Category: Health Care Law

Leading the News

Senate HELP Updates Track-and-Trace, Compounding Proposals

On July 24^th, the Senate Health, Education, Labor, and Pensions (HELP) Committee released updates to its drug compounding and track and trace legislation. Committee Chairman Tom Harkin (D-IA) and Ranking Member Lamar Alexander (R-TN) say they hope the Senate will pass the measure by unanimous consent in the near future. On July 25^th, the Congressional Budget Office (CBO)indicated the bill would have virtually no impact on the federal budget.

House Energy and Commerce Subcommittee Advances SGR Bill

On July 24^th, the House Energy and Commerce Subcommittee on Health passed by voice vote a bill to repeal the sustainable growth rate (SGR) Medicare physician payment method. The bill now moves to the full committee, which will consider a repeal of the SGR on July 31^st. Rep. Michael Burgess (R-TX) suggested the committee will support the bill, but he said the legislation could become part of larger budget negotiations near the end of 2013.

Implementation of the Affordable Care Act

On July 22^nd, Republicans on the House Ways and Means Committee sent a letter to Treasury Secretary Lew requesting information regarding a delay of the ACA employer mandate. The letter criticizes testimony provided by Treasury official Mark Iwry in previous committee hearings, stating he failed to provide sufficient information.

On July 22^nd, House and Senate Republicans sent a letter to HHS Secretary Sebelius that urges a release of information regarding health insurance premiums in 34 states taking part in the ACA federal and federal-state partnership exchanges.

On July 23^rd, while speaking with members of the National Council of La Raza, First Lady Michelle Obama urged supporters to go out and inform their families and friends about the facts regarding the implementation of the ACA.

On July 23^rd, the Government Accountability Office (GAO) issued a report on pre-ACA base insurance premium rates. The report was requested by Senator Orrin Hatch (R-UT).

On July 24^th, Rep. Diane Black (R-TN) introduced H.R. 2775, a bill to prohibit ACA subsidies from being provided to Americans until a system is in place to verify the financial standing of individuals applying for subsidies.

On July 24^th, the American Medical Association (AMA) and the American Hospital Association (AHA) called on HHS to delay Stage Two requirements relating to the development of meaningful use of electronic health records (EHRs). The AMA and AHA suggest Stage Two should be delayed by one year to provide flexibility to small and rural providers.

On July 25^th, during a Senate Small Business Committee hearing on the implementation of the ACA, Senator Mary Landrieu (D-LA)said she understands some business owners are harmed by coverage mandates of the law. Senator Landrieu said she is open to exploring ACA changes that will avoid harming business owners.

On July 25^th, Speaker of the House John Boehner (R-OH) said no decision has been made on if Republicans will use a continuing resolution to block additional funding for ACA implementation and enforcement.

On July 26^th, CMS announced a moratorium on enrollment of home health agencies in Miami and Chicago and a temporary halt on ambulance suppliers in Houston.

On July 26^th, Maryland released premium rates for individual health insurance to be sold on the state’s ACA exchange. Nine carriers will offer plans through the exchange.

Other HHS and Federal Regulatory Initiatives

On July 22^nd, the Food and Drug Administration (FDA) provided Teva Pharmaceuticals exclusive rights until 2016 to sell its Plan B One-Step emergency contraception over the counter and without age restrictions.

On July 22^nd, CMS announced the suspension of the National Average Retail Prices (NARP) survey, which provided pricing information on over 4,000 common drugs.

On July 23^rd, the U.S. District Court of Appeals for D.C. ruled that the HHS Secretary is able to delegate his or her authority to outside contractors.

On July 23^rd, HHS issued a final rule that orders discounts for orphan drugs, which are often used to treat rare conditions, to apply when used to treat non-orphan conditions.

On July 26^th, the FDA released two proposed rules to regulate the safety of imported food. The first rule is available here, and the second rule can be found here.

Other Congressional and State Initiatives

On July 24^th, the House Appropriations Labor-HHS Subcommittee delayed a markup of the FY 2014 appropriations bill that was scheduled for July 25^th. A spokesperson for the full committee indicated scheduling conflicts resulted in the delay.

