Category: Health Care Law

Twisting Arms to Get Jabbed, White House Says: ‘Vaccination Incentives All Around!’

On April 21, 2021, in a further push to encourage COVID-19 vaccinations for those individuals who have been hesitant, the White House issued a fact sheet titled, “President Biden to Call on All Employers to Provide Paid Time Off for Employees to Get Vaccinated After Meeting Goal of 200 Million Shots in the First 100 Days.” This announcement further signals the administration’s dedication to vaccinating the U.S. population and its willingness to offer incentives to employers that support their employees in becoming vaccinated. Employers that have remained neutral on this issue could be persuaded to “take up arms” and join the fight against COVID-19.

Specifically, the fact sheet calls on employers “to offer full pay to their employees for any time off needed to get vaccinated and for any time it takes to recover from the after-effects of the vaccination.” To aid in this, the fact sheet announces a new tax credit for nonprofits and businesses with fewer than 500 employees. This tax credit is an extension and expansion of the tax credits initially provided by the Families First Coronavirus Response Act (FFCRA) in 2020 and that were subsequently extended until September 30, 2021, by the recent passage of the American Rescue Plan Act of 2021 (ARPA). The tax credit as amended by the ARPA allows qualifying businesses to recoup the costs of providing paid leave to employees who cannot work or telework as a result of “obtaining immunization related to COVID-19 or recovering from any injury, disability, illness, or condition related to such immunization,” in addition to the other qualifying reasons for emergency paid sick leave.

IRS Guidance on ARPA Tax Credits

Also on April 21, 2021, the Internal Revenue Service (IRS) issued a news release elaborating on the White House’s fact sheet. The IRS news release largely summarizes its earlier April 2021 guidance, which details the procedural aspects of the tax credit. As the IRS explained in its earlier guidance, the “refundable” tax credits under the ARPA provide an offset “against the employer’s share of the Medicare tax.” This means that “the employer is entitled to payment of the full amount of the credits if it exceeds the employer’s share of the Medicare tax.” The IRS guidance further explains:

The tax credit for paid sick leave wages is equal to the sick leave wages paid for COVID-19 related reasons for up to two weeks (80 hours), limited to $511 per day and $5,110 in the aggregate, at 100 percent of the employee’s regular rate of pay. The tax credit for paid family leave wages is equal to the family leave wages paid for up to twelve weeks, limited to $200 per day and $12,000 in the aggregate, at 2/3rds of the employee’s regular rate of pay. The amount of these tax credits is increased by allocable health plan expenses and contributions for certain collectively bargained benefits, as well as the employer’s share of social security and Medicare taxes paid on the wages (up to the respective daily and total caps).

According to the IRS guidance, to claim the tax credits, eligible employers must “report their total paid sick leave and family leave wages (plus the eligible health plan expenses and collectively bargained contributions and the eligible employer’s share of social security and Medicare taxes on the paid leave wages) for each quarter on their federal employment tax return, usually Form 941, Employer’s Quarterly Federal Tax Return.” The IRS guidance further provides:

In anticipation of claiming the credits on the Form 941, eligible employers can keep the federal employment taxes that they otherwise would have deposited, including federal income tax withheld from employees, the employees’ share of social security and Medicare taxes and the eligible employer’s share of social security and Medicare taxes with respect to all employees up to the amount of credit for which they are eligible.

For additional information, interested employers can review the Form 941 instructions.

Finally, the guidance states the following:

If an eligible employer does not have enough federal employment taxes set aside for deposit to cover amounts provided as paid sick and family leave wages (plus the eligible health plan expenses and collectively bargained contributions and the eligible employer’s share of social security and Medicare taxes on the paid leave wages), the eligible employer may request an advance of the credits by filing Form 7200, Advance Payment of Employer Credits Due to COVID-19. The eligible employer will account for the amounts received as an advance when it files its Form 941, Employer’s Quarterly Federal Tax Return, for the relevant quarter.

Key Takeaways

The expansion of qualifying reasons to provide paid sick leave and obtain tax credits is an important development for all eligible employers because it provides another tool for many employers seeking to incentivize employees to get vaccinated. Now employers are not fighting this incentive battle alone when trying to encourage employees to become vaccinated; the government is upping the ante to incentivize employers to provide further relief and rewards to employees for getting vaccinated.

Of course, there are numerous other ways that both eligible and ineligible employers can incentivize employees to get vaccinated, and there are both pros and cons to mandatory vaccination policies. While a thorough discussion of these issues is beyond the scope of this brief update, employers interested in learning more about the legal and practical considerations for implementing vaccination policies (whether mandatory for an entire workforce, mandatory for a subset of employees based on job duties and exposure risk, or completely voluntary), can review our articles on vaccination policies and vaccine passports.

© 2021, Ogletree, Deakins, Nash, Smoak & Stewart, P.C., All Rights Reserved.

ARTICLE BY Michael K. Mahoney,  James M. Paul  and Colin H. Hargreaves of Ogletree, Deakins, Nash, Smoak & Stewart, P.C.
For more articles on coronavirus vaccinations, visit the NLR Coronavirus News section

The Ongoing US Vaccine Passport Debate

One main principle among public health measures is to use the least restrictive method necessary to protect the population, or to do the greatest good. From the public health perspective, requiring COVID status credentials (“Credentials”) makes sense because it allows people who present a low risk to others to not be subject to unnecessary restrictions. However, implementation and use of Credentials will require careful consideration of individual privacy concerns, as well as the ethical questions related to access and additional privilege.

