subscribe
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
Testimonies focus on benefits of 340B Drug Program

By Anthony H. Nguyen, J.D.


Various testimonies were provided in a hearing before the House Committee on Energy and Commerce examining how covered entities are using the 340B Drug Pricing Program. The hearing discussed various issues, including how covered entities (1) track and use savings from the 340B Program; (2) use contract pharmacy arrangements; (3) use child sites; and (4) interact with the Health Resources and Services Administration (HRSA). In addition, the hearing focused on the requirements different types of covered entities must meet in order to receive reduced prices through the 340B Program.


Neither the 340B statute nor HRSA guidance, however, explain how 340B entities must use savings from the program. There is no requirement that the discounted 340B price be passed on to uninsured patients who seek treatment at 340B entities. As a result, the 340B entity will acquire the drug at a discounted price, but the uninsured patient may pay the full list price for the drug. While some 340B entities pass savings on to uninsured patients, it has been reported that some use savings from the 340B Program to pay for the operations of the covered entity, such as marketing. The House Committee convened the hearing to examine current practices and usage of savings generated by the 340B Program.


Background. Established by Congress, the 340B Drug Pricing Program mandates that drug manufacturers provide outpatient drugs to eligible health care organizations, also known as covered entities, at reduced prices to remain eligible for reimbursements through entitlement programs such as Medicaid and Medicare. Covered entities are eligible to receive discounts on outpatient prescription drugs from participating manufacturers and report saving between25 and 50 percent of the average wholesale price for covered outpatient drugs.


Covered entities do not receive discounts on inpatient drugs under the 340B Program. Covered entities can realize substantial savings on outpatient drugs through 340B price discounts and generate 340B revenue by selling 340B drugs at a higher price than the discounted price at which the covered entity obtained the drug.


Testimonies. Shannon A. Banna, Director of Finance and System Controller, at Northside Hospital, Inc., noted that the 340B Program savings allow the hospital to provide drugs to some of its most vulnerable patients and expand its charity care and community programs. In addition, the hospital met 340B Program requirements, with only a single instance of inadvertent diversion of less than $7 in an HRSA audit. Northside is an independent Georgia nonprofit corporation that owns or operates an extensive network of health care facilities in Georgia.


Michael Gifford, President and Chief Executive Officer (CEO), of AIDS Resource Center of Wisconsin, a nonprofit providing health care services and support for HIV patients, stated that the savings generated by the 340B Program allowed entities to purchase certain medications at a price lower than what these medications are normally purchased for. In turn, these savings that are generated off the reimbursement for the medication purchased using 340B pricing are then reinvested into programs and services that directly benefit the individuals the covered entity serves.


Ronald A. Paulus, MD, President and CEO, of Mission Health Systems, Inc., testified that six Mission Health hospitals qualify to participate in the 340B Program based on either disproportionate share hospital (DSH) or critical access hospital status. The hospitals use of 340B Program savings directly reflects the intent and design of the 340B Program, going to support high quality, safety net services and programs many of which are otherwise unavailable in the region and would be unavailable absent the 340B program. He noted that funds provided by 340B program savings were integral to the hospital's work.


Charles B. Reuland, Executive Vice President and Chief Operating Officer (COO), of The Johns Hopkins Hospital stated that participation in the 340B Program allowed the hospital to provide care and service to vulnerable individuals and families. As a safety net hospital, Johns Hopkins uses its 340B savings to respond to emerging crises and to continue serving the most vulnerable patients in Baltimore. Reuland noted that since 2009, Johns Hopkins has offered a charity program designed to improve access to effective, compassionate, evidence-based primary and specialty care to uninsured and underinsured patients from the neighborhoods immediately surrounding the hospital.


