Category: Health Care Law

Food and Drug Administration (FDA) Guidance for Industry and FDA Staff: Mobile Medical Applications

GT Law

 

On September 25, 2013, the Food and Drug Administration (the “FDA”) released final guidance on the regulatory requirements regarding the introduction of mobile medical applications into the marketplace (the “Final Guidance”).  The purpose of the Final Guidance and its Appendices is to assist manufacturers with determining if a product is a mobile medical app and if so the FDA’s expectations for that product.  This Alert summarizes some the key components of the Final Guidance.

I. Summary of the Guidance

This Final Guidance informs manufacturers, distributors and other entities on how the FDA intends to apply its regulatory authorities to select software applications intended for use on mobile platforms (mobile applications).1   Some mobile applications may meet the definition of a medical device under section 201 of the Federal Food, Drug, and Cosmetic Act (FD&C Act)), but because some may pose a lower risk to the public, FDA intends to exercise enforcement discretion.  A majority of mobile applications either do not meet the definition of the FD&C Act or are in a category where the FDA intends to exercise enforcement discretion.

The FDA intends to apply its regulatory oversight on those mobile applications that are medical devices and whose functionality could post a risk to a patient’s safety if the mobile application does not function appropriately.  The Final Guidance is intended to provide clarity and predictability for manufacturers of these mobile applications.

The Final Guidance provides lengthy definitions of the following terms:

  • Mobile Platform
  • Mobile Application
  • Mobile Medical Application
  • Regulated Medical Device
  • Mobile Medical App Manufacturer

The above-referenced definitions can be found in the full guidance.

II. Scope

The Final Guidance explains the FDA’s intent—to focus its oversight on a segment of mobile apps.

III. Regulatory Approach for Mobile Medical Apps

The FDA intends to apply its regulatory oversight to only those mobile apps that are (1) medical devices; and (2) whose functionality could pose a risk to a patient’s safety if the mobile app were to not function as intended. The FDA believes that if it fails to function as intended, this subset of mobile medical apps poses potential risks to the public health as currently regulated devices. The FDA strongly recommends that manufacturers who fall within the scope of this guidance follow the Quality System2  regulation (which includes good manufacturing practices) in the design and development of their mobile medical apps and initiate prompt corrections to their mobile medical apps, when appropriate, to prevent patient and user harm. Manufacturers of mobile medical apps must meet the requirements associated with the applicable device classification.

A. Mobile medical apps: Subset of mobile apps that are the focus of the FDA’s regulatory oversight

The FDA currently intends to apply its regulatory oversight to only the subset of mobile apps.3   Of major importance, mobile apps can transform a mobile platform into a regulated medical device by using attachments, display screens, sensors, or other such methods. In spite of the transformation, FDA considers such mobile apps to be mobile medical apps.

The following are mobile apps that the FDA considers to be mobile medical apps that are subject to regulatory oversight:

  • Mobile apps that are an extension of one or more medical devices by connecting4  to such device(s) for purposes of controlling5  the device(s) or displaying, storing, analyzing, or transmitting patient-specific medical device data.
  • Mobile apps that transform the mobile platform into a regulated medical device by using attachments, display screens, or sensors or by including functionalities similar to those of currently regulated medical devices. Mobile apps that use attachments, display screens, sensors or other such similar components to transform a mobile platform into a regulated medical device are required to comply with the device classification associated with the transformed platform.
  • Mobile apps that become a regulated medical device (software) by performing patient-specific analysis and providing patient-specific diagnosis, or treatment recommendations. These types of mobile medical apps are similar to or perform the same function as those types of software devices that have been previously cleared or approved.

B. Mobile Apps for which the FDA intends to exercise enforcement discretion (meaning that FDA does not intend to enforce requirements under the FD&C Act)

The Final Guidance illustrates the FDA’s exercise of enforcement discretion for mobile apps that: (i) Help patients (i.e., users) self-manage their disease or conditions without providing specific treatment or treatment suggestions; (ii) Provide patients with simple tools to organize and track their health information; (iii) Provide easy access to information related to patients’ health conditions or treatments; (iv) Help patients document, show, or communicate potential medical conditions to health care providers; (v) Automate simple tasks for health care providers; or (vi) Enable patients or providers to interact with Personal Health Record (“PHR”) or Electronic Health Record (“EHR”) systems.

It is important to note that some mobile apps listed above and below may be considered mobile medical apps, and others might not.

