On January 17, 2024, the Supreme Court of the United States heard oral argument in two cases—Relentless v. Dep’t of Commerce, and Loper Bright Enters. v. Raimondo—that could have far-reaching effects on administrative law jurisprudence and the authority of federal agencies in years to come.

At the core of both cases is the Supreme Court’s Chevron doctrine, which refers to how courts are to review an agency’s interpretation of a statute that it administers.  Under the test of Chevron v. Natural Resources Def. Council, if an agency’s construction of an ambiguous statute is deemed to be reasonable, a court defers to the agency’s construction—even if the court believes the agency’s construction was not the best reading of the statute. 

Over the last four decades, Chevron deference has faced criticism from those who argue that it is the role of courts, not federal agencies, to say what the law means.  Arguing on Wednesday in support of overturning Chevron, counsel for Loper Bright argued that the Court should instead simply ask one question: “What is the best reading of the statute?”

Continue Reading Supreme Court Tackles Chevron And Could Change How Agencies Regulate The Health Care Industry

The Department of Health and Human Services Office of Inspector General (OIG) kicked off the new year with four new advisory opinions covering retiring physicians, preferred hospital organization discounts for Medigap patients, and gift cards for the referral of potential physician practice customers of a non-clinical consulting company. While OIG published the favorable opinions last week, it issued them on December 28, 2023 to cap off a busy 2023 season.

Two opinions, Opinion 23-13 and Opinion 23-14, are substantially similar to each other and to two other opinions  issued earlier in the year (Opinion 23-09 and Opinion 23-10). All four opinions approve the use of discounts by a preferred hospital organization (PHO) within a “preferred hospital” network as part of Medicare Supplemental Health Insurance (Medigap) policies.

Specifically, the opinions approved of an insurance company contracting with the PHO to provide discounts on the otherwise-applicable Medicare inpatient deductibles for its policyholders and, in turn, the insurer providing a premium credit of $100 off the next renewal premium to those policyholders who used a network hospital for an inpatient stay. This flurry of PHO Medigap discount opinions likely reflects the fact that an OIG advisory opinion is binding only on its requestor, leading different PHOs to seek approval for the same proposal.

The other two opinions include Opinion 23-12, a favorable review of a one-time, voluntary redemption offer to physician partners reaching age 67 to have their partnership units repurchased by a partnership over a 2-year period, contingent upon the physician partners’ agreement to retire from the practice of medicine,  and Opinion 23-15, a favorable review of a consulting company’s gift card offer to physician practices for the referral of potential new customers.

Continue Reading OIG Publishes First Advisory Opinions of the Year

The Department of Health and Human Services (HHS) released a final rule today governing federal protections for health care workers exercising their right to nondiscrimination on the basis of conscience objections.

The rule, entitled, Safeguarding the Rights of Conscience as Protected by Federal Statutes, is scheduled to be published in the Federal Register on Thursday, January 11 and will take effect on March 11, 2024. The rule effectively repeals the majority of a Trump-era rule that was blocked by federal court orders before it even went into effect.

The new rule reinstates provisions of an Obama-era rule that placed the Office for Civil Rights (OCR), the HHS office that handles nondiscrimination enforcement, in charge of coordinating complaints for violations of the conscience protections of various federal laws. The rule also implements a voluntary notice provision that establishes an industry best practice to alert employees to their rights under the laws.

Continue Reading HHS Repeals Most of 2019 Health Care Conscience Protection Rule

On Nov. 8, 2023, the Senate Finance Committee voted 26-0 to approve the Better Mental Health, Lower Cost Drugs, and Extenders Act. Among its other provisions, the bill, for which final legislative text has not yet been released, would, for the first time, mandate minimum prices that Medicare Part D plans, and the pharmacy benefit managers (PBMs) with which they contract, must pay to certain types of pharmacies as reimbursement for the drugs they dispense to Part D plan enrollees.

This measure, together with new pharmacy contracting requirements and related enforcement provisions also included in the bill, would represent an important—albeit limited—modification to pharmacy network contracting rules under Part D, which have been limited by the statutory “non-interference clause” barring the Centers for Medicare and Medicaid Services (CMS) from interfering in contract negotiations between pharmacies and plans or their PBMs.

