Category: Health Care Law

2024: The Year of the Telehealth Cliff

What does December 31, 2024, mean to you? New Year’s Eve? Post-2024 election? Too far away to know?

Our answer: December 31, 2024, is when we will go over a “telehealth cliff” if Congress fails to act before that date, directly impacting care and access for Medicare beneficiaries. What is this telehealth cliff? Let’s back up a bit.

TELEHEALTH COVERAGE POLICIES

Current statute (1834(m) of the Social Security Act) lays out payment and coverage policies for Medicare telehealth services. As written, the provisions significantly limit Medicare providers’—and therefore patients’—ability to utilize telehealth services. Some examples:

  • If the patient is in their home when the telehealth service is being provided, telehealth is generally not eligible for reimbursement.
  • Providers cannot bill for telehealth services provided via audio-only communication.
  • There is a narrow list of providers who are eligible to seek reimbursement for telehealth services.

COVID-19-RELATED TELEHEALTH FLEXIBILITIES

When the COVID-19 pandemic hit in 2020, a public health emergency (PHE) was declared. Congress passed several laws, and the administration acted through its own authorities to provide flexibilities around these Medicare telehealth restrictions. In general, nearly all statutory limitations on telehealth were lifted during the PHE. As we all know, utilization of telehealth skyrocketed.

The PHE ended last year, and through subsequent congressional efforts and regulatory actions by the Centers for Medicare and Medicaid Services (CMS), many flexibilities were extended beyond the end of the PHE, through December 31, 2024. Congress and CMS continue to grapple with how to support the provision of Medicare telehealth services for the future.

CMS has taken steps through the annual payment rule, the Medicare Physician Fee Schedule (MPFS), to align many of the payment and coverage policies for which it has regulatory authority with congressional deadlines. CMS has also restructured its telehealth list, giving more clarity to stakeholders and Congress as to which pandemic-era telehealth services could continue if an extension is passed. But CMS can’t address the statutory limitations on its own. Congress must legislate. CMS highlighted this in the final calendar year (CY) 2024 MPFS rule released on November 2, 2023, noting that “while the CAA, 2023, does extend certain COVID-19 PHE flexibilities, including allowing the beneficiary’s home to serve as an originating site, such flexibilities are only extended through the end of CY 2024.”

THE TELEHEALTH CLIFF

This brings us to the telehealth cliff. CMS generally releases the annual MPFS proposed rule in July, with the final rule coming on or around November 1. If history is any indication, Congress is not likely to act on the extensions much before the current December 31 deadline. This sets up the potential for a high level of uncertainty headed into 2025.

If we go over, this telehealth cliff would directly impact care and access for Medicare beneficiaries. The effects could be felt acutely in rural and underserved areas, where patients have been able to access, via telehealth, medical services that may have been out of reach for them in the past. The telehealth cliff would also impact how providers interact with their patients, and their collective ability to continue to utilize telehealth in a way that has benefited patients and providers alike. It could also influence how health plans choose to cover these services in the private marketplace beyond 2024. Such a dramatic change would impact business decisions for many providers and practices heading into 2025. And, at a time when provider shortages are still a significant issue, it would eliminate an option that has allowed many providers, practices and facilities to extend scarce resources for patient care.

TAKE ACTION

Stakeholders should be raising these concerns to Congress now. There are many ways to engage, including reaching out directly to key Members of Congress, looking for opportunities to testify or submit written testimony for relevant congressional hearings, and participating in organized events where Members of Congress will be present. This cliff can be avoided, but not without a concentrated effort and a lot of noise.

© 2024 McDermott Will & Emery
For more on Telehealth, visit the NLR Communications, Media & Internet section.

Out with the Old? Not So Fast! A Quick Review of 2023 Highlights

2023 has brought many updates and changes to the legal landscape. Our blog posts have covered many of them, but you may not remember (or care to remember) them. Before moving on to 2024, let’s take a moment to review our top five blog posts from the year and the key takeaways from each.

VAX REQUIREMENT SACKED IN TN: MEDICARE PROVIDERS LOSE EXEMPTION FROM COVID-19 LAWS

Our most read blog of 2023 covered the federal COVID-19 vaccination requirement that applied to certain healthcare employers, which was lifted effective August 4, 2023. (Yes, in 2023 we were still talking about COVID-19). However, keep in mind that state laws may still apply. For example, Tennessee law generally prohibits employers from requiring employee vaccination, with an exception for entities subject to valid and enforceable Medicare or Medicaid requirements to the contrary (such as the federal vaccine requirement). However, now that the federal vaccine requirement is gone, there is no exception for these Medicare or Medicaid providers, and they are likely fully subject to Tennessee’s prohibition.

INTERPRETATION OF AN INTERPRETER REQUEST? 11TH CIRCUIT WEIGHS IN ON ACCOMMODATION OF DEAF EMPLOYEE

In this blog post, we covered a recent Eleventh Circuit case in which the court addressed ADA reasonable accommodation requests . The employee requested an accommodation, and the employer did not grant it—but the employee continued to work. Did the employee have a “failure to accommodate” claim? The Eleventh Circuit said yes, potentially. The court clarified that an employee still must suffer some harm—here, he needed to show that the failure to accommodate adversely impacted his hiring, firing, compensation, training, or other terms, conditions, and privileges of his employment. So, when you are considering an employee’s accommodation request, think about whether not granting it (or not providing any accommodation) could negatively impact the employee’s compensation, safety, training, or other aspects of the job. Always remember to engage in the interactive process with the employee to see if you can land on an agreeable accommodation.

POSTER ROLLERCOASTER: DOL CHANGES FLSA NOTICE REQUIRED AT WORKPLACES

If your business is subject to the FLSA (and almost everyone is), you probably know that you must provide an FLSA poster in your workplace. In this blog post, we reported that there is an updated FLSA “Employee Rights” poster that includes a “PUMP AT WORK” section, required under the Provide Urgent Material Protections (PUMP) for Nursing Mothers Act (more information on the PUMP Act here).

