FDA effectively spends prescription drug user fee collections

After conducting its 2017 review of FDA policies and procedures and financial records related to the FDA’s use of prescription drug user fee collections, the Office of Inspector General (OIG) concluded that, overall, the FDA spent prescription drug user fee collections appropriately. Since the passage of the Prescription Drug User Fee Act (PDUFA) of 1992 (P.L. 102-571), prescription drug user fees have significantly helped in expediting the drug approval process and eliminating backlogs of pending human drug applications. The average approval time for an application prior to the PDUFA was two years (OIG Report, A-05-16-00040, September 2017).

The PDUFA

The PDUFA, which must be reauthorized by Congress every five years, authorizes the FDA to collect user fees from pharmaceutical and biotechnology companies that are seeking FDA approval of certain human drug and biological products to expedite the review of human drug applications. The user fees provide the FDA with resources, including the ability to hire more reviewers and support staff and upgrade information technology systems. According to the OIG, these resources help the FDA meet its goal of timely review of human drug and supplement applications.

Inadequate documentation

The OIG reviewed $796,065,980 in prescription drug user fees reported for October 1, 2014, through September 30, 2015, and determined that the FDA did not have adequate supporting documentation for $6,402 in travel expenses, made a duplicate payment for airfare of $1,213, and overpaid a traveler $587. The OIG attributed the inadequate documentation to oversight by FDA staff rather than a systemic issue. Therefore, the OIG made no recommendations.

Policies to strengthen nongroup insurance markets could fix ACA problems

Enrollment and stability in the nongroup insurance market continues to be threatened by the uncertainty of support for the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148). Faced with the concerns in this environment, the Robert Wood Johnson Foundation and Urban Institute issued a report, Stabilizing and Strengthening Nongroup Markets, expressing the opinion that “[t]argeted policies could fix the ACA’s problems without sacrificing its gains in coverage, affordability, and access to care.” The report identifies policies that would stabilize the nongroup insurance markets, encourage insurer participation, improve affordability, and rein in premium growth. Some policies would be implemented immediately and others would be implemented in the long term; however, solving the problems will take significant political action.

“Strategies that increase the buying power of enrollees and increase enrollment would make participation more attractive to insurers.” To strengthen ACA marketplaces, the report suggested that policymakers learn from the Medicare Advantage and Medicare Part D markets that successfully compete with the traditional Medicare program.

The current climate

The report pointed out that neither Congress nor the Trump Administration has committed to paying cost-sharing reductions, and the administration signaled it does not intend to enforce the individual mandate penalties. Open enrollment periods have been shortened and federal outreach and enrollment funds will be cut 40 percent in the Navigator program, while the ACA advertising effort will be cut 90 percent. In addition, HHS will limit access to healthcare.gov every week during the 2018 open enrollment period. Such actions will reduce coverage.

Short-term commitments

According to the report, the federal government must commit to (1) reimbursing insurers on an ongoing basis for cost-sharing reductions; (2) enforcing the individual mandate penalties; (3) increasing funding for outreach and enrollment assistance; and (4) permanently reinstating a government-funded reinsurance for nongroup markets.

Long-term commitments

Long-term recommendations addressed in the report include strengthening marketplaces, expanding coverage, reducing premiums and cost-sharing requirements, and encouraging the broadest range of insurers to participate. In addition, the federal government should permit states to expand Medicaid, eliminate non-ACA-compliant nongroup insurance products, and reverse current administrative decisions that hinder enrollment. The report noted that the lack of insurer competition is associated with higher benchmark premiums because it eliminates insurer negotiating leverage.

The report suggests that improving affordability would increase coverage, reduce the number of people uninsured, and bring more healthy enrollees into the insurance pool, lowering average premiums. Other long term policy recommendations include providing additional financial assistance to lower premiums and cost-sharing requirements for nongroup coverage, attaching premium tax credits to gold rather than silver plans lowering out-of-pocket costs for all enrollees receiving tax credits, and increasing cost-sharing subsidies for people with lower incomes.

