Health News Update

A comprehensive resource for professional healthcare information and solutions

In This Issue
Welcome to Health News Update

We have updated and consolidated our Health NetNews emails into one of the most comprehensive sources of professional health care information and solutions. Covering important monthly developments in the areas of Health Care Compliance, Medicare and Medicaid Reimbursement, Coding, Health Reform, and Food and Drug Law, we hope this resource provides useful content and features.

On the Front Lines
CMS clarifies electronic visit verification requirements for personal care, home health services

By Wolters Kluwer Editorial Staff

In response to the 21st Century Cures Act's (Cures Act) (P.L. 114-255) requirement that all states implement electronic visit verification (EVV) both for Medicaid personal care services (PSC) and home health care services (HHCS), the Center for Medicaid and CHIP Services (CMCS) has issued an informational bulletin containing strategies for EVV implementation for providers and other stakeholders. The Cures Act mandates that PCS' implement EVV by January 1, 2019, and HHCS implement it by January 1, 2023.

Cures Act requirements. The Cures Act requires the HHS Secretary to collect and disseminate best practices to state Medicaid directors for (1) EVV systems training and (2) notice and educational materials to be sent to family caregivers and beneficiaries on EVV systems. Having completed its review, CMCS is now sharing its findings to assist states in their implementation of the EVV systems.

EVV models. CMCS has identified five major EVV system models now in use in various states: (1) provider choice model; (2) managed care plan choice; (3) state mandated in-house system; (4) state mandated external vendor; and (5) open choice. All five models have similar solutions but they vary on state involvement in vendor selection and EVV management. Under the Cures Act, states have complete flexibility in choosing which model to implement, as long as the model meets statutory requirements that include privacy and security standards as required by the Health Insurance Portability and Accountability Act (HIPAA) (P.L. 104-191). CMCS does not endorse any one model.

Provider choice. Providers select their EVV vendor and self-fund EVV implementation. Other than setting EVV systems standards, states have little or no involvement. As a result, the state may have EVV data access limitations, which may complicate state reporting requirements.

Managed care plan choice. Similar to provider choice, but the managed care plans select and reimburse their EVV vendors. This approach may place the most burden on states, especially if the state has multiple managed care plans, because it complicates training and support.

State mandated in-house. The state develops and operates its own EVV system, which allows for standardization and better data access, but the state administrative burden is greater.

State mandated external vendor. The state contracts with a single EVV vendor to implement a single EVV solution. This option is less costly that a state building its own EVV system, while still maintaining program and compliance oversight. On the other hand, administrative burdens and costs may be higher.

Open vendor. This option is a hybrid approach in which the state contracts with at least one EVV vendor or operates its own EVV system, while allowing those with existing EVV systems to continue to operate.

Model selection and implementation. Based on its evaluation of state experience with EVV systems, CMCS has highlighted eight actions that it says a state should consider when selecting an EVV model: (1) assess the current EVV system; (2) evaluate the state's existing vendor relationships; (3) define EVV requirements; (4) integrate EVV systems with Medicaid and other systems; (5) understand technological capabilities; (6) solicit stakeholder input; (7) assess state staff capacities; and (8) roll out EVV in phases or use pilots. The informational bulletin contains a far more detailed discussion of the considerations inherent in each of these eight actions.

Next steps. Federal funding may be available for states in adopting their EVV system. States should contact their Regional Office MMIS Lead for more information. CMCS Informational Bulletin, May 16, 2018; Frequently Asked Questions, May 16, 2018

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Proactive is practical; risk assessment best audit-planning tool

By Kathryn S. Beard, JD

Due to regulatory and enforcement trends through federal and state health care programs, including Medicaid and Medicare, risk-based physician auditing—a proactive benchmarking analytic method mirroring those used by the HHS Office of Inspector General (OIG), Department of Justice (DOJ), and other agencies—should be considered by all compliance programs. Jared Krawczyk, Director of Analytics at Nektar Analytics, gave tips on the transition to proactive, risk-based auditing to attendees of a Health Care Compliance Association (HCCA) webinar.