Sue Veer, President and CEO of Carolina Health Centers, Inc., a federally qualified health center that serves as the primary care medical home for 26,952 patients in the west central area of South Carolina, noted that using 2016 as a sample, 142,045 or 43.1 percent of the 329,679 prescriptions dispensed at the system's two pharmacies were filled with 340B purchased inventory for eligible patients. The system's total 340B savings for 2016—calculated as the net margin after the sale of the drug—was $561,620. She further noted that the savings enabled the health center to provide deeply discounted pharmacy services to those patients eligible for the income-based sliding fee program, offer medication therapy management to promote clinical and cost effective care, and assist patients with qualifying for manufacturer Patient Assistance Programs.



Back to Top

Proactively manage and mitigate compliance risk amid continuous change with ComplyTrack®

Track and compliance issue, investigation or audit and enable any employee to instantly report issues across the enterprise. Get the actionable insights you need to manage risk and stay focused on your bottom line.
Compliance
Research compliance program growth depends on structure, tools, executive support

By Kayla R. Bryant, J.D.

Ensuring that clinical research programs are in full compliance with regulations and requirements depends on the cooperation of executives at the highest levels of the organization. Deepika Bhatia and Trissi Gray, from the Office of Compliance at UT Southwestern Medical Center, presented their approach to compliance at a Health Care Compliance Association (HCCA) webinar entitled, "Implementing Clinical Research Corrective Action and Prevention Plans," and noted that this cooperation leads to the development of a culture of compliance not only within the clinical research sphere, but the entire organization.


Structure and tools. At UT Southwestern Medical Center, over $422 million in funding each year is spread across about 5700 research projects. The presenters emphasized the necessity of having a set structure and a variety of effective tools in their compliance arsenal when overseeing such a large array of projects. Research compliance should have a clear chain of command and a defined space in the organization's overall compliance sphere. Helpful tools include Velos, a clinical research management system, eIRB for tracking investigational review board (IRB) submissions, eCOI for tracking conflicts of interest, and eGrants for automating the grants and project management process.


Defense. Protecting an organization from research compliance issues involves three lines of defense. Overall operational management and internal controls apply broadly and establish a compliance framework. More targeted areas of focus, such as financial control, risk management, and security, allow for closer oversight of various areas. Finally, internal and external audits reveal specific problems that need to be addressed. Over time, compliance programs grow in maturity, resulting in a collective, collaborative, proactive approach.




Recommendations for creating compliant security relationships with vendors

By Harold Bishop, J.D.


Recent regulatory changes have had an impact on what "covered entities" must do to create and maintain a compliant security relationship with their "business associates." This impact, and how information technology (IT) and compliance departments can interact to improve business associate (BA) selection and management, were the topics of a recent Health Care Compliance Association (HCCA) webinar featuring Francois J. Bodhuin, Director, Information Security Officer, and Joseph A. Piccolo, Vice President, Corporate Compliance, at the Inspira Health Network. The presenters also offered a five-step life cycle approach to managing vendor security requirements.


Background. The term "covered entity" is defined in 45 C.F.R. sec. 160.103 as either a health plan, a health care clearinghouse, or a health care provider who transmits any health information in electronic format. According to the presenters, the HITECH privacy provisions (Title XIII) of the American Recovery and Reinvestment Act (ARRA) (P.L. 111-5) resulted in the promulgation of the January 25, 2013, Final rule (78 FR 5566), which strengthen the privacy and security protections for health information established under the Health Insurance Portability and Accountability Act of 1996 (HIPAA). The rule also expanded the definition of "business associates" (BAs) to include subcontractors/vendors (and written assurance from subcontractors/vendors that they will uphold the security and privacy of protected health information (PHI)), increased reporting requirements, and enhanced penalties (see HIPAA final rule modifies Privacy, Security, and Enforcement Rules and establishes direct liability for business associates that violate certain rules, January 25, 2013).


Enforcement themes and challenges. The presenters noted several themes present in recent government enforcement actions, including accusations of inadequate risk assessment plans, outdated vendor agreements, the lack of risk analysis, and inadequate oversight (lack of communication). The presenters also laid out several new logistical challenges, including (1) insuring that vendor agreements are current (and incorporate the 2013 rule changes); (2) the need to educate board members, employees, and vendors; and (3) monitoring of vendor agreements.