The following examples represent mobile apps for which the FDA intends to exercise enforcement discretion:

  • Mobile apps that provide or facilitate supplemental clinical care, by coaching or prompting, to help patients manage their health in their daily environment.
  • Mobile apps that provide patients with simple tools to organize and track their health information.
  • Mobile apps that provide easy access to information related to patients’ health conditions or treatments (beyond providing an electronic “copy” of a medical reference).
  • Mobile apps that are specifically marketed to help patients document, show, or communicate to providers potential medical conditions.
  • Mobile apps that perform simple calculations routinely used in clinical practice.
  • Mobile apps that enable individuals to interact with PHR systems or EHR systems.

IV. Regulatory Requirements

Manufacturers of mobile medical apps are subject to the requirements described in the applicable device classification regulation.6

Our team will continue to provide you with updated information on various aspects of this Final Guidance.

1 While many have suggested that this guidance provides similar views on software, the Agency has taken a more formalized position on certain software requirements and the classification of such products.  For example, the FDA has previously clarified that when stand-alone software is used to analyze medical device data, it has traditionally been regulated as an accessory to a medical device or as medical device software.  Medical Devices; Medical Device Data Systems Final Rule (76 FR 8637) (Feb. 15, 2011).

2 See 21 CFR part 820.

3 See Appendix C.

4 To meet this criterion, the mobile medical apps need not be physically connected to the regulated medical device (i.e. the connection can be wired or wireless).

5 Controlling the intended use, function, modes, or energy source of the connected medical device.

6 Class I devices: General Controls, including:

  • Establishment registration, and Medical Device listing (21 CFR Part 807);
  • Quality System (QS) regulation (21 CFR Part 820);
  • Labeling requirements (21 CFR Part 801);
  • Medical Device Reporting (21 CFR Part 803);
  • Premarket notification (21 CFR Part 807);
  • Reporting Corrections and Removals (21 CFR Part 806); and
  • Investigational Device Exemption (IDE) requirements for clinical studies of investigational devices (21 CFR Part 812).

Class II devices: General Controls (as described for Class I), Special Controls, and (for most Class II devices) Premarket Notification.

Class III devices: General Controls (as described for Class I), and Premarket Approval (21 CFR Part 814).

 

Article by:

Of:

Greenberg Traurig, LLP

IRS Announces Modification to “Use-It-Or-Lose-It” Rule for Health Care Flexible Spending Accounts

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On October 31, 2013, the Internal Revenue Service (“IRS”) announced a modification to the “use-it-or-lose-it” rule that applies to health care Flexible Spending Arrangements (“FSAs”) under a cafeteria plan. Under the use-it-or-lose-it rule, unused amounts in a participant’s health care FSA for a plan year not used to pay eligible medical expenses incurred during the plan year were required to be forfeited to the employer, unless the employer adopted the 2 1/2 month grace period. The grace period rules permit participants to use amounts remaining from the prior year to pay eligible medical expenses incurred during the first two months and 15 days immediately following the end of the plan year (March 15 for a calendar year plan).

The New Carryover Provision

Under the new rule, an employer, at its option, may permit a participant to carryover to the immediately following plan year up to $500 in unused amounts from a health care FSA. This carryover may be used to pay or reimburse medical expenses under a health care FSA incurred during the entire plan year to which it is carried over. The rule also provides that:

  • The carryover does not count against or otherwise affect the maximum payroll reduction limit for the plan year ($2,500 for 2014).
  • Although the maximum unused amount allowed to be carried over to any plan year is $500, the plan may specify a lower amount.
  • If a plan permits a carryover, the same dollar limit must apply to all plan participants.
  • A plan that adopts the carryover provision is not permitted to provide the FSA grace period.
  • The use of the carryover option does not affect the plan’s ability to provide for the payment of expenses incurred in one plan year during a permitted “run-out” period at the beginning of the following year.
  • A plan is not permitted to allow unused amounts related to an FSA to be cashed out to the participant or used for any other taxable or non-taxable benefit.
  • A plan is permitted to treat reimbursements of all claims that are incurred in the current plan year as reimbursed first from unused amounts credited for the current plan year and, only after exhausting these amounts, as then reimbursed from unused amounts carried over from the previous year.
  • Any carryover amount used to pay for eligible medical expenses in the current plan year will reduce the amounts available to pay claims during the run-out period from the prior plan year.

For example, Jane Smith participates in her employer’s FSA with a calendar plan year, a run-out period from January 1 to March 31, an open enrollment in November for making salary reductions for the following year and the $500 carryover.

In November 2014, Jane elects a salary reduction of $2,500 for 2015. By December 31, 2014, she has $800 remaining from 2014. The plan may treat $500 of the unused $800 as available to pay 2015 expenses. Jane now has a total of $3,000 to spend in 2015. She is reimbursed for a $2,700 claim incurred in July 2015. The plan treats the first $2,500 as reimbursed with 2015 contributions, and the remaining $200 of the claim as reimbursed with unused 2014 contributions (leaving $300 for any further 2015 expenses). If she submits no further claims in 2015, the remaining $300 is carried over to 2016.

