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Jodi Daniel is a partner in Crowell & Moring's Health Care Group and a director at C&M International (CMI), an international policy and regulatory affairs consulting firm affiliated with Crowell & Moring. She leads the firm's Digital Health Practice and provides strategic, legal, and policy advice to all types of health care and technology clients navigating the dynamic regulatory environment related to technology in the health care sector to help them achieve their business goals.

Electronic health record (EHR) vendor Allscripts recently disclosed on an earnings call that it has reached a tentative agreement with the Department of Justice (DOJ) to pay $145 million to settle an investigation into the regulatory compliance of one of its recent acquisitions, Practice Fusion. This news, combined with DOJ’s other recent successful enforcement actions against EHR companies, represents a trend and should be a warning that compliance is a priority when it comes health IT. We anticipate that there will be more Anti-Kickback, HIPAA, and False Claims Act cases against similar health IT targets in the pipeline.

Allscripts acquired Practice Fusion, also an electronic health record company, in February 2018. According to the company’s public SEC filing from the first quarter of 2019, the investigation “relates to both the certification Practice Fusion obtained in connection with the U.S. Department of Health and Human Services’ Electronic Health Record Incentive Program and Practice Fusion’s compliance with the Anti-Kickback Statute and HIPAA.”


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A patient has an emergency and goes to a hospital she knows is in her plan’s network. She receives treatment. She leaves the hospital. Weeks later, she receives a medical bill for tens of thousands of dollars. Unbeknownst to her, some or all of her treating doctors were out-of-network.

This all-too-common story has contributed to a significant medical debt crisis in this country, and has captured the attention of policymakers on all sides of the political spectrum—leading to the rare circumstance of executive and legislative alignment and the potential for bipartisan legislative action.

Proponents of price transparency hope that it will improve competition and allow patients to better understand their financial responsibility ahead of receiving services. The idea is that disclosing prices to individuals will incentivize them to “shop around” for health care services, which may drive down costs. On the other hand, opponents of price transparency argue that releasing such information could compromise bargaining leverage between third party payers and providers, and have the effect of driving up prices since information exchanges in concentrated markets can lead to tacit coordination that’s difficult to detect and punish under the antitrust laws.


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The HHS Office of Civil Rights (“OCR”) closed out the month of April with some updates to HIPAA civil monetary penalty (“CMP”) limits and clarifications to OCR’s stance on the Privacy Rule’s application to transfers of electronic protected health information (“ePHI”) to third-party applications and application programming interfaces (“APIs”).

Differential CMP Caps Based on Enforcement Discretion

Under the current HIPAA Enforcement Rule, HHS employs a four-tier level of culpability scale in line with the HITECH Act. These four tiers correspond to appropriate CMPs ranges for violations by covered entities and business associates of the HIPAA Privacy and Security Rules. These penalty tiers are adjusted for inflation pursuant to the cost-of-living formula set forth in the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015.

For instance, if a person did not know and, by exercising reasonable diligence, would not have known that the person violated the applicable HIPAA provision, the CMP range the person could be levied was $100-$50,000 for each identical violation, up to a maximum of $1.5 million for all such violations annually (before adjusted for inflation). The $1.5 million annual cap on CMPs for HIPAA violations applied across all four tiers, even though the minimum penalties for each tier increased in amount.

Since HHS began using this four-tier structure, however, there has been debate about whether the HITECH Act mandates different annual CMP caps for each of the tiers. OCR’s April 30, 2019 Federal Register Notice changes HHS’s prior position on this, and now imposes the following annual caps on CMPs for HIPAA violations:.


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On March 27, 2019, the Centers for Medicare & Medicaid Services (CMS) announced a $1.65 million competition to accelerate development of AI solutions in health care. The Artificial Intelligence (AI) Health Outcomes challenge seeks innovative, AI-driven solutions that can predict unplanned hospital and skilled nursing facility (SNF) admissions and adverse events.

The challenge is a

In order to move health care organizations towards consistency in mitigating important cybersecurity threats to the health care sector, the Department of Health & Human Services (HHS) published multiple guidance documents on best practices for health care organizations to reduce cybersecurity risks (“HHS Cyber Guidance”). The HHS Cyber Guidance is the result of HHS’ public-private partnership with more than 150 cybersecurity and health care experts. While compliance is voluntary, this guidance serves as direction to health care entities on important practices that should be considered and implemented to reduce risk.

Why HHS has published this guidance


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  • More of our health information is becoming digital every day, as new technology companies enter the health care and wellness markets.
  • Many companies that hold a wealth of consumer health information are not covered by HIPAA.
  • Many consumers may not realize that their health information only is protected and they only have certain rights with respect to that information when it is held by certain entities, but not when it is held by others.
  • The private sector should work with regulators to develop a common sense, appropriate framework for use of health information by non-HIPAA covered entities.

