The American Hospital Association (AHA) and the recently the launch of the (Accelerator) at AHA’s 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 “innovation project” 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’s 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’s 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’s 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’s 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.

Â鶹´«Ă˝ 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 Â鶹´«Ă˝ 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’s internal review indicated that nearly 30 percent of studies considered “highly likely” 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 — 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 § 402(j) and FDA’s 2016 Final Rule implementing that provision (42 C.F.R. Part 11). In general, “applicable clinical trials” must have results submitted to ClinicalTrials.gov no later than one year after the trial’s 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’s 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’s 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 — a new, streamlined screening tool designed to make the agency’s inspectional resources more targeted and efficient. Then former FDA Commissioner Marty Makary, M.D., M.P.H., described the initiative as a way to “strengthen our inspectional approach by focusing our time and resources where they are most needed,” while minimizing operational disruption for lower-risk establishments. There is no indication from FDA that this initiative will change after Commissioner Makary’s recent resignation.

The pilot, which quietly began in April 2026, has already completed approximately 46 assessments across multiple FDA centers. Most have resulted in “No Action Indicated” (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 — trends that will likely influence enforcement strategy for years to come.

What the Announcement Actually Says (and What It Doesn’t)

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

• Purpose and Scope: Shorter, focused “screening assessments” 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’s remarks at the Food and Drug Law Institute (FDLI) Annual Conference represent the public record to date.

Legal and Regulatory Context

FDA’s 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’s existing inspection toolkit.

Importantly:

• No change in enforcement posture — 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 — FDA’s use of AI and data analytics to identify lower-risk facilities may raise questions regarding transparency and due process, although the pilot’s limited scope and voluntary nature (from the industry’s perspective) keep those issues largely theoretical for now.
• International implications — 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’s 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 “inspection readiness” — 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 — 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 — 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, “full inspection” 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 — 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 — ĚýWhile 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’s 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 — both for the pilot and for whatever comes next.

Â鶹´«Ă˝ 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 Â鶹´«Ă˝ relationship partner, ourĚýHealth Care & Life Sciences Sector, or to ourĚýHealth Care Practice GroupĚýwith any questions.

The Centers for Medicare & Medicaid Services’ (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. Ěý

Federal regulations define a “lead item” as “the 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.” (42 C.F.R. § 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’s 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. § 414.418 and be awarded a contract if the network’s 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’s 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’s 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.Ěý
• Suppliers should identify all costs associated with performance under the bid.Ěý
• ĚýSuppliers 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.

Â鶹´«Ă˝ 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 Â鶹´«Ă˝ 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’s growing reliance on statistical benchmarking and data analytics to identify aberrant billing patterns — a strategy increasingly targeting wound care providers in particular.

DOJ’s 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 — 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’s rate of beneficiaries receiving skin substitute grafts was 38.5% — 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’s institutionalized outlier-detection methodology. The Health Care Fraud Unit’s dedicated Data Analytics Team monitors billing trends, identifies aberrant providers, and helps prosecutors detect emerging schemes. DOJ leadership has stated publicly that “cutting-edge data analytics jumpstarted” 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 — 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 — covering Arizona, Nevada, and Northern California — was formed explicitly because “data analytics show” a migration of fraud schemes to these regions. See Â鶹´«Ă˝â€™s 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 — from the $1.2 billion Arizona case to the $45 million False Claims Act settlement to the Expert Wound Care seizure — reflects the DOJ’s 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 — 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 “knew or should have known” 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 — 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 Â鶹´«Ă˝ 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.

Â鶹´«Ă˝ (Â鶹´«Ă˝) secured a fully favorable Administrative Law Judge (ALJ) decision overturning $3,261,046.50 in Medicare overpayments assessed by the Centers for Medicare & Medicaid Services (CMS) against a Florida wound care clinic. Specifically, the ALJ overturned the Qualified Independent Contractor’s (QIC) determinations involving multiple beneficiaries and claims for skin substitute grafts and dermal grafts that relied solely on the products’ Q-code status to characterize them as investigational and experimental (and thereby preclude Medicare coverage).

Heightened Scrutiny for Wound Care Products

Skin substitute products or human cells, tissues, and cellular tissue-based products (HCT/Ps) have become subject to heightened scrutiny from the Department of Health & Human Services, Office of Inspector General (OIG), and CMS in recent years, with regulators citing increased utilization and expenditures as a basis for further review.[1] Indeed, Medicare spending for HCT/Ps has risen from $256 million in 2019 to over $10 billion in 2024.[2] CMS seeks to reduce gross fee-for-service program spending for HCT/Ps by $19.6 million in 2026 by reimbursing HCT/Ps as incident-to supplies as opposed to biologicals, despite regulation of HCT/Ps by the U.S. Food & Drug Administration (FDA).

In March 2025, CMS issued controversial Local Coverage Determinations (LCDs) for Skin Substitute Grafts/Cellular and Tissue-Based Products for the Treatment of Diabetic Foot Ulcers and Venous Leg Ulcers that was scheduled to become effective in January 2026. The new LCD would have dramatically limited the number of HCT/Ps covered by Medicare. Although CMS ultimately withdrew the LCD in December 2025, a target focus of CMS is still to reduce alleged spending waste for HCT/Ps.[3] Accordingly, heightened scrutiny by OIG and CMS has caused wound care providers to face increased Medicare audits, overpayment demands, and recoupment actions, requiring such providers to navigate the multi-level Medicare appeals process.

Improper Characterization of Products as Investigational and Experimental

In this particular case, the Florida wound care clinic (Clinic) faced overpayment demands claiming, among other things, that the application of certain skin substitutes products to the beneficiaries’ non-healing wounds were investigational and experimental (and therefore not covered by Medicare). Â鶹´«Ă˝ advocated extensively on behalf of the Clinic, responding with a robust defense strategy to unfavorable decisions from the Medicare Administrative Contractor (MAC) and QIC with arguments rooted in Medicare policy, professional coding guidance, and FDA documentation indicating the safety and efficacy of the products.

