Regulatory Developments

The Centers for Medicare and Medicaid Services has published a final rule that governed the way that Medicare Advantage and Medicare Part D plans interact with third-party marketing organizations. The rule, which goes into effect on June 28, 2022, will have a wide ranging impact on the insurers who run these plans.

Scot Hasselman

CMS recently issued updated Open Payments Frequently Asked Questions (FAQs). The FAQs are revised periodically to reflect the most up to date program requirements. This latest revision both added and removed FAQs, and also included some general edits.

The following FAQs were added: #2014, #2015, #2016, #2017, #2018, #2019, #2020, #2021 and #2022. Each new FAQ is reproduced in full below. They provide additional guidance regarding topics such as archived reporting years, salaries paid to covered recipients, reporting of device identifiers, valuing long-term device loans, debt forgiveness, and the definition of Nurse Practitioner.

Additionally, the following FAQs have been removed from the FAQ document “due to being no longer applicable, redundant with another FAQ, or of low utility” (according to CMS):
Continue Reading CMS Issues Updated Open Payments FAQs

In a notice published on April 7, 2022, the Health Resources and Services Administration (HRSA), the division of HHS that manages the distribution and oversight of CARES Act Provider Relief Funds (PRFs), requested comments from stakeholders on proposed changes to its Information Collection Request (ICR) Form that it will be submitting to the Office of Management and Budget (OMB).

The approved ICR uses an OMB form that is set to expire on January 1, 2023, so HRSA is requesting comments before submitting revisions to OMB. This is the first opportunity for providers who were subject to the first two PRF reporting periods (Period 1 and Period 2) to comment on the reporting program and provide feedback on requirements related to those reports. In addition to revising the PRF reporting form, HRSA is looking to add reporting for the American Rescue Plan (ARP) rural provider program to the ICR.

The ARP rural provider program was put in place by Congress to provide payments to providers and suppliers who served rural Medicaid, CHIP and Medicare beneficiaries from January 1, 2019 through September 30, 2020. The ARP Rural plan is distinct from the PRF, but it has similar reporting requirements and uses the PRF reporting portal for applications.
Continue Reading HRSA asks for comment on provider relief fund and ARP rural reporting requirements

In November 2020, four months after the Trump Administration issued a series of Executive Orders reiterating its policy goals on reducing the costs to consumers for prescription drugs and directing the Department of Health and Human Services, Office of Inspector General (“HHS-OIG”) to implement those policy objectives, HHS-OIG issued a Final Rule to amend certain provisions in the safe harbor regulations under the Federal Anti-Kickback Statute (“AKS”). The Final Rule included three key provisions:

  1. Elimination of discount safe harbor protection for manufacturer rebates paid directly, or indirectly through a pharmacy benefit manager (“PBM”) to Medicare Part D or Medicare Advantage plans (the “Rebate Rule”);
  2. Creation of a new safe harbor to protect point-of-sale (“POS”) price reductions paid by manufacturers to Medicare Part D plans, Medicare Advantage plans, and Medicaid managed care organizations (“MCOs”); and
  3. Creation of a new safe harbor to protect fair-market-value (FMV) service fees paid to PBMs by manufacturers.

The Final Rule imposed a January 1, 2022, effective date for the Rebate Rule. However, in January 2021, two months after issuance of the Final Rule and in connection to a lawsuit brought by the Pharmaceutical Care Management Association challenging the Rebate Rule, the Biden Administration agreed to delay the Rebate Rule’s effective date to January 1, 2023, as reflected in an Order by the United States District Court for the District of Columbia.

In the intervening time though, Congress passed the Infrastructure Investment and Jobs Act (the “Infrastructure Act”). That law, signed by President Biden on November 15, 2021, further delayed implementation of the Rebate Rule to January 2026. Thus the rule, which many thought would be eliminated as part of paying for the cost of the infrastructure bill, was still alive, if only delayed until the middle of the next presidential term.

Continue Reading Future of discount safe harbor for prescription drugs remains uncertain

On July 1, 2021, the Department of Justice (DOJ) released a memorandum signed by Attorney General Merrick Garland regarding the issuance and use of guidance documents. Addressed to the heads of all DOJ components, the memorandum rescinds two previous DOJ memoranda and outlines the principles governing the DOJ’s revised approach in evaluating guidance documents.

