a financial relationship falls under the Stark Law and a physician’s referral of the patient can’t satisfy the regulatory exception, the submission of a claim to Medicare for the service would trigger a violation of the Stark Law.

Okay. The Stark Law only applies to Medicare claims, but that’s a huge federal health care program for most of our listeners. It covers only relationships with physicians, but intent is irrelevant. So it is a strict liability statute. It’s a civil statute. There are penalties. It obviously prohibits payments based on its terms, and it also provides for civil monetary penalties, and it can lead to False Claims Act (FCA) exposure. So again, regulatory exceptions are required.

The big 鈥渢wo鈥� [exceptions] that you and I talk about a lot are the bona fide employment exception and the personal services arrangement exception. So the employment exception is obviously for employed relationships and the other one is for independent contract arrangements.

Well, we’re going to focus on FMV, which is applicable to both exceptions, as is commercial reasonableness. But that FMV issue can be and is tricky for folks and maintaining or keeping track of FMV is essential throughout the entire relationship. Again, as we have said many, many times, it’s not a set it and forget it. So we don’t just talk to you, set the compensation plan and then move on with our lives. We have to ensure that it is continuing to be FMV. Some of the things that we’ve talked in the past, and we’ll talk in more detail here and I’m very interested in information from you on that, .

But let’s talk about best practices for compensation reviews. Essentially the contract is important, right? So ensuring that at its base you have a contract that on its terms is FMV at the beginning and can maintain FMV throughout the entire term of the agreement. Transparency about the terms of the agreement is important as you’re planning with physicians and as you’re planning internally and checks of FMV throughout the term of the agreement is also important. And so we’ll talk a little bit about some of that stuff.

And then the catching problematic arrangements early is important because as we’ve discussed, reconciliation or known in other terms, 鈥渃lawbacks鈥� are uncomfortable, but necessary. I mean, it should be built into contracts, the ability to do [reconciliations] to maintain FMV. But let’s talk about with all that intro, what are some best practices for annual compensation reviews?

Angie Caldwell

That was so comprehensive in a very short period of time. So kudos to you for boiling it down. So giving and feeding off of my Gen Z children, I’m going to say it’s giving FMV vibes, right? Every year is giving FMV vibes. So let’s talk about a great policy for helping an organization determine and maintain FMV for their arrangements.

First and foremost, we need to start with a well-defined policy or process. So even that at times, because within that well-defined policy and process, we have to think about the organization’s philosophy, compensation philosophy. We have to understand the organization’s risk tolerance. We have to think about volume of arrangements and the administrative burden of maintaining this policy or process. So all of that thought goes into the calculus of determining that policy.

Then within the policy and the question that PYA often gets asked, and I’m sure that you get asked this as well, Jana, is what should the thresholds be? So we have a process for reviewing, but what are my guardrails? When do I know? How do I set guardrails or thresholds for deciding if I have a problem?

And so the policy and the process should define those thresholds. And so let’s talk about those thresholds a little bit and what they should be. So sometimes we talk about them in terms of slices or perhaps we talk about this in terms of tiers. And before I go down this path, I want to caution our listeners that one test in any tier within the determination of what you do with an arrangement and whether it requires additional review or not, probably more than one test is appropriate. So you and I on prior podcasts and likely the one that you referred to from 2024, we likely talked about bright lines around the 75th percentile or perhaps the notion that everything that’s paid at median is automatically FMV. So not to say that the 75th and the 50th aren’t great thresholds for starting a review, but adding a second element to that review is likely very important.

So let’s talk about that just in a little bit more detail. So within those tiers, what a best practice would be would be to create a mechanism such that you are looking at all of your physicians either annually or in some kind of cadence, annually best practice. I have seen some every other year when the risk tolerance within the organization or perhaps comp philosophy allowed for it, but probably an annual review. And you really want to catch, and this is something you had in your opening comments, Jana, you really want to catch the horse before it’s out of the barn. And that’s why then you’re doing these reviews on an annual basis, even if the contract doesn’t have a renewal clause or an update for two or more years. So you’re looking at this every year and making sure that everything is still good, that it’s still within FMV.

So first tier maybe is you compare the compensation, work RVUs, comp per work RVU, the differential between productivity and compensation, perhaps you use the median as a starting point and if a physician meets all of those tests within tier one, nothing is required. They’ve passed the test. If they fall out of that, they don’t hit those tests, they fail one of those tests. Then perhaps the second slice is more of an internal review and documentation. And so with that then you’re looking at, well, why did they fail the test? Is it because of location? Perhaps a physician is in a rural location. Perhaps they failed the test because within the compensation plan, there’s an experience clause that puts additional compensation because of experience. Perhaps they have unique training. Perhaps there’s a need, perhaps there’s a desperate need for the physician.

Then a third tier, going down, so you hit the second tier and you’ve decided that the second tier means that you have an internal review process or perhaps after the internal review process, it still doesn’t make sense. You’re still as an organization concerned about FMV, so then you document a third and enhanced review, which perhaps increases the benchmark thresholds from the 50th to the 75th. Again, not just one, not just one 75th percentile total compensation, total cash compensation, but perhaps you’re looking at a compensation per work RVU threshold with that. You’re looking at a productivity threshold with that and you’re looking at the differential between productivity and compensation with that in addition to what you’ve already gathered in tier one and tier two.

Your slice three or your tier three, if you still are failing, the arrangement is still failing all of those tests, then they fall into that outlier category, which would at that point probably require an external review and help from someone, an external evaluator.

So with all of that in mind, just to recap, best practices, document a policy and procedure, make sure that you have the ability to follow the policy and procedure and measure on a timely basis, annual being best practice, but then also let’s think about transparency and how much then gets disclosed to the physician as it relates to these tests on an annual basis. So again, just thinking about how uncomfortable perhaps a clawback is if this is part of the process and if the process has been communicated to a physician as part of their annual education process, it’s a much easier conversation. It’s not a surprise to the physician. So Jana, helping me think about that then as a best practice related to physician education, what are some of the key takeaways or key learning objectives that should be part of a physician education?

Jana Kolarik

Yeah. And thanks Angie, that’s super helpful background and understanding really the layers that can go into this analysis for organizations I think is super important to understand. So from an education perspective and from a transparency perspective, the discussion about the Stark Law, the discussion about kickback, the foundational legal reasons for why the organization is concerned about these issues should be part of the discussion and the need for FMV should be part of it. There should be contract provisions that obviously maintain FMV as I’ve mentioned. I think they should be at the sole discretion of the employer. So that’s because there can be some debates around the edges of these issues, but foundationally as the employer, there is a responsibility and a seen responsibility by that employer to maintain compliance with FMV. So in the end, it’s got to be at the discretion of the employer as to whether something is FMV.

