This morning CMS released a final rule regarding its most popular program for accountable care organizations (ACOs), the Medicare Shared Savings Programs. The final rule is based on the proposed rule for the program that was published in August.  The final rule adopts the major structural overhaul contained in the proposed rule, the reduction of the program to two tracks, Basic and Enhanced, the 1 year limitation for most established (ACOs) to remain in an “upside only” risk model and the 2 year limitation for most new ACOs to remain in an “upside only” risk model. The final rule increased the percentage of savings that will be shared with an ACO in an “upside only” model from 25% as proposed to 40%.  The rule also gives approved ACOs the ability to operate patient incentive programs which include cash payments up to $20 from certain ACO professionals and federally qualified health centers for qualifying primary care services,  provides some ACOs with more flexibility with respect to reimbursement for telehealth services, and includes numerous other detailed changes to the program’s operations. Continue reading…

Chris Raphaely

Chris joined Cozen O’Connor’s Philadelphia office in 2014 as co-chair of the Health Care Practice Group. Prior to joining the firm, Chris served as deputy general counsel to Jefferson Health System and general counsel to the system’s accountable care organization and captive professional liability insurance companies.

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On June 22, 2018 Governor Wolf signed HB 2477 (“Amendment”) into law breathing new life into Chapter 20 of the Medical Marijuana Act (“Act”), the country’s first-of-its-kind law for cannabis research. This follows Commonwealth Court Judge Patricia McCullough’s May 22, 2018 issuance of a preliminary injunction halting the Department of Health’s (“DOH”) implementation of the Act’s Chapter 20 regulations. Chapter 20 of the Act governs the registration and operation of clinical registrants, the certification of academic clinical research centers (“ACRC”), and partnerships between clinical registrants and ACRCs for research purposes. A clinical registrant is a grower/processor and dispensary that will have a contractual relationship with an ACRC. An ACRC is an accredited medical school in the Commonwealth of Pennsylvania that “operates or partners with an acute care hospital licensed within this Commonwealth.” As of May this year, DOH had already certified eight medical schools as ACRCs under the Act. Continue reading…

Chris Raphaely

Chris joined Cozen O’Connor’s Philadelphia office in 2014 as co-chair of the Health Care Practice Group. Prior to joining the firm, Chris served as deputy general counsel to Jefferson Health System and general counsel to the system’s accountable care organization and captive professional liability insurance companies.

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Bergen County Superior Court Judge Robert Contillo issued a recent decision deemed favorable by Horizon Healthcare Services Inc. (“Horizon”) in a case involving three healthcare providers (“Providers”) that challenged Horizon’s newer tiered health coverage plan for hospitals: OMNIA. The Providers alleged that Horizon unfairly designated them as Tier 2 Providers, a tier in which OMNIA Members access providers while incurring higher out-of-pocket costs than they would when accessing those providers in Tier 1. Although certain other claims may proceed, Judge Contillo dismissed the breach of contract claim because he determined that Horizon did not breach the network hospital agreements by “failing to include [the Providers] in Tier 1” because “[t]he plain and unambiguous language [under the agreement] does not guarantee that [the Providers] be included in Horizon’s new products, networks or subnetworks.”

This decision illustrates that tiered designation disputes between hospitals and payors may hinge on the language of the applicable network hospital agreements. Hospitals and other providers are encouraged to review their existing contracts and address this issue in future contracts to determine the level of discretion payors may have in including them in tiered and limited network products. As insurers continue to develop new products designed to lower costs, this will continue to be an important consideration for most providers.

Chris Raphaely

Chris joined Cozen O’Connor’s Philadelphia office in 2014 as co-chair of the Health Care Practice Group. Prior to joining the firm, Chris served as deputy general counsel to Jefferson Health System and general counsel to the system’s accountable care organization and captive professional liability insurance companies.

