The Belgian regulatory framework for medical devices is highly complex, and the already dense legal landscape was recently added to by the adoption of two new Belgian royal decrees: the Royal Decree of 25 September 2022 relating to performance studies involving in vitro diagnostic medical devices and the Royal Decree of 13 September 2022 amending and repealing various provisions regarding in vitro diagnostic medical devices.

What impact will these new Royal Decrees have? This alert will first provide you with a structured overview of the existing regulatory framework and then look more specifically at the consequences of these recent updates in the context of in vitro diagnostic medical devices.

The existing regulatory framework for medical devices

At a European level, medical devices are regulated by Regulation (EU) 2017/745 (the Medical Device Regulation), which replaced Directive 93/42/EEC (the Medical Device Directive). Belgian national measures to implement the Medical Device Regulation came into effect on 26 May 2021, and consist of the law of 22 December 2020 on medical devices, accompanied by three royal decrees:

  • The Royal Decree of 12 May 2021, which implements the provisions in the Belgian law of 22 December 2020;
  • The Royal Decree of 18 May 2021, which sets out the provisions regarding clinical trials involving medical devices; and
  • The Royal Decree of 28 April 2021, which aligns previous national rules with the Medical Device Regulation.

The new royal decrees for in vitro diagnostic medical devices

On 26 May 2022, Regulation (EU) 2017/746 (the In Vitro Diagnostic Medical Device Regulation) came into force, replacing Directive 98/79/EC (the In Vitro Diagnostic Medical Device Directive) and introducing major updates to the European regulatory framework for in vitro diagnostic medical devices, including changes to the scope of performance studies or clinical studies involving these devices.

The Belgian legislator transposed the In Vitro Medical Device Regulation by means of a law of 15 June 2022 that came into effect on 1 July 2022. The two newly adopted royal decrees mentioned above relate to this law, and they are important additions to the Belgian legislative landscape:

  • The Royal Decree of 25 September 2022 came into effect on 26 October 2022 and sets out the provisions regarding performance studies with in vitro diagnostic medical devices; and
  • The Royal Decree of 13 September 2022 came into effect on 4 November 2022 and aligns previous national rules with the In Vitro Diagnostic Medical Device Regulation.

The consequences of the recent legal changes

The Royal Decree of 25 September 2022 relating to the performance studies on in vitro diagnostic medical devices

This Royal Decree governs the conduct of performance studies involving in vitro diagnostic medical devices, and includes coordinated assessment procedures for performance studies where Belgium is acting as a coordinating Member State.

Certain studies now need to obtain prior authorization from the Federal Agency for Medicines and Health Products (the FAMHP) and are subject to an ethics committee review. These studies include i) performance studies in which surgically invasive sample-taking is done, ii) interventional studies, (iii) performance studies involving additional invasive procedures or other risks for subjects, and (iv) performance studies involving companion diagnostics, and (v) performance studies that assess in vitro diagnostic medical devices even though this is outside the scope of their intended purpose.

Certain other studies, must be notified to the FAMHP, but do not require prior authorization from the FAMHP and are not subject to ethics committee review. These studies include i) PMPF studies conducted to further assess in vitro diagnostic medical devices that already bear the CE marking and that involve submitting subjects to invasive and burdensome procedures additional to those performed under the normal conditions of the use of such device, and ii) performance studies involving companion diagnostics using only left-over samples.

Unlike the In Vitro Diagnostic Medical Device Regulation, the Belgian Royal Decree establishes a separate regime for performance studies involving in vitro diagnostic medical devices which are manufactured and used exclusively in healthcare facilities. 

The Royal Decree also requires that substantial modifications to any regulated studies be notified to the FAMHP for approval and are subject to ethics committee review. Additionally, the FAHMP in collaboration with the Minister for Social Affairs and Public Health or its representative is granted the discretion to revoke or suspend the study, or to require the sponsor of the performance study to modify any aspect, if any imposed requirements are not being met.

