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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
Updated moral, religious exemptions permit some employers to deny ACA contraception coverage

By Anthony H. Nguyen, J.D. and Patricia K. Ruiz, J.D.


In a carve-out of federal requirements under the Affordable Care Act (ACA) (P.L. 111-148) that essential health benefits must include coverage of contraception at no charge to consumers, the Trump Administration has issued new regulations that would exempt nonprofit organizations, small businesses, and individuals with nonreligious moral convictions opposed to contraceptive services from offering employees health plans with those services. Another set of regulations finalizes, with technical and clarifying changes, an interim final rule expanding protections for sincerely held religious objections of certain entities and individuals. Notably, the final rule extends the exemption to publicly held for-profit entities. The rule also maintains a previously created accommodation process permitting entities with certain religious objections to voluntarily continue to object while covered persons receive contraceptive coverage or payments arranged by their health issuers or third party administrators.


Moral objections. One final rule notes that the moral convictions exemptions apply to nonprofit organizations and to closely held businesses, as well as to institutions of education, health insurance issuers serving exempt entities, and individuals. Non-federal government entities or publicly traded businesses are not exempted under the final rule. Various changes were made in the new moral objections final rule to clarify the scope of the exemptions detailed in the previously issued interim final rule (see New regulations provide opportunity for moral objection to contraceptive coverage, October 18, 2017, and Contraception coverage exemptions extended for objecting employers on religious, moral grounds, October 11, 2017).


According to the final rule, moral convictions are protected in ways similar to religious beliefs. The convictions must be: (1) deeply and sincerely held; (2) purely ethical or moral in source and content; (3) ones that impose a duty; and (4) occupy a place "parallel to that filled by...God" in traditionally religious persons to the point where it could function as a religion. HHS stated that the ACA did not require contraceptive coverage in health insurance.


Clarification of moral exemption language. Based on public comments on the interim final rule, HHS clarified the exemption language to apply to (1) group health plans established or maintained by an objecting organization or (2) health insurance coverage that is offered or arranged by an objecting organization. The final rule also clarified that the objecting organization's moral objection is related to either its establishing, maintain, providing, offering, or arranging of (1) the contraceptive coverage or payments for contraceptive services or (2) association with either a plan, issuer, or third party administrator that provides or arranges for that coverage or payment.


According to HHS, these rules affect a small fraction of the women in the U.S. HHS noted that contraceptive coverage guidelines where no religious or moral objection exists were still in place. Additionally, HHS stated that the new final rule did not change the Health Resources and Services Administration's discretion to include contraceptives in the women's preventive services guidelines for other entities.


Litigation related to the prior interim final rules are pending before appellate courts, as federal courts in California and Pennsylvania had granted nationwide injunctions because of the lack of public comment period and the scope of the exemptions "contradicted" the ACA.


Expansion of eligibility for religious exemptions. The other final rule expands religious exemptions for group health plans and health insurance coverage of entities and individuals with sincerely held religious beliefs opposed to coverage of some or all contraceptive or sterilization methods encompassed by HRSA guidelines.


The types of organizations and individuals for whom the exemptions are provided include: (1) non-governmental plan sponsors; (2) nonprofit organizations; (3) for-profit entities (including both closely held and publicly traded); (4) institutions of higher education; (5) insurance issuers, to the extent that they provide a plan to otherwise exempt entities; and (6) individuals whose employers and issuers are willing to provide them a plan compliant with the individuals' beliefs. The final rule adds language to clarify that the exemptions only apply to non-governmental entities, including as exemptions apply to institutions of higher education.


Maintenance of accommodation. The rule finalizes provisions of the interim final rule maintaining option of choosing the accommodation process for entities that qualify for the exemption. It also makes technical changes to the accommodation regulations governing when an entity that was using or will use the accommodation can revoke the accommodation and operate under the exemption. This transitional rule allows entities currently using the accommodation to revoke it and use the exemption by giving 60 days' notice. The final rule also modifies the interim final rule, to add provisions that existed in the rules prior to the interim final rule. Final rule, 83 FR 57592, November 15, 2018; Final rule, 83 FR 57536, November 15, 2018


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Compliance
Proposal to provide hospitals free drugs could trigger anti-kickback violations

By Wolters Kluwer Editorial Staff


A drug company's proposal (proposed arrangement) to provide a free drug product (the drug) to hospitals for the hospitals to use exclusively to treat inpatients diagnosed with a specific form of epilepsy could potentially generate prohibited remuneration under the anti-kickback statute and the Office of Inspector General (OIG) could potentially impose administrative sanctions on the drug company under §1128(b)(7) or §1128(a)(7) of the Social Security Act (the Act). In an advisory opinion, the OIG concluded that under the proposed arrangement, the drug company would provide the drug for free to hospitals to use exclusively for their inpatients, some of whom may be federal health care program beneficiaries, who have been diagnosed with that rare form of epilepsy.


