FDA Meeting on Biomarker Development (Sept. 5)

On September 5, 2014, the FDA is holding a public meeting at the Washington Plaza Hotel, in Washington DC, to discuss current scientific and regulatory approaches to biomarker development, acceptance, and utility in the development of therapeutic products (e.g., drugs and biologics). Specifically, FDA will focus on (1) identifying challenges for biomarker applications in early- and late- phase clinical trials, and (2) emerging best practices for successful biomarker-based programs (including codevelopment of in vitro diagnostic devices and use of biomarkers as outcome measures in clinical trials). Public input from the meeting will be used to identify opportunities for biomarker-related regulatory guidance, improve understanding and consistency in regulatory review of therapeutic product applications that incorporate biomarkers in clinical trial designs, and identify potential strategies to facilitate scientific exchanges in regulatory and non-regulatory contexts. For more information on the meeting, which is being held in collaboration with Brookings Institution, and for early registration deadlines to attend the live meeting, see the FDA announcement.  FDA will also accept comments on this topic through November 5, 2014.

CMS Announces Plans for Medicare DMEPOS Competitive Bidding Round 2 Recompete and National Mail-Order Recompete

On July 15, 2014, the Centers for Medicare & Medicaid Services (CMS) announced its plans to recompete the supplier contracts awarded in Round 2 of the Medicare Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS) Competitive Bidding Program and the National Mail-Order diabetic testing supplies competition, as it is required by statute to do at least every three years.  The current contract period expires June 30, 2016; the new contracts will begin on July 1, 2016.  For the recompete, CMS is making changes to both the composition of the product categories (including adding new products) and the number of competitive bidding areas (CBAs).

The product categories to be included in the Round 2 Recompete are as follows:

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CMS Proposes Major Changes to Medicare DMEPOS Payment/Coverage Policy Inside/Outside of Competitive Bidding Areas

On July 2, 2014, the Centers for Medicare & Medicaid Services (CMS) released a proposed rule that would make a series of significant changes to Medicare coverage and payment policies for durable medical equipment (DME), prosthetics, orthotics, and supplies (DMEPOS). Notably, the proposed rule would establish a methodology for adjusting Medicare DMEPOS fee schedule payment amounts across the country using information from the Medicare DMEPOS Competitive Bidding Program (CBP) – which CMS estimates would cut Medicare DMEPOS reimbursement by more than $7 billion in FYs 2016 through 2020. The proposed rule also would: test the use of bundled monthly payment amounts for DME and enteral nutrition under the CBP; modify CBP change of ownership (CHOW) and termination of contract rules; clarify qualifications for providing custom fitting services for orthotics; and revise Medicare hearing aid coverage policy. These provisions, which were part of a broader proposed rule that would also update the Medicare end-stage renal disease prospective payment system for 2015, are summarized in our Client Alert.

CMS Proposes Changes to Sunshine Act "Open Payments" Regulations in 2015 Medicare Physician Fee Schedule Rule

This post was written by Elizabeth Carder-Thompson, Katie C. Pawlitz, and Nancy E. Bonifant.

Today the Centers for Medicare & Medicaid Services (CMS) issued an advance copy of the CY 2015 Medicare Physician Fee Schedule (PFS) proposed rule, which includes certain changes to the regulations implementing the Physician Payment Sunshine Act, also known as the Open Payments program. These proposed changes come just three days after the inaugural deadline for applicable manufacturers and group purchasing organizations (GPOs) to report to CMS detailed information regarding payments and transfers of value made to physicians and teaching hospitals, as well as physician ownership information.

As previously reported, the Physician Payment Sunshine Act and related regulations require pharmaceutical and medical device manufacturers and GPOs to register with and submit to CMS data on their financial relationships with physicians and teaching hospitals. This financial data will be made publicly available on the CMS Open Payments website.

