In a proposed rule sent to the federal register public inspection list on Sept. 1, the Centers for Medicare and Medicaid Services (CMS) announced a long-awaited minimum staffing requirement for Long Term Care (LTC) facilities that participate in the Medicare and Medicaid programs.

The proposed rule, set for publication in the Federal Register on Sept. 6, would create a floor for staffing in Medicare and Medicaid participating LTC facilities for both registered nurses (RN) and nurse aides (NA). Additionally, CMS is also seeking input on need to add on a minimum total nurse staffing requirement with the rule.

The staffing levels that the rule proposes exceed the current minimum staffing requirements of nearly every state. In the rule, CMS indicated that its proposed staffing requirement is merely a floor that could be adjusted upward based on acuity of resident need and that it may revisit the levels in later rulemaking with an eye toward increasing the staffing requirement even further.

Continue Reading CMS Proposes National Minimum Nursing Staff Requirements for LTC Facilities

On August 28, 2023, the Centers for Medicare and Medicaid Services (CMS) issued a final payment rule for inpatient and long-term care hospitals (“LTCH”) that builds on the Biden-Harris Administration’s priorities to provide support to historically underserved and under-resourced communities and to promote the highest quality outcomes and safest care for all individuals. 

The fiscal year 2024 Inpatient Prospective Payment System (FY 2024 IPPS) and LTCH Prospective Payment System (LTCH PPS) final rule updates Medicare payments and policies for hospitals as required by statute. The rule adopts hospital quality measures to foster safety, equity, and reduce preventable harm in the hospital setting.

Under the rule, acute care hospitals and long-term care hospitals will see total payment increases of $2.2 billion and $6 million respectively. Additionally, the rule focuses on health equity and rural hospital access by recognizing higher costs to treat underserved populations.

Continue Reading CMS Updates Medicare Rates and Policies for Inpatient and LTC Hospitals, Promoting Health Equity and Patient Safety

The Centers for Medicare and Medicaid Services (CMS) released the names of the top 10 drugs by Medicare spend on Aug. 29. The list is the first step in the new Medicare drug price negotiation system that was put into place by the Inflation Reduction Act in 2022. The new negotiated prices that will result from this process will take effect for the 2026 Medicare plan year.

The drug companies who manufacture the listed drugs now have until October 1 to sign the agreements to participate in the negotiation process for plan year 2026. The following day is the deadline for all manufacturer-specific data for CMS to consider and for any public comment on possible therapeutic alternatives.

After that point, CMS will conduct a series of listening sessions with the public and meetings with the manufacturers prior to submitting the maximum fair price initial offer on February 1, 2024. That offer will then begin the negotiation period which will end on August 1, 2024 with an announcement of the final negotiated price a month later.

Drugs chosen by gross Part D spend

The drugs chosen were single source drugs, which means that they have been approved or licensed for at least 7 years (11 years for biologics) and in that time there has been no generic or biosimilar competition. After eliminating some drugs as subject to exemptions (i.e. orphan drugs, small biotech drugs, plasma-derived products, etc.) CMS then ranked the drugs on the basis of gross spend from Medicare Part D over the course of the 12 months stretching from June 1, 2022 through May 31, 2023.

Due to the focus on gross spend as opposed to per patient cost, the top drugs on the list are also used by large numbers of the Medicare Part D population. The top drug, which has a gross spend of $16.4 billion was used by more than 3.7 million Medicare Part D enrollees.

After this initial negotiation period for the 2026 group is complete, CMS is expect to add an additional 15 drugs to the program in 2027 and then another 15 in 2028.

Reed Smith will continue to follow developments in the Medicare Prescription Drug Negotiation Program. If you have further questions on this process, please contact the health care lawyers at Reed Smith.

The Department of Health and Human Services’ Office of Inspector General (“OIG”) issued an unfavorable advisory opinion (the “Opinion”) last Friday in which it refused to bless a proposed arrangement involving an intraoperative neuromonitoring (“IONM”) company (the “Requestor”) and various surgeons who perform procedures for which IONM is used, desiring to form a physician-owned entity (“Newco”) that would arrange to provide both the technical and professional components of IONM services (the “Proposed Arrangement”).