But those processes that you mentioned, like what are the different steps that are gone through to analyze FMV is completely appropriate to talk about and to talk and to have that transparency, for example, and we’ll get into some of this and we’ve gotten into it in the past, but if you have a component of the compensation that deals with productivity and you’re dealing with wRVUs, having those wRVUs be transparent to the physician so they understand where they stand and understand too how they are calculated. So we’ve talked in the past about modifier adjusting and so forth and so on. So all of that and that education as to how physicians are compensated is very important so that it doesn’t end up being a surprise when they get their check or surprise at the end of the year if there is an issue with FMV, it should be a dialoguing issue.

The other piece of this that I think is important is that if it is necessary to maintain FMV, that the contract allows those reconciliations. And we can talk a little bit about what this looks like from your perspective, but from my perspective, reconciling as frequently as you can is fantastic if you can do it quarterly makes sense because then you have a sense as you go through the year, annually can be challenging just because folks don’t know where they stand at various points during the year. So those are frankly things that pop immediately to mind as I’m thinking about transparency and education.

Angie Caldwell

I think too with that communication, physicians need to understand why the organization does things the way that they do. And with that understanding, and again, not to the minutia, not to the point where specific confidential matters are disclosed across arrangement types or anything like that, but the physician having a general sense as to why the organization approaches things the way that they do and that general compensation philosophy I think is really important because the physicians, as we hope that they do, have colleagues all over the country and are likely receiving information about other organizations and the way other organizations do things. And without the context of how their organization is doing things, then I think it just becomes maybe a burr in the saddle, if you will, because they just don’t understand their organization’s philosophy and approach, which is likely very much to pay the physician for their personally performed services at FMV. It is a recruiting and retention problem if the physician is not paid at FMV . And so again, it’s really to the benefit of everyone to maintain this and communicate transparently around it.

Jana Kolarik

Agreed. And I think to the point that you just made, it plays into trust. So the transparency plays into the trust that the physicians have related to what’s happening. But I also think that there’s a lot of information that floats around amongst physicians that are in different contexts and so are compensated differently because of their context. So we’ve talked in the past about the group practice and the group practice exception and compensation through the group practice. Look, if you can meet those standards under Stark and the In-Office Ancillary Services Exception, you from a group practice perspective are not concerned about FMV because you are meeting the other nine factors that go into the group practice and the other factors that go into In-Office Ancillary Services Exception. But that world is very different than the world of the employment exception and the hospital situation where we’re living with the employment exception, which must be FMV and that has some rigor around it.

Can you talk to me a little bit, because you and I have talked about people’s understanding FMV as a number. Can you talk to me about what FMV is from a valuation perspective? What does that mean in your world?

Angie Caldwell

Yes. FMV is not algorithmic. It is not a formula, it’s not a plus, minus, divide, multiply, equals one number. FMV is a range and the range is determined by a valuator, an appraiser who is taking into account all of the individual facts and circumstances that they can gather, that they can muster around the arrangement in determining that range. So benchmark data, wonderful, and we’ve probably said this on a prior podcast, benchmark data is wonderful, but it is a starting place and in and of itself does not determine FMV. It’s a starting place for those individual facts and circumstances. And within each individual element, there is a range of compensation that within an individual market makes sense. And so when an appraiser is looking at compensation, again, it is a range and then the upper end of the range is typically where individuals focus. What is the range at which if I stick a toe over, then it becomes a problem?

And the upper end of a range, I’ve got to tell you, as an appraiser, that upper end of the range is very important because it’s the range at which we buckle down and then it’s not a dollar or more unless there is a change in fact or circumstance that would drive a new analysis or perhaps an update to that analysis. In all of your appraiser opinions that you’ve probably seen, Jana, and I’ve seen a few other appraiser opinions other than PYA, we will say, you might get a different answer if you ask someone else, and that’s because FMV is in a range, it’s not algorithmic, it’s not a formula, and someone may look at something a little different. But at the end of the day, even the high end should be within a range in and of itself to match the market dynamics and the personally performed services of the physician.

Jana Kolarik

And I think a lot of this … I think we talk about complex arrangements. So we talk about highly compensated physicians and a lot of these issues with compensation and with FMV come into play with very complicated arrangements that are at play and with physicians that are highly compensated where that art that is valuation becomes important to understand or have somebody on your speed dial. So talk to me about what happens if the annual review reveals a problem from your perspective.

Angie Caldwell

Yes. And then absolutely I want to hear your perspective too because there are a lot of tentacles to this. When you find yourself in a hole, your first step is to stop digging. So when you find a problem, stop digging and make a plan. The first thing is to check your data, make sure that what you are seeing is perhaps a problem or a test failure if we refer back to the tiering and the test within the tiering. If you get to that point, first and foremost, double check your data, make sure that what you’re looking at is accurate and that you can reperform the math in a way that still reveals an issue. That’s first and foremost.

Then it’s a matter of deciding again, do you need internal or external support related to this? Part of this is {keeping} confidentiality within your committee and within your group once a problem is identified. Again, if you have the level of transparency that we are speaking about earlier with respect to physician education, when that problem is revealed, if you have that level of transparency and education, it’s an opportunity to double down and to get really serious about the data, the information, all of the facts and assumptions determining if you need external support either from someone like me, Jana, or someone like you or perhaps both when the problem takes it to that level and we’ll come back to that in just a minute.

Then too, after you get your support gathered and you determine what you need, there is an analysis {around the} need to fix the problem that caused the arrangement to be at issue so that it doesn’t repeat itself. And so that then comes back to communication, trust, contractual arrangements, and then determining if the problem is systemic. The problem could very well be isolated to one arrangement and one physician, but if there is an underlying system issue, the way work RVUs are calculated, the way the systems are looking at those, maybe there’s something else systemic that’s happening, you want to not only fix the arrangement, but you want to fix the system around the arrangement to make sure that it doesn’t happen again.

So Jana, talk to me about your perspective on this and when there is a problem, what steps should be taken? And even in the worst of scenarios, what happens when you have the worst situation and you even might have to have a disclosure, talk to me a little bit about that.

Jana Kolarik

I think it’s the internal processes, like you had mentioned, the plan that’s in place, the process that’s in place, that should save you most of the time. So if you’re midstream with a contract and you have the ability to clawback or adjust, then you can solve for FMV issues without necessitating a repayment or a self-disclosure. So I think it’s important those provisions in the contract are not intended to be punitive to anybody. They’re really intended to be safety valves for a process that is intended to keep this [arrangement] within FMV and keep everybody compliant. So I think that is the immediate sort of reaction to we might have an issue. And if you find it early enough, that can be a saving grace.

