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
EXPERT SPOTLIGHT—'Uncertainty' is the diagnosis for health industry pain points

Actions by the Trump Administration and Congress are creating uncertainty across the spectrum of health care, from the largest health system to individual patients, according to Fay Rozovsky, JD, MPH, of The Rozovsky Group, Inc. Rozovsky, a health care risk management consultant and attorney, works with clients along the continuum of care, providing health care professionals, and organizations with practical risk management and patient safety solutions. She spoke with Wolters Kluwer about changes and challenges in the health care industry. Rozovsky is the author (along with Jane L. Conley), of Health Care Organizations Risk Management: Forms, Checklists and Guidelines.

What do you think were the most significant developments in health care over the past year?

The attempt to retool a number of regulatory requirements in the ramp up to the new Trump Administration and thereafter, the determination by the new Administration to overturn many of these reform measures. Add to the mix the attempt to repeal and replace the Affordable Care Act.

What do you expect will be the biggest pain point for your clients over the coming year?

It can be summarized in one word: uncertainty. Much of my work is in health care risk management and, in particular, enterprise risk management or "ERM" as it is known in the field. One of the goals of ERM is to smooth out the variabilities in health care processes and systems. Such measures help to eliminate wasteful spending, enhance patient safety, and utilize savings for investment in staffing, technology, etc. Signals coming from the new Administration and Congress reflect the antithesis of such an approach. The uncertainty is impacting all aspects of the health care industry, from the "brick and mortar" facilities, to health care providers, health plans, and, of course, patients.

How has the day-to-day practice of health care changed since you started?

When I started working in the field, the focus was very much on hospitals and physicians. Medical malpractice was a major focal point along with some legal-regulatory and transactional considerations such as antitrust. The "tools" were a far cry from today's technology such as instant, online access to laws, regulations, and case law. Data analytics were not part of the equation as it is today. The number of specialty publications in health law were far fewer as compared to contemporary resources. With such ready access to information, a practitioner is obliged to digest and apply much more data for the benefit of clients. It has also created a shift in client expectations from "will I have the memo in the next few days?" to "Please send that memo to me electronically today!"

What do you find most enjoyable about the practice of health care?

The fact that no two days are alike. There are a host of issues, challenges and health care professionals with whom to interact. There is also a willingness among health care leadership to listen to health care risk management professionals and health lawyers often before and not after a final decision has been made on a project or problem.

What continues to surprise you about your clients?

Their resiliency and willingness to ride the waves of change. Certainly, those who found change difficult to accept have moved on to other endeavors. Those who have remained steadfast have learned to absorb and even thrive in the vortex of change called contemporary health care. It is refreshing and surprising in many ways to see these innovators move ahead to reshape health care.

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Par Pharmaceutical granted summary judgment in FCA suit alleging prescription-switching scheme

By Wolters Kluwer Editorial Staff

A False Claims Act (FCA) (31 U.S.C. §3729 et seq.) suit alleging that Par Pharmaceutical Companies (Par) used a prescription-switching scheme (substituting more expensive drugs for the generics that were prescribed) to overcharge Medicaid was dismissed because the plaintiffs, which included the United States and the states of Michigan and Indiana, could not establish that the claims were actually false. In this case, no such false claim was ever filed because the claim forms were facially truthful, even though the result may have been that Medicaid paid more than it would have paid had generic drugs been used.

The suit. The United States, Indiana, and Michigan jointed a qui tam suit brought against Par Pharmaceutical Companies, Inc., Walgreens, Omnicare, and CVS under the FCA. The suit alleged that the Par and the three pharmacies engaged in an unlawful prescription-switching scheme in which they substituted more expensive drugs for the generic drugs that were originally prescribed, thus overcharging Medicaid in violation of the FCA. The three pharmacies were ultimately dismissed from the suit, leaving only Par. Par filed a motion for summary judgment.