In the PFS proposed rule, CMS proposes the following changes to the Physician Payment Sunshine Act regulations:

  • Deleting the definition of “covered device” as duplicative of the definition of “covered drug, device, biological or medical supply”
  • Deleting the reporting exclusion for payments made to speakers at accredited continuing medical education events when certain requirements are met. Although CMS is deleting this express exclusion, it notes that such payments may still be excluded generally from reporting under the separate exclusion for indirect payments, which applies in those instances in which the applicable manufacturer is unaware of the identity of the covered recipient. In other words, the practical impact of this change may not be significant in the long run.
  • Requiring the reporting of the marketed name of the drug, device, biological, or medical supply related to the payment being reported. Previously, CMS finalized that for drugs and biologicals, manufacturers must report the market name of a related product, but that for devices and medial supplies, manufacturers could report either the name under which the product is marketed or the general therapeutic area or product category associated with the device or medical supply.
  • Requiring manufacturers to report stocks, stock options or any other ownership interest as distinct categories.

The proposed rule will be published in the Federal Register on July 11, 2014, and comments are due to CMS by September 2, 2014.

CMS Proposes Discontinuing 2 HCPCS Codes under New Demonstration

As recently announced, CMS is conducting what it describes as a “limited demonstration” of an internet-based notice and comment mechanism on internally-generated requests to discontinue Level II HCPCS codes.   CMS has just released details regarding the first two HCPCS codes it is proposing to remove under this process:

  • A7042 Implanted Pleural Catheter, Each.  CMS rationale:  the catheter is included in the procedure and therefore a separate code is unnecessary.
  • A9586 Florbetapir f18, diagnostic, per study dose, up to 10 millicuries.  CMS rationale:  HCPCS code A9599 “Radiopharmaceutical, Diagnostic, for beta-amyloid positron emission tomography (pet) imaging, per study dose” adequately describes this product.

CMS will accept public comments on the proposed HCPCS discontinuations until July 21, 2014.  Comments should be submitted to hcpcs@cms.hhs.gov, and include the following text in the subject line:  “COMMENT RE: DISCONTINUATION OF CODE _____.” 

FDA Will Not Enforce Compliance for Mobile Device Data Systems and Other Low Risk Devices, Agency Reports

This post was written by Jennifer Pike.

In a new draft guidance document, the Food and Drug Administration (FDA) has announced that it does not intend to enforce compliance with general regulatory controls that apply to Medical Device Data Systems (MDDS), medical image storage devices and medical image communications devices.

MDDS refers to hardware and software that transfers, stores, converts format and displays medical device data, but that does not modify the data or control the functions or parameters of any connected medical device. In 2011, MDDS were classified by FDA as Class I medical devices subject to general regulatory controls under the Federal Food, Drug and Cosmetic Act. FDA has since determined that MDDS pose a low risk to the public and play an important role in advancing health.  The agency has therefore decided not to enforce compliance with the controls that apply to MDDS, medical image storage devices and medical image communications devices (e.g., registration and listing, premarket review, postmarket reporting and quality system regulation).

The draft guidance also proposes changes to FDA’s draft guidance titled “Mobile Medical Applications” issued on September 25, 2013 to conform with the new draft guidance.

Comments regarding the draft guidance should be submitted to FDA by August 25, 2014.

CMS Proposes 0.3% Cut in Medicare Home Health PPS Rates for CY 2015

Today CMS released its proposed rule to update Medicare home health prospective payment system (HH PPS) rates for CY 2015. CMS estimates that the rule would reduce Medicare payments to home health agencies by approximately $58 million (-0.3%) in 2015 compared to 2014 levels. Specifically, while CMS anticipates a 2.2% home health payment update percentage ($427 million increase), the increase would be more than offset by implementation of the second year of a four-year phase-in of the rebasing adjustments to the HH PPS rates, which would result in a -2.5% adjustment ($485 million decrease).

The proposed rule also includes a number of policy proposals, including: simplification of the face-to-face encounter documentation requirements and clarification of when such documentation is required; changes to the HH PPS case-mix weights; revisions to the home health quality reporting program; simplification of therapy reassessment timeframes; a revision to the Speech-Language Pathology personnel conditions of participation; and limitations on the reviewability of CMS’s decision to impose a civil monetary penalty for noncompliance with federal participation requirements. Finally, the rule discusses insulin injections under the HH PPS and the delay in implementation of ICD-10-CM, and it solicits comments on the HHA value-based purchasing.

