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Our ML Strategies colleague Aaron Josephson was quoted extensively in an August 16 FDA Week article (FDA Week is a focused newsletter from InsideHealthPolicy) covering the debate over FDA’s withdrawal of its proposed rule on reporting data falsification. Aaron spent over a decade working at the FDA, and reviewed the rule when he was working as a senior policy advisor in FDA’s device center in 2017. The rule was proposed back in 2010, and FDA withdrew the regulation last fall after determining it would not protect research subjects or improve the quality of research data submitted to FDA. The debate over this regulatory proposal has resurfaced in recent weeks, following the agency’s announcement that it had learned of a data manipulation issue with animal testing contained in the package submitted for a newly approved gene therapy product called Zolgensma.
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DOJ Seeks Dismissal of FCA Qui Tam Case to Escape Onerous Discovery Obligations

August 22, 2019 | Blog | By Jane Haviland, Karen Lovitch

On August 20, 2019, the United States exercised its authority under the False Claims Act (FCA) to seek dismissal of a relator’s qui tam suit because of the defendant’s burdensome discovery demands, in Polansky v. Executive Health Resources, Inc.  Since the lawsuit’s inception in 2012, the U.S. Department of Justice (DOJ), the U.S. Department of Health and Human Services' (HHS) Centers for Medicare and Medicaid Services (CMS), and other government agencies have attempted to fend off a series of burdensome Touhy requests but failed to do so.  Meanwhile, the scope of discovery has ballooned.  Collectively, DOJ and HHS have deployed six attorneys to work this case.  And, to top it off, DOJ is concerned about relator’s credibility and his ability to prove a FCA violation.  DOJ’s dismissal request thus comes as no surprise.
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Congress Looking to Streamline CBD Drug Research

August 14, 2019 | Blog | By Aaron Josephson, Elizabeth Conti

Recently, a bipartisan group of Senators introduced the Cannabidiol and Marijuana Research Expansion Act (S. 2032), a bill to encourage scientific and medical research on marijuana and its compounds including cannabidiol, or CBD. The bill would expedite the process by which researchers can request an increase in the amount of a Schedule I substance used for approved research by sidestepping the FDA when requesting more marijuana for use in their research. The legislation also would streamline development of FDA-approved drugs that use CBD and marijuana by allowing accredited medical and osteopathic schools, practitioners, research institutions and manufacturers with a Schedule I registration to manufacture marijuana for research.
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The proposed 2020 Outpatient Prospective Payment (OPPS) rule was published on August 9, 2019.  Buried in the 819 pages of proposed changes and justifications, CMS took another swing at cutting Medicare Part B reimbursement rates for 340B drugs.   CMS opened its discussion of 340B provisions in the 2020 OPPS proposed rule by first stating it was keeping in effect the 340B reimbursement cut first implemented though the 2018 OPPS rule. The 2018 OPPS rule slashed most hospitals’ Part B reimbursement for 340B drugs from Average Sales Price (ASP) plus 6% down to ASP less 22.5%, a reduction of almost 30%.
Practice Hero Health Care Compliance Fraud Abuse Regulatory Counseling Mintz

Open Payments Program Expansion

August 12, 2019 | Blog | By Brian Dunphy, Rachel Yount

On July 30, 2019, the Centers for Medicare & Medicaid Services (CMS) announced more proposed changes to the Open Payments Program, otherwise known as the Sunshine Act. The proposed changes include new requirements that are expected to impose burdens on pharmaceutical and medical device manufacturers.
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In Policy Reversal, HHS and FDA Propose Plan to Import Foreign Drugs

August 8, 2019 | Blog | By Benjamin Zegarelli

On July 31, 2019, the U.S. Department of Health and Human Services (HHS) and the Food and Drug Administration (FDA) jointly published a proposal, called the Safe Importation Action Plan, to allow certain entities to import drugs from foreign entities. While this development was not a surprise given President Trump’s campaign promises to lower drug prices by, among other things, removing barriers to drug product importation, it represents a stark departure from prior agency positions that the importation of drugs could not be adequately verified as safe and would not lead to significant cost reductions.
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In June 2019, the Delaware Supreme Court issued a decision reaffirming a risk of director liability where there is no board-level reporting process for essential compliance matters.  The facts of the case arise from a 2015 listeria outbreak at Blue Bell manufacturing which resulted in the death of three people. The Delaware case reaffirmed the position that directors may be subject to liability if the director “(1) completely fail[ed] to implement any reporting or information system or controls, or (2) having implemented such a system or controls, consciously fail[ed] to monitor or oversee its operations thus disabling themselves from being informed of risks or problems requiring their attention.”  
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Earlier this month, the Department of Health and Human Services (“HHS”) Office of Inspector General (“OIG”) issued its 2019 “Solutions to Reduce Fraud, Waste, and Abuse in HHS Programs: Top Unimplemented Recommendations.” The OIG releases a version of this report each year outlining its top 25 unimplemented recommendations to reduce fraud, waste, and abuse (“FWA”) among HHS programs. This blog post focuses on those recommendations specific to Medicare Part C and Part D for 2019.
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FCC Seeks Big Role in Telemedicine with New Fund

July 31, 2019 | Blog | By Russell Fox, Jonathan R. Markman

$100 million in Federal funds may soon become available to help healthcare providers cover the costs of broadband and connected care services. Earlier this month, the Federal Communications Commission (FCC) voted on a proposal, on which it will seek public comment, for a new “Connected Care Pilot Program,” and the comment period on that proposal has now begun. The proposed program would direct money to telehealth initiatives, especially for medically underserved populations like low-income families and veterans. The money would come from the Universal Service Fund (USF), which is an existing fund of fees paid by telecommunications service providers currently used for a variety of purposes.
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Senate Finance Committee Passes Drug Pricing Bill

July 30, 2019 | Blog | By Theresa Carnegie, Ellyn Sternfield, Matt Mora, Michelle Caton, Eli Greenspan

Senators Chuck Grassley (R-IA) and Ron Wyden (D-OR), Chairman and Ranking Member (respectively) of the Senate Finance Committee, have fired the latest shot in Congress’s ongoing battle against high drug prices. Last week, the Senators introduced their much-anticipated proposal to lower drug prices: a chairman’s mark called the Prescription Drug Pricing Reduction Act (PDPRA) of 2019.

