October 3, 2014

A&B Healthcare Week in Review, October 3, 2014

Healthcare Week in Review


  • On October 3, 2014, the Department of Health and Human Services (HHS) released a proposed rule entitled “Medicare and State Health Care Programs: Fraud and Abuse; Revisions to Safe Harbors Under the Anti-Kickback Statute, and Civil Monetary Penalty Rules Regarding Beneficiary Inducements and Gainsharing”. This proposed rule would amend the safe harbors to the anti-kickback statute and the civil monetary penalty (CMP) rules under the authority of the Office of Inspector General (OIG). The proposed rule would add new safe harbors, some of which codify statutory changes set forth in the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA) and the Affordable Care Act (ACA), and all of which would protect certain payment practices and business arrangements from criminal prosecution or civil sanctions under the anti-kickback statute. HHS also proposes to codify revisions to the definition of “remuneration,” added by the Balanced Budget Act (BBA) of 1997 and the ACA, and add a gainsharing CMP provision in its regulations. Comments on the proposed rule must be submitted by 5:00 PM on December 2, 2014.
  • On October 2, 2014, the Centers for Medicare and Medicaid Services (CMS) Center for Medicare and Medicaid Innovation (CMMI) released a request for information (RFI) seeking input on initiatives to test innovations in 1) plan design, including but not limited to value-based insurance design (VBID); 2) care delivery; 3) beneficiary and provider incentives and engagement; and/or 4) network design in Medicare health plans and Medigap and Retiree Supplemental health plans. CMS seeks input from stakeholders about their experiences with and perspectives about the following types of products that are made available to Medicare and/or Medicaid beneficiaries: stand-alone Medicare Prescription Drug Plans (PDPs); Medigap and Retiree Supplemental health plans; Medicare Advantage and Medicare Advantage Prescription Drug (MA and MA-PD) plans; and Medicaid managed care plans (Medicaid plans). To be assured consideration, responses must be received by November 3, 2014.
  • On October 3, 2014, the Food and Drug Administration (FDA) announced the availability of a draft guidance entitled "FDA Notification and Medical Device Reporting for Laboratory Developed Tests (LDTs)." This draft guidance document is intended to describe the process for clinical laboratories to notify FDA of the laboratory developed tests (LDTs) they manufacture as well as to describe the Medical Device Reporting (MDR) requirements for clinical laboratories manufacturing LDTs. LDTs are those in vitro diagnostic devices that are intended for clinical use and designed, manufactured, and used within a single laboratory. Comments on the draft guidance must be received by February 2, 2015. More information may be found here.
  • On October 3, 2014, FDA announced the availability of draft guidance entitled "Framework for Regulatory Oversight of Laboratory Developed Tests (LDTs)." This document describes a risk-based framework for addressing the regulatory oversight of a subset of in vitro diagnostic devices (IVDs) referred to as laboratory developed tests (LDTs), which are intended for clinical use and designed, manufactured and used within a single laboratory. This document describes FDA’s priorities for enforcing pre- and post-market requirements for LDTs, and the process by which FDA intends to phase in enforcement of FDA regulatory requirements for LDTs over time. Comments are due February 2, 2015. More information may be found here.
  • On September 29, 2014, CMS released a notice entitled “Data Submission for the Federally-facilitated Exchange User Fee Adjustment”. For context, the final rule entitled "Coverage of Certain Preventive Services Under the Affordable Care Act", published by HHS, the Treasury, and Labor on July 2, 2013 (78 FR 39870), sets forth regulations regarding coverage for certain preventive services under section 2713 of the Public Health Service Act, which requires coverage without cost sharing of certain preventive health services, including certain contraceptive services, in non-exempt, non-grandfathered group health plans and health insurance coverage. In order to facilitate the Federally-Facilitated Exchange (FFE) user fee adjustment, and ensure that these user fee adjustments reflect payments for contraceptive services provided under this accommodation and that the adjustment is applied to the appropriate participating issuer in an FFE, the final rule requires information collection activities from applicable participating issuers and third party administrators. These processes are described in the notice released this week. The burden associated with these processes includes the time for applicable participating issuers and third party administrators to submit identifying information and total payments made for contraceptive services in the prior calendar year, and for third party administrators to notify HHS of their intent to seek the user fee adjustment. HHS estimates 488 third party administrators, 48 qualified health plan (QHP) issuers, and 325 fully insured issuers of eligible organizations will submit this information. Comments on the proposed information collection activities are due November 28, 2014.