The Drug. The drug, which was approved by the FDA in 1953 and has been used for more than 60 years to help treat patients with rare and serious conditions, is an injectable that is frequently self-administered. In some cases, however, the drug is administered to a patient during an inpatient hospital stay, and the drug is not separately reimbursable in the inpatient setting. One of the FDA approved indications for the drug is for the treatment of a rare form of epilepsy (the syndrome). In the inpatient setting, the drug typically requires a one to five day stay. The drug is administered twice daily for two weeks, and then dosing is gradually tapered and discontinued over a subsequent two-week period. Terminating drug therapy prematurely can lead to clinical complications for the patient. The drug company indicated that hospitals often refuse or are unable to stock the drug because government programs and other insurers do not provide sufficient reimbursement to cover the high cost of the drug, therefore, delaying patient access.


The proposed arrangement. Under the proposed arrangement, the drug company would give free doses of the drug to hospitals to use exclusively for inpatients that are diagnosed with the syndrome and are prescribed the drug. The drug company would stock the drug at participating hospitals on a consignment basis at no cost to the hospitals or any payor. Additional vials would be provided to the patient once he or she returned home. The patient would then continue to receive the drug for free until either coverage is obtained or the therapy (including the two-week taper period) is complete. The drug company certified that it would not advertise the proposed arrangement.


Federal anti-kickback statute analysis. The OIG found that giving the drug for free to a hospital would remove the hospital's reason for refusing to stock the drug, paving the way for the drug to be administered to qualifying inpatients. Additionally, the proposed arrangement would not result in any savings for the federal health care programs as the amount a federal health care program would reimburse a hospital for an inpatient stay would not be reduced even if the hospital received the drug for free. The proposed arrangement could also function as a seeding arrangement where once patients are discharged from a hospital administering the drug for free then their insurers (including federal health care programs) and patients would be charged with the drug.


The OIG further found that the proposed arrangement could result in steering or unfair competition discouraging prescribers from considering other viable and cheaper treatment options. It was unclear to the OIG why the drug company is stocking the drug in the hospital on a consignment basis if the drug company also would have to give the drug to the hospital for free. Finally, the receipt of the free vials of the drug would be contingent on future purchase of the drug for patients with insurance coverage for the drug. Based on the facts provided by the drug company, supplemental submissions and other publicly available information, the OIG concluded that the proposed arrangement presents more than a minimal risk of fraud and abuse under the anti-kickback statute. OIG Advisory Opinion, No. 18-14, November 16, 2018




Physician's billing privileges properly revoked where he failed to maintain former practice records

By Wolters Kluwer Editorial Staff


A CMS contractor properly revoked the Medicare enrollment and billing privileges of a Florida physician who failed to maintain his own patient records from a former practice location, even though he ultimately obtained them and submitted them to CMS, the Departmental Appeals Board (DAB) ruled. His failure to maintain records, including his orders for clinical laboratory services, for three former patients for seven years from the dates of those orders violated 42 C.F.R. §424.516(f)(1)(i)(A) and that violation was a basis for revocation of his Medicare enrollment and billing privileges for a period of one year.


Material facts not in dispute. The physician was enrolled as a Medicare provider, and on or about August 30, 2016, he received a request from Safeguard Services, LLC, the Zone Program Integrity Contractor (ZPIC), for the records of five patients. On September 10, 2017, he notified the ZPIC that the records for two patients were ready to be picked up but that he did not have records for three of the patients whom he saw as part of his employment with Salud Medical Center, his former practice group. He advised the ZPIC that the records for the three former patients should be requested from Salud because he no longer saw those patients, he was not the records custodian for their records, and he had no access to the records.


However, by letter dated May 23, 2017, (after notice of revocation of privileges from his CMS contractor) he informed the ZPIC that he obtained the records for the three former patients from Salud and he provided copies with his letter. It was undisputed that Salud was the entity that billed and received Medicare payment for services provided by the physician to the three Medicare-eligible beneficiaries whose records he obtained from Salud and delivered to the ZPIC.


