On the Reed Smith Life Sciences Legal Update blog, Health Care team members Thomas Greeson and Paul Pitts have written about post-election implications for the radiology industry. The report describes their assessments of the short and mid-term time horizon for a number of health policy developments such as integration (e.g., accountable care organizations), government enforcement, antitrust, and self-referrals. For additional details, see our full post.
HHS has launched the State Innovation Models Initiative, a $275 million competitive funding opportunity for up to 30 states to design and test multi-payer payment and delivery models designed to generate savings and improve care for Medicare, Medicaid, and Children’s Health Insurance Program (CHIP) beneficiaries. States can apply for either Model Testing awards, intended to assist in implementing developed models (up to 5 states), or Model Design awards providing funding and technical assistance as states assess system improvement options (25 states).
Recent hearings on health policy issues include:
- Senate Health, Education, Labor and Pensions Committee hearings on HIV/AIDS drug costs, health care delivery reforms, and federal laws to ensure patients’ access to care and privacy.
- A Senate Finance Committee hearing on “Progress in Health Care Delivery: Innovations from the Field.”
- A House Judiciary Subcommittee on Intellectual Property and Competition hearing on health care consolidation and competition after the ACA.
- A House Veterans’ Affairs Committee hearing on the Veterans Affairs Department’s prosthetics purchasing policy.
Coming up, the House Education and the Workforce Health Subcommittee is holding a hearing May 31 on “Barrier to Lower Health Care Costs for Workers and Employers.” In addition, on June 6, the House Veterans’ Affairs Committee has scheduled a hearing entitled “Through the Looking Glass: Return to PPV (Pharmaceutical Prime Vendor program).”
HHS published a rule on February 27, 2012 that implements the procedural framework for submission and review of State Innovation Waiver applications under section 1332 of the ACA, effective April 27, 2012. Under the rule, states will have flexibility to apply for a State Innovation Waiver to pursue their own strategies to provide their residents with access to high quality, affordable health insurance. The program is intended to allow states to implement policies that differ from those in the ACA if: they provide coverage that is at least as comprehensive and affordable as the coverage offered through Health Insurance Exchanges; the state provides coverage to at least as many residents as otherwise would have been covered under the ACA; and the policies do not increase the federal deficit. The final rules reflect limited changes to the March 14, 2011 proposed rules based on public comments, including clarification that a state does not have to enact a new law to support a section 1332 waiver if the state already has a law in place.
CMS is launching a new Innovation Advisors program, which will provide fellowships to up to 200 individuals to test new models of care delivery in their own organizations and communities. CMS is seeking experts in health care economics and finance, population health, systems analysis, and operations research to support the Innovation Center in testing new models of care delivery that support the three-part aim of improving health, improving care, and lowering costs through continuous improvement. Innovation advisors will be expected to commit up to 10 hours per week to the Innovation Advisor Program during the initial six months of their fellowships, with part of that time devoted to the seminars and instruction and the rest devoted to implementing the improvement project proposed in their application.
CMS and the HHS Office of the National Coordinator are hosting the first "Care Innovations Summit" in Washington, DC on January 26, 2012 to "showcase innovative work in care delivery and payment." Presentations will be delivered by “national thought leaders, senior government officials and visionary innovators,” who will provide information on opportunities for collaboration, funding, and partnership. The target audience for the summit includes health care professionals, patient advocates, entrepreneurs, policymakers, researchers, investors, and health information technology innovators. The event is free, but space is limited and registration is required.
The House of Representatives has voted to repeal the ACA, by a largely party-line vote of 245 to 189. The House subsequently passed H. Res. 9, to instruct four House committees (Education and the Workforce, Energy and Commerce, Judiciary, and Ways and Means) to report legislation to replace the law with provisions that achieve a number of objectives, including: removing excessive regulations and wasteful spending, decreasing health insurance premiums through increased competition and choice, medical liability system reform, increasing the number of insured Americans, increasing state flexibility to administer Medicaid, and encouraging personal responsibility for health care coverage and costs, among others. As previously reported, the President has said he would not sign the repeal bill if it ever reached his desk (which is unlikely in light of Democratic control of the Senate). In his State of the Union address on January 25, 2011, President Obama offered to work with lawmakers to “improve this law by making care better or more affordable.”