Interaction of IT and compliance. The presenters stressed the need for IT and compliance to jointly develop a process that (1) makes use of HHS Office of Civil Rights (OCR) guidance, audit criteria, and recent settlements; and (2) sets guidelines for vendors, including a vendor code of conduct, specific policies and procedures for vendors, and vendor education requirements.


The presenters see the IT role as performing annual security assessments, frequent vulnerability scans, and the integration of risk analysis. In addition, in support of compliance, they believe that IT must: (1) be represented on the compliance committee; (2) have software that tracks vendors; (3) develop security questionnaires; and (4) evaluate the security programs of vendors. Compliance, according to the presenters, must support IT by: (1) being a conduit for communication in understanding vendor relationships; (2) collaborating with IT on new and unique projects; (3) educating the board on the compliance/IT partnership; (4) developing and updating policies; and (5) including audits as part of the annual work plan.


Collaborative management of vendors. The presenters recommend language in vendor agreements that will allow for the covered entity to conduct a survey or questionnaire of the vendor. They suggest that the questionnaire incorporate the organizational values of the covered entity, not just government requirements. The questionnaire should be required of both new and existing vendors. The presenters also recommend that the covered entity create an oversight group to review vendor responses, extrapolate risk levels, review actions taken with the vendor, tweak questionnaires, and report results to executives though the compliance committee.


Five-step approach. The presenters concluded by describing their five-step life cycle approach to managing vendor security requirements. Their approach centers on the following elements: (1) patient satisfaction; (2) quality outcomes; (3) electronic data security; (4) patient engagement/population management; and (5) stewardship and reputation.


Back to Top


The Journal of Health Care Compliance is the smart way to stay up-to-date on current and emerging compliance issues and avoid inquiries, penalties, and losses.
Reimbursement
Reduction of provider's reimbursement rate for failure to submit quality data was proper

By Wolters Kluwer Editorial Staff


Reduction of a provider hospital's reimbursement calculation rate for the 2013 fiscal year was proper because the provider failed to comply with quality data submission requirements, the Provider Reimbursement Board (PRRB) determined. The penalty was reasonable when the provider had submitted the required data for the prior three quarters, any technical difficulties were deemed provider staff error, and a reminder email clearly stated date submission information and deadline.


Background. Under federal law, Medicare provider hospitals are required to submit quality of care data under the Hospital Inpatient Quality Reporting program (IQR), and are penalized for failure to submit data accordingly. CMS made a determination that the provider, a Medicare-certified acute care hospital, failed to meet quality reporting requirements for 2013. Consequently the provider was charged a two percent reduction to the market basket update used to calculate Medicare payments, for the fiscal year 2013. Specifically, the provider failed to timely submit Healthcare Associated Infection (HAI) to the National Healthcare Safety Network (NHSN) for the fourth quarter. CMS notified the provider that the data was missing and as a result, a penalty of a two percent reduction in the provider's 2013 market basket update was imposed. The provider requested reconsideration of the decision, the reduction decision was upheld, and the provider filed a timely appeal with the Board.


Fee reduction. The Board rejected the provider's argument that it did not submit the required fourth quarter data because it was confused by an email reminder received from CMS that included submission instructions, and that it experienced technical difficulties in submitting the data according to the email. The Board found that while the email was confusing, it did not justify noncompliance with the data submission requirements. Specifically, while the email included information regarding quality improvements, it did not direct the provider to submit the data to an alternate source. The provider did not request clarification from of the submission process prior to the submission deadline. The Board also looked at the provider's past practices and considered that the provider properly submitted the date for the prior three quarters significant. While the provider also argued it had technical difficulties with the data system when it attempted to submit the data, the Board found no evidence of CMS or Medicare contractor system failure, but did find provider error and the provider needed to upgrade its software.


The Board also found that the CMS's reconsideration requests were consistent with past practices of resolving similar reconsideration requests. In other words, in cases where provider staff error was found, such as in this case, CMS has consistently upheld noncompliance determinations.


