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Articles Posted in Health Law

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California has joined a number of other states, including Vermont and Washington, in requiring pharmacy benefit managers (PBMs) to register with a state department. Assembly Bill 315 (AB 315), Pharmacy Benefit Management was signed by California Governor Jerry Brown on September 29, 2018 and became effective January 1, 2019. The bill includes several new requirements detailed below. A complete list of legislation affecting PBMs across the country can be found here.

Pharmacy benefit managers ostensibly exist as middlemen seeking to reduce prescription drug prices and to negotiate contracts on behalf of their clients. PBMs are now responsible, among other things, for administering the various pharmacy benefits for health plans, conducting drug utilization reviews, and negotiating rebates and reimbursement amounts. Although professionals in PBM positions, as the California Assembly analysis writes (available as PDF download here), “have one of the most prominent roles in determining coverage and payment for drug products, despite never taking physical possession of the drug”, they have largely “escaped scrutiny of regulation and licensure.” With the large purchasing power they wield, their arguably conflicting interests, and the increasingly aggressive stance of PBMs when dealing with those they interact with, it is important that the business dealings of PBMs are transparent and that the managers are held accountable.

This new bill now requires PBMs to register with the California Department of Managed Health Care (DMHC) and to “exercise good faith and fair dealing” by requiring PBMs to provide quarterly disclosures to the purchasers of their services, including revealing both direct and indirect conflicts of interest. Additional disclosures containing certain information can be requested by the purchaser at any time. These disclosures can include information such as rates negotiated with pharmacies, drug acquisition cost, and rebates received from pharmaceutical manufacturers.

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In response to the current opioid crisis sweeping across the country, Congress passed the Substance Use-Disorder Prevention that Promotes Opioid Recovery and Treatment for Patients and Communities Act (commonly referred to as the SUPPORT Act). President Trump signed the Act on October 24, 2018, which will take full effect on January 1, 2022.

The Act included over 120 provisions. One of these provisions, Section 6111 (“Fighting the Opioid Epidemic with Sunshine”), expands the reporting obligations that are required as part of the Physician Payments Sunshine Act. The Sunshine Act, which the Center for Medicare and Medicaid Services (CMS) refers to as the Open Payments Program, was passed in 2010 as part of the Patient Protection and Affordable Care Act. This made it mandatory for pharmaceutical and medical device manufacturers to disclose to CMS any payments or other transfers of value, such as consulting fees or research grants, made to physicians or teaching hospitals. This payment information is then made publicly available in a searchable online database.

The SUPPORT Act extends the Sunshine Act to now include additional health professional affiliates – physician assistants, nurse practitioners, clinical nurse specialists, certified nurse-midwives, and certified registered nurse anesthetists. In addition, CMS is now authorized to post National Provider Identifier numbers (NPIs) on the public database, something that was previously barred by the Sunshine Act.

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This is a summary of the article Courts Recognize Irreparable Injury Caused by Medicare Appeals Backlog written by Jessica L. Gustafson, Esq. and Abby Pendleton, Esq., published in the January/February 2019 issue of BC Advantage.

Presently, there are 426,594 appeals pending and awaiting OMHA adjudication. Despite a statutory mandate to “conduct and conclude a hearing…and render a decision on such hearing by not later than the end of the 90-day period beginning on the date a request for hearing has been timely filed,” the average processing time for OMHA appeals is presently 1,142 days (over 3 years). Unfortunately for appellants, there are significant financial repercussions resulting from adjudicators’ failures to adhere to their statutory mandates for timely appeals adjudication. Delays in appeals processing not only violate the Social Security Act, but also create financial hardship for appellants.

Specifically, Medicare contractors are allowed to begin recouping an alleged overpayment after a reconsideration decision is issued. Following issuance of a partially favorable or unfavorable reconsideration decision, CMS will begin recoupment activities while an appellant awaits an Administrative Law Judge (ALJ) hearing and decision.