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The Pennsylvania Department of Health (DOH) published the much anticipated final version of the temporary regulations under the Medical Marijuana Act applicable to Clinical Registrants and Academic Clinical Research Centers (ACRC) in Pennsylvania (“Temporary Regulations”). The Clinical Registrant/ACRC relationship was first developed in Pennsylvania with a specific focus on research.  A Clinical Registrant is a unique category of Medical Marijuana Organization under Pennsylvania law that is granted a permit to act as both a grower/processor and dispensary. An ACRC is “an accredited medical school” in Pennsylvania that “operates or partners with an acute care hospital licensed and operating” in Pennsylvania. The Temporary Regulations require Clinical Registrants and ACRCs to enter into Research Contracts together and provide some broad guidance about the content of those written agreements. Additionally, the Temporary Regulations address certification of ACRCs, capital requirements, approvals for clinical registrants, and the process for Clinical Registrant applicants who wish to convert their already issued grower/processor or dispensary permits to Clinical Registrant permits.

For more information about the Temporary Regulations or the Medical Marijuana Act, contact Chris Raphaely, J. Nicole Martin or another member of Cozen O’Connor’s Cannabis Industry Team.

Chris Raphaely

Chris joined Cozen O’Connor’s Philadelphia office in 2014 as co-chair of the Health Care Practice Group. Prior to joining the firm, Chris served as deputy general counsel to Jefferson Health System and general counsel to the system’s accountable care organization and captive professional liability insurance companies.

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In moves that stunned and alarmed insurers, providers, and consumers alike, on October 12, the White House issued an announcement and an Executive Order that appear to be purposefully designed to decimate the Exchanges under the ACA:

1. The White House announced that the government will stop making cost-sharing reduction payments to insurance companies under Obamacare.  According to the White House, there is no appropriation for such payments.  As the Exchange plans will still be obligated to bear the costs of the cost-sharing reductions, premiums for Exchange plans that remain in the market would be expected to rise dramatically.  Many Exchange plans have termination provisions which allow them to terminate their 2018 contracts if the cost-sharing subsidies stop.  On October 13, eighteen states and the District of Columbia sued the administration to restore the funding.
2. The President also issued an Executive Order requiring the relevant agencies to consider regulations or guidance (1) allowing more employers to form association health plans (AHPs) and (2) expanding the availability of short-term, limited-duration insurance (STLDI).  If the regulations come to fruition, younger and healthier people are expected to be siphoned from Exchange products and into cheaper AHPs and STLDI plans (that potentially offer skimpier coverage), creating adverse selection.  Premiums will rise for those left in the Exchanges.

Is the ultimate goal of these moves the total destruction of the Exchanges?  Are they bargaining chips designed to bring Congress back to the table to fix the “problems” with the ACA?  If the latter, will Medicaid spending cuts sought by many Republicans be part of that discussion?  Stay tuned.

Chris Raphaely

Chris joined Cozen O’Connor’s Philadelphia office in 2014 as co-chair of the Health Care Practice Group. Prior to joining the firm, Chris served as deputy general counsel to Jefferson Health System and general counsel to the system’s accountable care organization and captive professional liability insurance companies.

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With the House GOP pulling the American Health Care Act (AHCA) due to lack of sufficient support even within its own party, Obamacare is not out of the woods.

The ACA’s two pillars, the individual marketplaces and Medicaid expansion, remain vulnerable and could be used as political bargaining chips in Washington as the battle over “health care reform” plays out in the coming months and years.

In response to the House’s failure to pass the AHCA, the President and House Speaker have expressly said that Obamacare will “implode” and the administration has many ways to see to it that it does sooner rather than later. On the other hand, the administration and Congress could also move on to on tax reform and other items while changes to the marketplaces are implemented by regulation.  The administration already has proposed regulations on the table that has been characterized as a “good faith” effort to implement minor changes to prop up the marketplaces. Reportedly, however, many insurers will want more in the form of funding for cost sharing reductions and reinsurance to keep sufficient numbers of insurers in the marketplaces long term.  Continue reading…

Chris Raphaely

Chris joined Cozen O’Connor’s Philadelphia office in 2014 as co-chair of the Health Care Practice Group. Prior to joining the firm, Chris served as deputy general counsel to Jefferson Health System and general counsel to the system’s accountable care organization and captive professional liability insurance companies.

