Life Science Compliance Update

January 25, 2016

Office of Management and Budget To Revise Fraud Rules by Spring

The White House Office of Management and Budget released their 2016 rule agenda at the close of last year, laying out some of the goals they have for releasing final and proposed rules over the next year. In that agenda, revisions to three healthcare fraud and abuse rules are planned, including one that would increase the Office of Inspector General's ability to impose civil monetary penalties.

Three Rules for Office of Inspector General

Rule Number 0936-AA04, the rule affecting the OIG's Civil Monetary Penalty Rules, implements authority under the Affordable Care Act and authorizes Centers for Medicare and Medicaid Services to assess new penalties. CMS will be permitted to assess fines for failing to grant timely access to the OIG; for ordering and prescribing while excluded; for making false statements, omissions, or misrepresentations in an enrollment application; for failing to return an overpayment; or for making or using a false record or statement that is material to a false or fraudulent claim. The rule also aims to add clarity to the regulatory scheme and provide a blueprint for how to make regulations more accessible to the public. This rule is set to have final action taken by May 2016.

Rule Number 0936-AA05 focuses on Fraud and Abuse, and includes some revisions to the OIG's Exclusion Authorities. As you may recall, the Affordable Care Act expanded the OIG's authority to protect Federal health care programs from fraud and abuse. This Rule will update OIG regulations to codify the changes made by the Affordable Care Act, while also updating and clarifying the regulations pursuant to the Medicare Prescription Drug Improvement and Modernization Act of 2003. This rule will have final action taking place in May 2016.

The last of the three rules set to affect OIG this year by the Office of Management and Budget is Rule Number 0936-AA06. This Rule will amend the safe harbors to the anti-kickback statute and civil monetary penalty rules under the authority of the OIG. This final rule will ad some new safe harbors, some of which codify statutory changes set forth in the Medicare Prescription Drug Improvements and Modernization Act and the Affordable Care Act. The new safe harbors were created to protect certain payment practices and business arrangements from criminal prosecution and civil sanctions under the kickback provisions of the statute. This Rule will also codify the Affordable Care Act's revised definition of "remuneration" and add a gainsharing civil monetary penalty provision. This rule will have Final Action taken by June 2016.

Bonus Rule: Centers for Medicare and Medicaid Services

Another rule set to be released in 2016 is the final version of the sixty-day overpayments rule. The rule will require providers to return overpayments and to notify the agency that the payment was returned within sixty days of first identifying the overpayment. This rule will apply to Medicare Part A and B providers as well as suppliers.

The rule also provides for a ten-year "look back" period on claims that are not identified by a provider. The "look back" period has been harshly criticized from industry participants, arguing that the agency is "overstepping its statutory authority," in part because it conflicts with look back periods for Part C and D overpayments, which are significantly shorter.

This rule was originally slated to go into effect in February 2015, but was pushed back due to "exceptional circumstances" revolving around the rule's complexity and the volume of public comments received. While the rule being pushed back may seem like a positive move, providers and suppliers still must give back overpayments, whether the final rule is in effect or not. Penalties can now include potential False Claims Act liability carrying fines as high as $10,000 per unreturned overpayment and future exclusion from Medicare.

These agenda items and final rules are in addition to the HHS agenda items we have previously written about.

October 08, 2013

Health IT: White House Office of National Coordinator Issues Surveillance Guidance for Meaningful Use

According to a report at FierceEMR, The Office of the National Coordinator of Health IT has issued its first surveillance guidance to assist its ONC-Authorized Certification Bodies (ONC-ACBs), which certify which electronic health record products qualify for participation in the Meaningful Use Incentive program.

The ONC-ACBs are required by the permanent health IT certification program to conduct periodic surveillance of the EHR products they certify. The new guidance, issued July 2, outlines ONC's surveillance requirements, such as annual submission of a surveillance plan and surveillance approach. It flags four surveillance plan elements that ONC considers priorities for the ONC-ABCs to monitor:

  • Exchange capabilities
  • Safety-related capabilities
  • Security capabilities
  • Population-management capabilities

The guidance also states that the assessment of EHR developers' complaint processes is a priority of ONC, and that the ONC-ACBs' surveillance plans need to address how they will assess vendors' handling of complaints, especially safety-related ones.

And according to InformationWeek: The Certification Commission for Health IT, or CCHIT, is among the half-dozen ONC-ACBs that have been testing and certifying EHRs products under the temporary program. CCHIT will seek to be authorized under the permanent program as well, said CCHIT chair Karen Bell.

"The good news is that ONC has given us a year for the transition before the permanent program goes live," she said in an interview with InformationWeek. In the meantime, CCHIT will continue to test and certify products for ONC meaningful use certification.

