Health Industry Washington Watch : Washington DC Healthcare Industry Law Firm : Reed Smith : Health Industry Washington Watch : Regulations, Medicare/Medicaid, Governmental Organizations

This post was written by Jacqueline B. Penrod.

On March 10, 2010, the Office of the National Coordinator for Health Information Technology (ONC) published a proposed rule to establish certification programs for health information technology (HIT). The rule follows the publication of two other rules on January 13, 2010 that addressed the adoption of certification standards and criteria and established a proposed definition of “meaningful use” that will be applied to determine the initial incentive payments to providers pursuant to the American Recovery and Reinvestment Act of 2009. The March 10 proposed rule describes two certification programs. The first program would establish a temporary certification process so that organizations will be able to test and certify complete electronic health records (EHR) and/or EHR modules; the second program would be more comprehensive and is designed to replace the temporary program with a permanent one. The purpose for proposing a temporary program initially is to assure the availability of certified EHR technology before providers must demonstrate meaningful use in order to be eligible to receive payments under the Medicare and Medicaid EHR Incentives Program. It is anticipated that there will be a separate final rule issued for each of these programs. Comments on the temporary certification program must be submitted by April 9, 2010; comments on the permanent certification program are due May 10, 2010.

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On March 5, 2010, the Health Resources and Services Administration (HRSA) published a final notice on 340B drug pricing program contract pharmacy services. The notice announces the availability of final guidelines regarding the utilization of multiple contract pharmacies and suggested contract pharmacy provisions, which previously had been limited to the “Alternative Methods Demonstration Project” program. These final guidelines, which are effective April 5, 2010, replace all previous 340B program guidance documents addressing non-network contract pharmacy services.  Additional analysis is available on our Life Sciences Legal Update blog.  

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On March 23, CMS is hosting a National Provider Conference Call on the ICD-10-CM/PCS coding system. Topics to be covered include: the requirement use ICD-10-CM/PCS codes for services provided on or after October 1, 2013; a comparison of the ICD-9-CM and ICD-10-CM; common ICD-10-CM myths and misperceptions; and the impact of ICD-10-CM on medical record documentation.

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The House Energy and Commerce Health Subcommittee has scheduled a hearing for March 10 on "Drug Safety: An Update from the FDA." At the hearing, the FDA will detail its current challenges and successes in the area of drug safety.  Joshua M. Sharfstein, M.D., FDA Principal Deputy Commissioner, is slated to testify. 

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Last night the Senate joined the House in approving H.R. 4691, the Temporary Extension Act of 2010, which President Obama promptly signed into law.  The legislation includes a one-month extension of the Medicare physician fee schedule freeze in lieu of the 21.2% cut that briefly went into effect March 1, 2010 (that is, the law continues to hold payments at 2009 levels through the end of March). The measure also extends the outpatient therapy cap extension process, which had expired at the end of 2009, through March 31, 2010.  In addition, the law extends COBRA insurance premium assistance through March 31, 2010. Note that lawmakers are negotiating a longer-term extension of expiring Medicare provisions, along with an extension of enhanced federal Medicaid matching payments and other health policy revisions, as part of a broader jobs bill, the "American Workers, State and Business Relief Act."

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On March 1, 2010, a 21.2% across-the-board cut in Medicare physician fee schedule (MPFS) payments went into effect under the statutory sustainable growth rate (SGR) formula. While Congress had temporarily blocked the cut and maintained rates at 2009 levels for the first two months of 2010, that authorizing legislation expired February 28, 2010. Lawmakers are working to implement a fee schedule fix as part of job promotion legislation, but while the details of the bill and the timing for enactment still are uncertain, action in the next week is anticipated with reports that extension of the freeze may be continued until September 30, 2010. In the meantime, CMS has instructed its contractors to hold for the first 10 business days of March MPFS claims with dates of service on or after March 1, 2010.  According to CMS, the hold should have a minimum impact on provider cash flow, since current law provides that clean electronic claims are not paid before 14 calendar days (29 for paper claims) after the date of receipt. 