Notably, the QIC improperly upheld the initial overpayment demand on new grounds that were not identified in the original overpayment determination, claiming that Q-codes used to bill the products indicated that the products were investigational and experimental. However, in the favorable decision, the ALJ rejected this argument and cited CMS’ guidelines on Q-codes, noting that such codes are only established to identify drugs, biologicals, and medical equipment or services not identified by national HCPCS Level II codes, but for which codes are needed for claims processing.

The ALJ’s favorable decision underscores that MACs or QICs may not uphold overpayment determinations by labeling HCT/Ps as investigational or experimental solely because they are Q‑coded. As Medicare scrutiny of HCT/Ps continues, this decision offers instructive guidance for wound care providers facing aggressive recoupment efforts and highlights the critical advantage of a proactive, well‑coordinated defense supported by experienced health care counsel. Wound care providers seeking counsel to navigate overpayment demands or the complex regulatory landscape for HCT/Ps are encouraged to contact the authors.

Â鶹´«Ă˝ 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 Â鶹´«Ă˝ relationship partner, our Health Care & Life Sciences Sector, or to our Health Care Practice Group with any questions.

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On April 16, 2026, the U.S. Food & Drug Administration (FDA) it will convene the Pharmacy Compounding Advisory Committee (PCAC) on July 23 and 24, 2026, to discuss permitting compounding pharmacies to prepare certain peptides used for ulcerative colitis (UC), wound healing, obesity, insomnia, opioid withdrawal, inflammatory conditions, and osteoporosis, among other conditions. Although these peptides have been used, companies have not studied them for safety or efficacy, and FDA has not conducted a rigorous assessment of their use. In the past, FDA has declined to add these substances to the bulk compounding list because of safety and/or efficacy concerns.Ěý

These peptides are under consideration for addition to the FDA’s that may be used by compounding pharmacies.

This list is important because it identifies bulk drug substances that may be legally compounded, provided the substances meet the following requirements:

1. Comply with an applicable United States Pharmacopeia (USP) or National Formulary (NF) monograph, if one exists, and the applicable USP chapter on pharmacy compounding;
2. Are components of FDA-approved drug products if an applicable USP or NF monograph does not exist; or
3. Appear on FDA’s list of bulk drug substances that can be used in compounding () if such a monograph does not exist and the substance is not a component of an FDA-approved drug product.

In addition, bulk drug substances must be accompanied by a valid certificate of analysis and must have been manufactured by an establishment registered with FDA.

If these peptides are added to the bulk compounding list, compounding pharmacies would be permitted to use them to prepare compound products.  

The list of peptides to be discussed by PCAC are listed below.

Bulk drug substance	Uses evaluated
BPC-157 (free base) BPC-157 acetate	UC
KPV (free base) KPV acetate	Wound healing and inflammatory conditions
TB-500 (free base) TB-500 acetate	Wound healing
MOTs-C (free base) MOTs-C acetate	Obesity and osteoporosis
Emideltide (free base) Emideltide acetate	Opioid withdrawal, chronic insomnia, and narcolepsy
Semax (free base) Semax acetate	Cerebral ischemia, migraine, and trigeminal neuralgia
Epitalon (free base) Epitalon acetate	Insomnia

Although there is wide interest among influencers and consumers in compounded peptides for the above indications, as well as for general wellness and anti-aging, it is important to understand that limited data are available regarding the safety and efficacy of these products. U.S. Department of Health & Human Services (HHS) Secretary Robert F. Kennedy Jr. has stated that he has used peptides in the past with favorable results and has expressed interest in making them more accessible through legitimate suppliers. These developments, along with broader public interest, may be contributing to FDA’s consideration of whether to permit peptide use in compounding.

The PCAC will review the available clinical evidence in deciding whether to recommend adding these peptides to the FDA bulk compounding list.

Why Potentially Lifting the Restriction Is Important

• If permitted, access to higher-quality peptides may increase.
• Compounding pharmacies could legally prepare products using these peptides.
• Demand may shift away from unregulated or illicit markets.
• These peptides may become more widely accepted, even in light of lack of robust clinical data on safety and efficacy.

We will continue to monitor the deliberations of the PCAC on these peptides.

As noted in our earlier blog post, FDA recently clarified its position on compounded glucagon-like peptide-1 (GLP-1) peptides. FDA expressly stated that compounding, regularly or in inordinate amounts, a drug product that is essentially a copy of a commercially available drug product is impermissible. See our blog titled “FDA Clarifies Policies for Pharmacy Compounders of GLP-1 Products.”

Â鶹´«Ă˝ 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 Â鶹´«Ă˝ relationship partner, ourĚýHealth Care & Life Sciences Sector, or to ourĚýInnovative Technology SectorĚýwith any questions.

In this episode, Jana Kolarik, a partner in Â鶹´«Ă˝â€™s Health Care Practice Group and Angie Caldwell, Principal and CFO of PYA, discuss 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 “Let’s Talk Compliance” 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!

Jana Kolarik

Hello and welcome to the Let’s Talk Compliance podcast series of Health Care Law Today, presented by Â鶹´«Ă˝ & Lardner and PYA. I’m your co-host, Jana Kolarik, a partner in Â鶹´«Ă˝’s health care practice group.

Angie Caldwell

And I’m your other co-host, Angie Caldwell, principal with PYA. We are 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, Jana and I will be discussing some potentially problematic provider compensation topics.

I am excited to be podcasting with you today, Jana.

Jana Kolarik

Me too, Angie. So I think our first topic today is we’re going to talk through maybe work relative value units (wRVU) and productivity models. I think this has been a topic that you and I have spent a lot of time discussing. And I think just as a beginning structure issue, thinking through this particular issue with the lens from my perspective as a lawyer, thinking through personally performed services under the Federal Physicians Self-Referral Law, commonly known as Stark Law, and also sort of thinking through fair market value (FMV), which we’ll talk about as FMV under Stark as well. But also thinking through that personally performed aspect of WRVUs will kind of be peppered through this and is affected not only from a Stark perspective, but a kickback perspective. I mean, you and I have spoken about this in multiple different ways.