The scheme. In establishing prescription drug reimbursement rates, the states cap the amount of the reimbursement via a Maximum Allowable Cost (MAC). Par sought to exploit the fact that newly issued drugs would not be assigned a MAC until other sellers of that drug appeared. Furthermore, MACs applied to specific dosage strengths and formats. Thus, if a MAC existed for a 10-mg fluoxene tablet, it would not apply to a 10-mg fluoxene capsule. Par, therefore, began manufacturing certain drugs in formats that would allow it to release the drug as new, without being subjected to any existing MACs, which meant that Par could charge more for those drugs. Par then went to the pharmacies and convinced them to switch certain prescription orders to its version of the drugs, on the theory that the pharmacies could make more money if they did so. At least some of the pharmacies agreed to the switch, and they filed Medicaid reimbursement claims for the Par drugs.

False claims. Par's defense to the FCA claims was that the claims that were filed were not false. In refusing to accept the theory of falsity from express misrepresentation, the court expressly rejected the theory that charging more than the lowest possible rate was, by definition, a false claim because it directly affected payment. The courts interpreting the FCA have never made that equivalency.

Falsity by omission. As for falsity by omission, courts have rejected the idea that submitting a claim equates with representing a legal entitlement to payment. Omissions can be a basis for liability only if they render the defendant's representations misleading with respect to the goods and services.

The court characterized the complaint's theory as stating that the pharmacies should never had dispensed the Par drugs; once they did, they should have self-reported regulatory violations so that Medicaid would not be misled into paying them. Prior cases, however, have rejected that argument. A violation of an underlying regulation is not equivalent to filing a false claim. Furthermore, omitting information in the claim form as to the series of events that gave rise to the particular drug being dispensed did not go to the truth or falsity of the representations on the claim form itself. The court indicated that Par's scheme may well have violated some law or regulation but not the FCA.

False claims. Even if somehow the claims were deemed false, the court said, the claims in the complaint would still fail because they never offered any evidence of even one filed claim that was a product of the alleged scheme. A general allegation that Medicaid was overcharged was insufficient. A plaintiff must produce evidence of actual false claims.

Other allegations. The court also rejected a variety of additional claims, including conspiracy to violate the FCA, common law fraud, theft, and unjust enrichment. A conspiracy might have existed, the court said, but the conspiracy claim failed because one of the elements is a false or fraudulent claim for payment, which, as previously noted, did not exist. Just as the FCA is not a general anti-fraud statute, it is also not a general anti-conspiracy statute.

Par's motion for summary judgment was granted on all claims. U.S. ex rel Lisitza v. Par Pharmaceutical Companies, Inc., No. 06 C 06131, May 10, 2017

Board reverses summary judgment against SNF on alleged CoP violations

By Wolters Kluwer Editorial Staff

An administrative law judge (ALJ) erred in granting summary judgment for CMS against NMS Healthcare of Hagerstown, LLC (NMS), according to a Departmental Appeals Board (DAB) decision. The DAB found that genuine issues of material fact exist as to whether NMS was in substantial compliance with certain Medicare participation requirements for a period in 2014, and whether the noncompliance posed immediate jeopardy to a facility resident. The DAB remanded the case to the ALJ in part for further proceedings.

Violations. CMS had found that NMS, a skilled nursing facility in Maryland, violated provisions in 42 C.F.R. § 483.10(j)(1)-(2) with respect to a single resident, a woman in her 70s. CMS found that NMS did not meet the following requirements: (1) to provide access to the resident for members of the resident's immediate family and others, subject to the resident's right to deny or withdraw consent; (2) to give the resident the right to be free from involuntary seclusion; and (3) to provide or arrange services that meet professional standards of quality. NMS admitted the resident in 2011, when she showed early signs of dementia and suffered from depression. She lived in a non-restricted area of the facility until being hospitalized in January 2014. On her return from hospitalization, she was documented as "having difficulty with return to facility," and her primary care physician, who was also her attending physician at the hospital, "validat[ed] that incapacity concerns remain at this time." Thus, she was placed in NMS's secure unit, where she resided through March 28, 2014. While there, access to her was denied to her daughter, "boyfriend," and attorney. CMS ultimately imposed a $5,650 per-day civil money penalty (CMP) based on a finding that the violations placed her in immediate jeopardy. NMS requested a hearing with an ALJ, which upheld CMS's determination. NMS appealed to the DAB.