HOLIDAY ROAD! DOL WEIGHS IN ON TRACKING FMLA TIME AGAINST HOLIDAYS

In this now-timely blog post from June 2023, we discussed new guidance on tracking FMLA time during holidays. The DOL released Opinion Letter FMLA2023-2-A: Whether Holidays Count Against an Employee’s FMLA Leave Entitlement and Determination of the Amount of Leave. When employees take FMLA leave intermittently (e.g., an hour at a time, a reduced work schedule, etc.), their 12-week FMLA leave entitlement is reduced in proportion to the employee’s actual workweek. For example, if an employee who works 40 hours per week takes 8 hours of FMLA leave in a week, the employee has used one-fifth of a week of FMLA leave. However, if the same employee takes off 8 hours during a week that includes a holiday (and is therefore a 32-hour week), has the employee used one-fourth of a week of FMLA leave? Not surprisingly, the DOL said no. The one day off is still only one-fifth of a regular week. So, the employee has still only used one-fifth of a week of FMLA leave. Review the blog post for options to instead track leave by the hour, which could make things easier.

OT ON THE QT? BAMA’S TAX EXEMPTION FOR OVERTIME

Alabama interestingly passed a law, effective January 1, 2024, that exempts employees’ overtime pay from the 5% Alabama income tax. In this blog post, we discussed the new exemption. It is an effort to incentivize hourly employees to work overtime, especially in light of recent staffing shortages and shift coverage issues. The bill currently places no cap on how much overtime pay is eligible for the exemption, but it allows the Legislature to extend and/or revise the exemption during the Spring 2025 regular session. If you have employees in Alabama, be sure to contact your payroll department or vendor to ensure compliance with this exemption.

As always, consult your legal counsel with any questions about these topics or other legal issues. See you in 2024!

© 2023 Bradley Arant Boult Cummings LLP
For more news on 2023 Legal Landscape Updates, visit the NLR Labor & Employment section.

10 Market Predictions for 2024 from a Healthcare Lawyer

As a healthcare lawyer, 2023 was a pretty unusual year with the sudden entrance of a number of new players into the healthcare marketplace and a rapid retrenchment of others. With innovation showing no signs of slowing down in the year ahead, healthcare providers should consider how to adapt to improve the patient experience, increase their bottom line, and remain competitive in an evolving industry. Here are 10 personal observations of the past year that may help you plan for the year ahead.

  1. Health tech will continue to boom. Without a doubt, in my practice, health tech exploded, and understandably. In the face of tight margins, healthcare technology may offer the promise of immediate returns (think revenue cycle). But it is also important to understand the context. Health tech offers the promise of quick implementation relative to construction of clinical space, and it can be accomplished without additional clinical staff or regulatory oversight, potentially resulting in a prompt return on investment. Advancing technologies and AI will enable real-time, data driven surgical algorithms and patient-specific instruments to improve outcomes in a variety of specialties.
  2. Value-based care is here to stay. Everyone is interested in value-based care. In the past, value-based care was simply aspirational. Now, there are significant attempts to implement it on a sustained basis. It is not a coincidence that there has also been significant turnover in healthcare leadership in the past few years, and that has likely led to more receptivity.
  3. Expansion of value-based care models. There has been considerable activity around advanced primary care and single-condition chronic disease management. We are now starting to see broader efforts to manage care up and down the continuum of care, involving multi-specialty care and the gamut of care locations. Increased pressure to lower costs will result in increased volumes in lower cost, ambulatory settings.
  4. Regulatory scrutiny will continue to increase. For most, this is a given. In 2023, we saw increased scrutiny up and down the continuum, whether related to pharmaceutical costs, regulation of pharmacy benefit managers, healthcare transaction laws, or innovations in thinking around healthcare from the Federal Trade Commission. With the impending election, it is likely healthcare will receive considerable attention and scrutiny.
  5. Private equity (“PE”) will resume the march – with discipline. In my practice, PE entities rethought their growth strategies to focus on how to bring acquisitions to profitability quickly, from a “growth at all costs” mind set. Now there appears to be an increasing focus on operations and an emphasis on making realistic assumptions to underly growth. This has led to a more realistic pricing discipline and investment in management teams with operational experience.
  6. Partnerships. There is an increasing trend towards partnerships between PE entities and health systems. Health systems are under considerable financial stress, and while they do not universally welcome PE with open arms, some systems do appear open to targeted partnerships. By the same token, PE entities are beginning to realize that they require clinical assets that are most readily available at health systems. This will continue in 2024.
  7. The rise of independent physician groups. There is increasing activity among freestanding physician groups. Some doctors are leery of PE because they believe it is solely focused on profits. Similarly, many physicians are reluctant to be employed by health systems because they believe they will simply become a referral source. While we are not likely to see a return to 2002, where many PE and health system physician deals were unwound, we will see increasing growth by independent physician groups.
  8. Continued consolidation. The trend towards consolidation in healthcare is nowhere near ending. To assume risk (the ultimate goal of value-based care), providers require scale, both vertically and horizontally. While segments of healthcare slowed in 2023, a resumption of growth is inevitable.
  9. Increased insolvencies. Most healthcare providers have very high fixed costs and low margins. Small swings in accounts receivable collections, wages, and managed care payments can have a large impact on entities that are just squeezing by.
  10. New entrants. Last year saw several new entrants to the healthcare marketplace nationally. Who in 2023 would have thought Best Buy would enter the healthcare marketplace? There is still plenty of room for new models of care, which we will see in 2024.

2024 promises to be an interesting year in the healthcare industry.

© 2023 Blank Rome LLP
For more news on 2024 Healthcare Industry Laws, visit the NLR Health Law & Managed Care section.

Chicago Employers: Prepare for New Paid Leave Ordinance Effective 31 December 2023

On 9 November 2023, the Chicago City Council passed the Chicago Paid Leave and Paid Sick and Safe Leave Ordinance1(the Ordinance). The Ordinance takes effect on 31 December 2023, and replaces Chicago’s current paid sick leave ordinance.2 Under the Ordinance, starting 1 January 2024, Chicago employees are entitled to up to 80 hours of paid time off in a 12-month period, with 40 hours allocated to paid sick leave and 40 hours allocated to general paid leave.