Many programs approach auditing and monitoring in a reactive manner, responding to requests and without a set plan, which can result in random documentation reviews. According to Krawczyk, this is done because of data issues, lack of understanding of benchmarking, low resources, and, occasionally, fear of knowledge. Having a proactive plan, however, can increase efficiency, reduce the auditing team's workload, help focus resources based on risk, and include due diligence of new practices to reduce surprises during an audit. A proactive plan requires analyzing the organization's risk, determining what areas are most likely to receive an audit, noting what data and other items auditors are looking at to choose where to conduct audits in those areas, and minimizing the organization's risk based on that information by addressing aspects of data that may attract auditors' attention.

Krawczyk noted that not all analyses are created equal. For example, coding peer comparisons and modifier usage are less challenging with lower levels of risk; top billed procedures and Medicare payments, however, should be receive a more in-depth analysis. He specifically focused on "highly productive" physicians, where additional audit procedures should be considered to evaluate the medical appropriateness of services and adherence to industry professional standards.

Homebound patients shopping, dining out raise suspicions FCA violations

By Wolters Kluwer Editorial Staff

Evidence that patients who were able to leave their home for extended periods of time to shop and dine out who were declared as homebound on forms submitted to Medicare for reimbursement of in-home patient care services is enough to support claims of violations of the False Claims Act (FCA) (31 U.S.C. §3729 et seq.). After previously dismissing a relator's FCA claims against Care Plus Home Health Care, Inc. (Care Plus), a court granted leave to amend based on the relator's proposed amended complaint, allowing the case to move forward.

Background. A registered nurse who was employed by Care Plus as the Office Director of Nursing, claimed that Care Plus's business practices were designed to fraudulently maximize billing, primarily to Medicare. She alleged that Care Plus continued to provide services to patients who were not eligible for home health services under the Medicare guidelines and billed Medicare for such unnecessary and/or ineligible services. She further alleged that the provider falsified required documentation and medical records to increase Medicare billings and avoid reimbursement of Medicare overpayments.

The nurse filed a quit tam action for presentation of false claims, making or using a false record or statement to cause a false or fraudulent claim to be paid, and making or using a false record or statement to avoid an obligation to pay money to the government. A court dismissed the claims except as they related to allegations that defendants falsified Outcome and Assessment Information Set (OASIS) information or medical records. The relator asked the court for leave to amend the complaint to provide additional supportive factual allegations as to the claims that were dismissed.

False claims. The relator's proposed amended complaint provided seven sample patients as cases in which Care Plus billed ineligible Medicare patients for home health benefits. She provided documentation of patients who ambulated independently, including leaving their home for frequent trips to shop or dine out, but were declared as home bound on forms submitted to Medicare. With respect to four of the seven exemplar patients, the proposed amended complaint alleged that Care Plus knew of the patients' ineligibility when the claims were submitted. The court concluded that the new allegations cured the previous deficiencies and permitted a reasonable inference that false claims were submitted as part of a fraudulent scheme.

False statements. The proposed amended complaint included new factual allegations regarding the allegedly false statements. The complaint included copies of the forms submitted to Medicare documenting the author of the false statement, the date of the false statement, and the means used. Taking these allegations as true, the court determined that this was sufficient information to cure previous deficiencies and permit a reasonable inference that Care Plus knowingly falsified the documents to seek payment from the government.

Reverse false claim. According to the court, the proposed amended complaint contained only a formulaic recitation that Care Plus made false certifications knowingly to conceal or avoid an obligation to pay or transmit money or property to the government. There were no factual allegations that Care Pus owed a specific financial obligation to the government or that documents were falsified to decrease a financial obligation. Therefore, the court found that the proposed amended complaint did not cure the previous deficiencies as they relate to the reverse false claim. US ex rel. Wagner v. Care Plus Home Health Care, Inc., No. 15-CV-260-GKF-JFJ, May 14, 2018

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Medicare enrollees relying on Part D, over half covered by three plan sponsors

By Wolters Kluwer Editorial Staff

According to the Kaiser Family Foundation's (KFF) analysis of the Part D program in 2018 and trends over time, a rising share of Medicare beneficiaries are part of a Medicare Advantage prescription drug plan (MA-PD). The KFF noted that over half of all Part D enrollees (55 percent), comprised of both those in stand-alone prescription drug plans (PDPs) and MA-PDs, are covered by either UnitedHealth, Humana, or CVS Health.

