Legislative Developments

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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

[Note, this is Part 3 in an ongoing series of posts exploring substantive aspects of the Consolidated Appropriations Act, 2023 (P.L. 117-328) (referred to hereafter as 2023 CAA). Earlier parts covered Medicare Payments and the PIE Act]

The Modernization of Cosmetics Regulation Act of 2022 (MoCRA) is Subtitle E of the Food and Drug Administration Title of the 2023 CAA. The subtitle itself is a major change for the cosmetics industry, bringing almost all manufacturers and distributors into a regulatory and reporting structure similar to that currently used by the FDA to govern drugs and medical devices.

The Senate and House committee markups for both versions of the FDA User Fee legislation included a version of this law. However, the final version of that legislation had almost all policy riders stripped from it. But, it reappeared in the 2023 CAA and is now law.

So, what is MoCRA and what does it do? As with the previous posts on the 2023 CAA, we will go a little deeper on this than a regular blog post. That approach is particularly warranted here since this is an entirely new regulatory structure.…

Continue Reading Health Provisions of the Consolidated Appropriations Act, 2023: Part 3 Cosmetics Regulation

In December 2022, the New York City Council introduced the Secure Jobs Act. The Act attempts to redefine the long-established system of at-will employment by requiring New York City employers to provide “just cause” before firing an employee. The Act builds on December 2020 legislation that imposed similar restrictions within the fast food industry…

[Note, this is Part 2 in an ongoing series of posts exploring substantive aspects of the Consolidated Appropriations Act, 2023 (P.L. 117-328) (referred to hereafter as 2023 CAA). Part 1, available here, covered changes in Medicare payment rates.]

Buried in the “Miscellaneous” chapter of Subtitle F (“Cross-Cutting Provisions”) of the Food and Drug Administration Title (Title III) of the 2023 CAA is Section 3630, a provision without a short title called “Facilitating exchange of product information prior to approval.”

This provision was originally proposed as the Pre-approval Information Exchange Act (or PIE Act) in March 2022 and was included in the House version of the Food and Drug Administration user fee legislation before being dropped from that legislation along with almost all other policy riders in a deal to get the FDA User Fee program approved before it expired.

But the same language was included in the 2023 CAA that was signed into law on Dec. 29, 2022. And again, while it was not directly entitled as such in the law, it is the PIE Act and that is how this post will refer to it. So, exactly what is the PIE Act and what does it do?  Before assuming there is “PIE” for everyone, read more for important content on the boundaries of this law, and remaining challenges for companies seeking to exchange information under this statutory authority.…

Continue Reading Health Provisions of the Consolidated Appropriations Act, 2023: Part 2 The PIE Act

The Consolidated Appropriations Act, 2023 (P.L. 117-328) (referred to hereafter as 2023 CAA) runs more than 1,600 pages long in the official PDF version, so you would be excused if you missed a few key substantive health provisions that were included in the law.

Many of the substantive provisions of the law had been proposed as parts of other packages throughout the year, including the Infrastructure law, the FDA User Fee legislation and the Inflation Reduction Act. However, for one reason or another, these provisions were eliminated from the final versions of the laws that were passed.

The 2023 CAA included, among other aspects, changes to the Medicare payment program and sequestration requirements, additions to the accelerated approval process for drugs, a regulatory regime for cosmetics, and changes related to pre-approval communication of health care economic information to payors, formularies and similar entities.

This is the first in a series of posts exploring some of the more important policy aspects of the law. With part 1, we will explore the changes to Medicare payment rules.…

Continue Reading Health Provisions of the Consolidated Appropriations Act, 2023: Part 1 Medicare Payments

The Inflation Reduction Act included some very significant changes to the ways in which the Medicare program handles drug pricing.

Among the changes are a redesign of the Medicare Part D (prescription drug benefit) program, as well as requirements that certain drug prices be negotiated with the Centers for Medicare & Medicaid Services and a provision that drug manufacturers pay inflation rebates to on utilization of drugs covered by Medicare Part B and Part D in certain circumstances.

To address these changes to the law, Reed Smith has put together a series of alerts and webinars on the topics.…

Continue Reading Analysis of Medicare Prescription Drug Pricing Changes in Inflation Reduction Act

The House Energy and Commerce Committee seems poised to make substantial changes to the Food and Drug Administration’s (“FDA’s”) Accelerated Approval Program. The committee’s Democratic chairman, Frank Pallone, Jr. (D-NJ) and Republican ranking member, Cathy McMorris Rodgers (R-WA) have proposed competing bills that were featured prominently in the Health Subcommittee’s legislative hearing on March 17, 2022.

The Accelerated Approval Program was developed in 1982, largely in response to the HIV/AIDs epidemic, to expedite approval of novel drugs that treat serious conditions with unmet medical needs based on a surrogate endpoint.  Drugs that receive accelerated approval must undergo post-approval (Phase IV) studies to confirm the intended clinical benefit.  If the clinical testing does not demonstrate the intended clinical benefit, FDA has mechanisms to remove the drug from the market.