In late March, the Biden administration announced that vaccination credentials or “passports” would not be mandated at the federal level and that there would be no centralized universal federal vaccinations database. Instead, the federal government’s role will be to develop standards for such solutions so they are designed to protect people’s privacy and are “simple, free, open source, and accessible both digitally and on paper,” according to White House coronavirus coordinator Jeff Zients.

To date, federal standards for the interoperability, security, or privacy of Credentials have not been published. Despite this fact, smartphone apps are already popping up that allow individuals to upload their COVID-19 test results and vaccinations that create a digital QR code, which can be scanned to validate a person’s COVID status.  A few companies are also developing a “smart card” option that does not require a smart phone.

Despite the lack of federal standards, these digital Credential solutions are already being implemented by health care providers administering the vaccine and others who are looking to meet “reopening” requirements. Reason being, while federal and state governments are not willing to require vaccination, proof of COVID status will otherwise be required in order for people to enter certain places. For example, in California the rules for reopening indoor live events require proof of vaccination or a negative test result from individuals before they are allowed to enter the venue. In New York, some state employees reportedly are required to use the state’s Credential solution, the Excelsior Pass, when returning to work.

While Credentials make sense from a public health perspective, concerns remain. Politicians in multiple states have proposed anti-passport legislation, citing privacy and civil liberty violations created by public and private entities requiring proof of vaccination.

One concern is the lack of comprehensive federal legislation that would protect the information that could be collected from individuals in connection with digital Credentials. While health care providers, health plans, and their contracted technology providers are generally subject to the Health Insurance Portability and Accountability Act (HIPAA) and its implementing regulations – which impose certain security requirements and limit how health information may be used without a patient’s consent – HIPAA may not always apply to the data involved. For example, a patient could authorize their health care provider to disclose their test results and/or vaccine record to the Credentials vendor, who would then generate and maintain the passport credentials. The customer in this case is the patient, not a health care provider or health plan, which means that HIPAA would not apply.

While it seems like HIPAA applicability is a minor distinction, the privacy and security implications can be significant. Under HIPAA, patients may share their health information however they choose, and health care providers and plans are required to send records to third parties upon a patient’s request. The sending of such records does not, in itself, make the third party recipient subject to HIPAA.  Digital Credential vendors and the public and private entities verifying testing/vaccination status thus may bypass HIPAA’s privacy and security requirements.

Businesses who collect COVID status and other consumer information may still be regulated by the Federal Trade Commission (FTC). However, generally speaking, fewer privacy protections apply in this kind of situation, and the applicable security standards are less specific. At the state level, digital Credential vendors may be subject to laws that are similar to, or even more stringent than, HIPAA, but this is not always the case.

As a result, the door is potentially left open for companies to collect substantial amounts of electronic health and other data without the privacy and security protections that exist in a traditional health care environment. Due to the potential value of the data and the fact that the Credentials will be offered for free, some skeptics believe companies will want to monetize the data collected to the fullest extent possible. Additionally, the potential for government agencies to collect data using Credentials and utilize it for other purposes beyond public health (e.g. monitoring and law enforcement) is a legitimate concern.  If either of these things happen, there will still be a “cost” to people in using these Credentials, and in the absence of a reasonable alternative people may have little choice but to pay it.

The use of Credentials raises ethical concerns as well. Ultimately, Credentials should be available and accessible by all, via a variety of mechanisms. In practice, the use of Credentials raises the question of equal access and the further divide that could be created in society.  Reports indicate that vaccine availability still varies greatly among communities, and that the rate of vaccination among racial minorities and low-income populations remains low. As a result, requiring or allowing use of a Credential becomes a privilege for those who have been vaccinated, which could lead to significant bias toward anyone without a Credential. Implementation and use of Credentials also needs to account for the subset of the population who are unable to receive a vaccine for medical reasons and those who may object to a vaccine based on religious or philosophical beliefs. Without some form of accounting in the implementation of Credentials, these groups may be unnecessarily penalized.

For the moment, individual users of digital Credentials are trusting the recipients of their data. Private and public entities are left to make tough decisions about the development and use of Credentials from a legal and ethical perspective while trying to anticipate the guidelines that might be articulated by the Biden administration.

©1994-2021 Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. All Rights Reserved.

ARTICLE BY Lara D. Compton and Bridgette A. Keller of Mintz
For more articles on vaccine passports, visit the NLR Coronavirus News section.

COBRA Alert: Enhanced Benefits for Those Eligible

On March 11, 2021, President Biden signed into law the American Rescue Plan Act (ARPA), which provides important health insurance benefits to certain eligible individuals. Specifically, the ARPA requires employers to cover 100% of Consolidated Omnibus Budget Reconciliation Act (COBRA) premiums from April 1, 2021, through September 30, 2021, for former employees who:

  • Became COBRA-eligible in or after November 2019;
  • Lost employer-sponsored health insurance because of an involuntary termination of employment or because of an involuntary reduction in hours; and
  • (1) Elected COBRA; (2) elected COBRA but let the coverage lapse; or (3) did not elect COBRA.