** March 3 update:  In light of Congressional passage of a one-month extension of the physician fee schedule fix, CMS announced it has lifted the hold on MPFS claims. 

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The Reed Smith Health Industry Washington Watch blog has been updated to discuss a variety of health policy developments, including the following:  

• Legislative Developments.  President Obama convened a bipartisan health reform summit. The House of Representatives has approved a bill to temporarily extend current physician fee schedule payments and extend the Medicare outpatient therapy cap exceptions process, along with legislation to repeal the antitrust exemption for health insurance companies. A number of recent hearings have focused on health policy issues.
• Other HHS Developments.  CMS has released its Advance Notice of 2011 Medicare Advantage/Part D payments, extended a Medicare Secondary Payer (MSP) reporting deadline, issued guidance on DME telemarketing, delayed its PECOS enrollment requirement for ordering physicians, and announced an organizational realignment. FDA has issued a proposed rule on reporting information on falsification of data, announced an initiative with NIH to speed patient access to new therapies, and updated its listing of specific drugs that are being evaluated for potential safety issues. HHS has announced relief for state Part D drug cost expenses, released the names of entities reporting certain breaches of protected health information, and has addressed enforcement of the HITECH business associate requirement.
• Health Industry Events. CMS is holding meetings/educational calls on DMEPOS competitive bidding, the PQRI and E-prescribing, Part D data, and HCPCS code applications. The FDA is hosting meetings on clinical trial requirements and reducing radiation exposure. HHS is hosting a workshop on the HIPAA Privacy Rule’s de-identification standard.
• OIG & GAO Reports. The OIG has issued reports on RAC fraud referrals and ASP reporting and pricing. The GAO has reported on electronic personal health information exchange.

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Yesterday President Obama convened a health reform summit in an effort to bring together key members of Congress and administration personnel to discuss ways to move forward on health reform. After a long day of policy debate, however, the summit failed to result in a bipartisan breakthrough on reform legislation.   While isolated areas of agreement were indentified, such as in the area of fraud and abuse efforts and certain aspects of insurance market reforms, the meeting largely highlighted the divisions between the two parties on fundamental aspects of reform. In particular, Democrats and Republicans at the meeting were far apart on such basic questions about how large a role the federal government should play in establishing insurance market rules, whether insurance coverage should be mandated, and how to achieve cost-savings in the health care system, among others. The summit is widely viewed as laying the groundwork for Democratic leaders to forge ahead with comprehensive health reform without Republican support -- if compromise can be reached among Democrats. In particular, Democrats appear to be ready to use a Senate parliamentary procedure known as “budget reconciliation” that would require only 51 Senate votes for passage in order to enact a bill in the coming weeks.   Additional background information on current health reform legislative efforts is available here.  
 

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On February 25, 2010, the House of Representatives approved H. R. 4691, the “Temporary Extension Act of 2010,” by a voice vote. Among other things, the bill would extend current Medicare physician fee schedule rates through the end of March 2010; in the absence of such an extension, Medicare payments will be subject to a 21.2 % across-the-board cut on March 1, 2010 under the statutory sustainable growth rate (SGR) formula. The bill also would extend the Medicare outpatient therapy cap exceptions process – which expired at the end of 2009 – through March 2010.  The bill now moves to the Senate, where its fate is uncertain because at least one Senator is objecting to the legislation's cost not being offset. A vote on the measure therefore may not come until mid-week next week if parliamentary steps (cloture vote) must be taken to move the legislation.  Even if the SGR fix does not occur before March 1, CMS can hold claims for physician services for 14 days before processing them with the 21.2 % fee cut.

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The HHS Office of Civil Rights (OCR) has indicated that the agency will be delaying enforcement of the HITECH Act provisions under which Business Associates are required to directly comply with the HIPAA Privacy and Security Rules.  Although the statutory compliance date for the Business Associate requirement is February 17, 2010, Adam Greene, an OCR attorney, "unofficially" indicated in a recent speech that HHS will be exercising its enforcement discretion to not enforce the new provision until after a proposed and final rule on this subject have been promulgated.

