The HHS Office of Medicare Hearings and Appeals (OMHA) has announced the Settlement Conference Facilitation (SCF) program, a pilot alternate dispute resolution process designed to bring the appellant and CMS together to discuss the potential of a mutually-agreeable resolution to the claims appealed to an Administrative Law Judge (ALJ) hearing. If a resolution is reached, a settlement document is drafted by the facilitator (an employee of OMHA) to reflect the agreement and the document is signed by the appellant and CMS at the settlement conference session. As part of the agreement, the requests for an ALJ hearing for the claims covered by the settlement will be dismissed.
On July 14, 2014, HHS announced a $100 million Medicaid Innovation Accelerator Program to assist state health system reform efforts designed to improve health care while reducing costs. The initiative, which is intended to complement other federal-state delivery system reform efforts, will “help jumpstart innovation” by providing data analytics, quality measurement, and other technical supports, and advancing timely dissemination of best practices among states.
CMS has reversed course on the applicability of certain ACA provisions to health insurance issuers in the territories. While HHS previously used the Public Health Service Act definition of "state" that applied ACA market reforms to the territories, CMS has modified this interpretation in light of concerns that it is undermining the stability of the territories' health insurance markets. Specifically, on July 16, 2014, CMS announced that HHS now concludes that the territories are not states for purposes of ACA health insurance market provisions related to guaranteed availability, community rating, single risk pool, rate review, medical loss ratio, and essential health benefits. CMS intends to issue regulations to affirm this interpretation.
On July 21, 2014, the Health Resources and Services Administration (HRSA) released an “interpretive rule” reiterating that 340B-covered entities affected by the orphan drug exclusion may purchase orphan drugs at 340B prices when those orphan drugs are used for indications other than the rare disease or condition for which the drug received an orphan designation. HRSA’s previous regulations implementing this policy were vacated by a May 23, 2014 U.S. District Court ruling because of a lack of statutory authority to engage in such rulemaking.
Under the interpretive rule, HRSA reiterates that section 340B(e) of the Public Health Service Act (PHSA) excludes drugs with an orphan designation only when those drugs are transferred, prescribed, sold, or otherwise used for the rare condition or disease for which the drug was designated as an orphan drug under section 526 of the Federal Food, Drug, and Cosmetic Act (FFDCA). The agency holds that Section 340B(e) does not exclude drugs used for conditions or diseases other than for which the drug was designated under section 526 of the FFDCA. According to HRSA, “interpreting the statutory language to exclude all indications for a drug that has an orphan drug designation would be contrary to the Congressional intent of section 340B(e) to balance the interests of orphan drug development and the expansion of the 340B Program to new entities.” To facilitate identification of drugs with an orphan designation for 340B Program purposes, HRSA will publish and update on a quarterly basis a listing of orphan drug designations, providing the name of the drug and the designated indication. If a covered entity lacks the ability to track drug use by indication, it would be unable to purchase drugs with orphan designations through the 340B Program.
The interpretive rule is effective July 21, 2014. Note that the Pharmaceutical Research and Manufacturers of America (PhRMA), which filed the original lawsuit on the 340B orphan drug regulation, has filed a motion asserting that “HHS’s actions are in direct circumvention” of the prior court ruling, and challenging HRSA’s authority to implement this policy through an interpretive rule.
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.
In a recent website update, the Health Resources and Services Administration (HRSA) reaffirmed its current interpretation of the 340B discount drug program orphan drug exemption – despite a May 23, 2014 U.S. District Court ruling that vacated HRSA’s orphan drug regulation because of lack of the statutory authority to engage in such rulemaking. According to HRSA, the Court did not invalidate HRSA’s interpretation of the statute, under which HRSA allows 340B-covered entities affected by the orphan drug exclusion to purchase orphan drugs at 340B prices when those orphan drugs are used for indications other than the rare disease or condition for which the drug received an orphan designation.
The Senate has confirmed Sylvia Mathews Burwell to be Secretary of Health and Human Services on a bipartisan vote of 78 to 17. Secretary Burwell was sworn in on June 9, 2014.
CMS to Implement Ordering/Referring Denial Edits for HHA Certifying Physicians, Effective July 1, 2014
CMS plans to apply “Phase 2” ordering and referring denial edits to certifying physicians of Part A home health agency (HHA) services effective July 1, 2014. These edits, which currently apply only to the attending physician of an HHA, will ensure that the physician that certifies the patient’s eligibility to receive services under the Medicare home health benefit has a valid individual National Provider Identifier (NPI) and are of a specialty type eligible to order and refer the HHA items and services on the claim. The edits will deny the claim when this information is missing or invalid.
On May 9, 2014, CMS announced it is implementing the first phase of its reforms to the Quality Improvement Organization (QIO) Program in an effort to “gain efficiencies, to eliminate any perceived conflicts of interest, and to better address the needs of Medicare beneficiaries.” Under this first phase, CMS has named two Beneficiary and Family-Centered Care (BFCC) QIO contractors -- Livanta LLC and KePRO -- to support case review and monitoring activities on behalf of patients, separate from traditional QIO quality improvement activities. Under the second phase, which is expected to be announced in July, CMS will award contracts to organizations that will focus on data-driven quality initiatives intended to improve patient safety, reduce harm, and improve clinical care and transparency.