On July 25^th, the CBO wrote a letter noting the Senate’s immigration bill, S. 744, will reduce deficits largely because of cash flows related to Social Security and Medicare Part A.

Other Health Care News

On July 24^th the Institute of Medicine (IOM) published a report on the variation in health care spending among Medicare beneficiaries.

Hearings and Mark-Ups Scheduled

Senate

On July 30^th, the Senate Budget Committee will conduct a hearing to examine containing health care costs.

On July 31^st, the Senate Environment and Public Works Committee will conduct a hearing to examine toxic chemical threats and public health protections.

House of Representatives

On July 30^th, the House Energy and Commerce Committee will conduct a markup of legislation to reform the sustainable growth rate (SGR) Medicare physician payment method. The markup is scheduled to continue on July 31^st.

On July 31^st, the House Ways and Means Health Subcommittee will hold a hearing to analyze the Obama administration’s authority to offer tax credits through the ACA exchanges.

On July 31^st, the House Science Research and Technology Subcommittee will hold a hearing on the frontiers of human brain research.

On August 1^st, the House Ways and Means Committee will hold a hearing to analyze the implementation of the ACA.

On August 1^st, the House Energy and Commerce Committee will hold hearing to understand the latest issues relating to the implementation of the ACA. 

David Shirbroun also contributed to this update.

Recently, HRSA publicly announced the issuance of a final rule clarifying when 340B covered entities can purchase and distribute orphan drugs through the 340B Drug Pricing Program.  Separately, HRSA quietly posted a report on its completed audits of 340B covered entities through July 12, 2013.  While the new rule does shed light on when 340B entities can purchase orphan drugs at 340B discounted prices, the new audit report keeps 340B entities in the dark on HRSA enforcement of established regulatory violations.

Orphan Drugs

The Orphan Drug Act specifies that drugs used to treat a specific rare condition or disease, such as ALS or Huntington’s disease, qualify as orphan drugs, and provides incentives for manufacturers of such drugs.  The FDA designates which drugs qualify as orphan drugs.

The Affordable Care Act excludes orphan drugs from 340B pricing, but does not provide specifics on the breadth of the exclusion.  The new 340B rule, which will go into effect October 1, 2013, specifies that the orphan drug exclusion only applies to three types of qualified 340B covered entities:

• Free standing cancer hospitals
• Critical access hospitals, and
• Rural referral and sole community hospitals.

Other types of covered entities can still purchase orphan drugs at 340B prices, as long as the entity is in compliance with other conditions of the 340B program.

Under the final rule, the orphan drug exception is only applicable to the three types of entities if the drug at issue is designated as orphan by the FDA and is being transferred, prescribed or sold for the rare condition or disease for which it was designated as orphan by the FDA.  So, for example, if drug X is designated as orphan for treatment of ALS, but is also FDA-approved to treat anorexia, it may be purchased at 340B discounts to dispense to anorexia patients.

A word of warning – providers can potentially qualify as a 340B covered entity under more than one of the eligibility classifications.  Going forward, HRSA will require that each covered entity designate itself as a single type of covered entity and abide by all governing regulations specific to that type of entity.   Providers will want to consider the applicability of the orphan drug exception when deciding which type of entity they will be for 340B purposes.

Audit Update

HRSA did not announce that it posted a report on completed FFY 2012 program audits through July 12, 2013.  While there is some interesting information in the report, the report is more striking for what it doesn’t say.

The report reflects:

• HRSA completed a total of 34 FFY 2012 audits.
• HRSA conducted audits of 340B covered entities in 20 different states:  5 audits in Texas, 3 in Georgia and Illinois, and 2 in California, Florida, Kentucky, Washington and Wisconsin, and multiple states had only 1 reported audit.
• Half of the audits had no adverse findings and half had 1 or more adverse findings.
• The most common adverse finding was dispensing drugs to ineligible patients, this included situations involving ineligible sites and or use of ineligible providers.
• The second most common finding was a violation of the duplicate discount prohibition through Medicaid billings.
• The third most common adverse finding was inaccurate record entries, involving incorrect addresses, listing of closed facilities, or use of an unlisted contract pharmacy.

