CMS, FDA provide support in response to natural disasters

In response to the natural disasters that have inundated the U.S. in recent months, CMS and the FDA have provided additional support to the individuals and businesses dealing with the aftermath.

CMS

Administrator Seema Verma announced on October 19, 2017, support for California residents displaced and recovering from the October wildfires in response to the declaration of a public health emergency for the state by Acting HHS Secretary Eric D. Hargan. Such a declaration permits CMS to waive or modify certain Medicare, Medicaid, and Children’s Health Insurance Program (CHIP) requirements to provide necessary services. Specifically, the following steps have been taken by CMS:

·         A blanket skilled nursing facility waiver and assistance for hospitals and other health care facilities.

·         Special enrollment period for all Medicare beneficiaries so they may change their health or prescription drug plans immediately.

·         Assistance for dialysis patients displaced from their usual facility.

·         Hotline to assist Part B providers and suppliers in helping recovery efforts and receiving temporary Medicare billing privileges.

Similar assistance was provided in response in areas affected by Hurricanes Harvey, Irma, and Maria (see Emergency preparedness in the wake of historic hurricanes, Health Law Daily, October 3, 2017).

 

FDA

The FDA, knowing that tobacco manufacturers and importers in some areas (including certain Caribbean Islands and counties in Florida, Texas, and California) have been affected by both the hurricanes and wildfires, is extending the compliance deadlines for ingredient listing and health document submission requirements by six months. The extension applies to areas for which a disaster area has been declared by the Federal Emergency Management Agency (FEMA). For non-small-scale manufacturers and importers in the specified areas, the deadline for ingredient listings is now May 8, 2018; for small-scale manufacturers, November 8, 2018. For small-scale manufacturers, the health documents are due May 8, 2018; the non-small-scale manufacturers and importers deadline remains the same—February 8, 2017.

Over-the-counter drug monograph reform the topic of subcommittee hearing

Under proposed legislation, “Over-the-Counter Monograph Safety, Innovation, and Reform Act of 2017,” the over-the-counter (OTC) monograph process would be modernized to streamline rule-making and cut down on FDA resources, while being funded through the establishment of a user fee program. In a hearing before the House Committee on Energy and Commerce’s subcommittee on health on September 13, 2017 regarding the discussion draft, witnesses from the industry and the FDA voiced their support, as well as real world examples and reasoning, for the proposed changes.

Monographs and current process

Unless the FDA has approved a new drug application, the only way an OTC drug can be marketed is if it conforms to a monograph—a standard set of specifications established by the FDA for each therapeutic category of product—and is thus considered generally recognized as safe and effective (GRASE). A monograph is created through a three-step public rulemaking process via the Federal Register and a public comment period. It requires the convening of advisory review panels, publishing of an advanced notice of proposed rulemaking (ANPRM) with a comment period, review by the FDA, publishing a tentative final monograph (TFM), and later finalization of the monograph and subsequent amendments and updates. The FDA has around 88 rulemakings in 26 therapeutic categories covering over 100,000 OTC drug products, and there are 800 active ingredients for over 1,400 uses that the FDA oversees. There are no user fees associated with monograph products currently, and a small staff oversees the OTC program as well as attending to other current mandates. The rulemaking process spans many years and the industry waits for a decade or more for finalized monographs, for example, the ANPRM for external analgesic products was published in 1979 and the monograph has still not been finalized.

Legislation

Since 2014, the FDA has examined monograph reform and the possible creation of a user fee program. The discussion draft includes proposes the following changes: (1) authorizing of the OTC Monograph User Fee Program; transition of OTC monographs from a rulemaking process to an administrative order procedures; (2) expediting administrative order procedures for OTC monograph drugs that pose an imminent hazard to public health or are associated with serious adverse events; (3) providing for a procedure to account for minor changes; (4) providing for a two-year exclusivity period for certain OTC innovative changes; and (5) clarifying how sunscreens would be reviewed.

Stakeholder witnesses

 Witnesses from across the industry presented statements before the subcommittee. They touched not only on the problems with the current process and their support of the proposals, but also their support in the industry supplementing the government’s efforts with the user fee program.

  • Bridgette L. Jones, MD, FAAP, representing the American Academy of Pediatrics (AAP), raised an example of how long it takes to get a monograph changed. Over a decade ago, in response to a petition to the FDA, an FDA advisory committee voted unanimously “that it was no longer appropriate for adult data on cough and cold products to be extrapolated to establish efficacy of the drugs in children under 12 . . . [and that] cough and cold drugs not be used in children under 6 years of age.” Currently, not even draft changes have been made to the monograph. She also noted that it is appropriate that the monograph be amended to provide dosing instructions for children under two years of age and that “if the monograph process worked better, surely this change would have happened years ago.”
  • Scott Melville, President and CEO of Consumer Healthcare Products Association (CHPA), notes the value that OTC medicines bring to the health of Americans and to the U.S. health care system and stresses that it’s important that the oversight process “is one that is efficient, transparent, and accommodating to innovation.” He also notes that his industry “is willing to supplement government resources with a modest user fee program.”
  • Kirsten Moore, Project Director, Health Care Products, The Pew Charitable Trusts, gave examples of the “unnecessary delay incorporated into a multi-step rulemaking system, which compromises FDA’s ability to respond swiftly to address new safety information and protect consumers” and urged Congress to pass the legislation as soon as possible.
  • Michael Werner, Partner, Holland & Knight, on behalf of the Public Access to SunScreens (PASS) Coalition, and Gil Roth, President, Pharma & Biopharma Outsourcing Association, also spoke in support of the OTC legislation.
  • Janet Woodcock, MD, Director for the Center for Drug Evaluation and Research (CDER) with the FDA confirmed the troubles with the current process and the present staffing levels raised by the other stakeholders. Her agency, as well as the other organizations, offered to continue to work with Congress to make the OTC reforms a reality.