The Proposed Arrangement would essentially create a “turn-key” entity owned by the surgeons (the “Surgeon Owners”) that would subcontract to the Requestor and its affiliated physician practice (the “Practice”) “virtually all of the day-to-day requirements of an IONM business.” The Surgeon Owners would be responsible for forming Newco, preparing Newco’s internal governance documents, and determining the methodology for distribution of Newco’s profits amongst themselves. However, the Surgeon Owners would be passive investors, with limited involvement in Newco’s day-to-day operations.

Continue Reading OIG Issues Unfavorable Advisory Opinion, Upholding Longstanding Contractual Joint Venture Concerns

The health care industry seems to have so much potential for new technologies built on Artificial Intelligence (“AI”) technology, such as chatbots that assist patients and/or physicians in patient care and the adoption of tools that expedite the health claims approval process. We have also seen reports documenting some of the problems that can arise from developing and using a rapidly emerging technology like AI. Responsible and successful adoption of AI likely requires a multi-disciplinary AI governance team with the varied skillsets necessary to develop, maintain, and monitor compliance with appropriate guardrails that can mitigate risk now and prepare for a future with more regulation.

In our recent Reed Smith client alert, we highlight areas for AI governance teams to consider before organizations develop or adopt AI-based technology.

Reed Smith will continue to follow the developments in this area. If you have any questions about this or any other AI health care developments in the health care industry, please reach out to the health care lawyers at Reed Smith.

On August 1, 2023, the U.S. Food & Drug Administration (“FDA”) and the Drug Enforcement Administration (“DEA”) issued a joint letter to all Americans to provide a status update regarding the ongoing shortage of prescription stimulants. Stimulants fall under the purview of both FDA and DEA because they are controlled substance drugs. Both agencies recognize the important role of prescription stimulants when it comes to the treatment of conditions such as attention-deficit/hyperactivity disorder (“ADHD”), binge eating disorder, and narcolepsy.

According to the letter, the agencies are working closely with manufacturers and other members of the drug supply chain to address these shortages, which are the result of two main factors—manufacturing delays and an increased demand for the stimulants.

Continue Reading FDA and DEA seek to ameliorate the shortage and misuse of stimulants

The Department of Health and Human Services Office of the Inspector General (OIG) has released an advisory opinion permitting a technology company to charge health care providers “per booking” fees to participate in its online provider directory and to allow the same providers to bid on advertising that appears as specialized search results or banner ads within its digital “marketplace.” This is the second time that the OIG has opined on this particular arrangement, having approved an earlier, although slightly different, version of the arrangement by the same company in Advisory Opinion 19-04, which was issued in 2019.

In the most recent opinion, the OIG determined that, although the arrangement might violate the Federal Anti-Kickback Statute (AKS) and the Beneficiary Inducement Civil Monetary Penalty (CMP) law, the office would not enforce those statutes against the company because the nature of the revised fees and search functionality presents a sufficiently low risk of fraud and abuse. Important to the OIG’s decision was the requestor’s certification that the fees do not exceed fair market value of the requesting company’s services to providers related to its marketplace nor do they take into account the user’s insurance status or the volume or value of referrals to the providers.

The OIG’s opinion letter protects only the current arrangement described to it by the requestor, and the agency declined to opine on any continuing contracts under an older version of the program.

Continue Reading OIG again approves online health directory’s use of appointment and advertising fees

Three years after the Department of Health and Human Services’ (HHS) Office of the National Coordinator of Health Information Technology (ONC) issued a final rule that defined and clarified the scope of the information blocking provisions of the 21st Century Cures Act (the Information Blocking Rule), the HHS Office of Inspector General (OIG) has now published its own final rule implementing penalties for violations of the Information Blocking Rule by certain regulated actors (the OIG Final Rule). 

The OIG Final Rule (i) implements OIG’s authority to impose civil money penalties (CMP) related to violations of the Information Blocking Rule; (ii) explains OIG’s approach to enforcement of its information blocking CMP authority; and (iii) codifies the CMP amounts at 42 C.F.R. part 1003, conforming with the Civil Monetary Penalties Law as amended by the Bipartisan Budget Act of 2018.

The OIG Final Rule is effective August 2, 2023, however, enforcement of the information blocking penalties will begin on September 1, 2023. Importantly, OIG will not impose information blocking CMPs for conduct occurring prior to September 1, 2023.

