Category: Health Care Law

COVID-19: CMS Issues Second Round of Groundbreaking Changes for Telehealth – What You Need to Know

The Centers for Medicare and Medicaid Services (CMS) has introduced a new crop of temporary regulatory flexibilities in response to the COVID-19 public health emergency (PHE) in the form of new blanket waivers, implementing guidance related to provisions of the Coronavirus Aid, Relief, and Economic Support Act (CARES Act) regarding rural health clinics (RHCs) and federally qualified health centers (FQHCs), as well as a new interim final rule (April IFC). This flurry of new guidance comes exactly one month after CMS published an interim final rule on March 30 (March IFC). The new guidance sets forth a historic expansion of telehealth services by fully expanding the list of permissible telehealth providers, significantly broadening the availably of audio-only telehealth services for Medicare beneficiaries, among other significant telehealth expansions. The new blanket waivers and the April IFC (except as otherwise specifically designated) are retroactively effective as of March 1, 2020.

This article discusses the telehealth waivers and flexibilities in this most recent guidance from CMS aimed at making health care available to Medicare beneficiaries in a manner that keeps both providers and patients safe during the PHE.

Expanded List of Eligible Telehealth Practitioners

A long awaited change is here! Now, for the duration of the COVID-19 PHE, physical therapists, occupational therapists, and speech language pathologists, along with all others eligible to bill Medicare for professional services, may furnish distant site Medicare telehealth services. Prior to this blanket waiver, only physicians, nurse practitioners, physician assistants, and other specified providers could deliver Medicare covered telehealth services. The new blanket waiver removes these restrictions. However, practitioners must still adhere to applicable state law practice and licensure requirements when performing telehealth services.

Audio-Only Telehealth Elevated

In the March IFC, CMS established separate payment for audio-only telephone E/M services, specifically including CPT codes 99441, 99442, and 99443. In response to stakeholder feedback that the use of these codes is more widespread than CMS expected—as well as CMS’s realization that the audio-only visits are appropriate for a higher intensity of service than initially anticipated—CMS is:

  1. waiving the required use of video technology, and is allowing the use of audio-only equipment to furnish services described by the codes for audio-only telephone evaluation and management services (E/M), and behavioral health counseling and educational services (the list of the designated audio-only codes can be found here); and
  2. increasing reimbursement for CPT codes 99441, 99442, and 99443 to more closely align with reimbursement for similar office visits.

Codes that may be billed without satisfying the interactive video requirement will have a notation in the telehealth code list indicating that audio-only is appropriate. The ability to receive these increased payment rates is retroactive to March 1, 2020. Also, while the code descriptors refer to an “established patient,” CMS is exercising its enforcement discretion during the PHE to relax the requirement that the audio-only services be limited to established patients. CMS reminds practitioners that the cost-sharing obligations are still applicable to these telehealth services in cases where the practitioner is not appropriately waiving the cost-sharing obligations.

Opioid Treatment Programs (OTPs) May Furnish Periodic Assessments via Telephone

Pursuant to the April IFC, during the PHE CMS is allowing OTP periodic assessments to be furnished via two-way interactive audio-video communication technology and, in cases where beneficiaries do not have access to two-way audio-video communications technology, the periodic assessments may be furnished using audio-only telephone calls, provided all other applicable requirements are met. CMS expects that OTPs will use clinical judgment to determine whether they can adequately perform the periodic assessment with audio-only phone calls, and if not, then they should perform the assessment using two-way interactive audio-video communication technology or in person as clinically appropriate. Regardless of the format that is used, the OTP should document in the medical record the reason for the assessment and the substance of the assessment.

Medicare Coverage of RHCs and FQHCs Provided Telehealth

Previously, RHCs and FQHCs were not able to be paid by Medicare for telehealth services as a distant site. However, as required by the CARES Act, Medicare will now cover and reimburse telehealth services provided by RHCs and FQHCs from January 27, 2020 through the duration of the PHE. The key flexibilities afforded to RHCs and FQHCs include:

  1. Any telehealth service listed in the Medicare telehealth code list may be provided by the RHC/FQHC practitioners and the RHC/FQHC must use HCPCS code G2025 to identify the services being provided via telehealth;
  2. Effective March 6, 2020, patients may be at any site, including their home;
  3. The services can be furnished by any health care practitioner working for the RHC or FQHC within their scope of practice; and
  4. The practitioners can furnish the telehealth services from any distant site location, including their homes, during the time they are working for the RHC or FQHC.

CMS released detailed guidance on (a) claims submission requirements for RHCs/FQHCs; (b) how CMS will go about reprocessing and paying claims; (c) the timing of processing; (d) special billing rules and requirements related to cost-sharing waivers; and, (e) other important information that RHCs and FQHCs should review in advance of billing for any telehealth services. CMS set a payment rate for these claims at $92.03 (average amount of all telehealth services on the telehealth service list, weighted by volume), which will be reassessed if the PHE extends beyond the end of the year. CMS hopes these changes will increase access to care for beneficiaries in rural and underserved areas.

Hospital Billing and Facility Fee Reimbursement for Outpatient and Home Settings

Now hospitals may bill for telehealth services furnished by hospital-based physicians to patients registered as hospital outpatients, including when patients are at home, provided the home is serving as a temporary provider-based department of the hospital. CMS stated that the March IFC did not specifically address billing for hospital outpatients. CMS also reminded providers that reasons for the visit must be documented in the patient’s medical record. As such, hospitals can bill for both the distant site provider fee and the originating site facility fee for telehealth services rendered by hospital-based practitioners, even for patients at home.

New Telehealth Code Approval Procedure

Ordinarily CMS adds codes to the telehealth code list as part of its annual rule making. CMS is now changing its process to allow for the addition of new telehealth codes to the designated Medicare telehealth code list on a sub-regulatory basis, without the need for notice and comment. This will allow for faster and perhaps more frequent additions to the telehealth codes list and scope of Medicare telehealth benefit. However, any codes added to the list during this time period will remain on the list only during the COVID-19 PHE.

Time-Based Level Selection for E/M Telehealth

In the March IFC, CMS allowed for the E/M level selection for office/outpatient E/M services furnished via telehealth can be based on medical decision-making or time for the duration of the PHE. In doing so, CMS referenced typical times associated with E/M services in the Medicare public use file. However, the times in the public use file do not always align with the typical times included in the office/outpatient E/M code descriptors, causing confusion in the physician community. CMS resolved this confusion in the April IFC by revising its policy to clarify that the times listed in the CPT code descriptor should be used.