Assume these same facts, except that Jane’s $2,700 expense is incurred and submitted in January 2015 (during the 2014 run-out period). Jane is reimbursed for the claim first from 2015 contributions ($2,500) and then from 2014 contributions ($200). Since this claim was incurred during the run-out period, the 2014 run-out amount is reduced to $600 ($800-$200). If on February 1, 2015 Jane receives a medical bill from 2014 for $700 and submits the expense, the plan may only reimburse her for $600 of the total $700 claim. Jane continues to have $300 available for any 2015 expense, which may be carried over to 2016.

Next Steps

An employer that wants to implement the new carryover option must amend its cafeteria plan on or before the last day of the plan year from which amounts may be carried over and the amendment can be made effective retroactively to the first day of that plan year. For example, an employer can amend a calendar year plan on or before December 31, 2013 and have the carryover rule apply for 2013. The employer must notify participants of the new rule.

This increased flexibility will reduce a key barrier for many potential FSA users and may increase enrollment in FSA programs. Participants will no longer have to perfectly predict normally unpredictable health expenses a year in advance. Even though the carryover is limited to $500, the majority of forfeitures under the use-it-or-lose-it rule were less than $500.

Employers should carefully consider whether their employees would benefit from adopting the carryover rule instead of the grace period rule. The carryover rule is limited to $500 but permits the $500 to be used to pay for eligible expenses during the entire year into which it was carried over. In contrast, the grace period rule permits the entire amount of unused dollars in a health care FSA to be used but only to pay expenses incurred during the first 2 1/2 months of the next year.

Employers seeking to modify a 2013 plan that currently has a grace period should also carefully consider the ERISA implications of eliminating the availability of the grace period for 2013 contributions.

Article by:

Eric W. Gregory

Of:

Dickinson Wright PLLC

Government Shutdown Now Over – But What About Sequestration?

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The government may be back up and running and funded under a short-term continuing resolution (CR), but the battle is far from over as Congress heads toward new deadlines to address budgetary matters.  There has been some confusion about what the current budget agreement means in terms of sequestration’s annual cuts to discretionary and mandatory programs instituted in 2012.  The law signed by the President to address the short-term continuing resolution and temporarily raise the debt ceiling does not provide federal agencies flexibility to administer new sequestration cuts at this time.  With the government spending levels remaining at FY 2013 levels for the duration of the CR, a new round of sequester cuts are not set to kick in until January 2014.

The law established a short-term budget conference committee, with a set deadline of Dec. 13, 2013 to outline recommended spending levels and program cuts.  Of note is that the committee deadline is set in advance of when the second year of the sequester will begin.  The deadline provides a window of opportunity for the new budget conferees to address how the sequester cuts are applied in FY 2014.   The conferees may contemplate making other adjustments to entitlement programs (Medicare and Medicaid) to address health care spending issues that will be negotiated during their deliberations.  In addition, Medicare payments to physicians are set to be cut by approximately 25 percent if Congress does not address the cut by December 31, 2013 and offset the cut with a payfor that would likely include cuts to other health care entities. Any of these negotiations and decisions, if ultimately accepted by Congress, could impact the size of the Medicare sequester cuts in January FY 2014.

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Government Shutdown Aftermath: Centers for Medicare & Medicaid Services (CMS) Under Pressure to Finalize Medicare Payment Rules

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  • Because of the prolonged government shutdown, the Centers for Medicare & Medicaid Services (CMS) may encounter delays in promulgating final payment rules that would otherwise be effective January 1, 2014.
  • It is reasonable to expect that CMS will miss the November 1, 2013 statutory deadline to publish final rules due to the staff shortage from the shutdown as well as the complexity of many significant rule changes that were proposed earlier this year.
  • There is precedent for delaying the effective date of an entire payment rule to allow for the proper 60-day notice and comment period, and there are cases where only portions of a rule that represent significant changes have been delayed.
  • Providers should assess whether CMS has taken the requisite time to properly account for stakeholder input through the comment process, and, if not, they should identify possible remedies.

Despite the short-term resolution to the government budget and debt-ceiling “crisis,” health care providers serving approximately 50 million Medicare beneficiaries may be waiting longer than usual this year to see what rates they will be paid in 2014 as a result of the government shutdown. Any delay is likely to cause great angst amongst providers, including physicians, hospitals, laboratories, and post-acute care facilities such as home health agencies, whose livelihood depends to a significant degree on the terms of annual reimbursement rules. These include the Physician Fee Schedule (PFS), the Hospital Outpatient Prospective Payment System (HOPPS), the Clinical Laboratory Fee Schedule (CLFS) and the Home Health Prospective Payment System (HHPPS).