The Ordinance comes eight months after the Illinois legislature’s enactment of the Illinois Paid Leave for All Workers Act (PLAWA),3 which goes into effect on 1 January 2024 and guarantees that Illinois workers can earn or accrue up to 40 hours of paid leave per year that may be used for any reason. Although employers covered by the Ordinance are exempt from PLAWA,4 the Ordinance adopts PLAWA’s purpose of providing general paid leave to employees in addition to paid sick leave.

METHOD FOR ACCRUAL, CARRYOVER, AND FRONTLOADING

The Ordinance provides that a covered employee5 will accrue one hour of general paid leave and one hour of paid sick leave for every 35 hours worked. Both general paid leave and paid sick leave are accrued in hourly increments and the total accrual for both forms of leave is capped at 40 hours in a 12-month period. At the end of the 12-month period, covered employees are allowed to carryover up to 16 hours of general paid leave and up to 80 hours of paid sick leave to the subsequent 12-month period. Chicago employers may also choose to “front-load,” or grant, 40 hours of paid leave or 40 hours of paid sick leave (or both) on the first day of employment or on the first day of the 12-month period.  If an employer elects to front-load general paid leave hours, the employer is not required to allow employees to carry over unused general paid leave hours to the following 12-month period. However, employers must allow employees to carry over up to 80 hours of paid sick leave into the next 12-month period even if the leave is front-loaded.

USE OF LEAVE

Employers must allow covered employees to use accrued paid sick leave after completing 30 days of employment, and use accrued general paid leave after completing 90 days of employment. An employer may set a reasonable usage minimum increment, not to exceed four hours per day for paid leave or two hours per day for paid sick leave. If a covered employee’s scheduled workday is less than such minimum increments, then the minimum increment of time cannot exceed the covered employee’s regular scheduled workday.

Similar to the PLAWA, general paid leave under the Ordinance may be used for any reason and employees cannot be required to provide a reason for or documentation to support the leave. Paid sick leave may be used for the same reasons set forth under the current Chicago paid sick leave ordinance, including:

  • For illness or injury, or for the purpose of receiving professional care, which includes preventive care, diagnosis, or treatment for medical, mental, or behavioral issues, including substance use disorders;
  • For a family member’s illness, injury, or order to quarantine, or to care for a family member receiving professional care;
  • For domestic violence, or if a covered employee’s family is the victim of domestic violence;
  • If the covered employee’s place of business is closed by order of a public official due to a public health emergency, or the employee needs to care for a family member whose school, class, or place of care has been closed; or
  • For the covered employee to obey an order issued by the mayor, the governor of Illinois, the Chicago Department of Public Health, or a treating healthcare provider requiring the employee to stay at home to minimize the transmission of a communicable disease; to remain at home while experiencing symptoms or sick with a communicable disease; and to obey a quarantine order or an isolation order issued to the employee.

REQUESTING LEAVE

For general paid leave, an employer may require a covered employee to provide reasonable notice not to exceed seven days prior to the need for leave and may require preapproval to ensure continuity of business operations. An employer may also require seven days’ notice for paid sick leave. If the need for paid sick leave is not reasonably foreseeable, an employer may require a covered employee to give notice as soon as is practicable by notifying the employer by phone, email, or other means. The Ordinance defines “reasonably foreseeable” as including, but not limited to, prescheduled appointments with health care providers and court dates in domestic violence cases.

If a covered employee uses paid sick leave to be absent for more than three consecutive work days, the employer may require certification that the paid sick leave was used for a qualifying purpose. For health-related paid sick leave, this certification can be documentation signed by a licensed health care provider. For domestic violence-related paid sick leave this certification can be a police report, court document, or a signed statement from an attorney, a member of the clergy, or a victim services advocate. An employer may not delay the commencement of paid sick leave or delay payment of wages based on not receiving the required documentation or certification. However, an employer can take disciplinary action, up to and including termination, against a covered employee who uses paid sick leave for purposes other than those described in the Ordinance.

PAYMENT OF PAID LEAVE AND PAID SICK LEAVE

The Ordinance sets forth general requirements relating to the payment of general paid leave and paid sick leave. General paid leave and paid sick leave must be compensated at the employee’s regular rate of pay, including health care benefits. The regular rate of pay for nonexempt or hourly employees is calculated by dividing the employee’s total wages by total hours worked in full pay periods of the prior 90 days of employment.  Wages do not include overtime pay, premium pay, gratuities, or commissions. Employers must pay an employee for their general paid leave and paid sick leave by the next regular payroll period after the time off was taken.

PAYMENT OF PAID LEAVE UPON TERMINATION

Under the Ordinance, an employer with 50 covered employees or less is not required to pay out any accrued, unused general paid leave upon termination. An employer with 51 to 100 covered employees (Medium Employer) must pay out accrued, unused general paid leave, up to 16 hours, until 31 December 2024. On or after 1 January 2025, a Medium Employer must pay all accrued, unused paid general leave upon an employee’s termination for any reason. Unless otherwise provided in a collective bargaining agreement, an employer cannot enforce a contract or a policy that requires the employee to forfeit any earned general paid leave upon separation from employment. Employers are not required to pay out accrued, unused paid sick leave.

Further, all unused paid sick leave and paid general leave is retained by the covered employee if the employer sells, transfers, or assigns the business to another employer and the employee continues to work in the City of Chicago.

EXISTING LEAVE POLICIES AND UNLIMITED PAID TIME OFF PROGRAMS

If a covered employee accrues paid sick leave before 1 January 2024 and the employer’s existing paid time off policy does not comply with the Ordinance, then on 1 January 2024, any paid sick leave that the covered employee is entitled to will rollover to the next 12-month period.