Enrollment. More than 43 million Medicare beneficiaries out of the 60 million total beneficiaries nationwide are enrolled in Part D plans. Only 28 percent of these beneficiaries were enrolled in MA-PDs in 2006, but the number has surged to 42 percent in 2018. Over 12 million of the Part D enrollees receive premium and cost-sharing assistance through the Part D Low-Income Subsidy (LIS) Program. Currently, UnitedHealth, Humana, and CVS Health cover more than half of all Part D enrollees and two-thirds of all stand-alone PDP enrollees. The proposed mergers of CVS Health with Aetna and Cigna with Express Scripts would further consolidate the Part D marketplace. If these mergers come to pass, based on 2018 enrollment, four firms would cover 71 percent of all Part D enrollment and 86 percent of stand-alone drug plan enrollment.

Premiums and deductibles. While premiums have risen modestly in recent years by two percent, premiums are up by eleven percent since 2015. The average PDP premium is $41 per month while the combined average Part D premium for PDP and MA-PD enrollees is $32 for 2018. While premiums for seven of the ten most popular PDPs continue to vary widely across plans, all premiums have increased in 2018. The top five PDP plans with lower premiums in 2018 versus 2017 generally have higher enrollment in 2018 then 2017.

In 2018, although four in ten PDP and MA-PD enrollees are in plans that do not charge a Part D deductible, a larger share of PDP enrollees then MA-PD enrollees are in plans that charge the standard deductible amount of $405.

Cost Sharing for generics and brands. The majority of Part D enrollees encounter small cost-sharing amounts for generic drugs but, as expected, face higher cost sharing for brands and non-preferred drugs. For example, only nineteen percent of Part D enrollees and 24 percent of MA-PD enrollees pay $0 for preferred generics. For the second (non-preferred) generic tier, almost four in ten in PDP enrollees and seven in ten of MA-PD enrollees pay between $10 and $20. It is difficult to assess the out of pocket costs for non-preferred drugs for PDP versus MD-PD because different plans use different approaches to cost sharing.

CMS releases redesigned Drug Spending Dashboards

By Wolters Kluwer Editorial Staff

CMS' redesigned version of its Drug Spending Dashboards will, for the first time, contain year-over-year information on drug pricing and will show which manufacturers have increased drug prices. These updates to the dashboards have been released following the Trump Administration's blueprint for reducing drug costs, known as American Patients First (see HHS heeds Trump's call to action, solicits comments on drug pricing, May 16, 2018).

The dashboards are interactive online tools that offer spending information for drugs in Medicaid and Medicare Part B and Part D programs, The focus of the information is on average spending per dosage unit and the change in that spending over time. The information is useful for understanding spending trends and the new version reports the percentage change in spending on drugs per dosage unit.

Increases in drug spending. CMS noted that some of the most commonly used drugs in the three programs saw double-digit increases over the last several years. Orencia jumped 17.2 percent from 2012 through 2016, while Crestor saw a 13.2 percent increase over the same time period. The drugs listed in the table experienced significant annual increases from 2012 to 2016 and CMS included the drugs that saw either annual increases of at least 5 percent in Part B and at least 10 percent in Part D and Medicaid.

These increases have been a subject of great focus by the Trump Administration. CMS noted that in 2012, Medicare spent 17 percent of its total budget, or $109 billion, on prescription drugs, but that by 2016, those numbers increased to 23 percent, or $174 billion. In 2016 alone, the drugs listed in the press announcement accounted for $39 billion in total spending by Medicare and Medicaid.

Rebates. CMS also provides summarized information on manufacturer rebates through its Medicare Part D Manufacturer Summary Rebate Report. The agency is prohibited from publicly disclosing drug-specific information on manufacturer rebates, so the information is summarized by therapeutic class.

Part D Prescriber Public Use File. The Part D Prescriber Public Use File (PUF) supplies information on prescribed prescription drugs paid for under the Medicare Part D Prescription Drug Program. The PUF is based on information from CMS' Chronic Conditions Data Warehouse, which contains Prescription Drug Event records submitted by Medicare Advantage Prescription Drug (MAPD) plans and stand-alone Prescription Drug Plans (PDP).