As we noted prior to the government shutdown, over three quarters of the staff at CMS, the federal agency that administers the Medicare and Medicaid programs, are subject to a furlough. Most of the remaining staff are funded through non-annual discretionary appropriations, such as those who are working to implement the health care marketplaces under the Affordable Care Act. Therefore, even though the government reopened on October 17, 2013, the likelihood that CMS and other executive branch offices will finalize a series of important 2014 Medicare payment rules by the November 1st statutory deadline is becoming increasingly doubtful.

Much depends on the progress executive branch officials had already made on specific payment rules before the shutdown, on how fast staff are able to ramp up now that it is over (for the time being), and on competing priorities and deadlines for the Administration. Adding to the complexity of finalizing the payment rules this year, CMS had proposed numerous significant changes that could greatly impact reimbursement for calendar year 2014. Some of the most significant changes that were proposed in earlier rulemaking include:

Home Health Prospective Payment System
  • Responding to this proposed rule, industry stakeholders have been vocal in their concerns over portions of the proposed rule, which imposes a 14% reduction in Medicare home health funding by means of the maximum allowable rebasing adjustment of 3.5% each year from 2014 to 2017. In comments submitted to the agency, numerous stakeholders from the home health sector specified methodological flaws in the rule including that it was drafted using outdated data and the wrong base year; its impact was only analyzed for 2014 even though it applies to 2014-2017; and that it failed to include an adequate small business impact analysis per the Regulatory Flexibility Act – in fact, the Small Business Administration has expressed concern with the proposed HHPPS rule.
Hospital Outpatient Prospective Payment System
  • Collapsing Outpatient Visits: Collapsing 20 hospital clinic visits, Type A emergency department (ED) and Type B ED visit codes into 3 new codes – one for each type of visit.
  • Packaging: Identifying seven new categories of items and services whose costs will be packaged into payment for other services to which they are integral, ancillary or supportive, including, among others, radiation oncology, clinical diagnostic laboratory tests, and drugs, biologicals, and radiopharmaceuticals that function as supplies when used in a diagnostic test or procedure.
  • New Cost Centers: Using distinct cost-to-charge ratios (CCRs) for cardiac catheterizations, CT scans and MRIs to calculate OPPS payment weights – a change which represents significant cuts to CT and MRI reimbursement (approx. 26% and 11%, respectively).
Clinical Laboratory Fee Schedule
  • New National Limitation Amounts (NLAs) that will govern reimbursement for over 100 tier 1 molecular pathology codes, covering genetic testing ranging from cancers to rare diseases such as cystic fibrosis.
Physician Fee Schedule
  • Cuts in reimbursement for independent laboratories (-26%), radiation therapy centers (-13%), diagnostic testing facilities (-7%), radiation oncology (-5%), pathology (-5%), and interventional radiology (-4%), among others.
  • Capping for certain services in the PFS at the Outpatient Prospective Payment System (OPPS) or Ambulatory Surgical Center (ASC) rates for 2013.
  • Revisions to the Medicare Economic Index (MEI) that could cut reimbursement for diagnostic testing facilities, portable x-ray suppliers, and radiation therapy centers.

Legal Background for Payment Rule Timing

Various laws and executive orders govern when a Medicare payment rule must be posted for public comment, the required length of time of the notice and comment process, and when the final rule is to become effective.

The Administrative Procedure Act (APA) normally requires a 30-day delay in the effective date of a rule. Furthermore, the Congressional Review Act (CRA) generally requires an agency to delay the effective date of a major rule by 60 days in order to allow for congressional review of the agency action. Finally, in order to receive the proper stakeholder input, the Paperwork Reduction Act (PRA) requires CMS to provide a 60-day notice and comment period before promulgating a rule. Thus, CMS has a statutory deadline of November 1, 2013 if it wants to have an effective date of January 1, 2014 for a Medicare payment rule.

A comment period of at least 60 days is the default under Executive Order 12866, § 6(a)(1) (Sept. 30, 1993), Regulatory Planning and Review, as amended by Exec. Orders 13258 (Feb. 26, 2002) and 13422 (Jan. 18, 2007) (providing that “each agency should afford the public a meaningful opportunity to comment on any proposed regulation, which in most cases should include a comment period of not less than 60 days”).

If CMS finds good cause to waive the delay in the effective date of a final rule because the delay is unnecessary, impractical, or contrary to the public’s interest, or the statute permits waiving the delay, the final rule may become effective upon publication.