With regard to if you find it well into the process, which happens after time has passed, again, if it’s an employee there is frequently the ability or there is the ability if that person continues to be an employee to reconcile the payments that have been overpaid and get those repaid to the entity such that it isn’t an issue and there isn’t a need for a self-disclosure. So that’s the other piece of it. Even if time is passed, you’re not midstream. If there is a relationship there and an understanding of the process and the transparency that goes along with it, some of those discussions can be had and that problem can be rectified.

In the situation where the physician has left – is no longer employed – or the physician is frankly unwilling to repay the amount of money that’s been overpaid, then you’re in a situation of thinking through the self-disclosure options with regard to Centers for Medicare & Medicaid Services (CMS).

And that process is I’ve dealt with it frequently CMS is actually a good regulatory agency to deal with. The process is relatively straightforward and the settlement is typically not for the full amount of the Medicare payments, but rather a percentage, but that process in writing up the self-disclosure and making that happen and fixing the problem, as you’ve mentioned, is important because when you do file that self-disclosure, you want to make sure and you have to attest to the fact that the problem has been fixed. So if it’s the systemic issues that you’re mentioning, if it’s the calculation of the wRVUs that’s been problematic, fix that. If it’s the contract provisions that have just become problematic, fix that. So I think no matter what it is, the fixing of it is super important.

So I think from my perspective, those are the things that I would highlight. As far as bringing you in, I love to see processes that with the more straightforward compensation arrangements allow the use of surveys and the ability for organizations to handle this internally. So that there are these safety valves that you and I help them put in place, that they’re able to pull levers and ensure compliance throughout the year for most of their arrangements. It’s for those ones that are more complicated that I frequently become involved with more closely and then we’ll bring in you, someone like you as a valuation consultant to help navigate next steps with regard to compensation planning and FMV and explaining what happened if it is unclear to the organization at that point. So that from just a resources perspective is typically how it would be ideal to handle. So what are your thoughts on that?

Angie Caldwell

I couldn’t agree more. My preference is also an internal process to know, understand, find and resolve. And then really only when there is a matter that has some stickiness to it that an external evaluator or legal then gets involved because the teams, the internal teams are talented and they often have great resources and sometimes it’s just a matter of bandwidth. And so that’s another area where you and I can help, Jana. It’s just a matter of there aren’t enough hours in the day and so they need someone else just to help from a bandwidth or possibly even from a project management perspective. But really overall, I couldn’t agree with you more as to the process and how those problems need to be resolved within the arrangement. And it all comes back to, and I know we’ve said this before in other podcasts, it all comes back to the planning. If you can start out on that right foot contractually and from a communication perspective 鈥� with education that the compensation within the original contract is designed in a way to result in FMV compensation, that’s the best starting place really for all of it.

Jana Kolarik

Yeah, amen. I wonder if we want to segue a little bit into different compensation arrangements and how they fit in with the different specialties. Do we want to talk a little bit about that, about potentially problematic provider compensation elements that should just be flagged for folks to keep in mind? I know we’ve talked in the past quite a bit about hospital-based physicians and what ended up being the best practices, I guess, as compensation planning for them. And I know we had put a slide in the annual conference that we had related to that compensation structure alignment examples. Can we talk about what are things that would be maybe aligned structures and then things that may be considerations for maybe potentially not aligned structures that if possible should be avoided? Can we talk about that a little bit?

Angie Caldwell

Absolutely. So the best designed compensation plans are those that align the way the physician works and with the way they are incentivized through their compensation. So if you think about your hospital-based specialties … And I said that like it was an absolute, so let me say there’s not a one-size-fits-all, there are circumstances where different models do work, but generally speaking, for hospital-based coverage type specialties, a productivity-based work RVU model is likely misaligned in that the physician, the provider is not … They are a catcher. They are not the ones out in the market with a clinic, having the visits and the encounters outside, they are catching what comes to the facility. So they don’t have control over the volume of patients that are coming in. Now they do have control to some extent to how many patients they perhaps see in a day or perhaps throughput within an emergency room or for perhaps, or even the number of patients that they see in a hospitalist scenario.

So generally speaking, in a hospital-based specialty, a more coverage type or shift-based model is better aligned with perhaps some incentives where it makes sense. {A shift based model} doesn’t always make sense for throughput – for surge, high surge – high volume times when you know that your provider has to go above and beyond to be able to see what has come to the facility or is on the floor or is in the emergency department on that day.

On the other end of that, thinking about a proceduralist, it makes more sense for a proceduralist or a surgeon to be on a work RVU model. It is very much as you think about those different types of physicians and how each individual patient comes in, comes out, they’re in the clinic, it is very much a measure of the personal work effort of the physician and it’s less of a coverage.

Rural-based providers, I’m just going to put them in a separate category because so much of a rural provider, so much of that compensation is based upon need in the market and you might not have the volume to be able to support what is necessary from an FMV perspective for that provider, but that is just the reality at times for rural medicine. So I’ll put them in a separate category because each individual situation needs to be looked at.

In the middle are our primary care physicians. So think about family medicine, think about rheumatology, think about endocrinology, perhaps even nephrology, where you are managing a patient panel. And so in those situations, it’s almost a hybrid model that works the best. So we’re seeing a lot of movement in primary care specialties today moving to a panel-based tiered-based model with an incentive for productivity, but {productivity} is not the main calculus for the compensation.

In all of these models, Jana, I highly recommend a quality and engagement incentive simply because there are missions and needs of the employer. Especially in a hospital employed scenario, there are needs of the employer that the employer needs the physician to help drive the mission, the clinical quality, the center of excellence and all the care management and all of the things that make that facility and that system great. And so in those scenarios, that’s how you can engage with the physician to really push those mission critical elements for the hospital and health system. Have you seen anything different?

Jana Kolarik

No, but I have seen, and I think you and I have had discussions about this, I’ve seen just a push by all physicians to be paid on some type of productivity measure by wRVU, even if hospital-based. And I think the misalignment is there, but I think from a compensation perspective, I’m not sure that it benefits them. I mean, that’s the thing that I think in the end you want, as you said, the compensation that best fits the services that are being provided by that physician and frequently that model doesn’t make sense for them, even though they believe in some part of their brain that they will be paid more from a productivity perspective.

Also, I’m interested in your comments about that, but I also really want to talk a little bit, because I know we’ve talked about this in the past too, and I just want to mention it here because it is like burning a hole in my brain right now, which is quality of the data. So we talked about systems issues. And so I think you and I have had discussions over and over about we cannot emphasize enough the importance of the data that’s driving any of these factors. So just even picking up again on the wRVU calculation. So we mentioned briefly the modifier adjusting, which is part of the billing system. And I’d love for you to address that in some comments about what does that mean and how does that affect things?