Providers are identified by their National Provider Identifier (NPI) and the specific prescriptions that were dispensed at their direction, listed by both brand name (if applicable) and generic name. The dataset includes the total number of prescriptions dispensed for every prescriber and drug, including the original prescriptions, any refills, and the overall drug cost. That cost includes the ingredient cost of the medication, dispensing fees, sales tax, and any applicable administration fees and is based on the amount paid by the Part D plan, Medicare beneficiary, government subsidies, and any other third-party payers.

The dataset does have several limitations, including that the data may not be representative of a physician's entire practice or all of Medicare. The data is also not supposed to indicate the quality of care provided.

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Billing and Coding Update

Edited by Wolters Kluwer Editorial Staff

Chest Wall Respiratory Sensor Procedures (0466T-0468T)

Three codes (0466T, 0467T, 0468T) have been added to the 2018 Current Procedural Terminology (CPT®) Category III code set for reporting insertion, revision or replacement, and removal of a chest wall respiratory sensor electrode or electrode array. Category III codes are designed to allow data collection for emerging technology, services, procedures, and service paradigms that do not meet the requirements for Category I designation. Code 0466T describes the initial insertion or implantation of a chest wall respiratory sensor electrode or electrode array and is an add-on code designed to be used only in conjunction with code 64568. Code 0467T describes the revision or replacement of an existing chest wall respiratory sensor electrode or electrode array. Both of these procedures include the connection of the sensor electrode or electrode array to a pulse generator. Code 0468T describes the permanent removal of a chest wall respiratory sensor electrode or electrode array. Codes 64568, 64569, and 64570 have been editorially revised to include new parenthetical notes instructing users when to appropriately use codes 0466T, 0467T, and 0468T for the separate and distinct work related to chest wall respiratory sensor procedures. Note that code 0466T is an add-on code to code 64568 and should never be reported alone. Otherwise, codes 64568, 64569, and 64570 remain unchanged and continue to describe cranial nerve (eg, vagal or hypoglossal) neurostimulator electrode array and pulse generator implantation, revision or replacement, and removal, respectively.

Coding Incompetent-Veins Treatment

Increased attention to the diagnosis and management of venous pathology and advances in technology has resulted in new treatment options for venous incompetence. This article provides an overview of the recent changes to the sclerotherapy and endovenous ablation therapy codes in the Current Procedural Terminology (CPT®) code set. Historically, the least invasive treatment has been direct puncture sclerotherapy, which involves injection of a sclerosant or a chemical into a target vein that irritates the lining of the blood vessel and causes the vessel to collapse. CPT code selection for reporting sclerotherapy is determined by the anatomy being injected.

For 2018, the descriptors for sclerotherapy codes (36468, 36470, and 36471) were revised to distinguish them from two new codes (36465, 36466), which describe injection of a new proprietary, non-compounded foam sclerosant with ultrasound-guided outflow compression maneuvers. Codes 36465 and 36466 may not be used to report the injection of self-prepared (self-compounded) sclerosant into any incompetent lower-extremity veins. When self-compounded sclerosant injections are performed to treat incompetent lower-extremity truncal veins or lower-extremity veins other than truncal veins (eg, branch veins or perforating veins), code 36470 or 36471 should be reported. When non-compounded sclerosant injections are performed to treat incompetent lower-extremity veins other than truncal veins (eg, branch veins or perforating veins), code 36470 or 36471 should be reported. Lower-extremity truncal veins include the great saphenous vein (GSV), small saphenous vein (SSV), anterior accessory of the great saphenous vein (AAGSV), posterior accessory of the great saphenous vein (PAGSV), and intersaphenous vein (vein of Giacomini).

Codes 36465 and 36466 require the use of ultrasound-guided compression maneuvers of the outflow vein to slow dispersion of the foam to unintended deep or superficial veins; therefore, ultrasound guidance is included in codes 36465 and 36466 and not separately reportable. Because ultrasound-guided compression is a requisite component, it is inappropriate to report code 36465 or 36466 for sclerosant injection into deep veins, as it is not possible to effectively use compression in the deep-venous system. If ultrasound guidance is performed with procedures represented by codes 36468-36471, code 76942, Ultrasonic guidance for needle placement (eg, biopsy, aspiration, injection, localization device), imaging supervision and interpretation, may be reported separately. Code 36468, 36470, and 36471 may only be reported once per extremity per session, no matter how many separate injections are performed. Codes 36465 and 36466 are reported once per extremity per day, while code 36465 is reported for a single vein and 36466 is reported for multiple veins.