A History of Delays

CMS regularly misses the November 1 deadline, and in some cases the final rule is published in late November. In certain instances, CMS has delayed the effective date of a payment rule to account for the 60-day notice and comment period as well as the 30-day minimum effective date requirement. For example, for the CY 2003 PFS, CMS delayed the effective date from January 1 to March 3 after publishing the final rule on December 31, 2002. During the last government shutdown in 1995, CMS published the CY 1996 PFS on December 8th and retained an effective date of January 1, 1996 for the overall rule, but extended comments for new or revised payment codes until Feb 6th. The agency has used similar processes for other payment rules, such as the CY 2008 HOPPS rule that extended the comment period until the end of January for certain codes that were significantly changed.

Recent history seems to indicate that if the rules are delayed into December, there is a small, albeit infrequently used, possibility that rules/codes that are significantly changed may have a delayed comment and effective date. However, CMS has also ignored such deadlines in the past and, through a variety of methods, has been able to justify shorter notice and comment periods and effective dates less than 60 days from original publication.

Conclusion

It is reasonable to believe that due to the government shutdown and ensuing staff shortage, CMS could incur significant delays in publishing Medicare final payment rules, in some cases until well after the “standard” statutory November 1st deadline. While CMS has extended notice/comment periods and effective dates, it has done so rarely and only when delays relate to significant substantive changes made in the rules. Because a series of complex and economically significant changes to reimbursement rates and rules has been proposed for 2014, stakeholders should work to ensure that CMS provides adequate time for consideration of industry input via notice and comment in compliance with the spirit and letter of the law.

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New Employee Wellness Program Rules for 2014

Poyner Spruill

Employers continue to look for ways to manage the cost of employee health care coverage as they navigate the turbulent waters of healthcare reform, and wellness programs continue to be a popular strategy.  However, adoption and expansion of these programs have been hampered somewhat by questions about their effectiveness, cost, and the risk of noncompliance with the uncoordinated web of laws and regulations governing these programs.  While evidence seems to be emerging that at least some wellness program designs can be an effective means for cost control and long-term savings due to improved health, recently issued final regulations under the Health Insurance Portability and Accountability Act (HIPAA) effective beginning in 2014 only add additional burdens to employers’ compliance efforts.

HIPAA amended ERISA to generally prohibit discrimination against individual participants and beneficiaries in eligibility, benefits or premiums based on “health status-related factors,” including physical and mental illnesses, claims experience, receipt of health care, medical history, genetic information, evidence of insurability, and disability.  However, under the wellness program exception to HIPAA group health plans may offer premium discounts, rebates, reduced co-payments and/or lower deductibles (generally referred to as ‘rewards’) to participants and beneficiaries who take part in “programs of health promotion and disease prevention.”

The final HIPAA nondiscrimination regulations, effective for plan years beginning after 2013, create two categories of programs under the wellness program exception: ‘participatory wellness programs’ and ‘health-contingent wellness programs.’

Participatory wellness programs either provide no reward  or do not condition a reward on the achievement of a health standard.  Examples of participatory wellness programs include:

  • Reimbursing all or part of the cost of a fitness center membership;
  • Reimbursing costs of participation or rewarding participation in a smoking cessation program regardless of whether the individual quits smoking; and
  • Rewarding participation in a no-cost health education seminar, a health risk assessment, or a diagnostic testing program, regardless of outcomes and without requirement for further actions.

A participatory wellness program must be available to all similarly situated individuals regardless of health status, but otherwise is not required to comply with the more strenuous requirements applicable to health-contingent wellness programs.

Health-contingent wellness programs require an individual to satisfy a standard related to a health factor to obtain a reward or require an individual to undertake more than a similarly situated individual based on a health factor in order to receive the same reward.  Health-contingent wellness programs are divided into two subcategories: ‘activity-only wellness programs’ and ‘outcome-based wellness programs.’

Activity-only wellness programs require an individual to perform or complete an activity related to a health factor in order to obtain a reward, but do not require the individual to attain or maintain a specific health outcome.  Examples of activity-only wellness programs include walking, diet, or exercise programs.  If an individual cannot participate in the activity due to a health factor, then a reasonable alternative (or waiver of the otherwise applicable standard) must be provided in order to qualify for the reward.

Outcome-based wellness programs require an individual either to attain a specific health standard or complete an activity or other requirement related to the health factor in order to obtain a reward.  These programs usually have two tiers: a measurement, test or screening, followed by a program that targets individuals who do not meet a pre-specified standard.  Examples of outcome-based wellness programs include:

  • Reward for non-tobacco use, or participate in a tobacco use cessation program; and
  • Reward for cholesterol, blood pressure or body mass index below a specified level, or take additional steps, such as complying with a prescribed plan of care or participating in a exercise program.