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CMS has announced a realignment of its organization structure and named new senior CMS appointments. Most notably, CMS has established a new Office of External Affairs and Beneficiary Services, along with the following four “Centers”: the Center for Medicare; the Center for Medicaid, CHIP and Survey & Certification; the Center for Program Integrity; and the Center for Strategic Planning. CMS also named Marilyn Tavenner, former Secretary of Health and Human Resources for the Commonwealth of Virginia, to the new position of CMS Principal Deputy Administrator. In addition, CMS announced that Peter Budetti, an MD/JD who has addressed health care fraud in a number of capacities, will be serving as Deputy Administrator for Program Integrity. The Obama Administration still has not named a candidate for CMS Administrator; Charlene Frizzera continues to serve as Acting Administrator. 

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On February 24, 2010, the House of Representatives approved H.R. 4626, the “Health Insurance Industry Fair Competition Act,” by a vote of 406 to 19. The bill, which would repeal the antitrust exemption for health insurance companies provided under the McCarran-Ferguson Act, now moves to the Senate, where it could be considered as part of broader health reform legislation. 

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A number of recent hearings in the House of Representatives have focused on health policy issues, including: 

• An Oversight and Government Reform Federal Workforce Subcommittee hearing on H.R. 4489, the "Federal Employees Health Benefits Program Prescription Drug Integrity, Transparency, and Cost Savings Act." 
• A Science and Technology Committee hearing on "How Can NIST (National Institute of Standards and Technology) Better Serve the Needs of the Biomedical Research Community in the 21st Century?"
• An Energy and Commerce Oversight and Investigations Subcommittee hearing entitled "Anthem Blue Cross Premium Hike." 

In addition, today the House Energy and Commerce Health Subcommittee is holding a hearing on medical radiation, and on March 3, the Senate Homeland Security and Governmental Affairs Committee, Federal Financial Management Subcommittee will review oversight challenges in the Medicare Part D prescription drug program.   Two health care fraud hearings have been scheduled for Thursday, March 4. The House Judiciary Subcommittee on Crime, Terrorism and Homeland Security has scheduled a hearing entitled “The Enforcement of the Criminal Laws Against Medicare and Medicaid Fraud,"  and the House Appropriations Labor-HHS Committee is holding a hearing on "Combating Health Care Fraud and Abuse."

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The Centers for Medicare & Medicaid Services (CMS) has issued its “Advance Notice” of changes to payment methodologies for Medicare Advantage (MA) organizations and Medicare Part D prescription drug plans for calendar year 2011. This year CMS is combining the Advance Notice with the annual “Call Letter” to health plans outlining upcoming non-payment policy changes. Among other thing, the Advance Notice includes: a preliminary estimate of a 1.38% change in the national per capita MA growth percentage; changes in risk adjustment payment methodologies; a 3.41% risk adjustment to reflect differences in coding patterns between MA plans and fee-for-service providers; and an update to the standard Part D benefit parameters. Other issues addressed in the Call Letter include practices to curb waste of unused drugs, reassignment, release of data, and drug coverage for beneficiaries with ESRD. Comments will be accepted until March 5, 2010. 

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Medicare is the “secondary” payer of health benefits for Medicare beneficiaries when another entity is the “primary” payer. Under new MSP enforcement rules, all entities that are considered primary payers and meet the definition of a responsible reporting entity (RRE) must register with CMS and comply with certain reporting requirements. Such RREs include (1) group health plans, and (2) non-group health plan (NGHP) arrangements, such as carriers of liability insurance (including self-insurance), no-fault insurance, and workers’ compensation. CMS recently announced it is extending its reporting requirement for NGHPs until January 1, 2011. CMS also has posted three new alerts on NGHP RRE Compliance, NGHP Alert Risk Management and NGHP RREs Who Must Report.

