On September 28, 2015, the Centers for Medicare & Medicaid Services (“CMS”) issued a request for information (“RFI”) seeking comments on two key components of the physician payment reform provisions included in the Medicare Access and CHIP Reauthorization Act of 2015 (“MACRA”), the law enacted on April 16, 2015, repealing the sustainable growth rate formula used to update payment rates under the Medicare Physician Fee Schedule.  The RFI was originally open for a 30-comment period.  However, CMS has announced that it is extending the comment period for an additional 15 days.  Comments to the RFI are now due to CMS on November 17, 2015.

The RFI included an extensive list of questions related to the implementation of the Merit-Based Incentive Program System (“MIPS”), as well as adoption and physician participation in Alternative Payment Models (“APMs”) and Physician-Focused Payment Models (“PFPMs”).  More details on the questions that CMS has raised and the areas where CMS is seeking input in the RFI are discussed in the Epstein Becker Green Client Alert, “New Opportunity to Comment on Key Components of Medicare Physician Payment Reform: CMS Issues 30-Day Request for Information on MIPS and APMs.”

Importantly, in the CMS announcement extending the public comment period released on October 15, 2015, CMS identified sections and questions in the RFI that are of higher priority to the agency.  For example, CMS has ranked questions about how physicians should be identified to determine eligibility, participation, and performance under the MIPS performance categories, and what measures and reporting mechanisms should be used for each of the four MIPS performance categories (quality, resource use, clinical practice improvement activities, and meaningful use of certified electronic health record technology), above questions about public reporting requirements, use of measures from other payment systems, and the weighting of performance categories and the determination of performance scores and thresholds.  Similarly, for questions related to the adoption of APMs, CMS has prioritized questions about how to define the amount of services furnished through an eligible APM entity, how to determine the Medicare and other payer payment thresholds used to identify qualifying and partial qualifying APM participants, and how to compare state Medicaid medical home models to medical home models expanded under Section 1115A(c) of the Social Security Act.  Given the short period of time to provide comments to CMS, stakeholders should consider the priority rankings that CMS has assigned to the various topics that it is seeking input on.

All stakeholders, not just physicians, should consider how the fundamental shift in Medicare physician payments, from traditional fee-for-service to value-based models, will impact them.  It is important to engage with CMS now by submitting comments to the RFI, in order to shape how these new payment mechanisms are implemented in the years to come.  For additional information about the physician payment reforms implemented in MACRA, or if you are interested in submitting comments to CMS, please contact Lesley Yeung or the Epstein Becker Green attorney who regularly handles your legal matters.

In January 2015, CMS announced that it was considering developing voluntary clinical templates to help physicians adequately document their encounters with Medicare patients who receive home health services.[1] CMS initially proposed a sample paper template progress note and suggested clinical template elements for an electronic progress note. CMS hosted three Special Open Door Forums to solicit feedback on the proposed templates from physicians, home health agencies, and other interested stakeholders to provide feedback on the proposed templates.

On August 12, 2015, CMS announced that a suggested clinical template had been submitted to the Office of Management and Budget (OMB) for review.[2] Although CMS had initially proposed the creation of separate paper and electronic templates, the proposed progress note template that was submitted to OMB combines the information into one template.

The proposed template is designed as a paper progress note that includes a list of clinical elements that will allow electronic health record vendors to create prompts to assist physicians when documenting eligibility and the face-to-face encounter. The template is intended to help physicians and allowed non-physician practitioners capture necessary information, to increase compliance with Medicare requirements, and to reduce the possibility that home health claims will be denied for failure to meet Medicare requirements. CMS estimates that it will take approximately 10 minutes to complete the electronic template and approximately 15 minutes to complete the paper template.

Use of the proposed template will be completely voluntary. Physicians and home health agencies must still ensure that the patient’s medical record supports certification of the home health benefit, as the Progress Note Guidance specifies that “completion of this Progress Note alone will not substantiate eligibility for the Medicare Home Health Benefit.” However, the elements included in the proposed template do provide an indication of what CMS may consider adequate documentation of the face-to-face encounter and of a patient’s eligibility for home health services.

Public comments on the proposed template are due by October 13, 2015 and may be submitted electronically via http://www.regulations.gov, or by mail.

[1] Home Health Medical Review and Home Health Electronic Clinical Template.

[2] 80 Fed. Reg. 48,321 (Aug. 12, 2015).

