This blog post has been prepared in collaboration with Nemours. Ms. Boyer is a Manager of Nemours Children’s HospitalMaya Upplauru is an associate in Crowell & Moring’s Health Care Group in Washington, D.C.

This Bulletin is brought to you by AHLA’s Children’s Health Affinity Group, which is part of the Academic Medical Centers and Teaching Hospitals and In-House Counsel Practice Groups.

One of the most fear-inducing experiences for new and first-time parents is the middle of the night illness of a young child. Many may head directly to the emergency department (ED) because they lack any means to communicate with their health care provider after-hours. Parents of children with chronic conditions or rare diseases are often forced to travel long distances to see specialists at regional centers of excellence and may struggle to check in or get questions answered once they are back at home. Teenagers managing chronic conditions may prematurely discontinue their treatment plan when they transition to college in a different state or when they enter the working world after college.

Today’s tech savvy parents are comfortable with digital health care solutions that are available 24 hours per day on their mobile phones, as they provide experiences that are similar to virtually any other products or services outside of health care. Yet too often today, their experience with the health care industry does not meet their expectations for digital access, efficiency and convenience.

Virtual care services, such as telehealth and remote patient monitoring, are increasingly being used to create a better experience and deliver convenient, effective care for parents and caregivers of young children. More specifically, telehealth can provide an access point to health care for children and families at times when they cannot reach their primary care provider, are unable to travel, or do not need an in-person visit and can avoid exposure to additional contagions at the ED or doctor’s office.

In low acuity, high distress cases such as a high fever, ear pain, respiratory illness and vomiting, telehealth providers can provide direct care or advise the family whether an ED or primary care visit is warranted. This kind of support is not only reassuring for young families, but can help reduce pressure on EDs so they can prioritize the sickest patients, educate families about which level of care is most appropriate for future health needs, and reduce unnecessary costs to the families and to the health care system.

Telehealth can also help to ensure continuity of care for families who may move or seek specialty care across state lines and want to keep in touch with their provider, particularly for children with complex or chronic diseases or adolescents who attend college out of state.

Challenges

Telehealth technology has the potential to improve outcomes and patient experience, while improving cost through more appropriate utilization of health care services. Pediatrics is particularly ripe for disruption by digital health technologies, including telehealth, virtual care, and remote patient monitoring solutions, because of the widespread adoption of technology by children and their parents as well as the generally low acuity of most common childhood illnesses. Yet there are still significant regulatory barriers that stand in the way of ubiquitous access to telehealth and related services, especially across state lines. Below, we have outlined several of these issues, focusing on the Medicaid and Children’s Health Insurance Programs (CHIP) populations.

  • Inconsistent State Definitions: The definition of “telehealth” (or “telemedicine”) varies widely across states and remains completely undefined in certain states. Some states include additional modalities, such as “store and forward” (e.g. the patient takes a picture and sends it to the provider) as well as remote patient monitoring, as part of their telehealth definition, while others exclude them. All of these variations make it more difficult for telehealth services to be provided across state lines.
  • State Licensure: Each state has a different set of licensure requirements for health care providers which can make it difficult for providers in different states to deliver care or conduct consultations with patients who may have difficulty traveling. Providers must be licensed in each state where their patients are located, which may lead to multiple fees, rules and administrative processes for them to meet the needs of their patients. The Interstate Medical Licensure Compact (IMLC) is aimed at streamlining this process, but not every state has signed on and, even in those states that participate, obtaining a license can still be costly and burdensome. Some states have enacted telehealth-specific licensure programs – such as New Mexico – which may address some of these challenges.
  • Scope of Practice: Certain states have laws limiting the scope of practice that impact telehealth. For example, some states have prohibitions on the corporate practice of medicine, which create barriers to different types of entities providing telehealth services. Further, some states limit or restrict which types of providers are eligible to receive payment for telehealth services.
  • Coverage Parity: Many states do not require insurance coverage of telehealth services, and some payers, including Medicaid Managed Care Organizations (MCOs), limit coverage to in-network providers only. The resulting confusion about which services are covered– in-person versus via telehealth– can place administrative and financial burdens on patients and families, especially when they receive unexpected bills for services they believed to be covered. Additionally, there is often confusion among providers and payers, resulting in payer denials of coverage or reimbursement.
  • Reimbursement Parity: Some states do not require reimbursement parity between in-person and virtual services of the same kind. If a provider will be reimbursed less for providing the same service virtually, this provides a disincentive to provider adoption and therefore further limits access to virtual care. Again, in some cases, certain provider types are completely excluded from reimbursement.
  • Billing and Coding: There is a lack of uniformity for telehealth billing codes and coding guidelines across states, which leads to incorrect billing and confusion among providers and patients. In some cases, different payers require certain modifiers and place of service codes, making it hard for providers to track and navigate a wide variety of requirements and remedy claims issues. These challenges are exacerbated when a provider works across state lines, as the number of payers and their respective requirements multiply.
  • Broadband Access: Across rural and urban settings, connectivity can be challenging for underserved populations. Rural families may lack broadband access, and urban families may rely solely on mobile connectivity. The Federal Communications Commission (FCC) offers programs to subsidize the cost of broadband, but these programs generally apply to connectivity for providers, not for patients, therefore addressing only part of the problem.

