House Panel Approves Off-Label Communication, OTC Monograph User Fee, Good Samaritan Health Professionals Bills

The House Energy and Commerce Health Subcommittee voted to approve the following health policy bills on January 18, 2017:

  • H.R. 2026, the Pharmaceutical Information Exchange (PIE) Act. This bill would create a safe harbor that would allow drug and medical device companies to share certain health care economic or scientific information with payers, formularies, and other coverage, reimbursement, and population-based health care decision makers prior to FDA approval. Such information – including clinical and pre-clinical data and results relating to an unapproved drug therapy, or drug indication, or other condition of use being investigated or developed – must be based on competent and reliable scientific evidence and relate to an investigational use of a new drug or device or an investigational use of an approved drug or device. The safe harbor would allow for such information to be shared only if a supplemental application has been submitted to FDA for such use or, at a minimum, the study or studies needed to support the submission of a supplemental application have been completed “with the intention that a supplemental application will be submitted to [FDA] for approval of the use.” The bill was approved by a vote of 18 to 14.  If it becomes law, H.R. 2026, the PIE Act, would partly codify current FDA policy governing pre-approval communications with payors, formulary committees, and similar entities. FDA’s policy, announced in a draft guidance issued January 2017 (Drug and Device Manufacturer Communications with Payors, Formulary Committees, and Similar Entities – Questions and Answers), states that pre-approval information “may help payors plan and budget for future coverage and/or reimbursement decisions prior to FDA approval of investigational products,”  The policy also clarifies that FDA “does not intend to object” to the dissemination of this information under 21 C.F.R. § 312.7(a).  FDA’s policy permits the following information to be disclosed pre-approval:  (1) product information (e.g., drug class); (2) information about the indication sought, such as information from the clinical study protocol(s) about endpoint(s) being studied and the patient population under investigation (e.g., number of subjects enrolled, subject enrollment criteria, subject demographics); (3) factual presentations of results from clinical or preclinical studies (i.e., no characterizations or conclusions should be made regarding the safety or effectiveness of the product); (4) anticipated timeline for FDA action and/or possible FDA approval; (5) product pricing information; (6) targeting/marketing strategies (e.g., outreach activities planned to generate prescriber awareness about the product); and (7) anticipated product-related programs/services (e.g., patient support programs, including information about copay/savings cards).
  • H.R. __, the Over-the-Counter Monograph Safety, Innovation, and Reform Act. The legislation would make what many consider to be long-overdue reforms to the FDA over-the-counter (OTC) monograph program for nonprescription drugs marketed without an approved new drug application. To modernize and streamline the process, the legislation would create a system for future changes to drug monographs through an administrative order procedure with the opportunity for development meetings or other consultations, submission of comments on proposed orders, and dispute resolution procedures. To enhance public health, the legislation would create a mechanism for faster safety label changes, and establish a pathway for innovations under monographs. The bill would establish an OTC monograph user fee program to support related reforms. The bill was approved by a voice vote.
  • H.R. 1876, the Good Samaritan Health Professionals Act. This bill would provide limited liability protection for health care professionals providing services as a volunteer during a federally-declared disaster. The bill was approved by a voice vote.

The bills now advance to the full Energy and Commerce Committee.

SAMHSA Finalizes Changes to Rules for Disclosure of Substance Abuse Records to Support Health Care Operations

The Substance Abuse and Mental Health Services Administration (SAMHSA) has issued a final rule addressing the disclosure of substance use disorder patient records that is intended to facilitate health care activities while protecting patient privacy.  The final rule identifies the circumstances under which lawful holders of patient identifying-information may disclose such information to their contractors, subcontractors, and legal representatives to support payment, health care operations, and audit and evaluation activities.  In addition, the final rule establishes an optional abbreviated notice of the prohibition on redisclosure that must accompany each disclosure made with the patient’s written consent.  Finally, the rule makes a number of technical corrections to a related January 18, 2017 final rule.  The rule is effective February 2, 2018.


