Category: Health Law Highlights

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Health Law Highlights

CMS Again Settles Record Stark Self-Disclosures in 2023

From McGuireWoods, by Gretchen Heinze Townshend, Timothy Fry, Kristen H. Chang, Varsha Gadani, Micaela Enger:

The Centers for Medicare & Medicaid Services (CMS) reported a record 176 settlements of voluntary self-disclosures related to past or potential violations of the physician self-referral law (Stark Law) in 2023, with settlements totaling over $12 million. This represents an increase from 103 self-disclosures and over $9 million in settlements in 2022. Despite the increase in total settlements, the average settlement amount in 2023 was $71,363.73, one of the lowest on record. The CMS’ self-referral disclosure protocol (SRDP) allows healthcare providers to self-disclose violations to resolve overpayment liability. The data suggests that CMS is focusing on processing SRDP submissions more quickly, with average settlement amounts remaining consistent with previous years.

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Health Law Highlights

Fair Market Value and Commercial Reasonableness Considerations Amid CMS Radiopharmaceutical Reimbursement Challenges

From VMG Health, by Carla Zarazua, Preston Edison, and James Tekippe, CFA:

Radiopharmaceutical drugs (RPs) are crucial for diagnosing and treating diseases. However, the current pricing structure by the Centers for Medicare and Medicaid Services (CMS) places a financial strain on hospitals and health systems and potentially restricts patient access to these vital resources. The existing CMS payment structure categorizes diagnostic RPs as supplies, bundling their cost into the overall procedure rate, causing a disconnect between the cost of acquiring RPs and the reimbursement received, particularly for high-cost drugs. 

The CMS encourages hospitals to use cost-effective resources while ensuring patient care. A temporary exception allows for separate pricing for new and high-cost drugs for two to three years, but this is a finite period. The current pricing model may force hospitals to limit the use of high-cost or newer RPs, potentially leading to suboptimal patient care and stifling innovation in drug development.

In response to these challenges, the CMS proposed five alternative payment models in 2024, including paying separately for diagnostic RPs with per-day costs above a certain threshold, restructuring the ambulatory payment classification (APC), and adopting codes that incorporate the disease state being diagnosed. Stakeholders, including the Medical Imaging & Technology Alliance (MITAS) and the American College of Radiology (ACR), advocate for separate payment for diagnostic RPs based on the average sales price (ASP) + 6% methodology.

However, the CMS has not yet decided on a new reimbursement structure for RPs, leaving hospitals to navigate the financial implications of using these drugs. To remain compliant with fair market value (FMV) and commercial reasonableness (CR), hospitals need to review and negotiate vendor agreements, document the necessity of higher-priced drugs, and establish a process for deciding which RPs to use.

In conclusion, while awaiting a resolution from the CMS, hospitals and health systems must proactively develop compliance protocols and negotiate agreements to minimize the financial impact and ensure optimal patient care. The proposed changes to the reimbursement structure for RPs represent a significant step towards addressing the economic challenges faced by healthcare providers and improving patient access to essential diagnostic and therapeutic resources.

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Health Law Highlights

New State Health Privacy Laws—Moving Beyond HIPAA and Recasting Consumer Health Data Rights?

From Jones Day, by Alexis S. Gilroy, Lisa M. Ropple, Ryan P. Blaney, Claire E. Castles, Jennifer C. Everett and Kristen Pollock McDonald:

The new consumer health data (CHD) privacy laws enacted in Washington and Nevada aim to offer state-level protections for personal health data not covered by the Health Insurance Portability and Accountability Act (HIPAA). The laws, effective from March 31, 2024, mandate entities to obtain affirmative consent before collecting or sharing CHD, develop privacy policies, implement security safeguards, and restrict geofencing. Both laws grant consumers rights to access, review, and delete their CHD, and to withdraw consent for its collection or sharing. Washington’s law, uniquely, gives consumers a private right of action for CHD-related violations, potentially leading to increased litigation. Companies are advised to review and revise their policies and practices to ensure compliance.