Notice of revocation. On March 16, 2017, First Coast Service Options, Inc., the physician's Medicare administrative contractor (MAC), notified him that his Medicare enrollment and billing privileges were revoked effective April 15, 2017, and cited 42 C.F.R. §424.535(a)(10) as the authority for the revocation based on the fact that he failed to maintain and provide access to documents requested by CMS or its contractor. A re-enrollment bar of one year was imposed by the MAC. The physician requested reconsideration, however, the revocation was upheld on reconsideration, and he subsequently requested a hearing before an ALJ.


Basis for summary judgment. CMS filed a motion for summary judgment and prehearing brief, and the physician filed his brief, cross-motion for summary judgment and response in opposition to the CMS motion. The ALJ noted that HHS regulations that establish the procedure to be followed in adjudicating a revocation case are at 42 C.F.R. pt. 498, 42 C.F.R. §§405.800, 405.803(a), 424.545(a), and 498.3(b)(5), (6), (15), (17), and that the regulations do not establish a summary judgment procedure or recognize such a procedure. However, the DAB has long accepted that summary judgment is an acceptable procedural device in cases adjudicated pursuant to 42 C.F.R. pt. 498. The DAB has recognized that the Federal Rules of Civil Procedure do not apply in administrative adjudications such as the instant matter, but the DAB has accepted that the procedural rules and related cases provide useful guidance for determining whether summary judgment is appropriate.


Furthermore, a summary judgment procedure was adopted as a matter of judicial economy within the ALJ's authority to regulate the course of proceedings and he made that procedure available to the parties by way of his prehearing order. He further noted that summary judgment is not automatic upon request but is limited to certain specific conditions. Dominguez v. CMS, Docket No. C-17-1064, Decision No. CR5035, March 12, 2018


No genuine dispute of material fact. After accepting the physician's rendition of the facts for purposes of summary judgment, the ALJ found that there was no dispute as to any material fact pertinent to revocation issue. The physician had admitted that he failed to maintain documents required by 42 C.F.R. §424.516(f)(1)(i)(A) for three of five patients for seven years, and resolution of the case therefore turned upon application of the law to the undisputed facts. Accordingly, summary judgment in favor of CMS was appropriate, and the physician's Medicare enrollment and billing privileges were revoked for failure to comply with the documentation requirements for enrollment privileges.


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Reimbursement
CMS's payment deduction policy must be exercised in a procedurally proper way

By Wolters Kluwer Editorial Staff


CMS's payment deduction policy regarding disproportionate share hospitals (DSH) is consistent with the Medicaid Act; however, CMS must promulgate the policy in a procedurally valid fashion. A district court decision to enjoin CMS from enforcing its policy was insufficient. The district court's judgment was affirmed and remanded.


Procedural history. The Tennessee Hospital Association (Tennessee Hospital) and three of its member hospitals challenged efforts by CMS to direct Tennessee to recoup certain reimbursements paid to the hospitals under the Medicaid program. The Tennessee Hospital is a DSH serving a disproportionate share of Medicaid eligible and low-income patients and is entitled to receive supplemental DSH payments under the Medicaid Act to help offset the cost of caring for indigent individuals. The Medicaid Act limits the amount of DSH payments each hospital can receive in a given year. CMS contended that Tennessee Hospital miscalculated its DSH payment adjustments for fiscal year 2012 and received extra payments when it failed to account for Medicaid-eligible patients who have additional sources of insurance coverage.


On December 1, 2016, Tennessee's Medicaid program (TennCare) notified Tennessee Hospital that audits of 2012 payment adjustments revealed it had received significant DSH overpayments for fiscal year 2012 and directed Tennessee Hospital to repay the excess funds to the state. In response, Tennessee Hospital sued, arguing that CMS's payment-deduction policy was contrary to the unambiguous language in the Medicaid Act, ran contrary to a published 2008 rule and was not promulgated pursuant to the required notice and comment rulemaking process.


The district court granted summary judgment in Tennessee Hospital's favor reasoning that the policy was arbitrary capricious, procedurally invalid, and promulgated in excess of CMS's statutory authority. The district court permanently enjoined CMS from enforcing the policies against Tennessee Hospital for fiscal years 2012-2016. CMS appealed the district court's judgment in favor of Tennessee Hospital, and Tennessee Hospital appealed the district court's failure to impose a permanent injunction.


The appeal. On appeal, CMS argued that the payment deduction policy set forth in the 2008 rule and a 2010 Frequently Asked Questions (FAQs) is a valid interpretive rule that answers unaddressed questions raised by the Medicaid Act and the 2008 rule. It further argued that the policy merely clarified how to comply with preexisting regulatory obligation to report uncompensated care costs and did not create new rights or duties.