By Arthur J. Fried, Patricia M. Wagner, Adam C. Solander, Evan Nagler, and Jonathan Hoerner

On September 2, 2015, the U. S. Department of Health and Human Services (“HHS”) announced a $750,000 settlement with Cancer Care Group, P.C. (“CCG”), a radiation oncology practice in Indiana, for Health Insurance Portability and Accountability Act of 1996 (HIPAA) Privacy and Security Rules violations. The alleged violations occurred in 2012, but a subsequent HHS Office for Civil Rights (OCR) investigation led to allegations from OCR that there was a lack of compliance with HIPAA Privacy and Security Rules requirements dating back to 2005.

CCG notified OCR on August 29, 2012 of a data breach of electronic protected health information (ePHI) resulting from the theft of a laptop bag that was left unattended in an employee’s car.  The bag contained a laptop computer and unencrypted backup storage media.  OCR estimated that the stolen data included the names, addresses, dates of birth, Social Security numbers, insurance information, and clinical information of approximately 55,000 current and former patients.

After receiving notification of the breach, OCR conducted an investigation that OCR alleged revealed CCG was in “widespread non-compliance with the HIPAA security rule.”  Specifically, OCR determined that CCG failed to conduct an enterprise-wide risk analysis at any time between April 21, 2005 (the compliance date of the Security Rule) and November 5, 2012, almost 5 months after the data breach.  OCR also determined that CCG also failed to have in place a written policy covering the removal of hardware and electronic media containing ePHI from CCG facilities.  OCR noted that an enterprise-wide risk analysis would have determined that removal of unencrypted media was a high risk to the group’s ePHI security.

In addition to the $750,000 payment, the settlement requires CCG to adopt a robust corrective action plan to correct HIPAA compliance program deficiencies. The entire Resolution Agreement can be viewed here.

This case highlights the need for all covered entities and business associates to conduct regular risk assessments and vulnerability testing.  A proper risk assessment will help organizations to identify vulnerabilities to the ePHI they store. While the Security Rule does not mandate encryption, as it is an addressable implementation specification, this settlement again reinforces OCR’s position that unencrypted computer hard drives, mobile devices, and electronic media will be under intense scrutiny should a breach occur. Thus, in most instances it is advisable for those types of devices to be encrypted.

The Health Resources and Services Administration (“HRSA”) issued a notice proposing guidance under the 340B Drug Pricing Program.  The proposed Omnibus Guidance was issued in pre-publication format and is available online at https://s3.amazonaws.com/public-inspection.federalregister.gov/2015-21246.pdf.  The notice is scheduled to be published in the Federal Register on August 28, 2015 and will be available at https://www.federalregister.gov/articles/2015/08/28/2015-21246/guidance-340b-drug-pricing-program-omnibus.

HRSA intends to finalize the proposed guidance after consideration of public comments.  The notice is open for a 60-day public comment period, with comments due on or before October 27, 2015.

The proposed Omnibus Guidance notice attempts to clarify current 340B Program requirements for covered entities enrolled in the 340B Program and for drug manufacturers that make their drugs available to covered entities under the 340B Program.  Highlighted below are some of the most notable aspects of the proposed guidance.

A.  340B Program Eligibility and Registration[i]

  • Among other clarifications and areas discussed, HHS is seeking comments on alternatives to demonstrating the eligibility of an offsite outpatient facility or clinic.

B.  Drugs eligible for purchase under the 340B Program[ii]

  • HRSA clarifies that the definition of “covered outpatient drug” excludes only those drugs in the designated sites of service described in the statute that are reimbursed under Medicaid as part of a bundled reimbursement rate for a service (not a drug billed to any other party or reimbursed separately by Medicaid).

C.  Individuals Eligible to Receive 340B Drugs

The proposed guidance clarifies the definition of eligible 340B patients by focusing on the prescriber’s relationship to the covered entity, the patient’s relationship to the covered entity, and the setting of the covered entity.  In HRSA’s interpretation, the criteria that determine if an individual is “a patient of the entity” eligible for the use of 340B drugs must be met on a “prescription-by-prescription or order-by-order basis.”[iii]  An individual is an eligible patient of a covered entity under the proposed guidance if all of the following conditions are met:

  1. The individual receives a health care service at a covered entity site which is registered for the 340B Program and listed on the public 340B database.
  2. The individual receives a health care service from a health care provider employed by the covered entity or who is an independent contractor for the covered entity, such that the covered entity may bill for services on behalf of the provider.
  3. An individual receives a drug that is ordered or prescribed by the covered entity provider as a result of the service described in (2). An individual will not be considered a patient of the covered entity if the only health care received by the individual from the covered entity is the infusion of a drug or the dispensing of the drug.
  4. The individual receives a health care service that is consistent with the covered entity’s scope of the grant, project, or contract.
  5. The individual is classified as an outpatient when the drug is ordered or prescribed. The patient’s classification status is determined by how the services for the patient are billed to the insurer (e.g., Medicare, Medicaid, private insurance). An individual who is self-pay, uninsured, or whose cost of care is covered by the covered entity will be considered a patient if the covered entity has clearly defined policies and procedures that it follows to classify such individuals consistently.
  6. The individual has a relationship with the covered entity such that the covered entity maintains access to auditable health care records which demonstrate that the covered entity has a provider-to-patient relationship, that the responsibility for care is with the covered entity, and that each element of this patient definition in this section is met for each 340B drug.[iv]

In the summary of the proposed guidance, HRSA discusses the applicability to the patient definition to the following scenarios.[v]

  • An individual that sees a physician in private practice for follow-up care from a covered entity is not an eligible patient since the private practice is not listed in the 340B database.
  • An individual is not an eligible patient when the health care is provided by an organization that has an affiliation arrangement with the covered entity (even if the covered entity has access to the affiliate’s records).
  • Privileges or credentials at a covered entity are not sufficient to demonstrate that a patient treated by the privileged provider is an eligible patient of the covered entity.
  • The proposed guidance explains that a covered entity’s employees must independently meet the eligible patient definition and are not automatically eligible patients by status of their employment. Even covered entities with self-funded plans, which are financially responsible for employees’ health care, and contract with loosely affiliated health care professionals, must have its employees independently meet the eligible patient definition.

D.  Covered Entity Responsibilities

Diversion

  • In discussing drug inventory/replenishment models in the summary to the proposed guidance, HRSA definitively states that an improper accumulation, even prior to the placement of an order, equals diversion and constitutes a violation.[vi]

Prohibition of Duplicate Discounts[vii]

  • Covered Entities can select whether to use 340B drugs for its Medicaid Managed Care Organization (“MCO”) patients and can vary the selection at different covered entity sites and MCOs as long as such distinction is made available to HHS. In addition, a covered entity should have mechanisms in place to identify MCO patients.
  • The proposed guidance reserves the right to make the covered entity MCO carve-in or carve-out information publicly available through an Exclusion File or other mechanism.
  • With respect to contract pharmacy arrangements, the default position in the proposed guidance is that contract pharmacies will not dispense 340B drugs for Medicaid Fee-for-Service (“FFS”) or MCO patients. The summary to the proposed guidance states that if a covered entity wishes for its contract pharmacy to dispense 340B drugs to Medicaid FFS or MCO patients, the covered entity will provide HHS a written agreement with its contract pharmacy and State Medicaid agency or MCO that describes a system to prevent duplicate discounts.[viii]

Maintenance of Auditable Records[ix]

  • HRSA is proposing a record retention standard of 5 years for manufacturers and covered entities.
  • For covered entities, a systemic failure to maintain records adequate to permit auditing is considered a failure to meet the statutory audit requirements, and constitutes grounds for a loss of eligibility and termination from the program.

E.  Contract Pharmacy Arrangements[x]

  • The proposed guidance does not include any limitation on the number of contract pharmacies permitted (“one or more licensed pharmacies”) to dispense 340B drugs to the covered entity’s patients.
  • HRSA reiterates its long-standing position that a covered entity “retain complete responsibility” for contract pharmacy compliance with program requirements. The proposed guidance contemplates that Covered Entities will conduct quarterly reviews (i.e., a comparison of the covered entity’s prescribing records to the contract pharmacy’s dispensing records) in addition to independent annual audits.

F.  Manufacturer Responsibilities[xi]

  • HRSA includes guidance regarding limited distribution plans, such as specialty pharmacy or restricted distribution networks, and requires advance written notification of such plans to HRSA in advance of their implementation.
  • HRSA proposes to require manufacturer credits or refunds both in routine instances of retroactive adjustment to relevant pricing data as well as exceptional circumstances such as erroneous or intentional overcharging for covered outpatient drugs. Manufacturers would not be allowed to calculate refunds in any manner other than by individual NDC including (but not limited to) aggregating purchases, de minimis amounts, and netting purchases.  This refund or credit is expected to occur within 90 days of the determination by the manufacturer or HHS that an overcharge occurred.
  • HRSA proposes to extend the requirement for an annual recertification to manufacturers, in which case they would be required to review and update their 340B database information, including the NDCs subject to 340B pricing.