Continue Reading OIG Finalizes Information Blocking Penalties

On June 6, 2023, the Center for Medicare and Medicaid Services (“CMS”) released a Quality Safety & Oversight memorandum (“QSO Memo”) reminding state survey agencies, accrediting organizations, and hospitals of the requirements for discharges and transfers to post-acute care (“PAC”) providers. 

The standard for hospital discharge planning is set forth in 42 CFR 482.43, which requires a hospital to have “an effective discharge planning process that focuses on the patient’s goals and treatment preferences and includes the patient and his or her caregivers/support person(s) as active partners in the discharge planning for post-discharge care.”  Moreover, the hospital “must discharge the patient, and also transfer or refer the patient where applicable, along with all necessary medical information pertaining to the patient’s current course of illness and treatment, post-discharge goals of care, and treatment preferences, at the time of discharge, to the appropriate post-acute care service providers and suppliers, facilities, agencies, and other outpatient service providers and practitioners responsible for the patient’s follow-up or ancillary care.”  42 C.F.R. 482.43(b). 

Continue Reading CMS Issues Requirements for Hospital Discharges to Post-Acute Care Providers

The Drug Enforcement Administration (DEA) has published a new final rule regarding reporting of theft or significant loss of controlled substances. Through the final rule, the DEA amended the existing regulations governing the form and timing used to formally report these thefts or losses.

The rule, which goes into effect on July 24, 2023, adds a follow-up requirement to the initial requirement of all registrants to report the theft or loss in writing to the DEA field office within one business day of discovery. Under the new rule, the formal follow-up notice must be electronically filed with DEA within 45 calendar days of the discovery.

Continue Reading DEA Adds Second Step to Reporting Procedure for Controlled Substance Theft or Loss

HIPAA enforcement actions in the past year have continued to focus on the patient right to access initiative and large scale data breaches. While most of the recent enforcement actions focused on the patient right to access initiative, two noteworthy settlements stemmed from covered entities disclosing protected health information in response to negative online reviews.

Over the past year, the types, sizes, and locations of the investigated entities varied, and resulted in settlements ranging from $3,500 – $240,000. Department of Health and Human Services Office for Civil Rights (“OCR”) seemed to consistently impose comparatively higher settlements amounts for violations that resulted in large scale data breaches.

Continue Reading Patient access and big-ticket data breaches lead OCR enforcement initiatives

The comment period for the U.S. Department of Health and Human Services Office for Civil Rights (OCR proposed changes to Privacy Rule ended on June 16, 2023, and the first portion of comments have been released to the public. As of June 19, 2023, 25,905 comments were submitted to the U.S. Department of Health and Human Services Office for Civil Rights (OCR), with 65 of those comments being made publicly available for review.

The publicly available comments can be viewed on under the “Browse Posted Comments” tab. The relevant changes at issue were announced on Monday, April 12, 2023 by the OCR issuing a notice of proposed rulemaking (NPRM) to modify the HIPPA Privacy Rule to address the release of reproductive health care information to third parties for the purposes of civil, administrative, or criminal proceedings for care that is lawfully obtained.

Continue Reading HIPAA Privacy Rule commenters express concerns about privacy, health outcomes, LQBTQIA+ rights, and historical health care disparities

Note: This is Part 2 in a series of blog posts on developments from the U.S. Food and Drug Administration (“FDA”) regarding its commitments set forth under the Prescription Drug Under Fee Act Reauthorization Performance Goals and Clinical Trial Diversity and Modernization mandates established by Congress under the Food and Drug Omnibus Reform Act of 2022 (FDORA), including developments on the intersection and use of digital health technology in clinical trials and clinical trial diversity. Part 1, covering the Digital Health Technologies framework is available here.

The Food and Drug Administration (FDA) has released draft guidance intended to help modernize the design and conduct of clinical trials by making them more efficient and enabling them to incorporate the newest technological and methodological advancements into their design.

FDA continues to issue guidance in the wake of the Food and Drug Omnibus Reform Act of 2022 (FDORA), which in part requires FDA to provide further oversight and guidance on “Clinical Trial Diversity and Modernization.” Under Section 3607(c) of FDORA, consistent with its obligations modernize clinical trials, FDA is specifically required to “work with foreign regulators pursuant to memoranda of understanding or other arrangements governing the exchange of information to facilitate international harmonization of the regulation” as it pertains to innovative approaches to clinical trial design and implementation.