Loosened Remote Physiological Monitoring (RPM) Billing Requirements

Historically, RPM service described by CPT code 99454 could not be reported for monitoring of fewer than 16 days during a 30-day period. However, in the April IFC, acknowledging that many patients with COVID-19 who need remote patient monitoring do not need to be monitored for a full 16 days, CMS, for the duration of the PHE, is allowing RPM services to be reported for periods of time that are fewer than 16 days of 30 days, but no less than 2 days, as long as the other requirements for billing the code are met. CMS emphasized that payment for when monitoring lasts for fewer than 16 days of 30 days, but no less than 2 days, is limited to patients who have a suspected or confirmed diagnosis of COVID-19.

Inclusion of Telehealth and Virtual Care in ACO Primary Care Services

For the duration of the COVID 19 PHE, for purposes of the Medicare Shared Savings Program, CMS is revising the definition of primary care services used in the program’s assignment methodology, for performance year starting on January 1, 2020, to include remote evaluation of patient video/images, virtual check-ins, e-visits, telephone evaluation and management services and telehealth.

What’s Next?

The breadth of these changes and speed at which they have been made undoubtedly illustrates CMS’s view of telehealth as a key tool in addressing the COVID-19 PHE. The question that remains is which of these changes will have staying power beyond the PHE and will industry supporters finally have their day when telehealth is simply an equal choice or option among others in health care delivery.

For additional web-based resources available to assist you in monitoring the spread of the coronavirus on a global basis, you may wish to visit the websites of the CDC and the World Health Organization.

Foley has created a multi-disciplinary and multi-jurisdictional team to respond to COVID 19, which has prepared a wealth of topical client resources. Click here for Foley’s Coronavirus Resource Center to stay apprised of relevant developments, insights and resources to support your business during this challenging time.

Authored by:  Thomas B. Ferrante Rachel B. Goodman Emily H. Wein of 
Foley & Lardner LLP
© 2020 Foley & Lardner LLP

CARES Act Provider Relief Fund – Acceptance of Funds Comes with Conditions

Healthcare providers are among those financially adversely affected by the COVID-19 pandemic.

A survey conducted by the Medical Group Managers Association (“MGMA”) on April 7 and 8, 2020, found that 97% of medical practices have experienced a negative financial impact directly or indirectly related to COVID-19.  MGMA also indicates that, on average, practices report a 55% decrease in revenue and a 60% decrease in patient volume since the beginning of the COVID-19 crisis.

In response to the financial impact on healthcare providers, the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act, signed into law on March 27, 2020, appropriated $100 billion in relief funds to hospitals and other healthcare providers under the Public Health and Social Services Emergency Fund, also called the “CARES Act Provider Relief Fund.” On April 10, 2020, the United States Department of Health and Human Services (“HHS”) released the initial terms and conditions related to the distribution of the initial $30 billion of the $100 billion.  Rather than await the submission of applications by healthcare providers, HHS has begun a rapid delivery of relief funding to healthcare providers and suppliers that are enrolled in Medicare and received Medicare fee-for-service reimbursement in 2019.  These eligible healthcare providers are being allotted a portion of the initial $30 billion distribution based upon their proportionate share of the approximately $484 billion of Medicare fee-for-service reimbursements made in 2019.

Healthcare providers identified as eligible to receive funds from this first distribution should have received an email to that effect.  Eligible healthcare providers have begun receiving payments via the Automated Clearing House account information on file used for reimbursements from The Centers for Medicare and Medicaid Services (“CMS”).  Healthcare providers that normally receive a paper check for reimbursement from CMS will receive a paper check in the mail.

These payments are not loans and, if used consistent with the applicable terms and conditions, will not need to be repaid.  Healthcare providers must sign an attestation confirming receipt of the funds and agreeing to the terms and conditions of payment within 30 days via the online payment portal.  Should a healthcare provider choose to reject the funds, the healthcare provider within 30 days of receipt of payment must complete the attestation to indicate this and remit the full payment to HHS.  The portal will guide the healthcare provider through the attestation process to accept or reject the funds.

The healthcare provider is required to certify, among other things, that it provides or provided after January 31, 2020 diagnoses, testing, or care for individuals with possible or actual cases of COVID-19.  In a recent update, HHS clarified that to meet this requirement, care does not have to be specific to treating COVID-19, as “HHS broadly views every patient as a possible case of COVID-19.” HHS also clarified that a healthcare provider’s eligibility is not adversely affected if it ceased operations as a result of the COVID-19 pandemic, so long as the healthcare provider provided diagnoses, testing, or care for individuals with possible or actual cases of COVID-19.

In addition to imposing use restrictions for the funds and recordkeeping requirements, the CARES Act authorizes the HHS Office of Inspector General (“OIG”) to audit both interim and final payments made under the program.  Healthcare providers that elect to accept the funds must be prepared to submit to these OIG audits.  Because the funds are limited to necessary expenses or lost revenues due to the pandemic not otherwise reimbursable from other sources, there may be differences in OIG’s interpretation of whether the funds were used for an appropriate purpose.  At a minimum, this may necessitate returning certain disallowed funds following an audit.

Failure to abide by the terms and conditions could result in False Claims Act liability for healthcare providers that do not make proper use of the funds.  Thus, recipients of the funds should carefully consider their ability to comply with the terms and conditions and should ensure that proper controls are in place for proper use of the funds.

© 2020 Ward and Smith, P.A.. All Rights Reserved.

For more on CARES Act funding, see the Coronavirus News section of the National Law Review.

Medicare and the 2020 Election

Now that the campaign for President appears to be down to two candidates, we need to address the health care questions that both will face. In this blog, we will talk about Medicare and in a later blog, we will talk about the public option.

