On Nov. 29, 2018, Deputy Attorney General Rod J. Rosenstein announced several amendments to policies on individual accountability set forth in the 2015 Yates Memo. As a result, companies facing FCA actions—especially defendants in health care cases—should consider following three strategy tips:  (1) Establish clear benchmarks for cooperation.  (2) Advocate for individual releases.  And (3) Emphasize that litigation costs outweigh the potential recovery in appropriate cases.

To learn more please read this Bloomberg BNA article written by Partner William S.W. Chang and Associate Spencer Churchill.

 

In its recent notice of proposed rulemaking setting policy for Medicare Advantage (MA) and the Prescription Drug Program (PDP) for calendar year 2020, CMS announced that it would establish extrapolation as a method to be used in risk adjustment validation (RADV) audits, and further, that it would not make any adjustments to account for errors in Medicare fee for service data in determining recovery amounts.

CMS uses a risk adjustment process to modify MA plan payments to better reflect the relative risk of each plan’s enrollees. Payments to each MA plan are adjusted based on risk scores that reflect enrollees’ health status (categorized into Hierarchical Condition Categories (HCCs)) and demographic characteristics derived from member claims data. To counteract incentives that a plan might have to over-report enrollee diagnoses, CMS emphasizes that all diagnoses submitted to enhance risk must be documented in a medical record, and uses RADV audits to ensure that medical record documentation exists, and thus, that payments to MAOs accurately reflect the level of risk assumed. Continue Reading CMS Announces and Solicits Comments on Expanded RADV Audit Methodology

In the most recent technical changes made to Part C and Part D plans for 2019, CMS codified the star ratings methodology in regulations. Now, CMS is proposing changes to these regulations, such as new definitions to clarify the meaning of terminology used in describing the star ratings methodology. In addition, CMS is proposing several changes to improve program quality and accessibility of the Medicare Advantage (MA) and Part D Prescription Drug Program (PDP) Plan Quality Rating for measures other than Consumer Assessment of Healthcare Providers and Systems (CAHPS).

Continue Reading MA/PDP Star Ratings: Proposed Technical Changes for 2020

On November 1, 2018, the Centers for Medicare & Medicaid Services (“CMS”) filed the pre-publication version of the CY 2019 Physician Fee Schedule Final Rule (“2019 PFS Final Rule”). Within this massive publication, CMS finalized two regulatory changes affecting the exceptions at 42 CFR § 411.357 to the Physician Self-Referral Law (also known as the “Stark Law”) for compensation arrangements. The 2019 PFS Final Rule reconciles the regulations with the statutory changes made to the Stark Law enacted by the Bipartisan Budget Act of 2018 (“2018 BBA”) with respect to (1) how arrangements may fulfill the “writing” requirement under the compensation exception and (2) how arrangements that initially proceed without a signed agreement may still meet the signature requirement of an applicable exception. Parties to financial arrangements in effect on or after February 9, 2018 that implicate the Stark Law may rely upon these new modifications.

The Stark Law generally prohibits a physician from making a referral of designated health services (“DHS”) to an entity with which he or she (or an immediate family member) has a financial relationship. Section 411.357 details several excepted compensation arrangements carved out from the “financial relationship” definition for the purposes of the Stark Law. These exceptions include arrangements for the rental of office space and equipment, bona fide employment relationships, group practice arrangements with hospitals, certain fair-market-value compensation arrangements, among others. Continue Reading 2019 Physician Fee Schedule Rule Modifies Stark Regulations to Reflect Statutory Changes

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

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. Continue Reading CMS PROPOSES RULE TO REQUIRE PRESCRIPTION DRUG MANUFACTURERS TO DISCLOSE DRUG PRICES IN TV ADS

On October 3rd, the United States Senate passed a bipartisan opioids package with a sweeping vote of 98 to 1, after the U.S. House of Representatives passed the final version of the bill with a vote of 393 to 8. One of its components, the “Fighting the Opioid Epidemic with Sunshine Act,” expands the scope of reporting requirements under the Physician Payment Sunshine Act (known as the “Sunshine Act”), which will have immense implications for the pharmaceutical and medical device and supply industries.

Enacted at section 6002 of the Affordable Care Act in 2010 to increase transparency around the financial relationships between health care providers and drug manufacturers, the Sunshine Act requires “applicable group purchasing organizations” and “applicable manufacturers,” including pharmaceutical and medical device or supply companies with operations in the United States, to track and report payments and transfers of value that they make to “covered recipients,” currently defined to include physicians and teaching hospitals. These transfers of value include items such as consulting fees, honoraria for speaking events, and research grants.

The opioids legislation package expands the definition of “covered recipients” to include other types of health care professionals: physician assistants, nurse practitioners, clinical nurse specialists, registered nurse anesthetists, and certified nurse midwives. The new legislation additionally sunsets a prohibition in the Sunshine Act that prevents the inclusion of the National Provider Identifier on the CMS Open Payments website.

Given the Administration’s focus on the opioid crisis, identified as a “national emergency,” the expansion of the Sunshine Act reflects the reality that prescriptions of opioids and other drugs to individuals may come from health professionals who are not physicians. State “sunshine laws” that imposed reporting requirements on payments to these professionals have existed for a number of years, but the changes passed in the opioids package would make this standard the baseline for reporting covered payments nationwide. By the time these changes would be effective on January 1, 2022, applicable group purchasing organizations and manufacturers will need to update their Sunshine Act compliance and monitoring activities to account for the greatly enlarged scope of individual health care professionals to whom they may be providing direct or indirect transfers of value.

The expansion of the Sunshine Act’s covered recipient definition was introduced in the Senate version of the opioids package, and remained in the overall legislation despite vigorous opposition. To become law, the bill requires the signature of President Trump.

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

 

The Food and Drug Administration (FDA) has announced several new initiatives that reflect its ongoing commitment to maintain patient safety, while also championing the need and opportunity for health care innovation.

During opening day of Health Datapalooza, FDA Commissioner Scott Gottlieb highlighted the critical import of novel digital health tools in achieving patient-centered care, and outlined how the agency is committed to moving the ball forward in health care innovation through the following initiatives: Continue Reading FDA Advances Flexibility-Based Framework for Digital Health and AI

Despite the Trump Administration’s declaration of a state of emergency on October 26, 2017, the federal response to the opioid crisis largely languished on the back burner—much to the chagrin of states in the trenches of the opioid epidemic. However, based on the flurry of activity over the past several weeks, the federal government response now seems to be gathering substantive momentum, with various agencies and government actors launching attacks on all fronts—administrative, legislative, and enforcement alike. The federal government’s recent efforts present opportunities for health care organizations, life sciences companies, and health tech companies to get involved at the ground level to help influence opioid policy and provide needed products, services, and support to reduce the incidence of opioid abuse and address the health care needs of patients.

Continue Reading The Freight Train Gathers Steam: An Update on the Federal Response to the Opioid Crisis