In another procedural defeat for the Texas Medical Board (the “Board”) over its embattled telemedicine rule, last week, a federal judge held that the Board waited too long to request certification of appeal to the Fifth Circuit.  Thus the Board’s existing appeal will move forward under the collateral-order doctrine.  The Board’s brief is available here.  Though this is a procedural setback for the Board, its appeal of the decision regarding its ability to escape antitrust liability under the state-action immunity doctrine is still pending before the Fifth Circuit.

As we have been closely following, in January 2015, the Board issued an “emergency” proposed rule requiring physicians to perform a face-to-face or in-person physical examination of a patient prior to issuing a prescription or risk sanctions for unprofessional conduct. Teladoc, Inc. and other Plaintiffs subsequently brought an antitrust claim against the Board alleging that the new regulation violates Section 1 of the Sherman Act and the Commerce Clause. The Board filed a motion to dismiss arguing (1) that the Board is entitled to state action immunity; (2) Plaintiffs’ claims were barred by the statute of limitations; and (3) Plaintiffs failed to state a claim under the Commerce Clause. A federal district court denied the Board’s motion to dismiss on all three grounds and specifically found that the Board is not entitled to state action immunity because its actions are not actively supervised by the state.

Continue Reading Texas Medical Board’s Appeal Must Proceed Under Existing Jurisdiction Arguments

HHS Office for Civil Rights will cast a wider net and increase its investigations into smaller HIPAA privacy breaches starting this month. OCR announced a new initiative to increase its efforts examining breaches that affect fewer than 500 individuals. OCR Regional Offices already investigate every reported breach affecting 500 or more individuals, and will continue to do so, but now they will intensify efforts to scrutinize smaller breaches.

Investigations into the root cause of even a small breach can discover system- and enterprise-wide noncompliance and security and privacy shortcomings. An investigation into a single stolen laptop that held PHI of 80 individuals may uncover an entity’s failure to encrypt any of the data it stores and uses. And just as easily as a larger breach, a small breach can reveal that a covered entity has not completed a full risk assessment of its organization and its PHI protections. Continue Reading OCR to Increase Investigations of Smaller HIPAA Breaches

FDA released two new draft guidances on Monday, August 8 in an attempt to help device manufacturers determine when a modification triggers the obligation to file a new 510(k) under 21 C.F.R. § 807.81(a)(3). The first draft guidance, entitled Deciding When to Submit a 510(k) for a Change to an Existing Device (“2016 Device Change Guidance”), is a revision to FDA’s 1997 final guidance of the same name (“1997 Final Guidance”).  The other is a spinoff guidance, entitled Deciding When to Submit a 510(k) for a Software Change to an Existing Device (“2016 Software Device Change Guidance”), which is specific to software modifications.  It is important to note that the 1997 Final Guidance represents FDA’s official current policy on regulatory responsibilities stemming from device modifications, but in our experience, elements of the policy in the draft guidances may be used by the FDA immediately even before finalization. Continue Reading FDA Releases Revised Guidance on Device Modification Policy

On August 10, 2016, the Centers for Medicare and Medicaid Services (CMS) released a memorandum through its Center for Medicare and Medicaid Innovation announcing changes to the Medicare Advantage Value-Based Insurance Design (MA-VBID) model for 2018.

VBID is an umbrella term for benefit plans that structure enrollee cost-sharing and other plan characteristics in a way that encourages the enrollee to utilize high value health care services that are likely to improve their health status. The concept has been used by commercial insurers for years, but only became possible in the MA landscape after the Affordable Care Act granted CMS the authority to test new benefit models. Continue Reading Medicare to Refine and Expand its Value-Based Insurance Design Model

Capping off a busy month of HIPAA settlements, on August 4, the Office for Civil Rights (“OCR”) announced a $5.55 million settlement with Advocate Health Care Network (“Advocate”), the largest fully-integrated healthcare system in Illinois.  The settlement is the largest HIPAA settlement ever by a single entity.  The settlement comes on the heels of two July settlement announcements with Oregon Heath & Sciences University (“OHSU”) ($2.7 million) and the University of Mississippi Medical Center ($2.75 million).  In total, OCR has reached nine HIPAA settlements in 2016, in addition to the imposition of civil monetary penalties against Lincare, Inc. (which we covered here).  In contrast, the office entered into only six settlements in all of 2015.   As Jocelyn Samuels, the Director of OCR, indicated in a press release regarding the Advocate settlement, the settlements should be a wake-up call to HIPAA Covered Entities and Business Associates:

We hope this settlement sends a strong message to covered entities that they must engage in a comprehensive risk analysis and risk management to ensure that individuals’ ePHI is secure. This includes implementing physical, technical, and administrative security measures sufficient to reduce the risks to ePHI in all physical locations and on all portable devices to a reasonable and appropriate level.

Continue Reading Latest OCR HIPAA Settlement Provides Lessons for Covered Entities

Mintz Levin’s Health Care Enforcement Defense Group published its most recent Health Care Qui Tam Update on August 4, 2016. This Update covers 31 health care-related False Claims Act cases that have been unsealed since the last Health Care Qui Tam Update.