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As of January 29, 2019, a total of 38 hospitals have joined a lawsuit against the Department of Health and Human Services (HHS) over the new site-neutral payment policy that went into effect beginning January 1, 2019. The final rule that modified the Outpatient Prospective Payment System (OPPS) will result in a reduction of $380 million in Medicare reimbursements for hospital outpatient clinic visits. Half of the total reduction will apply next year, following a two-year phase-in period.

The American Hospital Association (AHA) and the Association of American Medical Colleges (AAMC) led the December 4, 2018 lawsuit, which has now grown to include 36 other hospitals or associations that are in opposition to the rule. The 2019 OPPS modifications will make payments for clinic visits site-neutral by reducing the payment rate for hospital outpatient clinic visits provided at off-campus provider-based departments (PBDs) by 60%. Previously, Section 603 of the Bipartisan Budget Act of 2015 ensured off-campus PBDs that began operations on or after November 2, 2015 were exempt from site-neutral payments. Now, however, the HHS has fundamentally overwritten Section 603, subjecting the PBDs that were originally protected to the lower OPPS rate.

Rick Pollack, president and CEO of the AHA said in a December press release, “These cuts directly undercut the clear intent of Congress to protect hospital outpatient departments because of the real and crucial differences between them and other sites of care…It is alarming that CMS continues to propose cuts that will harm the teaching hospitals that provide care to the most vulnerable patients, including Medicare beneficiaries.”

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The Patient Test Result Information Act – commonly referred to as Act 112 – now requires Pennsylvania imaging entities to directly communicate with patients if the entity finds “significant abnormalities” in the patient’s test results, as well as to continue to follow normal reporting procedure to inform the ordering physician. The catalyst for this legislation, signed by PA Governor Tom Wolf on October 24, 2018, was the perceived risk that the increased workload of health care providers increases the prospects that test results may be overlooked or misread. PA State Representative Marguerite Quinn, who introduced the bill, expressed worry over “two situations in which abnormal test results were not communicated to the patient, resulting in the unnecessary death of both people” in a February 20, 2015 memo. These circumstances caused her to press for better communication between imaging centers and any person who receives outpatient diagnostic imaging services.

A “significant abnormality” is defined by the Pennsylvania Medical Society (PAMED) as “a finding by a diagnostic imaging service of an abnormality which would cause a reasonably prudent person to seek additional or follow-up medical care within three months.”

Act 112 became effective on December 23, 2018 and will require imaging entities who provide outpatient services to notify their patients within 20 days of the date their results were sent to the ordering physician. The notification does not need to include a copy of the test results, but does need to include certain information, described below:

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Established in 1986, the National Practitioner Data Bank (“NPDB”) is a “repository of reports that contain information on medical malpractice payments and certain adverse actions related to health care practitioners, providers, and suppliers.” NPDB website. Under the NPDB, hospitals and other entities with peer review committees, health plans, and numerous others are required to report certain adverse actions to the centralized database. Reporting to the NPDB (or failing to report) has serious consequences to both mandatory report entities and practitioners that are reported. Entities that report improperly (or properly), may face lawsuits from reported practitioners. Conversely, reported practitioners who appear on the NPDB (properly or improperly) may have lasting career and reputational effects.

The NPDB Guidebook provides interpretation of NPDB requirements for mandatory report entities. On October 26, 2018, the Guidebook was updated for the first time since April 2015. While many of the October 2018 updates to the NPDB are editorial changes, there were also modifications made regarding what is considered a reportable surrender of privileges, as well as other reporting descriptions. These changes will likely lead to more reporting events.

These changes occurred predominately in Chapter E: Reports, Reporting Adverse Clinical Privileges Actions, with the addition of a new section entitled “Length of Restriction”. This section clarifies that, regardless of how a restriction order is written, if a professional review action affects the privileges of a practitioner in a negative way for longer than 30 days, it is reportable. This update appears to be a response to a 2017 federal court ruling that found that a proctoring restriction was not reportable because it was not clear that the restriction would take more than 30 days.