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On July 29, 2019, the Food and Drug Administration (FDA) published a notice to the Federal Register (84 Fed. Reg. 36609). The notice invites comments on information collected in connection with FDA research by obtaining information from pharmacists and other management at outsourcing facilities as well as related compounding businesses. The collected information will support a comprehensive analysis of the outsourcing facility sector with hopes to inform future FDA work in this area.
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ML Strategies Health Care Preview: August Recess in Sight

July 29, 2019 | Blog | By Eli Greenspan

This week, the Senate is expected to vote on a budget deal that would also suspend the debt limit for two years. This clears a major hurdle come September when both chambers of Congress will be in session with a laundry list of policies and programs to address, including appropriations. We cover this and more in this week's preview, which you can find by clicking here. 
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OIG Reports Focus on Hospice Quality of Care

July 25, 2019 | Blog | By Sarah Beth Kuyers

Earlier this month, the Office of Inspector General for the U.S. Department of Health and Human Services (OIG) released two reports regarding its concerns and recommendations related to quality of care at hospice facilities. These reports follow a portfolio report that the OIG released last summer regarding significant vulnerabilities in the Medicare hospice benefit. In these reports, the OIG outlines several quality of care issues and recommends several ways that CMS should strengthen safeguards, all of which may further increase enforcement in an already heavily scrutinized area.
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Another Chance for HIPAA and Part 2 Harmony?

July 22, 2019 | Blog | By Dianne Bourque, Matt Mora

There are reports that HHS plans to issue a proposed rule next month, which would again amend 42 CFR Part 2 (“Part 2”) and modify how the medical records of patients with substance abuse disorders are currently shared between providers. Part 2 amendments, especially amendments to align Part 2 with the Health Insurance Portability and Accountability Act (“HIPAA”), would be welcome news to the many stakeholders in the industry who have repeatedly voiced their concerns regarding the regulatory hurdles that surround the disclosure of drug and alcohol treatment records.
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Software Update: The Latest on FDA’s Pre-Cert Pilot

July 22, 2019 | Blog | By Aaron Josephson

Regular readers of this blog know that we’re closely following the FDA’s proposed regulatory framework for software as a medical device (SaMD), known as precertification—Pre-Cert for short. Generally, Pre-Cert involves a premarket evaluation of a software developer’s culture of quality and organizational excellence and continual, real-time postmarket analyses to assure software meets the statutory standard of reasonable assurance of safety and effectiveness.
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On July 11, 2019, the Centers for Medicare and Medicaid Services (CMS) issued its Home Health Prospective Payment System proposed rule for 2020. The proposed rule implements a previously finalized reimbursement methodology for Home Health Agencies (HHAs) called the Patient-Driven Groupings Model (PDGM). The proposal reflects CMS’s continued efforts to shift towards value-based payment models in the Medicare program.
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This week, the House is set to vote on repeal of the Cadillac tax, which is a forty-percent tax on high-cost health plans established by the Affordable Care Act. While its prospects for passage in the Senate are not entirely clear, passage out of the House clears an important hurdle. In other news, we are continuing to monitor the evolving drug pricing debate which is still expected to ramp up in the coming weeks with action from the Administration and Senate.
Viewpoint General
On June 26, 2019, the Office of Civil Rights (OCR) within the U.S. Department of Health and Human Services (HHS) released Frequently Asked Questions (FAQs) on how HIPAA allows health plans to share protected health information (PHI). The FAQs pose two questions: (1) whether HIPAA permits one health plan to share PHI about individuals in common with a second health plan for care coordination purposes; and (2) whether HIPAA permits health plans to use and disclose PHI to inform individuals about other health plans that it offers, without the individuals’ authorization, if the health plan received the PHI for a different purpose. The former answer is an affirmative “yes,” and the latter is a qualified answer of “yes, in certain circumstances.”
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Trump Administration Withdraws Proposed Rebate Rule

July 11, 2019 | Blog | By Susan Berson, Theresa Carnegie, Matt Mora

In an unexpected turn of events, the Trump administration has apparently reversed course and has withdrawn the proposed rule that would have amended the discount safe harbor under the Anti-Kickback Statute to eliminate protections for certain drug rebates paid by pharmaceutical manufacturers. “Based on careful analysis and thorough consideration, the president has decided to withdraw the rebate rule. The Trump administration is encouraged by continuing bipartisan conversations about legislation to reduce outrageous drug costs imposed on the American people, and President Trump will consider using any and all tools to ensure that prescription drug costs will continue to decline," White House Deputy Press Secretary Judd Deere said in a statement.
Viewpoint
The Third Circuit Court of Appeals recently dismissed a relator’s False Claims Act (“FCA”) case under the pre-Affordable Care Act (“ACA”) version of the public disclosure bar. The court decided in U.S. ex rel. Denis v. Medco that to escape the FCA’s public disclosure bar by qualifying as an “original source” under the pre-ACA version of the FCA, a relator must have first-hand, non-derivative knowledge of conduct giving rise to the FCA claim.

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