G.  Rebate Option for AIDS Drug Assistance Programs[xii]

  • HRSA proposes that AIDS Drug Assistance Programs seeking access to 340B prices  either purchase directly (i.e., at the 340B ceiling price) or, in order to receive a rebate after the purchase, make an election at the time of registration and inform HRSA that the it intends to pursue a rebate mechanism.
  • In addition, AIDS Drug Assistance programs choosing the rebate or hybrid option are expected to make a “qualified payment” and submit claims-level data to the manufacturer to support that payment. A “qualified payment” for a covered outpatient drug includes (i) a direct purchase at a price greater than the 340B ceiling price or (ii) a payment of the health insurance premiums that cover the covered outpatient drug purchases at issue and payment of a copayment, coinsurance, or deductible for the covered outpatient drug.

H.  Program Integrity[xiii]

  • Expanded program integrity provisions clarify HRSA audits of covered entities (including their child sites and contract pharmacies) and manufacturers and their contractors (such as wholesalers). All HRSA audits require the auditee’s provision of auditable records, HRSA’s initiation of notice and hearing procedures prior to making a final determination regarding compliance, and the opportunity to submit a corrective action plan to HRSA to address noncompliance.

In addition to the areas highlighted above, the proposed guidance contains additional clarifications regarding fundamental 340B Program issues, such as covered entity eligibility and registration, annual recertification, the GPO prohibition, and duplicate discounts.

_____

[i] Omnibus Guidance, Section II.A, p.8.

[ii] Id. at Section III.B, p.72.

[iii] Id. at Section III.C(a). p. 72.

[iv] Id. at Section III.C(a)(1)-(6), p. 72-3.

[v] Id. at Section II.C.(a)(1)-(6), p. 24-8.

[vi] Id.at Section II.C Drug inventory/replenishment models, p. 29.

[vii] Id. at Section III.D Prohibition of duplicate discounts (a)(2) and (c), p.74-5; Section III.E at (b)(2), p.78-9.

[viii] Id. at Section II.D Contract pharmacy, p. 35,

[ix] Id. at Section III.D Maintenance of auditable records, p. 76-7.

[x] Id. at Section III.E(b)(3), p. 79.

[xi] Id. at Section III.F Obligation to offer 340B prices to covered entities at (c), p. 81; Procedures for issuance of refunds and credits, p.82; and Manufacturer recertification, p. 82.

[xii] Id. at Section III.G(a)-(c), p. 83.

[xiii] Id. at Section III.H HHS audit of a manufacturer and its contractors (a)-(b), p. 88-9.

On Tuesday, September 1, 2015, from 1:00 PM to 2:00 PM ET, George BreenChair of Epstein Becker Green’s National Health Care and Life Sciences Practice Steering Committee, will co-present “Opportunities and Obstacles: Preparing for the Transition to the ICD-10 Code Set,” a webinar hosted by Bloomberg BNA.

With the transition to the ICD-10 code set coming in October, the health-care industry is grappling with adopting new technology and making last-minute preparations. The switch to ICD-10 also presents new opportunities to increase productivity and improve patient health.

The International Classification of Diseases is a standardized coding system used by providers for identifying illnesses and treatments, as well as for reimbursement. ICD-10 updates health-care diagnoses and procedure codes from the currently used 13,000 in ICD-9 to 68,000, and will be required for all entities covered under the Health Insurance Portability and Accountability Act.

Providers have several concerns about ICD-10, including how it will affect their reimbursements. Health-care professionals are going to have differences over what constitutes the correct diagnosis code under ICD-10, which might negatively impact reimbursement and also result in fraud and abuse concerns.

Epstein Becker Green would like to offer you a 25% discount off the registration fees for this program.  To sign up at this discounted rate, please follow the steps below:

  1. Go to http://www.bna.com/opportunities-obstacles-preparing-m17179930152/
  2. Click on “add to cart.”
  3. Sign in to your bna.com account – if you do not have a bna.com account, please click “create an account & continue”
  4. On the checkout screen you will see a box on the right side labeled “promotion code”.  Please enter the code FIRMDISC25 in this box and click submit.  Then click proceed to checkout.