The concept as we were talking through this before the podcast of not all [w]RVUs are created equally was something that just struck me, frankly, people’s understanding and, frankly, physicians’ understanding of what work RVUs are, I think is important because it’s a component of how they are being paid by payers. And it’s again, also this component of how they’re being paid through their practices or through health systems.

But let’s talk a little bit about what we’ve seen as far as issues with inaccurate or inconsistent determinations of wRVUs. Do you want to kick us off on some things that you found and then let’s just talk through them?

Angie Caldwell

Absolutely. So if you think about the prevalence of the productivity model as a compensation model type, probably 70% of hospital employed physicians are on a productivity-based compensation model. So it is very important then to ensure that the input to the compensation model surrounding work RVUs is correct and accurate. So what most often happens when measuring the work RVUs is around ensuring that the work RVUs are modifier-adjusted and personally performed.

Systems have limitations. No system is entirely perfect, but what we’ve seen happen in several instances is a system might not be able to compute or handle modifiers. A system between the billing system and the provider compensation system, the modifiers might be dropped out of the calculus. There are many, many things that can happen related to computing those work RVUs. So it is incredibly important to ensure that they are correct.

Jana Kolarik

Right. And I think some of this is, so when we talk about modifier adjustment, those modifiers are present in the billing itself. So they’re there in how it’s billed with the Current Procedural Terminology (CPT) code. And sometimes there’s, I don’t know, a misunderstanding about whether or not to keep them or leave them off when it comes to the physician compensation. So obviously the modifier adjustments are reducing, in many cases, the wRVUs that are then attributed (or the work RVUs that are being attributed) not only from a billing context, but also from a compensation context. So by leaving them off, essentially you’re attributing more WRVUs, which is then attributing more compensation from a productivity perspective to that physician.

So thinking through the modifier adjustment issue and the systems issue that you’ve encountered, systems are obviously the best situation. So if it’s calculated through a system, through an electronic health record (EHR), through something that is not touched by human hands, it could be more accurate. But how do you verify or touch up against when you come into it, a new client, whether or not their wRVU calculations are accurate? How do you figure that out?

Angie Caldwell

Sure. And I know you and I have talked about effective compliance programs and compliance audits, and this is one of those areas that the compliance team or even the internal audit team can help an organization ensure that the work RVU computations are accurate and that the modifiers are included within that calculation. To the extent that they are not, and it does happen, then on the other end, accommodations/mitigations need to be made within the compensation plan design to ensure that the overstatement of work RVUs in one part of the mathematical formula is offset by a reduction in the compensation per work RVU in the other side of the formula so that the overall compensation then doesn’t run afoul of FMV and the applicable regulations.

One of the things here that I think often gets misunderstood/overlooked or even perhaps becomes a complication is that the multiple payment procedure reduction, of course, that is a modifier, but many payers, because of the sophistication of the billing systems and the way that the information transmits between the hospital and payer, that modifier is often not even required to be billed compliantly. And so the payer knows that a multiple procedure has been done, but perhaps the modifier has been left off internally for compensation purposes. And that’s one that frankly can have a significant impact on a work RVU determination.

But it is important, again, within the compensation design to ensure that what we are measuring from a work RVU perspective is as accurate as possible and includes all modifiers, including the multiple procedure payment reduction modifier.

Jana Kolarik

Yeah, that makes a lot of sense. To me, there’s two buckets here. There’s the systems accuracy, and then there’s the compliance overlay related to the accuracy of the data. So is your system spitting out data that is accurate with regard to the modifier inclusion, as you’ve just mentioned? And then is the base CPT or coding that’s present for that particular physician accurate based on compliance audits? So let’s touch on that really quickly, just because it can affect it. And I think sometimes is overlooked and thought of separately when it should be thought of as a combined issue.

So if you have a healthy compliance program and a healthy auditing function within that compliance program that is testing the billing and coding of claims, we’ve talked about individuals coding their own claims, belief that the work provided was very high and that the medical decision making was very complex and coding things at higher levels – level fives – which can spin off higher wRVUs. But if you have a coding and documentation expert come into that information and looking strictly at what the documentation can support, it’s possible that the coder can say, “Look, it’s not a level five, it’s a lower level code.”

So ensuring that that documentation is correct, which then documentation is reflective of what has been coded and billed is important because it then affects not only sort of accurate billing and coding, which is important from a payer perspective and from a overpayment rule perspective and False Claims Act (FCA) perspective, but is then important from a compensation perspective. And I think frequently, if you have an issue with your coding documentation, your error rates, that disconnect sometimes will happen without realizing how it is affecting physician compensation until somebody like you comes along, Angie, and those questions are asked and really pushed on to make sure that if there is a productivity model that takes into account wRVUs, are those true and accurate wRVUs?

Angie Caldwell

The old adage garbage in, garbage out.

And it really does start with the documentation in the record from which that bill is then coded and that CPT and modifier is then attached. Not every service is going to be a level five service. And that’s where effective compliance programs can help. An easy test is to compare the physician coding frequency to a normal frequency from Centers for Medicare & Medicaid Services (CMS). So CMS will show you the frequency of the CPT code by physician specialty. Comparing that frequency, comparing that bell curve from a standard bell curve to the physician in question is a really easy way to see if that billing is perhaps off. And if it is, if the bell curve is completely to the right showing all level fives and very few {level} ones, then it’s an opportunity to ask more questions and find out exactly what’s going on. But that is the first step in ensuring that the compensation model then doesn’t get awry as a result of that incorrect billing or perhaps coding irregularities that may happen.

Jana Kolarik

Absolutely. And so let’s talk a little bit about other things that may affect what is being attributed to a physician as a wRVU. So we’ve had, there’s a distinct difference between billing and what’s being attributed to a physician under their national provider identifier (NPI) from a billing context and what is considered to have been personally performed by that physician. So what comes into play there is something that you want, which is collaboration between physicians and advanced practice practitioners (APPs), including physician assistants and nurse practitioners. So in the incident to context, in the global surgery package context, in the split shared situation, you have things that may have been billed under the physician’s NPI that may have been worked by an APP.