The report does not reflect the total number of entities audited during FFY 2012 or how many audits are yet to be completed.

In several audits where the only listed violation involved an incorrect record regarding a site or contact, no sanction was imposed and corrective action was either limited to correction of the database or is pending.  But where the inaccurate record included use of an unlisted contract pharmacy, or where there were other findings regarding ineligible patients or duplicate discounts, sanctions are reported as “to be determined” and corrective action remains “pending.”

So we know HRSA is actively auditing 340B entities and the activities it finds problematic, but we still don’t know what they are going do about those activities.

Through the first half of this year, the Centers for Medicare & Medicaid Services auditor has conducted numerous pre- and post-payment audits of meaningful use attestations submitted by eligible providers to the Medicare Electronic Health Record Incentive Program.  This newsletter provides an overview of pre- and post-payment audit activity as well as recommendations for how Eligible Providers should prepare themselves for audits.

Through the first half of this year, Figliozzi & Company (Figliozzi), the audit contractor for the Medicare Electronic Health Record (EHR) Incentive Program (EHR Incentive Program), has conducted numerous pre-payment and post-payment audits of meaningful use attestations submitted by eligible professionals, eligible hospitals and critical access hospitals (collectively, Eligible Providers).  This experience navigating pre-payment and post-payment audits has generated several recommendations that Eligible Providers should consider, whether or not they are under audit.

The following sections of this On the Subject provide an overview of Medicare EHR Incentive Program pre- and post-payment audit activity, an overview of the more recently implemented pre-payment audit program and recommendations for how Eligible Providers should prepare themselves for audits.

Overview of Incentive Program Audit Activity

The Centers for Medicare & Medicaid Services’ (CMS) EHR Incentive Program regulations authorize CMS to review an Eligible Provider’s meaningful use attestation to determine whether the Eligible Provider has met the requirements for an incentive payment.  Since its inception, CMS has incorporated automatic pre-payment edit checks into the EHR Incentive Program attestation and payment systems.  According to a February 2013 publication from CMS titled “EHR Incentive Programs Supporting Documentation for Audits” (CMS Audit Publication), CMS uses such pre-payment edit checks “to detect inaccuracies in eligibility, reporting and payment.”  Beginning with attestations submitted in January 2013, CMS also conducts pre-payment audits, which are “random and may target suspicious or anomalous data.”

In addition to pre-payment edit checks and audits, CMS also conducts post-payment audits, amounting to approximately 5 percent to 10 percent of Eligible Providers receiving incentive payments.  Eligible Providers selected for post-payment audits must present supporting documentation to validate their submitted attestation data, and CMS will withhold payment of the incentive payment for the Eligible Provider’s subsequent EHR incentive payment year until the audit is resolved.

Pre-Payment Audit Program

Implementation of pre-payment audits was widely anticipated in response to criticism from the Department of Health and Human Services Office of Inspector General (OIG).  In November 2012, the OIG released a report titled “Early Assessment Finds That CMS Faces Obstacles in Overseeing the Medicare EHR Incentive Program” (OIG Report).    The OIG Report noted that “CMS does not verify the accuracy of professionals’ or hospitals’ self-reported meaningful use information prior to payment.”

In recommending pre-payment audits, the OIG Report states that “[a]lthough CMS is not required to verify the accuracy of this information prior to payment, doing so would strengthen its oversight of the anticipated $6.6 billion in incentive payments.  Verifying self-reported information prior to payment could also reduce the need to identify and recover erroneous payments after they are made.”

CMS initially resisted the implementation of pre-payment audits in an October 2012 letter from CMS Acting Administrator Marilyn Tavenner to the OIG, speculating that implementation of pre-payment audits could significantly delay payments to Eligible Providers and, further, that requesting additional documentation from Eligible Providers would also impose an increased upfront burden.

Notwithstanding the initial resistance, CMS began conducting pre-payment audits for attestations submitted in 2013.  Figliozzi, which was previously appointed as a CMS contractor for purposes of conducting post-payment audits, conducts pre-payment audits on behalf of CMS.