Involuntary seclusion. The DAB found that there were genuine issues of material fact as to whether NMS violated the participation requirement that the resident not be placed in involuntary seclusion without any staff assessment of her clinical condition. There was evidence to support that staff assessments were made, even though no contemporaneous documentation existed. The ALJ had relied on the absence of documentation in upholding CMS's decision and CMP, but neither the federal regulation nor any DAB decisions on which the ALJ relied require contemporaneous documentation to support such a decision and the imposition of CMPs. NMS had presented written direct testimony from staff about the process and assessments that were undertaken prior to placing the resident in the secure portion of its facility. This was sufficient to create an issue of material fact and the ALJ erred in equating the absence of such documentation with the absence of evidence in NMS's favor.

Restricting visitors. The Board also found genuine issues of material fact as to whether NMS violated the participation requirement to provide the resident access to visitors. Though the regulation at issue on its face only permits restrictions on visitor access when consistent with the resident's "wishes," CMS and NMS agreed that other grounds may support restricting access, which the DAB assumed existed for purposes of its ruling. NMS provided written testimony that access was denied one of the resident's daughters because (1) the resident's medical Power of Attorney (POA) had requested such restriction, (2) that daughter had previously attempted to "kidnap" the resident, and (3) that daughter's visits "exacerbated" the resident's "psychiatric conditions." The DAB found that evidence supporting that third reason created a genuine issue of material fact that the restriction was not a violation of participation requirements. The DAB also found that there was sufficient evidence to support NMS's restricting the resident's attorney's access to the resident, where there was evidence that the resident lacked the mental capacity to understand the attorney and make rational decisions.

Professional standards of quality. The DAB also found that NMS raised genuine issues of material fact as to whether it had breached professional quality standards requiring: (1) a determination of clinical necessity before deciding to place a resident in a locked unit; (2) a decision to abridge a resident's rights be based on the least restrictive means possible; and (3) a medical POA's decisions be confined to the scope of the authority granted under the POA.

Immediate jeopardy. The ALJ had upheld CMS's decision that the violations it found placed the resident in immediate jeopardy. The DAB ordered that on remand, if the ALJ concludes that any of the violations in fact occurred, it must make a new determination as to immediate jeopardy.

Documentation. The ALJ had found that NMS was not in substantial compliance with the regulatory requirement that it maintain clinical records on the resident that were accurate and maintained in accordance with accepted professional standards. NMS did not dispute that finding, but appealed the $150-per day CMP that CMS had imposed based on this violation. The DAB held that on remand, the ALJ should assess whether that amount was reasonable. NMS Healthcare of Hagerstown, LLC v CMS, Docket No. A-17-25, Decision No. A-15-74, July 20, 2017

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HHS must explain Medicare outlier payment formula

By Wolters Kluwer Editorial Staff

The U.S. Court of Appeals for the District of Columbia Circuit ruled that HHS must provide better explanation of the formula used to create the Medicare outlier payment system. A group of 29 nonprofit hospitals, including Banner Health, argued that HHS violated the Administrative Procedure Act (APA) for every fiscal (FY) year between 1997 and 2007 by failing to identify and appropriately respond to flaws in its methodology that enabled certain "turbo-charging" hospitals to manipulate the system and receiving excessive payments at the expense of nonturbo-charging hospitals. The D.C. Circuit reversed the district court's grant of summary judgment for HHS with respect to the successfully challenged aspects of the FYs 2004, 2005, and 2006 Final rules.