Dissent. In the dissenting opinion, the dissenting Board member disagreed with the Board and opined that the reduction penalty should have been reversed. Furthermore, the dissent concluded that the provider reasonably interpreted that the quality reporting contractor was changing its past practice of submission, and the information in that email had an impact on the provider's actions. Mercy Medical Center v. Wisconsin Physicians Services, PRRB Hearing, Dec. No. 2017-D30, Case No. 13-0633, September 28, 2017




Inadequate staff training results in market basket reduction

By Anthony H. Nguyen, J.D.


A payment penalty by CMS that reduced an acute care hospital's payment update for fiscal year (FY) 2016 by 25 percent of the 2.7 percent market basket update was properly imposed. The Provider Reimbursement Review Board (PRRB) found that under the Hospital Inpatient Quality Reporting (IQR) program CMS had basis for the reduction.


Background. Doctor's Memorial Hospital is an acute care hospital located in Florida. For FY 2015 and beyond, CMS reduces the hospital's annual IPPS market basket percentage increase by 25 percent if a hospital fails to report the required quality data under the IQR program. A hospital that is subject to this penalty during a given year is also excluded from participation in the value-based purchasing program and ineligible to receive any value-based incentive payments for that year. For FY 2016 payment determinations, CMS required hospitals participating in the IQR program to submit data regarding various healthcare associated infections (HAI) beginning January 1, 2014.


On March 16, 2015, CMS notified Doctor's that it failed to meet IQR program requirements which would result in the reduction in Doctor's FY 2016 market basket update payment. Specifically, CMS alleged that Doctor's failed to timely report HAI data for the second quarter of calendar year 2014 as required under the IQR program. Following Doctor's request for reconsideration, CMS upheld its decision. Doctor's appealed to the PRRB.


Findings. Doctor's asserted that submitting data to the required national database had been problematic on multiple occasions. The hospital stated that prior employees who had submitted data were familiar with the complications and compensated for the data submission issues by "verifying and double check[ing] data right up to the deadline." The hospital faulted a new employee responsible for submitting the data as not aware of the prior obstacles with data submission and did not verify and double check the submission prior to the deadline.


The Medicare contractor rejected this argument noting it is the hospital's responsibility to ensure that new staff is adequately trained and aware of the requirements. The Board agreed finding in its review that there was sufficient evidence to conclude that the national database had issues preventing the hospital's timely submission of the IQR program data. Rather, the Board found evidence that a staffing change at Doctor's caused its data submission issues. As such the hospital failed to report data as required. Doctor's Memorial Hospital v. First Coast Service Options, Inc., PRRB Hearing, Dec. No. 2017-D19, Case No. 15-2800, September 26, 2017.


Back to Top

MediRegs Reimbursement Suite: your single source for coding and reimbursement research and tools.

Built for expert coders who need instant access to key regulatory content and coding, revenue, and payment tools, the MediRegs Reimbursement Suite has everything you need to understand the claims processing system.
Coding
AMA Coding Guidance: August 2017 CPT® Assistant

Edited by Wolters Kluwer Editorial Staff


Physical Therapy Evaluations


The Current Procedural Terminology (CPT®) 2017 code set includes significant revisions to the coding and descriptions for physical therapy evaluations and re-evaluation services in the Medicine/Physical Medicine and Rehabilitation (PM&R) subsection. New codes (97161-97163) that describe three levels of physical therapy evaluation and one additional code (97164) for re-evaluation were created. In addition, extensive guidelines were added. The codes that previously were used to report these services were deleted and replaced with these new codes. Previously published articles addressed occupational therapy and athletic training evaluation and re-evaluation codes, however, this article provides an overview of physical therapy evaluation and re-evaluation codes.


Reporting Esophageal Sphincter Augmentation Procedures


Prior to 2017, CPT® Category III codes 0392T and 0393T were used to report the laparoscopic insertion and removal of a flexible band of interlinked titanium beads with magnetic cores around the lower esophageal sphincter. For 2017, these codes were deleted from the CPT® code set and replaced with Category I codes 43284 and 43285. This article provides an overview of the appropriate reporting of these new surgical procedures.