Floor on Reimbursement to Certain Pharmacies

Section 201 of the bill, entitled “Assuring Pharmacy Access and Choice for Medicare Beneficiaries,” would require that, beginning in 2028, the “total reimbursement” paid for a Part D covered drug to an “essential retail pharmacy” that is an “independent community pharmacy” may not be less than the “average National Average Drug Acquisition Cost (aNADAC)” for retail community pharmacies for such drug. When an aNADAC for retail community pharmacies is not available for the drug, the drug’s aNADAC for applicable non-retail pharmacies or wholesale acquisition cost (WAC) would be used to set the reimbursement floor.

For these purposes:

  • “Essential community pharmacy” would be defined as a retail pharmacy that (1) is not an affiliate of a PBM or Part D plan sponsor, (2) is located in a medically underserved area, and (3) is designated as an essential retail pharmacy by CMS for a plan year, in a list published prior to the beginning of the plan year, based upon these criteria, subject to removals made by CMS when a pharmacy no longer satisfies these criteria.
  • “Independent community pharmacy” would be defined as a retail pharmacy with fewer than four locations that is not affiliated with any person or entity other than its owners.  Franchisees and pharmacies associated with pharmacy services administrative organizations (PSAOs) that meet the relevant requirements can qualify as independent community pharmacies.
  • “Affiliate” would mean “any entity that is owned by, controlled by, or related under a common ownership structure with a pharmacy benefit manager or [Part D plan] sponsor or that acts as a contractor or agent to such pharmacy benefit manager or [Part D plan] sponsor, if such contractor or agent performs any of the functions described” in the bill’s definition of “pharmacy benefit manager.”
  • While “total reimbursement” is not defined in the description of the provision passed by the Committee, a separate discussion draft of the bill released prior to the markup would define it as the “negotiated price” for the drug (essentially, the reimbursement amount the pharmacy is entitled to receive for the drug, including any dispensing fees) plus any incentive payments the pharmacy is entitled to receive and less any fees, pharmacy price concessions, discounts or other forms of remuneration paid by the pharmacy.

Accordingly, the bill’s reimbursement floor would appear to apply only to pharmacies located in a medically underserved area which are part of a chain that includes no more than three pharmacies.  We expect that “medically underserved areas” will be based upon designations made by the Health Resources and Services Administration (HRSA) under Section 330(b)(e)(A) of the Public Health Service Act, which includes a significant portion of the United States, primarily in rural areas.  Further, since the floor is generally set at the aNADAC for the drug, the guaranteed reimbursement such pharmacies would be entitled to receive would only be an approximation of their drug acquisition cost, and not include any reimbursement for other costs of operating a pharmacy or pharmacy profit.

The bill does not specifically define “average NADAC” or “aNADAC,” but the discussion draft of the bill would implement it as the average NADAC for the most recent plan year, when such NADAC was published for the drug for a full plan year.  That draft bill would also provide that when a NADAC for a drug is available but has not been available for a full plan year, the ”most recent” NADAC would be used instead, and when no NADAC is available, the drug’s WAC (i.e., manufacturer list price) would be used.  However, it is not clear whether those provisions will be part of the final legislative text of the bill. 

CMS currently publishes NADACs for retail community pharmacies for Medicaid reimbursement purposes, based upon survey data collected from such pharmacies. In general, a single NADAC is calculated and published for each strength and dosage form of a brand name drug and separately for all generic drugs as a group (including authorized generics) of a given strength and dosage form, subject to availability of adequate survey data.  Section 202 of the bill would separately require that NADAC data also be collected and published for “applicable non-retail pharmacies,” defined to include mail order and specialty pharmacies but exclude long-term care, hospital and certain other types of pharmacies. Further, NADAC would be based upon pharmacy acquisition costs “net of all discounts and rebates (to the extent discount and rebate information is available)”; since current NADACs are based only upon pharmacy invoice prices, the inclusion of rebate data in the calculation potentially could reduce current NADACs for some drugs. While pharmacy submission of data in response to NADAC surveys is currently voluntary, the bill would require all retail community pharmacies and applicable non-retail pharmacies receiving any Medicaid reimbursement to provide information in response to such surveys.