So as you’re looking at a particular physician, and I think you and I have talked quite a bit about surgical specialties and the use of APPs and when they’re used and how they’re used, how do you take that into account when you’re trying to discern whether or not the wRVUs that are being attributed to a particular physician or physician’s NPI are truly worked or performed by that? Does that make a difference in kind of your assessment?

Angie Caldwell

It sure does. And what we’re trying to get to from evaluation perspective, of course, is measuring the physician’s personally performed work effort. The work RVUs and the way that the billing is designed may not always capture only personally performed work effort. For example, in the split shared billing that you spoke of, or perhaps in a global surgical package situation.

So first, it’s always important when collecting the population of work RVUs to apply to the compensation model is to start with work RVUs that are rendered by the physician. So most billing systems will show you the codes by a rendering provider or billing provider. First capture it by rendering provider which will strip out all of the incident-to services that are not personally performed by the physician. Then it’s a matter of assessing the use of the APP and frankly, how the physician uses the advanced practice provider. Are they using them as an extender to do those post-surgical examinations? How are they using them? Or does the APP have a separate and complete patient panel from the physician? It’s important to know how the physician is using the APP.

In those instances where the physician is using the APP as an extender, it’s then important to understand that the way the billing system works is different from how the personally performed service is being determined because the APP is part of some of those codes. And those global surgical packages, the APP’s work is part of that CPT code. So understanding that-

Jana Kolarik

Pre and post.

Angie Caldwell

Yes. And understanding that and understanding how that impacts physician compensation is important. And most often from a valuation perspective, some consideration is made either in assessing and valuing the compensation per work RVU (the conversion factor), or within looking at the total value of the work RVUs attributed to the physician themselves. So in other words, some discount is likely applied to one or the other to ensure that the compensation ultimately results in FMV and to really assess what the physician is personally performing.

Jana Kolarik

Yeah, makes a ton of sense. Talk to me about, because we’ve talked about this from time to time, a wRVU for everything. So I’m sure that that statement sends a thrill of just pain through you. But the belief that under a wRVU model or a component that if you’re performing a service, there should be some type of wRVU for that service that I’m performing, even if it’s not something that’s a true wRVU that’s been calculated, that’s been set up through the CPT and through WRVUs through CMS. So talk to me about what that looks like and some of the questions that have come up about that and what is maybe a more effective way to deal with that situation than really creating a wRVU for everything.

Angie Caldwell

Yeah. And you and I have had some conversations about this, about how work RVUs as part of the total value of the CPT code, it’s truly a reimbursement methodology and initially was not intended to be how physicians were paid and compensated. Because the work RVU, again, it’s easy to measure, it’s consistently measured, it’s agnostic as to payer, and so it has become a great measure of physician work effort. {However we} know that it was not intended to be the one and only way to compensate a physician, there is a desire by the industry to make everything a work RVU because it is consistently measured, consistently applied, agnostic into payer, all of those wonderful things, but it doesn’t always work.

So translating administrative services into work RVUs, for example, within a compensation model, in my opinion, I’ve seen that be a very dangerous approach simply because the risk and the value of that clinical and administrative time is so different. Proxy work RVUs for clinical services where perhaps CMS has not provided a work RVU value, those are other areas where I can get behind a proxy work RVU in some instances for clinical services, but there are others where it just simply does not make sense and perhaps a collections-based or a per-encounter-based compensation methodology would make more sense and frankly be easier administratively.

Jana Kolarik

Yeah, 100%. And you and I have sort of fixed modeling that dealt with that latter issue, so a 100%. So let’s talk a little bit, I want to talk a little bit about specialties and wRVU compensation models. And I’d like to talk a little bit also after that about the mismatch of compensation and productivity. So in looking at wRVU compensation models, you and I have had multiple discussions over the years related to why is that specialty or why are we trying to shoehorn a hospital-based specialty into wRVU compensation model?

So let’s talk a little bit about where that makes sense to say no, to say, let’s try this a different way because it doesn’t make sense in this particular context. So context of hospital-based physicians, can you talk to me a little bit about compensation modeling that makes more sense just based on kind of flow of patients and control of schedule, those types of things and sort of in that context?

Angie Caldwell

So if we think about hospital-based physicians, they are “catchers.” The universe is in control of who arrives in the emergency room that day, how many patients are on the floor, and how many patients are in the intensive care unit (ICU) unit. They are catchers and not immediately responsible, if you will, for driving the procedures, the visits, and the encounters. There’s so many other things at play for that hospital-based physician. So a productivity model then makes a lot of sense when the patient is in … Or I’m sorry, when the physician is in – control of that schedule, the number of procedures, the number – by reputation -the number of patients that are coming to them, all of those things, it makes a lot of sense.

In a hospital-based setting, it starts to make a little bit less sense simply because we talked a minute ago about not everything is a level five. So a physician in a more of a coverage type role, coverage, meaning coverage of the floor, coverage of the emergency department (ED), coverage of the ICU, again, if their compensation model is based upon productivity, then they are incentivized, just because of the way their compensation model is designed, to drive work RVUs. And that perhaps puts the incentive to making more level fives when there aren’t level fives. So it makes more sense in those hospital-based settings to have more of a coverage type, a shift-based model, and then perhaps consider some productivity incentive for surge times or other high volume times.

Jana Kolarik

Yeah, makes sense. And to that point, and to underline the point that you’re making as well, if you do have those types of productivity components for those particular types of specialties, then again, not the billing compliance is ever unimportant, but it makes it all the more important if you have, especially if you have physicians in some way coding their own work, to have that double check and that audit over it, just to make sure that that billing is tight and accurate.

Angie Caldwell

Absolutely. And a word on, I know you and I have talked frequently about when is a productivity incentive appropriate for a hospital-based specialty. And there are times. It’s a compensation design – it does get tricky – it’s a compensation design skill that needs to be carefully and thoughtfully applied. But the base for the physicians working in these hospital-based specialties should be the normal, the value of that base compensation should be based upon the normal environment, the normal flow, the normal census, the normal number of visits, and then understanding that that’s going to fluctuate up or down, but rewarding the physician. No one intends to create a compensation model that doesn’t reward the physician for their skill and hard work. So recognizing when perhaps a surge incentive or a productivity incentive is warranted is a good thing to add to a compensation plan.

