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Software Update: The Latest on FDA’s Pre-Cert Pilot
July 22, 2019 | Blog
Regular readers of this blog know that we’re closely following the FDA’s proposed regulatory framework for software as a medical device (SaMD), known as precertification—Pre-Cert for short. Generally, Pre-Cert involves a premarket evaluation of a software developer’s culture of quality and organizational excellence and continual, real-time postmarket analyses to assure software meets the statutory standard of reasonable assurance of safety and effectiveness.
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CMS Proposes Changes to the Home Health Agency Prospective Payment System
July 19, 2019 | Blog | By Daryl Berke
On July 11, 2019, the Centers for Medicare and Medicaid Services (CMS) issued its Home Health Prospective Payment System proposed rule for 2020. The proposed rule implements a previously finalized reimbursement methodology for Home Health Agencies (HHAs) called the Patient-Driven Groupings Model (PDGM). The proposal reflects CMS’s continued efforts to shift towards value-based payment models in the Medicare program.
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ML Strategies Health Care Preview: House to Vote on Cadillac Tax
July 15, 2019 | Blog
This week, the House is set to vote on repeal of the Cadillac tax, which is a forty-percent tax on high-cost health plans established by the Affordable Care Act. While its prospects for passage in the Senate are not entirely clear, passage out of the House clears an important hurdle. In other news, we are continuing to monitor the evolving drug pricing debate which is still expected to ramp up in the coming weeks with action from the Administration and Senate.
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Trump Administration Withdraws Proposed Rebate Rule
July 11, 2019 | Blog | By Theresa Carnegie
In an unexpected turn of events, the Trump administration has apparently reversed course and has withdrawn the proposed rule that would have amended the discount safe harbor under the Anti-Kickback Statute to eliminate protections for certain drug rebates paid by pharmaceutical manufacturers. “Based on careful analysis and thorough consideration, the president has decided to withdraw the rebate rule. The Trump administration is encouraged by continuing bipartisan conversations about legislation to reduce outrageous drug costs imposed on the American people, and President Trump will consider using any and all tools to ensure that prescription drug costs will continue to decline," White House Deputy Press Secretary Judd Deere said in a statement.
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OCR Releases New HIPAA FAQs on Care Coordination by Health Plans
July 11, 2019 | Blog
On June 26, 2019, the Office of Civil Rights (OCR) within the U.S. Department of Health and Human Services (HHS) released Frequently Asked Questions (FAQs) on how HIPAA allows health plans to share protected health information (PHI). The FAQs pose two questions: (1) whether HIPAA permits one health plan to share PHI about individuals in common with a second health plan for care coordination purposes; and (2) whether HIPAA permits health plans to use and disclose PHI to inform individuals about other health plans that it offers, without the individuals’ authorization, if the health plan received the PHI for a different purpose. The former answer is an affirmative “yes,” and the latter is a qualified answer of “yes, in certain circumstances.”
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Third Circuit Dismisses FCA Case Under Pre-ACA Version of Public Disclosure Bar
July 10, 2019 | Blog | By Jane Haviland
The Third Circuit Court of Appeals recently dismissed a relator’s False Claims Act (“FCA”) case under the pre-Affordable Care Act (“ACA”) version of the public disclosure bar. The court decided in U.S. ex rel. Denis v. Medco that to escape the FCA’s public disclosure bar by qualifying as an “original source” under the pre-ACA version of the FCA, a relator must have first-hand, non-derivative knowledge of conduct giving rise to the FCA claim.
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Agencies Issue Final Regulations Expanding Access to Health Reimbursement Arrangements
July 10, 2019 | Blog
On June 13, 2019, the Department of Health and Human Services (HHS), the Department of Labor (DOL), the Department of the Treasury (Treasury Department) and the Internal Revenue Service (IRS) (collectively, the “Departments”) issued a coordinated set of final regulations (“final rules”). Entitled, “Health Reimbursement Arrangements and Other Account-Based Group Health Plans,” the final rules expand employers’ ability to offer health reimbursement arrangements (HRAs) to their employees to be used in conjunction with individual market coverage and recognize a new type of excepted benefit HRA that allows employees to pay for HIPAA excepted benefits and short-term coverage. This post summarizes the final rules.
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Federal Judge Strikes Down HHS Drug Pricing Disclosure Rule
July 9, 2019 | Blog
In follow-up to our previous post, the pharmaceutical industry gained a win on July 8th when a federal judge struck down the Trump administration’s rule that would have required drugmakers to include list prices for drugs in TV ads.