Frequently Asked Questions

Surgery: Digestive System

Question: Should code 49255 be reported when omentectomy is performed on omentum that is incarcerated within an incisional hernia, or is omentectomy included in the hernia repair code?

Answer: Code 49255, Omentectomy, epiploectomy, resection of omentum (separate procedure), may not be reported for resection of a piece of omentum contained within an incisional hernia. Code 49255 describes removing the entire organ, starting at the greater curvature of the stomach, and is typically performed for malignancy. Code 49255 may only be reported as a "separate procedure." When partial omentectomy is performed in association with hernia repair, code 49561, Repair initial incisional or ventral hernia; incarcerated or strangulated, should be reported. If the additional work related to the omentectomy is substantially greater than typically required, modifier 22, Increased Procedural Services, may be appended to code 49561. Documentation submitted must support the substantial additional work and the reason for the additional work (ie, increased intensity, time, technical difficulty of procedure, severity of patient's condition, physical and mental effort required).

Surgery: Urinary System

Question: Is code 50435 reported for the placement of a new nephrostomy tube via the old tract when the old nephrostomy tube had totally fallen out and the tract has closed? The procedure includes wire insertion from the old tract, tract dilatation, contrast injection, and new tube placement.

Answer: No, code 50435, Exchange nephrostomy catheter, percutaneous, including diagnostic nephrostogram and/or ureterogram when performed, imaging guidance (eg, ultrasound and/or fluoroscopy) and all associated radiological supervision and interpretation, would not be reported. This code is reported only if the nephrostomy tube is still in place and in the kidney. Report code 50432, Placement of nephrostomy catheter, percutaneous, including diagnostic nephrostogram and/or ureterogram when performed, imaging guidance (eg, ultrasound and/or fluoroscopy) and all associated radiological supervision and interpretation, for placing a nephrostomy catheter through an old tract. In the situation described, the service is represented by code 50432 (using a prior skin incision). If a new access is required, then code 50433, Placement of nephroureteral catheter, percutaneous, including diagnostic nephrostogram and/or ureterogram when performed, imaging guidance (eg, ultrasound and/or fluoroscopy) and all associated radiological supervision and interpretation, new access, would be reported.

Surgery: Nervous System

Question: When performing a translabyrinthine approach for the resection of a vestibular schwannoma, is it correct to report codes 61595 and 61616, or code 61526?

Answer: This is a cerebellopontine angle (CPA) tumor, and should be reported with code 61526, Craniectomy, bone flap craniotomy, transtemporal (mastoid) for excision of cerebellopontine angle tumor. Code 61526 was established specifically for translabyrinthine vestibular schwannoma removal. If both an otolaryngologist and neurosurgeon worked as a team to perform their respective portions of the procedure, each surgeon would report code 61526 with modifier 62, Two Surgeons, appended. Skull base codes 61595, Transtemporal approach to posterior cranial fossa, jugular foramen or midline skull base, including mastoidectomy, decompression of sigmoid sinus and/or facial nerve, with or without mobilization, and 61616, Resection or excision of neoplastic, vascular or infectious lesion of base of posterior cranial fossa, jugular foramen, foramen magnum, or C1-C3 vertebral bodies; intradural, including dural repair, with or without graft, should not be reported.

Radiology: Diagnostic Radiology (Diagnostic Imaging)

Question: A patient is scheduled for a magnetic resonance imaging (MRI) scan of the abdomen without contrast followed with IV and oral contrast, but the patient cannot drink the contrast. Therefore, a nasogastric (NG) tube or long gastrostomy (GI) tube is placed to administer the oral contrast. Is it appropriate to report codes for the MRI (with/without material[s]) and for the tube placement?

Answer: Yes, code 43752, Naso- or oro-gastric tube placement, requiring physician's skill and fluoroscopic guidance (includes fluoroscopy, image documentation and report), may be separately reported if the NG tube placement requires physician skill and fluoroscopic guidance is used. In the uncommon scenario that oral contrast is used for an MRI study and an NG tube needs to be placed in order to introduce the oral contrast, the NG tube placement is a separate procedure. The abdominal MRI scan (74181-74183) would also be reported. The appropriate code is determined by whether contrast (intravascular, intrathecal, or intraarticular) is used; oral contrast is not a factor in selecting the MRI code.