The official version of the rule is scheduled to be published on July 7, 2014. CMS will accept comments until September 2, 2014.

CMS Plans Series of Calls this Month on Medicare Dialysis Quality Programs

On July 10, 2014, CMS is hosting a national provider call to discuss the new Five Star Rating system that will be added to Dialysis Facility Compare (DFC) in October 2014. Among other things, the call will address the methodology used to calculate the ratings and how to access and preview the ratings.  In addition, CMS is holding a provider call on July 16 on the End-Stage Renal Disease (ESRD) Quality Incentive Program (QIP), a pay-for-performance initiative that ties a facility's quality scores to payment during a payment year (PY). The call will focus on the preliminary ESRD QIP PY 2015 Performance Score Report, which previews how well facilities scored on the relevant quality measures.  Finally, a July 23 call will focus on PY 2017 and PY 2018 ESRD QIP provisions in the upcoming ESRD prospective payment system proposed rule.

CMS Planning Changes to Medicare Shared Savings Program/Accountable Care Organization (ACO) Rules

Yesterday CMS submitted to the White House Office of Management and Budget (OMB) a proposed rule to make changes to the Medicare Shared Savings Program, including provisions relating to Medicare payments to providers participating in ACOs. These changes would apply to existing ACOs and approved ACO applicants participating in the program beginning January 1, 2016. The text of the rule is not available until it is cleared by OMB and sent to the Federal Register.

New Postings on the Reed Smith Health Industry Washington Watch Blog

The Reed Smith Health Industry Washington Watch blog has been updated to report on recent health policy developments, including the following:

  • HHS Regulatory Developments. HHS has released its spring semiannual regulatory agenda, along with a final rule on the employment orientation limit applicable to Affordable Care Act (ACA) health coverage waiting periods. CMS has announced Medicare payment adjustments for low-volume hospitals and Medicare-dependent hospitals.
  • Other HHS Developments. Secretary Sylvia Mathews Burwell has been sworn in as HHS Secretary. HHS has provided updates on ACA insurance costs and choices and announced management changes. HRSA is standing by its interpretation of the 340B orphan drug exclusion despite a court ruling. CMS is adding a “Provider Relations Coordinator” for MAC/RAC auditor process issues, and it plans to expand Medicare quality “star” ratings. CMS also has released Medicare Part B drug payment files and a variety of Medicare charge and other data. FDA has announced its “openFDA” data initiative, and it has released draft social media guidance documents and guidance on communicating new risk information about drugs.
  • OIG & GAO Developments. The OIG has issued a Special Fraud Alert on lab payments to referring physicians, along with reports on drug manufacturers’ Medicaid AMP determinations, state Medicaid drug rebate reporting, Medicare long-term care hospital interrupted stay policy, mail-order competitive bidding for diabetes test strips, and Medicare Part D drug formularies. The GAO has issued reports on Medicaid nursing home qualification, Medicaid managed care, and Medicare physical therapy self-referrals.
  • Legislative Developments. The Finance Committee is inviting comments on health care data transparency. Congress is considering a number of bipartisan public health bills, and committee hearings have addressed various health policy issues.
  • Odds & Ends. MedPAC has issued Medicare delivery reform recommendations, and Medicare contractors are cracking down on DMEPOS supplier violations.
  • Health Industry Events. Upcoming CMS events will focus on clinical laboratory payments, home health orders, and Medicare hospital outpatient payments and policies. An FDA workshop will address 3-D printing of medical devices.
  • @ReedSmithHealth is on Twitter. For the latest news on health policy issues involving Medicare, Medicaid, HIPAA, OIG, FDA, and more, follow us at @ReedSmithHealth.