Non-Invasive Drug-Eluting Ocular Inserts (0444T, 0445T)


Advances in medical technology are constantly being made in today's fast-paced biomedical engineering fields. These advances require appropriate reporting mechanisms to provide valuable information, such as utilization trends and aggregate claims data that can affect policies and approval from the U.S. Food & Drug Administration (FDA). CPT® Category III codes were created precisely for this reason.


For 2017, two new Category III codes (0444T, 0445T) were created that describe emerging technology and services for glaucoma treatment. These new codes describe the noninvasive placement of a drug-eluting ocular insert, and the noninvasive removal and subsequent replacement of a drug-eluting ocular insert in the treatment and management of glaucoma. Note that these services differ from existing Category III code 0356T, which is for the surgical insertion of a drug-eluting implant into the canaliculus through the punctum (part of the tear drainage system).


  • 0444T Initial placement of a drug-eluting ocular insert under one or more eyelids, including fitting, training, and insertion, unilateral or bilateral
  • 0445T Subsequent placement of a drug-eluting ocular insert under one or more eyelids, including re-training, and removal of existing insert, unilateral or bilateral

Frequently Asked Questions


Surgery: Integumentary System


Question: How should the Current Procedural Terminology (CPT®) code 10030, Image-guided fluid collection drainage by catheter (e.g., abscess, hematoma, seroma, lymphocele, cyst), soft tissue (e.g., extremity, abdominal wall, neck), percutaneous, be reported, i.e., must the drainage catheter be left in place to report code 10030?


Answer: To report code 10030, the drainage catheter needs to be left in place and secured with a suture or alternative fixation device for post procedure evacuation, and the patient sent to recovery. If a drain was not left in place for prolonged drainage, the procedure would be reported as an aspiration with code 10160, Puncture aspiration of abscess, hematoma, bulla, or cyst, rather than an abscess drainage.


Surgery: Musculoskeletal System


Question: What is the appropriate CPT code to report for an open distal hamstring tendon repair?


Answer: It would be appropriate to report 27385, Suture of quadriceps or hamstring muscle rupture; primary, for the open repair of a distal hamstring tendon.


Question: How should the insertion of a radial side plate and ulnar stem (such as the APTIS system [Aptis Medical; Louisville, KY]) during a total distal radioulnar joint replacement procedure be reported? Is it appropriate to report codes 25441 and 25442?


Answer: It would be appropriate to report only code 25442, Arthroplasty with prosthetic replacement; distal ulna, for this procedure. Code 25441, Arthroplasty with prosthetic replacement; distal radius, would not be additionally reported as the distal radius was not removed (the distal radius was used as an anchor point for the ulnar stem implant, instead).


Surgery: Cardiovascular System


Question: A patient presents with Type IV thoracoabdominal aortic aneurysm and, after the risks and benefits were discussed, it was determined that an endovascular repair would be performed due to the anatomy of the disease. Access was gained via the femoral artery percutaneously, and a fenestrated graft, which had four true fenestrations (none were scallops), was used. The proximal graft was landed in the distal thoracic aorta healthy tissue for a good seal. The fenestrations were lined up for the left and right renal arteries, celiac artery, and superior mesenteric artery, and these locations subsequently were stented with a covered stent. The distal graft was then deployed into the aortic bifurcation where iliac extension grafts were placed in the left and right iliac arteries to complete the surgery. What are the appropriate code(s) to report for this procedure, keeping in mind that a portion of the graft was placed in the thoracic aorta?


Answer: It would be appropriate to report code 34848, Endovascular repair of visceral aorta and infrarenal abdominal aorta (e.g., aneurysm, pseudoaneurysm, dissection, penetrating ulcer, intramural hematoma, or traumatic disruption) with a fenestrated visceral aortic endograft and concomitant unibody or modular infrarenal aortic endograft and all associated radiological supervision and interpretation, including target zone angioplasty, when performed; including four or more visceral artery endoprostheses (superior mesenteric, celiac and/or renal artery[s]), for four visceral branches (SMA, celiac, left renal, and right renal) and extension of the endograft into the iliac arteries.