ONC Proposes Trusted Exchange Framework for Health Information Networks

The Office of the National Coordinator (ONC) for Health Information Technology has released a draft trusted exchange framework that proposes policies, procedures, and technical standards to further Congressionally-mandated efforts to establish a nationwide, interoperable health system under the 21st Century Cures Act of 2016.  Currently, there are dozens of Health Information Networks (HINs) that operate locally, regionally, or nationally, but that do not exchange health information with each other.  The draft framework focuses on principles for trusted exchange of electronic health information and minimum required terms and conditions for trusted exchange among the nation’s multiple health information networks.  The trusted exchange framework aligns with HIPAA requirements, but also specifies terms and conditions to enable broader exchange of health information among both regulated (i.e., covered entities and business associates) and non-regulated entities.  The framework indicates that additional and faster progress is necessary in developing interoperability, especially in the case of medical specialties—such as long-term services and supports providing post-acute care or in lieu of institutionalization, behavioral health, and other ambulatory services.

Public comments are being accepted electronically at until February 18, 2018.  Subsequently, the ONC will select a Recognized Coordinating Entity (RCE), which will develop a single common agreement that qualified health information networks and their participants may voluntarily agree to adopt. Following the comment period and refinements to the draft framework, HHS expects to release a final draft of the combined trusted exchange framework and common agreement later this year.

Trump Administration Unveils Its First Bundled Payment Initiative — BPCI Advanced

The Trump Administration has rolled out its first CMS Innovation Center Medicare bundled payment initiative, the Bundled Payments for Care Improvement Advanced (BPCI Advanced). Under the new voluntary model, CMS will test whether bundled payments for 29 inpatient and 3 outpatient clinical episodes will lead to reduced Medicare expenditures while improving quality of care for Medicare beneficiaries. CMS anticipates that the performance period of the BPCI Advanced model will begin on October 1, 2018 and run through December 31, 2023.

BPCI Advanced builds on the ongoing Bundled Payments for Care Improvement (BPCI) initiative, which was launched in 2013 and runs through September 30, 2018. As in the BPCI model, BPCI Advanced seeks to incentivize providers to coordinate care to furnish services more efficiently while maintaining quality. Specifically, participants may either realize a gain or loss depending both on (1) how successfully they manage total Medicare fee-for-service costs of care (with limited exceptions) throughout each 90-day episode of care and (2) performance on specified quality measures.

There are key differences between the original BPCI and BPCI Advanced models, including the following (among others): Continue Reading

CMS Clears the Way for States to Add Medicaid Work/Community Engagement Requirements

CMS has announced a new initiative allowing states to propose demonstrations to “improve Medicaid enrollee health and well-being through incentivizing work and community engagement.” Specifically, states may propose Section 1115 waivers to make participation in work or other community engagement a requirement for continued Medicaid eligibility or coverage for non-elderly, non-pregnant adult Medicaid beneficiaries who are eligible for Medicaid on a basis other than disability.  CMS explains the criteria it will use to evaluate state proposals, including:  alignment with Temporary Assistance for Needy Families (TANF) and Supplemental Nutrition Assistance Program (SNAP) programs; population subgroups included in the demonstration (including observance of all federal civil rights laws); the proposed range of activities that would satisfy the work and community engagement requirement; the proposed beneficiary supports in meeting the new requirements; and local employment market conditions.  CMS also specifies that any section 1115 waiver program must be budget neutral; states will not be permitted to accrue savings from an associated reduction in enrollment.

The day after announcing the new Medicaid option, CMS approved a Kentucky waiver allowing the state to implement a community engagement requirement as a condition of eligibility for Medicaid beneficiaries aged 19 to 64, with a number of exceptions (former foster care youth, pregnant women, primary caregiver of a dependent, beneficiaries considered medically frail, certain beneficiaries with acute medical conditions, and full time students).  To remain eligible for coverage, non-exempt Medicaid recipients in Kentucky must complete 80 hours per month of community engagement activities (e.g., employment, education, job skills training, and community service).

HHS Creates Conscience and Religious Freedom Division within OCR

On January 18, 2018, HHS announced it has established a new Conscience and Religious Freedom Division within the HHS Office for Civil Rights (OCR).  The Division will focus on enforcement of (1) existing protections for health care providers who refuse to perform certain health care services on religious or moral grounds, and (2) laws that prohibit discrimination on the basis of religion in various HHS programs. 


Congress Holds More Hearings on Opioid Crisis and Public Health Threats

A number of recent Congressional hearings focused on the opioid crisis, including the following:

In addition, the Senate HELP Committee recently held the first of two hearings on public health threats, focusing on the country’s preparedness and response capabilities.  Part two of the hearing is scheduled for January 23, 2018.