And that could be, again, carefully designed so that you know when that surge is actually occurring within a unit. And it doesn’t even have to be based upon work RVUs and a traditional work RVUs times conversion factor kind of methodology. It could be based upon some kind of another incentive, an engagement incentive, or another incentive that’s valued a different way. So there are ways to accomplish it without the productivity being the main calculus of the compensation plan.

Jana Kolarik

Yeah, that makes total sense. And I do believe, and you and I have talked about this as well, there is kind of, I don’t know, this general pressure or belief among physicians that the productivity method of compensation is in some ways better than other ways. And I just want to say on this podcast that is not accurate, and I welcome your thoughts on that as well, because I do think there’s the pressure, internal pressure from physicians who should be paid the value of their work, and as you said, for their expertise, et cetera. But that pressure to believe that the WRVU methodology is in some way better than the others is something that just needs to be debunked. Thoughts on that?

Angie Caldwell

Absolutely. I’m with you. It’s not always the best model. I think it gets back to – it’s easy. It’s something to understand this times this equals that. And I think there’s a notion that the shift value or the salary value will be somehow be deflated because it’s not represented by the physician’s ({work RVU} work effort, but showing them and demonstrating to them that the compensation is fair, it’s FMV, it’s based upon the services provided, is important to help debunk that.

Jana Kolarik

Yeah. Fair. Thank you. So let’s talk a little bit about the mismatch of compensation and productivity and the belief and again, we’ve talked about this before, but there still is this clinging to the 75th percentile, this belief that that is really the amount that physicians in some way should be paid. And what does that look like though, this is the issue, when the productivity is not at the 75th percentile? And how do you deal with situations or how do you, as a valuation expert, deal with situations where you’re trying to educate your clients as to why the 75th percentile may not work with somebody who may is at the 25th percentile, they’re at the end of their career or they are just slower or less productive than others? How do you deal with those conversations? How do you explain that?

Angie Caldwell

Yes. And so it gets back to, number one, the myth that anything at lower than the 75th percentile is FMV. So number one, that’s just simply not true. But there are instances where the methodologies for determining FMV within an organization are based upon that threshold, that 75th percentile threshold, and nothing else.

Effective thresholds have more than one level of test, whether that be compensation per work RVU, whether it be a difference in the productivity level and the compensation level. Normally it’s a combination of those to determine if a physician’s compensation is within the range of FMV. In that testing and in determining the differential between productivity and compensation for a physician, there could be very good reasons as to why someone is compensated at the 75th, but producing at the 25th.

And I’ll give you a few of those reasons. So one is someone in a rural setting. So if you think about someone, a provider in a rural setting who may not have the volume simply because the population does not support volume for that physician, but that physician is needed desperately in a community. So to get the physician to that community to provide the service, sometimes 75th percentile compensation or more is required to provide them to the community to provide that service, but they will not have, likely, the productivity to support that level of compensation.

So again, understanding the facts and circumstances around that difference between productivity level and compensation level is extremely important.

Jana Kolarik

Yeah. So then it comes to the … And I think about this and the thing that strikes me as you’re going through the example, I think having folks internally at your practice, at your health system, at your hospital to evaluate compensation and then go out to valuation experts circumstantially. So let us rely on several different resources from a survey perspective. And then being able to know the point in time when it makes sense to then go to somebody like you to say, do we have enough behind this? We’re paying at the 75th, but their wRVUs or their productivity is much lower than that. Is there support for paying them at this level?

I mean, when you talk to clients about having those triggers in place for evaluation of compensation for their physicians, how do you talk to them about making sure that they’re careful in that analysis and when that trigger is frankly sprung for you to be brought in? How do you talk to folks about that? Because what you don’t want to obviously have happen is to not have a rule situation or not have an exception to this rule and have physicians paid at the 75th percentile, but producing at the 25th and not have the rationale around how that is still FMV for that particular physician. Talk to me about triggers.

Angie Caldwell

It is a very important conversation right now and one that PYA has advised on a lot lately because I think in the past, historically, the thought was is that every FMV opinion had to be generated by a third party valuator. And that’s simply not true. So much valuation work can be done internally by the organization created by, and that valuation work can be done through work of a compensation committee through an effective compliance program, and together then creating those thresholds that the organization can use to assess and determine a compensation valuation before sending something outside.

And so setting those parameters again, it’s organization-dependent, it’s going to be dependent upon an organization’s risk tolerance as to what they’re able to handle as an organization. And it’s going to be based upon, again, their location, their geography, their population. So we work with several organizations that have small urban facilities, but then they have very rural facilities in their system. And navigating the dynamics from an internal valuation threshold perspective of the two becomes complex. Having that active compliance program, having that active physician compensation governance committee is really important. And having more than one threshold, I think is also very important because just because it’s over the 75th doesn’t mean it’s not FMV, but being under the 75th doesn’t mean that it is. And so having multiple thresholds allows you to internally to better assess where your physicians are.

Jana Kolarik

Yeah, that makes total sense. I think that this has been a fantastic conversation just to key people into these issues with regard to these wRVU or productivity models and things that people should be thinking about. We’ll talk in another podcast about things that we can do and that we would recommend that folks do to add on to what you just said at the end of this conversation. What structures can you put in place? What are best practices with regard to compliance in this space? And I think that’ll be a nice second podcast in this series.

But I welcome final thoughts from you, Angie, on this. I mean, I think wRVU methodology, as you had mentioned, from my perspective, is something that is all over and that has come into spaces and specialties where it may not fit ideally, so has created issues from that. And from my perspective as well, the billing and coding and documentation issues can impact the compensation as can the use of physician extenders/APPs. So there’s a bunch of things in there from my perspective as a health care lawyer and from a compliance perspective that we can look at and be thoughtful about and work compliance around.