Pathology and Laboratory: Molecular Pathology


Question: A patient had a thromboembolic event and was placed on a newer oral anticoagulant (e.g., dabigatran, rivaroxaban). The physician wishes to evaluate the patient for venous thrombophilia risk factors. The new oral anticoagulants interfere with these assays and may cause false positive results. Therefore, an "in vitro" neutralization method is used to eliminate interference to obtain accurate thrombophilia assessments so that the patient does not need to discontinue treatment. Is it appropriate to report code 85525, Heparin neutralization, for assays that eliminate interference from other anticoagulants, as this is the only CPT code to report neutralization, even though the code specifically lists heparin in the code descriptor?


Answer: No, it would not be appropriate to report code 85525, Heparin neutralization, for the assay in question. Currently, there is no specific CPT code to report a neutralization assay other than for heparin. Therefore, in this case, it would be appropriate to report code 85999, Unlisted hematology and coagulation procedure. When reporting an unlisted code to describe a procedure or service, it will be necessary to submit supporting documentation (e.g., procedure report) along with the claim to provide an adequate description of the nature, extent, and need for the procedure; and the time, effort and equipment necessary to provide the service.


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 "August 2017."


Back to Top

MediRegs Coding Center: your single online coding reference.

Coding Center provides the real-time updates required to ensure proper code assignment up front, minimizing your claim denials and maximizing your efficiency.
Reform
2017 tax returns must include proof of minimum coverage, an exemption, or payment of penalty

By Harold Bishop, J.D.


For the upcoming 2018 filing season for 2017 individual tax returns, the Internal Revenue Service (IRS) will not accept electronically filed tax returns where the taxpayer does not address the health care insurance coverage reporting requirements of section 1502 of the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148). The IRS announcement, specifically states that for the IRS to accept an electronic tax return, the taxpayer must: (1) indicate that they had qualified health care insurance coverage (also called "minimum essential coverage") by checking the "Full-year coverage box on Form 1040, 1040A or 1040EZ; (2) submit Form 8965, Health Coverage Exemptions, claiming a coverage exemption (typically based on hardship); or (3) make an individual shared responsibility payment (penalty payment) when they file their federal income tax return.


In addition, the IRS announced that returns filed on paper that do not address the health care insurance coverage requirements may be suspended pending the receipt of additional information and any refunds may be delayed. The 2018 filing season will be the first time the IRS will not accept tax returns that omit this information.


Health insurance coverage requirement. Section 1501 of the ACA created the "minimum essential coverage" requirement, under which individuals are considered covered if they have health insurance through (1) the government, including Medicare, Medicaid, the Children's Health Insurance Program (CHIP), retiree coverage, TRICARE (military coverage), or Veteran's Administration (VA) health coverage; (2) private insurance that they purchased on their own, including COBRA coverage and coverage obtained through the Health Insurance Marketplace; or (3) provided by their employer (even if they didn't pay anything for the coverage).


Taxpayers that don't have coverage must claim a waiver or exemption or be subject to a penalty called the shared individual responsibility payment. For the 2017 tax year, that penalty is equal to 2.5 percent of adjusted gross income (AGI), or $695 per adult and $347.50 per child, up to a maximum of $2,085, whichever is higher. That amount must be figured and reported on the 2017 tax return, payable in 2018.