Former employees are not eligible for the ARPA COBRA subsidy if they:

  • Resigned voluntarily, or voluntarily reduced their hours;
  • Were terminated for gross misconduct;
  • Are now covered under another group health plan; or
  • Are Medicare-eligible.

Note, if COBRA coverage is set to expire before September 30, 2021, ARPA does not extend the expiration date; and many questions remain. For instance, does the ARPA COBRA subsidy extend to those who left employment per a mutual decision, for “good reason” under an employment agreement, or pursuant to a voluntary exit incentive plan? The Department of Labor is currently drafting regulations and guidance that should help answer these questions.

What Do Eligible Former Employees Need To Do?

For anyone who is covered by COBRA as of April 1, 2021, nothing needs to be done. It is up to the employer or the employer’s health insurance carrier to ensure that the premiums are paid for the relevant period. For those who let COBRA lapse or had not elected COBRA, the employer or the health insurance provider must provide notice of the new benefit and of a new enrollment period. The new enrollment period begins on April 1, 2021 and ends 60 days from delivery of the ARPA COBRA notification.

If you believe you may be entitled to coverage, are interested in receiving the benefits, and are not contacted by your former employer or their provider in the next few weeks, consider reaching out to the employer’s Human Resources Department or the insurance carrier to ask for information about your COBRA benefits under ARPA, or contact your employment lawyer.

© 2020 SHERIN AND LODGEN LLP

ARTICLE BY Gavriela M. Bogin-Farber of Sherin and Lodgen LLP
For more articles on COBRA, visit the NLR Corporate & Business Organizations section.

COVID-19: An Employer’s Role in Vaccination

As cases of the 2019 novel coronavirus (COVID-19) decrease and availability of the COVID-19 vaccine becomes more prevalent, employers face the daunting task of creating safe return to work plans. These plans often involve encouraging COVID-19 vaccination and, in some cases, mandating vaccination before employees may return to in-person work.

EMPLOYERS CAN MANDATE A COVID-19 VACCINE

On Dec. 16, 2020, the Equal Employment Opportunity Commission (EEOC) issued guidance clarifying that employers are lawfully permitted to require employees to be vaccinated before returning to work, subject to several exceptions.

These exceptions include:

1. Disability considerations

EEOC guidance reiterates an employer’s obligation to accommodate employees who have disabilities that would otherwise interfere with an employee receiving the COVID-19 vaccination. Under these circumstances, an employer may have to exempt such an employee from the vaccine mandate. Examples of such disabilities could include a history of allergic reaction to vaccine ingredients, or an employee who is pregnant or nursing and has been advised against vaccination by a doctor.

Notably, the EEOC acknowledged that under these circumstances an employer may deny a disability-related accommodation where there is no available alternative that would alleviate the “direct threat” posed by an unvaccinated employee. A direct threat is one that poses a “significant risk of substantial harm to the health or safety of the individual or others that cannot be eliminated or reduced by reasonable accommodation.” Employers must conduct an individualized assessment to determine whether a direct threat exists, taking into consideration:

  1. The duration of the risk
  2. The nature and severity of the potential harm
  3. The likelihood that the potential harm will occur
  4. The imminence of the potential harm

If such a threat is deemed to exist, the employer may be able to exclude the employee from the workplace but may need to provide an alternative accommodation, such as a remote work arrangement. Furthermore, because current guidance from the Centers for Disease Control and Prevention (CDC), recommends the ongoing use of personal protective equipment, health checks, masks and social distancing, employers may be able to accommodate unvaccinated employees within the workplace. As requirements for masking and distancing are lifted, the “direct threat” assessment will evolve.

2. Religious accommodations

Employees with sincerely held religious beliefs that conflict with vaccinations may also be entitled to an exemption from a mandatory vaccination policy. Like medical accommodations, an employer who knows that a sincerely held religious belief, practice or observance prevents the employee from receiving a vaccination must provide a reasonable accommodation, unless doing so would pose an “undue hardship” on the employer. Notably, having an “anti-vax” belief alone is not sufficient. The belief must be grounded in religion to qualify for protection.

Courts have defined “undue hardship” under Title VII as having more than a de minimis cost or burden on the employer. EEOC guidance explains that because the definition of religion is broad and protects beliefs, practices and observances with which the employer may be unfamiliar, the employer should ordinarily assume that an employee’s request for religious accommodation is based on a sincerely held religious belief. If, however, an employee requests a religious accommodation, and an employer has an objective basis for questioning either the religious nature or the sincerity of a particular belief, practice or observance, the employer would be justified in requesting additional supporting information.

The EEOC sagely advises that managers and supervisors responsible for communicating with employees about compliance with the employer’s vaccination requirement should know how to recognize an accommodation request from an employee with a disability or sincerely held religious belief and know to whom the request should be referred for consideration.

3. Mandatory vaccination policies trigger additional obligations under the ADA and other laws

The Americans with Disabilities Act (ADA) generally restricts employers’ ability to conduct medical examinations and request medical information from employees. However, the EEOC has specific guidance that clarifies that the COVID-19 vaccination itself is not a medical examination. Employers must use caution, though, as the EEOC also states that an employer’s use of pre-screening questions that ask whether the employee has been vaccinated may inadvertently constitute a disability-related inquiry. The guidance notes that employers can avoid any issues regarding disability-related inquiries if they require employees to be vaccinated by their own medical providers or encourage, but do not require, employees to be vaccinated.