Additional policies

To strengthen the nongroup insurance market, the report described three additional policies:

1. Benchmark premiums. Changing the way benchmark premiums are calculated affects the size of nongroup premium tax credits allowing people to choose from more plans without additional premium contributions.
2. Capping payment rates. Payment rates charged to nongroup insurers by health care providers could be capped, making it easier for insurers to enter new marketplaces and counteracting provider monopolies.
3. Standardize insurance options sold in the nongroup market. Standardizing the insurance options sold in the nongroup market could reduce the complexity of the enrollment process, improving comparability and facilitating price competition.

According to the report, “nongroup insurance markets must become larger, less expensive for consumers in both premiums and out-of-pocket costs, and less financially risky for insurers.”

Revised Common Rule strengthened human-subject protections, simplified IRB oversight simplified

In January 2017, the regulations for ethical conduct of human research, known as the Federal Policy for the Protection of Human Subjects and referred to as the Common Rule, were updated to better protect human subjects involved in research, while facilitating valuable research and reducing burden, delay, and ambiguity for investigators (82 FR 7149, January 19, 2017). In addition, the revisions modernize and simplify the current system of independent review board (IRB) oversight. The changes to the Common Rule, which was originally adopted in 1991, become effective January 19, 2018. At a Health Care Compliance Association (HCCA) webinar, Laura Odwazny, Senior Attorney, HHS Office of the General Counsel, provided the background of, and insight into, the main changes made to the Common Rule.

The Common Rule

The Common Rule, which currently applies to 18 federal departments and agencies, outlines the basic provisions for prior approval of human subjects research by IRBs, informed consent of participants, and institutional assurances of compliance with the regulations. Some agencies have adopted regulatory protections for human subjects in addition to the Common Rule.

Organizations whose researchers receive federal funding to conduct human research must have a Federalwide Assurance (FWA), a written commitment to comply with federal regulations related to human research protections, on file with the OHRP. According to Odwazny, under the current regulations, if a research institution voluntarily extends FWA to all research regardless of the funding source, OHRP can extend its oversight of activities of privately funded research; however the preamble of the Final rule includes a plan to eliminate the voluntary extension of the FWA.

Major changes

Odwazny identified three major rules that were adopted in the Final rule: (1) single-IRB review for multi-institutional research in the U.S.; (2) extended compliance oversight jurisdiction to independent IRBs; and (3) improved informed consent, as well as allowing broad consent for unspecified future research use of already collected information and biospecimens.

The following areas were specifically addressed:

  • consent forms;
  • carve outs;
  • definitions of identifiable private information (IPI) and identifiable biospecimens;
  • concepts of broad consent;
  • limited IRB review; and
  • exemptions for secondary use research of IPI or identifiable biospecimens.

Streamlining IRB oversight

Odwazny explained that under the revised Common Rule, agencies have the authority to enforce compliance directly against IRBs not operated under the Federalwide Assurance. Under this change, compliance actions can be directed against an independent IRB responsible for regulatory noncompliance rather than against the institution working with the independent IRB. In addition, U.S. institutions engaged in cooperative research, which involves more than one institution, must rely on a single IRB approval for the portion of research conducted in the U.S. (the effective date for this provision is January 20, 2020). The single IRB must be identified by the federal department or agency supporting or conducting the research or by the lead institution subject to the acceptance of the federal department or agency supporting the research. The Final rule also provided exceptions to the mandated single IRB review, exceptions for continuing review, and changes to IRB recordkeeping requiring documentation related to these new exceptions.

Keys to successful contracting and credentialing: honesty, questions, compliance

Contracting and credentialing are critical aspects when it comes to providers and payment. Insights and suggestions for avoiding missteps and getting the best agreement when it comes to contracting and credentialing were presented by Anna Whites and Nathan Moore, Compliance Officer at Premier Tox Laboratory, in a Health Care Compliance Association (HCCA) webinar on September 13, 2017.

Contracts

Whites defined a contract as an agreement that contains every aspect of what each party is required to do, noting that state and federal law outline contractual terms. Because different states have different laws, she recommended ensuring that the state law relied upon in the contract be the state where the individual or entity is located. She stressed the importance of reading the contract, understanding what it contains, and asking questions before signing. “Contract terms govern,” she said, and once the contract is signed, the parties can’t take the conditions back unless the contract provides for modifications as part of the terms. She also warned that the contract may require compliance with terms in other documents, for example, a provider manual.