A question which has faced not just these two individuals, President Trump and Presidential Candidate Biden, but has faced the country for the last 10-15 years, is the projected deficit in the Medicare program as it is now configured.  In an attempt to respond to and ameliorate this deficit, various steps have been taken in the past which have delayed the impact of the deficit but have not eliminated it.  Past steps that have been taken include the elimination of the cap on W-2 earnings for purposes of calculating the Medicare tax, the application of the Medicare tax to non-W-2 earnings for individuals whose taxable income is above a certain level, calculation of Medicare Part B monthly premiums based upon income (the higher the income, the higher the premium that needs to be paid by the beneficiary), and the attempt to both explicitly and implicitly limit the payments being made by the Medicare program for services provided to Medicare beneficiaries.  The explicit attempt was the development of the Sustainable Growth Rate (SGR), which was never effectively implemented and ultimately repealed.  The implicit attempt is ongoing and has resulted in the necessity for beneficiaries with private insurance to subsidize the care being provided to the Medicare (that’s correct, not Medicaid, but Medicare) beneficiaries.

This “subsidy” by private insurance to health care providers to cover the costs of providing care to the Medicare beneficiaries is slowly having an impact on the care delivery system. It has resulted in a few prior Medicare providers now refusing to render care to Medicare patients in the non-hospital setting.  It is also encouraging physicians only to take Medicare patients who have previously been their private patients when that individual had private insurance so that the continuity of care to those individuals is not being disrupted.

As this subsidy increases, it becomes more and more likely that fewer providers will be providing care to Medicare beneficiaries, to the extent that they can legally opt out.

The next issue raised in the campaign is the extension of the Medicare program proposed by Presidential Candidate Biden to individuals from the ages of 60-65. Unlike the Social Security program, which attempted to resolve its deficit problems by extending the retirement age from age 65 over a period of time to age 67, the proposal by Presidential Candidate Biden is the opposite and that is to reduce the eligibility age for Medicare from 65 to 60.

The questions that need to be answered are:

  1. How much is it going to cost?
  2. The proposal recognizes that the current Medicare program (currently facing a shortfall) cannot pay for the services provided to these new Medicare beneficiaries and proposes that the government pay the costs–which means the taxpayer. The question then is what changes will be made to the tax code and whose taxes will be increased–of course this raises the questions always associated with tax increases.
  3. It appears that all aspects of the Medicare program – Parts A, B, C, and D – will be available to the age cohort 60 to 65. Will the copays, deductibles and premiums, as applied to current Medicare beneficiaries, be applicable to this cohort?
  4. Will the same payments be made to the providers for care rendered to this cohort of new Medicare beneficiaries? Will this adversely impact the willingness of some providers to continue to participate in providing care to Medicare beneficiaries?

When answers to these questions become clear, to the extent that it does become clear, we will analyze these questions in a subsequent blog. Otherwise at this point in time, it is speculation as to the impact.

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

Price Gouging and Deceptive Advertising Practices Amidst COVID-19 Pandemic

The Federal Trade Commission, the Food and Drug Administration and state Attorneys General have bumped the protection of consumers in the midst of the COVID-19 crisis to the top of their respective lists, including, but not limited to, price gouging and unsubstantiated product efficacy claims.  The U.S. Department of Justice has also issued a broad mandate regarding criminal enforcement of deceptive, fraudulent and predatory practices.

 State Attorneys General

State Attorney General have actively been policing the advertising of claims related to products that purport to cure, treat or prevent COVID-19.  This includes both express and implied claims (e.g., immunity-based claims).

Currently are no vaccines, pills, potions, lotions, lozenges or other prescription or over-the-counter products to treat or cure.

By way of example, a group of thirty-two state attorneys general recently sent letters to executives at prominent online retailers, urging them to help police price gouging.  Additionally, the New York Attorney General has asked GoDaddy and other online registrars to halt and de-list domain names used for Coronavirus-related scams and fake remedies designed to unlawfully and fraudulently profit off consumers’ fears around the coronavirus disease.

The NY AG has also recently contacted Craigslist.com, calling on the company to immediately remove posts that attempt to price gouge users, or otherwise purport to sell items that provide “immunity” to the coronavirus or allow individuals to test for the disease.  For example, the AG’s letter referred to posts that promoted an “immunity pack,” a fake coronavirus testing kit, and face masks that are not even proven to provide coronavirus-related protection.  The AG also asked Craigslist to remove an advertisement for a bottle of Purell that was priced at over $200.

Price gouging on disinfectant products is also a priority.

State AGs and other federal agencies are actively investigating potential price gouging violations, filing enforcement lawsuits, issuing civil investigative demands (CIDs), and serving cease-and-desist warnings.  The NYC Department of Consumer and Worker Protection (DCWP) – formerly the New York City Department of Consumer Affairs (DCA) – has also been policing local business that it believes are selling necessary products (e.g., cleaning products, diagnostic products and services, disinfectants [wipes, liquids, sprays], face masks, gloves, hand sanitizers, medicines, paper towels, rubbing alcohol, soap, tissues and basic food supplies).

The State of New York’s price gouging statute prohibits the sale of goods and services necessary for the health, safety and welfare of consumers at unconscionably excessive prices during any abnormal disruption of the market.  During any abnormal disruption of the market for consumer goods and services vital and necessary for the health, safety and welfare of consumers, no party within the chain of distribution of such consumer goods or services or both shall sell or offer to sell any such goods or services or both for an amount which represents an unconscionably excessive price.

In the State of New York, whether a price is unconscionably excessive is a question of law for the court.  The court’s determination that a violation has occurred shall be based on any of the following factors:  (i) that the amount of the excess in price is unconscionably extreme;  or (ii) that there was an exercise of unfair leverage or unconscionable means;  or (iii) a combination of both factors in subparagraphs (i) and (ii).

Proof that a violation of has occurred can include, for example, evidence that:  (i) the amount charged represents a gross disparity between the price of the goods or services which were the subject of the transaction and their value measured by the price at which such consumer goods or services were sold or offered for sale by the defendant in the usual course of business immediately prior to the onset of the abnormal disruption of the market; or (ii) the amount charged grossly exceeded the price at which the same or similar goods or services were readily obtainable by other consumers in the trade area.  A defendant may be able to rebut such evidence by establishing that additional costs not within its control were imposed on the defendant for the goods or services.

Where a violation is alleged to have occurred, the AG may seek an injunctions, civil penalties and restitution.

Under the Rules of the City of New York, stores are prohibited from selling items that have been declared in short supply at excessively increased prices.  NYC has recently issued an emergency rule prohibiting price increases above 10% on various products necessary to combat the coronavirus.  New York State has now proposed legislation concerning medical supplies that includes a presumption that a price exceeding 10% of its price immediately prior to a public health emergency is to be considered unconscionably excessive.