If vaccination is mandated, federal law requires that employees be paid for the time spent waiting for and receiving the vaccine. Unionized employers may also consider their collective bargaining agreements when establishing a mandatory vaccination policy.

ENCOURAGING BUT NOT REQUIRING VACCINATION

Many employers are currently encouraging but not requiring vaccinations. This is especially the case in jurisdictions where vaccinations are not available to all adults. A policy of encouragement relieves the employer of the obligation to conduct disability and religious related accommodation analyses. Nevertheless, if employers offer incentives to employees to get vaccinated, like additional paid time off, gift cards, etc., accommodations may need to be made for those employees who are not eligible for the incentive due to a disability or religious belief that prevents them for receiving the vaccine.

Notably, an employer can ask or require employees to show proof of receipt of a COVID-19 vaccination. The EEOC has clearly stated this such a request is not a disability-related inquiry subject to the ADA’s restrictions. There are many reasons why employers would seek this information as they plan for return to “normal” business practices, including re-instituting in-person meetings, travel requirements, etc. In the meantime, such information will also assist employers in addressing quarantine requirements in the case of a workplace exposure. Interim CDC guidance from March 8, 2021, makes clear that vaccinated, asymptomatic employees do not have to quarantine or test after a known exposure.

PLANNING FOR A RETURN TO IN-PERSON WORK

Whether or not an employer elects to mandate vaccines now, it is advisable for employers to communicate with their workforce on their proposed strategy and expectations with respect to vaccinations. Employers should also keep in mind that they can change their vaccination policy in the future, converting from a non-mandatory policy to a mandatory one if warranted for the particular workforce.

Copyright © 2020 Godfrey & Kahn S.C.

ARTICLE BY Margaret R. Kurlinski of Godfrey & Kahn S.C.
For more articles on COVID-19 vaccinations, visit the NLR Coronavirus News section.

Lawsuit Seeks to Overturn Trump’s SUNSET Rule

On March 9, 2021, the Center for Science in the Public Interest, Democracy Forward Foundation, American Lung Association, and other groups filed a lawsuit in the U.S. District Court for the Northern District of California against the U.S. Department of Health and Human Services (HHS) challenging the Agency’s “Securing Updated and Necessary Statutory Evaluations Timely” Rule (“SUNSET Rule”).

The SUNSET Rule mandates HHS to assess its regulations every ten years to determine whether they are subject to review under the Regulatory Flexibility Act (RFA).  If a given regulation is subject to the RFA, HHS must review the regulation to determine whether the regulation is still needed and whether it is having appropriate impacts.  Regulations will expire if the Agency does not assess and (if required) review them in a timely manner.  The complaint alleges that the rule exceeds the Agency’s authority and is arbitrary and capricious, as it obligates HHS to review regulations at a pace that the Agency will not be able to achieve, which will result in the elimination of regulations that structure the plaintiffs’ operations and businesses, delineate their obligations and rights, or protect their members and the populations they serve.

By way of background, the Trump Administration released notice of the proposed SUNSET rule the day after the 2020 election and scheduled it to take effect on March 22, 2021.  The lawsuit alleges that the Trump administration rushed the rule and did not provide the public with enough time to comment.

The Biden White House has called for a regulatory freeze on any last-minute regulations approved by the Trump Administration.  As a result, HHS has delayed several Agency rules so far.  Plaintiffs filed the lawsuit against HHS, as the Agency has not yet issued a stay in response to the White House’s announcement.  It is unclear whether the SUNSET Rule will be impacted by the Biden Administration’s regulatory freeze before it takes effect on March 22, 2021.

© 2020 Keller and Heckman LLP
For more articles on SUNSET rule lawsuits, visit the NLR Health Law & Managed Care section.

New Policy to Remove Barriers to COVID-19 Testing

On February 26, 2021, the Centers for Medicare & Medicaid Services, Department of Labor and Department of Treasury issued guidance removing barriers to COVID-19 diagnostic testing and vaccinations and strengthening requirements that plans and issuers cover diagnostic testing without cost sharing. This guidance makes clear that private group health plans and issuers generally cannot use medical screening criteria to deny coverage for COVID-19 diagnostic tests for individuals with health coverage who are asymptomatic, and who have no known or suspected exposure to COVID-19. Such testing must be covered without cost sharing, prior authorization, or other medical management requirements imposed by the plan or issuer. For example, covered individuals wanting to ensure they are COVID-19 negative prior to visiting a family member would be able to be tested without paying cost sharing.  The guidance also includes information for providers on how to get reimbursed for COVID-19 diagnostic testing or for administering the COVID-19 vaccine to those who are uninsured.  Click here for the newly issued guidance.  See press release here.

The new guidance should encourage providers to offer COVID-19 testing at their offices and outpatient locations since private group health plans and issuers must cover and reimburse for COVID-19 testing of asymptomatic individuals and defers to the provider’s individual clinical assessment of the patient to determine whether the patient should be tested for COVID-19.  This new guidance should also increase patient access to testing and remove barriers to encourage patients to be tested prior to travel without fears of large out of pocket payment for testing.  The provider should check with health plans to confirm that they have implemented this policy prior to starting to administer the test to the newly covered group.  Likewise, patients should check their coverage under their health plans.