The rules of the permanent certification program "also open the door" for organizations in the future to be authorized to test and certify other health IT products that aren't currently identified in the ONC's meaningful use programs, such as remote monitoring and other devices, said CCHIT's Bell.


As for CCHIT, Bell expects 2011 to be a busy year, not only as other vendors seek meaningful use certification, but also as many hospitals seek certification for their mix of various vendor systems and/or home-grown EHR systems.


"So far the biggest demand [for testing and certification] has been from vendors, but we expect demand will burst from hospitals," Bell said. CCHIT is piloting a testing and certification program for hospitals.

February 14, 2013

White House PCAST: Rival Countries Gaining on US Medical Research Spending

The Nation once led the world in investments in research and development (R&D) as a share of gross domestic product (GDP), but more recently, the United States has been investing less in R&D than other leading and emerging nations invest.  Moreover, U.S. industry has been shifting its investments toward applied R&D, narrowing the support for basic and early-stage applied research, which is crucial to transforming innovation.  

Without adequate support for such research, the United States risks losing its leadership in invention and discovery—the driving force behind the new industries and jobs that have propelled the U.S. economy over the past century.  

President Obama’s Council of Advisors on Science and Technology (PCAST) recently released a report maintaining that if the United States wants to maintain “its lead in technology and innovation, then the federal government must be willing to spend more on basic research and encourage industry investments.” 

PCAST said that U.S. investment in research and development as a fraction of gross domestic product “has dropped from first in the world to eighth, and is fourth in the world among large economies.  The report warns that this is a significant threat to long-term research if qualified researchers left for other countries couple with a private sector that is focused primarily on near-term results. 

At the report’s announcement, John Holdren, director of the White House Office of Science and Technology Policy and PCAST co-chair, said that the United States, for now, has no equal in terms of capabilities.  “Note that I said unmatched and not unrivalled,” said Holdren, “we do have rivals.  More and more of them all the time.” 

The report argues that losing a high ranking in science and innovation would cost the US jobs in science and supporting industries as well as benefits to safety, medicine and national security.  “More than half, and perhaps as much as 85 percent of productivity growth in the United States in the first half of the 20th century” can be attributed to technical advances, says the report.  It also describes the National Science Foundation, National Institutes of Health (NIH) and the Energy Department as the “primary stewards of basic research in the United States.” 

To promote domestic research, PCAST urges the government to increase research and development expenditures from the current level of 2.9 percent of GDP to 3 percent as well as create policy incentives that will increase the private sector's investment in long-term research.  Private industry currently accounts for some two-thirds of the total R&D expenses in the U.S. 

The report also warns against instabilities in funding, such as the looming sequestration, and says the government should develop a multiyear funding approach to prevent research gaps.  It recommends using the multiyear financial plan similar to the Defense Department's future years defense program as a possible blueprint.

Taxes also come into play, with PCAST suggesting that the research and experimentation tax credit be made permanent and rise from a rate of 14 percent to 20 percent.  It says this will make it more useful to small and medium-sized enterprises that are R&D intensive. 

Among the actions that PCAST recommends, three stand out in scope and importance: 

(1)  that the President reaffirm his stated goal that U.S. total R&D expenditures (across the public and private sectors) should achieve and sustain a level of 3 percent of GDP;

(2)  that actions be taken, some achievable entirely by Executive decision, to increase the stability and predictability of Federal research funding; and

(3)  that Congress not only make the R&D tax credit permanent, but increase it to at least 17 percent, as you have already advocated. 

While the benefits from scientific advancements are evident in virtually every aspect of modern life, they are perhaps most immediate in the area of human health.  Biological discoveries have lengthened our lives; in the mid-2000s, the life expectancy in the United States reached an all-time high of 77.5 years, up from 49.2 years at the beginning of the twentieth century. 

 Advances in treatment rooted in improved understanding of biological function contribute to continual improvements in the quality of life in later years. HIV-AIDS, whose diagnosis was once a death sentence; is now treatable: In areas where HAART (highly active anti-retroviral therapy) became available, deaths related to HIV have decreased by 94 percent and transmission rates by 96 percent. 

Thanks to the development of vaccines, global incidences of diseases, including diphtheria, polio, yellow fever, and tetanus, have plummeted, and smallpox has been eradicat-ed. Sequencing of the human genome has led to the identification of genes associated with diseases such as multiple sclerosis and cystic fibrosis, bringing the promise of improved treat-ment and ultimately a cure. 

A healthier population is also an economically more productive population.  That is not, however, the only reason that Americans value the benefits of biomedical research.  We want longer, healthier lives for our elder parents, ourselves, and our children.  Further, it is an American social value to be generous in bringing healthier lives to our own neediest and to the world.  Today, Americans look to science and technology for health care that is not only more effective, but also more affordable, so that all may benefit fully.


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