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.

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.”)

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:

  1. Multi-Function Device Draft Guidance. FDA’s new draft guidance, “Multiple Function Device Products: Policy and Considerations,” explains the FDA’s regulatory approach to multi-function digital health devices—where some functionalities fall under the FDA’s definition of a medical device, and other functionalities do not. The guidance, mandated by the 21st Century Cures Act, provides examples in which the FDA will review certain functional software capabilities in a medical device. Consistent with previous guidance and risk-based frameworks from the FDA, the agency’s enforcement focus will be on medical device functions that diagnose and treat patients. For example, data analysis will be considered a device function for which the FDA would enforce compliance, but data tracking and trending will not.
  2. Software Precertification Pilot Program Expansion and “Pre-Cert 1.0” Roll-Out. Gottlieb outlined three updates to the Software Pre-Cert Pilot Program, originally announced last Fall. The FDA will hold a “user session” on May 10, 2018 to discuss the agency’s general progress on the pilot program, and to conduct an in-depth discussion of the three updates:
    • Draft Working Model – An initial framework and vision which outlines the program’s key components: Excellence Appraisal and Determining Precertification Level, Review Pathway Determination, Streamlined Premarket Review Process, and Monitoring Real-world Performance.
    • Challenge Questions – Key questions about various components of the Pre-Cert program for stakeholders to consider with regard to the areas outlined in the Draft Working Model.
    • Roadmap – An overview of the program’s milestones and timeline toward launching the first version of the program (“PreCert 1.0”).
  3. Expansion of Digital Health Tools for Drug Development. The FDA announced its intention to establish clear policies for integrating the review and validation of digital health tools into drug development programs. The FDA will publish a policy framework, through new guidance, and seek public input on the best practices to incorporate software intended for use with prescription drugs.
  4. Precertification Approach to Artificial Intelligence (AI). Gottlieb recognized the novel role that AI and machine learning can have on the medical device submission process (obviating the need to make multiple submissions) and new software validation tools. Gottlieb also discussed “employing the Pre-Cert approach to AI.” This suggests the FDA’s interest in a more effective approach to regulation of medical devices that use AI. This announcement expands upon the FDA’s brief mention of regulatory oversight of devices using “proprietary algorithms,” included in December’s Draft Clinical Decision Support and Patient Decision Support Guidance. (See our prior blog post analyzing the guidance.)
  5. Premarket Digital Safety Program Launch. Gottlieb announced the creation of a Premarket Digital Safety Program, which would allow for electronic submissions of premarket safety reports for an Investigational New Drug Application.
  6. Information Exchange and Data Transformation Incubator. Gottlieb announced the agency’s new digital health/technology incubator, to be known as the Information Exchange and Data Transformation (INFORMED). The incubator will initially be launched in the cancer context, with fellowship collaborations between the FDA and the National Cancer Institute, as well as with Harvard on AI and machine learning. Crowell & Moring’s Digital Health team is ready to assist with the submission of industry input, as well as strategic counseling on these issues.

The various initiatives, guidance, and calls for industry input reflect the FDA’s quest to be flexible in the face of digital health opportunity and innovation. Not only will the FDA’s newest initiatives support its quest to advance safe, patient-centered care, but these initiatives will provide the regulatory predictability critical to encouraging business investment in innovative technologies and products.

Crowell & Moring’s Digital Health team is ready to assist with the submission of industry input, as well as strategic counseling on these issues.

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

Building on momentum from Administrator Seema Verma’s announcement of the MyHealtheData initiative at HIMSS 2018, CMS has published more clues as to future action to liberate health information for patients.

In the CY 2019 call letter to Medicare Advantage organizations and Part D programs, CMS describes the Blue Button 2.0 project and its use of the interoperable application programming interface (API) standard Fast Healthcare Interoperability Resources (FHIR). CMS encourages Medicare Advantage plans to adopt “data release platforms” that either meet or exceed the capabilities of Blue Button 2.0, and makes it clear that the agency intends to pursue rulemaking requiring such adoption for 2020.

The FHIR standard is also discussed, although not required, in the 2015 Edition Health IT Certification Criteria for API access, regulations promulgated by the Office of the National Coordinator for Health IT (ONC) that set the rules for functionality and interoperability of electronic health record systems. It seems likely that ONC further promote FHIR for API-based patient access in their upcoming rulemaking updating the certification program, expected this summer.

This move from CMS arrives alongside increased Congressional interest in patient access to information about the cost of healthcare services. This includes a recent Senate price transparency initiative led by Senator Bill Cassidy. Almost 1000 pages of feedback have already been received by Senate staffers, describing why and how payers and providers can make healthcare price and cost information more accessible for individual patients.

Health plans that wish to get ahead of the future regulatory action can check out the developer resources for Blue Button 2.0 to see how CMS envisions API access working for payer data. Plans can also participate in an ongoing ONC Tech Lab project to learn more about on how these standard resources can be used for health plan-specific information and influence standards development.