The Royal Decree of 13 September 2022 amending and repealing various provisions regarding in vitro diagnostic medical devices

This Royal Decree aims to repeal and amend various royal decrees relevant in the context of in vitro diagnostic medical devices in order to align the Belgian framework with the European level. Notably, this Royal Decree does not only apply to in vitro diagnostic medical devices but also amends various royal decrees applicable to other types of devices, such as medical devices or implantables.

By way of example, the Royal Decree amends and specifies the tasks of materiovigilance contact points, which currently consist of i) immediately notifying the FAMHP and distributors and/or manufacturers or their agents of any serious incidents, ii) participating in investigations carried out by the FAMHP and in work related to the safety of use of devices, or iii) recording and evaluating any serious incident or risk of serious incident due to a device, according to the procedure published on the FAMHP website (see Article 3 of the Royal Decree of 15 November 2017 on the materiovigilance contact point in hospitals and the registrations of medical device distributors).

The Royal Decree further specifies that economic operators should periodically confirm the accuracy of their device’s data, and the FAMHP will notify any economic operator that fails to do so that its activities could be suspended until this obligation is complied with. Furthermore, the Royal Decree clarifies which information should be submitted to the FAMHP when applying for a derogation from the conformity assessment procedures. If the request is justified, the FAMHP may approve such derogation in the interest of public health or patient safety (see Article 8/1 and Article 9 of the Royal Decree of 12 May 2021 implementing the Law of 22 December 2020 regarding medical devices).

The Belgian legislator will undoubtedly continue to make changes to this already dense and complicated regulatory framework in order to get it aligned with European Union legislation. We will continue to follow these developments and our Crowell & Moring MedTech team is here to answer any questions you may have and to provide you with ongoing updates.

President Biden signs Executive Order directing HHS to “consider additional actions to further drive down prescription drug costs”

On October 14, 2022, President Biden signed an Executive Order (EO) directing the Secretary of the Department of Health and Human Services (HHS) to consider new healthcare payment and delivery models the Center for Medicare & Medicaid Innovation (CMMI), part of the Centers for Medicare & Medicaid Services (CMS) and created by the Affordable Care Act, can test to lower drug costs and promote access to innovative drug therapies for Medicare and Medicaid beneficiaries. The EO specifies the HHS Secretary should include models that may lead to lower cost-sharing for commonly used drugs and support value-based payment initiatives that promote high-quality care. The Secretary must submit its report, describing any models selected, within 90 days of the EO’s issuance.  

Continue Reading White House looks to CMMI to test new ways to lower drug prices

On October 21st, the U.S. Food and Drug Administration (FDA) released a draft guidance that, if finalized, will update the agency’s 2018 guidance on its Breakthrough Devices Program (the “Program”). In the draft guidance, the FDA announced that when reviewing the eligibility of medical devices for the Program, the agency will also consider whether a device will help address health care disparities and promote health equity. In other words, FDA intends to specifically consider whether a device may provide for more effective treatment or diagnosis in populations impacted by health and/or health care disparities when determining eligibility for breakthrough status.

The Breakthrough Devices Program was launched in 2018 to provide patients and health care workers with faster and easier access to medical devices that effectively diagnose and treat life-threatening or irreversibly debilitating diseases or conditions. This program allows the FDA to speed up the development, assessment and review of products all while preserving the statutory standards for premarket approval, 510(k) clearance, and De Novo marketing authorization. If this latest draft guidance is finalized after a period of public comment, the agency will incorporate the proposed language into the 2018 guidance.

