The Eliminating Kickbacks in Recovery Act of 2018-The New All-Payor Anti-Kickback Statute

By William J. Spratt, Jr. on Posted in Fraud & Abuse & False Claims Act, Health Insurers & Managed Care Organizations, Healthcare Law

The enactment, on October 24, 2018, of a federal law with a far too complicated name, i.e. the “Substance Use–Disorder Prevention that Promotes Opioid Recovery and Treatment for Patients and Communities Act” or the “SUPPORT for Patients and Communities Act”, created an all-payor anti-kickback statute aimed at prohibiting certain marketing practices of the substance abuse treatment community. Specifically, within the Act is the Eliminating Kickbacks in Recovery Act of 2018 (EKRA), which charts new ground for permissible ways to compensate employees and contractors engaged by “recovery homes,” “clinical treatment facilities,” and “laboratories.”

In the course of criminalizing certain payment arrangements, the Act has created a conflict with the federal Anti-Kickback Statute (AKS). The payment exceptions to the Act resemble the federal safe harbor regulations to the AKS. But, notably, the permissible compensation arrangements for employees and independent contractors diverge from the AKS and the safe harbor regulations. First, it treats employees and independent contractors the same. The exception to the AKS and the safe harbor regulation have often been cited to support compensation paid to a bona fide employee on a commission basis, notwithstanding divergent positions taken in case law and distinctions referenced by the Office of Inspector General in advisory opinions. But it would not be permissible under EKRA if the compensation is based on: (a) the number of individuals referred to a particular recovery home or clinical treatment facility; (b) the number of tests or procedures performed; or (c) the amount billed to or received from, the health care benefit program from the individuals referred. Unlike EKRA, Compensation paid to a bona fide employee in the provision of covered items and services is an exception to the payment proscription.  Independent contractors do not enjoy that same exception. Continue Reading

New Year, New Wellness Program Rules

By Erin M. O'Neal and Beth Alcalde on Posted in Accountable Care Organizations, Healthcare Law

Employers with established wellness programs that collect health information and/or require a medical exam can no longer rely on the EEOC regulations to justify that incentives provided under their wellness programs are voluntary. On December 20, the EEOC published a final rule (83 Fed. Reg. 65296) vacating the rules that allowed employers to offer those financial incentives to workers who participated in those wellness programs.

The EEOC entered the wellness program regulation arena in 2016 with rules under the Americans with Disabilities Act (ADA) and the Genetic Information Nondiscrimination Act (GINA). The ADA and GINA Wellness Program Rules required employers sponsoring wellness programs that collect health information (such as through a health risk assessment) and/or require a medical exam (for example, a biometric screening) to satisfy certain requirements. One such requirement involved limiting incentives under the wellness program to 30% of the cost of health coverage, so that the wellness program would qualify as a “voluntary” employee health program. Continue Reading

CVS Completes Acquisition of Aetna

By James M. Burns on Posted in Antitrust, Government Affairs, Licensure & Regulatory, Healthcare M&A, Joint Ventures, Transactions & Health Ventures

In a filing with the Securities and Exchange Commission on November 26, CVS Health Corporation announced that it has received all of the regulatory approvals necessary to complete its acquisition of Aetna and that the transaction will close on or before November 28. The announcement follows the recent approvals of the deal received from California and New York regulators. CVS previously received approval for the deal from the United States Department of Justice Antitrust Division in October, conditioned upon CVS’s agreement to divest Aetna’s Medicare Part D business to Wellcare. CVS has already begun steps to satisfy that requirement. Continue Reading

DOJ Settles “Anti-Steering” Antitrust Case Against Atrium Health

By James M. Burns on Posted in Antitrust, Government Affairs, Licensure & Regulatory

The United States Department of Justice Antitrust Division announced on November 15 that it was settling its antitrust lawsuit against Atrium Health (formerly known as Carolinas Health System). The action, United States v. Atrium Health, filed in the United States District Court for the Western District of North Carolina, challenged Atrium’s use of restrictions in its contracts with commercial insurers that the Antitrust Division contended had anticompetitive effects, preventing health insurers from promoting more cost-effective healthcare services for consumers in and around Charlotte, North Carolina.