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The U.S. District of Minnesota has ruled in Peterson v. Unitedhealth Grp. Inc., No. 14-CV-2101 (PJS/BRT), 2017 WL 991043 (D. Minn. Mar. 14, 2017) that ERISA does not permit United Healthcare (“United”) to claw back alleged overpayments related to patients from one plan by reducing or eliminating payments related to patients from different self-insured plans, dealing a potential blow to the use of an effective tool that health insurers have used to recoup alleged overpayments from providers.

In Peterson, the Plaintiffs were healthcare providers who brought suit against United as assignees of patients who were enrolled in United-administered plans. United had allegedly overpaid Plaintiffs for services provided to certain patients, and offset these alleged overpayments by reducing or eliminating payments for services that Plaintiffs provided to other patients, who were members of different United-administered self-insured ERISA plans. This practice is known as cross-plan offsetting. Continue reading…

Chris Raphaely

Chris joined Cozen O’Connor’s Philadelphia office in 2014 as co-chair of the Health Care Practice Group. Prior to joining the firm, Chris served as deputy general counsel to Jefferson Health System and general counsel to the system’s accountable care organization and captive professional liability insurance companies.

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Hours after taking the oath of office President Donald Trump signed a broadly worded executive order (“Order”) intended to minimize if not eliminate the impact of the ACA’s least popular provisions. With the Order President Trump can claim immediate action towards fulfilling a major campaign pledge while giving his administration and the Republican led Congress time to come up with a replacement plan.

The Order directs the secretary of HHS and other agency heads to, among other directives:

[E]xercise all authority and discretion available to them to waive, defer, grant exemptions from, or delay the implementation of any provision or requirement of the [ACA] that would impose a fiscal burden on any State or a cost, fee, tax, penalty, or regulatory burden on individuals, families, healthcare providers, health insurers, patients, recipients of healthcare services, purchasers of health insurance, or makers of medical devices, products, or medications. [And] [t]o . . . exercise all authority and discretion available to them to provide greater flexibility to States and cooperate with them in implementing healthcare programs. [And] [t]o . . . encourage the development of a free and open market in interstate commerce for the offering of healthcare services and health insurance, with the goal of achieving and preserving maximum options for patients and consumers.

The Order makes it clear that any agency actions under the order must be within the confines of the law and its existing regulations, both of which remain in place at least for now. The agencies still have the option of amending or repealing ACA regulations but the Order gives them the authority to take some action before going through the regulatory approval process.

Apparently, the agencies will decide which stakeholders’ costs and “burdens” under the ACA will be reduced. This presents them with an interesting challenge given the opposing interests inherent in the broad group of stakeholders expressly targeted for relief under the Order. For example, if the scope of the individual mandate (likely the prime target of the Order) were reduced relieving some individuals of the cost of buying health insurance, it would likely skew the risk pool of the exchange plans to less healthy participants increasing the cost and burden on the exchange’s insurers and those individuals who want to purchase insurance through the exchanges. That action could also end up reducing overall insurance coverage increasing the uncompensated care hospitals and other providers would be required to deliver.

Perhaps the most interesting aspect to watch, however, will be whether the Order ultimately has any significant substantive effect or simply ends up being a symbolic gesture. Some observers have contended that significant delays to, or gutting of, a portion of the ACA’s tightly woven and inter-related pieces mid-year 2017 would create chaos in the affected programs, like the health insurance exchanges, which are already underway this year. Therefore, there has been speculation that actions under the Order are not likely to be effective until 2018. The question is whether any actions under the Order, which are expressly limited to those that are permissible under the ACA, will mean anything in 2018 when it is almost certain that the ACA will have already been repealed.

Whether substantive or symbolic, clearly the first step in the ACA’s dismantling has been taken and we will be watching very closely as the administration and Congress take many more.

Chris Raphaely

Chris joined Cozen O’Connor’s Philadelphia office in 2014 as co-chair of the Health Care Practice Group. Prior to joining the firm, Chris served as deputy general counsel to Jefferson Health System and general counsel to the system’s accountable care organization and captive professional liability insurance companies.