To address health disparities, FDA proposes adding new section III.B.3.d to the 2018 guidance in which it acknowledges the urgent public health need for innovative technologies that help to reduce barriers to achieving health equity and help to improve health outcomes across diverse populations. . The new section would acknowledge that “[a]ddressing health and health care disparities is not only important for achieving health equity, but also for improving the overall quality of life and health outcomes for all patients.” It thus proposes to take into account whether a device “is designed to address a pathophysiological or clinical characteristic associated with certain populations that could have a clinically meaningful impact for the treatment or diagnosis of the condition in those populations.” If so, the device may “be considered as reasonably expected to offer a more effective treatment or diagnosis” and thus could be eligible for breakthrough status. FDA asserts that the proposed changes “may expedite the availability of certain devices that meet the statutory designation criteria and benefit populations impacted by health and/or health care disparities, thereby promoting and advancing health equity.”

In addition to the considerations for health care disparities, FDA proposed the following other changes to the 2018 guidance:

  • In the Introduction, certain non-addictive medical products to treat pain or addiction may not be eligible for the Breakthrough Devices program.
  • Section III.B.1 Designation Considerations will have added language stating that the FDA will “review all information on a proposed device including its function, potential for technical success, the potential for clinical success, potential for a clinically meaningful impact, and its potential benefits and risks when evaluating whether a device is reasonably expected to provide for more effective treatment or diagnosis”
  • The last section receiving updates is Section III.C Designation Review Process which will describe when the FDA may publicly disclose designation requests that have been “previously publicly disclosed or acknowledged by the sponsor of the Breakthrough Device designation request” and will publicly disclose its Breakthrough Device designation status for its intended use.

FDA will accept comments on the draft guidance through December 18, 2022.

Crowell & Moring and Crowell Health Solutions hosted a HealthTech roundtable with discussions focused on value-based care, health equity, data privacy, artificial intelligence, and other trends in health care technology in the Washington, D.C. office on October 27. The sessions featured numerous experts from health technology companies, advocacy organizations, and trade associations, all of whom have extensive experience advising on health care policy and business issues. Policy makers, thought leaders, health care innovators, and business executives also joined the conversation.

The first panel discussed the successes and challenges in value-based care, advancing health equity, and operationalizing value-based primary care. Panelists discussed current obstacles that health care organizations face in pursuing value-based care in the current operating environment coupled with the stronger profitability of the traditional fee-for-service model.

“We have seen the health care sector’s movement towards value-based care and the increase in the number of accountable care organizations. It will be interesting to observe the future of value-based care at a time when health care organizations are navigating high inflation and workforce shortages,” said Senior Counsel and Crowell Health Solutions COO and Managing Director Janet Walker, who facilitated the first discussion.

Panelists offered their thoughts on the Centers for Medicare & Medicaid Services (CMS) Innovation Center’s October 2021 Strategy Refresh and opined that the Biden Administration must acknowledge current challenges in its push to promote health equity and multi-payer alignment. They spoke about the importance of addressing health equity and the social determinants of health through value-based care, commented on their organizations’ efforts to treat patients across various population groups, and discussed the role of health care technology innovation in improving coordination of care. In addition, panelists spoke about the vital role that the acute care hospital-at-home program played at the onset of the COVID-19 crisis and the need for CMS to extend waivers for the program that were enacted during the public health emergency.

During the second session led by Partner and Crowell Health Solutions President and Managing Director Jodi Daniel, panelists discussed health data privacy issues as well as telehealth, artificial intelligence (AI) and machine learning, and other health technology innovations. “Understanding the challenges, opportunities, and pitfalls regarding data privacy is important. Technology innovation relies on access to data. We must address the patchwork of state laws around data privacy in the United States,” said Jodi Daniel.

Panelists emphasized the need for a more comprehensive data privacy statute at the federal level and discussed the provisions proposed in the American Data Privacy and Protection Act (H.R.8152), which would establish a national data privacy framework. They discussed how the bill would impact the health care industry and interact with the Health Insurance Portability and Accountability Act of 1996 (HIPAA). Panelists stated that there needs to be additional data privacy guidance, especially with respect to data not covered by HIPAA, following the release of the Supreme Court’s decision in Dobbs v. Jackson Women’s Health Organization.