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CMS has announced the dates for the 2010 Healthcare Common Procedure Coding System (HCPCS) public meetings, at which the agency will discuss its preliminary coding and payment determinations for all new public requests for revisions to the HCPCS. On May 4-5, CMS will review applications for codes for Drugs/Biologicals/Radiopharmaceuticals/Radiologic Imaging Agents; the May 25-26 sessions will review applications for Supplies; on May 27 CMS will focus on Orthotics and Prosthetics codes; and the June 8 session will review Durable Medical Equipment and Accessories coding applications. Draft agendas, including CMS' preliminary decision, will be posted on the HCPCS website at least 4 weeks before each meeting. 

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This post was written by Paul Sheives.

The Food and Drug Administration (FDA) has published a proposed rule on “Reporting Information Regarding Falsification of Data,” which would require sponsors to self-report any “information indicating that any person has, or may have, engaged in the falsification of data” associated with study results (clinical or pre-clinical) relied upon by the sponsor. Under the new regulations, sponsors would be required to report any such information to FDA as soon as possible, but no later than 45 days after learning of the activity. FDA is accepting comments on the proposed rule until May 20, 2010. For more information, see http://edocket.access.gpo.gov/2010/pdf/2010-3123.pdf

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This post was written by Paul Sheives.

FDA and the National Institutes of Health (NIH) have announced a new initiative aimed at improving efficiencies in translational science and regulatory science to close the gap in time between discovery of new technology and availability of therapies to patients. A new entity established under the initiative, the Joint Leadership Council, will seek to increase the consideration of regulatory issues early in the development of new technologies and therapies. In addition, the agencies jointly will issue grants totaling almost $7 million to develop better approaches to evaluating safety and efficacy for the development of new technologies and therapies. Additional information is available here. 

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This post was written by Paul Sheives.

On February 18, 2010, the FDA posted updated listings of specific drugs that are being evaluated for potential safety issues based on a review of reports in FDA's Adverse Event Reporting System. The postings, which are mandated by the Food and Drug Administration Amendments Act of 2007, reflect safety information through September 2009. The FDA cautions that the appearance of a drug on this list does not mean that FDA has concluded that the drug has or causes the listed risk, nor does it suggest that healthcare providers should not prescribe or patients should not take the drug. If the FDA determines after further evaluation that the drug is associated with the risk, FDA could require labeling changes, require development of a Risk Evaluation and Mitigation Strategy (REMS), or gather additional data to better characterize the risk.

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On February 18, 2010, the Department of Health and Human Services (HHS) announced that it will be providing states with an additional $4.3 billion in federal funding to offset the cost of Medicare Part D prescription drug coverage for individuals eligible for both Medicare and Medicaid. The increased aid results from HHS applying the temporary enhanced Federal Medical Assistance Percentage (FMAP) payments authorized by the American Recovery and Reinvestment Act (ARRA) to state “clawback” payments (state payments designed to offset the added expense to Medicare Part D for assuming drug costs for dual eligibles). The temporary adjustment in the clawback payments will apply for the period of October 1, 2008 through December 31, 2010. 

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The Health Information Technology for Economic and Clinical Health (HITECH) Act, enacted as part of the ARRA, requires covered entities to report to HHS within 60 days of discovery any breaches of protected health information that affect 500 or more individuals. The HHS Office for Civil Rights (OCR) has posted a list of covered entities that have reported such breaches of protected health information, and OCR will continue to update the list as it receives new reports. 

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The OIG has issued a report entitled “Recovery Audit Contractors' Fraud Referrals.” By way of background, CMS contracts with recovery audit contractors (RACs) to identify improper payments of Medicare Part A and Part B claims, and they receive contingency fees based on the amount of improper payments identified. While RACs are not responsible for reviewing claims for fraudulent activity, they are responsible for referring any cases of potential fraud they identify to CMS. In its review, the OIG found that RACs referred only two cases of potential fraud to CMS during the period of March 2005 through March 2008, while CMS reported receiving no potential fraud referrals from RACs during this period. The OIG notes that RACs do not receive contingency fees for such fraud cases, which may serve as a disincentive for RACs to refer cases of potential fraud to CMS. The OIG recommended that CMS: (1) determine the outcomes of the two referrals made during the demonstration project, (2) implement a system to track fraud referrals, and (3) require RACs to receive mandatory training on the identification and referral of fraud. CMS concurred with the recommendations.