New Preferred Pharmacy Network Contracting Requirements

Under the Part D statute and implementing regulations, a plan sponsor is subject to an “any willing pharmacy” obligation to contract with any pharmacy willing to agree to the plan’s standard terms and conditions for participation in its pharmacy network. However, CMS has indicated that this pharmacy contracting right does not extend to participating in a plan’s network as a “preferred pharmacy,” where enrollee cost-sharing for some or all drugs is lower than the cost-sharing they must pay at non-preferred pharmacies. Since many Part D enrollees have a strong financial incentive to use preferred pharmacies where they will pay less for their drugs, many pharmacies have complained that their statutory right has been undermined and they are disadvantaged to preferred pharmacies, including those that are affiliated with the plan sponsor or its PBM.

While the bill would not create an any-willing-pharmacy right for any individual pharmacy to participate in a plan’s network as a preferred pharmacy, it would create new aggregate network contracting obligations for Part D plans. Specifically, beginning in 2028, a Part D plan sponsor using a preferred pharmacy network would be required to contract with, as preferred pharmacies:

  • At least 80 percent of the “essential retail pharmacies” in its service area that are also “independent community pharmacies”; and
  • At least 50 percent of the “essential retail pharmacies” in its service area that are not also “independent community pharmacies.”

Consequently, taken together with the reimbursement floor noted above, essential retail pharmacies that are also independent community pharmacies (i.e., in a medically underserved area and part of a chain of three pharmacies or less) would have a good chance of being included in a preferred network as a preferred pharmacy (and thereby less disadvantaged in obtaining Part D enrollees’ business), and the plan must generally pay them reimbursement at or above their pharmacy acquisition cost. While pharmacies in medically underserved areas that are part of larger chains would not have any guaranteed reimbursement terms, the plan (or the PBM contracting on its behalf) would have to offer good enough terms to incentivize enough of such pharmacies to participate to meet the 50 percent threshold.

Clarification of “reasonable and relevant” any willing pharmacy contract terms

CMS has stated in guidance that the pharmacy network “standard terms and conditions” which a Part D plan sponsor must offer to any willing pharmacies must be “reasonable and relevant” to the given type of pharmacy, with additional explanation of what that means, but it has not codified those details in regulation. The bill would require that it undertake a notice-and-comment rulemaking to promulgate standards for such reasonable and relevant terms and conditions, to take effect beginning in plan year 2028, and for such purposes issue a request for information on those contract terms and conditions, as well as contracting practices between pharmacies and Part D plan/PBMs (including with respect to information on reimbursement and dispensing fees), by no later than Jan. 1, 2025.

Enforcement and Reports to Congress

Part D plans that violate these requirements would be subject to civil monetary penalties, in addition to an obligation to make a pharmacy whole for any failure to provide required reimbursement. Further, PBMs would be required to reimburse plan sponsors for any violations related to responsibilities the plan delegated to the PBM. CMS would establish a process by which pharmacies could submit an allegation, via a standardized template, that a plan was in violation of the standards for reasonable and relevant contract terms and conditions or the protections for essential retail pharmacies that are independent community pharmacies. 

These requirements would significantly enhance CMS policing of plans’ and their PBMs’ compliance with their any willing pharmacy contracting obligations, as well as ensure enforcement of these new contracting and reimbursement obligations. Additionally, CMS would be required to brief Congress and publish periodic reports, beginning no later than 90 days after the enactment of the bill, on topics relating to the implementation of the CMS negotiated price regulation that takes effect in 2024 (requiring that negotiated prices used to determine cost sharing reflect the lowest possible reimbursement payable to the pharmacy, taking into account post-adjudication pharmacy price concessions (“DIR fees”)). Topics to be covered include: (1) monitoring of changes to contract terms and conditions offered to pharmacies for preferred network participation; (2) CMS enforcement or oversight activities related to any willing pharmacy provisions; and (3) CMS plans, strategies or initiatives to address or mitigate concerns relative to convenient pharmacy access.