As with the post-payment audits, CMS intends to conduct pre-payment audits of approximately 5 percent to 10 percent of Eligible Providers submitting attestations for meaningful use; according to the CMS Audit Publication, some Eligible Providers will be selected at random, while others will be audited based on submission of “suspicious or anomalous data.”  Given the unrelated process for selecting Eligible Providers for pre- and post-payment audits, it is possible that CMS may audit up to 20 percent of Eligible Providers submitting attestations for meaningful use in a given year.

Eligible Providers selected for pre-payment audits must present supporting documentation to validate data submitted during attestation before CMS will release their incentive payments.  The CMS regulations for the Medicare and Medicaid Program provide that Eligible Providers must keep documentation supporting their demonstration of meaningful use for six years.

Pre-Payment Audit Preparation Best Practices

Based on Eligible Providers’ experience with the pre-payment and post-payment audits, we recommend the following practices to improve the chance of a successful audit:

• Understand Core and Menu Set Measures.  An Eligible Provider should review and be familiar with the specification sheets and frequently asked questions (FAQs) for the core and menu set meaningful use measures published by CMS on the EHR Incentive Program website.  The specification sheets and FAQs resolve many ambiguities created by the measures themselves and the auditors rely upon them as interpretive guidance to the measures.
• Use Multi-Disciplinary Teams.  Eligible Providers should utilize a multi-disciplinary team of information technology and clinical personnel for the implementation and management of their EHR systems and meaningful use requirements to ensure the system is properly configured for measures (such as the drug-drug and drug-allergy interaction checks measure) that simply require functionality to be activated during the Eligible Provider’s meaningful use reporting period.
• Documenting Measure Compliance.  Eligible Providers should retain documentation for each of the measures.  Such documentation may include: dated screen captures that demonstrate the Eligible Provider met the measure during the reporting period or otherwise by the applicable deadline, security risk assessment reports or an e-mail from an immunization registry confirming receipt.
• Security Assessment. If an Eligible Provider relies upon a vendor hosting its EHR to conduct the security risk analysis required for the protection of electronic health information meaningful use measure, then the Eligible Provider should request a letter from the vendor stating the timing of the vendor’s assessment in order to demonstrate that the security assessment was completed before the end of the Eligible Provider’s meaningful use reporting period.
• Certification of EHR System.  Eligible Providers should be prepared to provide documentation that they have implemented the version of a vendor’s EHR that has been certified as supporting meaningful use by the Office of the National Coordinator for Health Information Technology rather than an earlier uncertified version.  Eligible Providers using an EHR system that is provided on a “software-as-a-service” (SaaS) basis or otherwise from a cloud environment should be prepared for the auditor to request verification regarding the version number of the EHR system in use during the applicable reporting period.  Eligible Providers must obtain such verification from their EHR vendor and, as such, should maintain a relationship with an appropriate contact person at the vendor.  Eligible Providers should also monitor upgrades and version changes pushed by EHR vendors to ensure any upgrade does not affect the certified status of the EHR technology.  A significant change to an EHR system may require the vendor to seek re-certification of the system.

Effective August 26, 2013, the Centers for Medicare & Medicaid Services require that a long-term care, or LTC, facility that chooses to arrange for the provision of hospice services through a Medicare-certified hospice must have a signed agreement with the hospice delineating the services that will be provided by each.

New Condition of Participation Requirement for Long-Term Care Facilities

The Centers for Medicare & Medicaid Services (CMS) has added a new Condition of Participation (CoP) that requires that long-term care (LTC) facilities (that is, Medicare-certified skilled nursing and Medicaid-certified nursing facilities) that choose to arrange for the provision of hospice services through a Medicare-certified hospice must have in place a written agreement delineating the respective roles and responsibilities of each.  The CoP requires that the agreement, signed by an authorized official of the LTC facility and the hospice, must be in place before any hospice services can be provided through the arrangement by the hospice.  The new CoP requirement is effective August 26, 2013.