The Update takes an in-depth look at three noteworthy cases and analyzes the trends observed in recently unsealed cases:

  • A substantial majority of the unsealed cases had been under seal for periods well in excess of the required statutory period. Of the 31 complaints, 28 were filed before 2015, with three unsealed complaints dating back to 2010. Of the remaining complaints, four were filed in 2012, eight in 2013, 12 in 2014 and three in 2015. As these cases illustrate, lengthy extensions of the seal on qui tam actions continue to be routine.
  • The cases identified were filed in federal district courts in 18 states, including multiple cases in California (3), New York (4), Florida (4), Kentucky (2), Massachusetts (2), Ohio (2), and Pennsylvania (3).
  • The federal government declined to intervene, or elected not to intervene at this time, in 23 of the 31 cases. The federal government intervened, in whole or in part, in eight cases.
  • Nature of the Claims
    • 15 of the recently unsealed cases involved both state and federal claims.
    • Nine involved allegations of unlawful kickbacks. Of these nine, five also alleged violations of the Stark Law.
    • Claims for relief under state or federal anti-whistleblower retaliation provisions appeared in six of the 31 recently unsealed cases.
  • In nearly two-thirds of the unsealed cases (20 of 31), relators were current or former employees of the defendant. In two cases, the relator’s relationship to the defendant was not revealed by the unsealed filings.

The full Update is available here.

As we previously reported, in 2015 and early 2016, bills and voter initiatives were introduced in several states that would impose drug pricing controls and transparency requirements on pharmaceutical manufacturers. Of approximately a dozen bills that have been introduced in state legislatures over the past year and a half, just one bill, Vermont’s, has made it into law. A bill in California passed the Senate on June 1st and is expected to be voted on by the Assembly by August 31st, and ballot measures to control drug prices in California and Ohio are expected to be on the ballots in 2016 and 2017. All other initiatives have died in committee and never made it to a floor vote.

Since their introduction, these drug price transparency bills have been fiercely opposed by the pharmaceutical industry to apparent effect. The latest casualty is a high-profile Massachusetts drug price transparency bill that Massachusetts lawmakers failed to vote on before adjourning on July 31st. According to an industry spokesperson, Massachusetts is a critical state for the biotech industry as many pharmaceutical companies have headquarters or major research operations in the state. And according to state lobbying reports, 27 pharmaceutical companies, plus PhRMA and the Massachusetts Biotechnology Council, lobbied against the bill in 2015.

The pharmaceutical industry has also launched a full scale lobbying effort against the California and Ohio ballot measures. The industry managed to thwart the signature gathering for the Ohio ballot measure through litigation and kept the measure off of the 2016 ballot. As of now, the California initiative is expected to be on the ballot in 2016, but the industry has spent approximately $68.4 million in a campaign against the initiative as well as lining up organizations including consumer and medical groups, to oppose the measure.

With the failure of many state drug pricing initiatives, the pressure will continue to increase for lawmakers at the federal level to contain drug costs – particularly in this election year.

 

Last week, the OIG issued a favorable opinion to a hospice provider seeking to make supplemental payments to skilled nursing facilities.  Under the proposed arrangement, the hospice provider would make a supplemental payment to the nursing facility for dual-eligible individuals electing the hospice benefit that would be in addition to and separate from what the managed care organization (“MCO”) pays the nursing facility.

This supplemental payment by the hospice provider is different than the traditional payments that hospice providers make to nursing facilities for dual-eligible individuals.  Traditionally, when a dual-eligible individual residing in a nursing facility elects the hospice benefit, Medicare pays the hospice provider a per diem rate that does not include room and board.  Medicaid is responsible for paying the individual’s room and board.  Medicaid pays room and board to the hospice provider and the hospice provider pays the nursing facility the negotiated rate.  In a 1998 Special Fraud Alert on nursing home arrangements with hospices, the OIG specifically stated that this payment arrangement, in which the hospice provider pays the nursing facility only after receiving payment from Medicaid, is acceptable. Continue Reading OIG Gives Green Light to Hospice Provider’s Payment to Nursing Facilities

Expanding on our recent blog post discussing CMS’s final rule (the “Final Rule”) implementing portions of the Protecting Access to Medicare Act of 2014 related to clinical laboratories, my colleague Karen Lovitch and I published an article in BNA’s Medicare Report entitled CMS Regulations Overhaul Medicare Clinical Laboratory Fee ScheduleThe article discusses the reporting obligations of clinical laboratories, the impact of the Final Rule on reimbursement for clinical laboratory tests, and areas in which laboratories should expect further sub-regulatory guidance from CMS.

Last month, we reported on a Massachusetts federal court jury’s decision to acquit the former CEO of Warner Chilcott in one of the first prosecutions of a health care executive following the Department of Justice’s (“DOJ”) Yates Memo.  Last week, another Massachusetts federal court jury acquitted two more former health care executives of felony charges following another closely watched post-Yates-Memo prosecution.  This time, the jury found William Facteau, the former CEO of Acclarent, and Patrick Fabian, Acclarent’s former Vice President of Sales, not guilty of 14 counts of felony fraud related to Acclarent’s off-label promotion of a medical device (although the jury did find them guilty of related misdemeanor charges). Continue Reading Another Jury Acquits in One of the First Few Prosecutions of Health Care Executives Following DOJ’s Yates Memo