Is HHS Secretary too high for Price?

The presumptive nomination of Rep. Tom Price (R-Ga) to lead HHS as the agency’s Secretary was considered on January 18, 2017, by the Senate Committee on Health, Education, Labor and Pensions. The committee’s chair, Lamar Alexander (R-Tenn), praised the nomination of Price, calling him an “excellent nominee” and highlighting how he will “build a better bridge” to repeal and replace the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148). The top Democrat in the committee, Senator Patty Murray (D-Wash) questioned Price on policy, conflicts of interest, and past statements, including one suggesting cost is not an issue for women buying birth control.

Opening statement

In his opening statement, Price talked about his passion for medicine, experience as a physician, and fascination with “fixing things.” He pointed to problems in the health care industry, recalling the point when he noticed “more individuals within our office who were dealing with paperwork, insurance filings, and government regulations than there were individuals actually seeing and treating patients.” He highlighted his goal of returning the focus of health care to the patient.

ACA

Price also noted his belief that the ACA should be repealed and replaced simultaneously and concurrently—a position that is consistent with the most recent stances of President-elect Trump (R) and House Speaker Paul Ryan (R-Wis). Price and Alexander both expressed a desire to avoid a “quick-fix” and to, instead, develop health care reform “that’s done in the right way, for the right reasons, in the right amount of time.”

Critique

Murray challenged Price’s qualifications and positions, including Price’s prior opposition to allowing Medicare to negotiate drug prices and plans to shift $1 trillion in Medicaid costs onto states. Additionally, Murray suggested that Price did not meet a basic, necessary qualification to lead HHS, namely the ability to put science before ideology. Finally, Murray condemned the Senate’s decision to move forward with Price’s confirmation hearings amidst an ongoing investigation into Price’s allegedly unethical medical stock trades during his time in the House.

Protected health info and HIPAA focus of HHS discussion

With 2017 just beginning, covered entities under the Health Insurance Portability and Accountability Act (HIPAA) (P.L. 104-191) need to be aware of current trends in the realm of protected health information (PHI). In a Health Care Compliance Association webinar titled “What’s New on the HIPAA Front?” Vaniecy Nwigwe and Debbie Campos of HHS Office for Civil Rights presented an overview discussion of PHI designation and authorization, PHI breaches, enforcement matters, and marketing.

The HIPAA Privacy Rule generally requires covered entities, i.e. health plans and most health care providers, to provide individuals, upon request, with access to the PHI about them in one or more “designated record sets” maintained by or for the covered entity. This includes the right to inspect or obtain a copy, or both, of the PHI, as well as to direct the covered entity to transmit a copy to a designated person or entity of the individual’s choice, as described in 45 C.F.R. Sec. 164.524(c)(3).

PHI designations

Designation occurs when an individual directs the covered entity to transmit the PHI about the individual directly to another person or entity designated by the individual. Conversely, authorization occurs when an individual gives permission to another person to direct the covered entity to transmit the PHI to another person (or entity) designated by the authorized individual (or entity).

The same requirements for providing the PHI to the individual, such as the fee limitations and requirements for providing the PHI in the form and format and manner requested by the individual, apply when an individual directs that the PHI be sent to another person.

According to the speakers, this distinction matters because of fees. The fee limitations only apply to individuals who direct a covered entity to send PHI to another person or entity. Under the Privacy Rule, a covered entity is prohibited from charging an individual who has requested a copy of her PHI more than a reasonable, cost-based fee for the copy that covers only certain labor, supply, and postage costs that may apply in fulfilling the request.

Breaches

From September 2009 through November 2016, approximately 1,738 instances involving a breach of PHI affecting 500 or more individuals were reported. Of that, 60 percent of the breaches initiated through theft or loss. In addition, there were over 58,000 reports of breaches of PHI affecting less than 500 individuals during calendar year 2016 alone.

Enforcement

Highlighting some of HHS’ enforcement actions, the speakers noted that over 125,445 complaints had been received as of December 31, 2015, and over 30,000 cases have been resolved with corrective action or technical assistance. HHS expects to receive 22,000 complaints in 2017.

In one prime example of a major breach, the speakers noted that nonprofit health system, St. Joseph Health’s ePHI was publicly accessible on the internet from February 1, 2011, to February 13, 2012, affecting the records of over 31,800 individuals. St. Joseph Health agreed to adopt a comprehensive corrective action plan and pay $2.4 million to settle allegations that the health system violated the HIPAA Privacy and Security rules (see Health system slammed over searchable internet server, Health Law Daily, October 19, 2016). St. Joseph Health also agreed to conduct an enterprise-wide risk analysis, develop and implement a risk management plan, revise its policies and procedures, and train its staff on the revised policies and procedures.