OIG Issues Special Fraud Alert on Lab Payments to Referring Physicians

Today the HHS OIG issued a Special Fraud Alert highlighting its concerns regarding two trends involving transfers of value from laboratories to physicians that the OIG believes “present a substantial risk of fraud and abuse under the anti-kickback statute.” Specifically, the OIG details risks involved with certain compensation paid by laboratories to referring physicians and physician group practices for (1) blood specimen collection, processing, and packaging, and (2) submitting patient data to a registry or database. The Special Fraud Alert reiterates the OIG’s “longstanding concerns” when payments from laboratories to physicians exceed the fair market value of the physicians’ services or reflect the volume or value of referrals of federal health care program business.  Reed Smith is preparing an analysis of the Alert.

Finance Committee Invites Comments on Health Care Data Transparency

Senate Finance Committee Chairman Ron Wyden and Ranking Member Chuck Grassley are asking providers, patients, insurers, entrepreneurs, and other stakeholders for ideas on ways to improve the availability and utility of health care data, while protecting patient privacy. In particular, the Senators are requesting information on: the data sources that should be made more broadly available; the form such data should be conveyed; ways to reduce the unnecessary fragmentation of health care data; and reforms to overcome barriers that stand in the way of effective use of existing data sources. Comments will be accepted until August 12, 2014.

GAO Assesses Trends in Medicare Physical Therapy Self-Referrals

The GAO recently examined “self-referral” for outpatient physical therapy (PT) services, which the GAO defines as a provider referring patients to entities in which the provider or the provider's family members have a financial interest. According to the GAO, non-self-referred PT services per 1,000 Medicare FFS beneficiaries increased by 41% from 2004 to 2010, while the number of self-referred PT was generally flat. Expenditures associated with non-self-referred PT services also grew at a higher rate than for self-referred services. The GAO observed that these findings differ from its prior reviews of self-referrals involving advanced imaging, anatomic pathology, and intensity-modulated radiation therapy, in which the GAO found that self-referred services and expenditures grew faster than non-self-referred services and expenditures. The GAO suggests that a potential reason for this difference is that non-self-referred PT services can be performed by providers who can directly influence the amount, duration, and frequency of PT services through the Medicare written plan of care, whereas radiologists, for example, generally do not have the discretion to order more imaging services or more intense imaging procedures.

In addition, the GAO found that the relationship between provider self-referral status and PT referral patterns was mixed, and varied on the basis of referring provider specialty, Medicare beneficiary practice size, and geography. Self-referring providers in the three specialties that GAO examined (family practice, internal medicine, and orthopedic surgery) generally referred more beneficiaries for PT services on average than non-self-referring providers, but ordered fewer PT services per beneficiary compared to non-self-referring providers. The GAO also found that PT service referrals in the year a provider began to self-refer increased at a higher rate relative to non-self-referring providers of the same specialty.

In the report, “Medicare Physical Therapy: Self-Referring Providers Generally Referred More Beneficiaries but Fewer Services per Beneficiary,” the GAO concluded that regardless of referral patterns, the substantial growth in PT services raises concerns about costs for Medicare and beneficiaries. The GAO suggests that CMS’s initiative to collect additional information on beneficiary functional status on all PT claims may help CMS better assess the appropriateness of PT treatment provided by both self-referring and non-self-referring providers.

Congressional Hearings Examine Medicare Fraud, ACA, Digital Health, MedPAC Report, Brain Injuries

Recent Congressional hearings on health policy issues include the following:

MedPAC Issues Medicare Delivery Reform Recommendations

On June 13, 2014, the Medicare Payment Advisory Commission (MedPAC) released its June 2014 Report to the Congress on Medicare and the Health Care Delivery System. Among other things, MedPAC addresses ways to align Medicare fee-for-service (FFS), Medicare Advantage, and accountable care organization policies on payment, risk adjustment, and quality measurement. MedPAC also discusses various FFS reforms, including post-acute care reforms to promote payment consistency across settings and bonus payments to support primary care. Finally, MedPAC discusses changing income eligibility standards for the Medicare Savings Programs to help low-income Medicare beneficiaries afford out-of-pocket costs, and it examines the impact of medication adherence on health spending. 