Opportunities

The federal government has made a few encouraging strides that could help to address some of these challenges. These initiatives include:

  • FCC Connected Care Pilot: The FCC has issued a Notice of Inquiry regarding telehealth for low-income consumers. While the comment period is closed, the pilot is a signal that the FCC is interested in creative solutions to solve the connectivity problems described above, within the agency’s statutory limitations.
  • CMS Integrated Care for Kids Model: Building from a Request for Information on pediatric health earlier this year, CMS has announced eight cooperative agreements for up to $16 million each in funding for innovative state Medicaid models addressing behavioral and physical health needs arising from the nation’s opioid crisis. Telehealth and digital health services bring significant value in addressing the health concerns of children; however, more must be done to address challenges relating to providing care across state lines.
  • Modernization of Reimbursement Policy for Digital Health: Changes to Medicare payment policy for telehealth could have a positive downstream impact on Medicaid and other pediatric payers. In the proposed 2019 Physician Fee Schedule Rule, CMS proposed several new remote patient monitoring and virtual check-in codes. Further, the Creating High-Quality Results and Outcomes Necessary to Improve Chronic (CHRONIC) Care Act, passed this year as part of a larger budget deal, aimed at expanding telehealth services for certain chronic condition populations.

In addition to these initiatives, the federal government could make continued progress in the following ways:

Building on Existing Efforts to Increase Evidence

  • Funding Additional Research: More data is needed on the impact of virtual care and other consumer digital health technologies on access, satisfaction, quality, cost and outcomes for children and families. Areas ripe for research and potential future cost-savings include: avoidable ED visits and readmissions, behavioral health services, chronic disease management, and children with medical complexity. Particular attention should be paid to the unique needs of children and pediatric use cases, and how those needs differ from the adult population.
  • Resources for Best Practices: Further investment is needed to identify and disseminate best practices for telehealth and other virtual care services to state Medicaid and CHIP programs. This includes identification of any unique barriers for the pediatric population and ways to address them, and compiling emerging practices, their impact and lessons learned from existing initiatives implementing telehealth services across all federal agencies including the Health Resources and Services Administration (HRSA), the U.S. Department of Defense (DoD), and the U.S. Department of Veterans Administration (VA), to share and encourage alignment across federal programs. This data could also be shared with state Medicaid and CHIP programs.

Leverage Current Policies and Federal Initiatives

  • New Demonstration Project Focusing on the Multi-State Challenge: CMS could launch a regional, multi-state demonstration pilot to test a set of aligned Medicaid policies impacting digital health access and payment focused on Medicaid and CHIP, especially when care is provided across state lines.
  • Integrate Telehealth as a Priority Focus in Existing Models: Exploring and/or promoting the use of telehealth and other virtual health services in existing Center for Medicare and Medicaid Innovation initiatives, like Accountable Communities for Health, where digital health technologies may be foundational to linking clinical care with essential community social services for children and supporting care for children in a range of settings, including school based clinics.

Finally, CMS could provide technical assistance and resources, such as model telehealth service agreements, to support states and providers in managed care contract negotiation as well as service contracts that abide by fraud and abuse regulations to expand coverage and access to consumer digital health technologies for children and families. Two precedent examples of these model contract provisions are (1) the model Business Associate Agreement published by the HHS Office for Civil Rights to aid covered entities entering into agreements with business associates under HIPAA, and (2) the EHR Contracts Untangled resource published by the Office of the National Coordinator for Health IT (ONC) to assist providers in contract negotiation with electronic health record vendors.