The Sixth Circuit disagreed, ruling that while CMS was correct insisting that its payment deduction policy is consistent with the Medicaid Act, CMS failed to promulgate the policy in a procedurally valid fashion. The payment deduction policy found in the FAQ and 2008 rule seeks to amend rather than merely clarify 2008 regulations and therefore is the sort of agency action that requires notice and comment rulemaking. Furthermore, the district court's decision to enjoin CMS from enforcing its policy from fiscal years 2012-2016 was insufficient. The district court' final judgment was affirmed. CMS must devise a procedurally valid legislative rule requiring deductions of third party payments. The case was remanded to the district court to permanently enjoin CMS from enforcing the payment deduction policy against Tennessee Hospital. Tennessee Hospital Association v. Azar, Nos. 17-5970/6033, November 14, 2018




CMS announces historic cut back in improper program payments

By Bryant Storm, J.D.


CMS achieved reductions in improper payments in 2018 across Medicare Fee-For-Service (FFS), Medicare Part C, Medicare Part D, Medicaid, and the Children's Health Insurance Program for the first time in improper payment reporting history, according to a CMS announcement.


FFS. Among the most notable cutbacks is the 2018 Medicare FFS improper payment rate of 8.12 percent—the lowest Medicare FFS improper payment rate since 2010. The Medicare FFS improper payment rate for 2018 fell from the 2017 Medicare FFS improper payment rate of 9.51. The 2018 Medicare FFS improper payment rate evaluates claims measured between July 1, 2016 and June 30, 2017.


Program integrity efforts. CMS has implemented several initiatives that led to the reductions in improper program payments, including prior authorization initiatives, a targeted probe and educate medical review strategy, and provider education on Medicare policy.


Reductions. The improper payment reductions stem from successes across multiple payment areas. Home health corrective actions led to a $6.92 billion decrease in estimated improper payments from 2015 to 2018—an improper payment rate decrease from 58.95 percent in 2015 to 17.61 percent in 2018. Skilled nursing facility corrective actions resulted in a $1.04 billion decrease in estimated improper payments from 2017 to 2018—an improper payment rate decrease from 9.33 percent in 2017 to 6.55 percent in 2018. Additionally, the Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS) improper payment rate decreased from 46.26 percent in 2016 to 35.54 percent in 2018—a $1.14 billion decrease in estimated improper payments from 2016 to 2018.


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Coding
CPT® Assistant September 2018 Coding Updates

Edited by the Wolter Kluwer Editorial Staff


The September 2018 issue of the CPT Assistant included articles that discussed coding for noninvasive estimated coronary fractional flow reserve Category III codes; reporting autologous adipose-derived cell therapy; and code selection for lesion excision for the integumentary versus musculoskeletal system. In addition, frequently asked questions were answered.


Noninvasive estimated coronary fractional flow reserve Category III codes. To properly vet and analyze the effectiveness of new techniques and devices, the American Medical Association (AMA) assigns them temporary Category III codes, which allow for data collection and analysis of clinical efficacy, safety, applicability to clinical practice, and payer coverage. For 2018, four new Category III codes (0501T, 0502T, 0503T, and 0504T) were added to the Current Procedural Terminology (CPT®) code set to report noninvasive estimated coronary fractional flow reserve (FFR). FFR uses computational fluid dynamics and simulated maximal coronary hyperemia to compute FFR measurements from existing computed tomography (CT) coronary angiogram–acquired images.


Code 0501T contains all of the individual components itemized in codes 0502T, 0503T, and 0504T. Code 0502T describes only the data preparation and transmission, while code 0503T describes solely the analysis and generation of the FFR model, and code 0504T describes the anatomical data review, with interpretation and report. In addition to the new codes, two parenthetical notes have been added to provide instruction on the appropriate reporting of these codes. Prior to 2018, the unlisted CT code (76497) or the unlisted cardiovascular code (93799) was used to report this procedure.


Reporting autologous adipose-derived. Adipose-derived regenerative cells are a heterogeneous population of cells found in adipose tissue that includes adult stem cells, endothelial progenitor cells, endothelial cells, vascular smooth muscle cells, and leukocytes. Two new Category III codes (0489T, 0490T) were established in the CPT® 2018 code set to report autologous adipose-derived regenerative cell therapy for the treatment of scleroderma in the hands. Code 0489T is used to report adipose tissue harvesting, isolation and preparation of harvested cells, including incubation with cell dissociation enzymes, removal of nonviable cells and debris, determination of concentration, and dilution of regenerative cells. Code 0490T is used to report injections of the harvested and processed adipose-derived regenerative cells in one or both hands.


