Life Science Compliance Update

May 30, 2017

Medicare Backlog Must Be Fixed

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Since 2014, the American Hospital Association (AHA) has been in court with HHS regarding HHS’ failure to meet statutorily-imposed deadlines for Medicare administrative appeals. And, as has been reported, the Medicare appeals backlog has reached its all-time worst. If you’re a healthcare provider or supplier waiting for a hearing before an Administrative Law Judge (ALJ) at the Office of Medicare Hearings and Appeals (OMHA) – the third level of the Medicare appeals process – you’ve likely been waiting years to have your case heard or, at least, you’re expecting such a wait.

The suit centered on the Recovery Audit Contractor program. The RAC program's mission is to correct improper Medicare payments by identifying and collecting over- and underpayments. Healthcare providers have the option of appealing recovery auditors' findings, and HHS' Office of Medicare Hearings and Appeals administers hearings concerning denied Medicare claims. Claim denials that reach the third level (of five possible levels) of the appeals process are brought before administrative law judges, who issue decisions regarding coverage determinations.

Court order

Recently, a court determined that there were equitable grounds to issue a writ of mandamus. The Court reasoned that even with certain good faith efforts made by HHS to reduce the backlog (such as a Proposed Rule issued this past summer), the appeals backlog was “still unacceptably high.” In its decision, the Court found that HHS did not “point to any categorically new administrative actions” and continues “to promise the elimination of the backlog only ‘with legislative action’ — a significant caveat.”

The Court ordered HHS to achieve the following reduction thresholds, as proposed by AHA, from the current backlog of cases pending at the ALJ level:

  • 30% by December 31, 2017;
  • 60% by December 31, 2018;
  • 90% by December 31, 2019; and
  • 100% by December 31, 2020

In the ruling, U.S. District Court Judge James Boasberg ordered HHS to eliminate the backlog in accordance with the timeline AHA outlined in its motion for summary judgment. Boasberg also ordered HHS to file progress reports every 90 days on its efforts to reduce the backlog.

AHA Statement

On December 6, 2016, the AHA released a statement from its general counsel: AHA General Counsel Melinda Hatton said the decision “is a victory for hospitals that continue to have billions of dollars in Medicare reimbursement tied up in a heavily backlogged appeals system. To meet the court-ordered backlog reductions, we trust that HHS will implement real reforms critical to resolving the backlog, including fundamental reforms of the Recovery Audit Contractor program.”

Good news for providers

As cited by the Advisory Board, William Dombi, VP for law at the National Association for Home Care and Hospice, said the "ruling may finally spur concrete action by [CMS] to reduce what are wholly unreasonable delays in providing appeal rights to Medicare beneficiaries and providers of health services." However, HHS has said even with additional resources, it likely will not be able to eliminate the backlog before 2021, so we will continue to monitor this story.

January 30, 2017

Senate Finance Committee Holds Hearing on Dr. Price to Lead Department of Health and Human Services

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On Tuesday, January 24, 2017, the Senate Committee on Finance held a hearing to consider the nomination of Representative Thomas Price, M.D., to be Secretary of the Department of Health and Human Services (HHS). The hearing was the last for Dr. Price before the entire Committee holds its formal vote on confirmation and provided key insights to Representative Price’s views on healthcare reform, from the Affordable Care Act (ACA) repeal and replace to Medicare and Medicaid reform.

The hearing somewhat highlighted the division between the political parties, with Democrats focusing on concerns surrounding Representative Price’s healthcare investments, his previous statements on health policy, and his legislative record combating the ACA. On the other hand, Republican support for Representative Price remained strong, and he seems to be on track for confirmation some time over the next couple of weeks.

Opening Remarks

In his opening remarks, Senate Finance Committee Chairman Orrin Hatch offered glowing remarks on Representative Price’s qualifications to lead HHS, noting that he has the “experience and qualifications necessary to effectively lead this large and diverse set of agencies.” Chairman Hatch noted numerous stakeholder organizations that have “enthusiastically” supported Price’s nomination, including the American Medical Association, the American Hospital Association, and the Healthcare Leadership Council.

Senator Hatch also criticized Senate Democrats for their “grossly exaggerated attacks” on Representative Price’s record, attempting to derail his nomination. “I have never seen a party in the Senate – from its leaders on down – publicly commit to not only opposing virtually every nomination, but to attacking and maligning virtually every single nominee,” noted Chairman Hatch.

Senate Finance Committee Ranking Member Ron Wyden voiced concerns surrounding Representative Price’s nomination for HHS Secretary. Senator Wyden pointed to the Trump Administration’s promises not to cut Medicare and Medicaid, noting that the President’s positions are in contrast with Representative Price’s policy positions.

Senator Wyden labeled Representative Price’s ACA replacement plan as “repeal and run,” stating that if it became law, “18 million Americans would lose their health care plans in less than two years.” Senator Wyden expressed concern the future of women’s health and coverage for individuals with pre-existing conditions if Representative Price’s replacement bill were enacted.

In his opening remarks, Representative Price spoke fondly about his time as a physician and legislator in the Georgia State Assembly, highlighting his experience in strengthening children’s healthcare throughout his tenure. Representative Price also complimented HHS’ “incredible work” in the areas of drug treatment research, as well as food safety. Representative Price commented on his frustrations with the current healthcare system, noting that the system has lost focus on its top priority: the patient. He emphasized a “bipartisan, team-driven” policy when it comes to reforming healthcare, calling for a “patient first” system that strengthens medical innovation, accessibility, and choice.