I think the other thing from my perspective as a regulatory and compliance lawyer, it’s the claims accuracy. It’s the coding accuracy that plays into the accuracy of the data and therefore the accuracy of the wRVUs that are coming out of it. So ensuring that your compliance and your audit folks and everything is aligned with regard to how things are coded, my preference is if physicians want to code their work, I think it’s fine, but I do believe that a second eye on the coding and documentation is important for claims accuracy and the coding frequency that you have, again, CMS has been very clear about proactive audits being important to them and frankly important when you look at the Overpayment Rule and other things that play into that and the need to refund amounts that have been incorrectly billed, but really getting that data accurate from the get go and again, ensuring some of those levers are in place to ensure the accuracy of the claims data because it then affects the compensation data for these physicians.

But talk to me a little bit frankly about any of that. But the modifier adjustment thing I think seems to be confusing to folks. So talk to me about that a little bit.

Angie Caldwell

The data is so important, Jana, and it goes back to we are weaving a wonderful tapestry here today because we’re linking things back to the top of the podcast, but it goes back to trust, right?

Jana Kolarik

Yes.

Angie Caldwell

So if your data is not believable, then you fall back on that trust issue. And so from a valuator perspective, and I know this is not unusual to internal valuation and assessment teams as well, but you’re really looking at the data with a level of professional skepticism always when you’re reviewing it, and you can’t assume that everything is always working perfectly.

So when we were talking earlier, so weaving back to our talking about the tiers and the thresholds, another potential test, or perhaps maybe not part of the tiers, but part of the overall policy is that there should be a process to review the coding and the wRVU calculation for certain providers that fall into, maybe it’s a thing that has to be done for all of your tier three or tier two providers. That becomes part of the rotation for your internal coding and auditing team to ensure, again, that that data is as crisp as it possibly can be coming into the determination of compensation.

Because by the time that it gets to compensation, then the likelihood of there being a problem, it just gets greater. You’re more at the end of the process at that point, but if you have frequent reviews quarterly, semi-annually, if they fall into a tier, they automatically go into a bucket for one of those reviews, I really think it’s critical and part of a really good compensation planning process and compliance program. There are things from a coding perspective that can be done easily. You can look at bell curves for the physician specialty, looking at how they fall. Are they an outlier compared to their peers and then finding out why they are an outlier compared to their peers then is important.

But all of that is just absolutely critical because things can happen as system updates, as we know, as we deal with our internal systems every day, system updates and things can happen that just turn things slightly one side or another, then that makes a calculation that was reliable six months ago, perhaps not as reliable. And so it’s just always very, very, very important to make sure that all of that is clean, both from a claims perspective as well as from all of the other parts along the way where a modifier could fall off.

I had a scenario, a situation where the medical record data was transferred into a separate system and then the separate system was computing the compensation on a productivity basis. So as that happened, the modifiers were included in the first system, but then when the transfer happened over into the compensation system, the modifiers were dropped. It was a process that worked for a very long time, but then all of a sudden something changed just ever so slightly in the underlying schematics of how that data was transferred, and then all of a sudden compensation was being computed without any modifiers. And it took a minute for the organization to find it, but they found it through a process where they were looking at their data where before they were paying bonuses on a semi-annual or quarterly basis, they were looking at the data, viewed their data with professional skepticism and said, “What is happening? This trend is unbelievable. Why is it unbelievable?” So just emphasis on that matter that the data is so very important.

Jana Kolarik

Yeah, and I think to that point, looking at not having such a this point in time view of data as well, but looking holistically as you look at things and making sure that you are looking at trends and so forth, or that one of the people on your team is tracking those things because gosh knows I get into minutiae and I think you do as well, but having somebody that has that macro view of where things are going and if it doesn’t make sense, why would this have happened and digging into those details, I think always from a compliance perspective, no matter what area you’re dealing with is important. That’s so helpful. Thank you.

We have covered the things that I wanted to cover in our podcast today and the things that I wanted to make sure that we shared that we were unable to share during the annual conference. So thank you for this time and thanks for digging into some of this again with me. You know I always enjoy it. Are there any kind of final things that you just want to mention to our listeners before we say goodbye?

Angie Caldwell

I think we have also covered everything that I wanted to cover today. Jana, it is always a pleasure to be here with you and to be able to dialogue about these issues just back and forth for a podcast and even in real time in our daily work. So I really appreciate you. Thank you.

Jana Kolarik

Likewise, likewise. Thanks so much, Angie. We want to thank our listeners for joining our Let’s Talk Compliance podcast series with Health Care Law Today, your connection to timely legal updates in the health care and life sciences industry. We encourage you to subscribe to this podcast and check out our part one of this two-part series. Visit 麻豆直播’s Health Care Law Today blog at healthcarelawtoday.com and pyapc.com. If you like the show, don’t forget to subscribe and be sure to rate us five stars. Until next time, I’m Jana Kolarik of 麻豆直播 & Lardner.

Angie Caldwell

And I’m Angie Caldwell with PYA. Thank you.

The American Hospital Association (AHA) and the recently the launch of the (Accelerator) at AHA鈥檚 Health Research & Educational Trust (HRET), a three-year national initiative designed to help hospitals and health systems operationalize and scale proven technologies across care environments. The initiative is supported by a $12 million commitment from West Health Institute and will focus on three priority areas: electronic health record (EHR) optimization, virtual care, and artificial intelligence (AI) utilization and integration.

The announcement addresses a practical challenge for hospitals and health systems: many organizations are testing or adopting technologies that can improve care delivery, quality, safety, and operational performance, but it can be difficult to move those tools from limited pilots to consistent use across the organization. The Accelerator is intended to help close that gap. Participating hospitals and health systems will have access to a digital hub, implementation support, peer-learning opportunities, and examples from hospitals and health systems serving as national models. In other words, the initiative is focused on helping hospitals make the technologies work in real care delivery settings.

Why This Matters

The AHA/West Health announcement is another sign that AI, virtual care, and EHR optimization are moving out of the 鈥渋nnovation project鈥� category and into the day-to-day operations of health care delivery. That shift matters because once technology is embedded in clinical workflows, staffing models, patient communications, documentation practices, triage pathways, and care management programs, it becomes more than an IT initiative. Implementation can raise practical questions about clinical oversight, medical staff governance, professional responsibility, documentation, reimbursement, and compliance infrastructure.

For hospitals and health systems, the key question is no longer only whether a technology works. It is whether the organization can implement the technology safely, consistently, and in a way that aligns with existing health care regulatory requirements.