CMS Invites Medicaid Stakeholders to Participate in Call on New Medicare Card Project (Jan. 23)

CMS is hosting a call on January 23, 2018 to brief state Medicaid agencies, Medicaid providers, managed care organizations, and other Medicaid stakeholders about the new Medicare card project. Under this initiative, CMS is moving away from Social Security Number-based Health Insurance Claim Numbers to new Medicare Beneficiary Identifiers (MBIs).

1/22 update:  this call has been postponed indefinitely.

CMS Gives States Options for Complying with Cures Act Mandate to Cap Medicaid DME Rates

As previously reported, the 21st Century Cures Act prohibits federal financial participation (FFP) payments to the states for certain Medicaid durable medical equipment (DME) expenditures that exceed what Medicare would have paid for such items, either on a fee schedule basis or under competitive bidding.  The provision is effective January 1, 2018.

CMS recently provided guidance to the states on the scope of the FFP limitation, noting that it only applies to DME covered by a state’s Medicaid program on a fee-for-service (FFS) basis that is also covered by Medicare. The FFP limitation does not apply to prosthetics, orthotics, or medical supplies, nor does it apply to items for which Medicaid is not the primary payer.  Medical equipment and appliances provided in an institutional setting and paid as a component of the institutional payment are not subject to the FFP limitation, but DME items paid on a FFS basis separate from the institutional payment will be subject to the limit.

CMS presents two basic options available to the states to demonstrate compliance with this provision. First, states may base their Medicaid DME payment rates on Medicare fee schedule or competitive bid rates, or on a lesser percentage of those rates (if this requires a state plan amendment, the amendment must be submitted by March 31, 2018).  Second, the state could conduct a “robust” comparison of Medicare and Medicaid rates, using both rate and unit utilization data; CMS expects the first comparative analysis to be submitted to CMS by March 31, 2019 (pending certain regulatory approvals).  CMS also would consider alternative approaches designed to meet a state’s specific needs.

Under any of these methods, if a state discovers that its payments for relevant DME items exceed the FFP limit, CMS directs that the overpayment must be returned to CMS.

CMS Mulling Changes to CLIA Personnel, Proficiency Testing Referral Rules

CMS is requesting information from the public on potential changes to longstanding Clinical Laboratory Improvement Amendments of 1988 (CLIA) personnel, histocompatibility, and related policies, which have not been comprehensively updated since 1992. With regard to personnel requirements, CMS seeks information that will enable it to revise the regulations to “better reflect current knowledge, changes in the academic context and advancements in laboratory testing,” particularly with regard to nursing and physical science degrees, competency assessment, laboratory training and experience requirements, and documentation. Regarding CLIA histocompatibility requirements, CMS asks for comments regarding potential updates to crossmatching requirements (including whether virtual crossmatching should be an acceptable alternative to physical crossmatching) and other rules that may not reflect current laboratory practice.

In addition, CMS requests feedback regarding CMS’s flexibility to impose alternative sanctions for laboratories issued a Certificate of Waiver (CoW) that are determined to have participated in prohibited proficiency testing (PT) referral. CMS also seeks comments on appropriate sanctions when a laboratory has referred its PT samples to another laboratory and has reported the other laboratory’s result as their own. Furthermore, CMS invites input on existing and potential new CLIA-related fees.

CMS will accept comments until March 12, 2018. CMS will consider submitted comments in a future related rulemaking.

OIG Invites Anti-kickback Safe Harbor, Fraud Alert Recommendations

The HHS Office of Inspector General (OIG) has published its annual solicitation of recommendations for new or revised anti-kickback statute safe harbors and new Special Fraud Alerts. The OIG states that in considering any recommendations, it will seek to determine potential financial benefits to health care providers in ordering or referring health care services. The OIG also will weigh the extent to which the proposals would increase or decrease:

  • Access to health care services,
  • Quality of health care services,
  • Patient freedom of choice among health care providers,
  • Competition among health care providers,
  • Costs to federal health care programs,
  • Potential overutilization of health care services, and
  • The ability of health care facilities to provide services in medically underserved areas or to medically underserved populations.