Implications for pharmacies, plan sponsors and PBMs

These provisions of the bill reflect a bipartisan interest to take actions to help “mom and pop” community pharmacies, particularly in rural areas where many pharmacies have closed, citing low levels of reimbursement from PBMs. That said, these measures represent relatively modest steps—e.g., a requirement to pay a portion of pharmacies at least their drug acquisition costs is hardly a bonanza for pharmacies—presumably reflecting the Committee’s interest in keeping the cost of the provision manageable. The Congressional Budget Office has scored this provision as increasing Federal expenditures by slightly more than $1 billion over the ten-year period 2024-2033, with most of its requirements taking effect in 2028.

In addition to the points noted above, these provisions could affect pharmacy network contracting for pharmacies that are not essential retail pharmacies. In particular, the reimbursement rates negotiated by larger pharmacy chains are sometimes based upon the number of competing pharmacies in a given network, with deeper discounts provided in exchange for a narrower network that drives more of the enrollees’ business to that chain. The requirements to contract with 80 percent/50 percent of essential retail pharmacies as preferred pharmacies would limit some plan and PBM flexibility to design such narrow networks.

More generally, many of the details of this provision remain to be finalized, ranging from details which will be fleshed out in the legislative text of this bill to further amendments that may be made, and of course implementation by CMS—assuming the provision is enacted into law in the first place. While the overall Finance Committee bill appears to have strong bipartisan support in the Senate, it is not clear what level of support it would have in the House of Representatives. Among other factors, there are other bills in the House that would impose various requirements on health plans and PBMs with respect to prescription drug pricing, which also have bipartisan support, presumably reflecting the desire of various Representatives to claim credit for taking action in this area.

Reed Smith will continue to track developments with respect to this legislation as well as other developments relating to regulation of drug pricing and coverage. If you have any questions about this bill or any other topic related to prescription drug coverage, please reach out to the authors of this post or to the health care lawyers at Reed Smith.

Recent efforts by the federal government to develop a strategy for guiding (and regulating) the use of artificial intelligence (AI) have targeted multiple industry sectors, with healthcare at the forefront. For example, under the President’s recent executive order, in 2024 the Department of Health and Human Services is required to educate itself, publish guidance, and develop a strategy to potentially regulate the development and use of AI within its areas of oversight. Congress, in comparison, is taking a more measured approach, and its future involvement in AI regulation remains unclear.

We discuss the recent federal executive and legislative efforts in the United States and their potential impact for companies that use AI in the health sector in a Reed Smith in depth perspective article.

Reed Smith will continue to follow developments related to the regulation of AI in the health care sector. If you have any questions, please reach out to the authors or to the health care lawyers at Reed Smith.

The Centers for Medicare & Medicaid Services (CMS) has published its final rule that requires nursing homes enrolled in Medicare and Medicaid to disclose additional ownership and management information to CMS and state Medicaid agencies. The rule finalizes CMS’s proposed rule from February, with just two differences, as we describe further below.

The rule implements Section 1124(c) of the Social Security Act, which was added by the Affordable Care Act to require the disclosure of additional information about ownership and oversight of nursing facilities. Medicare-enrolled skilled nursing facilities (SNFs) and Medicaid-enrolled nursing facilities (NFs) will soon be required to report many detailed aspects of their ownership and management structure, including both the executive leadership and any members of the facilities’ governing bodies.

CMS plans to gather the information in 2024, beginning when the revisions to the Form CMS-855A is completed, regardless of where a facility is on its current five-year revalidation schedule. The information will then be made publicly available within one year.

Of note in the final rule is that CMS declined to finalize a broad definition of “real estate investment trust” (also known an “REIT”) from its February proposed rule and instead has finalized a definition that it finds more consistent with current federal law and industry practice.

Continue Reading CMS Finalizes Nursing Home Ownership Rule

On October 26, 2023, the Department of Justice (“DOJ”) announced that a Miami federal grand jury returned an indictment charging a Medicare Advantage Organization’s (“MAO”) former director of Medicare risk adjustment analytics with six counts of criminal fraud. DOJ alleged that the MAO received more than $53 million in overpayments from the Centers for Medicare & Medicaid Services (“CMS”) due to false diagnoses submitted on reimbursement claims for beneficiaries enrolled in the MAO’s plans.