Continue Reading FDA Issues Draft Guidance on Good Clinical Practice in Ongoing Clinical Trial Modernization Efforts

Almost two years after issuing its Interim Final Rule requiring COVID-19 vaccination for certain health care works, the Centers for Medicare and Medicaid Services (“CMS”) has issued a final rule addressing several regulations regarding COVID-19 vaccination, testing, and education requirements in health care facilities.

In short, the rule eliminates the COVID-19 vaccine requirement for staff at certain categories of Medicare-participating health care providers and ends COVID-19 vaccination testing requirements for staff at long-term care (“LTC”) facilities. Additionally, the rule finalizes previously interim provisions regarding COVID-19 vaccination “educate and offer” requirements for residents, staff, and clients at LTC facilities and Intermediate Care Facilities for Individuals with Intellectual Disabilities (“ICFs-IID”).

The rule states that rolling back COVID-19 vaccination and testing requirements enacted during the pandemic aligns with the end of Public Health Emergency (“PHE”) on May 11, 2023 and the concomitant reduction in infection rates, decline in deaths, and significant vaccination uptake by the public.

Continue Reading CMS Withdraws Health Care Staff Vaccination Requirements

Earlier this month, in response to the end of the COVID-19 public health emergency, the Department of Health and Human Services (“HHS”) issued the Eleventh Amendment to the declaration under the Public Readiness and Emergency Preparedness Act (“PREP Act”) for medical countermeasures against COVID-19. The PREP Act allows the Secretary of HHS to provide liability immunity, through a declaration, to certain individuals and entities against claims associated with the manufacture, distribution, administration, or use of certain defined medical products or devices, referred to as countermeasures.

HHS originally announced this PREP Act declaration in January 2020 in response to the COVID-19 pandemic (the “Declaration”).  The Declaration has been amended at various points throughout the pandemic.  This latest amendment makes several different updates:

Continue Reading HHS Amends and Extends COVID-19 PREP Act Declaration

On May 3, New York Governor Kathy Hochul signed into law provisions that will require health care entities to submit a notification to the state Department of Health (DOH) providing information about any material transaction involving that health care entity.

The law, passed as part of the state’s budget, was originally crafted to give the DOH authority to review and approve those transactions. Ultimately, following several iterations during the legislative process, that approval power was stripped out by the state general assembly and replaced with the current notice requirement.

The law will take effect on August 1, 2023 and states on its face that it will apply to all “material transactions” involving health care entities that close on or after that date. That said, the requirements for transactions that close between August 1 and August 31 are a somewhat open question, given the 30-day notice requirement in the law. The DOH is tasked by the law with creating regulations that may address this situation.

Continue Reading New York Passes Health Care Transaction Notice Requirements

On April 24, 2023, the OIG formally announced that it will be modernizing its existing Compliance Program Guidance (“CPG”).

The OIG has provided a CPG for various industry subsections since 1998.  Each CPG was developed in an effort to set forth voluntary compliance standards to be utilized in identifying and preventing fraud and abuse in federal health care programs.  In September 2021, the OIG published a request for information (“RFI”), wherein OIG requested insight on how providers use CPG and what improvements could be made to provide more relevant and accessible guidance.  

Providers and other industry representatives made recommendations including, but not limited to, creating industry-specific guidance, consolidating existing CPG, enabling user-friendly access to CPG, and ensuring ongoing updates to identify the OIG’s current positions on new and emerging risks in health care.

Continue Reading OIG announces Modernization of Compliance Program Guidance

On April 24, 2023, the Department of Health and Human Services’ Office of Inspector General (“OIG”) issued a modification to advisory opinion 20-04, from July 2020, where the OIG opined favorably on the proposal to purchase or receive donations of unpaid medical debt owed by qualifying patients from certain types of health care providers, including hospitals, and then forgive that debt.  Now, the OIG has been asked to modify certain conditions related to the public disclosure of hospitals’ donation or sale of medical debt. The requestor of the modification is a charitable organization that locates, buys, and forgives individual patents’ medical debt.