The Accelerator鈥檚 Three Priority Areas

The Accelerator focuses on three areas that are already priorities for many hospitals, but that can be difficult to implement consistently across an organization: EHR optimization, virtual care, and AI utilization and integration.

EHR Optimization

EHR optimization has become both an operational priority and a compliance issue. Hospitals are looking for ways to reduce administrative burden, improve clinical workflows, support earlier identification of patient risk, and make it easier for care teams to act on the right information at the right time. As EHR workflows become more closely integrated with AI-enabled tools, clinical decision support, documentation functions, virtual care platforms, and care management programs, hospitals should assess whether those workflows continue to support integral functions including accurate documentation, appropriate billing, medical record integrity, and clear clinical accountability. This is especially important when technology changes how information is presented to clinicians, how documentation is generated, or how patient needs are escalated. Even when a tool improves efficiency, the hospital still needs a clear process for determining who is responsible for reviewing the information, acting on it, and documenting the clinical decision-making process.

Virtual Care

The Accelerator鈥檚 focus on virtual care also reflects the continued evolution of telehealth from an access tool to a broader care delivery and staffing strategy. For hospitals and health systems, virtual care may include telehealth visits, virtual nursing, centralized care teams, specialist consults, remote monitoring, and hybrid care models. These models can help expand capacity, support staffing flexibility, and improve access, but they also need to be structured carefully. Scaling virtual care requires more than selecting a platform. Hospitals need workflows that are clinically appropriate, operationally sustainable, and compliant across the states and care settings in which patients and clinicians are located.

Artificial Intelligence Utilization and Integration

The Accelerator鈥檚 AI focus is notable because it is framed around utilization and integration, not just experimentation. In hospital settings, AI tools may support a range of functions, including clinical workflow support, documentation, risk identification, operational efficiency, and care team coordination. The regulatory analysis depends less on the fact that a tool uses AI and more on how the tool is used, what role it plays in the care delivery process, and who remains responsible for clinical judgment. An AI tool that supports an administrative workflow raises different regulatory issues than a tool that influences clinical decision-making, generates clinical documentation, prioritizes patient outreach, recommends next steps, or communicates information to patients or care teams. Hospitals should classify AI-enabled tools by use case and risk level, then align oversight, documentation, monitoring, and escalation processes accordingly.

From Pilots to Systemwide Practice

A similar implementation challenge applies beyond the Accelerator. For many hospitals, the difficult step is not identifying a promising technology-enabled use case but moving that use case from a limited pilot to a workflow that can operate consistently across the organization.

Many hospitals are already testing or using AI-enabled tools, virtual care models, remote monitoring programs, or EHR-enabled interventions in limited settings. Those pilots can be useful, but broader implementation is different. A pilot may be managed through a narrow protocol, limited users, and close operational oversight. Systemwide implementation requires a more formal framework, including policies, governance, training, escalation pathways, documentation standards, medical staff involvement, billing review, and ongoing monitoring.

A workflow that is appropriate for a small pilot may not be sufficient once the same technology is deployed across multiple service lines, facilities, or patient populations. As hospitals move from pilots to broader implementation, legal and compliance teams should be involved early enough to help design a scalable model, not just review issues after the technology is already in use.

Regulatory Questions Hospitals Should Ask Before Scaling

Hospitals and health systems evaluating AI, virtual care, and EHR-enabled tools should consider several threshold questions before moving from pilot programs to broader implementation. These questions should be addressed early in the implementation process, rather than after the workflow is already live.

1. Who is furnishing the service?

Hospitals should determine whether the technology changes which clinicians or care team members are involved in furnishing the service. For example, a virtual nursing model, centralized monitoring program, or AI-supported triage workflow may involve different personnel than the hospital鈥檚 traditional in-person workflow. That can raise questions about licensure, scope of practice, supervision, delegation, credentialing, privileging, and medical staff oversight.

2. Where are the patient and clinician located?

For virtual care models, patient and clinician location remain central regulatory questions. Hospitals should evaluate whether clinicians are appropriately licensed or otherwise authorized to furnish services to patients in the states where the patients are located. This is especially important for centralized or cross-state virtual care models. Hospitals should also consider state-specific virtual care requirements.

3. How is the workflow documented?

Hospitals should confirm that the medical record accurately reflects the care furnished, the individuals involved, the information reviewed, and the clinical decisions made. If technology generates summaries, prompts, alerts, draft notes, risk scores, or recommended actions, hospitals should determine whether and how those outputs are incorporated into the medical record and who is responsible for reviewing them.

4. How is the service billed?

Technology-enabled workflows can affect coding, billing, and reimbursement. Hospitals should evaluate whether the workflow supports the requirements for the service being billed, including any applicable requirements related to clinician involvement, supervision, time, documentation, patient consent, or location of service, and payor-specific coverage or billing rules.

5. Who reviews and acts on technology-generated information?

Hospitals should clearly define who is responsible for reviewing alerts, summaries, escalations, or recommendations generated through AI-enabled tools, EHR workflows, remote monitoring platforms, or virtual care programs. If a workflow generates information that requires clinical action, the hospital should have a clear process for review, escalation, documentation, and follow-up.

6. Does the workflow require medical staff or committee review?

Some technology-enabled workflows may require review through medical staff, clinical leadership, quality, compliance, IT, or other governance channels, particularly if the tool affects clinical decision-making, patient safety, documentation, or care delivery responsibilities. Hospitals should consider whether existing committees and policies are sufficient or whether additional review processes are needed for AI-enabled or virtual care workflows.

Looking Ahead

The AHA/West Health Accelerator reflects the continued push to move AI, virtual care, and EHR-enabled tools from limited pilots into broader operational use. For hospitals and health systems, broader implementation of these tools creates an opportunity to improve quality, safety, efficiency, and access. It also underscores the need for practical regulatory planning. As these tools become part of day-to-day care delivery, hospitals should be prepared to show not only that the technology works, but that it is being implemented consistently and with appropriate clinical and operational oversight. Hospitals should also build regulatory review into the implementation plan, with clear accountability for clinical review, documentation, billing, escalation, and ongoing monitoring.

麻豆直播 is here to help you address the short- and long-term impacts in the wake of regulatory changes. We have the resources to help you navigate these and other important legal considerations related to business operations and industry-specific issues. Please reach out to the authors, your 麻豆直播 relationship partner, our Health Care & Life Sciences Sector, or to our Health Care Practice Group with any questions.