But from your perspective, what are the takeaways that you want to leave people with with regard to this particular topic?

Angie Caldwell

Absolutely. If your primary method of paying physicians is on a work RVU productivity basis, it’s imperative that the calculation process surrounding those work RVUs is excellent. It must be excellent. Notice I didn’t say perfect. I don’t know that any calculation process is going to be perfect, but it does need to be excellent to ensure that the overall compensation plan doesn’t run afoul of FMV.

Jana Kolarik

Yeah. Thank you. This has been a great conversation. Really always appreciate your thoughts and the discussion on these topics and hope that our listeners find it equally as instructive and helpful. Thank you.

Angie Caldwell

Thank you. Thank you, Jana.

Jana Kolarik

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 be sure to be on the lookout for part two of this series. Visit Â鶹´«Ă˝’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 Â鶹´«Ă˝ & Lardner.

Angie Caldwell

And I’m Angie Caldwell at PYA. Thanks for listening.

Medicare payment suspensions result in a cessation of payments for Medicare services until the suspension is resolved, typically several months after the initial action to suspend. Payments withheld will then be released after recoupment of any determined overpayments. The Trump Administration has stated that it will aggressively use its authority (created by the 2010 Affordable Care Act) to suspend payments based upon a credible allegation of fraud. Below we set forth the context for such suspensions, as well as the key parameters for such actions. 

Trump Administration Focus on Fraud, Waste, and Abuse 

In a March 16, 2026 , the Trump Administration launched an interagency Task Force to Eliminate Fraud, targeting transactions and processes in federal benefit programs “that are most susceptible to fraud schemes.” Recent enforcement activity in California as part of this anti-fraud initiative highlights the Administration’s increasing reliance on aggressive program-integrity tools to combat suspected health care fraud.

Approximately one month after the Task Force’s launch, federal authorities reportedly by suspending payments to 447 hospices and 23 home health agencies in Southern California, signaling a heightened willingness to take swift administrative action against providers perceived to pose fraud risks. Earlier, in an April 2, 2026 , the U.S. Department of Justice (DOJ) announced that eight California defendants were arrested on federal charges for allegedly participating in a scheme to defraud the nation’s health care system of more than $50 million, including through the operation of sham hospice facilities that submitted Medicare claims for beneficiaries who were not terminally ill.

These large-scale actions underscore the government’s growing willingness to aggressively combat suspected fraud, waste, and abuse in federally funded health care programs. For providers and suppliers in the health care sector, particularly in California, the recent hospice actions are a stark reminder that fraud enforcement is no longer limited to post-investigation recoupments or False Claims Act (FCA) litigation; it increasingly includes immediate operational measures.

Payment Suspensions as an Emerging Enforcement Priority

This broader enforcement posture is also reflected in DOJ and the U.S. Department of Health & Human Services’ (HHS) increasing focus on payment suspensions as a fraud-fighting tool. Previously, in a July 2, 2025, , HHS and DOJ announced a new “DOJ-HHS False Claims Act Working Group” (the Working Group) and identified multiple priority enforcement areas for the Working Group to address health care fraud and abuse. The press release also encourages the submission of tips and complaints on waste and mismanagement. Membership in the Working Group includes leadership from the HHS Office of General Counsel, the Centers for Medicare & Medicaid Services (CMS) Center for Program Integrity, the Office of Counsel to the HHS Office of Inspector General (OIG), and DOJ’s Civil Division. 

As pertinent to this discussion, DOJ’s 2025 press release noted that as part of its efforts, the Working Group “shall discuss considerations bearing on whether HHS should implement a payment suspension pursuant toĚý….” Although CMS has several bases upon which it can impose payment suspensions, including “reliable information that an overpayment exists,”, its most significant suspension tool is a suspension based on a “credible allegation of fraud.” See our prior blog titled “DOJ-HHS False Claims Act Working Group: Focus on Medicare Payment Suspensions.”

What Is a Medicare Payment Suspension?

As defined by 42 C.F.R. § 405.370, a Medicare payment suspension is the withholding of payment by a Medicare contractor from a provider or supplier of an approved Medicare payment amount before a determination of the amount of an overpayment exists, or until the resolution of an investigation of a credible allegation of fraud. A payment suspension may be applied against part or all of Medicare payments.  Notice to the provider or supplier may be waived if harm to the Medicare Trust Funds is suspected. . There is no administrative appeal process to challenge the imposition of a suspension..

What Is a Credible Allegation of Fraud?

One basis for a Medicare payment suspension is a “credible allegation of fraud.” This basis for payment suspension was added by the Affordable Care Act and codified at  for Medicare, with a Medicaid corollary at . The term is not defined in the statute, although the statute provides that “a fraud hotline tip (as defined by the Secretary) without further evidence shall not be treated as sufficient evidence for a credible allegation of fraud.” 42 U.S.C. § 1395y(o)(4).

In implementing regulations at 42 C.F.R. § 405.370, CMS defines a “credible allegation of fraud” as an allegation of fraud from any source, including but not limited to the following: (1) fraud hotline tips [defined as a complaint or other communications submitted through a fraud reporting phone number or website intended for the same purpose, e.g., the HHS-OIG Hotline] verified by further evidence; (2) claims data mining; and (3) patterns identified through provider audits, FCA cases, and investigations.

By statute, HHS must consult with HHS-OIG in determining whether there is a credible allegation of fraud against a provider of services or supplier. 42 U.S.C. § 1395y(o)(2). 

In its Program Integrity Manual, CMS notes that fraud suspensions may also be used for “reasons not typically viewed within the context of false claims,” e.g., a determination by the Quality Improvement Organization (QIO) that diagnosis-related groups have been upcoded, suspected violations of the physician self-referral law, and credible allegations of kickbacks underlying medically necessary items or services.  

Similar provisions apply to state Medicaid programs (although Medicaid is not addressed in 42 U.S.C. § 405.370, the provision cited in the press release as the basis for Working Group’s consideration). The state Medicaid agency must suspend all Medicaid payments to a provider after the agency determines there is a credible allegation of fraud for which an investigation is pending under the Medicaid program against an individual or entity unless the agency has good cause to not suspend payments or to suspend payment only in part. ; see also  (Federal Financial Participation funding).