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Health Law Highlights

HHS Issues Guidance to Teaching Hospitals and Medical Schools on Informed Consent Requirements

From The HIPAA Journal, by Steve Alder:

The Department of Health and Human Services (HHS) has issued a letter to teaching hospitals and medical schools, emphasizing the necessity of obtaining informed consent from patients before conducting sensitive examinations, particularly when the patient is under anesthesia. The letter comes in response to reports indicating that medical students often perform such examinations without obtaining proper consent during their training. The HHS insists on the importance of documenting informed consent and upholds the patients’ right to refuse such examinations for teaching purposes. The Centers for Medicare & Medicaid Services (CMS) has provided new guidelines to clarify hospital responsibilities regarding informed consent. Furthermore, the Office for Civil Rights (OCR) underscores the HIPAA Privacy Rule, which allows patients to restrict access to their protected health information (PHI), even when unconscious.

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Health Law Highlights

ACA Health Insurance Plans Are Being Switched Without Enrollees’ OK

From National Public Radio, by Julie Appleby:

Some consumers are being switched from one ACA insurance plan to another without their consent, potentially disrupting their medical care and prescription needs. This unauthorized switching can also lead to large IRS bills for back taxes. Agents can access a policyholder’s coverage using only a person’s name, date of birth, and state. This ease of access plays a significant role in the problem.

Consumers may end up in plans they did not choose and may bear tax burdens if they are signed up for coverage that includes premium tax credits for which they are ineligible.

The Centers for Medicare & Medicaid Services (CMS) is aware of the problem and has outlined technical efforts to resolve issues when complaints are lodged. However, it is unclear whether these efforts will be sufficient. CMS is considering further regulatory and technological solutions, including two-factor authentication. States that run their own marketplaces have been more successful in preventing unauthorized switches as they require more information before a policy can be accessed.

The issue is causing an outcry from agents who lose out on commissions when their clients are switched by other agents. It also casts a shadow on a record year for ACA enrollment, with more than 21 million people signing up for 2024 coverage.

Florida, Georgia, and Texas appear to be hotspots for plan-switching. 

Some agents suspect names and lists of potential clients are being circulated to agents willing to bend the rules. Online or social media advertising is a way some outfits troll for prospects, who then end up on lists sold to brokers or are contacted directly by agents.

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Health Law Highlights

California Enacts First-in-Nation Pharmacy Medication Error Reporting Law

From Husch Blackwell, by Kevin Khachatryan:

On October 8, 2023, the California Governor signed Assembly Bill 1286 (AB 1286), a comprehensive pharmacy bill aimed at enhancing patient safety. The bill’s key mandate is a new requirement for community pharmacies to report outpatient medication errors to the California Board of Pharmacy. The legislation also includes several other provisions that regulate the practice of pharmacy in California.

The bill was enacted in response to a 2021 survey by the California Board of Pharmacy, which revealed significant staffing issues contributing to medication errors. The survey found that 91% of retail pharmacists reported inadequate staffing for safe patient care, 83% lacked sufficient time for safe patient consultation, and 78% had insufficient time to conduct proper health screenings before administering immunizations. This led to the establishment of a Medication Error Reduction and Task Force Ad Hoc Committee and the sponsorship of AB 1286.

AB 1286 also introduces several other changes, including amendments which govern staffing decisions in pharmacies and the responsibilities of the Pharmacist-in-Charge (PIC). The law now requires chain community pharmacies to be staffed at all times with at least one clerk or pharmacy technician dedicated to pharmacy-related services, subject to certain conditions. The bill also expands the list of actions that constitute unprofessional conduct and authorizes specially trained pharmacy technicians to prepare and administer certain vaccines and medications.

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Health Law Highlights

USPTO Issues Training Materials to Examiners for Searching FDA and NIH Resources

From Knobbe Martens, by Joseph Mallon, Ashley Morales:

On March 20, 2024, the USPTO issued an alert about new training materials for patent examiners, developed to enhance searches for prior art in FDA and NIH databases. The training was first presented at the Biotechnology, Chemical, and Pharmaceutical Partnership Meeting on March 19, 2024.

The materials guide patent examiners on using various FDA and NIH resources to search for drug information. These resources include FDALabel, Drugs@FDA, and DailyMed. Examiners were also given guidance on how to use Google for searching FDA.gov.

These materials were developed as part of the ongoing collaboration between the USPTO and the FDA, initiated by Executive Order 14036, which seeks to promote competition in the American economy. The goal is to balance the patent system to incentivize investments for life-saving drugs and biologics, while preventing its misuse to delay the introduction of affordable generic drugs and biosimilars.

