Kusserow on Compliance: Court rules against HHS and orders end of Medicare claims appeal backlog

The U.S. District Court for the District of Columbia has ordered HHS to eliminate pending Medicare claims appeals and outlined a schedule for reducing the backlog. Failure to meet these deadlines will permit claimants to move for default judgment in their favor. This would apply to Medicare appeals that have been pending at the administrative law judge (ALJ) level without a hearing for more than a year. DHHS is obligated to submit a progress report every 90 days on reducing the backlog. This action is the latest in the 2.5 year pending litigation initiated by the American Hospital Association (AHA) and several hospitals.  The Office of Medicare Hearings and Appeals (OMHA) has been unable to comply with the 90-day statutory deadline for appeals, resulting in a backlog of almost 1 million pending appeals.  Last June, the Government Accountability Office (GAO) reported the failure to meet statutory deadlines for the resolution of appeals, noting they had fallen years behind in the backlog. Following this, the OMHA placed a moratorium on accepting new appeals requests in order to catch up on pending appeals, which did little to reduce the backlog.

Dr. Cornelia Dorfschmid is a leading expert on dealing with Medicare claims appeals and has been assisting clients with these kinds of issues for 25 years. She noted that as a result of the actions by the Federal Court, the appeal process may begin to function again as it was expected to do. If a provider has a concern about demand letters coming from government agencies or their contractors, she offers the following advice on how to deal with them:

  1. Correct interpretation of the projected estimate. The first step in assessing the exposure to a demand letter is to determine whether the estimate was projected from a random sample that was based on the correct interpretation and application of the various medical documentation requirements and payer coverage rules. If the medical review, the application of coverage criteria, and case-by-case review findings can be challenged in an appeal or a quality assurance process, the overpayment estimate derived from the sample would not be tenable.
  2. Statistically valid random sample. A demand for overpayments must be generated from a statistically valid random sample; and if it not then the validity of the projection of the total overpayment estimate is difficult to defend.
  3. Confidence and precision.   If each sampled case was reviewed correctly and the sample was a statistically valid random sample, acceptable confidence (i.e, degree of certainty that the sample correctly depicts the universe) and precision (i.e., range of accuracy) are the third piece needed for a quality estimate of the total overpayment in the universe.

Richard P. Kusserow served as DHHS Inspector General for 11 years. He currently is CEO of Strategic Management Services, LLC (SM), a firm that has assisted more than 3,000 organizations and entities with compliance related matters. The SM sister company, CRC, provides a wide range of compliance tools including sanction-screening.

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Copyright © 2016 Strategic Management Services, LLC. Published with permission.

SCOTUS denies cert in biosimilar licensing dispute

The Federal Circuit’s decision finding it mandatory that a biosimilar-product applicant give a post-licensure notice to the manufacturer of the original FDA-approved biologic (the reference product sponsor) 180 days prior to beginning commercial marketing will remain law, because the Supreme Court denied a petition for writ of certiorari in Apotex Inc. v. Amgen Inc. A preliminary injunction granted by a district court will remain in effect, despite the biosimilar applicant giving notice to the reference product sponsor of its filing of an application to market the biosimilar (see Biosimilar applicant must give 180-day post-licensure notice to reference sponsor, Health Law Daily, July 6, 2016).

Background

In 2002, Amgen Inc. received a biologics license from the FDA for Neulasta® (pegfilgrastim), a human-engineered protein for patients undergoing chemotherapy. In 2014, Apotex Inc. filed an application for an FDA license to market a biosimilar version of Neulasta, invoking the abbreviated pathway for regulatory approval of follow-on biological products that are highly similar to a previously approved reference product. The abbreviated biosimilar pathway was allowed by the Biologics Price Competition and Innovation Act of 2009 (Biologics Act), which was created by sections 7001-7003 of the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148).

Under the Biologics Act, a biosimilar-product application may not be submitted until four years after the reference product was first licensed by the FDA and a biosimilar-product license may not be made effective until 12 years after the reference product was first licensed. The Biologics Act also contains detailed requirements that are focused on ways to avoid or streamline potential patent litigation by requiring the exchange of patent information between the biosimilar-product applicant and the reference product sponsor after the FDA accepts the biosimilar-product application for review. Finally, the Biologics Act requires the biosimilar-product applicant to give notice to the reference product sponsor 180-days before commercial marketing of its FDA-licensed product.