© 2020 Giordano, Halleran & Ciesla, P.C. All Rights Reserved

ARTICLE BY Anjali N. Baxi of Giordano, Halleran & Ciesla, P.C.
For more, visit the NLR Health Law & Managed Care section

Bias in Healthcare Algorithms

The application of artificial intelligence technologies to health care delivery, coding and population management may profoundly alter the manner in which clinicians and others interact with patients, and seek reimbursement. While on one hand, AI may promote better treatment decisions and streamline onerous coding and claims submission, there are risks associated with unintended bias that may be lurking in the algorithms. AI is trained on data. To the extent that data encodes historical bias, that bias may cause unintended errors when applied to new patients. This can result in errors in utilization management, coding, billing and healthcare delivery.

The following hypothetical illustrates the problem.

A physician practice management service organization (MSO) adopts a third-party software tool to assist its personnel in make treatment decisions for both the fee-for-service population and a Medicare Advantage population for which the MSO is at financial risk. The tool is used for both pre-authorizations and ICD diagnostic coding for Medicare Advantage patients, without the need of human coders. 

 The MSO’s compliance officer observes two issues:

  1. It appears Native American patients seeking substance abuse treatment are being approved by the MSO’s team far more frequently than other cohorts who are seeking the same care, and
  2. Since the deployment of the software, the MSO is realizing increased risk adjustment revenue attributable to a significant increase in rheumatic condition codes being identified by the AI tool.

Though the compliance officer doesn’t have any independent studies to support it, she is comfortable that the program is making appropriate substance abuse treatment and utilization management recommendations because she believes that there may be a genetic reason why Native Americans are at greater risk than others. With regard to the diagnostic coding, she:

  1. is also comfortable with the vendor’s assurances that their software is more accurate than eyes-on coding;
  2. understands that prevalence data suggests that the elderly population in the United States likely has undiagnosed rheumatic conditions; and,
  3. finds through her own investigation that anecdotally it appears that the software, while perhaps over-inclusive, is catching some diagnoses that could have been missed by the clinician alone. 

 Is the compliance officer’s comfort warranted?

The short answer is, of course, no.

There are two fundamental issues that the compliance officer needs to identify and investigate – both related to possible bias. First, is the tool authorizing unnecessary substance use disorder treatments for Native Americans, (overutilization) and at the same time not approving medically necessary treatments for other ethnicities (underutilization)? Overutilization drives health spend and can result in payment errors, and underutilization can result in improper denials, patient harm and legal exposure. The second issue relates to the AI tool potentially “finding” diagnostic codes that, while statistically supportable based on population data the vendor used in the training set, might not be supported in the MSO’s population. This error can result in submission of unsupported codes that can drive risk adjustment payment, which can carry significant legal and financial exposure.

©2020 Epstein Becker & Green, P.C. All rights reserved.

ARTICLE BY Bradley Merrill Thompson and
Jason E. Christ of Epstein Becker & Green, P.C.
For more, visit the NLR Health Law & Managed Care section

Top 5 Telehealth Law Predictions for 2021

With 2020 officially behind us, what does 2021 have in store for telemedicine and digital health policy? A year ago, our team predicted 2020 would bring “notable expansions in Medicare and Medicaid coverage” and “the reimbursement landscape looks promising for virtual care services.” Looking back, that was an understatement (if an easy one). Below are five new predictions for what legal changes telemedicine and digital health companies might expect to see this year.

1.  Licensing: More Efforts to Increase Reciprocity and Reduce Barriers

In an effort to balance workload nationally and expand access to health care practitioners during the Public Health Emergency (PHE), many states temporarily suspended medical licensing requirements. As these temporary waivers begin to sunset, some state legislatures will seek to make the waivers permanent, allowing practitioners licensed in other states to deliver telehealth services across state lines, provided the out-of-state practitioner follows local state practice standards. While this may be a topic of discussion among policy shops, we expect few states will actually enact such changes in 2021.

Federally, the PREP Act allows practitioners to deliver telehealth services across state lines under a licensure exemption for COVID testing and certain limited “covered countermeasures” (e.g., treatment of COVID-19 infections). The PREP Act also grants certain immunities and protections, preempting state laws during the PHE. Given its Constitutional complexity and political nature, interstate licensing does not have a widely-accepted “solution,” nor does it have the bipartisan support seen in other areas of telehealth. Licensure will be a friction point between virtual care stakeholders and traditional practitioners invested in brick and mortar locations industry. The status quo (i.e., profession-specific interstate compacts and state-by-state patchwork legislative efforts) has left many digital health stakeholders unimpressed, frustrated, and increasingly searching for an alternate solution. Yet, a federal “top-down” preemption approach will be perceived as an unconstitutional encroachment on states’ rights under the 10th Amendment. Keep an eye out for a third channel to thread the needle, perhaps tying federal funds (e.g., Medicaid or COVID relief dollars) to state adoption of certain licensure waivers, enticing states to opt-in to interstate licensure reciprocity rather than federally compel it.