When the same physician performs the cell harvesting, processing, dosing, and injections, codes 0489T and 0490T would be reported. When different physicians perform different steps of the treatment, each physician would report his or her work separately using codes 0489T and 0490T. For example, one physician may harvest and process the cells (code 0489T) and a different physician may perform the injections (code 0490T). Code 0490T may not be reported for a single injection. In addition, exclusionary and instructional notes were added in the appropriate Surgery and Category III subsections to provide guidance for correct reporting of these codes.


Code selection for lesion excision: Integumentary versus musculoskeletal system. This article highlights the types of lesion-excision codes in the Integumentary System (11400-11646) and the Musculoskeletal System (21011-28047), as well as the guidelines within each section that help determine the appropriate system from which to select an appropriate code(s) to report.


Integumentary System. In the Integumentary System guidelines in the CPT codebook, an excision is defined as the full thickness (through the dermis) removal of a lesion, including margins, simple (nonlayered) closure, and local anesthesia. To determine the appropriate code to report, the greatest clinical diameter of the apparent lesion is measured, including the margin required for complete excision, prior to the procedure. Each lesion excised is reported separately. Simple closure (12001-12018) is included in the excision of benign and malignant skin lesions and cannot be reported separately. Intermediate closure (12031-12057) or complex closure (13100-13153), if performed, may be reported separately. Surgical margin refers to the narrowest border around the lesion required to adequately excise the lesion, based on the physician's judgment.


Musculoskeletal lesions excision. The Musculoskeletal System subsection defines procedures related to the excision of subcutaneous soft connective tissue tumors, fascial or subfascial soft tissue tumors, radical resection of soft connective tissue tumors, and radical resection of bone tumors. Code selection for musculoskeletal lesion excision is based on the size, location, and depth of the tumor, and not whether the tumor is benign or malignant. Soft tissue tumor excision codes are categorized by anatomic site throughout the Musculoskeletal System subsection. Excision of benign subcutaneous soft tissue tumors (lesions) of cutaneous origin (eg, sebaceous cyst) are reported with excision of benign lesions codes (11420-11426) from the Integumentary System. Radical resection of soft tissue tumors that have a cutaneous origin are reported with excision of malignant lesions codes (11600-11646) from the Integumentary System.


Simple and intermediate repair is included in the soft tissue lesion musculoskeletal excision procedures; however, if complex repair with extensive undermining or other techniques is performed to close a defect created by a soft tissue tumor excision, the complex repair codes are reported separately. The code selection for musculoskeletal lesion excisions is determined by measuring the greatest diameter of the tumor with the narrowest margin required for the complete excision of the tumor, based on the physician's judgment at the time of the excision. The radical resection of soft tissue tumors may be confined to a specific layer or it may involve the removal of tissue from one or more layers. Radical resection of soft tissue tumors is most commonly reported for malignant or very aggressive benign tumors.


Frequently Asked Questions

Evaluation and Management: Office or Other Outpatient Services

Question: Do I report Current Procedural Terminology (CPT®) code 94150, when using a peak-flow meter for spirometry testing?


Answer: No, there is no code for reporting the performance of peak-flow rate measurement, which is not the same as the service described by code 94150, Vital capacity, total (separate procedure). A peak-flow rate measurement is an inherent part of an evaluation and management (E/M) examination and is not reported separately. If a physician provides instructions to the patient on the use of a peak-flow meter device and no other service(s) is provided, the appropriate E/M code (eg, 99201-99215 for office/outpatient services) should be reported based on the total time spent providing the service. If an E/M service is not performed, but testing services (covered under Pulmonary subsection of the CPT code set) are performed, peak-flow measurement would not represent a separately identifiable service. Therefore, from a CPT coding perspective, it would not be appropriate to report code 94799, Unlisted pulmonary service or procedure, to describe a peak-flow rate measurement using a peak-flow meter.


Surgery: Musculoskeletal System

Question: When the physician performs a Hoke technique percutaneous Achilles tendon lengthening, is it appropriate to report CPT code 27605 or code 27606?


