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Carrie Roll is an Associate in the firm’s Washington, DC office. Carrie's practice involves a variety of transactional, regulatory, and fraud and abuse matters. Her transactional experience focuses on advising health care clients on joint ventures, mergers and acquisitions, service agreements, and corporate stock and asset acquisitions. She has served as corporate and regulatory counsel to pharmacy benefit managers, retail pharmacies, and health care providers in acquisitions, and also advises health care clients on a variety of regulatory issues.

Last week, the Medicare Payment Advisory Commission (the “Commission”) debated a package of policy reforms that would change the way Medicare reimburses physicians for Medicare Part B drugs. In the midst of calls to lower drug prices, the Commission has been developing its Part B reform package over the last two years and now, finally, appears poised to move forward with a vote at next month’s meeting.

Medicare Part B drugs are a multi-billion dollar benefit and typically include higher cost specialty drugs that are administered in a physician’s office on an outpatient basis. Drugs covered under Medicare Part B are reimbursed through a so-called “buy and bill” approach. That is, the physician buys the drugs and bills Medicare for their use. Medicare pays the provider the average sales price (“ASP”) of the drug plus a markup of 6% of the ASP.  The 6% markup is generally considered compensation to physicians for the storage, handling, and other administrative costs associated with these specialty drugs. Continue Reading Medicare Advisors Debate Part B Drug Payment Reforms

More than two years since issuing the proposed rule, the HHS Office of the Inspector General (OIG) issued the long-awaited and highly anticipated final rule (the Final Rule) that provides amendments to the Anti-Kickback Statute (AKS) regulatory safe harbors and adds protections for certain payment practices and business arrangements under the beneficiary inducement provisions of the Civil Monetary Penalty Law (CMP). These amendments and updates to the AKS and CMP regulations attempt to clarify the OIG’s enforcement position in light of changes due to health reforms, to streamline the OIG’s advisory opinion workload, and to implement long-existing mandates enacted in statutes. This post discusses the amendments to the beneficiary inducement provisions of the CMP codified in 42 C.F.R. Part 1003 (CMP Regulations). Continue Reading At Long Last, OIG Issues Final Rule for Beneficiary Inducement Safe Harbors

image3_417910087A Trump victory was not the only surprise on election night. California’s drug pricing initiative, which would have required state agencies to negotiate drug prices at least as low as those paid by the U.S. Department of Veterans Affairs, was defeated by a wide margin (46% to 54%). This clear-cut defeat came as a surprise to many considering that polls taken just a couple of months earlier showed widespread support for the initiative. The California ballot initiative was introduced last year in the midst of widespread criticism of soaring drug prices. The initiative had early support but floundered leading up to the election when major pharmaceutical companies expended considerable resources into the campaign to defeat it. Continue Reading In the Wake of the Election, What’s Next for State Drug Pricing Initiatives?

In an unprecedented administrative action, the U.S. Department of Health & Human Services Office of the Inspector General (“HHS-OIG”) penalized a medical billing company for preparing and submitting claims to Medicare for diagnostic tests that were never conducted. On September 19, 2016, the owner and operator of a New Jersey billing company entered into a $100,000 settlement agreement with HHS-OIG and agreed to be excluded from participation in federal health care programs for a minimum of five years under the Civil Monetary Penalties Law.

The medical billing company was responsible for preparing and submitting claims to Medicare on behalf of an OB-GYN practice based, in part, on “superbills” identifying the services purportedly performed during a patient encounter. According to HHS-OIG, the billing company routinely added additional CPT codes to Medicare claims for unperformed services that the billing company knew were neither performed nor identified as performed on the superbill. Continue Reading Billing Companies Beware – OIG Signals a Crack Down on Fraud and Abuse at All Levels

image1_133753922Last month, the U.S. Government Accountability Office (GAO) released a report in which it found that manufacturer drug coupon programs for privately insured patients could potentially cause the Medicare Part B program to overspend on certain high-cost Part B drugs. The pricing for most drugs reimbursed by the Medicare Part B program is based on each drug’s average sales price (ASP), which is defined as the amount that physicians and other purchasers pay manufacturers for the drug. Currently, the ASP does not take into account drug coupons offered to privately insured patients. Continue Reading GAO Report Suggests Discount Coupons Impact Medicare Spending for Part B Drugs

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

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.

 

On June 17, the Texas Medical Board (“Board”) filed a brief with the Fifth Circuit Court of Appeals reiterating that the Board’s rulemaking processes are protected under the state action immunity doctrine, noting that the case could significantly impair state agencies in carrying out their governmental functions. The Board’s brief is the most recent action in the Teldoc case that has dragged on for almost two years and left little certainty for those who provide telemedicine services in the State.

As we previously reported, it all began when the Texas Medical Board issued an emergency proposed rule clarifying that physicians must 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, whose business model is based on providing health care services via telephone and without a face-to-face or in-person physical examination, sued the Texas Medical Board, alleging that the proposed rule violated antitrust laws. Late last year, a federal district court denied the Texas Medical Board’s motion to dismiss, finding 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 Seeks State Action Immunity Protection in Fifth Circuit Brief

As discussed in our recent post, states have turned up the heat on drug companies through both legislation and voter initiatives that would require drug companies to disclose their pricing mechanisms for certain high-cost drugs. Prior to this recent slate of drug pricing legislation and initiatives that largely put the onus on drug companies to explain the sharp rise in prescription drug costs, states have attempted to address prescription drug prices through “cap the copay” legislation.

“Cap the copay” legislation is aimed at cushioning the financial pain for patients who need high cost medicines. In 2013 and 2014, at least seven states – Delaware, Louisiana, Maine, Maryland, Montana, New York, and Vermont – passed legislation limiting the out-of-pocket payments of patients in private health plans. However, similar legislation introduced in Oregon and Illinois in 2015 failed to make it out of committee. Continue Reading Legislation to Reduce Consumer Cost-Sharing Takes a Back Burner in the Drug Pricing Debate

A few months ago, we noted that states were jumping into the drug pricing fray largely driven by a lack of federal action and a rising tide of public discontent. State legislation has taken various forms but most of the proposals reflect industry arguments that rising prices reflect rising R&D costs and would require pharmaceutical companies to either reveal their costs or explain their pricing.

Among the states where drug pricing legislation has been introduced, on June 2nd, Vermont became the first state to actually pass such legislation. The Vermont law requires drug companies to explain price increases on medications identified by state officials for which significant health care dollars are spent and where list prices rose by 50% or more over the previous five year period or 15% or more over a 12 month period.  For these identified medications, drug companies will be required to provide a report to the State Attorney General of “all factors that have contributed to a price increase” and “the role of each factor in contributing to the price increase.” The law does not just target drug companies. It also require health insurers to provide Vermont residents with information about how much they will pay out of pocket for their prescription drugs, and the law contains other price transparency provisions. Continue Reading States Step Up Efforts on Drug Pricing Initiatives