Health Law Informer

On Friday, July 7, 2023, the Centers for Medicare & Medicaid Services (CMS) published their long-awaited proposed remedy to the unlawful 340B drug payment reductions.

Background: In 2018, CMS significantly reduced the Average Sales Price (ASP) plus six-percent (6%) formula for calculating 340B drug payments to ASP minus 22.5%. After conflicting decisions from the District of Columbia’s federal District and Appeals Courts, on June 15, 2022, a unanimous U.S. Supreme Court concluded that the ASP minus 22.5% formula was “unlawful” and violated a clear statutory mandate to reimburse 340B drugs at ASP plus 6%. American Hospital Assn. v. Becerra, 142 S. Ct. 1896, 1906 (2022). However, the U.S. Supreme Court did not address remedies and remanded the case to the U.S. District Court for the District of Columbia. On September 28, 2022, the District Court vacated the payment reduction and ruled that CMS had to stop paying the unlawful rate. However, it did not address the damages from January 1, 2018 – September 27, 2022.[1]  On January 10, 2023, the District Court further remanded the case to CMS to provide a remedy for the underpayments dating back to January 1, 2018.[2]  

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The CARES Act (“Act”) appropriates $100 billion to create a Public Health Social Service Emergency Fund (“Fund”) to prevent, prepare for, and respond to coronavirus domestically and internationally for necessary expenses to reimburse, through grants or other mechanisms, eligible health care providers enrolled in Medicare and Medicaid who provide diagnoses, testing, or care for individuals with possible or actual cases of COVID–19, for health care-related expenses or lost revenues that are attributable to coronavirus. Although the Act sets forth some high level qualifying criteria, the actual mechanism by which providers can apply for or request funds, or additional qualifiers for eligibility, if any, have not yet been released. To date, the Act notes that funds appropriated under this provision may be used for:

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Google has confirmed that it is working with Ascension, one of the nation’s largest health systems in a project that will involve the health data of millions of Americans.  Google and Ascension have partnered in a project to store and analyze patient data with the intended goal of using Google’s artificial intelligence tools to enhance patient care and medical decision making.  As a result of this partnership, it has been estimated that over 100 Google employees may have access to sensitive patient data such as name, birth date, diagnoses and treatments.  Such access by Google to millions of patient’s health data has resulted in some concern over how the data will be protected, including a recently announced inquiry into the relationship by the U.S. Department of Health and Human Services’ Office of Civil Rights (“OCR”).  OCR has stated that it “would like to learn more information about this mass collection of individuals’ medical records with respect to the implication for patient privacy under HIPAA.”  Ascension has said that the project with Google has complied with the law and followed the healthcare organization’s “strict requirements for data handling.” 

We will continue to follow this important story.  Several other tech companies continue to try to gain a bigger share of America’s health care market, which will all have to be balanced with patient data privacy and security concerns.

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CMS today issued its Price Transparency Requirements for Hospitals Final Rule, which will go into effect on January 1, 2021. (CMS had initially proposed that it go into effect January 1, 2020, but agreed that that deadline was too “challenging”).  Hospitals will be required to post on a public website, among other things, the “payer-specific negotiated charges” for each payer and plan.  These negotiated rates have typically been subject to lock and key treatment through confidentiality agreements.  Noncompliance with the rules may result in corrective action plans (CAPs), civil monetary penalties (CMPs) of $300 per day (indexed to an inflation factor), and a public notice of the CMP on a CMS website. Under the rules, CMS can issue “subsequent” CMPs for continued noncompliance. A link to the Final Rule is here: https://www.hhs.gov/sites/default/files/cms-1717-f2.pdf.

The Trump Administration has also issued a proposed “Transparency in Coverage” rule that would require plans to give consumers access to a tool providing an estimate of their cost-sharing liability for all covered healthcare items and services.  It would also require plans to list on a website their negotiated rates for in-network providers and the allowed amounts paid for out-of-network providers.  A link to the Proposed Rule is here: https://www.hhs.gov/sites/default/files/cms-9915-p.pdf. 

We will continue to analyze and monitor these rules.  Stay tuned.

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We previously reported that District Court Judge Reed O’Connor of the Northern District of Texas declared on December 14, 2018 (1) that the Affordable Care Act’s (ACA) individual mandate is unconstitutional and (2) that the remaining provisions of the ACA are “inseverable” and therefore invalid.