2017 Memorandum

On November 16, 2017, then Attorney General Jeff Sessions published a memorandum entitled “Prohibition on Improper Guidance Documents” (the “2017 Memorandum”). The 2017 Memorandum sought to address instances in which guidance documents published by the DOJ were being used to “effectively bind private parties without undergoing the [notice-and-comment] rulemaking process.” Under the 2017 Memorandum, Attorney General Sessions prohibited publication of guidance documents “that purport to create rights or obligations binding on persons or entities outside the Executive Branch (including state, local and tribal governments).”  The 2017 Memorandum directed the DOJ to also adhere to several principles in constructing and publishing guidance documents. These included avoiding the use of mandatory language, specifically noting that voluntary standard non-compliance would not result in enforcement action and including unambiguous statements that published guidance documents were not legally-binding final agency actions.

Brand Memo

Following the 2017 Memorandum, then Associate Attorney General Rachel Brand released a memorandum entitled “Limiting Use of Agency Guidance Documents In Affirmative Civil Enforcement Cases” (the “Brand Memo”). The Brand Memo built upon the publication principles outlined in the 2017 Memorandum and extended them to the DOJ’s legal actions, preventing DOJ lawyers from utilizing non-compliance with guidance documents as a basis for filing a civil lawsuit. While DOJ lawyers could still use guidance documents read by a party as evidence that such party had knowledge of a legal mandate, “that a party fails to comply with agency guidance [documents] expanding upon statutory or regulatory requirements does not mean that the party violated those underlying legal requirements.”

Continue Reading DOJ revises approach to publication and enforcement of guidance documents

On August 2, 2021, the U.S. Food and Drug Administration (“FDA”)  published a final rule amending existing regulations (21 C.F.R. § 201.128 and 21 CFR § 801.4) that describe the types of evidence relevant to determine a drug or device’s intended use under the Food, Drug and Cosmetic Act (“FDCA”).  See 86 Fed. Reg. 41,384–85.

This final rule, which takes effect as of September 1, 2021, withdraws and replaces a final rule that FDA promulgated on January 9, 2017, but which never became effective due to an outcry concerning a problematic knowledge provision that was contrary to the statutory scheme of the FDCA and to physicians’ autonomy to use FDA-approved products in an off-label manner.

Prior to the 2021 final rule, FDA issued a proposed rule on September 23, 2020 that eliminated the 2017 rule’s knowledge provision and was much more aligned with FDCA intent and current FDA policy and practice.  FDA maintains, and we agree, that August 2021 final rule remains largely unchanged from the 2020 proposed language.

The following is a review of some important changes that FDA regulated entities should take note of as they develop and market FDA regulated products:

Continue Reading FDA clarifies evidence and knowledge requirements in intended use final rule

Effective January 14, 2021, the Internal Revenue Service (“IRS”) implemented a final rule (the “Final Rule”) concerning the tax deductibility of settlement payments made to the government.  This rulemaking followed a legislative update to the Internal Revenue Code of 1986 (“IRC”), which was implemented as part of the 2017 federal tax overhaul and specifically included

The October 3, 2019 Executive Order 13890 (“EO 13890”), entitled “Executive Order on Protecting and Improving Medicare for our Nation’s Seniors,” directs the Secretary of Health and Human Services to “propose regulatory and sub-regulatory changes to the Medicare program to encourage innovation for patients.”  EO 13890 explicitly requests that the Secretary make coverage

The U.S. Department of Health and Human Services filed a Notice of Enforcement Decision on Friday, April 26, 2019, announcing a new system of annual penalty limits for HIPAA violations based on an entity’s level of culpability. The agency revised its previous interpretation of the Health Information Technology for Economic and Clinical Health Act (HITECH

On July 18, 2018, the Office of Inspector General (OIG) of the Department of Health and Human Services (HHS) submitted to the Office of Management and Budget (OMB) for regulatory review a proposed rule entitled “Removal Of Safe Harbor Protection for Rebates to Plans or PBMs Involving Prescription Pharmaceuticals and Creation of New Safe Harbor