Executive Order and repeal efforts. On January 20, 2017, President Trump signed Executive Order 13765, which directed HHS and other federal agencies to "exercise all authority and discretion available to them to waive, defer, grant exemptions from, or delay the implementation of any provision or requirement of the [ACA] that would impose a fiscal burden on any State or a cost, fee, tax, penalty, or regulatory burden on individuals, families, healthcare providers, health insurers, patients, recipients of healthcare services, purchasers of health insurance, or makers of medical devices, products, or medications" (see Trump Administration previews health care plans with Executive Order, regulatory freeze, January 25, 2017). This Executive Order and recent Congressional efforts to repeal and replace the ACA may have led individual taxpayers to believe that the IRS will continue to relax its obligation to administer the health care law, as it did for 2016 tax returns. This IRS announcement makes it clear that this is no longer the case, the legislative provisions of the ACA are still in force until changed by the Congress, and that for tax year 2017, taxpayers remain obligated to follow the law and pay what they may owe.




New regulations provide opportunity for moral objection to contraceptive coverage

By Kayla R. Bryant, J.D.


Two new HHS interim Final rules, effective October 6, 2017, have sliced through the Patient Protection and Affordable Care Act's (ACA) (P.L. 111-148) contraception mandate by providing additional exemptions for objecting employers and insurers. In addition to religious organizations objecting on grounds of religious beliefs, non-religious groups may now decline to cover contraceptives based on "sincerely held moral convictions." The Health Resources & Services Administration (HRSA) retains discretion to continue to require coverage where no regulatory objections apply


Exemption. The rules create 45 C.F.R. Sec 147.133, expanding the exemption previously located at Sec 147.131(a). The expanded exemption applies to group health plans, issuers, and sponsors, which will not face penalties after omitting contraceptive coverage from benefits to the extent the plan sponsor objects to such coverage. Issuers do not need to have their own objections to be exempt from penalties. The exemption applies to plan sponsors for for-profit entities with no publicly traded ownership interests.


Accommodation. Although the Administration does not believe that any entities holding moral convictions will seek to use the optional accommodation process available for religious organizations, the rule has inserted references to the new exemption for moral convictions into regulations where the accommodation process is codified. The expansion of accommodation eligibility is intended to provide an opportunity for entities objecting on moral grounds to provide contraceptive coverage. Final rule, 82 FR 82 FR 47792, October 13, 2017, and Final rule, 82 FR 47838, October 13, 2017



Back to Top
Keep pace with the shifting health reform landscape using curated insights and tools found only in the Health Reform KnowlEDGE™ Center, now available on Cheetah™!

View every evolving aspect of health reform, including our expert legal analysis, from the unique vantage point of our single-source solution. Every feature, link, and individual bit of coverage connects directly to the detailed information and analysis on key areas-and latest developments-most important to you.
Life Sciences
Third-party payers may not recover under RICO for improper Depakote® marketing

By Wolters Kluwer Editorial Staff


The Seventh Circuit concluded that improper marketing to physicians does not support a claim by third-party payers under the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. §1964 (RICO) because the third-party payers are several layers removed in the casual sequence to support a RICO claim. The court reasoned that Abbott's prior criminal conviction and payment of $1.6 billion were the proper remedies.


Criminal proceedings. Abbott Laboratories manufactured Depakote®. The FDA approved the use of Depakote to treat seizures, migraine headaches, and some bipolar conditions. Abbott promoted the off-label use of Depakote while hiding its involvement in such marketing. In 2012, Abbott pleaded guilty to unlawful promotion of Depakote and paid $1.6 billion to resolve a criminal case and settle qui tam actions that had been filed against it.


RICO. In 2013, two welfare-benefit plans (payers) that paid for Depakote's off-label use filed suit, seeking treble damages under the civil liabilities provisions of RICO. The payers asked the district court to certify a class consisting of all third-party payers. The district court dismissed the action as untimely because civil RICO actions must be brought within four years after injury was or should have been known. However, because the qui tam suits began under seal that lasted until 2011, and the payers alleged that Abbott had concealed its role in the off-label production, the case was remanded for the parties to examine when a reasonable payer should have known that it was paying for drugs in response to an improper marketing campaign. The district court dismissed the complaint on different grounds, ruling that the payers could not show proximate cause as required by RICO (see Unorthodox dismissal not justified in Depakote® RICO suit, April 14, 2015).


