The Third Circuit granted on Tuesday the Federal Trade Commission’s (“FTC”) request for an injunction pending appeal of the proposed merger between Penn State Hershey Medical Center and Pinnacle Health System.  The injunction comes just before the temporary restraining order against the merger issued by the U.S District Court for the Middle District of Pennsylvania was set to expire on Friday.  Earlier this month, the district court denied the government’s request to block the merger. Continue Reading FTC Wins Stay of Pennsylvania Hospital Merger Pending Appeal in Third Circuit

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Covered Entities need to continue to check their inboxes for emails from the HHS Office for Civil Rights (“OCR”) requesting verification of contact information in connection with Phase 2 of the HIPAA Audit Program. OCR previously indicated that Covered Entities would begin to receive verification emails in May.  We understand that Covered Entities continue to receive emails requesting contact information verification this week.

Emails are sent from OSOCRAudit@hhs.gov and request a response from the entity verifying its information within five days.  A sample copy of the email is available from OCR’s website.  The receipt of an email requesting contact verification does not necessarily mean that an entity will ultimately be selected for an audit.  Covered Entities can begin to prepare for the next step in the audit process by reviewing OCR’s audit pre-screening questionnaire.

For the time being, Business Associates are not being contacted.  OCR will request a list of Business Associates from Covered Entities and plans to begin contacting Business Associates selected for audit this summer.  Business Associates should use this extra time to ensure that they are ready for an audit should they be selected.   OCR has provided a sample template for Covered Entities to use to list their Business Associates.

For further information on the Phase 2 Audits, please see our prior posts detailing the Phase 2 Audit program and discussing the audit protocol and other audit-related materials from OCR.  In order to assist covered entities and business associates with their HIPAA compliance efforts, we have repackaged the audit protocol into a more user-friendly format that can be downloaded here.

 

The pharmacy industry is under increasing scrutiny from all angles. Whether at the legislative or agency level, Washington as well as many states seem intent on addressing perceived issues surrounding drug pricing, reimbursement, and program integrity. For these reasons, Mintz Levin and ML Strategies brought together stakeholders and thought leaders from across the industry to share knowledge and insight on this rapidly shifting landscape at the 2016 Mintz Levin/ML Strategies Pharmacy Industry Summit in Washington, DC on May 10.

Continue Reading Recap: 2016 Mintz Levin/ML Strategies Pharmacy Industry Summit

On May 10, 2016, FDA released its first draft guidance for medical device manufacturers who are using additive manufacturing (AM), commonly referred to as 3D printing. The draft guidance, entitled “Technical Considerations for Additive Manufactured Devices,” was informed by a public workshop on 3D printed devices that FDA hosted back in October 2014, as well as the Agency’s experience with several dozen 3D printed devices that have already gone through its premarket review process.

In the broadest sense, AM is a process that uses computers to build complex three-dimensional objects by successively depositing two-dimensional layers of material that are then synthesized to form the final three-dimensional object. As FDA points out, the process “allows device manufacturers to rapidly alter designs without the need for retooling and to create complex devices built as a single piece.” The AM process is particularly appealing in the medical device field, where it can be used to create anatomically-matched devices by using a patient’s own medical imaging. This type of 3D printing also allows for the creation of structures and surfaces that are either impossible or impracticable to create using traditional manufacturing approaches.

The new document represents FDA’s initial thoughts on the emerging field of AM technology as it relates to medical devices, and the Agency points out that its recommendations may change as additional information becomes available, meaning this is a so-called “leap frog” guidance. The guidance is also limited in scope: it does not address the incorporation of biological, cellular, or tissue-based products in the AM process which, as the Agency notes, may require additional regulatory and manufacturing process considerations and/or different regulatory pathways. The Agency also clarifies that point-of-care device manufacturing — that is, the manufacturing of a device in a hospital or in doctor’s offices rather than at a manufacturing facility — may raise additional technical considerations.