Other states also utilize percentage-drive formulas when assessing excessive or unconscionable price increases, such as, without limitation, Arkansas, Florida, Michigan, Missouri, New Jersey, North Carolina, Ohio, Oklahoma, Pennsylvania, Tennessee, Texas, Utah, West Virginia, and Wisconsin.  Some states impose liability upon manufacturers and distributors.  Some states also impose civil fines and penalties for violations, in addition to potential criminal liability.

Any entity charged with price gouging during a public health emergency would be entitled to rebut an alleged violation of this new law with evidence that the additional costs not within the control of the defendant were imposed on the defendant for the consumer medical supplies.

FTC and FDA

The Federal Trade Commission and the Food and Drug Administration recently announced that it has issued joint warning letters to companies that allegedly had been disseminating unsubstantiated product advertising claims related to the coronavirus.  The letters cite efficacy claims that are not supported by competent and reliable scientific evidence, as well as issues relating to unapproved and misbranded drugs.

On March 26, 2020, FTC lawyer and Chairman Joe Simons issued a statement setting forth the agency’s enforcement efforts to protect consumers from unfair and deceptive commercial practices and to educate the public.  The FTC “will not tolerate businesses seeking to take advantage of consumers’ concerns and fears regarding coronavirus disease, exigent circumstances, or financial distress,” FTC lawyer Simons stated.

The FTC has also issued a press release calling attention to business-to-business scams that seek to exploit companies’ concerns about COVID-19, and sent letters to VoIP service providers and other companies warning them that “assisting and facilitating” illegal telemarketing or robocalls related to the coronavirus or COVID-19 pandemic is against the law.

“It’s never good business for VoIP providers and others to help telemarketers make illegal robocalls that scam people,” said FTC attorney Andrew Smith, Bureau of Consumer Protection Director.  “But it’s especially bad when your company is helping telemarketers exploiting fears about the coronavirus to spread disinformation and perpetrate scams,” Smith stated.

Department of Justice

The U.S. DoJ has issued a broad mandate with respect coronavirus-related fraud, price gouging and product hoarding.  In fact, it recently filed a number of federal criminal actions to combat fraud and other offenses related to the coronavirus pandemic.

Two of the actions were filed in California.  One involving allegations that an individual solicited investments in a company he claimed would be used to market pills that would prevent coronavirus infections, as well as market an injectable cure for those who had already contracted the virus.  The other, involving allegations that an individual mislabeled drugs that were purported to be a miracle cure for COVID-19.

Another two actions were filed in New Jersey.  One involving charges of violating the federal Anti-Kickback Statute and conspiracy to commit health care fraud.  The other, involving allegations of assault resulting from an individual who represented to have tested positive for COVID-19 that coughed on FBI agents, lied to them about his accumulation and sale of surgical masks, medical gowns and other medical supplies, and selling supplies to doctors and nurses at inflated prices.           .

The DoJ also recently filed a civil wire fraud lawsuit in a Texas federal district court against a website (coronavirusmedicalkit.com) that was purportedly offering access to bogus World Health Organization vaccines.

Digital marketers, consumer-facing businesses and others in the supply chain should consider consulting with experienced FTC defense counsel to avoid unsupported efficacy claims and inadvertently charging unlawful prices for goods and services necessary for the health, safety and welfare of consumers.

© 2020 Hinch Newman LLP

For more on FTC COVID-Actions, see the National Law Review Coronavirus News section.

CMS Waives Certain Penalties Classes of the Stark Law

On March 30, 2020, the Centers for Medicare and Medicaid Services (CMS) announced it will waive certain penalties classes of violations of the Physician Self-Referral Law, known as the Stark Law. The affected penalties are those listed under Section 1877(g) of the Social Security Act (42 U.S.C. 1877). These blanket waivers are effective retroactively to March 1, 2020.

The Stark Law is a strict liability statute generally prohibiting a physician from making referrals of Medicare- and Medicaid-designated health services to an entity with which the physician or an immediate family member has a financial relationship. Typically, if such a relationship exists between a physician and an entity, then the arrangement must satisfy an express Stark Law exception for the physician to bill for the referred services.

The blanket waivers temporarily allow payments and referrals between physicians and covered entities if the relationship falls into one of the express categories during the COVID-19 pandemic, even if such an arrangement would otherwise not meet a Stark Law exception. The blanket waivers apply to payments and referrals between an entity covered under the Stark Law and (1) a physician, (2) the physician’s organization defined under 42 C.F.R. 411.354(c) or (3) the physician’s immediate family member.

The blanket waivers must relate to one of the explicitly defined COVID-19 purposes and meet the following conditions:

  1. The providers are acting in good faith to provide care in response to the COVID-19 pandemic.
  2. The financial relationship or referral is protected by one of CMS’s 18 permitted relationships (discussed below).
  3. The government does not determine that the financial relationship creates fraud and abuse concerns.

Defined COVID-19 Purposes

To apply, the blanket waivers must be related to COVID-19 purposes. Such purposes include:

  • “Diagnosis or medically necessary treatment of COVID-19 for any patient or individual, whether or not the patient or individual is diagnosed with a confirmed case of COVID-19;
  • Securing the services of physicians and other health care practitioners and professionals to furnish medically necessary patient care services, including services not related to the diagnosis and treatment of COVID-19, in response to the COVID-19 outbreak in the United States;
  • Ensuring the ability of health care providers to address patient and community needs due to the COVID-19 outbreak in the United States;
  • Expanding the capacity of health care providers to address patient and community needs due to the COVID-19 outbreak in the United States;
  • Shifting the diagnosis and care of patients to appropriate alternative settings due to the COVID-19 outbreak in the United States; or
  • Addressing medical practice or business interruption due to the COVID-19 outbreak in the United States in order to maintain the availability of medical care and related services for patients and the community.”

Those wishing to use the blanket waivers need not provide advance notice to or receive approval from CMS. Those who rely on a blanket waiver, however, must retain records relating to its use, and the records must be available for the U.S. Department of Health and Human Services to review upon request.

The Blanket Waivers

The blanket waivers do not suspend the entire Stark Law. Rather, they apply only to 18 expressly enumerated relationships. These relationships can be divided into two classes: those that address payments and those that address referrals.