Outlier payments. The Medicare outlier payment system provides supplemental payments to hospitals to protect them from bearing a disproportionate share of the atypical costs associated with caring for patients whose hospitalization would be extraordinarily costly or lengthy. The court recognized that calculating cost outlier payments is an elaborate process where HHS applies a cost-to-charge ratio representing a hospital's "average markup" to a hospital's charges. According to the opinion, approximately 2 percent of hospitals manipulated the outlier payment program. In the lengthy per curium decision by the DC Circuit, often regarded as the nation's second most powerful court after the U.S. Supreme Court, the three-judge panel examined each of the challenges by the hospitals from 1997 to 2007 and found that HHS must provide more explanation for the FY 2004, 2005, and 2006 Final rules. The D.C. Circuit remanded the case to the district court for further proceedings. On remand, HHS will be given a chance to remedy the explanatory deficiencies.

FYs 2004 — 2006. The DC Circuit held that HHS acted arbitrarily and capriciously in failing to exclude charge data for the 123 historical turbo-chargers from its FY 2004 charge-inflation calculation. The court recognized that if HHS fails to supply a "satisfactory explanation" for including the turbo-charged data, that portion of the 2004 rule will be vacated. For the FY 2005 Final rule, as with FY 2004, HHS failed to adequately explain its decision not to adjust its projection cost-to-charge ratios downward. HHS used substantially the same methodology for calculating the outlier threshold that it had used in FY 2004, with some modifications. Lastly, the federal appeals court also agreed with the hospitals surrounding one of their challenges for the FY 2006 Final rule similar to the arguments raised for the FY 2004 and 2005 Final rules.

FY 2007. The court rejected the challenges by the hospitals for the FY 2007 Final rule. The hospitals' primary objection targets the methodology HHS employed to adjust its projection cost-to-charge ratios downward when calculating the fixed-loss threshold. In FY 2007, HHS finally attempted to account for the effect of declining cost-to-charge ratios on its efforts to make total outlier payments in a fiscal year equal 5.1 percent of non-outlier inpatient payments. Therefore, the court rejected the challenge to the FY 2007 outlier rule.

Other claims. The court rejected three additional claims made by the hospitals. First, the hospitals contended that HHS violated the APA for the outlier rules for every FY between 1997 and 2007 and the mid-year rule promulgated during FY 2003. Their primary challenge to the fixed-loss thresholds for FYs 1997 through 2003 is that the failure to discover and stop turbo-charging was arbitrary and capricious. The hospitals also argued that the HHS decision not to lower the FY 2003 fixed-loss threshold mid-year violated the agency's obligations under both the Medicare Act and the APA. Lastly, the hospitals challenged many of the district court's procedural rulings such as the court's refusal to consider certain evidence. Banner Health v. Price, No. 16-5129, August 18, 2017

Improved probe and education program targets specific providers within a particular service

By Susan L. Smith, JD, MA

Targeted Probe and Education (TPE) is an improved medical review strategy that will focus on specific providers/suppliers within the service rather than all providers and suppliers billing a particular service, according to a CMS news release. The TPE program began as a pilot in one Medicare Administrative Contractor (MAC) jurisdiction in June 2016 and was expanded in July 2017 to three additional MAC jurisdictions. Based on the success of the pilot programs, CMS plans to expand the TPE program to all MAC jurisdictions in 2017.

Probe and Educate program. The updated medical review strategy arose from an initial medical review strategy known as Probe and Educate, which combined the review of a sample of claims with education to help reduce errors in the claims submission process, but moves from a broader review to a more targeted one. TPE claim selection differs from previous probe and educate programs because the TPE claims selection is provider/supplier specific from the outset rather than a review of all providers for a specific service; thus, eliminating providers who are submitting claims that are compliant with Medicare policy from the review process.

Under the Probe and Educate program, MACs focused on review of inpatient hospital admissions related to the two midnight rule and home health eligibility requirements. MACs reviewed selected claims submitted by acute care inpatient hospital facilities, long term care hospitals, and inpatient psychiatric facilities for admissions that occur between October 1, 2013 and March 31, 2014 (see CMS issues additional guidance for "two midnight" rule for inpatient hospital admissions, November 5, 2013). MACs continued to conduct "probe and educate" reviews for inpatient stays shorter than two midnights. Under the probe and educate process outlined in an earlier CMS release, MACs reviewed claims to determine if the inpatient stay of less than two midnights was reasonable and necessary (see CMS extends RAC prohibition of reviews of stays longer than 2 midnights, February 3, 2014).