Following the Order, commenters largely believed that the Order had no immediate effect.  Supporting this view, the U.S. Department of Health and Human Services (HHS) said that the Order does not have any impact on 2019 enrollment or coverage and that the Order does not have any immediate effect on its enforcement of any portion of the ACA.  Continue reading…

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A Houston federal judge preliminarily enjoined the government from recouping alleged Medicare overpayments made to an ambulance service company facing bankruptcy.  See Adams EMS, Inc. v. Azar, No. H-18-1443, 2018 BL 391263 (S.D. Tex. 2018).

As you may be aware, there is a massive backlog in the Medicare appeals process for alleged overpayments.  The government can begin recouping at step 3 of the arduous 4-step administrative appeal process for overpayment demands.  In a nutshell, the process involves: (1) seeking a redetermination from the Medicare Administrative Contractor (MAC), (2) asking for reconsideration from a Qualified Independent Contractor, (3) requesting a hearing before an administrative law judge (ALJ) of the Office of Medicare Hearings and Appeals, and (4) appealing to the Medicare Appeals Council.  The law requires a decision on Step 3 within 90 days, but there is currently a 3-5 year backlog. Continue reading…

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Last Friday, in Texas v. United States, Judge Reed O’Connor of the Northern District of Texas (1) declared the Affordable Care Act’s (ACA) individual mandate to be unconstitutional.  In so doing, the Judge, a President George W. Bush appointee, also (2) declared the remaining provisions of the ACA to be “inseverable” and therefore invalid.

Individual Mandate.  As you might recall, the Supreme Court’s 2012 NFIB v. Sebelius decision held that the individual mandate and the shared-responsibility penalty (when viewed as a whole) were constitutional because they fell within Congress’ power to tax.  The provision at the time was found to be a “tax” because, among other things, it produced revenue for the government.  (Under the shared responsibility penalty, non-exempt individuals without health insurance had to pay this tax.).  The Tax Cuts and Jobs Act of 2017 subsequently amended the ACA by reducing the shared-responsibility payment to zero, starting in 2019.  According to the District Judge, when the shared-responsibility payment becomes zero, the individual mandate and the shared-responsibility payment together can no longer be classified as a “tax” and therefore lacks a constitutional hook. Continue reading…

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On November 1, 2018, CMS issued a 2,379 page final rule titled “Revisions to Payment Policies under the Medicare Physician Fee Schedule, Quality Payment Program and Other Revisions to Part B for CY 2019.”  While there are some interesting changes related to remote patient monitoring for chronic kidney disease patients and loosening of originating site requirements for certain behavioral health services, most notable is the new “virtual check-in” code (HCPCS code G2012). Traditionally, CMS viewed brief telephone calls as non-billable, deeming the services rendered by providers to patients on such calls to be merely ancillary and included in an office visit. Conversely, the only way to bill for the exchange was to conduct the office visit.

The stated purpose of the “virtual check-in” code is for the billing provider herself (not her clinical staff) “to assess whether the patient’s condition necessitates an office visit.” To the extent the in-person visits are rendered unnecessary by the “virtual check-in,” both CMS and the patient save money. Continue reading…

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As US companies continue to spend time and effort complying and responding to all of the new privacy laws and regulations both in the United States and aboard (i.e. GDPR and California Consumer Privacy Act of 2018) companies cannot forget the basics.  If you represent something in your Privacy Policy it better be accurate, up to date, and not misleading!

On July 2, 2018, the Federal Trade Commission (FTC) issued a number of press releases and a proposed settlement with California-based employee training company ReadyTech Corporation.  In announcing the settlement, FTC Chairman Joe Simons said, “Today’s settlement demonstrates the FTC’s continuing commitment to vigorous enforcement of the Privacy Shield.”  According to the FTC, this is the 4th case enforcing the Privacy Shield and 47th case enforcing international privacy frameworks such as the Safe Harbor framework and the Asia Pacific Economic Cooperation Cross Border Privacy Rules.

The ReadyTech settlement should be a warning for other companies that make representations in their Privacy Policies about the Privacy Shield, GDPR, CCPA and other data security and privacy frameworks.  By way of background, the Privacy Shield framework allows companies to transfer personal data lawfully from the EU to the United States.  To join the Privacy Shield framework, a company must self-certify to the U.S. Department of Commerce that it complies with the Privacy Shield Principles and related requirements that have been deemed to meet the EU’s adequacy standard.  A company, like ReadyTech, that claims it has self-certified to the Privacy Shield Principles, but failed to self-certify to the U.S. Department of Commerce, may be subject to an enforcement action by the FTC. Continue reading…

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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…

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