Conclusion

Technology offers the opportunity to improve the way health care is delivered and received, and is likely to continue shaping the health care market well into the future. Patients and families are increasingly demanding more convenient health care services, including virtual access to care, despite the many regulatory barriers impeding the seamless flow of care within and across state lines. Opportunities to improve the regulatory landscape abound, and realizing these opportunities could result in increased access, reduced cost for certain populations, and overall improved outcomes. However, such a future requires close partnership between providers, state governments and the federal government to jointly chart a path toward seamlessly connected care.

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.” Continue Reading Digital Health Updates in the 2019 Physician Fee Schedule (PFS) Rule

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. Continue Reading FDA Issues New Guidance for the Management of Cybersecurity in Medical Devices

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.

Overall, the agency has taken action designed to promote transparency in healthcare this year. In the drug pricing arena, CMS released a redesigned version of the Drug Spending Dashboards which identifies manufacturers that have increased their prices, along with year-over-year information on drug prices. Outside of the drug pricing space, CMS recently launched the eMedicare initiative to allow customers to find and compare Medicare coverage options and quickly see estimates on what the coverage would cost, among other features. CMS has also included requests for information on cost transparency and expanded patient access to data in recent payment rules, and is expected to propose more new policies in an upcoming regulation currently under OMB review.

CMS’s proposal is part of an ongoing effort by the Trump administration to bring down prescription drug prices and out-of-pocket costs, as signaled by the release in May of American Patients First, the administration’s drug pricing blueprint. This is also the latest in a series of steps focused on increasing data access and price transparency in healthcare. Although Congress was not successful in its attempt to address direct-to-consumer advertising this summer through a provision that would have allocated $1 million to the Food and Drug Administration to implement regulations requiring drug companies to list their prices in TV ads, Congress passed and the President signed into law legislation to improve transparency and lower health care costs for patients across the country. This law effectively paves the way for pharmacists to advise their patients on the cost of various medications and different payment methods, free from restrictions imposed by take-it-or-leave-it contracts with insurers.

In the present proposal CMS seeks public feedback on a variety of questions, including:

  • How providing consumers with the list price of a medication may influence interactions with prescribers, the selection of drug products, and the perceived efficacy of the prescribed drug.
  • How benefit design influences these choices.
  • Whether compliance with rule should be a condition of payment by a federal health care program.
  • Whether WAC is the amount that best reflects the “list price” for the stated purposes of price transparency and comparison shopping
  • Whether 30-day supply and typical course of treatment are appropriate metrics for a consumer to gauge the cost of the drug.
  • How to treat an advertised drug that must be used in combination with another non-advertised drug or device.
  • Whether the cost threshold of $35 to be exempt from compliance with this rule is the appropriate level and metric for such an exemption.
  • Whether rule should be extended to advertisements in other media forms, including radio, magazines, websites, etc.

This rulemaking presents a major opportunity for pharmaceutical companies, insurers, and patients alike to make their voices heard in an area that is critically important. Electronic comments can be submitted until December 17, 2018. For further assistance, please contact Jodi Daniel (jdaniel@crowell.com), Barbara Ryland (bryland@crowell.com), and Maya Uppaluru (muppaluru@crowell.com).

[1] See Red Lion Broad. Co. v. FCC, 395 U.S. 367, 390, 394 (1969) (“It is the right of the viewers and listeners, not the right of the broadcasters, which is paramount.”)

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.

Continue Reading New CMS Incentives for Remote Patient Monitoring and Patient Access

Next week, on June 21, 2018, attorneys from Crowell & Moring will hold a bootcamp entitled “Early Stage Investing in Health Technology.” Crowell & Moring attorneys will present on topics of interest to entrepreneurs, investors, and early stage health technology companies. Attendees will have the opportunity to learn about a range of matters including formation of a start-up, protection of intellectual property, FDA and product safety requirements, and how to commercialize a product through government and commercial reimbursement. Specifically, the bootcamp will feature the following presentations:

  • Building an Investible Health Tech Company;
  • IP Basics for Health Tech;
  • Navigating The Existing Regulatory and Product Safety Landscape In A New Digital World;
  • Healthcare Reimbursement:  Commercialization Strategies and Approaches; and
  • Adding Value: Managed Care Contracting Issues.

The bootcamp is a co-sponsored event with the Inova Center for Personalized Health (“ICPH”). Following the bootcamp, there will be a networking reception and panel presentation on the State of Heathcare Investing. For more information, contact a participant listed below or your regular Crowell & Moring contact.