Comments will be accepted until February 26, 2018. In its most recent semiannual report, the OIG provided a status report on the response to last year’s safe harbor solicitation. The OIG received 11 recommendations for new or modified safe harbors — none of which are being adopted at this time.

DOJ Recouped $2.4 billion in Health Care Industry False Claims Act Settlements in FY 2017

The Department of Justice (DOJ) obtained $3.7 billion in False Claims Act (FCA) settlements and judgments in fiscal year (FY) 2017, with $2.4 billion coming from health care industry cases. The $2.4 billion amount includes only federal recoveries; additional funds were recovered for state Medicaid programs.  The largest health care industry recoveries in FY 2017– more than $900 million – involved the drug and medical device industry.  Most of the government’s FCA settlements and judgments ($3.4 billion) related to qui tam lawsuits in FY 2017, with individual whistleblowers receiving $392 million.  The DOJ notes that 669 qui tam suits were filed this past year.

CMS Establishes New Rules for Medicare Shared Savings Program ACOs Impacted by Extreme/Uncontrollable Circumstances

CMS has just put on display an interim final rule with comment period to establish special policies to assess the performance year 2017 financial and quality performance of Medicare Shared Savings Program accountable care organizations (ACOs) affected by extreme and uncontrollable circumstances, such as Hurricanes Harvey, Irma, and Maria and the California wildfires.  CMS is aligning the Shared Savings Program policy with the extreme and uncontrollable circumstances rules it recently promulgated for the Quality Payment Program.  CMS will use the determination of an extreme and uncontrollable circumstance under the Quality Payment Program, including the identification of affected geographic areas and applicable time periods, to trigger the extreme and uncontrollable circumstances policies under the Shared Savings Program.  The rule establishes special criteria for determining ACO quality performance scores and modifies the payment methodology under Tracks 2 and 3 to mitigate shared losses owed by ACOs affected by extreme and uncontrollable circumstances during performance year 2017.  CMS expects the total increase in shared savings payments and total reduction in shared loss payments  for ACOs impacted by this rule in 2017 to be approximately $3.5 million.  The regulation is effective January 20, 2018.  CMS will accept comments on the rule until February 20, 2018.

Trump Administration Outlines Planned Regulatory — and Deregulatory — Actions for 2018

The Trump Administration has updated its “Unified Agenda of Regulatory and Deregulatory Actions,” which lists the scope and anticipated timing of pending and future regulations. In releasing the agenda, the Administration highlights its “ongoing progress toward the goals of more effective and less burdensome regulation,” including its plans to finalize three deregulatory actions for every new regulatory action in fiscal year 2018.  For instance, the Administration intends to issue a proposed regulation to “remove unnecessary and outdated requirements from the conditions of participation for the Medicare and Medicaid programs for Long-Term Care facilities.” Other planned HHS regulatory and deregulatory actions include, among many others:

  • Annual proposed updates to Medicare provider payment rates and policies;
  • A proposed CMS rule to establish requirements for third parties that provide financial assistance to patients for premiums to enroll in coverage provided by a qualified health plan;
  • A proposed CMS rule to provide Medicare coverage of certain devices under investigation through a clinical research study and certain associated routine care items and services in that research, under the proposed Expedited Coverage of Innovative Technology (ExCITe) coverage pathway;
  • A proposed CMS rule to provide an exception to Medicaid fee-for-service access to care documentation requirements for states with high managed care penetration rates;
  • A proposed CMS rule to repeal Health Plan Identifier regulations; and
  • A proposed HRSA 340B drug pricing program ceiling price and manufacturer civil monetary penalties rule.

More generally, HHS intends to take regulatory actions “aimed at improving service delivery through meaningful information sharing, supporting consumer autonomy and decision-making, and better aligning programs with the most current science.” At the same time, “HHS is committed to streamlining and clarifying its regulations to reduce unnecessary burden” while protecting public health. The Department also intends to continue its focus on addressing fraud, waste and abuse.

OIG Report Assesses Accuracy of Manufacturer-Reported Medicaid Rebate Program Data

The OIG recently issued a report evaluating the accuracy of pharmaceutical manufacturer-reported Medicaid drug rebate program data, including pricing information and FDA classification (e.g., innovator/brand or noninnovator/generic). The OIG determined that the “vast majority” of the drugs in the Medicaid rebate program were classified appropriately in 2016, but about 3% of these drugs (885 drugs) may have been misclassified.  The OIG estimates that from 2012 to 2016, Medicaid may have lost $1.3 billion in rebates for 10 potentially-misclassified drugs with the highest total reimbursement in 2016.