The new Republican leadership of the House of Representatives are moving ahead on legislation (H.R. 2) to repeal the Patient Protection and Affordable Care Act and the health care-related provisions in the Health Care and Education Reconciliation Act of 2010 (collectively known as the ACA). On January 7, the House approved a procedural motion to allow a vote on H.R. 2 and a companion measure, H.Res. 9, instructing relevant committees to report legislation replacing the “job-killing health care law” with provisions that achieve a number of objectives, including: removing excessive regulations and wasteful spending, decreasing health insurance premiums through increased competition and choice, medical liability system reform, increasing the number of insured Americans, increasing state flexibility to administer Medicaid, and encouraging personal responsibility for health care coverage and costs, among others. The Congressional Budget Office estimates that H.R. 2 would increase the deficit by approximately $230 billion over the 2012–2021 period, although supporters of the legislation dispute that figure.) While the “repeal and replace” measures are expected to pass the House, the President has said that he would not sign the repeal bill if it ever reached his desk, which is unlikely in light of Democratic control of the Senate.
As widely reported in the media, on October 14, 2010, a federal judge in Florida ruled that he will allow a lawsuit challenging the constitutionality of the Affordable Care Act to proceed. The lawsuit argues that the ACA's individual mandate that people buy health insurance or else pay a penalty exceeds Congress's authority under the Commerce Clause. Judge Roger Vinson agreed, holding that Congress is attempting to regulate not interstate commerce but economic inactivity by requiring individuals to purchase a private product "based solely on citizenship and on being alive." Judge Vinson ruled that the plaintiffs "have at least stated a plausible claim that the line has been crossed" concerning the outermost bounds of federal power under the Constitution. Litigation pending in Virginia has also been allowed to proceed, while a U.S. District Court judge in Michigan dismissed a separate challenge to the litigation, raising the likelihood that the constitutionality of the law will need to be resolved by the U.S. Supreme Court.
On July 23, 2010, the Obama Administration published an interim final rule with comment period implementing ACA requirements regarding internal claims and appeals and external review processes for group health plans and health insurance coverage in the group and individual markets. The rules generally apply to plan/policy years beginning on or after September 23, 2010. Comments will be accepted until September 21, 2010. In addition, on July 19, 2010, HHS, along with the Departments of Treasury and Labor, published an interim final rule implementing ACA requirements that group health plans and health insurance issuers provide preventive benefits coverage. The rule also prohibits the imposition of cost-sharing requirements for certain preventive health services. The rules generally apply to plan/policy years beginning on or after September 23, 2010. Comments will be accepted until September 17, 2010.
ACA Rules on Preexisting Condition Exclusions, Lifetime and Annual Limits, Rescissions, and Patient Protections
On June 28, 2010, the Obama Administration published an interim final rule with comment period implementing Affordable Care Act insurance reforms it dubs “a new Patient’s Bill of Rights.” Specifically, the regulation issued by the Departments of Health and Human Services (HHS), Labor, and Treasury implements ACA provisions regarding preexisting condition exclusions, lifetime and annual dollar limits on benefits, rescissions, and patient protections applicable to group health plans and health insurance coverage in the group and individual markets . The interim final rules are effective August 27, 2010; but generally apply to group health plans and group and individual health insurance issuers for plan/policy years beginning on or after September 23, 2010 (with certain exceptions). Comments on the regulation will be accepted until August 27, 2010. An HHS fact sheet is posted here. A Reed Smith analysis of the rule is available here.
On June 29, 2010, the HHS Office of Consumer Information and Insurance Oversight (OCIIO) announced that it is now accepting applications for the Early Retiree Reinsurance Program (EERP), a $5 billion program established by the Affordable Care Act. The EERP will reimburse participating employment-based plans for a portion of the cost of health benefits for retirees age 55 and older who are not eligible for Medicare and their spouses, surviving spouses, and dependents. The EERP will reimburse sponsors for certain Medicaid claim costs between $15,000 and $90,000 (indexed for plan years starting on or after October 1, 2011). This temporary program became effective June 1, 2010 and will end no later than January 1, 2014.