Crowell & Moring Participants:

A. Xavier Baker

Troy A. Barsky

Lex Eley

Michael H. Jacobs

Lisa A. Adelson

Rebecca Baden Chaney

Joe Records

Roma Sharma

Maya Uppaluru

Chalana N. Williams

Danielle Winston

 

On April 17, 2018, the Food and Drug Administration (FDA) released its Medical Device Safety Action Plan which outlines FDA’s intended steps to address medical device safety while preserving enough space for innovation in the market.

The FDA’s plan is the latest effort by the FDA on medical device safety, including a recent budget request seeking $70 million to create a Center of Excellence on Digital Health that would, among other things, craft new regulations for third-party certification for developing medical devices. This comes as FDA is pushing guidance and innovative approaches for oversight of digital health (see our blog).

According to FDA Commissioner Scott Gottlieb’s announcement, the FDA’s plan organized into five points that seek to balance patients’ timely access to devices and safety and effectiveness. Continue Reading FDA’s Medical Device Safety Action Plan

This morning, the Food and Drug Administration released highly anticipated guidance on clinical and patient decision support that has been in the works at the agency for several years, advising the digital health community about how it plans to regulate software that offers recommendations or feedback to its users—both healthcare professionals, and patients and caregivers. It also provides guidance on FDA’s interpretation of new software provisions in Section 3060 of the 21st Century Cures Act.

Given the explosion of these innovative digital health tools and their strong potential to transform healthcare, this guidance is a significant development for tech companies and investors focusing on this space. Comments will be accepted for 60 days. Continue Reading FDA Issues New Guidance for Clinical and Patient Decision Support Software

The Department of Health and Human Services, Office of the Inspector General (OIG), modified its Work Plan to announce that the agency will be conducting a nationwide audit of hospitals that participated in the Medicare Electronic Health Records (EHR) Incentive Program (also known as the Meaningful Use Program).  The OIG review is focusing on hospitals that received Medicare EHR incentive payments between January 1, 2011 and December 31, 2016.

The OIG’s modification to its Work Plan follows last month’s report that CMS improperly paid an estimated $729 million in Medicare EHR incentives. In our prior client alert, we flagged these findings as a potential area for significant overpayment recovery actions and noted that such actions could pose risks for incentive payment recipients. Read our entire client alert on the OIG’s nationwide audit on hospitals that participated in the EHR Incentive Program Here.

Congress is considering several adjustments to health IT policy which may have significant impact on the Centers for Medicare and Medicaid Services’ (“CMS”) electronic health records (“EHR”) incentives. On July 20th and 21st, Representatives met to discuss bipartisan legislation to improve the Meaningful Use program and introduced legislation that would authorize a CMS Innovation Center (“CMMI”) project to incentivize EHR adoption by behavioral health providers. The bills may be indicative of Congress’ attitude towards the Meaningful Use program, which has garnered criticism from providers for being burdensome.

On July 21, 2017, the House Committee on Energy and Commerce Subcommittee on Health held a hearing on H.R. 3120 and featured testimony from Cletis Earle, Chairman-Elect of the College of Healthcare Information Management Executives. The bill, sponsored by a group of bipartisan lawmakers, will allow CMS to modify the requirements of the Meaningful Use program in order to give the Secretary additional flexibility in implementing the program. Currently, providers and vendors must comply with the Stage 3 measures and objectives of the Meaningful Use program starting January 1, 2018 or be subject to Medicare reimbursement penalties. Earle argued that the implementation timeline for Stage 3 of the program is too rigorous for providers to meet and may lead to an increase in hardship exemption applications. Provider and vendor groups across the industry have suggested that the HHS Secretary Tom Price delay the Stage 3 obligations, noting that software implementation and cybersecurity issues have made the 2018 deadline unreasonable. Sponsors of H.R. 3120 note that the bill will reduce the burden on providers’ use of EHR systems, allowing providers to focus on care coordination and patient outcomes. In response, CMS noted that the proposed “Medicare Program; CY 2018 Updates to the Quality Payment Program,” which is open for comment through August 21, 2017, would give eligible providers an additional year to implement EHR technology that complies with the 2014 or 2015 edition of Certified Electronic Health Record Technology (“CEHRT”) and offers the opportunity to apply for hardship exemptions for the Advancing Care Information performance category of the Merit-based Incentive Payment System (“MIPS”). For more information, see our update on key proposals of the 2018 Proposed Rule here. Continue Reading Congress Remains Focused on Electronic Health Records