Additionally, panelists stated that federal statute is needed in order for certainty to develop health innovation and spoke about using AI to bridge gaps in health equity and using data that is representative of the entire population. They also discussed the potential for substantial cost savings by reducing diagnostic error through AI and machine learning innovation. 

The Crowell HealthTech Forum was co-organized by Crowell & Moring and Crowell Health Solutions, which is a strategic consulting firm focused on helping clients to pursue and deliver innovative alternatives to the traditional approaches of providing and paying for health care, including through digital health, health equity, and value-based health care. 

On September 28, 2022, the Food and Drug Administration (FDA) issued Clinical Decision Support Software final guidance. The guidance clarifies the agency’s scope of oversight and regulation of clinical decision support software based on the definition of a device in the Federal Food, Drug, and Cosmetic Act (FD&C Act). It also describes the criteria used to assess whether software functions do not meet the definition of a device.

Clarifying Types of Clinical Decision Support Software

Clinical decision support software (CDS), such as software that is designed to provide diagnostic support, clinical guidelines, and alerts to health care professionals and patients, may be categorized as a regulated device, under the FD&C Act, section 201(h).

However, the 21st Century Cures Act carved out an exception for software that does not meet the definition of “device” and is therefore outside FDA’s regulatory authority.  The new guidance describes FDA’s regulatory approach to CDS software functions and clarifies when CDS software functions do not meet the definition of a device under the FD&C Act, section 520(o)(1)(E) by reviewing the four non-device criteria. Also, the FDA advises that its existing digital health policies, including guidance regarding enforcement discretion, continue to apply to those clinical decision support software functions that do meet the definition of a device.

The final guidance not only responds to comments received from the 2019 publication of the FDA’s Draft Guidance on Clinical Decision Support Software (found here), but also narrows its scope to focus largely on the CDS software functions that do not meet the FD&C Act’s definition of a device. While the 2019 draft guidance discussed such non-device CDS software, it also: (1) explained the FDA’s approach to software that may technically meet the definition of a device but may not require FDA oversight because of the risk analysis outlined in the International Medical Device Regulators Forum (IMDRF) final document; (2) included an explanation of software that does meet the device definition and will likely be the subject of oversight, whether it is CDS or not; and (3) broadly considered health care professionals (HCPs), patients, and caregivers, in contrast to the final guidance, which focuses largely on software used by HCPs.

Defining Non-Device Clinical Decision Support Software

The FDA explains that if CDS software meets all of the following criteria under section 520(o)(1)(E) of the FD&C Act, it is excluded from the definition of a device and is therefore not regulated as a device by the FDA:

  1. It is not intended to acquire, process, or analyze a medical image or a signal from an in vitro diagnostic device or a pattern or signal from a signal acquisition system;
  2. It is intended for the purpose of displaying, analyzing, or printing medical information about a patient or other medical information (such as peer-reviewed clinical studies and clinical practice guidelines);
  3. It is intended for the purpose of supporting or providing recommendations to a health care professional about prevention, diagnosis, or treatment of a disease or condition; and
  4. It is intended for the purpose of enabling such health care professional to independently review the basis for such recommendations that such software presents so that it is not the intent that such health care professional rely primarily on any of such recommendations to make a clinical diagnosis or treatment decision regarding an individual patient.

The FDA interprets each of the four non-device criteria in detail and shares multiple examples for clarification.

Criterion 1

First, for criterion 1, the FDA explains that if software functions use input data such as medical images or signals from in vitro diagnostic devices (IVDs) or patterns or signals from signal acquisition systems, such products continue to be regulated as devices.

  • Medical images include images produced by medical imaging systems such as ultrasounds, x-rays, and more. The definition covers software functions that ultimately use medical images for medical purposes even if the images were not originally intended for such purposes.
  • Signals that either require the use of an IVD or signal acquisition system for medical purposes are also included in the device definition. Examples include electrocardiogram (ECG) leads used with software to generate signals, specimen samples studied using software such as digital pathology, and more.   
  • Patterns include multiple, sequential, or repeated measurements of a signal. For example, assays and instruments that produce signals for continuous glucose monitors (CGMs) generate patterns in the form of repeated glucose measurements.