Know the auditors and audit process, you’ll be audited someday

Providers and suppliers will be audited by CMS at some point, so it is important to understand the various types of audits and the appeals process, according the presenter of a Health Care Compliance Association (HCCA) webinar titled “Medicare Audits & Audit Appeals—From A to Z(PIC).” Scott R. Grubman, Esq., of Chilivis Cochran Larkins & Beyer LLP, focused his discussion on recovery audit contractors (RACs) and zone program integrity contractors (ZPICs) and the various steps of the audit appeals process, from the initial determination to judicial review.

RACs

Charged with “identifying and correcting improper payments through detection and collection of overpayments,” the RAC program started as a demonstration project and completed its first audits in 2011-2013. As new RAC contracts were awarded in October 2016, RAC audits will continue into the future. RACs are paid a contingency fee (somewhere between 7 and 17 percent of the recovery), but only when a favorable reconsideration is made, so they have a financial incentive to find and recover overpayments. According to Grubman, RACs “may not work on the side of fairness for providers.” But RACs are limited in the number of claims they can audit per provider per year and must maintain a 95 percent accuracy rate and an overturn rate of less than 10 percent. RAC audits, as well as MAC audits, are desk reviews, contrary to ZPIC audits.

ZPICs

Grubman warns to be careful when going through a ZPIC audit. ZPICs are tasked, for example, to investigate potential fraud and abuse and to refer parties for CMS administrative actions or for law enforcement; conduct investigations (not just as desk audits, but through interviews and onsite visits, too) and data analysis under the CMS Fraud Prevention System; and to identify the need for administrative actions such as payment suspensions. While RACs typically look at unintentional overpayments, ZPICs respond to intentional overpayments.

Audit process

Whatever the auditor that reviews the claim, an initial determination is first made as to whether the item and services are covered and the amount payable. The auditor then notifies the provider/supplier of the decision following specific notice requirements. A provider or supplier may appeal that decision, following this chronology:

1. Redetermination. A request for a redetermination must be filed within 120 calendar days from receipt of the initial determination, and within 30 calendar days to avoid CMS starting to recoup the overpayment. (Grubman suggests starting the count on the date listed on the determination, not receipt, to avoid running into any issues.) The redetermination involves an “independent review” performed by the same contractor (but a different individual). New issues may be raised by the contractor during redetermination, but a redetermination must be issued within 60 days from receipt of request.
2. Reconsideration. Within 180 days of the redetermination (or within 60 days to avoid recoupment), a party may file a request for reconsideration, which is an independent review of the evidence and findings conducted by a qualified independent contractor (QIC). QICs are bound by national coverage determinations (NCDs), CMS rulings, precedential Medicare Council decisions, and applicable laws and regulations. (Local coverage determinations (LCDs) and CMS program guidance is not binding but given substantial deference.) A QIC has 60 days to issue its reconsideration, and if the deadline isn’t met, the appellant can escalate to the next level of appeal.
3. Administrative law judge (ALJ). If the amount at issue exceeds $160, a request for an ALJ decision may be filed within 60 days of the reconsideration (recoupment cannot be avoided). A hearing is typically held either in person, video conference, or telephone, and parties may submit evidence and/or present witnesses. An ALJ decision is a de novo review and ALJs have wide discretion over the hearing. ALJs are bound by the same NCDs and laws and regulations and must give deference to non-binding authority as with reconsiderations. An ALJ must issue a decision within 90 days, however, there exists an immense backlog in issuing decisions, which has even become the subject of a legal challenge (see Court sets a timeline for Medicare claims backlog, December 6, 2016).
4. Medicare Appeals Council. Within 60 calendar days of the ALJ’s decision, a review by the Medicare Appeals Council may be requested. The Council’s review is limited to those issues the appellant claims to disagree with. Briefs are filed by the parties but no new evidence is provided. Typically a decision is made with no oral arguments and must be made within 90 calendar days.
5. Judicial review: Within 60 calendar days of receipt of the Council’s decision, a suit may be filed in the district court where the provider/supplier resides or has its principal place of business, with the Secretary of HHS named as defendant.

Maximum sentence for head of Houston Medicare fraud scheme

Medicare losses of nearly $7 million were acknowledged by two individuals involved in a scheme to defraud the program. They were sentenced to federal prison and ordered to pay restitution, according to the Department of Justice (DOJ). The scheme involved “so-called diagnostic testing labs” in the Houston area which paid Medicaid beneficiaries for use of their Medicare numbers to fraudulently bill Medicare.

A man from California formed 11 diagnostic testing clinics in the Houston area that were used to fraudulently bill Medicare for services and tests that were either not performed or not medically necessary. Co-conspirators were instructed to order ultrasounds, allergy tests, and pulmonary function tests for every beneficiary and to include poor circulation, shortness of breath, heart problems, and allergies on their charts. The other sentenced individual, a woman from Houston, acted as a marketer at seven of the clinics to recruit and pay the Medicare beneficiaries. Marketers were paid $80 to $100 cash, with part of the amount going to the beneficiary and the rest being kept by the marketer. When the first clinic was put under pre-payment review and payments slowed down, the owner recruited others to open new clinics and new bank accounts in their names.

The owner was sentenced to the statutory maximum of 10 years. The marketer was sentenced to 37 months in prison. Two other co-conspirators previously pleaded guilty and are awaiting sentencing.