2.  Modalities: Technology-Neutral State Laws that Prioritize Quality of Care.

In 2020, many states enacted new telehealth laws and rules to change prior practice standards, allowable modalities, or prescribing requirements. Changes included eliminating face-to-face exams, practicing via telephone only, or waiving modality prescribing restrictions on telemedicine. Some of these changes were made by legislation while others by executive order or regulation. Many of the changes were on a temporary basis during the pandemic (with expiration dates that, confoundingly, often did not match the federally declared Public Health Emergency date). These waivers created a telehealth regulatory environment that focused less on technical modalities of care delivery (e.g., audio-video vs. asynchronous) and more on meeting the standard of medical care for a given patient. Aiding in this effort, the American Telemedicine Association (ATA) published model policy language for state telehealth rules, to serve as a reference tool for best practices. This trend towards technology-neutral telemedicine laws will continue in 2021, with stakeholders emphasizing the importance of medical standard of care and clinical quality of services, rather than proscriptive modality requirements.

3.  Privacy: Greater Sensitivity to Patient-as-Consumer in Digital Health

Telemedicine and digital health companies handling patient information on substance use disorder treatment can expect to see favorable changes to HIPAA laws, designed to encourage easier sharing of patient data, particularly for treatment purposes. Similar changes are anticipated to regulations under 42 C.F.R. Part 2 to ease payment and health care operations. Telehealth companies should also keep an eye on state data privacy laws. More states are expected to enact their own consumer laws to protect data privacy, as California did with its California Consumer Privacy Act. And the Federal Trade Commission (FTC)—the nation’s top federal privacy regulator—will continue enforcement investigations against organizations that violate consumer privacy rights. Given the proliferation of new telehealth services and startup companies launched in 2020, increased privacy regulation is likely to occur in 2021.

4.  Enforcement: OIG/DOJ Will Build on Prior Investigations

Building on its 2019 and 2020 criminal and civil investigations, HHS OIG and DOJ will continue its takedown of companies engaged in “telefraud“: scams that couple aggressive online marketing tactics with telemedicine services to serve as a conduit for illegal kickback arrangements with pharmacies, DME suppliers, and laboratories. Most telemedicine enforcement actions to date have involved kickback schemes and billing for medically unnecessary equipment and diagnostic tests, and few have centered on billing and coding of telehealth professional services. The ATA has commented how these companies do not represent the industry at large, and issued a letter articulating hallmarks of legitimate telemedicine providers.

With many traditional in-person providers having newly (and quickly) moved into telehealth in 2020, along with new temporary waivers of billing and coding rules and a relaxed regulatory environment, the future will likely see more Medicare audits and overpayment claims of telehealth professional services. Some niche areas of enforcement may be marketing/referral arrangements with pharmacies and laboratories, waivers of patient financial responsibility, ordering high-cost genetic tests, billing for practitioners located outside the United States, and arrangements seeking to take advantage of the global pandemic.

5.  Payment: Continued Expansion of Telehealth Reimbursement

The pandemic compelled health plans, both government and commercial, to remove prior restrictions on telehealth and expand coverage for virtual care at a rate previously unseen. The new policy changes on Medicare reimbursement followed the previously established pathway of coverage, but the pace at which they were made was stunning. CMS also introduced nearly 100 telehealth service codes covered on a temporary basis until the Public Health Emergency expires. Much of 2020’s reimbursement expansion will continue through 2021, as commercial payers follow CMS’ lead. Remote patient monitoring still has plenty of room to grow. Despite the recent payment expansions RPM has seen, it has yet to have its “breakout year” in widespread use and payment.

Employers will explore more telehealth services for employees to deal with the stress of the pandemic, focusing on tele-primary care, behavioral health, and specialty care like fertility. As more traditional providers offer telehealth services in addition to in-person care, we may see telehealth increasingly paid on a fee for service basis (rather than a PEPM enterprise model). At the same time, value based models focusing on or centered around virtual care, including bundled payments and shared savings, will grow beyond the pilot phase, as providers begin to “own” certain care pathways.

Time will tell how these five predictions will hold up over the next 12 months. What is certain, however, is that telemedicine and virtual care continues to be one of the fastest-growing areas in healthcare.

© 2020 Foley & Lardner LLP
For more, visit the NLR Health Law & Managed Care section.

FDA in 2020: What a Year!

What a year for the Food and Drug Administration! FDA, an agency with regulatory oversight of 20-25% of products on which consumers spend, including food and medicines, but which typically stays out of the limelight, was thrust into the public eye amidst the COVID-19 pandemic. This was the year many Americans became familiar with lesser-known and niche policies like those governing emergency use authorizations (EUAs) and with the role of FDA in regulating laboratory developed tests (LDTs). The agency also took some flak for seeming to bow to political pressure in authorizing hydroxychloroquine for emergency use as a potential COVID-19 treatment, then rescinding the authorization, as well as for its less-than-accurate pronouncements of positive data concerning convalescent plasma treatment. These were reminders that the agency Americans trust to protect the public does get things wrong sometimes and is susceptible in some ways to political pressure, and that effectively ensuring the public health requires a balance between safety and effectiveness and patient access to medical products. As we look ahead, we eagerly anticipate how FDA will protect and promote public health in a Biden administration.