On April 13, 2026, the U.S. Food & Drug Administration (FDA) publicly disclosed that it had sent targeted reminder messages on March 30, 2026, to more than 2,200 sponsors and researchers concerning over 3,000 registered clinical trials that appear to lack required results postings on ClinicalTrials.gov. The agency鈥檚 internal review indicated that nearly 30 percent of studies considered 鈥渉ighly likely鈥� to be subject to mandatory reporting obligations still have no results available to the public. Former but then-current FDA Commissioner Marty Makary emphasized that the failure to report results distorts the scientific record by over-representing positive outcomes while concealing negative or inconclusive findings 鈥� a situation the agency views as a direct threat to public health and informed decision-making by patients, physicians, and regulators.

These reminders stem from long-standing statutory and regulatory requirements under Section 801 of the Food and Drug Administration Amendments Act of 2007 (FDAAA), codified at Public Health Service Act 搂 402(j) and FDA鈥檚 2016 Final Rule implementing that provision (42 C.F.R. Part 11). In general, 鈥渁pplicable clinical trials鈥� must have results submitted to ClinicalTrials.gov no later than one year after the trial鈥檚 primary completion date. The obligations apply regardless of whether the product ultimately receives marketing approval, and they extend to both positive and negative outcomes.

Although the March 30 messages are framed as voluntary compliance reminders rather than formal Notices of Noncompliance, they signal a clear shift toward more proactive, data-driven enforcement. Sponsors and research sites alike should treat this as an important opportunity to strengthen internal processes and contractual protections.

This renewed enforcement push underscores FDA鈥檚 commitment to combating publication bias and ensuring that both positive and negative clinical trial results are transparently available to patients, clinicians, and researchers. The sections below outline key considerations for sponsors and clinical trial sites.

Conclusion and How We Can Help

FDA鈥檚 April 2026 enforcement signal marks a meaningful shift toward greater accountability in clinical trial transparency. Sponsors and research sites that act proactively now will reduce regulatory risk, strengthen partnerships, protect reputations, and improve operational efficiency. More broadly, the reminder campaign underscores that results reporting is central to maintaining a complete scientific record, supporting informed clinical decision-making, and preserving public trust in the clinical research enterprise.

Our team regularly assists both sponsors and research sites with CTA review, compliance program development, ClinicalTrials.gov gap analyses, and FDA-response strategies. If you would like help reviewing agreements, drafting policies, or preparing for potential enforcement actions, please contact the author directly.

Introduction

On May 6, 2026, the U.S. Food & Drug Administration (FDA) announced the launch of a for one-day inspectional assessments 鈥� a new, streamlined screening tool designed to make the agency鈥檚 inspectional resources more targeted and efficient. Then former FDA Commissioner Marty Makary, M.D., M.P.H., described the initiative as a way to 鈥渟trengthen our inspectional approach by focusing our time and resources where they are most needed,鈥� while minimizing operational disruption for lower-risk establishments. There is no indication from FDA that this initiative will change after Commissioner Makary鈥檚 recent resignation.

The pilot, which quietly began in April 2026, has already completed approximately 46 assessments across multiple FDA centers. Most have resulted in 鈥淣o Action Indicated鈥� (NAI) classifications, with inspectors retaining full authority to extend assessments if issues arise. This development arrives amid broader agency efforts to leverage data, artificial intelligence (AI), and risk-based prioritization 鈥� trends that will likely influence enforcement strategy for years to come.

What the Announcement Actually Says (and What It Doesn鈥檛)

The official press release provides the primary public details. Key elements include:

• Purpose and Scope: Shorter, focused 鈥渟creening assessments鈥� that complement, rather than replace, traditional multi-day inspections. The pilot covers facilities involved in human and animal foods, biologics, medical products, and clinical research programs.
• Selection Criteria: Facilities are chosen using risk-based factors such as product type, prior inspection history, and operational characteristics. FDA noted that AI tools help identify low-risk sites.
• Flexibility Built In: Investigators may extend an assessment beyond one day (or convert it to a full inspection) if significant observations emerge. The program explicitly does not apply to higher-risk or complex facilities, as determined by FDA.
• Data Collection Goal: Findings will feed into improved risk models, helping FDA identify recurring compliance themes, generate facility-specific risk scores, and detect discrepancies between registered and actual operations.
• Timeline: The pilot runs through fiscal year 2026. FDA is developing evaluation metrics, including inspection duration, escalation rates, and utility of findings, before considering any broader rollout.

Important caveat: As of mid-May 2026, no detailed guidance document, Standard Operating Procedure (SOP), Federal Register notice, or inspection protocol has been released. The press release and Former Commissioner Makary鈥檚 remarks at the Food and Drug Law Institute (FDLI) Annual Conference represent the public record to date.

Legal and Regulatory Context

FDA鈥檚 inspection authority stems primarily from Section 704 of the Federal Food, Drug, and Cosmetic Act (FD&C Act) and related provisions of the Public Health Service Act. The agency has long employed risk-based inspection models, including under the Food Safety Modernization Act and various drug and biologics programs. The one-day pilot fits squarely within this framework: it does not alter underlying statutory obligations or enforcement policies. Instead, it adds a new, lighter-touch tool to FDA鈥檚 existing inspection toolkit.

Importantly:

• No change in enforcement posture 鈥� A one-day assessment can still result in Form FDA 483 observations, Warning Letters, or other enforcement actions if violations are identified.
• AI and data-driven selection raise transparency questions 鈥� FDA鈥檚 use of AI and data analytics to identify lower-risk facilities may raise questions regarding transparency and due process, although the pilot鈥檚 limited scope and voluntary nature (from the industry鈥檚 perspective) keep those issues largely theoretical for now.
• International implications 鈥� The pilot expressly includes foreign facilities, which could affect global supply chains and mutual recognition agreements.

Practical Implications for Industry:

Compliance and legal teams should view this pilot as an early signal of FDA鈥檚 evolving inspection philosophy: more frequent but more focused oversight, with an increased emphasis on demonstrable, real-time compliance controls.

Key takeaways:

1. Perpetual readiness over 鈥渋nspection readiness鈥� 鈥� With shorter inspection windows, facilities cannot rely on last-minute document assembly. Robust quality systems, audit-ready records, and personnel who can clearly articulate processes under time pressure will become critical.
2. Pre-inspection remote assessments may expand 鈥� The model appears to rely more heavily on documentation and data review before. or instead of during, the onsite assessment. Electronic systems, data integrity, and rapid export capabilities may therefore become even more important. Institutions and facilities should ensure that documentation is up-to-date and available upon immediate request.
3. Low-risk status as a strategic asset 鈥� Companies that consistently demonstrate strong compliance histories and mature pharmaceutical quality systems may be more likely to qualify for these streamlined assessments, potentially reducing operational disruption and costs. Conversely, any history of inspection findings or recurring compliance concerns may keep a facility in the traditional, 鈥渇ull inspection鈥� category. Institutions and facilities should continue strengthening FDA and research compliance programs, specifically around documentation retention and completeness, and compliance with policies and procedures.
4. Clinical research and medical products sites should prepare 鈥� Sponsors, Clinical Research Organizations, device, drug and biologics manufacturers should consider incorporating one-day assessment scenarios into mock inspections and internal audit exercises.
5. Documentation and response strategy 鈥� 听While the 15-day statutory windows for responding to a Form FDA 483 remains unchanged, facilities should prepare for heightened operational pressure. The current regulatory environment demands earlier identification of risks and a more robust audit-ready response strategy.