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ML Strategies Health Care Preview: ACA Oral Arguments to Begin
July 8, 2019 | Blog | By Alexander Hecht
This week, the Affordable Care Act (ACA) is back in the news with oral arguments set to begin before the U.S. Court of Appeals for the Fifth Circuit. The court will decide whether to uphold a federal district court's ruling that struck down the ACA. This case has the potential to reshape the political landscape in 2020 if it reaches the Supreme Court. On Capitol Hill, policymakers are working hard to bring forth a drug pricing package before the August recess. They will also have to balance the Administration's efforts, which is expected to issue an executive order this month on lowering drug costs. We cover this and more in this week's preview.
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Recent Executive Order Makes the Road to Increased Healthcare Transparency Unclear
July 2, 2019 | Blog | By Cassandra Paolillo
Last week, President Trump signed an “Executive Order on Improving Price and Quality Transparency in American Healthcare to Put Patients First.” The order, which “seeks to enhance the ability of patients to choose the healthcare that is best for them,” includes a number of provisions requiring the Departments of Health and Human Services, Labor, Treasury and others to pass regulations to increase transparency for patients. The following is a summary of the executive order and a brief overview of what providers and others in the healthcare industry can anticipate going forward.
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Divided Supreme Court Cuts Back Doctrine of Judicial Auer Deference to Agency Interpretations of Its Own Ambiguous Rules
July 2, 2019 | Blog | By Jane Haviland
On June 26, 2019, a divided Supreme Court in Kisor v. Wilkie issued one of its most important administrative law decisions in decades. The Supreme Court decided to uphold, but dramatically narrow, the doctrine of judicial deference to agency regulations, known as Auer deference, but at the same time unanimously found for petitioner James Kisor in overturning the Federal Circuit’s affirmance of the Board of Veteran’s Appeals decision to deny part of his claim for Vietnam War disability benefits. We discuss below the majority and minority opinions on Auer deference, the narrow unanimous holding of reversal, and the importance of this decision.
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Pharmaceutical Companies Object to HHS Drug Pricing Disclosure Rule
July 1, 2019 | Blog | By Joanne Hawana
Several parties from the pharmaceutical industry have teamed up with an advertising association to file a lawsuit against the Department of Health and Human Services (HHS) to prevent a new drug pricing disclosure rule from going into effect. The legal challenge was filed on June 14, 2019 and takes issue with a final rule adopted by HHS on May 8, 2019 (which we previously blogged about here) that purports to provide consumers with information regarding the price of prescription drugs. However, opponents to the HHS rule counter that the opposite will occur and that it will actually mislead patients about the price of prescription drugs. This point may not be difficult for the plaintiffs to demonstrate in support of their request for a declaratory judgment that the rule is unlawful, since even HHS has admitted in the final rule preamble that the new requirement may “discourage patients from using beneficial medications, reduce access, and potentially increase total cost of care.”
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Insys Bankruptcy Filing Immediately After Global Settlement Triggers Powerful Remedies
June 25, 2019 | Blog | By Samantha Kingsbury, Laurence Freedman
Over the last two years, much of the healthcare world has been watching the government’s prosecution of Insys Therapeutics for its sales and marketing practices related to its Subsys spray. Subsys is powerful and highly addictive fentanyl spray (administered under the tongue) that was approved by the FDA in 2012 for the treatment of persistent breakthrough pain in adult cancer patients who were already receiving, and tolerant to, regular opioid therapy. On June 5, 2019, DOJ announced a global resolution with Insys, including criminal pleas, a Deferred Prosecution Agreement (DPA), a civil settlement agreement, and a Corporate Integrity Agreement (CIA). Then, on June 10, 2019, Insys filed for bankruptcy protection, which triggered DOJ and HHS’s ability to upend these agreements and impose powerful criminal, civil, and exclusion remedies against Insys. While much of the coverage of this case over the last few years has focused on the high-profile prosecution and conviction of company executives (including Insys’s founder) and other employees who were accused of paying kickbacks to prescribers in exchange for increased prescriptions and increased doses of Subsys, the resolution of this case on the corporate side has proven to be equally fascinating.
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OIG Report Finds a Small Percentage of Hospitals Do Not Obtain Compounded Drugs from FDA-Registered Outsourcing Facilities
June 17, 2019 | Blog | By Joanne Hawana
On June 6, 2019, the U.S. Department of Health and Human Services’ Office of Inspector General (OIG) issued a report that found among a sample U.S. hospitals that obtained non-patient-specific (NPS) compounded drugs from outside compounders, 89% of hospitals obtained them only from compounders that were registered with the U.S. Food and Drug Administration (FDA) as outsourcing facilities. The OIG study was conducted to provide the FDA with insights to improve its oversight of compounders and enhance patient safety. According to the study, “factors associated with quality, including registration with FDA as an outsourcing facility, are among the most important factors considered when hospitals decide where to obtain their non-patient-specific compounded drugs.” Although use of compounded drugs is widespread in hospitals, the OIG also found that it is rare for hospitals to consider registering their own pharmacies as outsourcing facilities.