How Long Do Medicare Payment Suspensions Last?

Medicare payment suspensions are generally expected to last no longer than 18 months, although the period may be extended if the case has been referred to, and is being considered by, HHS-OIG, or if DOJ submits a written request to continue the suspension. CMS must evaluate whether there is good cause not to continue a suspension every 180 days after the initiation of the suspension. See 42 C.F.R. § 405.372(d).

Can the Imposition of a Medicare Payment Suspension Be Appealed?

As noted above, there is no administrative process to appeal a suspension. 42 C.F.R. § 405.374. Providers and suppliers can submit a rebuttal, and CMS will consider evidence of “good cause” that would justify discontinuation of the suspension. The lack of a formal appeal process has resulted in multiple court actions seeking temporary restraining orders or other injunctive relief. These actions are often unsuccessful due to jurisdictional challenges, although some bankruptcy court actions have been successful in limited circumstances. 

How Should Providers or Suppliers Respond if Notified of a Medicare Payment Suspension? 

• Act immediately to identify options: the process for rebuttal moves very quickly. Rebuttal is unlikely to be successful, but the provider or supplier should consider putting a response on the record to start a dialogue with CMS to address the suspension.
• CMS has some latitude to suspend payments in part rather than in full — there may be a way to limit the suspension to a certain stratification or even percentage of payments, especially if there is a beneficiary access issue.ĚýSeeĚýCMS Program Integrity Manual, Ch. 8, § 8.3.1.1Ěýfor a discussion of “good cause” exceptions.Ěý
• Identify the concerns behind the “credible allegation” and craft a response,Ěýe.g., analyze patient charts requested for review and be able to defend them.Ěý
• There may be some latitude for emergency releases of funds upon a showing of extreme need,Ěýe.g., meeting payroll.Ěý

Conclusion

As the Trump Administration ramps up its enforcement efforts against fraud, waste, and abuse, providers and suppliers are now expressly on notice to expect that governmental enforcers will place increased reliance on payment suspensions, most likely those based on credible allegations of fraud. Suspensions in some cases may be imposed without advance notice, and there is no pathway for appeal, although an opportunity for rebuttal is offered. Providers and suppliers subject to such suspensions may face months without Medicare payments. However, in appropriate situations they may be able to work with government enforcers to expedite the process and/or limit the scope. Providers and suppliers facing payment suspensions should be prepared to act quickly to respond, and the advice of experienced counsel is recommended. 

At Â鶹´«Ă˝, we are actively advising providers across the country on how to respond to this evolving legal landscape. From policy development and compliance strategy to enforcement defense, we are here to help. Please reach out to the authors, your Â鶹´«Ă˝ relationship partner, or to our Health Care Practice Group and Health Care & Life Sciences Sector with any questions.

On April 18, 2026, President Donald Trump signed an executive order (Order) titled , directing federal agencies to expedite the research, review, and approval of psychedelic drugs as potential treatments for serious mental health conditions. The Order represents a significant federal policy shift aimed at addressing what the Trump Administration describes as a crisis of serious mental illness in America, with particular emphasis on patients whose conditions have not responded to standard therapies.

Importantly, the Order does not, by itself, approve any psychedelic drug for medical use or create enforceable rights for patients or providers. Nonetheless, it signals a substantial directional shift in federal policy that is likely to accelerate the pace of psychedelic drug development and may increase investment in the sector and reshape the regulatory environment for years to come.

We discuss key provisions of the Order and highlight its implications for clinical researchers, health care providers, and the broader medical community.

Key Takeaways

• This is a significant federal policy shift aimed at developing psychedelic drugs for use in treating mental illness.
• The Order reshapes the regulatory environment for investigating the use of psychedelic drugs, including through U.S. Food and Drug Administration (FDA) review prioritization and potential Right to Try Act access for investigational psychedelic drugs.

• The Order increases research funding for investigating the use of psychedelic drugs.
• The Order directs expedited controlled substance scheduling review for certain psychedelic drugs.
• More clinical research is needed on the safety and efficacy of psychedelic drugs.

Background

The Order acknowledges that policymakers and the medical field have long struggled to address the burden of suicide and serious mental illness in the United States. According to the National Institute of Mental Health, an estimated 15.4 million adults in the United States live with serious mental illness. Per the Order, about eight million Americans are on prescription medications for these conditions, and existing treatments such as selective serotonin reuptake inhibitors (SSRIs) are not always effective or accessible for all patients. Veterans are at particular risk, with research showing that suicide rates are nearly twice as high among veterans as they are in the general population.

The Order identifies psychedelic drugs — including ibogaine compounds — as showing potential in clinical studies to address these conditions. Notably, FDA has already granted Breakthrough Therapy designation to nearly a dozen specific psychedelic drugs, including Compass Pathways’COMP360 psylocibin program for treatment resistant depression, Resilient Pharmaceuticals’ (formerly Lykos Therapeutics) MDMA-assisted therapy program for post-traumatic stress disorder, and Definium’s DT120-LSD D-tartrate orally disintegrated tablet for generalized anxiety disorder, and there are numerous products currently in the clinical trial pipeline undergoing review of safety and efficacy. Accordingly, the Order declares it the policy of the Trump Administration “to accelerate innovative research models and appropriate drug approvals to increase access to psychedelic drugs that could save lives and reverse the crisis of serious mental illness in America.”