For the first round of the Probe & Educate program, MACs reviewed home health agency claims to assess compliance with and promote provider understanding of Medicare home health eligibility requirements (see HHA claims will be reviewed to confirm understanding of eligibility requirements, November 10, 2015). In round two of the program, MACs began a one-year period of claim reviews and provider education and started submitting additional documentation requests (ADRs) December 15, 2016 (see 'Probe and Educate' program for home health eligibility continues, December 20, 2016).

TPE process. Based on data analysis, MACs will review claims (1) for items and services that pose the greatest financial risk to the Medicare Trust Fund or have a high national error rate and (2) of providers/suppliers that have the highest claim error rates or billing practices that vary significantly from their peers. Under the TPE, MACs will review the 20 to 40 claims per provider/supplier, per item or service, and per round, for a total of three rounds of review. After each round of review, the MAC will offer the provider individualized, one-on-one education to address errors within the provider's/supplier's claims based on the results of the review.

Removal from the review process. Providers/supplier may be removed from the review process after any of the three rounds of probe review, if they demonstrate low error rates or sufficient improvement in error rates. However, providers/suppliers with moderate and high error rates in the first round of reviews will continue on to a second round of reviews, followed by additional provider specific education, and those providers/suppliers that continue to have high error rates in the second round of review and education will continue to the third round. Providers/suppliers that continue to have high error rates after three rounds of TJPE may be referred to CMS for additional action.

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AMA Coding Guidance: June 2017 CPT® Assistant

Edited by Wolters Kluwer Editorial Staff

Important Moderate (Conscious) Sedation Updates

This article discusses the important changes made to the reporting of moderate (conscious) sedation services (hereinafter, termed moderate sedation) in the Current Procedural Terminology (CPT®) 2017 code set. In 2014, the American Medical Association (AMA) CPT® Editorial Panel and the AMA/Specialty Society Relative Value Scale Update Committee (RUC) convened a joint workgroup to discuss correct reporting of moderate sedation services. This workgroup was formed after Medicare claims data showed that anesthesia services were being reported for codes that included moderate sedation as inherent to the work of the physician performing a procedure. After almost two years of discussion by the joint workgroup, the CPT® Editorial Panel approved the following changes for the 2017 code set:

  • Creation of six new codes (99151, 99152, 99153, 99155, 99156, 99157) to report moderate sedation services in 15-minute increments,
  • Revision of the moderate sedation subsection guidelines and related parentheticals,
  • Deletion of the moderate sedation symbol (8) from all codes in the CPT® code set that were previously noted to inherently include moderate sedation services,
  • Elimination of Appendix G, "Summary of CPT Codes That Include Moderate (Conscious) Sedation."

This article also provides clarification on the elements required to report moderate sedation (what it includes and/or excludes). A clear understanding of what moderate sedation entails, when intraservice time begins, when it ends, and who performs the sedation, is critical to the selection of appropriate code(s) and to prevent misreporting.

New Athletic Training Evaluations Codes

The Current Procedural Terminology (CPT®) 2017 code set includes significant revisions to the coding and descriptions for athletic training evaluation and re-evaluation services in the Medicine/Physical Medicine and Rehabilitation subsection. Three new codes (97169, 97170, 97171) were created to describe three levels of athletic training evaluations and one code (97172) was created to describe re-evaluation. The codes (97005, 97006) that previously were used to report these services were deleted and replaced with these new codes (97169-97172) and extensive guidelines were added. This article provides an overview of these changes.

Ophthalmoscopic Angiography

A new code (92242) was added to the Medicine/Ophthalmology subsection of the Current Procedural Terminology (CPT®) 2017 code set. In addition, codes 92235 and 92240 were revised and new instructional parenthetical notes were added to assist with correct reporting of fluorescein angiography and indocyanine-green angiography. These changes were made in response to a request from the American Medical Association/Specialty Society Relative Value Scale Update Committee (RUC) Relativity Assessment Workgroup (RAW) based on the results of a screen that identifies codes frequently reported together as well as a screen that identifies rapidly growing services. This article provides an overview of the coding changes.