On April 2, 2015, Thomas Galassi, Director of the Directorate of Enforcement for OSHA, sent a memorandum to all Regional Directors announcing that the agency’s National Emphasis Program on Nursing and Residential Care Facilities would be extended until replaced by updated guidance or removed by the agency.  Mr. Galassi went on to state that, because the health care industry reports more work-related injuries and illnesses than any other general industry,

the Agency will continue to use both enforcement and collaborative efforts to address hazards such as musculoskeletal disorders from lifting patients or residents, exposures to tuberculosis, bloodborne pathogens, workplace violence, and slips, trips and falls. We are advising you of the Agency’s intent to soon issue updated guidance that instructs OSHA offices to allocate enforcement and other resources to additional inpatient healthcare facilities, such as nursing homes and hospitals that have occupational illness and injury rates above the industry average.

For the full blog post by our colleague Valerie Butera, please visit the OSHA Law Update blog.

By Alan J. Arville, Constance A. Wilkinson and Selena M. Brady

The House of Representatives Energy and Commerce Committee (“the Committee”) circulated draft language to include in its 21st Century Cures legislation earlier this week to reform the 340B drug discount program (the “340B Program”). Although the draft 340B language was pulled from the legislation yesterday, the language proposed provides insight into what future legislative reform may include. The draft language, if adopted, would have a substantial impact on all 340B Program stakeholders, including, covered entities, contract pharmacies, 340B technology vendors, and drug manufacturers.

The draft language addressed the concerns of several Committee members during the Health Subcommittee hearing on March 24, 2015 (discussed here), including the lack of clarity surrounding the patient eligibility definition, the lack of transparency on how hospital-based covered entities use 340B savings to benefit underserved patients, and the Health Resources and Services Administration’s (“HRSA”) limited authority to issue regulations and enforce 340B Program requirements. In addition, the draft language would impose several new requirements on 340B contract pharmacy arrangements. The following summarizes several key provisions included in the draft language.

Patient Eligibility Definition

The proposed language defining “patient” did not significantly deviate from the existing definition set forth in HRSA’s 1996 guidance, but added a requirement that the patient have an “in-person” clinical or medical visit at the covered entity.

New Obligations for Covered Entities

The draft language proposed several new requirements of covered entities in order to participate in the 340B Program, including the following:

  • Covered entities would pay a user fee not to exceed 0.1 percent of covered outpatient drug purchases.
  • Covered entities with high volume purchases would be required to conduct an annual independent audit of the entities’ 340B Program compliance, and provide the results to the Department of Health and Human Services (“HHS”).
  • Hospital-based covered entities (except for critical access hospitals) would be subject to substantial new reporting requirements, including the submission of an annual report detailing the following: (1) patient breakdown by payor and the aggregated amount of acquisition cost and reimbursement for covered outpatient drugs by payor, (2) the use of its 340B Program revenue relating to the access and provision of health care for the uninsured, underinsured, underserved and medically vulnerable, (3) its prevention of duplicate discounts, (4) the number of covered outpatient drugs dispensed by each of its contract pharmacies, (5) the amount of uncompensated care, and (6) the name of any third parties or vendors that administer its inventory management system or contract pharmacy arrangement.

Guidance on Contract Pharmacies

The proposed language also addressed contract pharmacies and imposed some potentially onerous obligations for covered entities and contract pharmacies. The contract pharmacy language required covered entities utilizing contract pharmacies to:

  • Have a contractual agreement in place with each contract pharmacy;
  • Register the contract pharmacy agreement and the contract pharmacy’s “distance” from the covered entity with HRSA;
  • Ensure compliance of each contract pharmacy agreement with the requirements to prevent drug diversion and duplicate discounts;
  • Develop a mechanism to track the income of the patients of the covered entity and the amount such patients pay to receive covered outpatient drugs from the contract pharmacy;
  • Maintain and ensure that each contract pharmacy maintains, auditable records;
  • Develop a process and conduct review of prescribing and dispensing records to identify irregularities; and
  • Provide annual audits of the contract pharmacy to be conducted by an independent auditor.