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The OIG has issued a report entitled "Average Sales Prices: Manufacturer Reporting and CMS Oversight." According to the OIG, for each quarter under review, over 40% of manufacturers submitted average sales prices (ASP) late, but most submitted the data within 10 days after the deadline. The OIG observes that current CMS methods for recording ASP data, including the use of manual processes, "may inhibit efficiency and result in potential errors." In addition, almost one-fifth of labeler codes with ASP submissions were associated with manufacturers that were not actually required to provide these prices, and in some cases Medicare payment amounts were based solely on submissions from manufacturers that did not have rebate agreements in effect. According to the OIG, if these manufacturers chose not to report ASPs, CMS would be unable to calculate ASP-based Medicare payment amounts for these drugs. In the report, the OIG recommends that CMS (1) develop an automated system for collecting ASP data, and (2) seek a legislative change to require all manufacturers of Part B-covered drugs to submit ASPs. CMS concurred with the first recommendation, but did not agree to seek a such legislative change at this time. In a separate report, “Comparison of Average Sales Prices and Average Manufacturer Prices: An Overview of 2008," the OIG noted that in 2008, the ASP for 80 HCPCS codes exceeded average manufacturer prices (AMP) by at least 5% in one or more quarters. If reimbursement amounts for these 80 codes had been lowered to 103% of the AMP, as is authorized by the statute, it would have reduced Medicare expenditures by almost $22 million. The OIG recommends that CMS develop a process to adjust payment amounts based on the results of OIG's pricing comparisons (CMS concurred), and that CMS lower Medicare reimbursement amounts for drugs that meet the 5% threshold (CMS did not agree). CMS also outlined steps it is taking to address a third OIG recommendation – that CMS ensure that drug manufacturers are submitting the required AMP data in a timely manner.

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The Government Accountability Office (GAO) has issued a report entitled "Electronic Personal Health Information Exchange: Health Care Entities' Reported Disclosure Practices and Effects on Quality of Care." The report, which was required by the HITECH Act, reviews practices implemented by health information exchange organizations, providers, and other health care entities that disclose electronic personal health information, based on case studies of operational health information exchanges and a selection of each of the exchanges’ participating providers. The health care entities reported that they implement widely-accepted practices for safeguarding personal information to help ensure the appropriate use and disclosure of electronic personal health information for treatment purposes. In addition, both the exchanges and providers reported examples of ways that sharing electronic personal health information has had a positive effect on the quality of care that providers deliver to patients.

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This post was written by Paul Sheives.

On March 30-31, FDA is holding a public meeting on “Device Improvements to Reduce Unnecessary Radiation Exposure from Medical Imaging.“ The purpose of the meeting is to seek stakeholder input on how manufacturers of devices used in computed tomography (CT) and in fluoroscopy could alter medical devices or clinical practice to lessen exposure to unnecessary ionizing radiation during these procedures. FDA also is accepting public comment on this issue until April 15, 2010.

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HHS is hosting a workshop on March 8 and 9, 2010 on methods for de-identification of protected health information (PHI) as designated in the HIPAA Privacy Rule. The meeting is designed to bring together experts with practical technical and policy experience to inform the creation of guidance materials on de-identification approaches.

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On March 10, CMS is hosting a national provider conference call on the 2010 Physician Quality Reporting Initiative (PQRI) and Electronic Prescribing Incentive Program (eRx).  Preregistration is required to receive the call-in information.

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On February 23, 2010, CMS is hosting a teleconference on its January 13, 2010 proposed rule implementing the electronic health record (EHR) incentive payment provisions of the American Recovery and Reinvestment Act of 2009 (ARRA). Among other things, the program will address: eligibility for incentives; what constitutes meaningful use; how to demonstrate meaningful use; and how to submit comments.