On July 1, 2010, HHS announced the establishment of a new Pre-existing Condition Insurance Plan (PCIP) that will offer coverage to uninsured Americans who have been uninsured for at least six months, have been unable to get health coverage because of a health condition, and are a U.S. citizen or are residing in the U.S. legally. To date, 29 states have elected to run their own plans, while 21 states have requested that HHS administer the plan. There are federal standards for general eligibility for the PCIP program, but state programs can vary on cost, benefits, and determination of pre-existing condition. The PCIP is a transitional program that will operate until 2014, when insurers will be banned from discriminating against adults with pre-existing conditions and individuals and small businesses will be able to purchase insurance through new Exchanges.
Reed Smith Health Care Reform Review: The Affordable Care Act - Analysis and Implications for DMEPOS Suppliers
Suppliers and manufacturers of durable medical equipment (DME), prosthetics, orthotics, and supplies (DMEPOS) will be impacted, directly and indirectly, by numerous provisions of the recently-enacted health reform legislation, H.R. 3590, the Patient Protection and Affordable Care Act (PPACA), as amended by H.R. 4872, the Health Care and Education Reconciliation Act of 2010 (Reconciliation Act), collectively known as the “Affordable Care Act” or ACA.
Among other things, the Affordable Care Act: expands the Medicare DMEPOS competitive bidding program; revises the Medicare DMEPOS fee schedule payments (including applying a “productivity adjustment” to the fee schedule update); exempts pharmacies from certain DMEPOS accreditation requirements; revises Medicare power wheelchair payment policy; mandates disclosure of certain payments between manufacturers and physicians; institutes a variety of new program integrity provisions; and imposes a new tax on medical devices. These provisions are discussed in greater detail below.
This memorandum supplements our extensive Affordable Care Act analysis released in April 2010, which explains how the law expands access to health insurance (including through subsidies, mandates, and market reforms); reduces health care spending (particularly in the Medicare program); expands federal fraud and abuse authorities; and institutes a variety of other health policy reforms. We also have posted additional Reed Smith Health Care Reform Review articles focusing on specific aspects of the legislation on our health policy blog, Health Industry Washington Watch, where we also are reporting on implementation efforts associated with the ACA.
To read the full alert, click here.
Under the ACA, certain group health plans and health insurance coverage existing as of March 23, 2010 (the date of enactment of the ACA), are considered “grandfathered” and excused from complying with some of the ACA’s health care improvement and market reform provisions. On June 17, 2010, the Department of Health and Human Services (HHS) and the Departments of Labor and Treasury published interim final rules on the "Status as a Grandfathered Health Plan under the Patient Protection and Affordable Care Act." Among other things, the rule establishes the circumstances under which plan sponsors may adjust co-payments, deductibles and employer contributions to their employees' premiums without forfeiting their grandfather status. For instance, as described in greater detail in the regulation, grandfathered plans may adjust costs to keep pace with medical inflation, add new benefits, make modest adjustments to existing benefits, voluntarily adopt certain new consumer protections, or make changes to comply with state or other federal laws. Plans will lose their grandfathered status, however, if they make major changes, such as significantly cutting or reducing benefits; significantly raising coinsurance, copayments, or deductibles; significantly lowering employer contributions or caps on payments for covered services; or changing insurance companies (with certain exceptions). The interim final rule is effective June 14, 2010, with certain exceptions, and comments will be accepted until August 16, 2010. HHS has posted a fact sheet summarizing the grandfathered health plan rule.