Marketing

Generally, a communication about a product or service that encourages recipients of the communication to purchase or use the product or service is considered marketing. In the case of covered entities, if the communication rises to this level, the covered entity must obtain an individual’s authorization to do so. Another form of marketing communication is an arrangement between a covered entity and any other entity whereby the covered entity discloses PHI to the other entity, in exchange for direct or indirect remuneration, for the other entity or its affiliate to make a communication about its own product or service that encourages recipients of the communication to purchase or use that product or service.

Biosimilar dispute headed to the Supreme Court

Biosimilar manufacturers will soon have a definitive answer on the timing of giving notice of commercial marketing, thanks to the Supreme Court. On January 13, 2017, the Court granted and consolidated Sandoz, Inc.’s petition for writ of certiorari and Amgen, Inc.’s conditional cross-petition for writ of certiorari. The dispute appeals the Federal Circuit’s July 21, 2015 decision holding that Amgen was entitled to an additional 180-day marketing exclusivity period because of Sandoz’s late notification of its intention to market a biologic product that is biosimilar to Amgen’s Neupogen® (see Court interprets biosimilar ‘enigma’ in favor of abbreviated biologic license applicant, Health Law Daily, July 22, 2015).

The Court also granted Apotex, Inc.’s motion for leave to file a brief as amici curiae; Apotex was involved in a similar dispute with Amgen (see Biosimilar applicant must give 180-day post-licensure notice to reference sponsor, Health Law Daily, July 6, 2016), though the Court denied Apotex’s petition for writ of certiorari earlier this term (see SCOTUS denies cert in biosimilar licensing dispute, Health Law Daily, December 12, 2016).

The Biologics Price Competition and Innovation Act (BPCIA), which was passed in 2010 as sections 7001-7003 of the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148), created an abbreviated pathway for FDA approval of a “biosimilar” biologic product. Amgen originally brought suit against Sandoz in federal court asserting various violations of Amgen’s approved license for its cancer-fighting biologic Neupogen (filgrastim) and infringement of Amgen’s patent for a particular method of using filgrastim. The Court will be hearing arguments relating to Sandoz’s question regarding the 180-day notice of commercial marketing and Amgen’s cross-petition on the optionality of a process to settle patent disputes known as the “patent dance” (see Shall we dance? Biosimilars step toward new legal and regulatory future, Health Law Daily, March 31, 2016).

Makeup of the Court

Since the February 13, 2016, death of Justice Antonin Scalia, there have been eight Justices sitting on the Court. President Barack Obama’s nominee to replace Scalia, D.C. Court of Appeals Chief Judge Merrick Garland, was not considered by the Senate; President-elect Donald Trump plans to nominate a successor early into his term. In order to receive a vote in cases pending before the Court, a Justice must be seated on both the day of the oral argument and the day the written decision is released. Trump’s nominee will only be part of the decision if he or she is confirmed and duly sworn in before the oral arguments, which are not yet scheduled.

Value-based payments and EHRs expected to continue trajectory during reform

Despite the uncertainty surrounding health care reform under the upcoming Trump administration, health law experts project that the transition to value-based payments and further development of electronic health record (EHR) systems will be a constant in the coming years. Four of Avalere Health’s senior vice presidents offered their opinions during the 2017 Healthcare Industry Outlook webinar, making educated guesses about what upcoming changes the industry may see.

What will change?

The webinar started with the topic on everyone’s mind: what will happen to the Patient Protection and Affordable Care Act (ACA)? Broadly, the presenters expect that federal spending on health care will be capped and states will be granted more flexibility in designing their Medicaid programs. Reduction of regulations to encourage the private sector to provide a range of products in a competitive market is also to be expected.

The likelihood of repeal was discussed for several different ACA sections. The most likely to be repealed were the individual and employer mandates, subsidies, industry taxes, Medicare tax for high earners, and cuts to disproportionate share hospitals. Certain reforms, like protection for pre-existing coverage, drug related provisions, and changes to Medicare Advantage and Medicaid payment provisions are considered likely to remain. Subjects likely to be up for serious debate are Medicaid expansion, the Center for Medicare & Medicaid Innovation (CMMI), essential health benefits, and the preventive services coverage requirement.

Other areas

The focus on quality and value in health care is not expected to waver during the new administration. In light of significant regulatory and policy barriers, providers are unable to establish outcome-based contracts and create more innovative payment arrangements. More flexibility in the ability to establish and agree on value between parties is expected to be a policy pressure point.

The value discussion typically focuses on provider performance, but the presenters noted that drugs are an important value consideration, especially in light of rising costs. The traditional approach to determining drug value is expected to evolve, as frameworks had previously been established based on clinical benefit, toxicity, and product cost, which ignored patient considerations and relied too much on data from limited populations. In addition to incorporating more real world data, drug value frameworks have begun to focus on not only on health outcomes, but patient experiences and financial considerations during treatment.

Although “virtually every hospital” is using some sort of EHR system, interoperability continues to be a sticking point. In the near future, the ability to more effectively use, share, and interact with data is expected to improve. Continued advancements in studying data is also expected to change the way providers practice, including big advances in population health.