  • Payor contracts. Provisions of payor contracts usually include services covered, provider types covered, frequency of services, and term and termination. Whites recommended providers pay close attention to these terms to ensure that they are able to meet the specifics of the provisions. Terms in payor contracts also address claims management. Providers should focus on the details of how, when, and where to submit a claim as well as how payment is made (electronically or paper), how medical necessity is defined, and how denials and appeals will be handled. In addition, providers must be aware of fee schedules included in the contract to ensure they know what they will be paid and if they are comfortable with the amount of the payment.
  • Provider contracts with health care entities. Provider contracts include the scope of services, reporting and oversight requirements, licensure and/or credentialing requirements, hours and payment, liability and insurance, and behavioral health carve-outs. Whites pointed out that when entering into a contract, parties must be aware of who is responsible for mistakes and whether tail coverage is provided. She recommended asking many questions about liability and obtaining coverage.
  • Entity provider contract with physicians and other staff. Under these contracts, the terms will include scope of services, who is in charge, who is liable, cost of services and whether the contract is with an employee or independent contractor. Providers need to determine whether employees or independent contractors are better for their organization.

In negotiations of contracts, there should be a discussion between the parties. The discussions should allow for changes and modifications. Parties should consider proposing pilots and new services. White highly recommended engaging an attorney to provide legal oversight of the contract and review the terms and provisions as well as the state and federal requirements.

Moore addressed the compliance oversight component in contracting and provided the following recommendations.

  • Ensure processes are in place to identify nonstardard terms or terms that would not be fulfilled in the organization in day to day operations.
  • Clarify any requirements that seem too rigorous prior to executing the contract.
  • Create awareness and make recommendations on how to fulfill any new requirements by coordinating with the appropriate department head.

Credentialing

Credentialing generally takes place when joining a new practice, becoming a participating provider, adding new providers to an existing group, updating information for carriers, and at the start of a new practice, Whites said. Credentialing involves collecting and verifying information about a provider’s professional qualifications, such as relevant training, licensure, certification and/or registration to practice in a health field, and academic background. Information collected before the process begins includes such documents as a copy of state licensure, a copy of board certification, proof of current malpractice coverage, a statement of disclosure of ownership and control interest statement, and a summary of any prior malpractice or disciplinary action. During the credentialing process, payors assess whether a provider meets certain criteria related to professional competence and conduct, Whites explained. Relevant factors may include location, cultural diversity, ability to speak other languages, treatment provided to children, availability, crisis training such as ability to provide care in emergency and address behavioral issues, and ability to refer and admit (to other hospitals or entities).

Whites recommended providers to be aware of specific degree requirements of the payor or network, state requirements regarding credentialing, and billing regulations that may limit reimbursable services to certain provider types. When permitted, Whites suggested submitting a resume. She also stressed that it is a provider’s right to: (1) request a status of the application, (2) review information that the payor used to deny or defer credentialing, and (3) correct any inconsistencies between the information obtained by the provider.

Credentialing issues

Whites and Moore identified issues and areas providers must be aware of to ensure that they are in compliance with requirements. Some of those areas include:

  • Cooperate in CMS audits and sites visits to ensure providers are properly enrolled, credentialed, and operating. Not cooperating may result in revocation of provider agreement.
  • Maintain compliance with payor requirements, good intentions are irrelevant to CMS.
  • Regularly review credentialing and licensing to ensure they are up to date.
  • Screen for excluded providers on available sources, prior to employment of individuals or contracting with vendors and maintain screening records for seven years. Develop a removal and notification process.
  • Ensure that providers are properly enrolled in Medicare and Medicaid enrollment systems.
  • Be aware of billing issues such as out-of-network denials, nonpayment for new provider types, and services that payors will not pay for because they were provided by a noncredentialed provider.
  • Ensure that providers are aware of coverage and payment rules regarding telemedicine.

Conclusion

Whites emphasized transparency and clarity in responses in contracting and credentialing. She stressed that providers must be honest because information is much more readily available to parties seeking it, for example, from the national databank. She noted that there are severe penalties for errors in credentialing and pointed out that CMS can exclude providers for multiple years. On the other hand, she said there are unintended negative consequences related to credentialing that arise from such things as not updating an address, not disclosing working with an excluded entity, and being responsible for a prior owner’s bad actions.