CMS has provided additional guidance on its evolving hardship exemptions policy for individuals who had difficulty signing up for a qualified health plan (QHP) through an Affordable Insurance Exchange by the March 31, 2014 deadline. As previously reported, in March CMS announced it had established a “special enrollment period” for individuals who were “in line” but could not complete the enrollment process by March 31 deadline; such individuals were permitted to claim a hardship exemption from the shared responsibility payment for the months prior to the effective date of their coverage. According to a subsequent May 2, 2014 guidance document, CMS believes that “some consumers may not have realized that the relief provided by the guidance above was limited solely to those individuals purchasing QHPs through the Marketplace.” CMS therefore is extending a comparable hardship exemption for all months prior to the effective date of coverage for individuals who obtained minimum essential coverage effective on or before May 1, 2014 outside of the Marketplace, whether the individual is in a state with a federally-facilitated Marketplace or a state-based Marketplace. The May 2 guidance also discusses special enrollment periods for individuals eligible for COBRA, individuals whose individual market plans are renewing outside of open enrollment, and AmeriCorps/VISTA/National Civilian Community Corps members.
Two more health care companies have settled potential violations of the HIPAA Privacy and Security Rules arising from the theft of unencrypted laptops by paying a total of almost $2 million and agreeing to continued oversight by the HHS Office for Civil Rights (OCR). In both instances, the breaches were self-reported and the settlements resulted from OCR’s subsequent investigations. For details, see the report on our Life Sciences Legal Update blog.
On May 9, 2014, the Health Resources and Services Administration (HRSA) released the results of its FY 2012 audits of covered entity compliance with 340B drug discount program rules. Based on a review of 51 covered entities encompassing more than 410 outpatient facilities/sub-grantees and more than 860 contract pharmacy locations, HRSA identified “several recurring critical areas of non-compliance for hospitals and non-hospitals.” For non-hospitals, HRSA flagged the following major non-compliance areas: the covered entity’s inability to maintain accurate database information; billing contrary to the Medicaid Exclusion File (which may have resulted in duplicate discounts); and dispensing drugs to ineligible individuals (diversion) at the covered entity and contract pharmacies. For hospitals, the major area of non-compliance cited by HRSA was obtaining covered outpatient drugs through a Group Purchasing Organization (GPO) in violation of statutory restrictions. HRSA also identified best practices to minimize the risks of non-compliance by covered entities, including: development and documentation of comprehensive 340B Program policies and procedures; development of concrete methodologies for routine self-auditing; routine processes for internal corrective action; verification that contract pharmacy arrangements comply with the 340B requirements and are properly listed in the HRSA Office of Pharmacy Affairs database; and strong partnerships with state Medicaid agencies to meet state-specific requirements and prevent duplicate discounts.
On April 11, 2014, President Obama formally nominated Sylvia Mathews Burwell to replace Kathleen Sebelius as Secretary of Health and Human Services (HHS). Burwell currently is the Director of the Office of Management and Budget (OMB). Previously, she served as President of the Walmart Foundation, President of the Global Development Program at the Bill & Melinda Gates Foundation, and in several roles during the Clinton Administration, including Deputy Director of OMB, Deputy Chief of Staff to the President, Chief of Staff to the Secretary of the Treasury, and Staff Director of the National Economic Council.
HHS has developed a Security Risk Assessment (SRA) tool to help providers comply with a Health Insurance Portability and Accountability Act (HIPAA) requirement that covered entities conduct a risk assessment to ensure compliance with HIPAA’s administrative, physical, and technical safeguards and to determine where electronic protected health information could be at risk. The SRA tool is intended to help entities regulated under HIPAA better understand potential vulnerabilities and identify safeguards that they could institute.
On March 4, 2014, the Obama Administration released its proposed federal budget for fiscal year (FY) 2015. Virtually all types of health care providers, health plans, and drug manufacturers would be impacted by the budget provisions if adopted as proposed – an unlikely scenario given the Republican House leadership’s reaction to the document. Nevertheless, the Medicare and Medicaid savings proposals (many of which are carry-overs from prior budgets) could resurface as spending offsets in the pending negotiations on Medicare physician fee schedule reform legislation or in future budget negotiations. Highlights of the Administration’s Medicare and Medicaid legislative proposals include the following (all savings estimates are for the 10-year period of FYs 2015-2024):Continue Reading...
This post was written by Jillian W. Riley.
On January 16, 2014, the Food and Drug Administration (FDA) issued a final guidance document for industry providing specific recommendations on the content and format of Dear Health Care Provider (DHCP or “Dear Doctor”) letters. DHCP letters are an important means of communicating new information to the health care provider community about a product that is already on the market. The guidance provides insight into (1) when to send a DHCP letter, (2) what information should be included, (3) how to organize the letter, and (4) how to format the letter. The recent guidance finalizes a draft guidance FDA published in November of 2010.