Category III Codes: Adaptive Behavior Treatment

Question: A technician saw a patient for direct face-to-face adaptive behavior treatment by protocol from 8:00 AM to 12:00 PM (4 hours). On the same day, for the same patient, a qualified health care professional (QHP) performed oversight and protocol modification from 9:00 AM to 10:00 AM (1 hour). The QHP reported the following codes: seven units of 0365T and one unit each of 0364T, 0368T, 0369T. Please clarify if it is appropriate to report the face-to-face technician time with codes 0364T and 0365T and the QHP supervision time with codes 0368T and 0369T for the same timeframe.

Answer: No, it is not appropriate to report those two CPT codes during the same time interval. CPT codes 0364T, Adaptive behavior treatment by protocol, administered by technician, face-to-face with one patient; first 30 minutes of technician time, and 0365T, Adaptive behavior treatment by protocol, administered by technician, face-to-face with one patient; each additional 30 minutes of technician time (List separately in addition to code for primary procedure), should be reported when the technician is solely providing face-to-face services to the patient (ie, from 8:00 AM to 9:00 AM and from 10:00 AM to 12:00 AM). Codes 0368T, Adaptive behavior treatment with protocol modification administered by physician or other qualified health care professional with one patient; first 30 minutes of patient face-to-face time, and 0369T, Adaptive behavior treatment with protocol modification administered by physician or other qualified health care professional with one patient; each additional 30 minutes of patient face-to-face time (List separately in addition to code for primary procedure), should be reported by the QHP for the 9:00 AM to 10:00 AM period when both the technician and the QHP are with the patient. Please note that these codes cannot be reported for overlapping time for the technician and the QHP time.

To view these articles via Coding Comply, search from the Search Code Sets tab in Coding Comply for any of the codes listed above, view the Related Documents by clicking on the paper icon next to the code, then select the article. To view these articles in The Coding Suite, go to the CPT® Assistant Archives folder and in the Search field within this folder and enter "March 2018."

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Trump's proposed rescission of CHIP funds draws ire from Democrats

By Sheila Lynch-Afryl, J.D., M.A.

President Donald Trump proposed to rescind $5.1 billion in funding to the Children's Health Insurance Program (CHIP) as part of a package attempting to cut $15.4 billion total in federal spending. The package would also rescind $1.9 billion in funding for fiscal year (FY) 2018 for the Children's Health Insurance Program Contingency Fund, which provides payments to states that have higher than expected enrollment. The rescissions were proposed pursuant to Sec. 1012 of the Congressional Budget and Impoundment Control Act of 1974 (P.L. 93-344).

The rescission package states that the $5.1 billion was made available by the Medicare Access and CHIP Reauthorization Act of 2015 (P.L. 114-10) to supplement the 2017 CHIP appropriation for states; this includes $3.1 billion in unobligated balances available on October 1, 2017, and $2 billion in recoveries as of May 7, 2018. Authority to obligate these funds to states expired on September 30, 2017, and "the remaining funding is no longer needed." The rescission would have no effect on outlays, according to the package, and enacting the rescission would not have a programmatic impact. In addition, there was $2.4 billion available to the contingency fund as of March 23, 2018, and CMS does not currently anticipate that any states will require a payment from the fund during FY 2018.

In a statement, Senate Minority Leader Chuck Schumer (D-N.Y.) said, "President Trump and Republicans in Congress are looking to tear apart the bipartisan Children's Health Insurance Program (CHIP), hurting middle-class families and low-income children, to appease the most conservative special interests and feel better about blowing up the deficit to give the wealthiest few and biggest corporations huge tax breaks." Senate Republicans, however, seem to be warming to the rescissions package.

Trump also proposed to rescind $800 million that was made available for FYs 2011 to 2019 to fund the Center for Medicare and Medicaid Innovation, created pursuant to Sec. 3021 of the Patient Protection and Affordable Care Act (P.L. 111-148), because the "funds are in excess of amounts needed to carry out the Innovation Center's planned activities in FYs 2018 and 2019, and the Innovation Center will receive a new mandatory appropriation in FY 2020."