Importantly, software functions that interpret the clinical relevance of medical images, signals, or patterns do not satisfy criterion 1 because they still acquire, process, and analyze the same input data described above. Thus, they are within the definition of device according to the FDA. However, some activity monitors or other signal acquisition systems that measure physiological parameters are not specifically intended or marketed for a purpose identified in the device definition (i.e., for use in the diagnosis of disease or other conditions, or in the cure, mitigation, treatment, or prevention of disease) and are not medical devices.

Criterion 2

Next, the FDA interprets criterion 2 as excluding software functions from the definition of device if they are intended to use medical information, such as patient medical information, peer-reviewed clinical studies, and clinical practice guidelines, as input data, as long as the software also meets the other three criteria described here.

  • Medical information about the patient includes information used to inform clinical decision making between HCPs or between HCPs and patients.
  • Other medical information means information that is “independently verified and validated as accurate, reliable, not omitting material information, and supported by evidence.”

Notably, for the FDA, the distinction between a device and a non-device may come down to the frequency of any given measurement. As the FDA clarifies, one blood glucose lab test is considered medical information under criterion 2, while repeated measures from a continuous glucose monitor constitute a pattern or signal under criterion 1.

Criterion 3

Criterion 3 excludes software from the device definition if it provides patient-specific recommendations to be interpreted by an HCP without explicitly directing the professional’s judgment. Examples of software functions that are intended to support or provide recommendations to an HCP about the “prevention, diagnosis, or treatment of a disease or condition,” include drug formulary guidelines, evidence-based clinical order sets for an HCP, clinical guidelines, reminders for preventative care, and patient data reports such as discharge papers.

The FDA uses two key characteristics to assess whether software is truly used to support an HCP: (1) the level of software automation, and (2) the time-sensitive nature of the HCP’s decision making. High levels of these two characteristics suggest that the software is more likely to replace the HCP’s judgment instead of supporting it, possibly making the HCP more susceptible to automation bias. Specifically, criterion 3 includes software that:

  1. Provides condition-, disease-, and/or patient-specific information and options to an HCP to enhance, inform and/or influence a health care decision;
  2. Does not provide a specific preventive, diagnostic, or treatment output or directive;
  3. Is not intended to support time-critical decision-making; and
  4. Is not intended to replace or direct the HCP’s judgment.

The specificity of information provided by the software, such as the provision of a specific treatment course, plays a critical role in the FDA’s assessment of criterion 3. The more specific the software’s output is, the more likely the FDA will find that it replaces rather than supports the HCP’s decision making. Software that provides risk probability of a health condition is also interpreted as providing too specific an output and fails criterion 3. Additionally, software that provides recommendations to patients and caregivers instead of health care professionals is also classified as a device.

Criterion 4

Finally, in order to meet criterion 4, the software must enable the HCP to independently review the basis of its recommendations. The FDA advises that overall, the software product or its labeling should provide the basis for its findings in plain language so that the HCP may independently evaluate the basis of recommendations. Also, similar analysis of time sensitivity in decision making used in criterion 3 applies to criterion 4.

More specifically, the FDA recommends taking the following measures to meet the fourth criterion:

  1. The software or labeling include the purpose or intended use of the product, including the intended HCP user and intended patient population.
  2. The software or labeling identify the required input medical information, with plain language instructions on how the inputs should be obtained, their relevance, and data quality requirements.
  3. The software or labeling provide a plain language description of the underlying algorithm development and validation that forms the basis for the CDS implementation, including:
    • A summary of the logic or methods relied upon to provide the recommendations (e.g., meta-analysis of clinical studies, expert panel, statistical modeling, AI/ML techniques);
    • A description of the data relied upon so that an HCP can assess whether the data is representative of their patient population (e.g., relevant sub-groups, disease conditions, collection sites, sex, gender, ethnicity) and assess if best practices were followed (e.g., independent development and validation datasets); and
    • A description of the results from clinical studies conducted to validate the algorithm/recommendations so that an HCP can assess the potential performance and limitations when applied to their patients (e.g., sub-populations with untested or highly variable algorithm performance).
  4. The software output provides the HCP user with relevant patient-specific information and other knowns/unknowns for consideration (e.g., missing, corrupted, or unexpected input data values) that will enable the HCP to independently review the basis for the recommendations and apply their judgment when making the final decision.

Takeaways

The FDA’s longstanding oversight of software that meets the definition of a device continues to apply to a subset of clinical decision support software. However, the final issued guidance clarifies the FDA’s interpretation of statutory criteria used to determine that a software function does not meet the definition of a device. The guidance extensively describes the FDA’s interpretative approach, contains a number of factors and considerations that will contribute to a determination as to whether CDS software is a device subject to FDA oversight or not, and contains numerous examples of device and non-device CDS based on the section 520(o)(1)(E)(iii) criteria.

In addition to regulatory engagement and compliance, there are other practical, business, and legal implications of designing, selling, and using CDS software. For example,

  • Will CDS software designers, sellers and users become targets of traditional product liability litigation?
  • If so, will courts will permit these products and their designers, sellers, and / or users to be subject to states’ traditional strict products liability regimes and associated defenses?
  • Can entities in the supply chain for CDS software use contractual provisions such as indemnification to plan for the allocation of liability before a lawsuit is filed? 

As entities are considering this complex regulatory positioning and other relevant guidance regarding FDA oversight and enforcement discretion related to CDS and other software, we are available to advise on how FDA may view a particular product and the steps needed for compliance. We are also following the developing landscape for liability and litigation related to CDS software, and are available to advise entities on how to navigate these issues.

On July 29, 2022, the Centers for Medicare & Medicaid Services (CMS) issued a final rule that updates Medicare payment policies and rates for skilled nursing facilities (SNFs) and enacts changes to the SNF Quality Reporting Program and the SNF Value-Based Purchasing Program beginning in FY 2023.

SNF Payment Rates and PDPM Adjustments

Nursing homes will receive a net increase of 2.7%, or $904 million, in Medicare Part A payments in FY 2023 as compared to FY 2022. Interestingly, this increase stands in direct contrast to the recommendation of the Medicare Payment Advisory Commission to reduce the Medicare base payment rates for SNFs by 5%. Moreover, CMS itself had initially proposed a decrease of $320 million in aggregate Medicare Part A payments to SNFs during FY 2023, although the decrease was partially as a means to offset the unintended increase in payments of approximately $1.7 billion per year that resulted from the implementation of the Patient Driven Payment Model (PDPM).

The PDPM was introduced in late 2019 as a new model by which to classify SNF patients under the SNF Prospective Payment System. The purpose of the PDPM was to eliminate certain incentives associated with classifying patients under the prior case-mix classification model, Resource Utilization Group, Version 4 (RUG-IV), in order to increase reimbursements, as well as to improve the overall accuracy and appropriateness of SNF payments. PDPM classifies patients into payment groups based on specific, data-driven patient characteristics. The implementation of the PDPM was intended to be “budget neutral,” however, as mentioned, ultimately resulted in an unintended increase in payments. In order to offset these unintended payments, CMS plans to recalibrate the PDPM parity adjustment gradually over the next two years.

Permanent Cap on Wage Index Decrease

In efforts to mitigate year-to-year instability in providers’ wage indexes, CMS finalized a permanent 5% cap on annual wage index decreases in future years, the result of which will be that geographic area’s wage index would not be less than 95% of its wage index calculated in the prior FY regardless of the circumstances causing the decline. Notably, in the past, CMS has implemented only temporary policies to offset significant changes to payments due to changes to the wage index. The application of a permanent cap is an important step as year over year changes to the wage index often create instability and negatively impact providers. Moreover, such changes are often unpredictable, and as CMS explained in the proposed rule, the importance to payers of maintaining predictability in Medicare payments is obvious. CMS’ implementation of a permanent 5% cap on annual wage index decreases is intended to not only increase the predictability of SNF PPS payments for providers, but also mitigate negative side effects to providers resulting from reductions to the wage index.