Injury. The Seventh Circuit reasoned that although payers part with money, they are not the only injured party and not the most directly injured party. The court explained that patients suffer by taking the off-labelled Depakote if it is useless because it may aggravate their condition, create side effects not justified by the benefits of its use, and/or prevent patients from taking drugs that would alleviate their conditions. The court noted that physicians also suffer less direct loss by prescribing ineffective medicine and thereby losing business and revenue. Thus, the court stated, although payers bear some costs for the off-label promotion, it is difficult to compare the patients' health costs and monetary costs with payers' costs.


In addition, the court determined that comparison difficulties are compounded by other factors. First, some off-label use of Depakote may be beneficial to patients. Second, some physicians may have written off-label prescriptions regardless of Abbott's misleading promotion. Third, some physicians may not have changed their practices at all and payers did not present any study or data to show causation in relation to Abbott's promotion. Accordingly, the court found insufficient grounds for the third party payers' suit and determined that the prior criminal proceedings were the proper remedies. Sidney Hillman Health Center of Rochester v. Abbott Laboratories, October 12, 2017



FDA issues guidance for generic drug marketing applications

By Wolters Kluwer Editorial Staff


The FDA issued a new draft guidance to assist applicants in determining which abbreviated approval pathway is appropriate for the submission of a marketing application for generic drug to the FDA. The draft guidance focuses on applications that can be submitted as abbreviated new drug applications (ANDAs) under section 505(j) of the FDC Act, petitioned ANDAs under section 505(j)(2)(C), or new drug applications (NDAs) pursuant to section 505(b)(2). It also seeks to clarify the differences between the three types of applications.


Duplicate generic drugs. A proposed drug product that is a duplicate of a previously approved drug product that was submitted and approved should be submitted under 505(j). These duplicates are presumed to be therapeutically equivalent to their reference listed drugs (RLDs). The ANDA must contain information showing that the proposed generic product has the same active ingredients, conditions of use, route of administration, dosage form, strength, and labeling as the RLD and is the bioequivalent of the RLD.


An application under this section must include information about the identity and quantify of all active and inactive ingredients of the proposed drug product, a characterization of any permitted difference between the proposed drug and the RLD, and justification demonstrating that the differences do not adversely affect the safety and effectiveness of the product. The application also must include information showing that the proposed labeling is the same as the labeling approved for the RLD other than changes required because of approved differences or because the new drug is produced or distributed by a different manufacturer than the RLD.


Minor differences. A drug product that differs from the RLD in its dosage form, route of administration, strength, or active ingredient (in a product more than one active ingredient) which the FDA has approved under this section that does not require additional studies to establish the safety and effectiveness of the proposed drug product, may be submitted for a suitability petition under 505(j)(2)(C). Limited confirmatory studies may be included in the petition to show that the characteristics that make the proposed drug product different from the listed drug do not alter its safety and effectiveness.


Significant differences. A proposed drug product with a new indication or a new dosing regimen as compared to the RLD and drugs where the rate and/or extent of absorption exceed, or are otherwise different from the 505(j) standards for bioequivalence may be submitted under 505(b)(2). Additionally, proposed drug products with significant labeling differences that no longer satisfy the 'same' labeling requirement, should be submitted under this section.


Because products submitted under this section are not considered the therapeutic equivalent to the RLD, applications should contain full reports of investigations of safety and effectiveness when at least some of the information comes from studies not conducted by or for the applicant. The application may rely on FDA findings of safety and/or effectiveness for a listed drug only to the extent that the proposed product shares characteristics in common with the listed drug, however the applicant must use comparative bioavailability data to establish a bridge between the proposed drug product and each listed drug to demonstrate that reliance on the listed drug is scientifically justified. Notice, 82 FR 47749, October 13, 2017



Back to Top
Cheetah™ Life Sciences: current, accurate, and authoritative references and professional tools with analysis and insight into virtually every aspect of life sciences law.
Contact Us
For all customer service inquiries, please call 800-449-9525.