In its description of the requirement, published in the June 27, 2013, Federal Register, CMS explains that where LTC facilities and hospices provide many of the same services to residents who have elected the hospice benefit, the purpose of the agreement is to ensure that duplicative or conflicting services are not provided to the resident as part of the hospice benefit, and that there will be no missing hospice services.  CMS believes that the written clarification of the responsibilities of the LTC facility and the hospice will increase coordination of care for patients as well as foster communication between the two providers assisting patients and their families.  CMS also believes that the clear division of responsibilities and increased communication required by this new rule will help address the duplication of services criticized by the Office of Inspector General in a July 2011 report, and address situations where neither the LTC facility nor the hospice are providing a needed hospice service.

Options and New Requirement

An LTC facility has two options under the newly added CoP: it may arrange for the provision of hospice services through a written agreement with a Medicare-certified hospice specifying the services to be provided by the LTC facility and the hospice, or it may assist the resident in transferring to a facility that will arrange for the provision of hospice services when a resident requests a transfer.

If the hospice care is furnished in an LTC facility through an agreement with a Medicare-certified hospice, the agreement must ensure, among other things, that the hospice services meet professional standards and principles that apply to individuals providing services in the facility and to the timeliness of the services.  The regulations prescribe what must be addressed in the agreement.  For example, the agreement would specify that it is the LTC facility’s responsibility to furnish 24-hour room and board care, meet the resident’s personal care and nursing needs in coordination with the hospice representative, and ensure that the level of care provided is appropriately based on the resident’s needs.  The hospice’s responsibilities are delineated to include providing medical direction and management of the patient, nursing, counseling (including spiritual, dietary and bereavement), social work and medical supplies and drugs necessary for palliative care associated with the terminal illness.  The final regulation and CMS’ commentary published in the Federal Register provide considerable guidance to providers in developing new agreements, or amending existing agreements with hospices, to address the new requirement.

LTC facilities choosing to provide hospice services through arrangements with hospices without the required written agreement can face sanctions for their failure to meet the requirement of this new CoP.  While one commenter suggested extending the deadline for implementation of the rule to allow hospices and LTC facilities more time to develop agreements, CMS believes that the August 26, 2013, effective date is an adequate timeframe.

Leading the News

CMS Releases Guidance on State Alternative Applications for Health Coverage

On June 18^th, the Centers for Medicare and Medicaid Services (CMS) released guidance on state alternative applications for health coverage through the ACA that will determine eligibility for enrollment in Qualified Health Plans (QHPs). In alternative applications, states must:

• Request information necessary for determining eligibility for coverage in a QHP.
• Minimize the burden on the applying household.
• Rely primarily on electronic information, and only request paper documentation when necessary.

Supreme Court Rules Generic Drugmakers Not Liable for Defects

On June 24^th, the Supreme Court issued a 5-4 ruling that generic drugmakers cannot be held liable for defective products as the drugs and warning labels must be exactly the same as brand name products. The case, Mutual Pharmaceutical Co. v. Bartlett, posited that even though generic companies cannot make changes to the label, they do have the discretion to pull the drug from the market. The majority, led by Justice Alito, found that federal generic law preempts state “failure to warn” law in this case. In two dissenting opinions, justices argued that the responsibility to remove the drug from the market was valid and that Congress’ intent was to preserve a role for state law in drug regulation.

Implementation of the Affordable Care Act

On June 14^th, the Jobs and Premium Protection Act (H.R. 763), which would repeal a tax on health insurance plans, gained the 218 cosponsors necessary to pass the House.

On June 17^th, Rep. Mark Meadows (R-NC) introduced legislation to delay implementation of the ACA until all activity by the IRS since the beginning of 2010 is audited.

On June 17^th, the House Oversight and Government Reform Committee subpoenaed HHS for information on the CO-OP program of the ACA.

On June 17^th, the five Democratic members of Pennsylvania’s House delegation wrote to Governor Tom Corbett (R) to urge him to expand Medicaid in the state.

On June 17^th, Senators Claire McCaskill (D-MO) and Tom Coburn (R-OK) sent a letter to colleagues urging a repeal of an ACA provision that they say creates a disparity in the Medicare hospital wage index system.