Looking Ahead

The FDA has indicated it will analyze pilot data before deciding on wider implementation. Regulated entities should monitor for:

• Future guidance documents or a draft inspection manual addendum.
• Public metrics regarding escalation rates and inspection outcomes.
• Potential expansion into additional program areas, such as compounding or combination products).

In the meantime, the announcement itself serves as a useful prompt for internal gap assessments, particularly around data integrity, rapid record retrieval, and management oversight.

Why This Matters

This pilot may signal a meaningful evolution in how FDA allocates inspectional resources and evaluates compliance risk. Although the initiative is framed as a streamlined assessment model for lower-risk facilities, it also reflects FDA鈥檚 broader movement toward AI-assisted oversight, data-driven enforcement, and more dynamic inspection strategies. For regulated entities, the practical implication is clear: facilities may be expected to demonstrate real-time operational compliance with far less advance preparation time and fewer opportunities to address deficiencies during a prolonged inspection. Organizations that maintain strong quality systems, accessible documentation, and a culture of continuous compliance will likely be best positioned as FDA continues modernizing its inspection framework.

Bottom line: This is not a relaxation of standards. It is a modernization of how FDA applies those standards, using improved risk signals and technology to inspect more facilities more efficiently. Companies that treat every day as though a one-day assessment could occur tomorrow will be best positioned 鈥� both for the pilot and for whatever comes next.

麻豆直播 is here to help you address the short- and long-term impacts in the wake of regulatory changes. We have the resources to help you navigate these and other important legal considerations related to business operations and industry-specific issues. Please reach out to the authors, your 麻豆直播 relationship partner, our听Health Care & Life Sciences Sector, or to our听Health Care Practice Group听with any questions.

The Centers for Medicare & Medicaid Services鈥� (CMS) guidance issued on April 2, 2026, addressing the Round 2028 Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS) Competitive Bidding Program (). Under the Medicare DMEPOS Competitive Bidding Program, suppliers compete by submitting bids to furnish certain items in designated competitive bidding areas, with contract awards and payment amounts set through the competitive process rather than the fee schedule.

The Round 2028, Nationwide Remote Item Delivery (RID) model, will include all announced product categories in a nationwide competitive bidding area, including:

• Class II continuous glucose monitors and insulin pumps
• Urological supplies
• Ostomy supplies
• Hydrophilic urinary catheters
• Off-the-shelf back, knee, and upper-extremity braces.

The Guidance gives suppliers two immediate planning points.

(1) First, CMS confirmed that the supplier locations included in a bid may collectively satisfy applicable state and local licensing requirements, so long as at least one included location holds a required license for the relevant state or area.

(2) Second, CMS underscored that bids for both lead and non-lead items must be bona fide and supported, when requested, by a narrative and documentation showing how the bidder considered the costs, overhead, and desired profit associated with furnishing both lead and non-lead items throughout the competitive bidding area. 听

Federal regulations define a 鈥渓ead item鈥� as 鈥渢he item in a product category with multiple items with the highest total nationwide Medicare allowed charges of any item in the product category prior to each competition.鈥� (42 C.F.R. 搂 414.402).

CMS also indicated in the that bidder registration and the bid window are targeted for late summer or early fall 2026, contract awards and single payment amounts are targeted for late summer or early fall 2027, and the next round is expected to begin no later than January 1, 2028.

Nationwide Licensure Requirements

CMS Accepts the Sum of Several Locations to Meet Licensure Requirements. As a baseline matter, suppliers participating in the nationwide RID competitive bidding area generally must satisfy applicable state and local licensure requirements for all states and territories where they will furnish bid items.For many suppliers, the most significant development is not the baseline obligation to cover every applicable jurisdiction, but CMS鈥檚 confirmation that a bidder may use multiple supplier locations to satisfy that obligation. CMS confirmed that all locations included in a bid must together meet applicable state and local licensing requirements for the areas where beneficiaries will be served; if a state requires a specific license, at least one included location must hold that license, but no more than one location is required to satisfy that requirement. Bidders still must be properly licensed by the close of the bid window and maintain required licenses through bid evaluation and, if awarded, the contract performance period.

That confirmation is particularly helpful for multi-location and commonly owned supplier organizations. It supports a structure in which the bidder maps each included location to the jurisdictions and product categories it will actually serve, rather than treating the primary bid location as the sole licensure entity for the nationwide competitive bidding area. This aligns with prior competitive bidding guidance under which commonly owned or commonly controlled suppliers were required to submit a single bid for the same product category in the same competitive bidding area and include the commonly owned or controlled locations that would furnish bid items. Prior Competitive Bidding Implementation Contractor guidance also warned that commonly owned or controlled supplier organizations submitting separate bids for the same competitive bidding area /product category combination would be disqualified.

Small Supplier Network. CMS also confirmed a potentially important option for small suppliers. If individual small suppliers cannot independently satisfy all state licensure requirements for the nationwide RID competitive bidding area, including requirements such as a physical location in a specific state or area, CMS states that a group of small suppliers may form a network under 42 C.F.R. 搂 414.418 and be awarded a contract if the network鈥檚 member locations collectively meet applicable enrollment requirements, including accreditation and licensing. For smaller suppliers, the Round 2028 guidance may create a meaningful planning opportunity, although the network rules remain technical and should be evaluated carefully before registration and bidding.

Action Item. For many suppliers, the planning exercise should now focus on location selection, licensure mapping, and organizing operations before the bid window opens.

Bid Screening and Evaluation

CMS鈥檚 April 2 on non-lead item bid verification should also shape bidding strategy. CMS states that all bids will be screened and evaluated to ensure they are bona fide, both as to the lead item and as to all non-lead items in a product category. When requesting support, CMS has traditionally asked bidding entities to provide a narrative rationale describing the bidder鈥檚 ability to furnish lead and non-lead items, supporting documentation showing the ability to obtain the lead item for less than the bid amount, and an explanation of how the lead-item bid amount would affect potential single payment amounts for non-lead items. CMS indicated the types of documentation that can substantiate a bid amount may include manufacturer invoices, receipts (including retail sales receipts), letters of intent from manufacturers or wholesalers, manufacturer price lists, and signed written quotes. CMS expects that narrative and documentation to show that the bidder considered all anticipated costs, including overhead, and desired profit associated with furnishing both lead and non-lead items throughout the competitive bidding area.