What’s perhaps most notable about this matter is that DOJ declined to prosecute the MAO because of the MAO’s significant and timely self-disclosure, cooperation, and remediation efforts, in addition to the MAO’s agreement to repay CMS the full amount of the estimated overpayments.

Continue Reading No Criminal Charges for Cooperative Medicare Advantage Organization

New minimum wage requirements have been signed into law by Governor Gavin Newsom, establishing five comprehensive minimum wage schedules for “covered health care employees,” which includes both contracted and subcontracted employees. Effective June 1, 2024, “covered health care facilities” will be required to implement the applicable minimum wage schedule, as set forth by the law.

To learn more about the changes to the law and what health care employers, contractors, and subcontractors have to do to come in to compliance with the law by its June 1, 2024 effective date, visit our blog on Employment Law Watch.

As promised back in April in an announcement of its plans to modernize compliance program guidance, the Department of Health and Human Services Office of Inspector General (OIG) issued the first of its new guidance documents for the health care industry on November 6, 2023. The first release is a general compliance program guidance (GCPG) designed to serve as a resource to all segments of the health care industry, regardless of the particular items or services offered.

In its newest release, OIG reiterates its view that the GCPG is by its very nature a voluntary guidebook that can act as a roadmap for a compliance program to follow, but that it is not binding on any individual or entity in the health care industry. This updated GCPG includes the following information for health care compliance programs, which we summarize further below: (1) key Federal authorities for entities engaged in health care business; (2) the seven elements of a compliance program; (3) adaptations for small and large entities; (4) other compliance considerations; and (6) OIG processes and resources.

Additional industry specific compliance guidance documents will be forthcoming, according to OIG, with its first updated guidance setting the stage for those to follow.

Continue Reading HHS OIG Issues General Guidance as First Step in Effort to Modernize Compliance Guidance

On September 28, 2023, the Office of Inspector General of the Department of Health and Human Services (OIG) issued Advisory Opinion 23-06, involving a proposed services arrangement between a pathology laboratory (the Requestor) and third-party referring pathology laboratories. 

The OIG determined that, if the requisite intent were present, the proposed purchase of the technical component of anatomic pathology services from certain laboratories would generate prohibited remuneration under the federal Anti-Kickback Statute (AKS). In doing so, the OIG highlighted the proposal’s lack of commercial reasonableness and reaffirmed its longstanding suspicion over arrangements that “carve out” federal health care program business.

Continue Reading OIG Issues Unfavorable Advisory Opinion Concerning Pathology Lab’s Proposed Purchased Services Arrangements

In an advisory opinion released on October 13, the Department of Health and Human Services (HHS) Office of Inspector General (OIG) approved a plan by a muti-specialty practice to pay its employed physicians bonuses related to outpatient procedures performed by those physicians at ambulatory surgical centers (ASCs) operated by the physician practice entity requesting the opinion (the Requestor).

According to the facts as presented by the Requestor, the practice employs a group of physicians across a range of specialties. The Requestor also operates two ASCs as corporate divisions of the practice’s legal entity and not as subsidiaries or affiliates. The Requestor plans to pay each employed physician who performs a procedure at either of the ASCs a quarterly bonus equal to 30% of the net profits generated by the facility fees that are directly attributed to that physician’s procedures performed at the ASCs during the preceding quarter.

Notably, there is no indication in the request that the bonus payments would be based solely on the professional component of services personally performed by the physicians; the measurement of profit per physician would be expected to include the technical component of the procedures.

Continue Reading OIG Permits Multi-Specialty Practice to Pay Doctors Bonuses for Outpatient Procedures


On October 31, FDA will be offering a webinar on its proposed rule ”Medical Devices; Laboratory Developed Tests.”

This webinar comes about a month after FDA issued a proposed rule revising 21 C.F.R. Part 809 (specifically, 21 C.F.R, § 809.3) to state, explicitly, that in vitro diagnostics (IVDs) are medical devices, even if they are developed and manufactured in a laboratory setting.

This category of tests is generally referred to as “laboratory developed tests” (LDTs) and FDA has historically extended enforcement discretion, accepting the availability of certain LDTs outside of the FDA device clearance and approval pathway.