OIG Highlights Inconsistencies in State Reporting of the Federal Share of Medicaid Drug Rebates

The OIG issued a report today entitled “Inconsistencies in States’ Reporting of the Federal Share of Medicaid Drug Rebates.”  States are eligible for higher federal financial participation (FFP) rates for certain Medical Assistance services, such as those related to family planning, Indian Health Services, and breast and cervical cancer care. Based on prior work, the OIG was concerned that states may not always use the higher FFP rates when refunding to the federal government its share of drug rebates that drug manufacturers paid to the states, which could result in a loss of federal share. The new OIG report assesses whether states reported drug rebates at the applicable FFP rates for the period July 1, 2011 through June 30, 2012. According to the OIG, while states claimed drug expenditures at higher FFP rates, they did not consistently report the federal share of drug rebates at those higher FFP rates for one or more quarters during the review period. The OIG also found that states used different methodologies to determine the federal share of drug rebates, which could be attributed to a lack of specific national CMS guidance instructing states to report drug rebates at the FFP rates at which drugs were originally reimbursed or that identifies acceptable methods to determine the federal share of drug rebates. The OIG recommended that CMS issue guidance that clearly instructs states to report drug rebates at the applicable FFP rates and identify acceptable methods to determine the federal share of drug rebates; CMS concurred.

GAO Reviews Financial Characteristics of Applicants for Medicaid Nursing Home Coverage

The GAO has issued a report entitled “Medicaid: Financial Characteristics of Approved Applicants and Methods Used to Reduce Assets to Qualify for Nursing Home Coverage.”  The report highlights ways applicants in Florida, New York, and South Carolina reduce their countable assets to qualify for Medicaid nursing home coverage, including (1) spending countable resources on goods and services that are not countable towards financial eligibility, such as prepaid funeral arrangements; (2) converting countable resources into noncountable resources that generate an income stream for the applicant (e.g., an annuity or promissory note); (3) giving away countable assets as a gift to another individual (which could lead to a penalty period that delays Medicaid nursing home coverage); and (4) for married applicants, increasing the amount of assets a spouse remaining in the community can retain (e.g., through the purchase of an annuity). The report does not include recommendations.

GAO Calls for Greater Medicaid Managed Care Program Integrity Efforts

A recent GAO report, “Medicaid Program Integrity: Increased Oversight Needed to Ensure Integrity of Growing Managed Care Expenditures," identified gaps in both state and federal Medicaid managed care program integrity efforts. For instance, based on a review of Medicaid activities in seven states, the GAO found that five state program integrity units and four Medicaid Fraud Control Units focused on Medicaid FFS claims and do not closely examine Medicaid managed care activities. Likewise, the GAO concluded that federal entities have taken few steps to address Medicaid managed care program integrity. As a result, federal and state entities may not be able to ensure that managed care organizations are taking appropriate actions to identify, prevent, or discourage improper payments. Given the expanding role of Medicaid managed care, inadequate managed care program integrity efforts “will leave a growing portion of federal Medicaid dollars vulnerable to improper payments.” The GAO therefore recommended that CMS: require states to audit payments to and by managed care organizations; update its guidance on Medicaid managed care program integrity; and provide states additional support for managed care oversight, such as audit assistance from existing contractors.

HHS Provides Update on ACA Insurance Costs and Choices, Announces Management Changes

HHS has released a report on premiums, tax credits, and health plan choices on the ACA federal Marketplace for plans operating in 2014.  In addition, CMS has launched an initiative, dubbed “From Coverage to Care," designed to answer questions consumers may have about their new health coverage under the ACA and to help individuals make the most of their new benefits. The Administration also has announced a number of management changes at CMS designed to strengthen implementation of the ACA going forward, including a Principal Deputy Administrator to oversee ACA Marketplace and other agency operations, a Marketplace Chief Executive Officer, and a Marketplace Chief Technology Officer.