Discussion and Commentary

Affordable Care Act

Senate Democrats harped on several different issues related to repeal and replace of the ACA, especially focused on the ACA’s individual mandate and the ban on denying coverage based on pre-existing conditions. Representative Price strongly stated that Republicans will not “abandon” people with pre-existing conditions as the Republican-led Congress makes plans to repeal and replace the law. Additionally, Representative Price voiced support for extending funding for the Children’s Health Insurance Program (CHIP).

Representative Price noted that he would not commit to utilizing the executive order issued by President Trump to eliminate the ACA individual mandate, nor did he promise that no one would lose coverage because of the executive order. “I’m humble enough to appreciate and understand that I don’t have all the answers,” Representative Price said, stating that “the people in the department have incredible knowledge and expertise.” Additionally, Representative Price did not comment on whether HHS would wait for Congress to prepare a replacement plan before taking steps to dismantle the ACA, noting that he would promise to put “patients at the center of healthcare.”

Sunshine Act

During the hearing, Senator Chuck Grassley went into detail about the Sunshine Act that he worked hard to implement. Senator Grassley noted that several years back, he worked hard to get the Patient Physician Sunshine Act passed in Congress, and that it took the prior Administration several years to get the Act in full swing, working the way it was intended. Senator Grassley questioned Dr. Price as to whether he would help support an expansion of the Sunshine Act, to include nurse practitioners and others, because he feels that the increased transparency is truly a good thing for patients and the healthcare industry as a whole.

When Dr. Price responded, he did not give a yes or no answer, instead opting to note that he does believe transparency is vital in so many different ways in health care, including drug pricing and industry interactions, so that patients can understand what is going on in the health care system.

Medicare and Medicaid Reform

Throughout Representative Price’s confirmation process, Democrats have emphasized that his position on Medicare and Medicaid is at odds with President Trump’s promise not to cut either program.  In the Senate hearing, Representative Price stated that Medicare must be reformed if the government wishes to keep its promise to seniors, while avoiding questions surrounding his support of reforming Medicaid into a block grant program, only commenting that he is in favor of turning Medicaid into a system “that responds to patients, not government.”

Representative Price indicated some support for the Center for Medicare and Medicaid Innovation (CMMI), calling it “vehicle that might help” incentivize innovation. At the same time, however, he also argued that the directives and programs from CMMI should not be mandatory, and that the center’s work had “gotten a bit off track” during the previous Administration.

January 25, 2017

Final Common Rule - Sixteen Agencies Update Regulations on Individuals Who Participate in Human Research

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The Department of Health and Human Services (HHS), along with fifteen other federal agencies, issued a final rule updating regulations that safeguard individuals who participate in research. The rule updates current regulations, known as the “Common Rule,” which has been in place since 1991, and finalizes a September 2015 proposal. The rule does not become effective until January 19, 2018, although cooperative research is not required to be compliant until January 20, 2020.

Since the Common Rule was promulgated, the volume and landscape of research involving human subjects have changed considerably. Research with human subjects has grown in scale and become more diverse. Examples of developments include: an expansion in the number and types of clinical trials, as well as observational studies and cohort studies; a diversification of the types of social and behavioral research being used in human subjects research; increased use of sophisticated analytic techniques to study human biospecimens; and the growing use of electronic health data and other digital records to enable very large datasets to be rapidly analyzed and combined in novel ways. However, these developments have not been accompanied by major change in the human subjects research oversight system.

HHS notes that the rule seeks to strengthen “protections for people who volunteer to participate in research” while balancing administrative burden, particularly for low-risk research.

According to HHS, more than 2,100 comments were received and as such, the final rule contains a number of significant changes from the proposed rule. Proposed policies that were ultimately not adopted include:

  • The final rule does not adopt the proposal to require that research involving non-identified biospecimens be subject to the Common Rule, and it does not require that consent be obtained to conduct such research. In general, researchers can continue to use such biospecimens in the way they are currently using them.
  • To the extent that some of the NPRM proposals relied on tools or standards that had not yet been proposed, the final rule either does not adopt those proposals or includes revisions to eliminate such reliance. Examples of items that were not included in the final rule include a template to be used for broad consent forms, and a decision tool to be used for making exemption determinations.
  • The final rule does not expand the policy to cover clinical trials that are not federally funded.
  • The final rule does not adopt the NPRM’s proposed concept of “excluded” activities. Generally, activities proposed to be excluded are now described as not satisfying the definition of what constitutes research under the regulations or are classified as exempt.
  • The final rule does not include the proposed standardized privacy safeguards for identifiable private information and identifiable biospecimens. Instead, in most respects, it retains the current approach to privacy standards.
  • The final rule does not adopt the proposal for more stringent criteria for obtaining a waiver of the consent requirements for identifiable biospecimens.

Some of the significant changes made to the Common Rule include:

  • Establishes new requirements regarding the information that must be given to prospective research subjects as part of the informed consent process.
  • Allows the use of broad consent (i.e., seeking prospective consent to unspecified future research) from a subject for storage, maintenance, and secondary research use of identifiable private information and identifiable biospecimens. Broad consent will be an optional alternative that an investigator may choose instead of, for example, conducting the research on nonidentified information and nonidentified biospecimens, having an institutional review board (IRB) waive the requirement for informed consent, or obtaining consent for a specific study.
  • Establishes new exempt categories of research based on their risk profile. Under some of the new categories, exempt research would be required to undergo limited IRB review to ensure that there are adequate privacy safeguards for identifiable private information and identifiable biospecimens.
  • Creates a requirement for U.S.-based institutions engaged in cooperative research to use a single IRB for that portion of the research that takes place within the United States, with certain exceptions. This requirement becomes effective 3 years after publication of the final rule.
  • Removes the requirement to conduct continuing review of ongoing research for studies that undergo expedited review and for studies that have completed study interventions and are merely analyzing study data or involve only observational follow up in conjunction with standard clinical care.

An HHS press release on the rule is available here.

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