Allowed Payments

  1. Personally Performed Services: Remuneration paid by an entity to a physician above or below the fair market value (FMV) for the physician’s personally performed services to the entity is permitted.
  2. Office Space and Equipment Rental Payments: Remuneration paid by an entity to a physician or by a physician to an entity below FMV for rental of office space or equipment is permitted by the waivers. Rental payments exceeding FMV are not covered.
  3. Purchase of Items or Services: Remuneration paid by an entity to a physician or by a physician to an entity below FMV for the purchased items or services, including use of the entity’s premises, is permitted by the purchase waivers. The purpose of these waivers is to permit parties to rapidly source critical items or services without overpaying for the service.
  4. Additional Incidental Benefits to Medical Staff: Remuneration from a hospital to a physician in the form of medical staff incidental benefits that exceed the $36-per-item limit set forth in 42 CFR § 411.357(m)(5) is protected. This waiver permits a hospital to offer a range of benefits to its medical staff members to facilitate participation in the health care workforce, such as childcare services or clean clothing for the physician while at the hospital.
  5. Nonmonetary Compensation: Remuneration from an entity to a physician in the form of nonmonetary compensation that exceeds the $423 annual limit set forth in 42 CFR § 411.357(k)(1) is permitted. Similar to the medical staff benefit waiver, this waiver allows an entity to provide additional services that would otherwise exceed the limits established by the regulations to facilitate participation in the health care workforce during the COVID-19 pandemic. Currently, it is unclear how this waiver will be assessed when the blanket waiver period ends because the public emergency declaration caused by the COVID-19 pandemic is terminated. More guidance from CMS on the application of this waiver may be issued.
  6. Low-Interest or Interest-Free Loans: Remuneration among individuals and entities in the healthcare industry in the form of a loan, with an interest rate below FMV or on terms that are unavailable from another independent lender, is allowed. Essentially, CMS is attempting to increase cash liquidity within the health care industry to mitigate potential cash flow problems among health care workers and providers during the COVID-19 pandemic.

Allowed Referrals

  1. Referrals by Physician-Owner of a Hospital: Referrals by a physician-owner of a hospital that temporarily expands its facility capacity above the number of operating rooms, procedure rooms and beds for which the hospital was licensed on March 23, 2010 without prior application and approval of the expansion of facility capacity will temporarily not be prohibited by the Stark Law. (In the case of a hospital that did not have a provider agreement in effect as of March 23, 2010, but did have a provider agreement in effect on December 31, 2010, the effective date of such provider agreement applies.)
  2. Referrals by Physician-Owner of Ambulatory Surgical Centers that Temporarily Convert to Hospitals: Referrals by a physician-owner of a hospital that converted from a physician-owned ambulatory surgical center to a hospital on or after March 1, 2020 are permitted provided that:
  • The hospital does not satisfy one or more of the requirements of Section 1877(i)(1)(A) through (E) of the Act.
  • The hospital enrolled in Medicare as a hospital during the period of the public health emergency described in Section II.A of this blanket waiver document.
  • The hospital meets the Medicare conditions of participation and other requirements not waived by CMS during the period of the public health emergency described in section II.A of this blanket waiver document.
  • The hospital’s Medicare enrollment is not inconsistent with the Emergency Preparedness or Pandemic Plan of the state in which it is located.
  1. Referrals by Owners to a Home Health Agency: Referrals are now permitted by a physician of a Medicare beneficiary for the provision of designated health services to a home health agency (1) that does not qualify as a rural provider under 42 CFR 411.356(c)(1) and (2) in which the physician (or an immediate family member of the physician) has an ownership or investment interest.
  2. Referrals for Services at Locations Other than the Health Care Facility: Referrals are now permitted by a physician in a group practice for medically necessary designated health services furnished by the group practice in a location that does not qualify as a “same building” or “centralized building” for purposes of 42 CFR 411.355(b)(2). Also, referrals by a physician in a group practice for medically necessary designated health services furnished by the group practice to a patient in his or her private home, an assisted living facility, or independent living facility where the referring physician’s principal medical practice does not consist of treating patients in their private homes will not violate the Stark Law.
  3. Referrals to Immediate Family Members in Rural Areas: Referrals are now permitted by a physician to an entity with which the physician’s immediate family member has a financial relationship if the patient who is referred resides in a rural area.
  4. Relaxing Compensation Arrangement Written Requirements: Stark Law compensation arrangement exceptions frequently require the arrangement to be in writing. However, referrals are now permitted by a physician to an entity that the physician (or an immediate family member of the physician) has a compensation arrangement that does not satisfy the writing requirements of an applicable exception but satisfies all other requirements of the applicable exception, unless that requirement is waived under one or more of the blanket waivers above.

CMS encourages providers to contact CMS with questions regarding the applicability of the blanket waivers. Providers should send any requests to 1877CallCenter@cms.hhs.gov and include the words “Request for 1877(g) Waiver” in the subject line. All requests should include the following minimum information:

  • the name and address of requesting entity
  • the name, phone number and email address of the person designated to represent the entity
  • the CMS Certification Number (CCN) or Taxpayer Identification Number (TIN) of the requesting entity; and
  • the nature of the request.

The contours and applications of these blanket waivers are complex and often require a nuanced understanding of how they are couched into the existing regulatory framework addressing the provision of health care services under the Social Security Act, the Stark Law, and a number of other statutes and regulations.

© 2020 Much Shelist, P.C.

For more on healthcare blanket waivers amidst COVID-19, see the National Law Review Coronavirus News section.

Physicians Face Regulatory Exposure for Prescribing COVID-19 Drugs Cited by President Trump

Physicians and medical professionals throughout the world are facing and attempting to treat one of the most serious and deadly viruses that has affected the world in our lifetime. Medical professionals are on the front lines and in a position, despite their best efforts to protect themselves, to contract the disease. Medical professionals do not only fear for their own lives but also for the lives of their family members if they unintentionally bring this disease home.

In light of safety concerns for their family members, over the past few weeks, there have been reports claiming physicians throughout Ohio have prescribed chloroquine and hydroxychloroquine, frequently cited by President Donald Trump, to family members and friends. In some reported instances, prescriptions were issued even when such individuals did not exhibit signs or symptoms of the coronavirus.