Coding Brief: Closed Treatment of Pelvic Fracture(s)/Dislocation(s)

Two new codes, 27197 and 27198, were established in the Current Procedural Terminology (CPT®) 2017 code set to report closed treatment of posterior pelvic ring fracture(s)/dislocation(s), with or without anterior pelvic ring fracture(s)/dislocation(s). Prior to the establishment of the new codes, there was no differentiation in the type of pelvic ring fracture that was reported with codes 27193, Closed treatment of pelvic ring fracture, dislocation, diastasis or subluxation; without manipulation, and 27194, Closed treatment of pelvic ring fracture, dislocation, diastasis or subluxation with manipulation, requiring more than local anesthesia. Codes 27193 and 27194 were deleted in the 2017 CPT® code set. This coding brief provides an overview of the new codes and their reporting.

Frequently Asked Questions

Surgery: Musculoskeletal System

Question: How many times may codes 20552, Injection(s); single or multiple trigger point(s), 1 or 2 muscle(s), and 20553, Injection(s); single or multiple trigger point(s), 3 or more muscles, be reported per session with imaging guidance?

Answer: The trigger point injection(s) codes (20552 and 20553) are reported once per session based on the number of muscles injected, regardless of the number of trigger points injected in each muscle. Code 20552 is reported for trigger point(s) injection(s) in 1 or 2 muscles, and code 20553 is reported for trigger points injection(s) in 3 or more muscles. If imaging guidance is utilized, report the appropriate radiology code (76942, 77002, and 77021) in addition to the injection codes.

Surgery: Respiratory System

Question: What code(s) should be reported for bronchoscopy with multiple transbronchial lung biopsies of a single lobe?

Answer: Report code 31628, Bronchoscopy, rigid or flexible, including fluoroscopic guidance, when performed; with transbronchial lung biopsy(s), single lobe.

Question: What is the appropriate code(s) to report bronchoscopy with bronchial alveolar lavage?

Answer: Report code 31624, Bronchoscopy, rigid or flexible, including fluoroscopic guidance, when performed; with bronchial alveolar lavage.

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 "June 2017."

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Centene bets on Nevada exchange with insurance coverage

By Anthony H. Nguyen, J.D.

Missouri-based Centene Corporation, also known as SilverSummit in Nevada, will be offering health insurance coverage to all Nevada residents in 2018. Nevada Governor Brian Sandoval noted that Silver Summit would be partnering with the state's exchange to provide insurance options for residents in counties where Prominence and Anthem had signaled a pullout for 2018. There will be two insurance carriers planning to offer insurance options on the exchange in 2018, Health Plan of Nevada and SilverSummit. SilverSummit will provide an insurance option in all of Nevada's 17 counties; Health Plan of Nevada will provide an insurance option in three counties.

In what is likely an unintended policy gap, the Affordable Care Act (ACA) (P.L. 111-148) depends on private companies to provide insurance to people who do not get coverage through a government program or work. The federal government provides subsidies on a sliding scale to help middle-income Americans pay their premiums, but the government does not force insurers to offer coverage.

While some insurers nationwide are pulling out of the health insurance exchange after determining that participation is too uncertain or financially risky, especially in rural counties, Centene Corporation also will begin offering insurance in the Kansas and Missouri exchanges and expanding its offerings in Florida, Georgia, Indiana, Ohio, Texas, and Washington.

The Nevada Division of Insurance had previously announced that 14 of the state's 17 counties would be without an exchange health insurance option, which would have left 8,000 consumers in these counties without access to qualified health plans (QHPs) and federal subsidies beginning in January 2018.

Utah submits modified Medicaid expansion plan to CMS

By Wolters Kluwer Editorial Staff

On August 15, 2017, the state of Utah re-submitted its 2016 Medicaid expansion plan, with certain modifications, to CMS for approval. The state's new plan is designed to expand coverage for approximately 6,000 needy adults without minor dependents, including homeless individuals and those in need of mental health or chemical dependency treatment.