However, concerns have mounted regarding FDA’s ability to remove ineffective drugs from the market, and those concerns were punctuated during a February 3, 2022 Health Subcommittee hearing on the reauthorization of FDA User Fees. Dr. Patrizia Cavazzoni, the Director of the Center for Drug Evaluation and Research at the FDA testified that the program’s existing mechanism to withdraw accelerated approvals is cumbersome, resource intensive, and seldom used.…

Continue Reading Competing bills propose amendments to FDA’s accelerated approval program

On August 1, 2021, the Senate released the legislative text of the bipartisan infrastructure bill, the “Infrastructure Investment and Jobs Act,” H.R. 3684.  The Senate is expected to vote this week, before a month-long recess beginning on August 9, 2021.  The 2,702 page legislation contains several relevant health care-related provisions, including a delay of the implementation of the rule eliminating the Anti-Kickback Statute (“AKS”) safe harbor protection for Medicare Part D rebates.

Rebate for Discarded Amounts of Medicare Part B Single-Dose Container or Single-Use Package Drugs

First, the legislation requires manufacturers of single-dose container or single-use package drugs payable under Medicare Part B to provide a rebate to the government for any discarded portion of that drug.  The rebates will be charged each quarter, beginning with the first quarter of 2023, and must be paid in regular intervals, as determined appropriate by the Secretary of the U.S. Department of Health and Human Services (“HHS”).  The legislation provides that, in order to enforce this provision, HHS will conduct periodic audits of both drug manufacturers and providers who submit claims.  For violations of this provision, HHS will impose Civil Monetary Penalties in amounts equal to the sum of the amount that the manufacturer would have paid and twenty-five percent of such amount.…

Continue Reading Health Care Provisions in the Infrastructure Investment and Jobs Act

Over the last decade, members of the medical and public health communities around the world have widely studied and acknowledged the impact of social determinants of health (SDOH)—the conditions in the environments where people live, learn, work, play, and age—on a wide range of health, functioning, and quality-of-life-risks and outcomes.[1]  In the past year…

On April 19th, 2021 Governor Andrew Cuomo (D) signed the state’s Budget for Health and Mental Hygiene (A3007C/S2507C), which includes several significant changes impacting the state’s nursing home operators and investors. Most notably, the legislation’s principal provisions require reinvestment of revenue into each nursing home facility and a cap on the profit the facility can…

During a press conference on Monday, March 29, 2021, Florida Governor Ron DeSantis signed Senate Bill 72, which grants civil immunity to corporations, hospitals, nursing homes, government entities, schools, and churches from COVID-19-related lawsuits, except in cases of gross negligence or intentional misconduct.  Plaintiffs who file suit in Florida alleging coronavirus-related injuries will face…

The U.S. Senate recently voted unanimously to approve the Competitive Health Insurance Reform Act (Act), which the House of Representatives had already passed earlier in the fall. Currently, health insurers have federal antitrust immunity under the McCarran-Ferguson Act for state-regulated activity that constitutes the business of insurance. Should President Trump opt to sign CHIRA into…

In the evening of December 21, 2020, both Houses of Congress passed the Consolidated Appropriations Act, 2021, H.R. 133.  The sprawling, 5,593-page legislation includes the most significant health care-related provisions to be passed since the CARES Act.  The President is expected to sign the legislation shortly.  Of note, in the course of appropriating billions of…

With only one day left before the final rule scaling back nondiscrimination regulations took effect, the U.S. District Court for the Eastern District of New York (EDNY) issued an order staying the repeal of certain parts of the former regulations. On June 19, 2020, the Department of Health and Human Services’ (HHS) Office for Civil Rights (OCR) and the Centers for Medicare & Medicaid Services (CMS) published a final rule scaling back nondiscrimination regulations first released in 2016 to implement Section 1557 of the Affordable Care Act (ACA). The 2016 regulations had imposed significant requirements on health care providers to ensure that all individuals were provided “meaningful access” to care. As part of the 2016 regulations, OCR banned discrimination “on the basis of sex,” which was defined broadly as “on the basis of pregnancy, false pregnancy, termination of pregnancy, or recovery therefrom, childbirth or related medical conditions, sex stereotyping, or gender identity.” The 2020 final rule revised the 2016 regulations significantly, however. In one of its most controversial changes, OCR removed the definition of “on the basis of sex” contending that “on the basis of sex” shall revert to the “plain meaning” of the term “sex” in Title IX of the Civil Rights Act – meaning not to encompass discrimination on the basis of sexual orientation or gender identity. OCR’s decision came on the heels of a Supreme Court ruling in Bostock v. Clayton County, Ga. four days prior which concluded that discrimination “on the basis of sex” encompasses claims based on gender identity and sexual orientation under Title VII of the Civil Rights Act. Accordingly, within the course of less than a week, the Supreme Court broadly interpreted the same term that OCR severely limited.