Skilled Nursing Facility Quality Reporting Program 

The final rule also provides for a new process measure for the SNF Quality Reporting Program (QRP)—the Influenza Vaccination Coverage among Healthcare Personnel measure. As the name suggests, the new measure assesses the rate of influenza vaccination coverage among health care personnel in SNFs beginning with the FY 2024 SNF QRP. Notably, influenza vaccination coverage among health care personnel is typically lower in long-term care settings, such as SNFs, when compared to other care settings. As CMS explained, residents of long-term care facilities often have greater susceptibility to influenza due to general frailty and comorbidities, close contact with other residents, interactions with visitors, and exposure to staff who rotate between multiple facilities. Therefore, through this new measure, CMS emphasizes the importance of monitoring and reporting influenza vaccination rates among health care personnel in SNFs.

Suppression of Readmission Measure for Skilled Nursing Facility Value-Based Purchasing Program

The SNF value-based purchasing (VBP) program rewards nursing facilities with incentive payments based on the quality of care they provide to Medicare beneficiaries, as measured by performance on a single measure of hospital readmissions—the Skilled Nursing Facility 30-Day All-Cause Readmission Measure (SNFRM).

In a prior rule, CMS adopted a policy for the duration of the COVID-19 public health emergency that enables it to suppress the use of the SNFRM for purposes of scoring and payment adjustments in the SNF VBP Program if CMS determines that circumstances caused by COVID-19 have affected the measure and the resulting performance scores significantly. And, CMS applied this policy for FY 2023. Citing concerns of the effect of the COVID-19 pandemic on CMS’ ability to accurately assess performance on the SNFRM, the current final rule provides that facility readmission measures will not be included as part of the performance scoring for FY 2023. CMS explained that the pandemic has had “direct, significant, and continuing effects” on its ability to measure the performance of skilled nursing facilities on the SNFRM, and thus on its ability to use the SNFRM to calculate payments for the FY 2023 program year. Specifically, the validity of such data is compromised by the combination of significant variation in COVID-19 case rates across the U.S, changes in hospitalization patterns in FY 2021, and fewer admissions to SNFs. CMS advised that performance on this measure will still be reported publicly, it just will not affect payment, in FY 2023.

In addition to suppressing the SNFRM for the FY 2023 SNF VBP Program for the purpose of scoring and payment adjustments, CMS will implement special scoring procedures for FY 2023 and adopted additional performance measures.

Staffing Levels

Earlier this year, CMS sought public feedback on its proposal to require minimum staffing levels in nursing homes and to potentially tie certain payments to the level of staff turnover, which CMS notes has been linked to patient quality of care. While the final rule does not address this issue, CMS advised that it will propose rulemaking on this issue next year, after further studying “the level and type of staffing needed to ensure safe and quality care.”

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If you have any questions about the impact of the above, please reach out to the below.

On July 13, 2022, the U.S. Department of Health and Human Services (“HHS”) Office for Civil Rights (“OCR”) issued guidance to the nation’s retail pharmacies about their nondiscrimination obligations to ensure access to reproductive health care services, including medications used to terminate pregnancies. As we previously discussed, the Biden Administration and OCR have been taking action as some states seek to restrict or criminalize abortion services in response to the Supreme Court’s decision in Dobbs v. Jackson Women’s Health Organization.  