In light of these findings, the OIG recommended that CMS: (1) follow up with identified manufacturers to determine whether current classifications are correct; (2) improve the CMS Drug Data Reporting for Medicaid System; and (3) pursue a means to compel manufacturers to correct inaccurate classification data reported to the Medicaid rebate program (either through new legislative authority or a determination that CMS has the authority to suspend potentially-misclassified drugs from Medicaid rebate program participation until the manufacturer corrects all inaccurate information).  CMS concurred with the OIG’s recommendations.  With regard to the third recommendation, CMS pointed out that it shares oversight responsibility with the OIG, and CMS “encourages OIG to use its enforcement authority to compel manufacturers to correct inaccurate drug classification data reported to the Medicaid drug rebate program.”  The OIG responded that while it will continue to pursue penalties against manufacturers where appropriate, it “believes it lacks legal authority to affirmatively pursue penalties for the submission of inaccurate drug classification data.”

CMS Plans Educational Call on Low Volume Appeals Settlement Initiative (Jan. 9)

On January 9, 2018, CMS is hosting a call to discuss its new low volume appeals settlement option. As previously reported, this option is available for certain Medicare fee-for-service providers, physicians, and other suppliers with fewer than 500 appeals pending at the Office of Medicare Hearings and Appeals and the Medicare Appeals Council at the Departmental Appeals Board. The call will cover provider/supplier eligibility and which pending appeals may be settled.  The call will not include a question and answer session, but questions may be submitted in advance. Registration information is available here.

GOP Tax Bill Eliminates ACA Individual Insurance Mandate Penalty

While previous broad Republican efforts to dismantle the Affordable Care Act (ACA) have failed, the GOP tax bill cleared by Congress today has succeeded in effectively repealing the ACA’s individual health insurance mandate.  By way of background, the ACA established a penalty for failure to maintain health insurance coverage that provides at least minimum essential coverage, as defined by various ACA regulations.  The penalty generally is equal to the greater of (1) 2.5% of income in excess of tax filing thresholds, or (2) a flat dollar threshold (for 2017, the threshold is $695 per adult and $347.50 per child, up to a family maximum of $2,085), subject to certain limitations and exemptions.  The “Tax Cuts and Jobs Act” (HR 1) cuts this penalty to zero, effective with respect to health coverage status for months beginning after December 31, 2018.  The tax bill does not impact the ACA’s employer insurance coverage responsibilities.  President Trump is expected to sign the bill into law in the near future. 

The individual insurance mandate was intended to encourage healthier individuals to obtain health insurance, thereby resulting in a more favorable risk pool and lower insurance premiums overall.  The Congressional Budget Office (CBO) recently estimated that if the individual mandate were repealed, the number of people with health insurance would decrease by 4 million in 2019 and 13 million in 2027, and average premiums in the individual market would increase by about 10% in most years of the coming decade.  Furthermore, federal budget deficits would be reduced by about $338 billion between 2018 and 2027, according to the CBO, mainly due to reduced federal spending on insurance exchange subsidies and Medicaid.

Senate Majority Leader Mitch McConnell has committed to considering legislation to mitigate potential health insurance premium increases caused by the repeal of the individual insurance penalty, including bills to fund cost-sharing-reduction payments and to create high risk pools for individuals with pre-existing conditions.  House consideration of such legislation is not assured, however, likely exacerbating uncertainties in the individual insurance market.  

Year-End Congressional Hearings Examine Health Policies

This month, Congressional committees held a number of hearings that focused on health policy issues, including the following:

FDA Proposes Framework for Regulating Software as a Medical Device

The Food and Drug Administration (FDA) recently released new draft guidance documents to clarify its approach to regulating software as a medical device. The first draft guidance, Clinical and Patient Decision Support Software, addresses provision of the 21st Century Cures Act that exempts certain clinical decision support software from the definition of a medical device. The second guidance, Changes to Existing Medical Software Policies Resulting from Section 3060 of the 21st Century Cures Act, sets forth types of software that the FDA no longer considers medical devices. These guidance documents are analyzed on our sister blog, Life Sciences Legal Update.