For employers that have recently adopted “unlimited paid time off policies,” the Ordinance provides that employers may offer unlimited paid time off policies and so long as the covered employer provides unlimited paid time off at the beginning of employment or the start of a 12-month period, there is no requirement to permit carryover of unused general paid leave to the next year. However, employees must still be allowed to carry over up to 80 hours of paid sick leave. Although the covered employer may still require reasonable notice for both foreseeable and unforeseeable reasons for leave, it may not require preapproval for such leave. Further, if the employer has an unlimited paid time off policy, upon separation from employment (or transfer outside of the City of Chicago’s boundaries), employers must pay the monetary equivalent of 40 hours of general paid leave less the amount of general paid leave used by the covered employee during the prior 12-month period preceding separation of employment (or transfer outside of the City of Chicago’s boundaries). Finally, employers must still comply with the other requirements in the Ordinance related to the administration of general paid leave and paid sick leave.

NOTICE AND POSTING

Similar to the current Chicago paid sick leave ordinance, a covered employer must post in a conspicuous place a notice advising covered employees of their right to paid time off. The Ordinance also sets the following requirements:

  1. The employer must provide the same notice to the covered employee with the first paycheck issued to the employee, as well as on an annual basis with a paycheck issued within 30 days of 1 July.
  2. In every pay stub or wage statement to the covered employee, the employer must provide a written notification stating the updated amount of paid leave and paid sick leave available to the employee.
  3. The employer must notify employees at least five calendar days before any changes to the employer’s paid time off policy are made.
  4. The employer must provide employees with a 14-day written notice of changes to its paid time off policies that affect the employees’ final wages.
  5. The employer must notify the covered employee in writing that the employee may request payout of their accrued, unused paid leave time when the employee has not been offered a work assignment for 60 days.

PENALTIES FOR VIOLATION, DAMAGES, AND PRIVATE CAUSE OF ACTION

Any employer who violates the Ordinance may be subject to fines between US$1,000 and US$3,000 for each separate offense. If the employer violates the notice requirements, then the employer may be fined US$500 for the first violation and US$1,000 for any subsequent violation. Each day a violation occurs constitutes a separate and distinct offense.

Further, an employer who violates the Ordinance may be liable to the affected employee for damages equal to three times the full amount of any leave denied or lost by reason of the violation, plus interest, costs, and reasonable attorney’s fees paid by the employer to the covered employee. The Ordinance also provides for a private right of action, which is available to covered employees on 31 December 2023 for violations related to paid sick leave and 1 January 2025 for violations related to general paid leave.

Chicago employers should review their current paid time off policies and payroll systems for compliance and should consider consulting their labor and employment attorneys for assistance in developing a policy that meets the requirements of the Ordinance. The lawyers of our Labor, Employment, and Workplace Safety practice regularly counsel clients on a wide variety of issues related to paid leave policies and are well positioned to provide guidance and assistance to clients on this significant development in Illinois.

FOOTNOTES

1 Chi., Ill., Mun. C. Chi. § 6-130 (2023).

2 Chi, Ill., Mun. C. Chi. § 6-105 (2023).

3 Paid Leave for All Workers Act, Pub. Act No. 102-1143 (Jan. 1, 2024).

4 See Sang-yul Lee, et al., Illinois Guarantees One Week of Paid Leave for All Workers, K&L Gates (Mar. 15, 2023), https://www.klgates.com/Illinois-Guarantees-One-Week-of-Paid-Leave-for-All-Workers-3-15-2023. Employers covered by local paid sick leave ordinances, such as the Ordinance, are exempt from PLAWA so long as such municipality has an ordinance in place on January 1, 2024. See 820 ILCS § 192/15(p).

5 A “covered employee” is defined as an Employee who works at least two hours for a Chicago employer in any particular two week period. See Chi., Ill., Mun. C. Chi. § 6-130-010 (2023).

Copyright 2023 K & L Gates
For more news on Chicago Paid Leave Policy, visit the NLR Labor & Employment section.

Legal Considerations for Healthcare Providers

Navigating the Physician and Non-Physician Relationship

Relationships between physicians and other healthcare professionals are highly regulated and can be complex to navigate. With non-physicians performing more services, including medical services with physician supervision, a variety of questions arise. What scope of services can be provided? What level of supervision is required? Can a non-physician have an ownership or related
interest in the entity providing services? With licensure on the line, it is critical to understand the legal requirements of the state where your practice operates.

What is the Corporate Practice of Medicine Doctrine (CPOM)?

Aimed at protecting patients, the CPOM restricts private ownership of medical corporations in an effort to prevent interference with a physician’s medical judgment. Although most states prohibit the corporate practice of medicine, every state provides exceptions. As with most laws, the exceptions vary by state.

Is it a Medical Service or Not?

What may seem like a simple question can be anything but. For example, a standard facial may be performed at a spa by a non-physician, but if the facial includes treatment that effects the tissue beneath the skin it crosses into the area of medical services. These nuances inform who can perform the service and with what level of physician supervision. What constitutes physician supervision is an additional area for consideration necessary to defining the physician/non-physician relationship and compensation.

Can Healthcare Providers Manage a Practice?

A Non-medical services provided by a healthcare professional require additional consideration with respect to corporate structure and compensation. Management services agreements are one way to afford a non-physician a greater stake in the practice. These agreements define the relationship and compensation associated with the provision of managerial and administrative services for a practice.

What Should I Know About Restrictive Covenants?

In the competitive medical field of today, healthcare providers should have a clear understanding of any restrictions before entering into a relationship with a physician or non-physician, switching practices, creating a new practice, forming
a relationship with multiple practices or terminating a relationship. It is important to understand any potential restrictive covenants and their impact, as you may want to challenge or negotiate those terms.

©2023 Strassburger McKenna Gutnick & Gefsky
By Danielle L. Dietrich , Erica L. Laughlin , Gerri L. Sperling , Michael G. Nicolella of Strassburger McKenna Gutnick & Gefsky
For more news on Legal Considerations for Healthcare Providers, visit the NLR Health Law & Managed Care section.

A Time for Clauses – Santa and No Gag

As we approach December, the impending arrival of Santa Claus is no doubt dominating discussions in many households.  However, there is another, perhaps lesser known, “clause”-related item that health plan sponsors need to keep top of mind in the coming month.

Specifically, as discussed in our blog found here, health plan sponsors must remember to file their first annual “no gag clause” attestation on December 31, covering the period from December 27, 2020 through the attestation date.