In announcing the package, Trump noted that the national debt is more than $21 trillion and the deficit could reach $1 trillion next year. He urged Congress to support the rescissions: "Unless the federal government as a whole commits to cutting spending and letting the economy grow, bloated deficits and outrageous levels of debt will haunt future generations." Under the Congressional Budget Act, if Congress does not act within 45 days of the proposal, the proposal expires.

HHS' American Patients First broad effort to address high drug costs

By Wolters Kluwer Editorial Staff

The Trump Administration has released "American Patients First," its blueprint for lowering U.S. prescription drug prices. The plan includes proposals to create incentives for decreasing prices and reducing consumer out-of-pocket costs. However, the report is noteworthy for what it does not contain—any mention of allowing Medicare to negotiate drug prices directly or of allowing U.S. consumers to import drugs from other countries.

HHS is on board with these attempts to preserve the future of health care. "Securing the next generation of cures for the next generation of American patients will require radical reforms to how our system works," HHS Secretary Alex Azar said. "Our blueprint will bring immediate relief to American patients while also delivering long-term reforms." CMS Administrator Seema Verma added that, "CMS makes up 40% of all drug spending in America, and we will continue using our leverage to increase competition and strengthen negotiations in order to lower drug prices."

Proposals. Despite the absence of two major potential solutions, the blueprint contained several proposals for attacking high drugs costs that the pharmaceutical companies might not embrace. For example, it directs CMS to develop demonstration projects to test what it calls "value-based care," which is an arrangement in which the drug manufacturer would agree to refund money if the medication does not work as intended. Another proposal calls for evaluating options to allow high-cost drugs to be priced differently based on their indication—differing from Part D plans' current requirements to pay the same price regardless of the drug's use. Yet another proposal would make some generic drugs free for certain low-income Medicare beneficiaries.

Realignments. The blueprint identifies four realignments: (1) increase competition among drugmakers; (2) improve government negotiation tools; (3) create incentives for lower list prices; and (4) bring down out-of-pocket consumer costs. The difference between the higher prices U.S. consumers pay and the lower prices that consumers in other countries pay was referred to as "global freeloading," a common pharmaceutical industry term. In addition, today's higher drug prices were blamed in part on both "the loss of patent exclusivity on successful products" (i.e., the patents on blockbuster drugs that made them billions of dollars ran out and generics flooded the markets) and the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148).

To accomplish these realignments, the plan includes several measures that HHS hopes will lead to lower drug prices, including (1) requiring drug ads to provide the drug's cost to the consumer; (2) removing the ban that prevents some pharmacies from telling consumers that the drug they want is available more cheaply outside of their plan; (3) discouraging drug companies from using various tricks and tactics to prolong their patents to keep generics out of the market; (4) altering the current rebate system to allow some consumers to pocket a part of the rebates normally paid to insurers and employers; and (5) pressuring other countries to raise their drug prices.

A portion of the plan is devoted to HHS's request for feedback on its proposals and its call for interested parties to propose further ideas for cutting costs, an indication that these proposals are still at least in part under development. An additional complication in HHS' efforts to carry out this plan is that certain portions of what it aspires to do are outside of its immediate control. These portions will require Congress to enact laws to carry out the changes. American Patients First, May 11, 2018

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Life Sciences
Clinical testing watchdog group lacked standing to effect FDA informed-consent changes

By Wolters Kluwer Editorial Staff

A patient advocacy organization lacked standing to contest a Food and Drug Administration (FDA) denial of its petition to amend clinical testing informed-consent content, a federal district court in the District of Columbia has ruled. Because the organization lacked members, it could not assert representational standing, and in order to claim organizational standing it needed to show the same standing elements of any individual. The organization failed to do this at the motion stage.

Background. The Center for Responsible Science (CRS) is a non-profit, non-member organization that seeks to promote advances in regulatory science by advocating for better results for patients and "bringing policy up to date with existing science." As part of its mission and activities, CRS monitors serious adverse events in human clinical trials.

In May, 2014, the organization and two individuals petitioned the FDA to amend its informed-consent regulation so as to include information about preclinical animal testing. Specifically, the petition requested that the FDA add three informed-consent elements to the eight existing ones, including a notice that: due to differences between animals and humans, animal tests may not predict whether a drug is safe and/or effective for use in humans; that some participants in clinical trials in which other investigative drugs were tested have died or have been seriously injured by the drug that was tested; and that the drug the human participant will be given may later prove to be either unsafe for humans or ineffective in treating the condition for which it is being tested, and the clinical trial participant should not assume that the drug will treat a medical condition that he or she may have, because a determination of efficacy in an animal study does not necessarily predict efficacy in humans.