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Heritage Pharmaceuticals Admits to Generic Drug Price Fixing Scheme
June 13, 2019 | Blog | By Farrah Short
In the latest development in the Department of Justice (DOJ) Antitrust Division’s ongoing investigation into the generic pharmaceutical industry, Heritage Pharmaceuticals, Inc. has entered into a deferred prosecution agreement (DPA) with DOJ. The terms of the DPA require Heritage to pay a $225,000 criminal penalty and provide full cooperation with the ongoing investigation. The one-count felony charge, filed in the Eastern District of Pennsylvania on May 30, alleges that Heritage violated Section 1 of the Sherman Act by conspiring with multiple unnamed parties to divide up the domestic market and fix prices for glyburide, a diabetes medication, from April 2014 through December 2015. According to DOJ, the DPA provides that the United States will not prosecute Heritage for three years.
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HIPAA Updates: New Guidance for Business Associates and Continued Data Breaches
June 10, 2019 | Blog
The HHS Office for Civil Rights (OCR) released a new guidance document regarding which HIPAA violations business associates (BAs) can and cannot be held directly liable for. In the guidance, OCR states that BAs can be held directly liable for a list of 10 violations but notes that certain other violations, like the reasonable cost requirement for a patient’s access to their PHI, cannot be enforced directly by OCR against a BA. The covered entity (CE) is still on the hook for violations of this type, however, so CEs should carefully review their BAAs to ensure that it covers requirements that don’t directly apply to BAs but are still enforceable against CEs. Large data breaches also continue to dominate the press.
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OIG Issues Fraud Alert Regarding Fraudulent Genetic Testing Schemes
June 5, 2019 | Blog | By Karen Lovitch
Earlier this week the OIG took the somewhat unusual step of issuing a fraud alert directed to Medicare beneficiaries (rather than to Medicare providers) regarding “fraud schemes” that involve genetic testing. According to the OIG, beneficiaries are being offered genetic tests in order to obtain their Medicare information, which is then used to commit identity theft or to submit fraudulent claims to Medicare. Beneficiaries are being targeted through telemarketing calls, booths at public events, health fairs, and door-to-door visits.
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EMR Company Suffers Double Whammy After HIPAA Breach
June 5, 2019 | Blog
Medical Informatics Engineering, Inc. (Medical Informatics) and its wholly-owned subsidiary, NoMoreClipboard, LLC, an electronic medical record and software services provider is now liable for a combined total of $1 million to both the federal and state governments after hackers accessed approximately 3.5 million patients’ health records in 2015. The breach, reported to OCR on July 23, 2015, occurred through a compromised user ID and password. Compromised patient information included social security numbers, names, email addresses, health insurance policy information, addresses, dates of birth, and clinical information.
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Azar v. Allina: Supreme Court Decides Important Case on When CMS Must Use Formal Rulemaking when Instructing Medicare Contractors
June 4, 2019 | Blog | By Laurence Freedman, Daryl Berke
On June 3, 2019, the U.S. Supreme Court issued a decision in Azar v. Allina Health Services. The case involved a challenge by hospitals over whether the Department of Health and Human Services (“HHS”) was required to proceed through notice-and-comment rulemaking before promulgating a retroactive Medicare rate calculation methodology for Disproportionate Share (DSH) payments to hospitals. In a 7-1 decision by Justice Gorsuch, the Court ruled in favor of the hospitals, holding that the new rate calculation established a substantive legal standard, and therefore notice-and-comment was required under the Medicare Act.
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Cannabis-Derived Ingredients in FDA-Regulated Products: More Questions than Answers at FDA’s May 2019 Public Hearing
June 3, 2019 | Blog | By Joanne Hawana
As most folks with any interest in the burgeoning cannabidiol (CBD) industry likely know, on May 31, 2019, the Food and Drug Administration held a public hearing “to obtain scientific data and information about the safety, manufacturing, product quality, marketing, labeling, and sale of products containing cannabis or cannabis-derived compounds.” Stakeholders who attended the hearing presented many diverse viewpoints and the FDA panelists – who were in listening mode – received extensive information from across that spectrum of perspective.
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Viewpoint Editors
Karen S. Lovitch
Chair, Health Law Practice & Co-Chair, Health Care Enforcement Defense Practice
Joanne S. Hawana
Member
Rachel E. Yount
Of Counsel
Pat G. Ouellette
Associate
Stephnie A. John
Associate
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