In order to preserve the stockpile of medications for patients, on March 22, 2020, the Ohio Board of Pharmacy issued an emergency rule (OAC 4729-5-30.2) that prohibits a pharmacist from filling prescriptions for chloroquine or hydroxychloroquine without a valid COVID-19 diagnosis and positive test result.

On March 30, 2020, the Ohio Attorney General’s Office issued the following statement, which highlighted the Pharmacy Board’s new emergency rule and advised physicians to self-report to the State Medical Board of Ohio if they prescribed these medications improperly:

“It has come to my attention that physicians may be abusing their privilege to prescribe medications by writing prescriptions for chloroquine and hydroxychloroquine for themselves, their friends and their families without any legitimate medical need for the medication. As Attorney General, I am very concerned with these reports and will work vigorously with Ohio’s regulatory boards and agencies to address any illegal or prohibited conduct. I encourage anyone who has written a prescription of this type improperly to self-report to their respective regulatory authority.”

The State Medical Board of Ohio is also on record stating that it takes allegations of inappropriate prescribing very seriously, and that it will be actively investigating complaints as they come in and working with the Ohio Attorney General on any necessary enforcement actions for bad prescribing.[i]

In addition to state regulators, the U.S. Attorney’s Office for the Northern and Southern Districts of Ohio have set up a COVID-19 Task Force. One of its responsibilities is to investigate and criminally prosecute physicians who have egregiously prescribed chloroquine and hydroxychloroquine to themselves, family members, or friends without a legitimate medical purpose. The Task Force is comprised of representatives of the United States Attorney’s Office, Ohio Attorney General’s Office, State Medical Board, and the Pharmacy Board.[ii]

Physicians who recently prescribed chloroquine and hydroxychloroquine and who are considering whether they should self-report to the Medical Board should first contact experienced legal counsel to determine the implications of a possible self-report, including the potentiality of license discipline and/or criminal charges.

[i] See:  https://clt945532.bmeurl.co/A27E486

[ii] See: https://www.dispatch.com/news/20200324/feds-yost-will-prosecute-doctors-who-abuse-power-with-personal-coronavirus-prescriptions

© 2020 Dinsmore & Shohl LLP. All rights reserved.

For more COVID-19 developments, see the dedicated National Law Review Coronavirus News page.

COVID-19 Update: Patent Rights in the COVID-19 Pandemic: How will Industries and Governments Respond?

As the world scrambles to address an ever-expanding wave of COVID-19 infections, new and urgent needs for medical supplies, diagnostics and treatments arise.  Shortages of such supplies are plaguing hospitals and care-givers, while doctors and nurses put their lives at risk in their desperate efforts to save COVID-19 patients.  Many of these vital supplies, however, are protected by valuable patent rights.  The essence behind patents rights is to exclude others from making, using, or selling a patented invention, except by authorization of the patent holder in carefully negotiated license agreements to ensure proper compensation for the efforts and costs invested in developing the patented invention.1  On the other hand, the U.S. government has rights to forcibly license a patented invention during times of need, in particular when there is a threat to public safety.2  Will the government resort to use of these available, yet rarely used, compulsory licensing provisions?  How patent owners are responding to the current COVID-19 pandemic is revealing that benevolence may, in some cases, have a place in commercial business without the government needing to exercise its compulsory licensing rights.

In the face of the COVID-19 pandemic, several large companies have come forward with offers to manufacture medical supplies such as masks and respirators.  Manufacturers, such as the auto makers General Motors, Ford and Tesla, are offering to repurpose production lines to help manufacture and increase the supply of ventilators and other much needed medical equipment.3  Fashion and cosmetic companies, such as Louis Vuitton, L’Oréal and Coty, are also pitching in and offering to re-allocate their resources to produce hand sanitizers, while fashion designers, like Christian Siriano and Brandon Maxwell, are offering to mobilize their teams to produce masks and hospital gowns.4  Even the beer company giant, ABInBev will use its facilities to manufacture and distribute hand sanitizer.5

On the patent front, the drug manufacturer AbbVie has taken a bold public health stance by suspending enforcement of its global patent rights on all formulations of the HIV medication, Kaletra (Aluvia) while the drug is being evaluated as a candidate to treat COVID-19 in several clinical trials.  AbbVie’s bold stance would allow generic versions of Kaletra to be made by others without fear of repercussion based on patent infringement.  This would allow countries to purchase generic versions of Kaletra, if it is found effective in treating COVID-19, and would help alleviate possible drug supply shortages.  AbbVie is the first drug-maker to take such a strong public health stance amid the COVID-19 pandemic.  However, whether AbbVie’s decision to suspend its patent rights to Kaletra is an act of pure benevolence, mounting public pressures, or because at least one clinical trial  already suggested Kaletra may not be effective in treating COVID-19, AbbVie’s strong public health stance is at the very least a comforting thought and may hopefully sway other drug-makers, like Gilead Sciences Inc. (“Gilead”), to do the same.

On the other end is the drug-maker Gilead who recently halted emergency access to its COVID-19 candidate drug, Remdesivir, except for pregnant women and children with severe symptoms.6  In suspending access to Remdesivir, Gilead issued a company statement7 on March 22, 2020 citing “overwhelming demand” and “exponential increase” in requests which “flooded [its] emergency treatment access system.”  However, Gilead’s restrictions to Remdesivir come on the heels of it being granted “orphan” drug status8 by the U.S. Food and Drug Administration (“FDA”) on February 23, 2020 and on the heels of a Chinese drug-maker, BrightGene Bio-Medical Technology (“BrightGene”),9 filing for patent protection in China for a combination drug therapy to treat COVID-19 using the active ingredients of Remdesivir.  The 1983 Orphan Drug Act10 allows a seven-year market exclusivity period for pharmaceutical companies developing treatments for a “rare disease” and also provides tax credits.  Gilead’s strategic move to obtain orphan drug status for Remdesivir blocks generic drug manufacturers from supplying the drug and thus further limiting access.

Remdesivir has been previously used to treat the Ebola virus, Middle Eastern Respiratory Syndrome (MERS) and Severe Acute Respiratory Syndrome (SARS), but these infections did not cause a sustained global crisis to earn Gilead a sizable or continued financial revenue stream and other more successful experimental therapies existed.11  If Remdesivir is found to be effective for combating COVID-19, a patent protecting such a use may stand to earn a high and continued stream of global revenue for the patent owner.  As new combination drug patents or method patents for new uses of known drugs may be separately patentable, repurposing Remdesivir as a combination drug patent or for treating COVID-19 may prove to be a blockbuster hit for its patent owner.  Thus, while Gilead has cited overwhelming demand as the reason to restrict access to Remdesivir, one can’t help but wonder whether patent rights and the associated commercial revenue are Gilead’s underlying concern.