Here are some quick reminders about the requirement, along with some next steps for plans that are catching up:

  • What is the “No Gag Clause” Attestation?

The “no gag clause” attestation, which must be filed annually by December 31, requires group health plans and issuers to certify that they are not subject to agreements that directly or indirectly restrict them from disclosing provider-specific cost or quality-of-care information to certain parties, electronic accessing de-identified claims and encounter information (consistent with privacy laws) or sharing this information with a business associate.

  • How to File an Attestation

The attestation is filed electronically on CMS’s dedicated website, found here.  Instructions, frequently asked questions and a user manual can be found on CMS’s website here.

  • Who is Responsible for the Attestation?

While self-insured plans retain the ultimate responsibility for ensuring that the attestation is submitted, they can contract with their third-party administrators to file on their behalf.

For fully-insured plans, the insurance issuer’s submission of an attestation will satisfy the attestation requirement for both the plan and the issuer.

  • What Should Plan Sponsors Do Now?

For plans that have not yet begun to address the attestation, there is still time to take the necessary steps as follows:

  • If they have not already done so, plans should review their service agreement(s) to ensure that they do not contain any gag clauses.
  • Plans may also wish to obtain written confirmation from their administrators that no prohibited gag clauses are included in their applicable contracts (and, if any are, that the contracts are amended to remove them effective December 27, 2020).
  • Self-insured plans should contact their administrator(s) to coordinate who will be filing the submission.  At this stage, many administrators already have their processes in place and may not wish to file on the behalf of the plan, in which case the plan will need to do the filing.  This will make accomplishing the first two steps more important.

Getting these tasks accomplished as soon as possible will allow plan sponsors to put these prohibited clauses behind them and focus on the good Clauses of the season—Santa and Mrs.

© 2023 Proskauer Rose LLP.
For more news on No Gag Clauses, visit the NLR Health Law & Managed Care section.

Sharing Scientific Information with HCPs on Unapproved Uses of Medical Products: Dos and Don’ts Under FDA’s New Draft Guidance

In October 2023, the FDA released draft guidance entitled “Communications From Firms to Health Care Providers Regarding Scientific Information on Unapproved Uses of Approved/Cleared Medical Products: Questions and Answers Guidance for Industry” (“2023 Draft Guidance”).[1] The 2023 Draft Guidance supersedes previous draft guidance from 2014 entitled “Distributing Scientific and Medical Publications on Unapproved New Uses–Recommended Practices” (“2014 Draft Guidance”), which was a revision of a 2009 final guidance entitled “Good Reprint Practices for the Distribution of Medical Journal Articles and Medical or Scientific Reference Publications on Unapproved New Uses of Approved Drugs and Approved or Cleared Medical Devices.”

All three of these FDA guidance documents provide recommendations for industry regarding the sharing of scientific information with Health Care Providers (“HCPs”)[2] on unapproved uses of approved or cleared drugs and medical devices, termed “SIUU communications” by the 2023 Draft Guidance. HCPs are permitted to prescribe medical products for unapproved uses when the unapproved use is determined to be medically appropriate for a given patient. However, manufacturers may not promote their products for an unapproved use. For this reason, FDA’s position (which is articulated to some extent across all of the above-mentioned guidance documents, but most clearly and emphatically in the 2023 Draft Guidance) is that firm[3] communications to HCPs regarding unapproved uses of approved or cleared products should include all of the information necessary for HCPs to evaluate the strengths, weaknesses, validity, and utility of the information about the unapproved use in order to make determinations regarding medical appropriateness.

In the 2023 Draft Guidance, FDA seeks to balance the interests of HCPs in learning, and manufacturers in sharing, truthful and non-misleading information about unapproved uses of approved medical products, with the intent to inform clinical practice decisions against the government’s interest in protecting patients from medical product uses that have not met applicable safety and effectiveness standards required under FDA’s premarket approval framework.

While the 2023 Draft Guidance reiterates many of the recommendations from the 2014 Draft Guidance, the 2023 Draft Guidance leverages a new “Q&A” format to provide firms with more detailed and specific recommendations, including hypothetical scenarios, around SIUU communications. Below, we restate the four Q&A questions included in the 2023 Draft Guidance and then highlight key aspects of the responses provided by FDA through brief commentary and recommended Dos and Don’ts.

Q1. What should firms consider when determining whether a source publication is appropriate to serve as the basis for an SIUU communication?

According to the 2023 Draft Guidance, any study or analysis described in a source publication that serves as the basis for an SIUU communication should be scientifically sound,[4] and should provide information that is relevant to HCPs engaged in making clinical practice decisions for the care of an individual patient; in other words, these sources should be clinically relevant.[5] While the 2014 Draft Guidance suggested that scientific or medical journal article reprints intended for distribution to HCPs should describe studies that are considered “scientifically sound” by appropriate experts, the 2023 Draft Guidance builds out this standard and provides greater insight into what types of source material would meet (and not meet) the standard.

Do:

  • Choose scientifically sound studies that provide clinically relevant information to support your SIUU communications
    • For human and animal drugs, randomized, double-blind, concurrently controlled superiority trials are most likely to provide both scientifically sound and clinically relevant information (though other well-designed and well-conducted studies may also be appropriate)
    • For medical devices,[6] look to well-controlled investigations, partially controlled studies, studies and objective trials without matched controls, well-documented case histories conducted by qualified experts, reports of significant human experience with a marketed device as sources of scientifically sound and clinically relevant information
  • Consider studies with real-world data and associated real-world evidence, which may meet the scientifically sound and clinically relevant threshold depending on the nature of the data and underlying analyses

Don’t:

  • Rely on studies without an adequate control group, isolated case reports, or studies that lack sufficient detail to permit scientific evaluation as the sole basis for an SIUU communication
  • Rely on studies with “unreliable” data, even if you include disclaimers noting the limitations (e.g., studies that fail to control for confounding factors or fail to clearly define study endpoints)
  • Rely on articles focused on non-clinical studies as the sole basis for an SIUU communication
  • Rely on scientific data generated in early stages of medical product development as the sole basis for an SIUU communication, as such data can produce results that are inconsistent with later studies
  • Distort studies in SIUU communications or base SIUU communications on publications that distort studies or include fraudulent data
  • Continue to share an SIUU communication that is based on a study or analysis that is no longer clinically relevant (ex: subsequent research has established the findings from the study are not reliable)

Q2. What information should firms include as part of SIUU communications?