As we await proposed HHS regulations on interoperability and patient access to data, and as more companies than ever before are collecting and using data to power advanced data analytics, artificial intelligence, and machine learning to improve health care quality and delivery, it is important to understand the scope and limitation of protections and the applicability of the HIPAA Privacy Rule.

Patients, providers and caregivers now have access to a wide array of devices and applications to manage and track patient health, improve treatment adherence, and better coordinate care. Large technology companies, athletic gear manufacturers, and others are entering a rapidly growing consumer health technology market. They are developing new technologies including tracking apps, wearables, and social networks that are increasingly integrated into patients’ daily lives. With an estimated 86.7 million U.S. consumers owning wearable devices by 2019, patients are generating billions of data points that provide insight into their health. Yet many of these companies are not subject to existing privacy protections under HIPAA, creating a significant gap in consumer protections.

At the same time, HHS is pushing for greater interoperability and patient access to data to address a challenge that remains widespread even after the investment of billions of federal dollars into the adoption of electronic health records. Agencies are encouraging and mandating easier availability of electronic health data, through current and anticipated CMS and ONC regulations and through a variety of government initiatives such as: 1) Blue Button and MyHealtheData; 2) incentivizing the adoption of open APIs; 3) developing new fee-for-service payment policies regarding remote monitoring and virtual care reimbursement; and 4) launching Sync for Science, a technical standard for facilitating patient-mediated data exchange for research. Consumers and companies alike seek guidance on the implications of collecting, storing, maintaining, and commercializing personal health data.
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CMS has finalized the adoption of multiple CPT codes in the CY 2019 PFS that create more opportunities for providers and digital health companies to collaborate on chronic care management business models in the fee-for-service market.

Virtual Check-Ins

CMS finalized the creation of a new code to reimburse providers for brief “check-in” services conducted using communications technology by creating HCPCS code G2012, defined as “[b]rief communication technology-based service, e.g. virtual check-in.”
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Yesterday, the FDA released draft guidance on the management of cybersecurity in medical devices submitted to the agency for premarket review. Noting that cybersecurity threats to the healthcare sector have increased in number and severity, the FDA offered new recommendations for device design, labeling, and documentation that medical device manufacturers will need to consider during premarket submission processes.

The guidance comes shortly after the FDA’s launch of its Medical Device Cybersecurity Playbook, which provides a framework for healthcare delivery organizations to use in preparing for and responding to cybersecurity threats against patient medical devices.

Given rapid changes in technology and increasing innovation in the digital health market, the guidance intends to decrease the risk of cyberattacks that could render medical devices inoperable and potentially harm patients. Comments on the draft guidance are due on March 18, 2019.
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On October 15, 2018, the Centers for Medicare & Medicare Services (“CMS”) in the Department for Health and Human Services proposed a rule to require prescription drug manufacturers to post the Wholesale Acquisition Cost (“WAC”) for drugs and biological products covered by Medicare or Medicaid in direct-to-consumer television advertisements. The WAC reflects the manufacturer’s list price for a drug to direct purchasers, not inclusive of any discounts or rebates. CMS is proposing this rule in the context of broadcast advertisements, an area in which the Supreme Court has recognized that the government may take special steps to help ensure that viewers receive appropriate information.[1]

CMS stated that 47 percent of Americans have high-deductible health plans and that many patients may pay the list price of the drug until they meet their deductible. The proposed rule aims to provide greater transparency into the prices charged by prescription drug manufacturers. The theory is that markets operate more efficiently with greater transparency, and that increased exposure of the list price will also provide a moderating force to discourage price increases. While wholesale prices do not equate to the patient’s out-of-pocket obligation, CMS asserts that benefit designs are impacted by WACs, and patients in high-deductible plans may pay the full list price until meeting their deductible – thus, the WAC may still be relevant to many patient and impact their decisions and market dynamics. The price required to be posted would be for a typical course of treatment for an acute medication like an antibiotic, or a thirty day supply of medication for a chronic condition that is taken every month. The posting would take the form of a legible textual statement at the end of the ad and would not apply where the list price for a thirty day supply or typical course of treatment of a prescription drug was less than $35.
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CMS has issued its 2019 Physician Fee Schedule Proposed Rule, containing highly anticipated new reimbursement policies for telehealth, remote monitoring, and other uses of digital tools, as well as updates to health IT requirements in the Quality Payment Program, with a stronger focus on patient access to health information. Comments are due September 10 at 5pm.

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