Of course this has not been a straightforward situation: we have seen decades of debate among FDA and industry stakeholders about the exact boundaries of FDA’s expressed enforcement discretion—where those boundaries should lie, and even interpretation (gleaned from enforcement action) of more precisely where they do, in FDA practice, actually lie.

Continue Reading The Latest Episode of the LDT Drama: FDA Issues Long-Awaited Proposed Rule for Laboratory Developed Tests

On September 15, 2023, FDA published an update to the guidance document – “Breakthrough Devices Program, Guidance for Industry and Food and Drug Administration Staff.” Notably, FDA states that it may consider a medical device’s ability to improve health and healthcare disparities when deciding whether to designate a medical device as a breakthrough device. The agency may use this information to determine whether a candidate device provides more effective treatment or diagnosis when compared to the current standard of care. Below, we provide additional information regarding the breakthrough device program and the updated guidance.

Continue Reading FDA Updates Breakthrough Device Guidance

UPDATE: Late in the evening of September 28, the House defeated H.R. 4368 by a vote of 191-237, with 27 Republicans voting against the bill. It was the only one of the four appropriations bills to fail.

Editor’s Note: This post was originally published at 11:15 PM EST on September 27, 2023 while the House of Representatives was still voting on amendments to other appropriations bills.

A group of conservative Republicans in the House of Representatives’ proposed Agriculture, Rural Development, Food and Drug Administration, and Related Agencies Appropriations Act, 2024 (H.R. 4368) would rescind the Food and Drug Administration (FDA)’s January 2023 change to the Risk Evaluation and Mitigation Strategy (REMS) program to allow certified retail pharmacies to dispense mifepristone as part of a medication abortion regimen. The proposal would effectively limit retail pharmacy dispensing of the only medication that is labeled for medication abortion.

Continue Reading GOP House Bill Proposes Repeal of Retail Pharmacy Dispensing of Mifepristone

Good news for Medicare-eligible patients: the Centers for Medicare & Medicaid Services (CMS) is making it easier for individuals with limited income to apply and reenroll in Medicare Savings Programs (MSPs).

On Sept. 21, CMS issued a final rule that will streamline the enrollment and eligibility processes for the MSPs and align them with the requirements and processes for other public programs. The rule will also serve to reduce the complexity of the application and reenrollment process for eligible individuals. 

Continue Reading CMS Final Rule Streamlines Medicare Savings Program Eligibility and Enrollment

On April 27, 2023, Washington Governor Jay Inslee signed into law House Bill 1155, otherwise known as the My Health My Data Act.  Certain “geofencing” portions of the law became effective July 23, 2023.  Other provisions will become effective for “small businesses” on June 30, 2024, and for all other regulated entities on March 31, 2024. Below is a brief summary of the law’s following core components: (1) covered individuals and entities, (2) covered data, and (3) data collection and sharing requirements.

Continue Reading Implementation Underway for Washington’s New Wide-Reaching Consumer Health Data Law

Shortly after Connecticut’s 2023 legislative session kicked off, Governor Ned Lamont announced a series of policy initiatives aimed at reducing health care costs and undertaken in collaboration with the Connecticut Hospital Association. “An Act Protecting Patients and Prohibiting Unnecessary Health Care Costs” (“the Act”), which was passed by the Connecticut Legislature in early June and signed into law by Governor Lamont in late June, implements some of those initiatives. Among other things, the Act targets pharmaceutical marketing practices and imposes extensive reporting requirements. These provisions apply to “pharmaceutical manufacturers” and come into effect on October 1, 2023.

Broadly, the provisions require “pharmaceutical manufacturers” that employ “pharmaceutical representatives” to register annually with the Department of Consumer Protection (“DCP”) as “pharmaceutical marketing firms” and provide annual reports to DCP containing various information about their employed “pharmaceutical representatives.” The provisions also require “pharmaceutical representatives” to disclose specific information to prescribing practitioners and pharmacists and provides DCP with the authority to impose penalties for non-compliance.

The nuance lives in the Act’s definitions, and several key questions remain open, including to what extent the Act applies to medical device and technology manufacturers.

Continue Reading New Connecticut Law Targets Drug and Device Manufacturers who Employ Sales Representatives for Additional Scrutiny

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.