In this post we’ll explore the FDA’s device law and policy activities from 2020. A future post will cover drug and biologics law and policy.

COVID-19 Diagnostics

FDA and the Centers for Disease Control and Prevention (CDC) received a lot of mostly negative attention early in the COVID-19 pandemic for well-documented (including by us) missteps related to testing. Since then, there has been a significant increase in the number of tests authorized by FDA for point-of-care (POC) uses in various patient-care settings such as clinics, emergency departments, physicians’ offices, and outdoor or mobile COVID-19 testing sites. Additionally, some tests allow patients to collect samples at home, but those samples need to be sent to a lab for processing because there are no widely available FDA-authorized test kits to diagnose COVID-19 that can be used fully at home (i.e., for collection and processing). FDA did authorize a prescription test kit that allows for at-home collection and processing of samples to detect SARS-CoV-2 (the virus that causes COVID-19) in November 2020, but expectations are that it will not be available to the public until early 2021. And on December 9, the agency authorized the first non-prescription specimen collection kit, which the consumer then sends to a clinical lab for processing; should the lab’s testing results be positive or indeterminate, a physician contacts that consumer to advise him or her regarding next steps. Our prior posts go into great detail about the state of affairs of COVID-19 diagnostic testing; see here and here.

In addition to handling hundreds of EUAs relating to COVID-19 tests, FDA also developed a SARS-CoV-2 reference panel providing a standard baseline for test kit validation testing and began releasing performance testing results from manufacturers and clinical laboratories using the reference panel.

A key question remains: have COVID-19 testing capacity and capabilities advanced to the point of allowing the type of reopening of the country that many of us have desired since March? Sadly, our assessment is that while there have been impressive advances in COVID-19 diagnostic testing, we are still not seeing deployment of rapid, point-of-need tests that could be used at airports, stadia, or other public venues including many workplaces. Rather than testing, the Trump Administration’s focus has been on vaccines and other therapeutics.

Laboratory Developed Tests

In August 2020, the Department of Health and Human Services (HHS), in an unsigned statement posted on its website and not published in the Federal Register, barred FDA from requiring premarket review for any LDT, including those for COVID-19, unless FDA goes through formal rulemaking procedures. This was not terribly surprising because the Trump Administration’s posture toward regulating without clear authority (and sometimes even with it) had been well-understood as unwelcome. But the August action was simultaneously unsurprising and fairly insignificant because FDA had not been requiring LDT developers to submit their tests for premarket review and was deprioritizing review of EUA requests for COVID-19 LDTs in favor of traditional, kit-based in vitro diagnostics (IVDs) from commercial manufacturers.

Further, FDA has been a key partner to Congress and the laboratory community in designing a legislative framework for LDT oversight in recent years. That effort resulted in the introduction earlier this year of the Verifying Accurate and Leading-edge IVCT Development (VALID) Act, which we covered in prior posts, and which aims to reform the federal oversight regimes for both LDTs and IVDs. In November, the issue of FDA review of COVID-19 LDTs resurfaced again when HHS appeared to reverse itself by ordering FDA to review COVID-19 LDTs to assure that those tests could enjoy PREP Act protection.

From the events of this past year, it is clear that the regulatory framework and policies surrounding LDTs will be a prominent topic of debate in 2021. However, we expect there will be no quick resolution of these issues, either at a legislative or agency policy level, in the short term and that LDTs will likely remain in a gray area of FDA regulation and policy for the foreseeable future.

Digital Health

While COVID-19 is undoubtedly FDA’s top priority, the agency has taken actions to advance other policy and programmatic goals this year. In September, FDA announced the establishment of the Digital Health Center of Excellence, which is envisioned to be a multi-center effort for developing, coordinating, and implementing comprehensive, agency-wide digital health policies and programs. We explored this idea and noted some concerns in our previous post here. What’s important about this 2020 development is that, despite the current once-in-a-century public health emergency, FDA devoted what must be limited resources to laying the groundwork for the Digital Health Center of Excellence, suggesting that as we move into appropriations season and, perhaps more consequentially, the user fee negotiations, FDA will be prioritizing and seeking additional support for digital health.

510(k) & PMA Reform

In our 2019 year in review post for devices, we detailed significant proposed changes to the premarket notification (commonly known as “510(k)”) and premarket approval (PMA) pathways. With respect to 510(k)s, the optional Safety and Performance Based Pathway relies on comparisons of devices to criteria (like consensus standards) rather than the technological characteristics of a predicate device that is already on the market. The Safer Technologies Program builds on the Breakthrough Devices Program by enabling earlier and more frequent interactions with FDA for devices that may not meet the stringent breakthrough criteria, but which could still be beneficial for patients. FDA’s PMA proposal would allow a device to be marketed based on a demonstration of a reasonable assurance of safety only, with reasonable assurance of effectiveness needing to be demonstrated soon after marketing authorization (often referred to as “progressive” or “conditional” approval). This fairly substantial change to the PMA process would require Congress to amend the Federal Food, Drug, and Cosmetic Act.