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Today the Obama Administration released an 11-page summary of its health reform proposal in preparation for a bipartisan health reform summit scheduled for February 25, 2010. Among other things, the proposal includes a relatively-detailed discussion how the Administration would promote access to affordable insurance, address health care fraud and abuse proposals, and bridge the differences between the House and Senate reform proposals in other key areas. Items of note include the following:

• Access to Health Insurance – The Administration proposes expanding access to affordable insurance through a series of insurance market reforms, including an insurance purchasing pool; federal premium subsidies; a requirement that individuals buy insurance or pay a penalty (with exceptions); a requirement that employers defray costs employees receiving federal subsidies (with exceptions); expansion of Medicaid; and a new Health Insurance Rate Authority to provide federal assistance and oversight to states in conducting reviews of unreasonable rate increases and other insurance industry practices. There is no mention of establishing a public health insurance plan to compete with private insurers.
• Waste, Fraud and Abuse – The Presidential proposal includes a variety of program integrity provisions, which include: a comprehensive sanctions database; registration and background checks of billing agencies and individuals; expanded access to the Healthcare Integrity and Protection Data Bank; liability of Medicare administrative contractors for claims submitted by excluded providers; strengthened standards for facilities that seek reimbursement as community mental health centers; limiting debt discharge in bankruptcies of fraudulent health care providers or suppliers; expanded use of technology for real-time data review; sanctions for illegal distribution of a Medicare or Medicaid beneficiary identification or billing privileges; a study of universal product numbers/claims forms for selected items and services under the Medicare program; a state Medicaid prescription drug profiling requirement; extrapolation of Medicare Advantage risk adjustment errors to contract payment for a given year; modification of certain Medicare medical review limitations; establishment of a CMS-IRS data match to identify fraudulent providers; and prevention of delays in access to generic drugs.
• Cost-Containment Provisions – While the summary document does not include a detailed discussion of Medicare provider rate changes, it does include a limited number of cost containment/fiscal sustainability provisions, including: an adjustment in Medicare Advantage payments to reflect “unjustified coding patterns”; an excise tax on the most expensive health plans ($27,500 for a family plan) beginning in 2018 for all plans; and new Medicare Hospital Insurance taxes on high-income taxpayers.
• Industry Fees -- The President proposes a $33 billion fee on brand name pharmaceutical manufacturers over 10 years (up $10 billion from Senate plan), beginning in 2011; a $67 billion assessment on health insurers over 10 years beginning in 2014 (with certain exceptions); and an excise tax (rather than fee) on medical device manufacturers, raising $20 billion over 10 years, starting in 2013.
• Quality of Care – Although not discussed in the summary document, a separate description on the White House web site states the President’s plan would provide “incentives for doctors, and hospitals that improve quality while providing for better coordination that helps to reduce harmful medical errors and healthcare-acquired infections.” The plan also includes “innovative payment reforms so providers are rewarded for the quality of care they provide, rather than just additional tests or treatments.” Likewise, it would reward greater coordination of care between primary care providers and specialists.
• Part D Coverage Gap – The President’s proposal fills the Medicare Part D prescription drug "doughnut hole" by providing a $250 rebate to Medicare beneficiaries who reach the coverage gap in 2010, and then phasing down the coinsurance requirement so it is the standard 25 percent by 2020 throughout the coverage gap.
• Medicaid Matching Funds – The President would eliminate the Senate’s proposed enhanced Medicaid matching provision for Nebraska and instead provide additional federal financing for all states to support the expansion of Medicaid.
• CLASS Act – The White House endorses the Community Living Assistance Services and Supports (CLASS) Program, a voluntary, privately-funded long-term services insurance program, but makes a series of changes designed to “improve the CLASS program’s financial stability and ensure its long-run solvency.”

The Administration also has released a variety of background and summary documents on the White House Health Care Meeting website.

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