Answer: Neither code 27605 nor 27606 should be reported for this procedure. Instead, code 27685, Lengthening or shortening of tendon, leg or ankle; single tendon (separate procedure), should be reported for the Achilles tendon lengthening. Codes 27605, Tenotomy, percutaneous, Achilles tendon (separate procedure); local anesthesia, and 27606, Tenotomy, percutaneous, Achilles tendon (separate procedure); general anesthesia, are reported only for an Achilles tendon tenotomy (surgical division of the Achilles tendon for the relief of a deformity caused by congenital or acquired shortening of a muscle, as in club foot) and should not be reported for the tendon-lengthening procedure.


Surgery: Digestive System

Question: What is the appropriate CPT code to report for the laparoscopic placement of an esophageal sphincter augmentation device when a hiatal hernia repair is also performed?


Answer: Code 43284, Laparoscopy, surgical, esophageal sphincter augmentation procedure, placement of sphincter augmentation device (ie, magnetic band), including cruroplasty when performed, should be reported. Code 43284 includes the work of hiatal hernia (cruroplasty repair); therefore, code 43281, Laparoscopy, surgical, repair of paraesophageal hernia, includes fundoplasty, when performed; without implantation of mesh, should not be reported separately.


Surgery: Female Genital System

Question: In conjunction with a Cesarean section (C-section), the physician also completely resects the fallopian tubes prophylactically for cancer prevention. How is this additional procedure reported?


Answer: Code 58700, Salpingectomy, complete or partial, unilateral or bilateral (separate procedure), would be reported when the physician completely resects the fallopian tubes prophylactically for cancer prevention during a C-section. Procedure described by code 58700 is a separate procedure that is usually considered an integral component of a total service and should not be reported separately. However, if it is carried out independently or is unrelated to the other procedure performed (C-section), then it may be reported with modifier 59, Distinct Procedural Service, appended.


Pathology and Laboratory: Molecular Pathology

Question: The laboratory performs genetic testing for the identification of sickle cell disease. When performing full gene sequencing first and proceeding to variant duplication/deletion using a single sample, can a laboratory report both CPT codes 81364 and 81363? If so, is a modifier necessary?


Answer: It would be appropriate to report code 81364, HBB (hemoglobin, subunit beta) (eg, sickle cell anemia, beta thalassemia, hemoglobinopathy); full gene sequence, with code 81363, HBB (hemoglobin, subunit beta) (eg, sickle cell anemia, beta thalassemia, hemoglobinopathy); duplication/deletion variant(s), for sequencing followed by duplication/deletion analysis. Use of a modifier is not necessary


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Reform
Congress must act to protect home and community-based Medicaid eligibility

By Bryant Storm, J.D.


If Congress does not extend section 2404 of the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148), several states will no longer apply the Medicaid spousal impoverishment rules to home and community-based services (HCBS) waivers, leading to instability for individuals who are currently receiving Medicaid long-term services and supports (LTSS). According to a Kaiser Family Foundation Issue Brief, the failure to extend section 2404 will undermine expansions of HCBS and hinder progress towards community integration.


Spousal impoverishment. Medicaid beneficiaries rely on LTSS for help with self-care tasks (eating, bathing, and dressing) and household activities (preparing meals, managing medication, and housekeeping). To qualify for LTSS, an individual must have a low income and limited assets. Medicaid spousal impoverishment rules serve to protect the spouse of an individual who needs LTSS by protecting enough income and assets to support the living expenses of the community spouse.


Section 2404. Section 2404 of the ACA required states to apply the spousal impoverishment standards to HCBS waivers. Prior to the ACA, states had the option as to whether they extended the impoverishment rules to HCBS waivers. If section 2404 expires—as it is set to at the end of 2018—five states plan to stop or scale back the application of the spousal impoverishment standards to HCBS waivers.


Institutional care. The requirement under section 2404 to apply the same financial eligibility rules to HCBS waivers and all other Medicaid services eliminates a bias in favor of institutional care. Thus, the protections in section 2404 serve to expand care options for Medicaid beneficiaries. If Medicaid beneficiaries lose the spousal impoverishment protections of section 2404, they may lose eligibility for HCBS and be forced into institutional care.




CMS targets exchange systems, seeks to improve eligibility, enrollment integrity

By Kayla R. Bryant, J.D.


CMS proposed several initiatives directed toward improving the operation of the health insurance exchanges designed to ensure that subsidy payments are appropriately provided. The advance release of the proposed rule includes various improvements based on recommendations that came from various audits conducted by the HHS Office of Inspector General (OIG) and the Government Accountability Office (GAO), and are intended to build on recent actions to improve exchange program integrity.