Specifically, the draft guidance addresses two aspects of medical devices manufactured using different AM technologies: (1) designing and manufacturing the devices, and (2) testing the devices. Continue Reading FDA Releases Draft Guidance for 3D Printed Medical Devices

The OIG recently issued a favorable advisory opinion permitting a health system (the “Health System”) to become the sole owner of a Group Purchasing Organization (“GPO”), some of whose members were also owned by the Health System (the “Proposed Arrangement”).

Despite determining that the Proposed Arrangement does not qualify for protection under the GPO safe harbor, the OIG considered whether allowing the GPO to be wholly owned by the same entity that also owns almost 1% of the member pool increases the risk of fraud and abuse to Federal health care programs.

The GPO Structure

The GPO has over 84,000 members nationwide, many of which are hospitals, nursing facilities, clinics, physician practices, laboratories, home care, and equipment organizations. It operates by negotiating products and pricing with vendors on behalf of its members and receives administrative fees from the vendors based on a percentage of the value of sales to the members.  The GPO provides annual written disclosures to the members regarding purchases made on behalf of each member and maintains records regarding discounts and vendor administrative fee distributions to members.

The Proposed Arrangement

To increase efficiencies, the GPO underwent a series of mergers and stock sales (not at issue here), after which the Health System owned 95% of the GPO, with an unrelated entity owning the remaining 5%. About 800 of the 84,000 members (just under 1%) are owned by the Health System.  Under the Proposed Arrangement, the Health System would purchase the remaining 5% of the GPO to become the sole owner. Continue Reading OIG Issues Favorable GPO Advisory Opinion

The Federal Trade Commission (“FTC”) and the state of Pennsylvania have two weeks to persuade the Court of Appeals for the Third Circuit that the pending merger of Penn State Hershey Medical Center (“Hershey”) and Pinnacle Health System (“Pinnacle”) is anticompetitive.  The FTC’s request for a preliminary injunction against the pending merger was denied on Monday by the U.S. District Court for the Middle District of Pennsylvania which found that the deal was likely to benefit patients.  FTC v. Penn State Hershey Medical Center, 1:15-cv-02362 (M.D. Penn May 9, 2016).  That decision is analyzed here.  On Tuesday, the government filed a motion in the district court seeking an injunction enjoining the proposed merger pending an emergency appeal to the Third Circuit.

Pursuant to a December stipulated temporary restraining order (“TRO”), the hospitals are entitled to consummate the merger within three business days following a ruling denying the preliminary injunction.  Thus, under that TRO, the merger could have closed today.  In their opposition to the FTC’s motion for an injunction pending appeal, the hospitals indicated that they would not oppose a two week extension of the TRO if the government filed for an injunction with the Third Circuit.  The FTC filed its emergency appeal and the district court granted the two week extension, setting the new TRO expiration date to May 27.  The hospitals’ response to the emergency motion is due Wednesday May 18th. Continue Reading FTC Granted 2-Week Reprieve in Effort to Block Pennsylvania Hospital Merger

The already enormous per-claim penalties under the federal False Claims Act (“FCA”) may nearly double by August 1, 2016, ratcheting up the stakes of FCA cases for health care providers, pharmaceutical and medical device manufacturers, and life sciences companies subject to the FCA. This week, the Railroad Retirement Board (“RRB”) published an interim final rule raising the minimum per-claim penalties under the FCA and the Program Fraud Civil Remedies Act (“PFCRA”) to $10,781 from $5,500, and increasing the maximum per-claim penalties to $21,563 from $11,000 (aspects of the penalties under the FCA and the PFCRA are within RRB’s jurisdiction). Although the RRB’s position may not affect the health care industry, other federal agencies are required to follow suit and adjust the per-claim penalties by July 1, 2016 and to make them effective by August 1, 2016.