An individual who does not meet the specified health standard must be provided a reasonable alternative (or waiver of the otherwise applicable standard) in order to qualify for the reward.

Both activity-only wellness programs and outcome-based wellness programs must satisfy the following five additional requirements:

  • Individuals eligible for the program must be given the opportunity to qualify for the reward at least once per year.
  • The size of the reward(s) under all health-contingent wellness programs is limited to a maximum of 30% (50% for tobacco nonuse/cessation programs) of the total cost of elected coverage.
  • The program has a reasonable chance of improving the health of, or preventing disease in, participating individuals, is not overly burdensome, is not a subterfuge for discrimination based on a health factor, and is not highly suspect in the method chosen to promote health or prevent disease.
  • The full reward must be available to all similarly situated individuals and, as previously discussed, a reasonable alternative must be provided for obtaining a reward.   The plan is permitted to seek verification from the individual’s physician only that a health factor makes it unreasonably difficult or medically inadvisable for the individual to participate in an activity, and not whether the individual can satisfy a specified health standard.  Alternatives do not have to be determined in advance but must be provided upon request within a reasonable time.
  • Notice of the availability of a reasonable alternative must be provided in all plan materials that describe the terms of the health-contingent wellness program, and include contact information for obtaining the alternative and a statement that recommendations of an individual’s personal physician will be accommodated.

Add to these new rules the alphabet soup of other rules that impact wellness programs, including HIPAA privacy and security, GINA, ADA, ADEA, Title VII, FLSA, and COBRA, and it becomes clear that plan sponsors would be well-served to have even the most seemingly simple program reviewed by legal counsel for compliance.

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Update on Government Shutdown's Impact on Trade

Katten Muchin

The ongoing federal government shutdown is impacting a wide variety of import and export trade activities. While the situation remains fluid as each agency executes its contingency plans, below is a summary of the current impact on trade.

Customs and Border Protection (CBP): The majority of CBP employees are exempt from the furlough as being deemed essential to the country’s security. Most of those exemptions are related to the agency’s ongoing revenue collections. Currently, ports are maintaining their normal hours of service. CBP also seems to be accepting and processing protests, although with some delays. However, CBP appears to have stopped processing ruling requests or responding to any court documents due to the shutdown. Among the CBP personnel not exempted from furlough are technicians and program managers. As a result, certain additional CBP activities, such as bonds and licensing and processing FDA refusals, may also be impacted.

Food and Drug Administration (FDA): FDA continues to perform entry review and to address high-risk recalls, civil and criminal investigations, and other critical public health issues. However, FDA has furloughed personnel as well, resulting in entry review delays. The agency is giving priority to perishable entries, defined as merchandise expiring within 30 days, and to any lifesaving medical product. The agency has generally ceased routine establishment inspections, monitoring of imports, notification programs such as those involving food contact substances and import formula, and its laboratory research activities.

International Trade Commission (ITC): ITC has shut down its investigative activities, including antidumping and countervailing injury investigations and reviews, and intellectual property rights infringement investigations and ancillary proceedings. The schedules and deadlines for all investigative and pre-institution activities are being tolled and all hearings and conferences have been postponed. In addition, ITC’s website is down, so information such as the online Harmonized Tariff Schedule is not available.

International Trade Administration (ITA): ITA’s website—including the online steel licensing system—is down. The agency recommends sending an email to steel.license@trade.gov for manual processing of license requests for shipments that do not have a steel license. Enforcement and Compliance (formerly, Import Administration) intends to uniformly toll all administrative deadlines related to the administration of US antidumping and countervailing duty laws for the duration of the shutdown. These include deadlines for preliminary and final determinations in antidumping and countervailing duty investigations and administrative reviews and deadlines for all actions by parties to these proceedings.

Bureau of Industry and Security (BIS): BIS is no longer accepting advisory opinion requests, classification requests (CCATS), encryption reviews, encryption registrations or export license applications. Similarly, BIS will not issue any final determinations. The SNAP-R application on BIS’s website is not available and will not reopen until the shutdown ends. All pending export license applications, commodity classification requests, encryption reviews, encryption registrations and advisory opinion requests will be held without action by BIS until the shutdown ends. Applicants may request emergency processing of export license applications for national security reasons.

Department of Agriculture (USDA): USDA’s website is down. The Animal and Plant Health Inspection Service (APHIS) is operating in the ports, but personnel will not be available for the renewal and authorization of notifications or permits.

Alcohol and Tobacco Tax and Trade Bureau (ATTTB): ATTTB has halted its regulatory functions, noncriminal investigative activities and audit functions. But it will ensure that all tax remittances are processed because these functions have been deemed necessary for safety and protection of property.