Eligibility and enrollment functions. Many exchange enrollees are eligible for advance premium tax credits (APTCs) under section 1412 of the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148) or cost-sharing reduction subsidies. Although some state-based exchanges (SBEs) perform their own eligibility and enrollment functions, including determination of eligibility for subsidies, many use the federally-facilitated exchange's infrastructure to do so.


Initiatives. CMS proposed requiring increased reporting specificity for exchanges to ensure that they are correctly finding applicants eligible for enrollment in coverage as well as subsidies. Exchanges would be required to provide annual reports showing compliance, but would also be required to demonstrate such compliance through audits. CMS also proposed, beginning in plan year 2020, requiring exchanges to conduct periodic data matching (PDM) more frequently for those enrolled in Medicare, Medicaid, and basic health plans. CMS plans to add authorizations to exchange applications that would allow an enrollee to have access to Medicare enrollment information.


Abortion coverage. CMS also focused on continued efforts to enforce requirements for issuers offering coverage for abortion services that are not eligible for federal funding under section 1303 of the ACA. The proposed rule would add new compliance reviews. In addition, CMS proposed that issuers send a separate bill to enrollees for only the portion of the premium that covers abortion services, and instruct enrollees to make an entirely separate payment for this portion of their premium.


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Life Sciences
FDA proposes IRB waiver of informed consent for minimal risk investigations

By Wolters Kluwer Editorial Staff


The FDA is proposing to amend its regulations to implement a provision of the 21st Century Cures Act (Cures Act) that would allow an exception from the requirement to obtain informed consent when a clinical investigation poses no more than minimal risk to the human subject and includes appropriate safeguards to protect the rights, safety, and welfare of human subjects. The proposed rule would permit an Institutional Review Board (IRB) to waive or alter certain informed consent elements or to waive the requirement to obtain informed consent, under limited conditions, for certain FDA-regulated minimal risk clinical investigations.


The Cures Act amendments to the FDC Act. On December 13, 2016, the Cures Act (Pub. L. 114–255) was signed into law amending certain provisions of the federal Food, Drug and Cosmetics Act (FDC Act). The FDA is proposing to update its regulations to reflect some of those changes. Specifically, §3024 of the Cures Act amended §520(g)(3) and §505(i)(4) of the FDC Act to provide the FDA with the authority to permit an exception from informed consent requirements when the proposed clinical testing poses no more than minimal risk to the human subject and includes appropriate safeguards to protect the rights, safety, and welfare of the human subject. The proposed rule, if finalized, would implement this statutory change.


Sections 505(i) and 520(g) of the FDC Act require the FDA to publish regulations governing the use in human subjects, of drugs and devices in clinical investigations. In 1962, amendments to §505(i) of the FDC Act provided that FDA regulations must ensure that informed consent for investigational use of drugs (including biological products) in human beings be obtained except where it is not feasible or it is contrary to the best interests of such human beings.


Current FDA regulations. Currently, the FDA's regulations governing the protection of human subjects (21 CFR parts 50 and 56) allow exception from the general requirements of informed consent only in life threatening situations when certain conditions are met (§50.23) or when the requirements for emergency research are met (§50.24). In all other cases, FDA regulations require that a human subject provide informed consent before participating in a clinical investigation. At this time, the FDA's regulations do not allow an exception from the general requirements of informed consent for minimal risk clinical investigations.


The proposed regulation would be based on the Common Rule that has included waiver of informed consent provisions for minimal risk research since it was originally issued in 1991 (56 FR 28001).


IRB criteria. The major provisions of the proposed rule would add §50.22 to part 50 (21 CFR part 50) to allow IRBs responsible for the review, approval, and continuing review of clinical investigations to approve an informed consent procedure that waives or alters certain informed consent elements or waives the requirement to obtain informed consent for certain minimal risk clinical investigations. For an IRB to approve a waiver or alteration of informed consent requirements for minimal risk clinical investigations, the proposed rule would require an IRB to find and document four criteria that are consistent with the ''Federal Policy for the Protection of Human Subjects'' (the Common Rule) (56 FR 28001, June 18, 1991).


The Common Rule criteria would be followed for the proposed IRB waiver. The criteria that have permitted an IRB to waive the requirements to obtain informed consent or allow changes to, or omission of, some or all elements of informed consent include: (1) the research involves no more than minimal risk to the subjects; (2) the waiver or alteration will not adversely affect the rights and welfare of the subjects; (3) the research could not practicably be carried out without the waiver or alteration; and (4) whenever appropriate, the subjects will be provided with additional pertinent information after participation.