  • On September 29, 2014, the Agency for Healthcare Research and Quality (AHRQ) announced that it requested Office of Management and Budget (OMB) approval for a proposed information collection project entitled ‘‘Improving Hospital Informed Consent with Training on Effective Tools and Strategies.’’ This proposed information collection was previously titled and published as ‘‘Improving Hospital Informed Consent with an Informed Consent Toolkit’’ in the Federal Register on July 9th, 2014 and allowed 60 days for public comment. AHRQ received one substantive comment. The purpose of this notice is to allow an additional 30 days for public comment. The ultimate aim of this project is to pilot test training modules to improve the informed consent process in U.S. hospitals. Public comments on the proposal are now due October 29, 2014. More information on the comment period extension may be found here.
  • On September 29, 2014, FDA announced a reopening of the comment period for the notice of availability of the draft guidance entitled "Internet/Social Media Platforms with Character Space Limitations: Presenting Risk and Benefit Information for Prescription Drugs and Medical Devices," published in the Federal Register of June 18, 2014. FDA is reopening the comment period in response to a request for additional time and to allow interested persons more time to submit comments. Comments are now due October 29, 2014. More information may be found here. FDA also announced a reopening of the comment period for the notice of availability of the draft guidance entitled "Internet/Social Media Platforms: Correcting Independent Third-Party Misinformation About Prescription Drugs and Medical Devices," published in the Federal Register of June 18, 2014. Comments are now due October 29, 2014. More information may be found here.
  • On September 29, 2014, FDA announced the availability of the guidance entitled ‘‘Establishing That a Tobacco Product Was Commercially Marketed in the United States as of February 15, 2007.’’ This guidance provides information on how a manufacturer may establish that a tobacco product was commercially marketed in the United States as of February 15, 2007. More information may be found here.
  • On September 30, 2014, the Department of Defense released a final rule entitled “Civilian Health and Medical Program of the Uniformed Services (CHAMPUS); TRICARE Uniform Health Maintenance Organization (HMO) Benefit—Prime Enrollment Fee Exemption for Survivors of Active Duty Deceased Sponsors and Medically Retired Uniformed Services Members and Their Dependents”. This final rule creates an exception to the usual rule that TRICARE Prime enrollment fees are uniform for all retirees and their dependents, and responds to public comments received to the proposed rule published in the Federal Register on June 7, 2013. Survivors of Active Duty Deceased Sponsors and Medically Retired Uniformed Services Members and their Dependents are part of the retiree group under TRICARE rules. In acknowledgment and appreciation of the sacrifices of these two beneficiary categories, the Secretary of Defense has elected to exercise his authority under the United States Code to exempt Active Duty Deceased Sponsors and Medically Retired Uniformed Services Members and their Dependents enrolled in TRICARE Prime from paying future increases to the TRICARE Prime annual enrollment fees. This rule is effective October 30, 2014.
  • On October 1, 2014, FDA announced the fee rate for using a rare pediatric disease priority review voucher for fiscal year (FY) 2015. The Food and Drug Administration Safety and Innovation Act (FDASIA) authorizes FDA to determine and collect rare pediatric disease priority review user fees for certain applications for review of human drug or biological products when those applications use a rare pediatric disease priority review voucher. These vouchers are awarded to the sponsors of certain rare pediatric disease product applications, submitted 90 days or more after July 9, 2012, upon FDA approval of such applications. The amount of the fee for using a rare pediatric disease priority review voucher is determined each FY based on the difference between the average cost incurred by FDA in the review of a human drug application subject to priority review in the previous fiscal year, and the average cost incurred in the review of an application that is not subject to priority review in the previous fiscal year. This notice establishes the rare pediatric disease priority review fee rate for FY 2015 and outlines the payment procedures for such fees. More information may be found here.
  • On October 2, 2014, FDA announced the availability of a guidance document entitled “Content of Premarket Submissions for Management of Cybersecurity in Medical Devices”. This guidance identifies cybersecurity issues that manufacturers should consider in preparing premarket submissions for medical devices in order to maintain information confidentiality, integrity, and availability. More information may be found here.
  • This week, HHS released corrections to the following rules:


U.S. Senate

  • The Senate is not in session. More information about the Senate schedule may be found here.
  • On October 2, 2014, Senator Bernie Sanders (I-VT), Chairman of the Subcommittee on Primary Health and Aging, Senate Committee on Health, Education, Labor and Pensions, and Representative Elijah Cummings (D-MD), Ranking Member of the House Committee on Oversight and Government Reform, issued letters to 14 pharmaceutical companies asking the firms to respond to reports of recent steep price spikes for generic drugs. The lawmakers cite data from the Healthcare Supply Chain Association on recent purchases by group purchasing organizations (GPOs) of ten generic drugs, which suggests that pharmacists “have seen huge upswings in generic drug prices that are hurting patients” and are having a “very significant” impact on pharmacists’ ability to continue serving patients. “It is unacceptable that Americans pay, by far, the highest prices in the world for prescription drugs. Generic drugs were meant to help make medications affordable for the millions of Americans who rely on prescriptions to manage their health needs. We’ve got to get to the bottom of these enormous price increases,” Sanders said in a press release.

House of Representatives

  • The House is not in session. More information about the House schedule may be found here.
  • On Friday September 26, 2014, President Barack Obama signed into law the Paul D. Wellstone Muscular Dystrophy Community Assistance, Research and Education Amendments of 2014 (H.R. 594). Representatives Michael C. Burgess, M.D. (R-TX) and Eliot Engel (D-NY) authored the legislation to update surveillance, research, and education activities to reflect scientific developments and continue the support of research and patient support initiatives across all forms of Muscular Dystrophy.


  • On September 29, 2014, the Office of Inspector General (OIG) released a report entitled “State Standards for Access to Care in Medicaid Managed Care”. OIG analysts surveyed State Medicaid agency officials in the 33 States with comprehensive, “full risk” Medicaid managed care and collected documentation from each State on its standards for access to care; they also conducted structured interviews with external quality review organizations and CMS. Researchers found that state standards for access to care vary widely. For example, standards range from requiring 1 primary care provider for every 100 enrollees to 1 primary care provider for every 2,500 enrollees. Additionally, standards are often not specific to certain types of providers or to areas of the State. States have different strategies to assess compliance with access standards, but they do not commonly use what are called “direct tests,” such as making calls to providers. Further, most States did not identify any violations of their access standards over a 5-year period. The States that found the most violations were those that conducted direct tests of compliance. Among the States that identified violations, most relied on corrective action plans to address the violations; six imposed sanctions. Finally, OIG’s review found that CMS provides limited oversight of State access standards.
  • In a report released on September 29, 2014, CMS provided an update to Congress on recovery auditing in the Medicare program for fiscal year (FY) 2013. The agency reports that in FY 2013, Recovery Auditors collectively identified and corrected 1,532,249 claims for improper payments, which resulted in $3.75 billion dollars in improper payments being corrected. The total corrections identified include $3.65 billion in overpayments collected and $102.4 million in underpayments repaid to providers and suppliers. After taking into consideration all fees, costs, and first level appeals, CMS concluded, the Medicare fee-for-service (FFS) Recovery Audit Program returned over $3.0 billion to the Medicare Trust Funds in FY 2013.
  • On September 29, 2014, the Government Accountability Office (GAO) released a report which finds that most of the largest issuers of health coverage from 2012 participated in the ACA Health Insurance Exchanges in 2014. GAO was asked to examine the number and types of issuers participating in both the individual and Small-Business Exchanges beginning in 2014, as well as how this compared with issuer participation in the individual and small-group markets prior to the Exchanges. GAO found that multiple issuers participated in nearly all 2014 Exchanges, and generally offered more health plans than the minimum of two required by the ACA. Overall, the number of participating issuers varied widely between states, from 1 to 17 issuers in the individual Exchanges and from 1 to 13 issuers in the Small-Business Exchanges. Issuers varied substantially in the number of plans they offered; 257 of the 291 issuers in the individual Exchanges, and 183 of the 207 issuers in the Small-Business Exchanges, offered more than the minimum number of plans required by the ACA in all the rating areas in which they offered coverage.
  • On September 29, 2014, GAO released the results of a study which suggests that integration of Medicare and Medicaid benefits may not lead to expected levels of Medicare savings. In 2009, the Medicare and Medicaid programs spent an estimated $103 billion on disabled “dual-eligible” beneficiaries (i.e. those individuals who are disabled, under age 65, and qualify for both Medicare and Medicaid benefits). Given the recent Congressional and agency emphasis on benefit integration for this relatively expensive population, GAO was asked to review opportunities to improve their care while reducing spending. GAO examined 1) spending, utilization, and health status patterns for the portion of this population with the highest spending; 2) the extent to which integrated dual special needs plans (D-SNPs) provided high quality of care for this population while controlling Medicare spending; and 3) D-SNPs’ and traditional MA plans’ performance in serving this population based on quality and resource use measures. GAO found that moderately better health outcomes for disabled dual-eligible beneficiaries in D-SNPs relative to those in traditional MA plans did not translate to lower levels of costly Medicare services such as inpatient stays, readmissions, and emergency room visits. These results were similar whether dual-eligible beneficiaries were at risk for high Medicare spending, aged, or aged and enrolled in Fully Integrated Dual-Eligible (FIDE) SNPs. Given these findings, GAO suggests that CMS’ expectations regarding the extent to which integration of benefits will produce savings through lower use of costly Medicare services “may be optimistic”. While operating specialized plans and integrating benefits could lead to improved care, GAO concludes, these conditions may not reduce dual-eligible beneficiaries’ Medicare spending compared with Medicare spending in settings without integrated benefits.
  • On September 30, 2014, GAO issued a legal opinion regarding ACA the risk corridors program for QHPs offered through the Health Insurance Exchanges. As established by section 1342(b)(1) of the ACA, the risk corridors program provides that HHS will make payments to QHPs experiencing losses above a set amount; conversely, plans realizing gains above a set amount will make payments to HHS. The report was requested by House Energy and Commerce Committee Chairman Fred Upton (R-MI) and Senate Budget Committee Ranking Member Jeff Sessions (R-AL), who questioned HHS’ authority to make risk corridor payments. GAO’s review concludes that the CMS Program Management (PM) appropriation for 2014 would have been available to CMS to make risk corridor payments this year (though HHS reported that it did not make or receive any payments under 1342 this year). However, since HHS stated that it intends to begin collections and payments under the risk corridors program in 2015, GAO concludes that the CMS PM appropriation for FY 2015 must include language similar to that included in the FY 2014 appropriation in order for funds to be available next year.