Continue Reading OIG Approves Charity’s Modifications to Plan to Purchase and Forgive Medical Debt

The Centers for Medicare and Medicaid Services (CMS) released a pair of proposed rules on April 27, 2023 that make substantial changes to the structure of Medicaid and the Children’s Health Insurance Program (CHIP), both in the traditional fee-for-service setting and for services provided through managed care organizations (MCOs), and incorporate feedback from stakeholders in a request for information process. Of note, these changes follow closely on the end of the COVID-19 suspension of enrollment processes for Medicaid, which resulted in continuous enrollment for beneficiaries without a need to demonstrate continued qualification for coverage. The rules are not yet published officially, but that publication is expected by next week.

According to CMS, the changes proposed in these new rules are meant to work in conjunction with an earlier proposed rule that streamlined eligibility and enrollment procedures in order to improve access to services and supports through the Medicaid and CHIP program. They do so by creating new standards of timely access and specifying medical loss ratio (MLR) requirements, as well as adding additional avenues for beneficiary feedback and advisory committees to inform state Medicaid directors of best practices.

Below is a high-level summary of some of the more material changes that are proposed in these rules. We will address the rules in more details in later alerts and blog posts.

Medical Loss Ratios and Access to Managed Care

The first of the two proposed rules from CMS addresses access in the managed care context. The rule, Medicaid and Children’s Health Insurance Program (CHIP) Managed Care Access, Finance, and Quality (CMS-2439-P) is scheduled for publication in the Federal Register on May 3, 2023 and has a 60-day comment period, with comments due by July 3, 2023.

Of particular note are the changes that the rule makes to the MLR regulations applicable to Medicaid MCOs. The rule attempts to realign the Medicaid and CHIP MLR regulations with those in existence for Qualified Health Plans and Medicare Advantage organizations. The rule accomplishes this by making changes to (1) the provider incentive arrangement standards, (2) the quality improvement activity reporting, and (3) the expense allocation methodology reporting.

Additionally, the rule attempts to increase access to services within the managed care model by, among other items, establishing maximum wait time standards for routine primary care, establishing a process whereby states use a “secret shopper” method to validate MCO compliance with wait time standards, and conduct annual enrollee experience surveys that are backed by a remedy plan where feedback dictates action.

The rule also makes changes to the State Directed Payment  process to help states use those programs to implement value-based arrangements and include non-network providers to drive quality care to Medicaid and CHIP beneficiaries. The rule includes requirements for the use of state directed payments and increased reporting requirements for states that use such a system.

Changes to Medical Care Advisory System

The second rule, Ensuring Access to Medicaid Services (CMS-2442-P), also has a May, 3, 2023 scheduled publication date and a July 3, 2023 comment date. This rule proposes to “take a comprehensive approach to improving access to care, quality and health outcomes, and better addressing health equity issues in the Medicaid program.”

The primary vehicle that the rule uses to accomplish this goal is a drastic change to the use of advisory committees in the Medicaid care process. The rule first changes the name of the committee to the Medicaid Advisory Committee and then sets forth in detail not only the membership requirements of the committee, but also on the scope of advice that the committee can provide—including policy and effective administration of the Medicaid program.

The rule also establishes a Beneficiary Advisory Group, which it sees as a vehicle for Medicaid beneficiaries, their families and related advocacy groups to provide feedback to the state on the effectiveness and coverage provided by the Medicaid program in that state.

Finally, for the fee-for-service programs, the rule proposes an interested parties advisory group to help the state with rate setting and other issues governing Home and Community Based Services within the state.

We will provide a more detailed analysis of each of the provisions, and their implications for providers and MCOs, of these rules in the coming weeks. If you have any questions or would like to comment on the regulations, please reach out to the health care lawyers at Reed Smith.

In part I, we discussed whether federal district courts could exercise jurisdiction under the federal-question statute over legal challenges to overpayment determinations made by the Centers for Medicare & Medicaid Services (CMS) under the agency’s controversial Risk Adjustment Data Validation (RADV) program for Medicare Advantage (MA) organizations. In part II, we discussed whether MA organizations must exhaust administrative remedies before filing suit under the federal-question statute.

In this final installment, we discuss a litigation nuance of potential significance in this unique context: namely, whether a district court may find that a MA organization can only challenge a RADV overpayment determination in the United States Court of Federal Claims.

Continue Reading A Potential Route to RADV Judicial Review: Part III