The FDA believes proposed §50.22 would provide appropriate safeguards to protect the rights, safety, and welfare of the human subjects participating in such clinical investigations. Proposed rule, 83 FR 57378, November 15, 2018.




Dietary supplement protein source labeling claims not preempted

By Wolters Kluwer Editorial Staff


To the extent that consumers' class claims against a manufacturer of electronic nicotine delivery systems (ENDS) were based on misrepresenting the pharmacokinetics of its nicotine formulation on product labels, they were preempted by the Tobacco Control Act (TCA) (21 U.S.C. § 387 et seq.) and dismissed by a federal district court in California. Claims concerning the alleged misrepresentation of the percentage of nicotine on the labeling, however, were upheld because they were not preempted. Claims based on false advertising were not plead with particularity and, therefore, were dismissed as were claims involving breach of express warranty and an "unidentified" state law consumer protection claim. The consumers' remaining claims survived the manufacturer's motion to dismiss. The court also found that the manufacturer's motion to decertify the class was premature.


JUUL ENDS. JUUL Labs, Inc. (JUUL) manufactures an electronic nicotine delivery system, referred to as ENDS. The ENDS contains a rechargeable battery and heating element. Disposable pre-filled pods of JUUL's patented nicotine solution attach to the ENDS. JUUL's pods combine benzoic acids with nicotine to produce nicotine salts. JUUL users inhale (vape) from the ENDS. This causes a sensor to activate a heating element, which converts the liquid nicotine to an inhalable vapor.


A group of JUUL consumers alleged that the product's nicotine salts are absorbed into a user's body faster and create a more pronounced effect than the nicotine in traditional cigarettes and claim that JUUL's pods contain 6.2 percent nicotine salt, rather than the 5 percent nicotine advertised. Its packaging bears a nicotine warning indicating that the product contains a substance known to cause cancer. However, there is no warning on the ENDS or pods themselves. The product labeling contains no information about the health effects of vaping. JUUL products warnings are in small print against low-contrast backgrounds and retail locations do not provide signs concerning the danger caused by nicotine in JUUL products. JUUL's advertising is similar to cigarette ads that targeted young people by making smoking appear glamorous. Minors obtained JUUL's products, despite the prohibition on the sale of ENDS to those under the age of 18. The JUUL consumers brought class claims against JUUL for various state law violations, including false advertising and fraud, unfair trade practices, strict liability – failure to warn; strict product liability – design and manufacturing defect, breach of warranties, and negligent misrepresentation. JUUL filed a motion to dismiss.


Preemption. The court determined that the consumers' claims were preempted by the TCA to the extent they were based on misrepresenting the pharmacokinetics of JUUL's nicotine formulation on the product labeling. JUUL argued that these claims were expressly preempted by the TCA that provided the FDA with exclusive authority to regulate ENDS labeling. A 2016 FDA Rule found that ENDS were "covered tobacco products" and fell under the FDA's regulatory authority. Express preemption occurs when language is contained in a federal statute that shows an explicit congressional intent to pre-empt state law. Here, the TCA contained an explicit preemption provision that prohibited states from establishing a "requirement which is different from, or in addition to, any [TCA] requirement... relating to tobacco product standards...misbranding, labeling... or modified risk tobacco products." The FDA formulated the exact language and placement of warning labels on tobacco products including ENDS. The consumers argued that JUUL should be required to warn of the greater potency its benzoic acid and nicotine salt formulation delivers. The court determined that allowing these claims to proceed, would usurp the FDA's authority to regulate the content of tobacco warnings.


However the court found that claims based on JUUL's alleged misrepresentation of the percentage of nicotine on the labeling of pods were not preempted as claims for false advertising did not tread on the FDA's authority. For the purposes of this motion, the court was required to accept the consumers' factual allegation that JUUL's pods contain 6.2 percent nicotine rather than the 5 percent represented on the packaging. Also, a clause in the TCA expressly excepted advertisements from preemption. Consequently, no aspect of the consumers' claims based on allegedly misleading advertising was preempted.


Other claims. The consumers' false advertising and some unfair trade practice claims were dismissed because they were not pleaded with the particularity required for fraud related claims because the consumers failed to identify what particular advertisements they saw or how they were influenced by them. Also dismissed were claims involving breach of express warranty and an "unidentified" state law consumer protection claim. The consumers' remaining claims survived the motion to dismiss including unfair trade practices, strict product liability, implied warranty, and negligent misrepresentation. The manufacturer's motion to decertify the class was premature. Colgate v. JUUL Labs, Inc., October 30, 2018


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