Atrium is the largest healthcare system in North Carolina, and operates nine general acute-care hospitals in Charlotte, North Carolina.  In 2016, the Antitrust Division, together with the North Carolina Attorney General’s Office, filed a suit against Atrium, contending that Atrium had used its dominant market position in Charlotte to force insurers to refrain from engaging in practices that might “steer” members to lower cost providers (principally through the creation of narrow networks and/or tiered networks that would not have included Atrium, absent the contractual prohibition). The Antitrust Division also alleged that Atrium’s contracts constrained insurers from providing consumers and employers with information regarding the cost and quality of alternative health benefit plans. Continue Reading

Privacy Policy: The Midterm Effect

By Robert E. Slavkin on Posted in Electronic Health Records & Medical Records, Healthcare Law, Technology

Congress has long attempted to grapple with issues of cyber-security, both within the healthcare field, and generally in the United States.  The Health Insurance Portability and Accountability Act (HIPAA), as well as the Health Information Technology for Economic and Clinical Health Act (HITECH) have provided significant compliance requirements for healthcare entities in the area of data security. For the last eight years, though, a united Congress has not addressed whether or not there should be a federal standard for how companies as a whole manage electronic data. Additionally, there is yet to be a federal law that addresses curtailing attempted foreign disruption of both government and private industry.

Ironically, it is possible that a divided Congress may do more to move the needle on cybersecurity than the current one? On most controversial issues, tax cuts, healthcare, there will likely be little to no movement due to partisan gridlock. However, issues like privacy tend to have bipartisan support, so there may be movement forward on the issue.

The issue of an overarching federal privacy regulation has been spurred on by the European Union’s General Data Privacy Regulation (GDPR) enacted earlier this year. It has caused all companies that do business in Europe to take a deep, hard look at their data infrastructure, and, in some cases, make significant investments in order to come into compliance. Additionally, states such as California enacted what is considered our country’s first laws to provide consumers with greater control of what companies may do with their data. In some ways, the California law contains similar aspects to the EU’s GDPR regulations.

Up until now, certain congressional committees have held hearings with tech industry representatives to discuss what a privacy framework might come to look like. Of course, as of yet, no proposed legislation has resulted from those conversations. With calls for action in the last several months from some industry giants such as Google and Microsoft, bipartisan action may not be far behind.

On-Line Resources Help Nonprofit Organizations Prepare for Cybersecurity Threats

By Elizabeth F. Hodge and Paul L. Kobak on Posted in Tax Exempt

The effects of a data breach can be disastrous for any company, but especially for a nonprofit organization, not only because of the harm to the affected individuals, including those served by the organization, but also the crippling effect it could have on day-to-day operations of an organization with limited resources. A security incident can also damage the organization’s reputation and ability to raise funds. Mitigating a data breach – which could include hiring network forensics investigators, retaining legal counsel, and sending breach notification letters to every person whose data may have been compromised – can get expensive quickly. Moreover, an organization’s own unintentional release of sensitive information could have consequences as serious as a security breach caused by a scammer.

Nonprofit organizations often collect personal information from a variety of sources such as donors, employees, volunteers, and the people who benefit from their services. This information is diverse and might include credit card and personal contact information of donors, financial and health information about the people served by the organization, and payroll and other employment information of its employees. The information collected and retained by nonprofit organizations is exactly the type of data cyber criminals pursue. Yet, often due to the nonprofit model, limited resources that could be used to proactively address cybersecurity threats may be allocated elsewhere. Even if resources are dedicated to cybersecurity, cyber criminals may perceive nonprofits as “soft targets.” Continue Reading

TV Drug Commercials Must Disclose the Drug’s List Price if HHS Adopts Proposed Rule

By Martin R. Dix and Thomas A. Range on Posted in Medicare & Medicaid, Pharmacy, Drugs, Medical Devices & Equipment

We are all familiar with prescription drug television commercials where it sounds like they hired a professional auctioneer to recite the drug side effects so fast you can hardly understand them. The U.S. Department of Health and Human Services (HHS) announced a proposed rule that would require pharmaceutical companies that advertise their prescription drug products on television to also disclose the “list price” (also known as the Wholesale Acquisition Cost) of certain drugs. The list price is the price that a drug manufacturer charges a drug wholesaler and does not include the wholesaler’s charges for delivering the drugs to the pharmacy or the pharmacy’s charges for dispensing the medication to the patient. Thus, list price is somewhat lower than an uninsured patient paying cash would normally pay and would be more useful to patients if it reflected what they could expect to pay for the drug.