An FCA violation results in “a civil penalty of not less than $5,000 and not more than $10,000, as adjusted by the Federal Civil Penalties Inflation Adjustment Act of 1990 (28 U.S.C. 2461 note; Public Law 104–410), plus 3 times the amount of damages which the Government sustains because of the act of that person.” Currently, the Department of Justice (“DOJ”) has set FCA penalties at a minimum of $5,500 and a maximum of $11,000 per claim. Even at the current level, many stakeholders think the per-claim penalties are out of line with any damage to federal health care programs.  For example, a single claim for which the government reimbursed a provider $100 could result in a penalty of up to $11,000.  And that penalty applies to every false claim.

What is behind the increase?

A section of the Bipartisan Budget Act of 2015, entitled the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015 (“2015 Adjustment Act”), requires federal agencies to update the civil monetary penalties within their jurisdiction. The 2015 Adjustment Act amended the Federal Civil Penalties Inflation Adjustment Act of 1990—which is incorporated into the text of the FCA—and enacted a “catch-up adjustment.” Notably, the “head of an agency” must adjust civil monetary penalties through an interim final rule (rather than through a proposed rule with a notice and comment period) by July 1, 2016, and the adjustment must take effect by August 1, 2016. Continue Reading Already Enormous False Claims Act Penalties Set to Increase

It is hard to believe that it is now four days and counting until our May 10, 2016 Pharmacy Industry Summit, here in our DC offices.

Here in Washington, it seems everyone has an idea on a drug “fix”:  amendments to the provisions governing Medicare reimbursement, new rebate requirements, changes to price reporting measures, revisions to the 340B Drug Discount Program, etc.  Proposals are interesting, but will Congress actually do anything?  If anything is actually going to pass, it has to get through the Senate.

Our Summit’s working lunch presentation is a Congressional Staff Panel, moderated by Alex Hecht, VP of Government Relations at ML Strategies.  The scheduled panelists include Mark LeDuc, Staff Director for the Senate Special Committee on Aging; Grace Stuntz, FDA Policy Advisor for the Senate HELP Committee; and Matt Kazan, Majority Staff for the Senate Finance Committee.

If you are interested in hearing what they have to say about what may, or may not happen, in the coming months, it is not too late to register to attend the Summit.  Registration can be completed on our Summit Microsite.  We hope to see you there.

Continuing our blog series on CMS’s massive proposed rule for the implementation of the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA), we dedicate this post to examining the Advance Payment Model (APM) provisions of the proposed rule.  As our colleagues discussed on May 3rd, the proposed rule contains two key initiatives: Merit-Based Incentive Payment Systems (MIPS) and Alternative Payment Models (APMs).

Continue Reading Alternative Payment Models (APMs) Under MACRA Proposed Rule

The Medicare Access and CHIP Reauthorization Act (MACRA) proposes a new approach, with new branding labels, to paying clinicians for the value and the quality of care that they provide by replacing a patchwork of existing quality-related programs, including the Electronic Health Records (EHRs) Incentive Programs, also known as “Meaningful Use.”  Under MACRA’s Merit-Based Incentive Payment System (MIPS), Advancing Care Information is one of four performance measures. In our first blog on the proposed rule, CMS Releases Proposed Rule for MACRA Implementation and Merit Based Incentive Payment Systems (MIPS), we discussed MIPS more fully.  Our final MACRA blog will discuss the Alternative Payment Models (APMs).

Advancing Care Information is a MIPS performance category focused on use of electronic health records (“EHR”).  Clinicians will get to choose to report customizable measures that reflect how they use EHR technology in their day-to-day practice, with a particular emphasis on interoperability and information exchange. Clinicians would need to use technologies, standards, policies, and practices to assure that their EHR technology is interoperatble, compliant with Office of the National Coordinator for Health IT (ONC) standards (including allowing patients timely access to EHR information to view, download, and transmit) and that it allows for the exchange of structured health information with other health care providers (including unaffiliated providers) using different EHR vendors. Continue Reading CMS Proposes “Advancing Care Information” Program to Replace Meaningful Use