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Two cases brought against an Alabama-based hospice company will result in an almost $6 million settlement payment. In two whistleblower complaints filed in 2013 by two former employees, one of which who worked as a clinical director in a Pennsylvania branch, SouthernCare Inc. is accused of wrongly billing Medicare for unnecessary hospice care. When the federal government decided to intervene in September of 2016, the cases were combined.

The complaints against SouthernCare include allegations that the company put patients in their hospice program who weren’t terminally ill in order to submit claims for the more expensive treatment to the government health insurance plan for seniors. SouthernCare denies the claims but did promise to pay almost $6 million to clear up the allegations. The two whistleblowers, Dawn Hamrock and Patricia Beegle, will share slightly more than $1 million of that, according to the settlement agreement.

Hamcock, the former Pennsylvania clinical director who resigned from the company in 2012, raised questions prior to her resignation regarding the way in which SouthernCare was handling Medicare claims.

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The Eliminating Kickbacks in Recovery Act of 2018 (“EKRA”) became effective October 24, 2018. ERKA makes it a criminal offense to knowingly and willfully offer, pay, solicit or receive any remuneration (i.e., anything of value), directly or indirectly, overtly or covertly, in cash or in kind, to induce a referral (or in exchange for a referral) to a lab, clinical treatment facility or recovery home.  Unlike the Federal Anti-Kickback Statue, ERKA applies to all payor sources.

Notably, the broad language of the ERKA permits the federal government to monitor arrangements intended to generate business for any laboratory, clinical treatment facility or recovery home for services payable by a federal health care program or commercial health insurers.  ERKA includes certain exceptions, as well as “preemption” language tied to the Federal Anti-Kickback Statute.

It is important that labs, clinical treatment facilities (i.e., a medical setting, other than a hospital, that provides detoxification, risk reduction, outpatient treatment and care, residential treatment, or rehabilitation for substance use, pursuant to licensure or certification under State law), and recovery homes, critically examine current compensation arrangements with employees and contractors, as certain types of payment arrangements will now be prohibited.

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The New York State Office of the Medicaid Inspector General (OMIG) maintains a Certification Program to ensure Medicaid providers are continuing proper compliance. This program works to eliminate any environment in a Medicaid provider’s system that may encourage fraud, waste, or abuse, as well as ensuring errors have the potential for self-correction if mistakes are located before the Medicaid program is billed. Providers who meet OMIG’s requirements must submit a certification at the time of enrollment and every December thereafter. This includes any Medicaid providers who have submitted $500,000 in Medicaid claims or those who may reach that goal in any consecutive 12-month time period, regardless of calendar year.

OMIG has identified seven compliance areas that must be covered by the Compliance Program:

  • Billings
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The practice of diagnosis and treatment of patients remotely by way of a telecommunications technology, also known as telemedicine, has gained popularity as companies who provide this type of healthcare have recently worked to make a name for themselves. Services such as CareClix, ConsultADoctor, and Teladoc are just a few of these providers who utilize telehealth as their primary healthcare service.

Telemedicine can be divided into two general categories: synchronous and asynchronous. Synchronous programs are those that occur in real-time, generally through a video conference or other similar means of communication between a patient and a medical provider. Asynchronous telemedicine, or “store and forward”, refers to the patient’s ability to gather all relevant information and communicate it to a medical provider over a delayed time period. The information is sent via secure email or other form of messaging service.

Beginning January 1, 2019 Medicare will be accepting certain medical services that fall under the classification of asynchronous telemedicine. The Centers for Medicare and Medicaid Services (CMS) published the final rule for the 2019 Physician Fee Schedule, which included a new code entitled “Remote Evaluation of Pre-Recorded Patient Information” (HCPCS code G2010). A list of the telehealth services that are currently covered by CMS can be found here.

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