After the FDA accepted Apotex’s application for review, Apotex and Amgen engaged in the exchange of patent information as required by the Biologics Act. After negotiations, the parties agreed to an action for infringement of two patents, but after one of the patents expired, Amgen’s patent infringement action against Apotex was only based on the one remaining disputed patent. This appeal, however, did not involve the infringement action but rather Amgen’s motion for a preliminary injunction to require Apotex to provide Amgen notice if and when it receives a license from the FDA and to delay any commercial marketing for 180 days from that notice. The Federal Circuit upheld the injunction and found that giving post-licensure notice to the manufacturer was mandatory.

Supreme Court

In September 2016, Apotex filed a petition for writ of certiorari with the Supreme Court. It requested review of two issues: (1) whether the Federal Circuit erred in holding that biosimilar applicants that make all disclosures necessary under the Biologics Price Competition and Innovation Act for the resolution of patent disputes must also provide the reference product sponsor with a notice of commercial marketing; and (2) whether the Federal Circuit improperly extended the statutory 12-year exclusivity period to 12 1/2 years by holding that a biosimilar applicant cannot give effective notice of commercial marketing for its biosimilar product until it receives a FDA license and therefore may not commercially market its biosimilar product for 180 days after receiving its license. On December 12, 2016, the Court denied Apotex’s petition.

Next abortion legislation arguments will use mixed evidence on fetal pain

Reproductive health issues have long been controversial, and one law professor believes that the next wave of abortion restriction legislation and court cases will take a new approach by discussing the effects of abortion on the fetus. In an article published in the New England Journal of Medicine, Professor R. Alta Charo projects that, because the recent arguments supporting abortion restrictions focusing on women’s safety were shot down due to medical evidence, the focus will turn to the effects on the fetus.

New focus on evidence

The recent U.S. Supreme Court decision Whole Woman’s Health v. Hellerstedt shot down a Texas law requiring physicians performing abortions to have admitting privileges at local hospitals while reasoning that the procedures have become so safe that such a requirement is not necessary. This reasoning signals a shift in court thinking and a new willingness to dive into the medical evidence surrounding the issue rather than defer to the legislature on factual issues. Charo pointed out that in 2007, when the Supreme Court upheld a statute banning dilation and extraction based on the legislature’s findings that such a procedure is not necessary to protect a woman’s health, the Gonzales v. Carhart opinion accepted the legislature’s factual findings because of mixed evidence. Even so, the opinion indicated that the court had a duty to review the facts underlying decisions involving constitutional rights.

Next steps

Charo believes that a shift will occur because medical evidence does not support the argument that abortion is unsafe and presents significant health risks to women. This shift will involve claims that a fetus can feel pain about 20 weeks after conception, based on fetal movement and hormonal activity in response to stimuli and stress. Charo observed that there are growing efforts to require fetal anesthesia, outlaw second-trimester use of dilation and evacuation, and prevent abortion starting at 20 weeks following conception. The opportunity arises for a legislature to state that medical opinion is mixed in light of studies showing that a fetus cannot feel pain due to the development timeline until almost 30 weeks. Charo believes that the Gonzales decision prioritized fetal concerns over women’s health and that that the opportunity may arise again. However, Whole Woman’s Health presents the possibility that the court will consider further evidence rather than deferring to the legislature’s fact finding.

Florida health care provider settles monopolization, conspiracy claims

Health First, Inc. and its subsidiaries have settled allegations that they attempted to establish a vertically integrated, self-reinforcing, illegally-maintained health care monopoly in Southern Brevard County, Florida. Just days after denying Health First’s motion for summary judgment, the federal district court in Orlando dismissed the antitrust claims with prejudice.

Omni Healthcare, Inc. and other physicians and physician practice groups filed suit against “fully integrated” health care corporation Health First, Inc. and three of its wholly owned subsidiaries: Holmes Regional Medical Center, Inc.; Health First Health Plans, Inc., and Health First Physicians, Inc. Omni alleged that Health First engaged in an anticompetitive scheme to monopolize Southern Brevard County’s interrelated health care markets for years and that the scheme has largely been successful.

The court denied Health First summary judgment on August 13, 2016, finding that Omni and other physicians and physician groups created genuine issues of material fact in whether Health First monopolized, attempted to monopolize, and conspired to monopolize the markets for physician services, Medicare Advantage, and ancillary services.