On April 12, 2017, the FDA denied the Citizen Petition, and six months later the CRS, along with individual petitioners, filed suit seeking declaratory and injunctive relief. The FDA moved to dismiss the lawsuit based on lack of standing, and for the reasons stated below, the court agreed.

CRS' standing obstacles. Organizations can sue either on their own behalf (organizational standing) or on behalf of their members (representational standing). Because CRS does not have any members, the court found that it could invoke only organizational standing. To prevail, it needed to show the same three standing elements as any individual-(1) injury, (2) causation, and (3) redressability. The injury needed to be concrete and demonstrable and with a consequent drain on CRS' resources, rather than simply a setback to any abstract social interests.

The burden on CRS. CRS alleged that it had standing because the interests at stake were germane to its purposes, and that the FDA's response will require further extensive advocacy work on its part, thereby placing a significant drain on its limited resources and the frustration of its mission. However, the court determined that such broad allegations cannot suffice to allege standing, particularly where advocacy spending and "detriment to its mission" standing alone have been held not to constitute sufficient injury.

The court needed to know how resources were being drained and from and to where they were being diverted. CRS merely concluded that in the absence of the amended regulation, it would cost the organization a substantial sum of money to educate and protect the welfare of potential clinical trial participants nationwide about the issues with animal testing. The court ruled that without more specifics, it was unable to discern whether those outlays would be "normally expended" to carry out the organization's advocacy mission and the ways in which resources would otherwise be spent if the regulation were amended. The court further noted that this was not a strenuous burden at the motion-to-dismiss stage, but a necessary one nonetheless. For the foregoing reasons, the court granted the FDA's motion to dismiss due to lack of CRS standing, but granted CRS leave to amend. Center for Responsible Science v. Gottlieb, April 27, 2018

FDA grants food manufacturers more time to roll out changes to nutrition labels

By Wolters Kluwer Editorial Staff

The FDA is extending the compliance dates by approximately 1.5 years for the Nutrition Facts Label Final Rule and the Serving Size Final Rule. Food manufacturers with $10 million or more in annual food sales will now have until January 1, 2020, to comply from the original July 26, 2018 date. For food manufacturers with less than $10 million in annual food sales the date is extended from July 26, 2019, to January 1, 2021. After carefully considering the numerous comments received after the previous label dates were issued, the FDA decided that extending the compliance dates would ensure that industry has sufficient time to comply with the new requirements.

The rules. The two final rules (81 FR 33742 and 81 FR 34000) apply to most packaged foods sold in the United States (see Nutrition Facts label gets ready for summer; reshapes serving sizes, trims fat info, May 20, 2016). Because of the broad reach of these rules, the industry has expressed concern about the ability to make the required changes by the compliance date. The FDA issued a proposal to extend the compliance date by 1.5 year (see FDA proposes 1.5-year compliance deadline extension for updated nutrition labels, October 2, 2017) and received a significant response.

Comments and considerations. The FDA noted that extending the compliance dates will mean that certain information required on the new Nutrition Facts label will not be available to consumers on all foods as soon as original anticipated. However, the old Nutrition Facts label is still accurate and consumers with medical conditions should continue to follow advice they receive from a healthcare professional concerning their conditions and diet. The FDA also understood that the extension creates a longer transition period when the two Nutrition Facts labels are in the marketplace. However, both labels will be truthful and accurate and the FDA will be providing educational materials to helps consumers understand information on the labels and to ease the transition.

Based on information available to the FDA and the information provided by industry commenters, the manufacturers' ability to meet the original compliance date is affected by many factors and not all manufacturers are able to meet the original date. Many comments were received relating to the processes involved in obtaining nutrient information from suppliers and timing involved for various size businesses to gain access to equipment for developing and printing new labels. The extension should provide adequate time for the coordination between suppliers, manufacturers, and labeler to ensure that the new labels are ready and in use by the new compliance dates. Final rule, 83 FR 19619, May 4, 2018

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