As Congress continues to debate the necessary appropriations to fund the government’s operations, the trade community should expect further impact on trade operations.

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Action Steps NOW To Comply With The Affordable Care Act

Womble Carlyle

Although the one-year delay in the effective date of the pay-or-play provisions of the Affordable Care Act (“ACA”) (until January 1, 2015) gives employer-sponsored health plans more time to prepare for those requirements, many ACA provisions will take effect on January 1, 2014. Employees are asking for information regarding these changes and the Department of Labor is already including ACA requirements in its benefit plan audits. The target keeps moving. Here is what you need to do NOW to ensure that your health plan is in compliance on January 1, 2014 and that you are prepared for what’s coming: 

  • Distribute the required Notice informing your employees about their coverage options by October 1, 2013 and to all new hires after October 1, 2013.
  • Determine if your plan will have “grandfathered” status in 2014.
  • Confirm that required plan design changes are in effect for 2014, including:
  • Elimination of annual limit on essential health benefits.
  • Elimination of pre-existing condition exclusions for new enrollees.
  • Limiting waiting period for enrollment to 90 days.
  • Elimination of restrictions related to participation in clinical trials (non-grandfathered plans only).
  • Conform cost-sharing provisions to ACA requirements (non-grandfathered plans only).
  • Provide coverage for ACA “essential benefit” categories (insured plans in individual and small group markets only).
  • Timely provide updated Summaries of Benefits & Coverage.
  • Develop strategies on how to use the rest of 2013 and 2014 to plan for ACA provisions that will go into effect in 2015, including (1) pay-or-play provisions, such as determination or confirmation of applicable larger-employer status and how to determine full-time employee status; and (2) reporting requirements.
  • Consider alternative options to continuing to provide health care coverage for your various categories of employees.
  • Implement cafeteria plan changes related to ACA and repeal of DOMA.
  • Bring wellness programs into compliance with ACA.
  • Prepare to pay ACA reinsurance fees (self-insured plans only).
  • Make sure you are complying with the final HIPAA rules concerning “protected health information” that went into effect on September 23, 2013.

The Government Shut Down and Its Impact on Public Health

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In the early morning of October 1, 2013, the U.S. federal government officially went dark. The shutdown came in the aftermath of the Senate’s decisive vote to reject a House plan that would have kept the government funded for several more months but delayed implementation of key portions of the Affordable Care Act (ACA) for one year.

The impact of the shutdown will be felt across all healthcare sectors as many federal employees face furloughs of unknown duration. In particular, the Department of Health and Human Services (HHS) announced in its Contingency Staffing Plan that over half of its employees will be furloughed. HHS’s Plan is based upon federal guidance that allows agency programs to continue only if they either do not rely on annual appropriations, or they involve the safety of human life or the protection of property.[1] According to HHS, the following programs and services will continue:

  • Funding for Medicaid and the Child Health Insurance Program will continue uninterrupted because funding has already been set aside for these programs.
  • Funding for Medicare will likewise continue uninterrupted but only in the short term. If the political impasse stretches beyond several weeks, the program could be disrupted by the reduction in HHS staff.
  • The Centers for Medicare & Medicaid Services (CMS) will continue to implement the ACA, “including coordination between Medicaid and the Marketplace, as well as insurance rate reviews, and assessment of a portion of insurance premiums that are used on medical services.”[2]
  • State and federal health insurance exchange programs will open as planned, though it is not clear how the information technology (IT) that underpins the exchanges will function since they are operated by government contractors.[3]
  • The National Institute of Health (NIH) will continue to provide patient care for current NIH Clinical Center[4] patients
  • The Food and Drug Administration (FDA) will be able to operate only for “vital activities” such as high risk recalls and other “critical public health issues.”
  • Substance Abuse and Mental Health Services Administration will continue programs such as the Suicide Prevention Lifeline using the balance of available grants.
  • Other programs supported through mandatory funding such as the Centers for Disease Control and Prevention (CDC) Global HIV/AIDS Program will continue.

However, several programs important to public health will be disrupted if a congressional compromise cannot soon be reached. For example:

  • Outside of matters related to “imminent threats to the safety of human life or protection of property,” CMS, FDA, NIH and other federal agencies will not publish regulations or other guidance during the shutdown.
  • CMS will not fund task forces that work to prevent healthcare fraud and abuse, and will scale back on Medicare provider audits.
  • The CDC seasonal influenza program, which tracks flu outbreaks and certain infectious diseases, will come to a halt.
  • No new patients will be admitted to the NIH Clinical Center. NIH-funded researchers may continue to work for as long as their money holds out but additional funds will not be released during the shutdown.
  • The FDA will not be able to support much of its food safety activities, such as routine inspections and public notification programs. The FDA’s laboratory research and some compliance and enforcement activities will be suspended.
  • No action will be taken on any grants related to medical research, improvement of the healthcare system, and monitoring of substance abuse programs.