Under the proposed rule, if a drug manufacturer advertises a prescription drug on television (including broadcast, cable, streaming, and satellite), the advertisement must disclose the list price of a 30-day supply for the drug if it can be reimbursed through Medicare or Medicaid. Drugs whose list prices do not exceed $35 per month for a 30-day supply or typical course of treatment will not be subject to the price-disclosure requirement.

The proposed rule is designed to encourage consumers to become more price sensitive, which in turn could minimize their out-of-pocket costs as well as the costs to prescription drug programs. Patients with high-deductible health plans often pay for their drugs until their insurance coverage is triggered. Additionally, seniors covered under Medicare Part D have coinsurance and out-of-pocket expenses. If consumers have access to better pricing information, HHS believes consumers may select lesser cost alternatives if all else is equal relative to the patient’s care. HHS also cites economic data indicating that a price-disclosure requirement would be likely to motivate drug manufacturers to be less willing to raise prices. Continue Reading

DOJ Approves CVS/Aetna Merger, Contingent on the Sale of Aetna’s Medicare Part D Business

By James M. Burns on Posted in Antitrust, Government Affairs, Licensure & Regulatory, Healthcare M&A, Joint Ventures, Transactions & Health Ventures

The United States Department of Justice Antitrust Division announced on October 10, 2018, that it was conditionally approving the CVS/Aetna merger, a $69 billion transaction that combines the nation’s largest retail pharmacy chain and the nation’s third largest health insurer. The deal, which was announced late last year, has been under review by the Antitrust Division (and state regulators) since that time. The approval is contingent upon the sale of Aetna’s Medicare Part D Individual Prescription Drug business to WellCare, which Aetna recently announced it was prepared to do to gain regulatory approval. Accordingly, while some additional state approvals are still required, the deal now appears poised to close before the end of the year.

Continue Reading

Drug Pricing Legislation Sent to the President for Enactment into Law

By James M. Burns on Posted in Antitrust, Government Affairs, Licensure & Regulatory, Healthcare Law, Pharmacy, Drugs, Medical Devices & Equipment

Two pieces of related legislation that would prohibit so called “gag clauses” in contracts between pharmacists and health plans and pharmacy benefit managers (PBM’s) have been passed by both the Senate and the House. The legislation prohibits any restrictions on the ability of pharmacists to alert consumers to situations where it may be less expensive for them to pay for prescription drugs out-of-pocket, rather than through their insurance benefits. The legislation received bipartisan support in both the Senate and the House, and is expected to be signed into law by the President (in September, President Trump tweeted his support for the legislation).

While the two bills apply to different insurance products, the provisions of both bills are largely the same. S. 2553, the “Know the Lowest Price Act of 2018,” prohibits contractual provisions that forbid a pharmacist from disclosing pricing information to enrollees with respect to Medicare Advantage and Medicare Part D drug plans, while S. 2554, the “Patient Right to Know Drug Prices Act,” eliminates such provisions in employee-sponsored and individual health insurance plans. By eliminating these restrictions, the legislation is designed to permit pharmacists to alert consumers that, on occasion, it may be less expensive for them to purchase drugs out-of-pocket, rather than through their insurance benefits. Notably, S. 2554 also amends the Medicare Prescription Drug, Improvement and Modernization Act of 2003 to require the reporting to the Federal Trade Commission of patent settlements between the manufacturers of biologics and biosimilar drugs (currently such reporting only applies to settlements between generic and branded pharmaceutical companies). Continue Reading

CMS Announces Loosening of Rules Regarding Part D Formularies

By Robert E. Slavkin on Posted in Health Insurers & Managed Care Organizations, Healthcare Law, Medicare & Medicaid, Pharmacy, Drugs, Medical Devices & Equipment

In a memorandum issued by the Centers for Medicare and Medicaid Management (“CMS”) on August 29, 2018, the federal government outlined new ‘flexibility’ and tools for Part D plans to “expand choices and lower drug prices for patients.” Beginning in 2020, Part D plans will be able to utilize what is called ‘indication-based formulary design’ to change their drug formularies to allow different drugs to be included for different indications. The theory behind this shift in policy is that it will allow Part D plans to negotiate more freely for lower drug prices. The theory also posits that such actions will provide Part D beneficiaries with more drug choices in a formulary.

At the present time, if a Part D plan includes a drug in a formulary, the Part D plan must provide coverage for all FDA-approved indications for the drug, even if another medication may be more appropriate for a certain diagnosis. The end result, according to the federal government, is that the present policy disincentivizes Part D plans from including more medications on a formulary, and thus, limits the Part D plans’ negotiating power. Continue Reading

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