On June 18^th, Enroll America launched its “Get Covered America” campaign to provide uninsured individuals with more information about the ACA enrollment process.

On June 19^th, Senators Susan Collins (R-ME) and Joe Donnelly (D-IN) introduced legislation to extend the definition of a full-time worker under the ACA from 30 hours to 40 hours.

On June 19^th, Republicans on the Senate HELP Committee sent a letter to FDA Commissioner Margaret Hamburg with questions on why the agency is able to promote the ACA.

On June 20^th, the Obama administration issued a state-by-state list of rebates that consumers will receive from insurers across the country that failed to meet ACA efficiency rules.

On June 20^th, a 95-52 vote in the Maine House of Representatives fell three votes short of overriding Gov. Paul LePage’s (R) veto of Medicaid expansion.

On June 21^st, four hospital organizations sent a letter to members of Congress urging for a delay to reductions to the Medicare and Medicaid Disproportionate Share Hospital (DSH) program.

Other HHS and Federal Regulatory Initiatives

On June 18^th, CMS issued a bulletin for state Medicaid agencies on when funding is available for certain administrative costs related to the activities of a state Long-Term Care Ombudsman.

Other Congressional and State Initiatives

On June 17th, former CMS administrator Don Berwick announced he will run to be governor of Massachusetts.

On June 17^th, the Senate unanimously passed a bill to end the ban on organ donations between people who are HIV positive.

On June 18^th, the Congressional Budget Office (CBO) projected that immigration legislation currently under consideration in the Senate would result in an additional $110 billion in health care spending over 10 years.

On June 18^th, the House passed a bill that would ban most abortions after 20 weeks. The legislation is expected to die in the Senate, and the White House has threatened to veto.

On June 19^th, bipartisan legislation introduced in the Senate and House would allow Medicare to cover prescription drugs for chronic weight management.

On June 19^th, a study published in the Journal of Infectious Diseases indicated that the human papillomavirus vaccine reduced the prevalence of HPV among teen girls by more than half.

On June 20^th, Senate Majority Leader Harry Reid (D-NV) said sequester cuts to the NIH must be eliminated. He said an inconsistency of funds at NIH is discouraging organizations from applying for grants and pursuing vital research.

On June 20^th, the House Ways and Means Health Subcommittee held a hearing on the 2013 Medicare Trustees Report.

Other Health Care News

On June 17^th, Susan G. Komen issued a press release that Executive Director of the IOM Judith Salerno will serve as the organization’s new CEO.

On June 18^th, former HHS Secretary Tommy Thompson announced the formation of the Working Group on Pharmaceutical Safety, an organization focused on compounding reform.

Hearings and Mark-Ups Scheduled

Senate

On June 24^th, the Senate Homeland Security and Governmental Affairs Committee will hold a hearingtitles “Curbing Prescription Drug Abuse in Medicare.”

On June 26^th, the Senate Finance Committee will hold a hearing to examine health care quality.

On June 26^th, the Senate Committee on Aging will conduct a hearing on respecting patients’ wishes and advanced care planning.

House of Representatives

On June 26^th, the House Energy and Commerce Subcommittee on Oversight and Investigations will hold a hearing titled “Challenges Facing America’s Businesses Under the Patient Protection and Affordable Care Act.”

On June 26^th, the House Energy and Commerce Subcommittee on Health will hold a hearing titled “A 21st Century Medicare: Bipartisan Proposals to Redesign the Program’s Outdated Benefit Structure.”

On June 27^th, the House Veterans’ Affairs Committee will hold a hearing to assess the VA’s capital investment options to provide veterans’ care.

On June 27^th, the House Committee on Education and the Workforce will conduct a hearing to address school lunch regulations and the consequences for schools and students.

On June 27^th, the House Small Business Committee will hold a hearing on mobile medical app entrepreneurs.

On June 28^th, the House Energy and Commerce Subcommittee on Health will hold a hearing titled “Examining Reforms to Improve the Medicare Part B Drug Program for Seniors.”

David Shirbroun also contributed to this update.