Action Item. Suppliers planning to submit bids can start to assemble documentation identifying all anticipated costs of providing items under the bid, if awarded.

Key Takeaways

Round 2028 planning should begin now.

• Suppliers should review their legal entities, PTANs, common ownership and control disclosures, state licensure footprint, network or subcontracting arrangements, and bona fide bid support before the bid window opens.
• For organizations with multiple affiliated locations, the practical question is no longer simply whether one entity can become licensed everywhere, but whether the bid can be structured so the included locations collectively satisfy the applicable state and local licensure requirements for the nationwide service area. Suppliers considering bid submission should consider their potentially expanded options.听
• Suppliers should identify all costs associated with performance under the bid.听
• 听Suppliers should also be mindful that CMS recently imposed a nationwide DMEPOS enrollment moratorium for certain supplier categories, which may further complicate expansion, enrollment, and licensure strategies leading into Round 2028 bidding.

Suppliers with questions about Round 2028 bid structure, licensure coverage, common ownership disclosures, or network and subcontracting options should consult counsel early so that enrollment, licensing, and operational decisions are aligned before bidding begins.

麻豆直播 is here to help you address the short- and long-term impacts in the wake of regulatory changes. We have the resources to help you navigate these and other important legal considerations related to business operations and industry-specific issues. Please reach out to the authors, your 麻豆直播 relationship partner, our Health Care & Life Sciences Sector, or to our Health Care Practice Group with any questions.

On April 28, 2026, the U.S. Department of Justice (DOJ) the seizure of more than $2 million from Expert Wound Care PC, a Pasadena-based wound care clinic accused of defrauding Medicare by billing for skin graft procedures never performed. The clinic allegedly submitted over $46.6 million in false claims within approximately seven months. The case underscores the DOJ鈥檚 growing reliance on statistical benchmarking and data analytics to identify aberrant billing patterns 鈥� a strategy increasingly targeting wound care providers in particular.

DOJ鈥檚 Data-Driven Enforcement Methods

According to the affidavit supporting the seizure warrant, the government flagged Expert Wound Care based on several statistical red flags:

• Per-claim averages. From July 2025 to March 2026, the clinic averaged approximately $37,449 per claim for skin substitute grafts 鈥� more than double the national average of $16,837.
• Billing trajectory. Medicare billing escalated from $4,975 in July 2025 to approximately $33 million in December 2025, an extraordinary spike easily detectable through automated monitoring.
• Utilization rates. The clinic鈥檚 rate of beneficiaries receiving skin substitute grafts was 38.5% 鈥� over six times the national average of 6%. Its share of total claims for these procedures was 63%, roughly nine times the national average.
• Payment concentration. One beneficiary alone accounted for approximately $6.2 million in payments, with an average paid amount per beneficiary of approximately $299,639.

These metrics reflect the DOJ鈥檚 institutionalized outlier-detection methodology. The Health Care Fraud Unit鈥檚 dedicated Data Analytics Team monitors billing trends, identifies aberrant providers, and helps prosecutors detect emerging schemes. DOJ leadership has stated publicly that 鈥渃utting-edge data analytics jumpstarted鈥� investigations in the wound care space, including a separate $900 million amniotic wound care fraud scheme.

This data-driven approach accelerated in 2025 and 2026. In June 2025, the DOJ announced its largest-ever National Health Care Fraud Takedown, charging 324 defendants in connection with over $14.6 billion in alleged fraud 鈥� including seven defendants charged with approximately $1 billion in fraudulent claims for performing medically unnecessary skin grafts on dying patients. In December 2025, owners of Arizona wound graft companies were sentenced to over 14 years in prison for a $1.2 billion wound graft fraud scheme, with $126 million in assets seized. In November 2025, one of the nation’s largest wound care providers agreed to pay $45 million to resolve False Claims Act allegations that it programmed billing software to ensure Medicare was always billed for higher-reimbursed procedures.

The DOJ has further committed to data-driven enforcement by announcing a Health Care Fraud Data Fusion Center, bringing together data specialists from the DOJ, Department of Health and Human Services Office of Inspector General, and the FBI to leverage cloud computing, artificial intelligence, and advanced analytics. The newly launched West Coast Health Care Fraud Strike Force 鈥� covering Arizona, Nevada, and Northern California 鈥� was formed explicitly because 鈥渄ata analytics show鈥� a migration of fraud schemes to these regions. See 麻豆直播鈥檚 recent blog on the West Coast Health Care Fraud Strike Force.

Key Takeaways and Risk Considerations

This enforcement action, viewed alongside broader DOJ prosecutions in the wound care sector, carries several important implications:

Wound care remains a top enforcement priority. The concentration of major prosecutions 鈥� from the $1.2 billion Arizona case to the $45 million False Claims Act settlement to the Expert Wound Care seizure 鈥� reflects the DOJ鈥檚 sustained focus on what it views as a high-risk category prone to upcoding, services-not-rendered fraud, and medically unnecessary utilization.

Whistleblowers are no longer the primary trigger. Proactive data analytics allow the DOJ and the Centers for Medicare & Medicaid Services to identify aberrant providers before any complaint or subpoena is issued. Providers whose billing patterns deviate significantly from benchmarks should expect scrutiny 鈥� regardless of whether a qui tam relator has come forward.

Statistical outlier status supports civil and criminal enforcement. The government uses data not just to flag potential fraud, but as substantive evidence, particularly to show that a provider 鈥渒new or should have known鈥� about improper billing. Rapid billing growth, per-claim averages far exceeding norms, and concentrated beneficiary payments can all support inferences of knowledge and intent.

Asset seizure is an aggressive early-stage tool. The government moved to seize funds before any indictment, using the civil forfeiture process to deprive the clinic of its proceeds while the investigation continues. Providers should understand that the DOJ may act swiftly to freeze assets, creating immediate financial disruption.

We will continue to monitor developments in this area. This alert is the first in a series that will explore the full spectrum of legal and compliance challenges facing wound care providers today 鈥� including the clinical and reimbursement context driving enforcement activity since 2019, the contractor audit and overpayment landscape, administrative law judge appeal strategies, common government liability theories, defense approaches to extrapolated recoupments and parallel proceedings, and proactive compliance frameworks. Future installments will offer in-depth guidance on each of these topics.

Please do not hesitate to reach out to your 麻豆直播 relationship partner or to our Government Enforcement Defense & Investigations and Health Care teams with any questions about how these enforcement trends may affect your organization.