Key Provisions of the Executive Order

To achieve the overarching policy declaration, the Order directs several federal agencies to take immediate action:

• FDA Review Prioritization. The Order directs the Commissioner of the FDA to provide Commissioner’s National Priority Vouchers (“priority vouchers”) to psychedelic drugs that have received a Breakthrough Therapy designation and that satisfy the criteria of the National Priority Voucher Program. The Commissioner’s National Priority Voucher Program is a FDA pilot program announced in June 2025. The primary purpose of the pilot program is to explore a pathway to dramatically reduce review times for drug and biological product applications with a one- to two-month review target. Ěý
  
  On April 24, 2026, merely six days after the Order was issued, FDA Commissioner Marty Makary announced that FDA had issued three priority vouchers to the following programs: (1) Compass Pathways’ psilocybin (COMP360) for treatment-resistant depression; (2) Usona Institute’s psilocybin for major depressive disorder; and (3) Transcend Therapeutics’ methylone (TSND-201) for PTSD, which is expected to be acquired by Otsuka Pharmaceutical Co. in Q2 2026. Notably, the voucher for Transcend Therapeutic’s methylone program — which is entering Phase 3 — came as a surprise to many industry observers, who had expected the third voucher to go to Resilient Pharmaceuticals (formerly Lykos Therapeutics) for its MDMA-assisted therapy for PTSD, which FDA declined to approve in August 2024.

• Right to Try. The Order further directs FDA and the Drug Enforcement Administration (DEA) to facilitate and establish a pathway for eligible patients to access psychedelic drugs, including ibogaine compounds, under the . This includes any necessary Schedule I handling authorizations for treating physicians and researchers consistent with 21 U.S.C. § 823, as well as any applicable waiver authority under the .

• Federal-State Collaboration and Funding. The Secretary of Health and Human Services (HHS) is directed to allocate at least $50 million from existing funds, through the (ARPA-H), to support and partner with state governments that have enacted or are developing programs to advance psychedelic drugs for serious mental illnesses. This support may include federal funding, technical assistance, and data sharing, as appropriate and consistent with applicable law.

• Interagency and Private-Sector Collaboration. HHS and FDA are directed to collaborate with the Department of Veterans Affairs (VA) and, as appropriate and consistent with applicable law — including the and the (HIPAA) — with the private sector, to increase clinical trial participation, data sharing, and real-world evidence generation regarding psychedelic drugs. Priority is to be given to drugs that have received a Breakthrough Therapy designation. HHS, FDA, and VA are further directed to sign data-sharing memoranda to ensure that data from relevant clinical studies conducted by federal agencies are made available to FDA to facilitate timely evaluation and approval under Section 505 of the .

• Timely Rescheduling. Lastly, the Order directs the Attorney General, in consultation with HHS, to initiate and complete review of any product containing a Schedule I substance that has successfully completed Phase 3 clinical trials for a serious mental health disorder. The objective is for rescheduling, if appropriate under 21 U.S.C. § 811, to proceed as quickly as practicable for products that are ultimately approved under Section 505 of the Federal Food, Drug, and Cosmetic Act.

Implications for Clinical Research

The Order has the potential to meaningfully reshape the landscape for psychedelic drug research. By directing FDA and DEA to reduce longstanding regulatory barriers, the Order may make it considerably easier for researchers to study psychedelic substances that are currently classified as Schedule I, a classification that imposes significant hurdles on researchers by treating these substances as having no accepted medical use and a high potential for abuse.

However, important caveats remain. The Order is not equivalent to FDA approval, and full clinical trials demonstrating safety and efficacy are still required. The emphasis on ibogaine has drawn particular scrutiny from the research community, given that ibogaine is at an earlier stage of clinical development than compounds like psilocybin or LSD and has raised safety concerns related to cardiotoxicity. Additionally, it remains debatable whether an executive order can compel rescheduling of a controlled substance. 

Implications for Health Care Providers

Health care providers should closely monitor the regulatory developments anticipated in the coming months. The Order’s Right to Try provisions are particularly noteworthy: by directing FDA and DEA to establish a pathway for eligible patients to access psychedelic drugs — including Schedule I handling authorizations for treating physicians — the Order may expand the circumstances under which physicians can administer or prescribe investigational psychedelic treatments. Providers who treat patients with serious mental illness, especially treatment-resistant depression, PTSD, and substance use disorders, should be prepared for potential new treatment pathways.

That said, the practical implementation of psychedelic-assisted therapies presents substantial infrastructure challenges. Unlike conventional medication visits, psychedelic treatment models may involve sessions lasting six to eight hours with therapist support throughout. Providers and health systems will need to address questions of staffing, facility requirements, therapist training, insurance reimbursement, and equitable access, particularly for patients in rural, lower-income, or underserved communities.

Significance for the Broader Medical Community

The Order represents a historic moment in U.S. drug policy and mental health treatment. For instance, the Multidisciplinary Association for Psychedelic Studies (MAPS) has the Order as “a meaningful shift in the federal government’s approach to psychedelic policy and drug development.”

Although the Order has been largely praised by stakeholders across the pharmaceutical, health care, and advocacy sectors, caution should be taken to ensure that implementation is guided by rigorous science, patient safety, and ethical frameworks. MAPS has that expanding access must be accompanied by “strong ethical commitments: frameworks developed with Indigenous people, responsible global partnerships, accessible public education, and protections against extractive or purely commercial approaches.”

Looking Ahead

Organizations engaged in clinical research, drug development, health care delivery, and health policy should monitor several near-term developments closely. Specifically, now that FDA has issued the three priority vouchers, stakeholders should watch for the submission and expedited review of new drug applications from these companies; the establishment of Right to Try Act pathways for psychedelic drugs and associated Schedule I handling authorizations; the allocation and distribution of $50 million in ARPA-H funding for state programs; the execution of data-sharing memoranda among HHS, FDA, and VA; and DEA and HHS review of products containing Schedule I substances that complete Phase 3 trials.

For stakeholders across the pharmaceutical, health care, research, and investment sectors, the Order represents a pivotal opportunity to shape the future of mental health treatment in America. Drug developers and life sciences companies may benefit from accelerated FDA review timelines, increased federal funding, and clearer regulatory pathways that could reduce both the cost and duration of bringing psychedelic therapies to market. At Â鶹´«Ă˝, we are tracking these developments closely and actively advising providers across the country on how to respond to this evolving legal landscape. From policy development and compliance strategy to enforcement defense, we are here to help. Please reach out to the authors, your Â鶹´«Ă˝ relationship partner, or to our Health Care Practice Group and Health Care & Life Sciences Sector with any questions.