Expanded HHS Authority

The proposed changes would have provided HHS with the authority to establish limits on what the uninsured pay for 340B drugs and allowed HHS to impose new penalties on covered entities for non-compliance with the 340B Program. Perhaps, most significantly, the proposed language would have given HHS the authority to issue regulations addressing several areas of the 340B Program including, but not limited to, covered entity eligibility, patient definition, contract pharmacy arrangements, covered entity reporting requirements, duplicate discounts, limits on amounts charged to uninsured patients, and penalties for non-compliance.

On March 24, 2015, the House of Representatives Energy and Commerce Health Subcommittee[1] (the “Subcommittee”) held a 340B Program hearing with testimony from the Deputy Administrator of Health Resources and Services Administration (“HRSA”), the Director of the Office of Pharmacy Affairs (“OPA”) of HRSA,[2] the Director of Health Care of the Government Accountability Office (“GAO”), and Assistant Inspector General of the Office of Evaluation and Inspection of the U.S. Department of Health and Human Services (“HHS”) Office of Inspector General (“OIG”).

The purpose of the hearing was to assess the functionality of the 340B Program, and, in particular, HRSA’s activities to address the findings in the GAO report, issued in September 2011, titled “Manufacturer Discounts in the 340B Program Offer Benefits, but Federal Oversight Needs Improvement,”[3] and OIG report, issued in February, 2014, titled “Contract Pharmacy Arrangements in the 340B Program.”[4]

The GAO issued a follow-up report on March 24, 2015, titled “Drug Discount Program, Status of GAO Recommendations to Improve 340B Pricing Program Oversight.”  The follow-up report stated that HRSA had implemented two of the GAO’s four recommendations and that HRSA plans to address the remaining two recommendations to clarify the patient definition and hospital criteria for eligibility.  The OIG also recommended that HRSA clarify patient definition, particularly in to the context of contract pharmacies.  The OIG provided examples of how eligibility determinations in the contract pharmacy setting can result in diversion based on the lack of clarity in the patient definition.  Additionally, the OIG stated that HRSA could increase 340B Program transparency by sharing 340B ceiling prices with providers and Medicaid state agencies (though the OIG acknowledged that HRSA lacked the authority to share 340B prices with Medicaid state agencies).

Throughout the hearing, several members of the Subcommittee expressed their support for the Program and acknowledged that the 340B Program is necessary for hospitals, health centers, and other Covered Entities to serve underserved populations.  At the same time, Subcommittee members expressed concerns that the 340B Program needs greater clarity, oversight by HRSA, and transparency.  Subcommittee Chairman Joseph R. Pitts’ (R.-PA) opening statement sums up the message delivered by Congress:

“This program, designed to stretch scarce federal dollars, is critically important for indigent and low-income patients who may otherwise be unable to access needed drugs or afford treatment. . . . One thing I hope we can all agree on, is that to preserve the 340B program and ensure that it is serving those who most need help, greater oversight and transparency is needed to increase the program’s accountability. Today’s hearing marks the first step in that direction.”[5]

The following are several themes that were discussed during the hearing:

  • Chairman Pitts suggested that Medicaid expansion as a result of the Affordable Care Act may lead to more hospitals meeting the disproportionate share hospital (“DSH Hospitals”) percentage, and thus, becoming Covered Entities under the 340B Program. Chairman Pitts questioned whether the DSH percentage was an appropriate proxy for determining the extent to which a hospital serves low income populations and whether a different methodology would be more appropriate.
  • A few Subcommittee members expressed concern that DSH Hospitals have no obligation to report how 340B savings are used to benefit underserved patients. One member expressed the more specific concern that there was no transparency to determine the extent to which the 340B discount is passed on to uninsured individuals.   The Subcommittee members contrasted this with HRSA grantees, such as health centers, which are required to reinvest proceeds to advance grant purposes. HRSA’s Deputy Administrator noted that such reporting and use of 340B savings by DSH hospitals is not required by the statute and, in response, a member of the Subcommittee suggested that this was an issue being discussed among the members that could potentially require a legislative fix.
  • A few Subcommittee members broached the topic whether, in light of HRSA’s limited rulemaking authority, whether HRSA’s issuance of guidance was a “long term solution” and whether HRSA needed more expansive rulemaking authority. Although HRSA’s Deputy Administrator acknowledged that enforcement of rules would strengthen HRSA’s oversight, the Deputy Administrator did not explicitly request rulemaking authority or other legislative change and stated simply that HRSA would use all the tools at its disposal to enforce 340B Program compliance.
  • Certain Subcommittee members expressed concern over the lack of clarity surrounding the patient eligibility definition; noting that compliance cannot be enforced if the definition is unclear.
  • Several Subcommittee members expressed concern and asked questions regarding the transparency of 340B ceiling prices to Covered Entities and the length of time it has taken HRSA to implement the pricing database. HRSA noted that the secure website would be operational later this year. Other Subcommittee members posed questions regarding whether the ceiling prices needed to be shared with state Medicaid agencies, even though HRSA does not have such authority.

