The recent Ebola outbreak has prompted the HHS Office for Civil Rights (OCR) to release a new bulletin for covered entities and business associates regarding their privacy obligations under HIPAA in emergency situations. The bulletin, “HIPAA Privacy In Emergency Situations,” provides an overview of the limited ways in which covered entities and business associates may use and disclose protected health information in emergencies, such as the Ebola outbreak.
CMS has announced that it is delaying until further notice enforcement of its regulations pertaining to health plan enumeration and use of the Health Plan Identifier (HPID) in HIPAA transactions, which were adopted in a September 5, 2012 final rule. This enforcement delay, which is effective October 31, 2014, applies to all HIPAA covered entities, including healthcare providers, health plans, and healthcare clearinghouses. This enforcement discretion period will allow HHS to consider recent recommendations by the National Committee on Vital and Health Statistics (NCVHS) that covered entities not use the HPID in the HIPAA transactions.
The Office of the National Coordinator for Health Information Technology (ONC) is launching the “Market R&D Pilot Challenge,” which will bring together health care organizations and innovative companies to test new health information technology products through pilot funding awards and facilitated matchmaking. Pilot proposals could be awarded in three domains: clinical environments (e.g., hospitals, ambulatory care, surgical centers); public health and community environments (e.g., public health departments, community health workers, mobile medical trucks, school- and jail-based clinics); and consumer health (e.g., self-insured employers, pharmacies, laboratories). Among other things, the program is intended to encourage early collaboration between entrepreneurs, medical and public health personnel, patients, and the research community in efforts to link health IT innovation to care delivery innovation. Up to 6 winning proposals will each receive a $50,000 award.
The OIG has issued a report on Medicare beneficiary copayment costs for outpatient services provided at critical access hospitals (CAH). Beneficiaries who receive services at CAHs pay Medicare coinsurance amounts based on CAH charges, in contrast to patients at acute care hospitals who are responsible for coinsurance amounts based on outpatient prospective payment system (OPPS) rates. According to the OIG report, “Medicare Beneficiaries Paid Nearly Half of the Costs for Outpatient Services at Critical Access Hospitals,” CAH charges are typically higher than the reasonable costs associated with CAH services or the OPPS rates that acute-care hospitals receive. The OIG estimates that Medicare beneficiaries paid nearly half the costs for outpatient services at CAHs in 2012 (approximately $1.5 billion of the estimated $3.2 billion cost for CAH outpatient services). The OIG recommends that CMS seek legislative authority to modify how coinsurance is calculated for outpatient services received at CAHs to reduce the percentage of costs paid by Medicare beneficiaries in coinsurance. For instance, CMS could consider (1) computing coinsurance so that it is based on interim payment rates rather than charges, and (2) processing claims for outpatient services at CAHs as if they were paid under OPPS for the purpose of calculating an OPPS equivalent coinsurance.
The Centers for Disease Control and Prevention (CDC) has issued a number of guidance documents for the health care industry on management of patients with known or suspected Ebola virus. To date, the CDC has offered recommendations regarding, among many other topics: the use of personal protective equipment by health care workers in hospitals; infection prevention and control; performing acute hemodialysis in patients with Ebola virus; transfers by emergency medical services; laboratory specimen handling; and Ebola-associated waste management. Reed Smith has formed a cross-practice Global Ebola Task Force to address legal issues emerging from the spread of the viral disease in West Africa and around the world.
HHS Office of Medicare Hearings and Appeals (OMHA) Hosting Second Medicare Appellant Forum (Oct. 29)
On October 29, 2014, the OMHA is hosting its second OMHA Medicare Appellant Forum. The meeting will update OMHA appellants on the status of OMHA operations and discuss OMHA and CMS initiatives designed to mitigate the Medicare appeals backlog at the OMHA-level of the administrative appeals process. The deadline for in-person registration is October 28, and registration for remote/webinar attendance ends October 24.
The HHS Office of Civil Rights (OCR) has released guidance on “HIPAA and Same-sex Marriage: Understanding Spouse, Family Member, and Marriage in the Privacy Rule.” The guidance stems from a Supreme Court decision in United States v. Windsor striking down Section 3 of the Defense of Marriage Act (DOMA), which had provided that federal law would recognize only opposite-sex marriages. In light of the ruling, HHS explains that legally married same-sex spouses are family members for the purposes of applying various provisions of the Privacy Rule, including standards for sharing an individual’s protected health information with a family member and the prohibition on using or disclosing genetic information of a family member for underwriting purposes. OCR intends to issue additional clarifications to address same-sex spouses as personal representatives under the Privacy Rule.
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.