Federal approval stalled. Utah first tried to expand coverage to these individuals last year. However, its 2016 proposal still awaits federal approval, despite Utah's initial planned start date of January 1, 2017. Utah hopes to have this plan approved in time for a new scheduled enrollment date of January 1, 2018.

Plan modifications. While awaiting approval, the state decided to modify their proposals and add employment requirements and other restrictions that had not been favorably viewed by the Obama administration. The new proposals included:

  • a five-year lifetime limit on coverage;
  • an overall $25,000 cap for the newly added categories;
  • a work requirement for beneficiaries of the less comprehensive Primary Care Network, which may eventually include childless adults on Medicaid;
  • a $25 copayment for nonemergency emergency room visits;
  • no presumptive eligibility for currently eligible individuals and targeted individuals without dependent children; and
  • the ability to amend eligibility requirements through state administrative rulemaking.

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Life Sciences
FDA user-fee reauthorization signed into law

By Kayla R. Bryant, J.D.

President Trump signed the FDA Reauthorization Act of 2017 (FDARA) (H.R. 2430) into law on August 18, 2017. The law reauthorizes the FDA's various user fee programs, which aid in funding the agency's various oversight activities—providing over one-fourth of all FDA funding. The law extends the federal Food, Drug and Cosmetic Act (FDC Act) (21 U.S.C. §301 et seq.) through fiscal year (FY) 2022.

User fees. The FDA collects user fees from sponsors of brand name drugs, generic drugs, medical devices, and biosimilar biologics. Some exceptions apply, and no fees are collected for supplemental new drug applications and drug manufacturing facilities, classification of medical devices substantially equivalent to marketed devices, generic drug applications submitted by government entities, and supplements to generic drug applications or supplemental biosimilar applications. The new law eliminates the agency's authority to waive or reduce medical device user fees in the interest of public health (see Bipartisan bill authorizing FDA user fees heads to the President's desk, August 4, 2017).

Support. Various members of Congress have offered significant support for the bill. The U.S. Senate Committee on Health, Education, Labor & Pensions (HELP) noted that committee Chairman Lamar Alexander (R-Tenn) and Ranking Member Patty Murray (D-Wash) coauthored the bill, and both senators are pleased to see the bipartisan efforts to strengthen medical research continue through this new law. Several members of the House Energy and Commerce Committee offered their support of the reauthorization, as did HHS Secretary Price. FDA Reauthorization Act of 2017, August 18, 2017

FDA provides guidance on identifying trading partners under DSCSA

By Wolters Kluwer Editorial Staff

On August 21, 2017, the FDA announced the availability of a draft guidance entitled "Identifying Trading Partners under the Drug Supply Chain Security Act," which, if finalized, would clarify statutory provisions on types of authorized trading partners and their respective statutory obligation.

DSCSA guidance. The FDA announced the availability of draft guidance for the Drug Supply Chain Security Act (DSCSA) (Title II of P.L. 113-54), entitled "Identifying Trading Partners under the Drug Supply Chain Security Act." This publication was issued to assist industry and state and local governments in understanding how to categorize the entities in the drug supply chain under the DSCSA. It explains how to determine when and how the DSCSA will apply to trading partners in the drug supply chain.

Guidance purpose. Effective 2023, the DSCSA sets forth drug distribution security requirements. It defines various entities in the drug supply chain, such as manufactures and distributors, as trading partners. Among other things, many trading partners will need to abide by new requirements to be "authorized trading partners." Certain trading partners will be subject to new requirements involving drug product tracing and licensure. This guidance is intended to clarify statutory provisions which define various types of authorized trading partners and their respective statutory obligations. It covers who is manufacturer, a repackager, a wholesale drug distributor, a third-party logistics provider, and a dispenser for purposes of certain DSCSA requirements. Notice, 82 FR 39589, August 21, 2017

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