Bipartisan Health Bills Advance

This week the House is scheduled to consider five bipartisan public health bills addressing traumatic brain injuries, newborns, trauma patients, and individuals with autism. Specifically, the House is expected to vote on the following:

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CMS Adds MAC/RAC "Provider Relations Coordinator" for Auditor Process Issues

In an effort to “increase program transparency and offer more efficient resolutions to providers” subject to the medical review process, CMS has created the new position of “Provider Relations Coordinator."  The Provider Relations Coordinator is intended to improve communication between providers and CMS on medical review process issues. For instance, providers can contact the Provider Relations Coordinator when an auditor is failing to comply with documentation request limits or has a pattern of not issuing review results letters in a timely manner. Providers also can submit recommendations for improving the Recovery Auditor or Medicare Administrative Contractor medical review process to the Provider Relations Coordinator.

OIG Reports Assess Impact of Mail-Order Competitive Bidding on Diabetes Test Strips Market Concentration

The OIG has issued two reports on Medicare market share of mail-order diabetes test strips – one examining the market share before the start of Medicare mail-order competitive bidding in July 1, 2013 and a second report examining the three-month period after competitive bidding went into effect. By way of background, the Medicare Improvements for Patients and Providers Act of 2008 (MIPPA) prohibited CMS from awarding competitive bidding program contracts for mail order diabetes test strips to suppliers that do not demonstrate that their bid covers at least 50%, by volume, of all types of mail order diabetes test strips. MIPPA also requires the OIG to complete a study to determine market shares of diabetes test strips in the competitive bidding program.

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CMS Plans Medicare Quality "Star" Ratings for Hospitals, Dialysis Facilities, Home Health

On June 18, 2014, CMS announced in a blog posting that it is planning to add a “Five Star” quality rating system to the Hospital Compare, Dialysis Facility Compare, and Home Health Compare websites on Medicare.gov. The agency will start making the new quality ratings available later this year and into early 2015. CMS already maintains star ratings on its Nursing Home Compare and Physician Compare sites.

OIG Report Concludes Part D Plans Generally Include Drugs Commonly Used by Dual Eligibles

The OIG has released an ACA-mandated report assessing the extent to which formularies used by Medicare Part D drug plans include drugs commonly used by full-benefit dual-eligible individuals(i.e., individuals eligible for both Medicare and Medicaid and who receive full Medicaid benefits and assistance with Medicare premiums and cost-sharing). The report, which covered the 3,309 Part D plans operating in 2014, determined that on average, Part D plan formularies include 96% of the 195 commonly-used drugs identified by the OIG. In addition, 64% of the commonly-used drugs are included by all Part D plan formularies. The OIG observes that these results are largely unchanged from the 2013 report. Formularies applied utilization management tools to 28% of the unique drugs reviewed in 2014, also the same as in 2013.

CMS Releases Updated Hospital Charge Data, New Chronic Conditions & Geographic Variations Files

Earlier this month, CMS released its first annual update to its Medicare inpatient and outpatient hospital charge databases. Specifically, the updated CMS databases include information on 2012 average hospital charges for the 100 most common Medicare inpatient services and 30 most common Medicare outpatient services. The database now includes two years of data, allowing researchers to begin to look at trends. CMS also has released a variety of information on chronic conditions among Medicare fee-for-service (FFS) beneficiaries, including data on prevalence, utilization, and Medicare spending. In addition, the CMS Geographic Variation Dashboards present Medicare FFS per-capita spending at the state and county levels in interactive formats, and a CMS Research Cohort Estimate Tool is intended to help researchers and other stakeholders estimate the number of Medicare beneficiaries with certain demographic profiles or health conditions.

Medicare Payment Adjustments for Low-Volume Hospitals and Medicare-Dependent Hospitals

On June 17, 2014, the Centers for Medicare & Medicaid Services (CMS) published a notice making changes to the Medicare payment adjustment for low-volume hospitals and to the Medicare-dependent hospital (MDH) program under the inpatient prospective payment system (IPPS). The adjustments, which were mandated by the Protecting Access to Medicare Act of 2014, apply to the second half of fiscal year (FY) 2014, or April 1, 2014 through September 30, 2014. The payment adjustments are expected to increase overall IPPS payments in FY 2014 by $227 million (an additional 0.24%) compared to the previous estimate of FY 2014 payments to all IPPS hospitals published in the IPPS final rule for FY 2014. Specifically, CMS estimates that approximately 600 hospitals qualifying as low-volume hospitals through September 30, 2014 will experience an increase in payments of approximately $161 million compared to CMS’s earlier estimate in the FY 2014 IPPS final rule, and 118 MDHs will experience an overall increase of approximately $66 million compared to CMS’s estimate in the final IPPS rule.