Although providers can take comfort in the fact that Medicare and Medicaid program reimbursement will proceed, a government shutdown for any period of time beyond three or four weeks could impede certain critical administrative functions, such as Medicare claims processing, and therefore impact their pocketbooks. Likewise, while substantial ACA implementation will continue, long term furloughs could affect certain components of the law (such as the exchanges) because they depend on government employees to help run the IT component, among other aspects of the program. Thus, the magnitude of the shutdown’s impact will depend on how long it endures.

*Copyright 2013, American Health Lawyers Association, Washington, DC. Reprint permission granted.

[1]/ Opinion of the Office of Legal Counsel, Department of Justice, Government Operations in the Event of a Lapse in Appropriations, 1995 WL 17216091 (Aug.16, 1995) at pp. 3-4: see also, Effect of Appropriations for Other Agencies and Branches on the Authority to Continue Department of Justice Functions During the Lapse in the Department’s Appropriations, 19 Op. O.L.C. 337, 1995 WL 917146 (Dec. 13, 1995).

[2]/ Contingency Staffing Plan, pp.2-3.

[3]/ CMS has not publicly stated whether the IT contracts are already issued and funded.

[4]/ The NIH Clinical Center is the agency’s research hospital.

Federal Government Shutdown

DrinkerBiddle

For the first time in 17 years, the federal government has officially shutdown.  Late last night, the Administration released a memo to all federal agencies advising them to execute their contingency plans (an agency-by-agency list is available here).

Yesterday the Senate passed a bill that would fund the government through November 15, 2013, but would make no changes to the Affordable Care Act (ACA).  (More information on the Senate vote is available here.)  Last night, by a vote of 228-201, the House passed legislation that would keep the government open through December 15, 2013, but would delay the ACA’s individual mandate requirement and would eliminate health insurance subsidies for Members of Congress, Congressional staff, the President, the Vice President, and political appointees.  By a vote of 54-46 the Senate voted to table, or kill, the legislation.

Following the latest Senate action, the House voted to formally request a conference committee with the Senate.  (Conference committees are joint House-Senate committees that are created to resolve disagreements between the House and Senate versions of a given bill.)  House Speaker Boehner (R-OH) appointed the following members to the conference committee:  House Majority Leader Cantor (R-VA-7), Ways and Means Chairman Camp (R-MI-4), House Budget Committee Chairman Ryan (R-WI-1), House Appropriations Chairman Rogers (R-KY-5), Representative Frelinghuysen (R-NJ-11), Representative Crenshaw (R-FL-4), Representative Carter (R-TX-31), and Representative Graves (R-GA-14).  House Democrats have not appointed conferees.  The Senate voted to table the request for conferees.

While the House and Senate cannot seem to agree on terms to fund the entire government, both chambers have passed H.R. 3210, legislation that would provide payment through the government shutdown for members of the Armed Forces (including reserve personnel) and civilian Department of Defense (DoD) employees and contractors whom the DoD Secretary determines are providing support to members of the Armed Forces.  The legislation passed the House by a unanimous vote, the Senate passed the bill by a voice vote, and was signed into law by President Obama last night.

At this point, both the House and the Senate appear at a stalemate.  Until Members of Congress can reach some agreement, the government shutdown will remain in place.  We will continue to update this blog as events unfold.

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Centers for Medicare & Medicaid (CMS) Delays Auditing of “Two-Midnight” Rule

vonBriesen

The Centers for Medicare & Medicaid (CMS) announced this week it will delay Recovery Audit Contractor (RAC) audits of the “two-midnight” rule for 90 days. The 2014 Inpatient Prospective Payment System Final Rule, released in August 2013, finalized the “two-midnight” rule, under which hospital inpatient admissions that span at least two midnights presumptively qualify as appropriate under Medicare Part A, and hospital inpatient admissions that span less than two midnights (i.e., less than one Medicare utilization day) are presumptively inappropriate for payment under Part A.  When auditing medical necessity, the RACs would presume that the occurrence of 2 midnights after formal inpatient hospital admission indicates an appropriate in patient status for a medically necessary claim. If the occurrence of 2 midnights after formal inpatient hospital admission does not occur, government recovery auditors do not apply the same presumption and claims for such admissions receive a higher level of scrutiny.

As part of its announcement, CMS stated it will not, for a period of 90 days, permit government recovery auditors to review the medical necessity of inpatient admissions of one midnight or less between October 1, 2013 and December 31, 2013.

CMS’ frequently asked questions with its announcement can be found here.

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