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On January 17, 2017, the Pennsylvania Department of Health (“DOH”) released grower/processor and dispensary permit applications (“Applications”), which can be found on Pennsylvania’s Medical Marijuana Program website. DOH will accept Applications from February 20 – March 20, 2017, and will begin taking questions about the Applications on February 8, 2017. Other highlights regarding the application process are set forth below.

• 12 grower/processor permits will be issued.
• 27 dispensary permits will be issued.
• Two grower/process permits will be issued in each of the six regions in the Commonwealth.
• The maximum number of dispensary locations in each region (by county) is set forth in the Applications’ instructions on page two.
• Each applicant will receive a weighted score out of a maximum number of 1,000 points.
• The Applications require information regarding, among other items, an applicant’s diversity plan, background information about principals, financial backers, operators and employees, capital sufficiency, an applicant’s plan of operation and an operational timetable, and an applicant’s anticipated community impact.
• Principals means “an officer, director or person who directly or beneficially owns securities of an applicant or permittee, or a person who has a controlling interest in an applicant or permittee or who has the ability to elect the majority of the board of directors of an applicant or permittee or otherwise control an applicant or permittee, other than a financial institution.”
• Financial backers means “an investor, mortgagee, bondholder, note holder, or other source of equity, capital or other assets other than a financial institution.”
• Financial institution means “a bank, a National banking association, a bank and trust company, a trust company, a savings and loan association, a building and loan association, a mutual savings bank, a credit union or a savings bank.”
• The non-refundable application fee for growers/processors is $10,000, and the initial permit fee for growers/processors is $200,000 (both payable with the Application).
• The non-refundable application fee for dispensaries is $5,000, and the initial permit fee for dispensaries is $30,000 per dispensary location, for up to $90,000 (both payable with the Application).
• A rejected Application would be returned to an applicant with the initial permit fee.
• DOH may reject an Application that is received after March 20, 2017 or without a U.S. Postal Form 3817, which is required as proof of an applicant’s mailing date.
• The DOH will post FAQs regarding the Applications on its website.

Continue reading…

Chris Raphaely

Chris joined Cozen O’Connor’s Philadelphia office in 2014 as co-chair of the Health Care Practice Group. Prior to joining the firm, Chris served as deputy general counsel to Jefferson Health System and general counsel to the system’s accountable care organization and captive professional liability insurance companies.

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Word spread quickly Monday (December 20, 2016) about CMS’ issuance of final regulations (to be published in the Federal Register on January 3, 2017) rolling out new mandatory bundled payments models for Acute Miocardial Infarction (AMI), Coronary Artery Bypass Graft (CABG), Surgical Hip and Fracture Treatment (SHFFT), a Cardiac Rehabilitation (CR) incentive model and Track 1+ Accountable Care Organizations. Speculation that President-elect Donald Trump’s nominee for HHS secretary, Rep. Tom Price, would move to roll the regulations back spread just as quickly.

The new regulations mandate bundled payment models (covering the period from admission to ninety days post-discharge) for AMI and CABG in 98 geographies covering 1,120 hospitals; for SHFFT in the 67 geographies where the Comprehensive Joint Replacement (CJR) has already been mandated covering 850 hospitals and for CR in 90 geographies covering 1,320 hospitals. CMS’ chart of geographies covered by each program is set forth here. The AMI, CABG and SHFFT programs give participant clinicians the opportunity to be excluded from Medicare and CHIP Reauthorization Act of 2015’s (MACRA) Medicare Incentive Payment System (MIPS) and to qualify under MACRA’s Advanced Alternative Payment Model (AAPM). Continue reading…

Chris Raphaely

Chris joined Cozen O’Connor’s Philadelphia office in 2014 as co-chair of the Health Care Practice Group. Prior to joining the firm, Chris served as deputy general counsel to Jefferson Health System and general counsel to the system’s accountable care organization and captive professional liability insurance companies.

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