On February 2, 2015, the Obama Administration released its proposed federal budget for fiscal year (FY) 2016. The budget would impact all types of health care providers, health plans, and drug manufacturers if adopted as proposed – which is unlikely given Republican control of the House and Senate. Nevertheless, Congress can be expected to consider the Medicare and Medicaid savings proposals (many of which are carry-overs from prior budgets) during expected debate in the coming months on Medicare physician fee schedule (MPFS) reform legislation or during future budget negotiations. The following is a summary of the major Medicare, Medicaid, and related policy proposals contained in the FY 2016 budget proposal.
Continue Reading Obama Administration Releases FY 2016 Budget Proposal with Medicare/Medicaid Provisions

On December 31, 2014, the IRS published final regulations providing guidance on the community health needs assessment and financial assistance policy requirements for charitable hospitals under the ACA. The regulations address the entities that must meet these requirements, related reporting obligations, and the consequences for failing to satisfy these ACA requirements. The regulations apply

On December 30, 2014, the Internal Revenue Service (IRS), the Employee Benefits Security Administration (EBSA), and the Centers for Medicare & Medicaid Services (CMS) published a proposed rule that would revise Affordable Care Act (ACA) summary of benefits and coverage (SBC) and uniform glossary requirements for group health plans and health insurance coverage. The changes

The Office of Inspector General (OIG) of the Department of Health and Human Services (HHS) has published a major proposed rule that would amend the safe harbors to the Anti-Kickback Statute (AKS) and the Civil Monetary Penalty rules to protect certain payment practices and business arrangements from criminal prosecution or civil sanctions under the AKS. Reed Smith has prepared a Client Alert analyzing the proposed rule, highlighting areas where the OIG is seeking public comment. Overall, the OIG appears to recognize that new health care delivery mechanisms demand a more flexible approach to fraud and abuse enforcement than has been the case in the past, as discussed in our analysis.
Continue Reading Reed Smith Client Alert: Analysis of HHS OIG Proposed Rule to Amend the Anti-Kickback Safe Harbors, CMP Rules on Beneficiary Inducements & Gainsharing Regulations

The Drug Enforcement Administration (DEA) has published a final rule to implement the Secure and Responsible Drug Disposal Act of 2010, which was intended to mitigate prescription drug abuse by providing safe and secure mechanisms for “ultimate users” to dispose of unused or unwanted pharmaceutical controlled substances. The regulations allow authorized manufacturers, distributors, reverse

On September 19, 2014, the Office of Inspector General (OIG) of the Department of Health & Human Services issued a Special Advisory Bulletin (SAB) in which it identified several potential regulatory risks to federal health care programs as the result of coupon programs used by drug manufacturers to reduce or eliminate patient copayments for brand-name drugs. In the SAB, the OIG explains that coupon program sponsors and pharmacies will risk the receipt of penalties if they do not take steps to actively prevent federal health care program beneficiaries from using the coupons. According to the OIG, these coupon programs qualify as examples of remuneration offered to consumers to encourage the purchase and use of specific items, and therefore implicate the federal Anti-Kickback Statute. In addition, a claim that includes items or services resulting from such a kickback violation would constitute a false or fraudulent claim under the False Claims Act.
Continue Reading HHS OIG Paints with Broad Brush in Criticizing Drug Manufacturer Coupon Programs

On the heels of its proposed rule to expand its health program exclusion authority, the Office of Inspector General (OIG) of the Department of Health and Human Services has published a proposed rule that would amend the health care program civil monetary penalty (CMP) regulations. The rule would codify the OIG’s expanded statutory authority under the Affordable Care Act to impose CMPs on providers and suppliers and would allow for significant penalties in a variety of scenarios, some of which could extend beyond what is currently permitted.

Reed Smith attorneys have prepared a Client Alert summarizing and analyzing the OIG’s proposed rule, including the various scenarios under which CMPs could be issued under the proposed regulations, such as: failure to report and return an overpayment; failure to grant OIG timely access to records upon request; ordering or prescribing items or services while excluded from a federal health care program, as well as arranging or contracting with an individual or entity who meets this criteria; making false statements or omitting or misrepresenting material facts in an application, bid, or contract; and failing to submit or certify drug-pricing and product information in a timely manner. In addition, the alert covers the changes in technical language proposed by OIG to clarify and more clearly define the scope of CMP regulations.
Continue Reading OIG Proposed Rule Would Expand Civil Monetary Penalty Authority