Shortly after OCR announced its reversal of the nondiscrimination requirement based on gender identity and sexual orientation, various interest groups began mounting legal challenges. With the order issued by EDNY on August 17, 2020, we are already seeing evidence of the legal battles likely to ensue over the definition of “on the basis of sex,” placing certain parts of OCR’s final rule in legal limbo.
Continue Reading Federal Court stays repeal of “On the Basis of Sex” definition in recent nondiscrimination final rule one day before regulations take effect

On June 30, 2020, United States Senators Elizabeth Warren (D-Mass.) and Marco Rubio (R-Fla.) introduced legislation proposing the Committee on Foreign Investment in the United States (CFIUS), an interagency committee authorized to review certain transactions involving foreign investment in the United States for national security concerns, assist the Federal Trade Commission (FTC) in “conduct[ing] a…

The recently passed “Coronavirus Aid, Relief, and Economic Security Act” (CARES Act) is sweeping legislation that will have widespread impact on companies in the health care and life sciences space. In addition to expanding coverage of COVID-19 testing and preventive services, the Act includes provisions to address health care workforce needs, eases restrictions surrounding telehealth…

The Department of Health and Human Services (HHS) is ahead of schedule to reduce its Medicare Administrative Law Judge (ALJ) appeals backlog, as required by court order, but lawmakers are still looking for ways to improve the efficiency of the Medicare appeals process.

Following a November 1, 2018 federal district court order in American Hospital Association [AHA], et al., vs. Azar (C.V. No. 14-cv-00851) to reduce the Medicare appeals backlog, HHS reported a reduction of 31.4% through the end of the fourth quarter of 2019, according to the third status report[1] (the “Status Report”) filed by HHS to the United States District Court for the District of Columbia on December 31, 2019.  The Status Report identifies 292,517 appeals remain pending at the Office of Medicare Hearing and Appeals (OMHA).  The 2018 court order requires HHS to achieve a 49% reduction by the end of FY 2020 and to clear the backlog entirely by the end of 2022.

At the time of the court’s decision, OMHA had 426,594 appeals pending and providers were waiting up to five years for an ALJ decision, notwithstanding a 90-day deadline under 42 U.S.C. 1395ff(d)(1)(A).  With a 31% reduction so far, HHS is currently approximately 12% ahead of the court’s projected pace for reducing the backlog – at the time of the order, the court projected a 19% reduction by the end of fiscal year (FY) 2019.
Continue Reading HHS Continuing to Reduce Medicare ALJ Appeals Backlog under Court Order; Senators Reintroduce Legislation Striving to Improve Efficiency of Medicare Appeals Process

Congress has completed action on federal fiscal year (FY) 2020 spending, and President Trump has signed the two domestic and national security funding packages into law.  The major health care policy provisions included in the domestic spending package, HR 1865, the “‘Further Consolidated Appropriations Act, 2020” (the “Act”), are summarized below.

Repeal of ACA Device, Insurance Taxes

The Act permanently repeals the Affordable Care Act’s (ACA) 2.3% excise tax on the sale of certain medical devices, which has been a top priority of the medical technology industry.  It also permanently repeals the excise tax on certain high-cost employer-sponsored health coverage (the so-called “Cadillac tax”) and the annual excise tax imposed on health insurer providers.

Medicare Part B Policies

The Act incorporates provisions of the Laboratory Access for Beneficiaries (LAB) Act, which delays the next round of clinical laboratory private payer data reporting for one year.  The Act also directs the Medicare Payment Advisory Commission (MedPAC) to study how to improve this data collection.

In addition, the Act excludes certain complex rehabilitative manual wheelchairs (e.g., HCPCS codes E1235, E1236, E1237, E1238, and K0008) from the Medicare durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS) competitive bidding program.  The Act also bars CMS from using competitive bidding rate information to adjust payment for certain wheelchair accessories and cushions furnished with complex rehabilitative manual wheelchairs.

The Act reimburses acute care hospitals on a reasonable cost basis for furnishing allogeneic hematopoietic stem cell transplants.  It also extends outpatient hospital pass-through status for a number of diagnostic radiopharmaceuticals.

Medicare, Medicaid, and Public Health Extenders

The Act extends through May 22, 2020 a number of Medicare, Medicaid, and public health programs and policies, including the following:…
Continue Reading FY 2020 Government Funding Bill Repeals ACA Health-Related Taxes, Extends Expiring Health Provisions, Makes Other Health Policy Updates

The House Energy and Commerce Committee held hearings December 10, 2019 to examine nine legislative proposals intended to expand health insurance coverage and reduce health care costs, including Medicare buy-in bills.  The Committee also recently held hearings on FDA oversight of the US drug supply chain and regulation of cosmetics, along with public health preparedness…

President Trump has signed into law a short-term continuing resolution that funds the federal government and extends certain expiring health care programs through December 20, 2019.  With regard to health care programs, the measure (HR 3055) delays a scheduled $4 billion reduction in Medicaid disproportionate share hospital allotments until December 21, 2019 and…