Based on the Subcommittee’s questions and the testimony, it appears that the Subcommittee is intent on “preserving” the 340B Program, and exploring whether legislative “fixes” are needed.  The Subcommittee discussed some areas that can only be addressed through the legislative process, such a change of methodology to 340B hospitals, and transparency requirements with respect to the utilization of 340B savings.

However, there currently does not appear to be any consensus on the scope of such legislation, or even whether legislation is needed.  Ultimately, legislation will likely depend on HRSA’s ability to ensure 340B Program compliance with its current tools, including Covered Entity and manufacturer audits, limited rulemaking authority, and the issuance of guidance.

[1] The full Energy and Commerce committee has primary jurisdiction over the 340B Program in the House of Representatives.

[2] The Office of Pharmacy Affairs is tasked with Administratoring the 340B Program.

[3] http://www.gao.gov/products/GAO-11-836

[4] http://oig.hhs.gov/oei/reports/oei-05-13-00431.pdf

[5] Opening Statement of Subcommittee Chairman Joseph R. Pitts, available at http://energycommerce.house.gov/hearing/examining-340b-drug-pricing-program.

The Centers for Medicare & Medicaid Services (“CMS”) expects Qualified Health Plan (“QHP”) Issuers to be more familiar with Marketplace requirements and better reflect those standards in Issuers’ written policies and procedures, officials stated at the recent 2015 QHP Certification Conference held at CMS Headquarters in Baltimore, Maryland.

Twenty-three Issuers across fifteen Federally-facilitated Marketplace (“FFM”) States were audited for compliance with Federal QHP requirements during 2014.  The audits focused largely on QHP’s policies and procedures relating to FFM operations, including oversight of first tier, downstream and related entities (“FDRs).  While CMS held to its previously announced policy to not pursue sanctions against non-compliant Issuers which made a good faith effort to comply with requirements, officials noted that audit findings showed a lack of familiarity with Federal QHP requirements.  Many QHPs’ Marketplace-related policies and procedures were either non-existent, newly created near the time of the audit or generic, not addressing Marketplace-specific requirements.  Other common findings included QHP failure to:

  • Meet notice accessibility requirements;
  • Address requirements on maintaining current and accurate provider directories;
  • Ensure compliance with agent/broker training and registration requirements; and,
  • Ensure that agent/broker compensation is equal inside and outside the Exchange.

CMS is reviewing available data to select Issuers for audit during 2015.  Audit initiation will be staggered throughout the year and may be conducted on a standard or expedited timeframe.  The process may be managed as a desk review or may be onsite, but will include review of QHP systems and documents as well as interviews and will look at QHP oversight of FDRs.  Despite CMS’s decision to extend its good faith compliance policy through 2015, it may be difficult to find a QHP to have acted in good faith where policies and procedures fail to reflect FFM requirements, such requirements remain unimplemented or QHPs fail to monitor contractor compliance with FFM rules.

CMS announced on February 13  (and to be published in a Federal Register notice this week) that despite the general guideline that final rules be issued within 3 years of a proposed or interim final rule, CMS will be taking an additional year to finalize the “Medicare Program; Reporting and Returning of Overpayments” final rule.   In February 2012 (see EBG’s February 22, 2012 Client Alert), CMS issued a proposed rule on the requirements under the ACA to report and return overpayments within 60 days to the Medicare program for providers and suppliers of services under Parts A and B.  CMS stated, “in this case, the complexity of the rule and scope of comments warrants the extension of the timeline for publication.”

While this does not otherwise impact the necessity, per the statute, that overpayments must be returned, as CMS reminds in its announcement – it is interesting that CMS has taken this long to finalize a rule implementing this requirement.  Significantly, this delay means we still await the fate of CMS’s proposal to implement a ten-year look-back period for paid claims – in contrast to the current 4 year period for claims re-openings, except in cases of fraud.