The ACA provides a tax-free, one-time $250 check for beneficiaries who reach the Part D coverage gap during 2010 and are not eligible for low-income subsidies. A June 10, 2010 CMS memo to Part D plan sponsors provides additional information on implementation of coverage gap rebate. The memo notes that prompt submission of prescription drug event (PDE) records is necessary to ensure that eligible beneficiaries receive rebates in a timely manner. CMS also instructs sponsors on how to prepare to address situations such as: the enrollee has not received a rebate check because of an address change or unsubmitted PDE records; the enrollee does not understand how they reached the coverage gap; or the enrollee mistakenly believes they reached the coverage gap, but did not. HHS also has announced a media campaign and other outreach efforts to protect beneficiaries from potential scams associated with the rebate checks. In addition to rebate checks, the ACA provides for a Part D drug discount program under which Medicare beneficiaries in the Part D coverage gap will have access to manufacturer discounts equal to 50% of the negotiated price of the drug (except generic drugs), effective January 1, 2011. CMS continues to provide guidance on this program, including a June 2, 2010 memo to Part D plan sponsors addressing: determinations regarding the applicable discount if the sponsor offers Part D supplemental benefits with fixed copays in the coverage gap; Employer Group Waiver Plan requirements to submit attestations and to make benefit information available for audit; the application of the discount before Platino coverage is applied; and coordination of benefits with other non-Part D payers that incorrectly paid primary to Medicare.
Reed Smith Health Care Reform Review: Analysis and Implications of Fraud Abuse and Program Integrity Provisions of the Affordable Care Act
In April 2010, Reed Smith provided an extensive analysis of the recently-enacted health reform legislation, H.R. 3590, the Patient Protection and Affordable Care Act (PPACA), as amended by H.R. 4872, the Health Care and Education Reconciliation Act of 2010 (Reconciliation Act). Together, these sweeping measures expand access to health insurance (including subsidies, mandates, and market reforms); reduce health care spending (particularly in the Medicare program); expand federal fraud and abuse authorities and transparency requirements; impose new taxes and fees on health industry sectors; and institute a variety of other health policy reforms.
In this analysis, we concentrate on those provisions in the new law that will affect Fraud Abuse and Program Integrity Provisions. These include changes to the federal False Claims Act, the Anti-Kickback Statute, and the Civil Monetary Penalty laws. In addition, we discuss the statutory predicates for upcoming anticipated regulations, including new transparency provisions and mandatory compliance programs.
Many of the new provisions require the Secretary of the Department of Health and Human Services (HHS) to issue implementing regulations, and we will be reporting on these developments in the coming months.
To read the full alert, click here.
Now that the Patient Protection and Affordable Care Act of 2010 (PPACA) and the companion Health Care and Education Reconciliation Act of 2010 (Reconciliation Act) have been enacted, attention shifts to analysis and implementation efforts. Reed Smith has prepared a number client alerts analyzing various aspects of the new health reform legislation, including a major alert concentrating on those PPACA provisions we believe are of most interest to health care providers and medical device and pharmaceutical manufacturers, along with summaries of major tax-related provisions of the PPACA, PPACA provisions impacting health plans, and the PPACA’s new tax incentives for small biotech companies. Future publications are planned, and will be available here.
On April 14, 2010, the Department of Health and Human Service (HHS), along with the Internal Revenue Service and the Employee Benefits Security Administration, published a notice soliciting comments on sections 1001 and 10101 of the PPACA. These provisions added section 2718 of the Public Health Service Act (PHS Act), which, among other things, requires health insurance issuers offering individual or group coverage to submit annual reports to the Secretary on the percentages of premiums spent on reimbursement for clinical services and activities that improve health care quality, and to provide rebates to enrollees if this spending does not meet minimum standards for a given year. Section 1562 of PPACA also added section 715 of the Employee Retirement Income Security Act of 1974 and section 9815 of the Internal Revenue Code of 1986, which effectively incorporate by reference section 2718 and other amendments to the PHS Act. The notice invites public comments in advance of future rulemaking, with particular emphasis on specific questions regarding: actual medical loss ratio (MLR) experience and minimum MLR standards; uniform definitions and calculation methodologies; level of aggregation; data submission and public reporting; rebates; federal income tax; enforcement; and economic analysis. Comments will be accepted until May 14, 2010.
In addition, HHS published a second notice on April 14 requesting comments regarding Section 1003 of the PPACA, which requires the HHS Secretary to work with states to establish an annual review of unreasonable rate increases, monitor premium increases, and award grants to states for their rate review process. Specific areas in which HHS seeks comments include: rate filings and review of rate increases; defining unreasonable premium rate increases; public disclosure; exclusion from the health insurance exchange; and grant allocation. Comments will be accepted until May 14.