The impact of these training materials on patent examination for brand-name drugs and biologics is yet to be seen. Further examiner training is expected under these ongoing collaboration initiatives.

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Health Law Highlights

Texas Physicians Push for More Regulation Over Med Spas

From KCENTV, by Baylee Bates:

Physicians are raising concerns over the lack of regulation and policy enforcement in the medical spa (med spa) industry, following the death of Fairfield resident Jenifer Cleveland after an IV treatment at a med spa. Dr. Patricia Aronin, affiliated with the TX400, a group of Texas physicians, has called for changes in the industry, which she describes as largely unsupervised and prone to malpractice.

Med spas, offering services ranging from IV therapy to skincare and cosmetic procedures, have grown in popularity but lack sufficient oversight. According to Dr. Aronin, many people do not realize that these services are medical treatments requiring adequate supervision and record-keeping. She asserts that the current state of affairs has been deteriorating over the past decade and has called for changes before more incidents occur.

The issue is compounded by the structure of the medical industry and Texas law, which has created opportunities for illegal practices within med spas. Dr. Aronin highlights that the Texas Medical Board requires good faith examinations and proper medical record-keeping, both of which she suspects are lacking in many med spas.

In response to Cleveland’s death, the Texas Medical Board temporarily suspended the license of Dr. Michael Patrick Gallagher, who served as the medical director at the med spa where Cleveland received her treatment. Dr. Aronin emphasizes that the role of the medical director in med spas is a critical area requiring reform, including clearer guidelines on hiring practices and the responsibilities of the position.

Dr. Aronin also calls for patients to be more proactive in advocating for their health, urging them to inquire about qualifications, practices, and equipment at med spas. She stresses the need for the public to recognize that med spa treatments are serious medical procedures, not casual beauty treatments. As of 2022, 63% of med spas were owned by non-physicians and non-surgeons, according to the American Med Spa Association.

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Health Law Highlights

Behavioral Health Industry Reshaping As a Result of AI

From The National Law Review, Jean Marie R. Pechette, Neal D. Shah, Joelle M. Wilson, Catherine Kozlowski, Matthew T. Lin:

Artificial Intelligence (AI) is significantly influencing the field of behavioral health, offering potential advancements in diagnostics, treatment, and patient outcomes. The application of AI technologies ranges from virtual mental health assistants and predictive analytics to AI-enabled chatbots for therapy and AI-integrated Electronic Health Records (EHR) for diagnosis and treatment. These technologies are expected to expand further as trust in AI systems grows.

Despite the transformative potential of AI in behavioral health, the legal and regulatory implications are uncertain. The US lacks a comprehensive federal law that regulates AI development and use. However, efforts are underway to address potential risks, including promoting transparency, ensuring fairness, and protecting privacy and security of health information.

Key legal risks associated with the use of AI in behavioral health treatment include data privacy, algorithm bias, and professional liability. Data privacy risks involve ensuring compliance with HIPAA, 42 CFR Part 2, and state privacy laws.

Providers can mitigate these risks to some extent by obtaining informed consent from patients before using AI tools, vetting third-party vendors offering AI solutions for adherence to data privacy and security rules, seeking transparency from developers and vendors about the data on which AI tools were trained, and reviewing the scope of professional liability coverage before adopting AI-enabled tools.

While AI holds significant promise for transforming behavioral health care, it’s crucial to anticipate and address the evolving regulatory frameworks and legal risks associated with AI applications. AI regulation is a moving target, and anticipating and mitigating legal risks will be key to fostering a trustworthy and secure environment for both practitioners and patients.

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Health Law Highlights

Health Care Groups Resist Cybersecurity Rules in Wake of Landmark Breach

From CyberScoop, by AJ Vicens and Elias Groll:

A devestating cyberattack on payment processor Change Healthcare has spurred discussions in Washington about urgent cybersecurity regulations for the healthcare sector. Health and Human Services (HHS) is working on developing mandatory rules, including updating the Health Insurance Portability and Accountability Act with cybersecurity requirements.

These updates are meeting resistance from the healthcare industry, which argues that hospitals should not be punished for the success of hackers. President Biden’s budget proposal includes funding for hospitals’ cybersecurity efforts and penalties for non-compliance. Despite this, the complexity of implementing such standards, especially for smaller health entities, and the current political climate suggest no significant changes will occur soon.