Gilead is not the only patent holder invoking a protectionist stance and seemingly attempting to profit from the global pandemic through the patent system’s exclusionary principle.  Labrador Diagnostics LLC (“Labrador”)—a company backed by its major investor SoftBank and who bought patents from a failed blood-testing start-up called Theranos—recently filed a patent infringement lawsuit against BioFire Diagnostics (“BioFire”), a health start-up who launched three COVID-19 tests.12  Labrador also requested an injunction demanding BioFire to stop using the technology covered by the Theranos patents.13  However, since filing the lawsuit and seemingly after public backlash, Labrador issued a press release14 stating it would allow third parties to use its Theranos patents to develop COVID-19 tests with a royalty-free license, but that it is continuing its lawsuit against BioFire for activities over the past six years not related to COVID-19 testing.

Similarly, in Italy, a patent holder of a special respirator valve used in respiratory machines allegedly threatened a patent infringement lawsuit against two engineers who volunteered to use their 3-D printing technology to manufacture the patented valves for a hospital in Brescia, Italy without obtaining permission or a license from the patent holder.15  However, in a follow-up statement, both the patent holder and the two engineers stopped short of calling the communications a threat, and instead characterized them as merely a refusal of the patent holder to assist or collaborate with the engineers.16

While some patent owners are choosing to suspend their global patent rights and others are taking a more protectionist stance, the U.S. government also has the right to take action by forcing patent owners to grant compulsory licenses when there is a threat to public safety.  A compulsory license refers to the government’s authority to grant permission to a party seeking use of another’s patented invention without the consent of the patent owner, and is provided broadly by 28 U.S.C. § 1498.  Several multilateral international agreements also address compulsory patent licenses.17  Other U.S. laws also allow for compulsory licenses in certain circumstances.  For example, march-in rights is a provision of the Bayh-Dole Act of 1980 and is codified in 35 U.S.C. § 203.  March-in rights allow the federal government the right to grant patent licenses to other parties or take licenses for themselves if the patented invention was researched and developed with the help of federally funded dollars.18

March-in rights may be a perfectly poised vehicle for increasing access to COVID-19 related therapeutic drugs and vaccines.  To fight the global pandemic, the Biomedical Advanced Research and Development Authority (“BARDA”), a division of the U.S. Department of Health and Human Services (“HHS”), has partnered with several drug manufacturers, including Johnson & Johnson, Sanofi and Regeneron Pharmaceuticals, to fund the development of treatments and vaccines for COVID-19.19  However, some members of Congress have expressed concern as to the affordability and access should such drugs be found safe and effective, especially since federal funds are being provided.

No U.S. federal agency has ever exercised its power to march-in and license patent rights to others.  For example, advocacy groups have long petitioned the National Institute of Health (“NIH”) to exercise march-in rights for HIV/AIDS related drugs, but have been rejected by the NIH contending that high drug prices are an insufficient reason to break a patent.  However, in the face of a global pandemic, “health or safety needs” may provide a strong basis for the exercise of march-in rights and grant of a compulsory license if more patent owners, like Gilead, take a protectionist patent stance.  On the other hand, if more companies like AbbVie take a more socially conscious approach, there may not be need for government intervention in terms of compulsory patent licenses.  Nevertheless, the availability of this measure may at least provide some comfort and may motivate companies to voluntary suspend their patent rights during this global public health emergency in order to avoid government march-in, or maybe as a pure act of benevolence showing that social responsibility has a place in commercial business.

1   See 35 U.S.C. § § 154, 271.

2   See, e.g., 28 U.S.C. § 1498(a), 35 U.S.C. § 203.

3   See https://www.usatoday.com/story/money/cars/2020/03/22/coronavirus-ventilator-shortage-gm-tesla-covid-19/2895190001/.

4   See https://wwd.com/fashion-news/fashion-scoops/fashion-designers-make-masks-hospital-gown-hand-sanitizer-to-fight-coronavirus-1203545006/.

5   See http://longisland.news12.com/story/41926769/anheuserbusch-to-make-hand-sanitizer-in-response-to-coronavirus-pandemic.

6   See Id.

7  https://www.gilead.com/purpose/advancing-global-health/covid-19/emergency-access-to-remdesivir-outside-of-clinical-trials.

8   See https://www.ibtimes.com/coronavirus-treatment-gileads-potential-covid-19-treatment-labeled-orphan-drug-could-2945353.

9   See https://time.com/5782633/covid-19-drug-remdesivir-china/.

10 Orphan Drug Act of 1983. Pub L. No. 97–414, 96 Stat. 2049.

11 See https://www.statnews.com/2020/03/16/remdesivir-surges-ahead-against-coronavirus/.

12 See https://www.theverge.com/2020/3/18/21185006/softbank-theranos-coronavirus-covid-lawsuit-patent-testing; see also, https://www.businessinsider.com/theranos-patents-fortress-labrador-diagnostics-lawsuit-biofire-coronavirus-tests-2020-3.

13 See Id.

14 See https://www.businesswire.com/news/home/20200316005955/en/.

15 See https://www.law360.com/articles/1255547/3d-printing-as-indirect-patent-infringement-amid-covid-19.

16 See https://www.theverge.com/2020/3/17/21184308/coronavirus-italy-medical-3d-print-valves-treatments.

17 See Convention of Paris for the Protection of Industrial Property, 13 I.S.T. 25 (1962), Art. 5(A)(2) (“Paris Convention”); See Agreement on Trade-Related Aspects of Intellectual Property Rights, April 15, 1994, Art. 31. (“TRIPS Agreement”).

18 See 35 U.S.C. § 203.

19 See https://crsreports.congress.gov/product/pdf/LSB/LSB10422.

© Copyright 2020 Cadwalader, Wickersham & Taft LLP

NJDOBI Mandates Insurance Carriers to Reimburse Providers for Telemedicine and Telehealth Encounters During State of Emergency and Public Health Emergency

NJDOBI issued Bulletin 20-07 to mandate insurance carriers to reimburse providers for telemedicine and telehealth encounters.  This applies to: (1) all health insurance companies; all HMOs; all health service corporations and any other entity issuing health benefits plans in New Jersey.