Continue Reading OCR Issues Anti-Discrimination Guidance for Pharmacies Related to Reproductive Health Care Services

The Biden Administration is taking action to support access to reproductive health care in response to the Supreme Court’s decision in Dobbs v. Jackson Women’s Health Organization. This is occurring as some states seek to restrict or criminalize abortion services. So far, there has been action by the White House, through an Executive Order, and by the U.S. Department of Health and Human Services (HHS), through guidance on HIPAA and privacy. 

Continue Reading Biden Acts to Protect Reproductive Health Care Services: Executive Order and Privacy Guidance

Last week, the Centers for Medicare & Medicaid Services (CMS) released data—for the first time—reporting on mergers, acquisitions, consolidations, and changes of ownership of Medicare enrolled hospitals and nursing homes over the past six years. This data, expected to be updated on a quarterly basis moving forward, has been lauded as an important step in improving transparency around nursing facility ownership and enhancing nursing home safety and quality of care. In conjunction with the release of CMS’ data, HHS’s Office of the Assistant Secretary for Planning and Evaluation (ASPE) released a related report analyzing the data and examining trends in changes of ownership over the past six years. In its report, ASPE also offers preliminary insights into how the data on ownership changes can support implementing policies bolstering competition in health care as well as ensuring program integrity in Medicare and Medicaid.

Continue Reading Changing Hands, Not Washing Them: CMS’ First Report on Nursing Home M&A Data

The final rule implementing “Contract Year 2023 Policy and Technical Changes to the Medicare Advantage and Medicare Prescription Drug Benefit Programs” is now available for review, and set for publication in the May 9, 2022 Federal Register.   The final rule adopts the proposed change that requires initial and service area expansion applicants to submit their proposed contracted networks during the application process.  The final rule delays this change from contract year 2023 to contract year 2024.

In making this change, CMS is basically reverting to its process prior to 2019, when it began allowing plans to attest to network adequacy for new contract or service area expansion applications, and relied on its triennial network review process to evaluate compliance with network adequacy standards for new and expanded contracts.

CMS expressed concern based on three years of experience that the attestation-only process could affect the integrity of the bidding process.  It specifically noted that a number of plans have requested to reduce the service area identified in their bid proposal once they realized that they did not have a sufficient network for one or more counties included in the service area.  The number identified as seeking such changes is small: since 2019, five organizations requested to make changes to the service area of a total of 10 plans after bid submission deadlines.  However, in CMS’ view, when a plan has to revise its bid to remove a county, it is likely that the initial bid submission was not complete, timely, or accurate.

CMS also noted that its post-application network adequacy reviews showed a pattern of organizations continuing to have inadequate networks even after their contract became operational.  CMS found a total of 19 plans that fell into this category.

The original issue that prompted the change in 2019 has not gone away, which is the potential challenge of applicants securing a full provider network almost a year in advance of the contract becoming operational.  The application is typically submitted in February – around 10 months prior to the contract year that begins on January 1.  CMS received many comments about the difficulty of obtaining final contracts in time for the application process, especially in underserved areas or those with relatively few providers.

CMS acknowledged the validity of plan comments, and did not fully explain why it decided to change the application process for all plans, rather than using its authority to take measures against the small number of plans that have demonstrated a problem with network adequacy compliance – such as disapproving a request for a new contract or service area expansion for a plan that seeks to change its service area after bid submission, or suspending enrollment until an operational plan comes into compliance with network adequacy standards.   Instead, CMS will provide two types of fairly limited flexibility for organizations to mitigate the impact of the change:

  1. CMS will allow a 10-percentage point credit towards the percentage of beneficiaries residing within published time and distance standards for the contracted network in the pending service area, at the time of application and for the duration of the application review.
  2. CMS will allow plans to use letters of intent (LOIs) in lieu of signed provider contracts, at the time of application and for the duration of the application review. The LOI must be signed by both the MA organization and the provider.  Applicants must notify CMS of their use of LOIs to meet network standards.

At the beginning of the contract year (that is, January 1), this flexibility would no longer apply, and plans would need to meet network adequacy standards for the entire service area with final, signed provider and facility contracts.