HHS Issues Spring 2014 Semiannual Regulatory Agenda

The Department of Health and Human Services (HHS) has released its Spring 2014 Semiannual Regulatory Agenda, which outlines planned regulatory initiatives across the Department and in a wide range of policy areas. Major prospective HHS rulemakings likely to have a significant economic impact on a substantial number of small entities are compiled in a separate Federal Register notice.

Obama Administration Finalizes Employment Orientation Limit Applicable to ACA Health Coverage Waiting Period

On June 25, 2014, HHS and the Departments of Labor and Treasury are publishing a final rule addressing the treatment of employment orientation periods for purposes of the Affordable Care Act (ACA) health insurance coverage waiting period limitation. The ACA generally bars employer-sponsored group health plans and group health insurance issuers from imposing a health coverage waiting period of more than 90 days after an employee is “otherwise eligible for coverage.” Being “otherwise eligible” to enroll in a plan means having met the plan's substantive eligibility conditions, which could include satisfying a bona fide employment-based orientation period. Under the June 25 final rule, such bona fide employment-based orientation periods may not exceed one month. The rule is intended to “ensure that an orientation period is not used as a subterfuge for the passage of time, or designed to avoid compliance with the 90-day waiting period limitation.” The final regulations apply to group health plans and group health insurance issuers for plan years beginning on or after January 1, 2015.

OIG Examines Medicare LTCH Interrupted Stay Policy

The OIG has issued a report entitled “Vulnerabilities in Medicare’s Interrupted-Stay Policy for Long-Term Care Hospitals.”  By way of background, the Medicare long-term care hospital (LTCH) interrupted-stay policy generally treats time spent at an LTCH before and after an interruption as a single stay, rather than considering the second portion of the LTCH stay to be a readmission with a separate payment. However, LTCHs receive payment for a second stay if a beneficiary returns home, receives services from multiple facilities before returning to the LTCH, or is discharged to an inpatient prospective payment system (IPPS) hospital, inpatient rehabilitation facility (IRF), or skilled nursing facility (SNF) and then readmitted to the LTCH after the applicable “fixed-day threshold” – a specified number of days that varies by the type of intervening facility. The OIG identified several vulnerabilities in the LTCH interrupted-stay policy, including inappropriate payments, financial incentives to delay readmissions, and potential overpayments to co-located LTCHs. The OIG estimates that in 2010 and 2011, Medicare inappropriately paid $4.3 million to LTCHs and “intervening facilities” (facilities that treated the patients during the interruptions in the LTCH stay) for interrupted stays, and potentially millions of dollars more for inappropriate readmissions. The OIG points out that the readmissions may be appropriate, but the OIG raises concerns regarding “whether financial incentives, rather than beneficiaries’ medical conditions, may have influenced some LTCHs’ readmission decisions.” The OIG recommends a series of steps to address identified vulnerabilities, including CMS analyses, enforcement, and recoupment of identified overpayments. Previously, in the May 15, 2014 proposed Medicare IPPS/LTCH PPS update for FY 2015, CMS proposed to expand the interrupted stay policy by adopting the same 30-day standard as the fixed-day threshold for a discharge to and readmission from an IPPS hospital, IRF or SNF. 

FDA Releases Drug/Device Industry Social Media Guidance Documents

The FDA released two draft social media guidance documents last week, describing how manufacturers, packers and distributors of prescription drugs and medical devices may: (1) communicate both benefit and risk information on Internet/social media platforms with character space limitations, and (2) correct independent third-party misinformation about a firm’s products.  For details, see Reed Smith's Client Alert posted on our Life Sciences Legal Update blog.