The guidance stresses the importance of collaborating with FDA when crafting DHCP letters to ensure that a DHCP letter is appropriate under the circumstances, that the target audience has been identified, and that the message is clearly conveyed. Additionally, the guidance provides template examples to aid industry in drafting a clear and effective DHCP letter.
Citing a “rapid and overwhelming increase in claim appeals,” the HHS Office of Medicare Hearings and Appeals (OMHA) has temporarily suspended the assignment of most new provider requests for an Administrative Law Judge (ALJ) hearing. In a memorandum to high-volume appellants dated December 24, 2013, Chief ALJ Nancy Griswold announced that the suspension, which was effective July 15, 2013, is expected to last at least 2 years, during which the OMHA will work through a backlog of appeals involving almost 357,000 Medicare claims and entitlements already assigned to the 65 ALJs. Note that notwithstanding the suspension, OMHA will continue to assign and process requests filed directly by Medicare beneficiaries. As previously reported, the OMHA is hosting a Medicare Appellant Forum on February 12, 2014 to provide additional information to appellants and providers on efforts to make the appeals process work more efficiently.
This post was written by Jennifer Pike.
The Food and Drug Administration (FDA) has announced the availability of a final guidance document which describes the qualification process for drug development tools (DDTs) intended for use, over time, in multiple drug development programs. DDTs are methods, materials, or measures that aid drug development. Examples of DDTs include biomarkers and patient reported outcome instruments.
The purpose of the guidance document is to describe the formal process that FDA will use in working with sponsors of DDTs to guide them as they refine the tools and rigorously evaluate them for use in the regulatory process. The guidance also provides a framework for interactions between FDA and sponsors to support work towards qualification of DDTs, as well as explains the kinds of data that should be submitted to support qualification of a DDT and creates a mechanism for FDA’s formal review of the data to ultimately qualify the DDT. For purposes of the guidance, the submitter of a DDT is the person, group, organization (including the federal government), or consortium that takes responsibility for and initiates a DDT qualification proposal using the procedures described in the guidance.
The creation of the DDT qualification process is one of multiple initiatives FDA has undertaken, as a result of its 2004 FDA’s Critical Path Initiative, to support the development of new DDTs. DDTs can help streamline the drug development process, improve the chances for clinical trial success, and yield more information about a treatment or disease. Comments to the guidance may be submitted at any time at www.regulations.gov.
President Obama announced on November 14, 2013 that HHS has adopted an administrative policy to allow insurers to continue to offer certain health insurance policies scheduled to be cancelled effective January 1, 2014 because of more stringent coverage requirements under the ACA. In short, under the“transitional” policy outlined in a letter to state insurance commissioners, health insurance issuers may choose to continue coverage that would otherwise be terminated or cancelled, and affected individuals and small businesses may choose to re-enroll in such coverage if the coverage was in effect on October 1, 2013 and the insurer meets certain conditions, including notification to the affected insureds regarding: (1) any changes in the options that are available to them; (2) which of the specified market reforms would not be reflected in any coverage that continues; (3) their potential right to enroll in a qualified health plan offered through a Health Insurance Marketplace and possibly qualify for financial assistance; (4) how to access such coverage through a Marketplace; and (5) their right to enroll in health insurance coverage outside of a Marketplace that complies with the specified market reforms. State agencies responsible for enforcing the specific market reforms are “encouraged to adopt the same transitional policy.” The letter notes the risk corridor program should help ameliorate unanticipated changes in premium revenue for health insurers, although the Administration will consider additional regulatory changes to provide additional assistance. The policy applies to health insurance coverage that is renewed for a policy year starting between January 1, 2014, and October 1, 2014, but the Administration has left open the possibility of extending the transition policy. Despite this announcement, House Speaker John Boehner has indicated that the House will proceed with its scheduled vote tomorrow on H.R. 3350, the “Keep Your Health Plan Act.”
On November 13, 2013, HHS issued its first report on ACA Health Insurance Marketplace/Exchange enrollment statistics. According to the Administration, 106,185 individuals have selected health plans during the first 33 days of the open enrollment period (October 1 through November 2, 2013), although this figure also includes individuals who have not yet purchased a policy and who are technically not yet enrolled in a plan. Note that the majority of the individuals who have selected a plan – almost 75% -- have gone through a state-based marketplace, with fewer than 27,000 individuals selecting a plan through the federally-facilitated marketplace (where HHS is running the marketplace alone or in partnership with the state). State numbers vary significantly, with 35,364 individuals in California selecting a plan through the state-run marketplace (about a third of all insurance selections nationwide for the period), compared to only 42 North Dakota residents selecting a plan through the federal marketplace. An additional 396,261 individuals nationwide have been assessed to be eligible for Medicaid or CHIP, representing 26% of the total applicants for coverage through the marketplaces. HHS also reports high volumes of traffic on marketplace websites and call centers, with almost 25 million unique visitors on marketplace websites and more than 3.1 million calls to state and federal marketplace call centers.