Like the 2014 Draft Guidance, the 2023 Draft Guidance emphasizes the importance of providing certain disclosures with SIUU communications to ensure such communications are not misleading and provide all the information necessary for HCPs to interpret the strengths and weaknesses and validity and utility of the information. The recommended disclosures in the 2023 Draft Guidance are similar to those recommended in the 2014 Draft Guidance, but are more detailed and extensive.

Do:

  • Provide a disclosure statement with any SIUU communication, which should include:
    • A statement that the use described in the communication is unapproved and the safety and effectiveness of the medical product for the unapproved use(s) has not been established
    • Disclosure of the FDA approved use of the medical product, including any limitations and contraindication(s) specified by the product’s FDA-required labeling[7]
    • Disclosure of any limitations, restrictions, cautions, warnings, or contradictions described in the FDA-required labeling about the unapproved use(s)
    • Disclosure of any serious, life-threatening, or fatal risks posed by the medical product that are relevant to the unapproved use(s) (that are either in the FDA-required labeling or known by the firm and relevant to the unapproved use)
    • Disclosure of any financial relationships between the firm and any authors, editors, or other contributors to the publications in the SIUU communication
    • A copy of the most current FDA-required labeling (or a mechanism for obtaining the labeling)
    • The publication date of any referenced or included publication(s) (if not specified in the publication or citation)
  • For an SIUU communication based on a source publication that is primarily focused on a particular scientific study or studies, for each such study where the following information is not included in the publication, provide a description of:
    • All material aspects of study design, methodology, and results
    • All material limitations related to the study design, methodology, and results
    • Any conclusions from other relevant studies, when applicable, that are contrary to or cast doubt on the results shared, including citations for any such studies

Don’t:

  • Omit any risk evaluation and mitigation strategy (REMS) applicable to the medical product (firms should disclose any REMS and should describe the goal(s) of the REMS)

Q3. What presentational considerations should firms take into account for SIUU communications?

The 2023 Draft Guidance offers a number of presentation-focused recommendations to ensure that SIUU communications are conveyed in a manner that enhances and does not interfere with HCP understanding of the underlying scientific information, and to avoid such SIUU communications being confused with promotional communications about approved uses.

Do:

  • Clearly and prominently present all recommended disclosures, considering type size, font style, layout, contrast, graphic design, headlines, spacing, volume, articulation, pace, and any other techniques to achieve emphasis or notice
  • For SIUU communications with both audio and visual components, present disclosures in both the audio and in text at the same time using the same/substantially similar language
  • Keep SIUU communications (including those relayed via email) separate and distinct from promotional communications about approved uses of medical products
  • Use dedicated vehicles, channels, and venues for sharing SIUU communications that are separate from the vehicles, channels, and venues used for promotional communications about approved uses of medical products. For example –
    • Present SIUU communications on a separate web page from the web page that hosts promotional communications about approved uses
    • At conferences and similar venues, ensure that SIUU communications are clearly identified and distinct from promotional communications about approved uses (e.g., by dividing booth space to allow a dedicated space for SIUU communications)
  • Use plain language in the content developed for SIUU communications to facilitate comprehension (i.e., clear and concise language that does not include technical jargon and clearly explains any scientific or technical terms)

Don’t:

  • Use persuasive marketing techniques, such as the use of celebrity endorsements, premium offers, and gifts. According to FDA, a firm’s choice to use persuasive marketing techniques suggests an effort to convince the HCP to prescribe or use the product for the unapproved use based on elements other than the scientific content of the communication
  • Include direct links from web pages that host promotional communications about approved uses to webpages that host SIUU communications
  • Utilize platforms with character limits that do not enable the firm to include the recommended disclosures for sharing SIUU communications (however, such platforms could be used to direct an HCP to an SIUU communication, subject to certain restrictions)

Q4. What additional recommendations apply to specific types of SIUU communications?

The 2023 Draft Guidance offers additional recommendations related to certain specific types of SIUU communications including journal reprints and clinical reference resources (such as clinical practice guidelines and reference texts). Of note, the 2023 Draft Guidance provides recommendations for a category of SIUU communications that is not specifically addressed in the 2014 Draft Guidance – “firm-generated presentations of scientific information from an accompanying published reprint.”

Discussion of such firm-generated presentations in the 2023 Draft Guidance represents a departure from the 2014 Draft Guidance, which stated that reprints (as well as clinical reference resources) regarding unapproved uses (of cleared or approved medical products) should not be “marked, highlighted, summarized, or characterized” by medical product manufacturers to emphasize or promote an unapproved use. The 2023 Draft Guidance provides new flexibility in this regard, expressly acknowledging that firms may develop their own presentations of scientific information from an accompanying reprint provided such presentation is truthful, non-misleading, factual, unbiased, and provides all the information necessary for HCPs to interpret the strengths and weaknesses and validity and utility of the presented information. The 2023 Draft Guidance includes a number of recommendations for firms to follow to prepare and distribute firm-generated presentations of information from an accompanying reprint.