  • On September 30, 2014, CMS released the first round of data through the Open Payments financial transparency program authorized under the ACA. Through Open Payments, CMS made available for the first time a list of consulting fees, research grants, travel reimbursements, and other “gifts” the healthcare industry—such as medical device manufacturers and pharmaceutical companies—provided to physicians and teaching hospitals during the last five months of 2013. The data contains 4.4 million payments valued at nearly $3.5 billion, attributable to 546,000 individual physicians and approximately 1,360 teaching hospitals. Future reports will be published annually and will include a full 12 months of payment data, beginning in June 2015. CMS gave physicians and hospitals 45 days to review payments attributed to them by manufacturers and group purchasing organizations (GPOs); in cases where the agency was unable to resolve disputes, the information was de-identified. Approximately 40 percent of the information published this week was de-identified, but CMS expects that data will be fully identifiable in 2015. The dataset may be accessed here.
  • On September 30, 2014, a federal district judge in Oklahoma ruled that the ACA’s premium subsidies cannot be made available to individuals who purchase health insurance on Federally-Facilitated Exchanges, granting summary judgment to the plaintiffs. The ruling is consistent with a decision this summer by a panel of the US Court of Appeals for the District of Columbia (Halbig v. Burwell), which held that the ACA’s plain language requires the IRS to calculate tax credits for premiums only for QHPs “which were enrolled in through an Exchange established by the State[.]” The D.C. Circuit has voted to hear the Halbig case en banc. In his ruling, Judge Ronald A. White holds that the IRS Rule implementing the ACA’s tax credit provision for both State- and Federally-Facilitated Exchanges is “arbitrary, capricious, an abuse of discretion or otherwise not in accordance with law, . . . in excess of statutory jurisdiction, authority, or limitations, or short of statutory right, . . . or otherwise is an invalid implementation of the ACA.” In so holding, he notes that the case is “a case of statutory interpretation” and that, by vacating the IRS Rule, the court in such a case “does not ‘gut’ or ‘destroy’ anything,” but rather “is upholding the Act as written.”
  • On September 29, 2014, the Patient-Centered Outcomes Research Institute (PCORI) convened a public forum on its proposed process for peer review and public release of its primary research findings. PCORI is receiving public comments on the proposed process through Friday, November 7, 2014. On September 30th, the PCORI board approved 46 new proposals, totaling nearly $102 million, to fund a range of patient-centered clinical comparative effectiveness research (CER) projects. The new awards include support for studies focused on two high-impact topics: obesity and the challenges of making smooth transitions as patients move from a hospital to home. More information on the awards may be found here.

This advisory is published by Alston & Bird LLP’s Health Care practice area to provide a summary of significant developments to our clients and friends. It is intended to be informational and does not constitute legal advice regarding any specific situation. This material may also be considered attorney advertising under court rules of certain jurisdictions.

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