Progress on implementing these proposals stalled due to the COVID-19 pandemic and two clouds now loom over them: the new administration and the question of which party will control the Senate. Senate Democrats have long been skeptical of FDA’s attempts to change the device regulatory model, fearing it is too industry-forward and lacks much-needed safety oversight. A new Biden-appointed FDA Commissioner may similarly be unenthusiastic about proposals that appear to make it easier to get products to market without thorough vetting. Pressure from a Democrat-controlled Congress on a Democratic administration would do little to help advance these proposals. FDA’s device program may, however, still benefit from a Democrat-controlled Senate in that Democrats may be more willing to fund the nascent National Evaluation System for health Technology (NEST), on which many of FDA’s plans for improved safety surveillance and premarket review rest. And we have yet to see the types of investments both Congress and industry will be making in the upcoming user fee reauthorization process.

Missed Deadlines

FDA’s Center for Devices and Radiological Health (CDRH), like other FDA organizational units, has statutory mandates, user fee commitments, and other self-imposed goals to meet, which include commitments to publish new regulations, make reports to Congress, draft or finalize guidance documents, and goals for completing premarket reviews for new medical devices. We have unfortunately seen CDRH miss some deadlines this year, which we hope is not a pattern of the center setting goals so lofty it cannot reasonably meet them, or of the center choosing to prioritize its own goals over those set by Congress.

For example, CDRH missed a statutory requirement in the 2017 Food and Drug Administration Reauthorization Act (FDARA) to issue a proposed regulation by August 2020 for over-the-counter (OTC) hearing aids. It has also repeatedly delayed publication of a draft guidance on the topic of medical device servicing and remanufacturing that has been on the priority guidance list since October 2018. The document appears on the FY 2021 priority guidance list as it did on the FY 2020 and FY 2019 lists, raising questions about whether it will actually be published this fiscal year. In addition, the center postponed a major guidance on clinical decision support software, which is also on the FY 2021 guidance priority list. CDRH also missed multiple deadlines over the past couple of years to issue a revised quality system regulation (QSR) that aligns with ISO 13485. While setting goals is, of course, the first step to achieving them, we wonder if FDA should take a (well-deserved, particularly in light of the extraordinary COVID-19 response effort) beat to catch up on some of these and other items before committing to more.

CDRH Director Jeff Shuren recently admitted that the diversion of FDA resources to processing EUA requests and creating policies and processes necessary to address the COVID-19 emergency did cause delays for many of the center’s other initiatives. Dr. Shuren has recently called for a reset in 2021 to refocus on CDRH’s priority projects, especially in the areas of digital health and 510(k) reform.

Stay tuned for our next post on FDA drug and biologics law and policy activities in 2020 and for more in 2021 on FDA activities related to COVID-19, user fees, and more.

©1994-2020 Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. All Rights Reserved.
For more articles on the FDA, visit the National Law Review Administrative & Regulatory section.

Opioids, Sober Homes and “Telefraud”: An Overview of the DOJ 2020 Healthcare Fraud Takedown

In September 2020, the U.S. Department of Justice (“DOJ”) and the U.S. Department of Health and Human Services (“HHS”) Office of Inspector General (“OIG”) announced its annual healthcare-related “takedown.” The takedown, which involved enforcement actions that actually occurred over numerous months preceding the press event (and as such, the reference to a “takedown” is a misnomer”) targeted alleged schemes that related to opioid distribution, substance abuse treatment facilities (“sober homes”), and telehealth providers, the latter of which served as the focus of the enforcement activity. In all, 345 defendants, across 51 judicial districts were charged with allegedly submitting more than $6 billion in false and fraudulent claims to federal health care programs and to private payers and almost 75% of that amount involve telefraud.

As we have previously reported, opioids have been a large focus of DOJ in the past few years in an attempt to stem the opioid epidemic through increased enforcement and this takedown is a continuation of those efforts. DOJ stated that the charges involved in the opioid-related takedown involved the submission of $800 million in false and fraudulent claims to Medicare, Medicaid, TRICARE, and private insurance companies for treatments that were allegedly medically unnecessary and often never provided. DOJ also continued the trend of charging medical professionals with the illegal distribution of opioids (or operating pill mills). Providers need to be mindful of safe opioid prescribing guidelines, develop and implement rigorous compliance programs, and keep up to date on ever shifting federal and state laws in this area.

Tied into the opioid crisis has been the rise in popularity of treatment for drug and/or alcohol addiction as well as the necessary costs of testing and treatment of those patients. The “sober homes” cases announced by DOJ include charges against more than a dozen individuals in connection with more than $845 million of allegedly false and fraudulent claims for tests and treatments. The subjects of the charges include physicians, owners and operators of substance abuse treatment facilities, as well as patient recruiters. Those providers in the substance abuse treatment space should be mindful of providing appropriate utilization of therapies and tests and actively monitor their patient generation/marketing activities for fraud and abuse implications.

Over the past few years, we have been predicting that telehealth is ripe for enforcement. Although we have seen enforcement activity involving telehealth providers in the past, this is the first time that DOJ/HHS has focused so sharply on telehealth providers as the target of a major takedown. The 2020 Takedown is a warning to those in the telehealth industry to pay special attention to compliance infrastructures and efforts especially as use of telehealth to serve patients expands, and related regulations loosen in light of the COVID-19 pandemic.

©2020 Epstein Becker & Green, P.C. All rights reserved.
For more articles on telefraud, visit the National Law Review Health Law & Managed Care section.