Do:

  • Include the full reprint with the firm-generated presentation
  • Include the disclosures outlined above in Q2, and clearly disclose what portions of the communication are firm-generated
  • Follow the presentational considerations outlined in Q3

Don’t:

  • Imply that the study, analysis, or underlying data or information from the reprint(s) represents larger or more-general experience with the medical product than it actually does
  • Present information, such as excerpts, quotes, etc., from the reprint(s) out of context, without the information necessary for HCPs to interpret the strengths and weaknesses and validity and utility of the information
  • Include representations or suggestions about the safety or effectiveness of the medical product for the unapproved use(s) that are not consistent with the reprint
  • Present any conclusions or representations about safety or effectiveness for the unapproved use without expressly attributing such statements to the reprint, and without immediately following such statements with a disclosure of any financial relationships between the firm and any authors, editors, or other contributors to the publications in the SIUU communication
  • Use statistical analyses or techniques to indicate clinical significance or validity of a finding not supported by the data or information in the reprint
  • Use tables or graphs or other presentational elements to distort or misrepresent the relationships, trends, differences, or changes among the outcomes evaluated in the reprint

Conclusion

While the 2023 Draft Guidance veers from the 2014 Draft Guidance in some respects, many of the same principles have been pulled through into the current guidance. As such, a medical product manufacturer who has already implemented the recommendations from the 2014 Draft Guidance should not face too heavy of a lift to adjust its activities to align with the 2023 Draft Guidance. While the landscape has not shifted drastically overall, firms should still closely review the additional detail and clarifications provided by the 2023 Draft Guidance to mitigate potential risk in navigating the often murky regulatory waters of engaging in off-label and pre-approval communications.

ENDNOTES

[1] Comments on the 2023 Draft Guidance are due by December 26, 2023.

[2] The 2023 Draft Guidance only applies to HCPs engaged in making clinical practice decisions for the care of an individual patient. Per the 2023 Draft Guidance, HCPs include physicians, veterinarians, dentists, physician assistants, nurse practitioners, pharmacists, or registered nurses who are licensed or otherwise authorized by law to prescribe, order, administer, or use medical products in a professional capacity. The 2014 Draft Guidance applied to “health care professionals,” but the term was not specifically defined.

[3] As defined by the 2023 Draft Guidance, firms are the “persons legally responsible for the labeling of medical products, and includes applicants, sponsors, requestors, manufacturers, packers, and distributors of medical products, and licensees of such persons, and any persons communicating on behalf of these entities.”

[4] To be “scientifically sound,” at a minimum, studies should meet generally accepted design and other methodological standards for the particular type of study performed, taking into account established scientific principles and existing scientific knowledge.

[5] Additionally, statistical robustness is generally necessary, though not sufficient, to determine if a study or analysis is appropriate for an SIUU communication. While statistical robustness factors into the rigor of the design and methodology of a study, it does not assure that the study relates to outcomes of clinical relevance to HCPs.

[6] Notably, while the 2014 Draft Guidance stated that journal articles discussing significant non-clinical research could fall within FDA’s enforcement discretion policy under the guidance, the 2023 Draft Guidance clarifies that, generally, sharing articles focused on non-clinical studies alone would not be consistent with FDA’s enforcement discretion policy as a non-clinical study alone is unlikely to provide information that is clinically relevant.

[7] “FDA-required labeling” includes, but is not necessarily limited to, the labeling reviewed and approved by FDA as part of the medical product premarket review process. For a prescription human drug (including biological products), this consists of the FDA-approved prescribing information that meets the requirements of 21 CFR 201.100. For a device, it includes the labeling approved during the review of a premarket approval application or De Novo classification.

©2023 Epstein Becker & Green, P.C. All rights reserved.
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Biden Executive Order Calls for HHS to Establish Health Care-Specific Artificial Intelligence Programs and Policies

On October 30, 2023, the Biden Administration released and signed an Executive Order on the Safe, Secure, and Trustworthy Development and Use of Artificial Intelligence (Executive Order) that articulates White House priorities and policies related to the use and development of artificial intelligence (AI) across different sectors, including health care.

The Biden Administration acknowledged the various competing interests related to AI, including weighing significant technological innovation against unintended societal consequences. Our Mintz and ML Strategies colleagues broadly covered the Executive Order in this week’s issue of AI: The Washington Report. Some sections of the Executive Order are sector-agnostic but will be especially relevant in health care, such as the requirement that agencies use available policy and technical tools, including privacy-enhancing technologies (PETs) where appropriate, to protect privacy and to combat the improper collection and use of individuals’ data.

The Biden Administration only recently announced the Executive Order, but the discussion of regulating AI in health care is certainly not novel. For example, the U.S. Food and Drug Administration (FDA) has already incorporated artificial intelligence and machine learning-based medical device software into its medical device and software regulatory regime. The Office of the National Coordinator for Health Information Technology (ONC) also included AI and machine learning proposals under the HTI-1 Proposed Rule, including proposals to increase algorithmic transparency and allow users of clinical decision support (CDS) to determine if predictive Decision Support Interventions (DSIs) are fair, appropriate, valid, effective, and safe.

We will focus this post on the Executive Order health care-specific directives for the U.S. Department of Health and Human Services (HHS) and other relevant agencies.

HHS AI Task Force and Quality Assurance

To address how AI should be used safely and effectively in health care, the Executive Order requires HHS, in consultation with the Secretary of Defense and the Secretary of Veterans Affairs, to establish an “HHS AI Task Force” by January 28, 2024. Once created, the HHS AI Task Force has 365 days to develop a regulatory action plan for predictive and generative AI-enabled technologies in health care that includes:

  • use of AI in health care delivery and financing and the need for human oversight where necessary and appropriate;
  • long-term safety and real-world performance monitoring of AI-enabled technologies;
  • integration of equity principles in AI-enabled technologies, including monitoring for model discrimination and bias;
  • assurance that safety, privacy, and security standards are baked into the software development lifecycle;
  • prioritization of transparency and making model documentation available to users to ensure AI is used safely;
  • collaboration with state, local, Tribal, and territorial health and human services agencies to communicate successful AI use cases and best practices; and
  • use of AI to make workplaces more efficient and reduce administrative burdens where possible.

HHS also has until March 28, 2024 to take the following steps:

  • consult with other relevant agencies to determine whether AI-enabled technologies in health care “maintain appropriate levels of quality”;
  • develop (along with other agencies) AI assurance policies to evaluate the performance of AI-enabled health care tools and assess AI-enabled health care-technology algorithmic system performance against real-world data; and
  • consult with other relevant agencies to reconcile the uses of AI in health care against federal non-discrimination and privacy laws, including providing technical assistance to and communicating potential consequences of noncompliance to health care providers and payers.