The mandate requires the insurance carriers to do the following:

  1. Review their telemedicine and telehealth networks for adequacy and grant any requested in-plan exception for individuals to access out of health telehealth providers if network providers are unavailable.
  2. Encourage their network providers to utilize telemedicine or telehealth services wherever possible and clinically appropriate in order to minimize exposure of provider staff and other patients to those who may have the COVID-19 virus
  3. Update their policies to include reimbursement for telehealth services that are provided by a provider in any manner that is practicable, including, if appropriate, and clinically appropriate, by telephone.   The Bulletin suggests that this be done on the carrier’s website.  This would include instruction on the use of telephone-only communications to establish a physician-patient relationship and the expanded use of telehealth for the diagnosis, treatment, ordering of tests, and prescribing for all conditions. Carriers are required to update telehealth policies to include telephone only services within the definition of telehealth.
  4. Reimburse providers that deliver covered services to members via telemedicine or telehealth. Carriers may establish requirements for such telemedicine and/or telehealth services, and guidance issued by the Department, including documentation and recordkeeping, but such requirements may not be more restrictive than those for in-person services. Carriers are not permitted to impose any specific requirements on the technologies used to deliver telemedicine and/or telehealth services (including any limitations on audio-only or live video technologies) during the state of emergency and public health emergency declared pursuant to EO 103.
  5. Ensure that the rates of payment to in-network providers for services delivered via telemedicine or telehealth are not lower than the rates of payment established by the carrier for services delivered via traditional (i.e., in-person) methods, and carriers must notify providers of any instructions that are necessary to facilitate billing for such telehealth services.
  6. May not impose any restriction on the reimbursement for telehealth or telemedicine that requires that the provider who is delivering the services be licensed in a particular state, so long as the provider is in compliance with P.L. 2020, c.3 and c.4 and this guidance.
  7. May not impose prior authorization requirements on medically-necessary treatment that is delivered via telemedicine or telehealth.

See the entire text of Bulletin 20-07.

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

CMS/HHS Issues FAQs on Essential Health Benefits and COVID-19

As the President issues a state of emergency in response to the Coronavirus (COVID-19) outbreak, the Centers for Medicare & Medicaid Services, U.S. Department of Health and Human Services, issued frequently asked questions (FAQs) on COVID – 19 and essential health benefits (EHB) coverage through the individual and small group insurance markets.

These FAQs state first that EHB generally include coverage for the diagnosis and treatment of COVID-19. However, the exact coverage details and cost-sharing will depend upon the individual’s plan, and some plans may require preauthorization before these services are covered. Under current regulations, each state and the District of Columbia generally determines the EHB that plans in their locality must cover. Moreover, many states are encouraging, and some are requiring, insurance carriers to cover a variety of COVID-19 services, including testing and treatment, without cost-sharing or preauthorization.

The FAQs went on to say that medically necessary isolation and quarantine required by and under the supervision of a medical provider during hospital admission is generally covered as EHB. However, quarantine outside of a hospital setting, such as a home, is not a medical benefit, nor is it required as EHB.

Finally, the FAQs addressed the possibility of a future COVID-19 vaccine. Although not yet available, all vaccines are analyzed by the Advisory Committee on Immunization Practice of the Centers for Disease Control and Prevention, who will recommend whether the vaccine should be included as EHB without cost sharing and before any applicable deductible. Current guidance indicates that the process of evaluation and final implementation as an EHB can take over a year, but plans may voluntarily choose to cover a vaccine before that time. The FAQs also note that participants may use the plan’s drug exemptions process to request the vaccine be covered.

© 2007-2020 Hill Ward Henderson, All Rights Reserved

Options for Employers When Employees Cannot Work From Home

Despite many politicians and employers discussing the option for employees to work at home, there are millions of employees who simply cannot do that. Bartenders, restaurant servers, cashiers, and many others have no one to serve and nothing to ring up when they work at home.

Employers of such employees accordingly have a difficult decision to make when business is at an all-time low or they have been shut down. Most cannot afford to pay employees during this time period and hope employees will qualify for unemployment benefits. The question for these employers thus becomes–to fire, or not to fire.

This is where a work furlough comes into play. A work furlough is essentially a temporary layoff that qualifies for unemployment benefits.

Furloughs rose in popularity some years ago when businesses had to cut costs. Most employers knew employees who worked from paycheck to paycheck would suffer a financial hardship if the employees lost their jobs. Employers did not want to terminate employment. These employers wanted to minimize the negative impact, psychologically and monetarily, a termination brings, and the hard feelings an employee may carry following termination. Employers wanted employees who were already-trained to return to work at the end of a furlough, rather than having to start the hiring process from scratch.

Work furloughs generally have a set beginning and end date, similar to the 15-day shut-down ordered in many cities. The employer does not pay the employee during the furlough. Employees, however, generally qualify for unemployment compensation benefits.

Employers who want to maintain better relations should tell their employees to apply for unemployment benefits on the first day of the furlough. This ensures the employees will receive the maximum compensation possible. Even an employee who uses vacation time or personal time may qualify for unemployment benefits.

Usually there is a one week waiting period before an employee is eligible to receive any unemployment benefits. Many states have benevolently waived this one week waiting period for job losses suffered due to the pandemic. In these states, employees will receive benefits beginning “day 1.” The employee will receive compensation during the second week and any later weeks during which the employee is not working.

Any employee who files after the first week of the furlough must use the second furlough week as the waiting period. The employee, therefore, loses a week of unemployment compensation.

Even if the furlough period is only one week in length, employees should file for benefits. This helps the employee if the employer is forced to extend a furlough or put employees on furlough again later that same year. The one-week waiting period only applies to the first week when the employee did not work during the first furlough. The employee does not have to wait yet another week to receive benefits (compensation) during any furloughs that take place within 12 months of the first furlough.

While furloughs are an excellent option for employers to consider, any employer considering termination or a furlough must carefully consider all state and local laws; the state emergency declarations and laws issued, given the pandemic; and federal law, including any relief package or whether the number of employees furloughed triggers obligations under WARN.

© Polsinelli PC, Polsinelli LLP in California

For more on the COVID-19 outbreak, see the National Law Review dedicated Coronavirus News section.