AI Safety Program and Drug Development

The Executive Order also directs HHS, in consultation with the Secretary of Defense and the Secretary of Veterans Affairs, to organize and implement an AI Safety Program by September 30, 2024. In partnership with federally listed Patient Safety Organizations, the AI Safety Program will be tasked with creating a common framework that organizations can use to monitor and track clinical errors resulting from AI used in health care settings. The program will also create a central tracking repository to track complaints from patients and caregivers who report discrimination and bias related to the use of AI.

Additionally, by September 30, 2024, HHS must develop a strategy to regulate the use of AI or AI-enabled tools in the various phases of the drug development process, including determining opportunities for future regulation, rulemaking, guidance, and use of additional statutory authority.

HHS Grant and Award Programs and AI Tech Sprint

The Executive Order also directs HHS to use existing grant and award programs to support ethical AI development by health care technology developers by:

  • leveraging existing HHS programs to work with private sector actors to develop AI-enabled tools that can create personalized patient immune-response profiles safely and securely;
  • allocating 2024 Leading Edge Acceleration Projects (LEAP) in Health Information Technology funding for the development of AI tools for clinical care, real-world-evidence programs, population health, public health, and related research; and
  • accelerating grants awarded through the National Institutes of Health Artificial Intelligence/Machine Learning Consortium to Advance Health Equity and Researcher Diversity (AIM-AHEAD) program and demonstrating successful AIM-AHEAD activities in underserved communities.

The Secretary of Veterans Affairs must also host two 3-month nationwide AI Tech Sprint competitions by September 30, 2024, with the goal of further developing AI systems to improve the quality of health care for veterans.

Key Takeaways

The Executive Order will spark the cross-agency development of a variety of AI-focused working groups, programs, and policies, including possible rulemaking and regulation, across the health care sector in the coming months. While the law has not yet caught up with the technology, the Executive Order provides helpful insight into the areas that will be topics of new legislation and regulation, such as drug development, as well as what may be the new enforcement priorities under existing law such as non-discrimination and data privacy and security. Health care technology developers and users will want to review their current policies and practices in light of the Biden Administration’s priorities to determine possible areas of improvement in the short term in connection with developing, implementing, and using AI.

Additionally, the National Institute of Standards and Technology (NIST) released the voluntary AI Risk Management Framework in January 2023 that, among other things, organizations can use to analyze and manage risks, impacts, and harms while responsibly designing, developing, deploying, and using AI systems over time. The Executive Order calls for NIST to develop a companion resource to the AI Risk Management Framework for generative AI. In preparation for the new AI programs and possible associated rulemaking from HHS, organizations in health care will want to familiarize themselves with the NIST AI Risk Management Framework and its generative AI companion as well as the AI Bill of Rights published by the Biden Administration in October 2022 to better understand what the federal government sees as characteristics of trustworthy AI systems.

Madison Castle contributed to this article.

©1994-2023 Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. All Rights Reserved.

Does the “Patent Eligibility Restoration Act of 2023” Revive Diagnostic Claims?

On June 22, Senator Chris Coons, along with Thom Tillis introduced the “Patent Eligibility Restoration Act of 2023” (hereinafter “the Act”) to amend 35 USC s. 101 to clarify the scope of patent-eligible subject matter. Section 101(b) would be amended to delete “includes a new use of a known process” and insert “includes a use, application, or method of manufacture of a known or naturally occurring process.” A section (k) would be added to define the term “useful” as meaning that the invention or discovery has a “specific and practical utility” from the perspective of a POSA. So far, so good. The use of a naturally occurring process can be read to cover the use of a naturally occurring correlation, an “If A then B” claim. The recognition of the discovery of the utility of a naturally occurring correlation, which leads to a diagnostic conclusion would seem to be included in this broad language.

But now things get a bit sketchy. The Act would abolish all the current judicial, e.g. Chakrabarty, exclusions but would add a set of statutory exclusions that overlap the judicial exclusions in some places. The exclusions include “an unmodified human gene”—good-bye Myriad—and an unmodified natural material as that material exists in nature, e.g., water. This exclusion would not jeopardize diagnostic claims since a per se is not being claimed.

More troublesome, Section C of the exclusions would include a process that “occurs in nature wholly independent of, and prior to, any human activity.” Diagnostic claims are process claims that are based on the recognition of the utility of a correlation that takes place in the body. The utility of the diagnostic claim lies solely in the recognition of the utility of the correlation. If a man has an elevated level of PSA he is at risk of developing, or may already have, prostate cancer. But isn’t the relationship between PSA levels and cancer/no cancer a process that occurs in nature wholly independent of, and prior to, any human activity, such as sampling and measuring the level of PSA in the blood? Please read the Act and tell me why I am wrong.

© 2023 Schwegman, Lundberg & Woessner, P.A. All Rights Reserved.

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CMS Takes Steps to Lower SNF Medicare Payment Error Rates

With the Medicare Comprehensive Error Rate Testing program projected error rate for skilled nursing facilities (SNFs) showing a significant increase in 2022 (15.1%, up from 7.9% in 2021), the Centers for Medicare and Medicaid Services (CMS) has instructed each of its Medicare Administrative Contractors (MACs) that review SNF Medicare claims to initiate a five-claim probe and educate medical review for each SNF in the MAC’s jurisdiction.

CMS surmises that the source of the increase in improper payments may lie with the change from resource utilization group (RUG) IV to the patient driven payment model (PDPM) and has noted that the primary root cause of SNF errors is missing documentation.

MACs are instructed to implement the five-claim probe on a rolling basis beginning with the top 20% of SNFs that show the highest risk. If any improper payments are identified, the MAC will adjust (or deny) the claim(s) and offer either widespread education or 1:1 individualized education depending on the error rate. 1:1 education will include claim specific information and allow the SNF to review the claim decision, ask questions and receive feedback.

Beginning June 5, 2023, SNFs nation-wide should be on the lookout for a prepayment probe and educate record request from the MAC and be prepared to respond within 45 days.

Copyright © 2023, Sheppard Mullin Richter & Hampton LLP.

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