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Health Headlines – March 13, 2017

13 Mar 2017


King & Spalding Client Alert: House Committees Approve GOP ACA Replacement – On March 8, 2017, the two House Committees responsible for healthcare policy related to the Affordable Care Act (ACA) held marathon-like deliberations to mark-up their respective portions of the Republican-sponsored health reform repeal and replacement bill, the American Health Care Act.  Debate in both Committees extended overnight, with the House Ways & Means Committee adjourning early morning on Thursday, March 9, after over 18 hours in session. The House Energy & Commerce Committee passed its recommended bill after 27 hours of debate later that afternoon. The Congressional Budget Office just released its estimate that while the American Health Care Act would save $337 billion over ten years, up to 24 million people would lose insurance coverage by 2026. The CBO report is available here. A detailed King & Spalding Client Alert summarizing the American Health Care Act and its prospects for passage is available here.

Reporters, Allison F. Kassir, Washington, DC, +1 202 626 5600,, and C’Reda Weeden, Washington, DC, +1 202 626 5572,

HHS States that Agency Will Not Be Able to Meet Deadline to Clear Medicare Appeals Backlog – In a status report filed on March 6, 2017, HHS revised projections regarding the Medicare appeals backlog, which make it unable to meet a court-imposed deadline to eliminate the backlog by 2020. The status report was filed in connection with the American Hospital Association (AHA) v. Burwell litigation in the District Court for the District of Columbia.

As previously reported here, the AHA filed suit against HHS in 2014 seeking mandamus relief to compel HHS to meet its statutory deadline for administrative review of denial of claims for Medicare reimbursement. In December 2016, the District Court for the District of Columbia granted AHA’s motion for summary judgment and imposed deadlines for HHS to reduce the appeals backlog, including complete elimination of the backlog by December 31, 2020. HHS filed a motion for the court to reconsider its order, but in January 2017, the court denied HHS’s motion, finding that HHS had failed to meet the “stringent standard” to alter or amend the court’s judgment.

Most recently, in the March 2017 status report, HHS reported a current backlog of 667,326 appeals at the Office of Medicare Hearings and Appeals. HHS also projected the number of pending appeals to grow to 1,009,768 by September 30, 2021. HHS cited multiple reasons for the revised projections, including lack of provider interest in a reopened administrative settlement program, as well as current funding and legislative authorities under the new Administration.

The status report is available here.

Reporter, Lauren Gennett, Atlanta, + 1 404 572 3592,

Fifth Circuit Upholds CMS’s Critical Access Hospital Guidelines – CMS’s definitions of “primary roads” and “secondary roads,” as used to determine what constitutes a critical access hospital, withstood another court challenge last week.

The U.S. Court of Appeals for the Fifth Circuit upheld CMS’s critical access hospital (CAH) guidelines, concluding that CMS’s interpretation of “primary roads” and “secondary roads” is persuasive and entitled to judicial deference. Baylor County Hospital District v. Price, No. 16-10310, 2017 WL 908222 (5th Cir. Mar. 7, 2017).

Medicare provides special reimbursement for certain rural facilities that meet the definition of a CAH.  CAHs receive cost-based reimbursement from Medicare, as well as additional Medicare payment.

To qualify as a CAH, and facility must satisfy several criteria, including sitting more than thirty-five miles from another hospital (or fifteen miles if only secondary roads are available). 42 U.S.C. § 1395i-4(c)(2)(B)(i)(I). Neither the statute nor the implementing regulation defined “secondary roads,” so CMS defined “primary roads” in Section 2256A of its State Operations Manual as:

  • A numbered federal highway, including interstates, intrastates, expressways or any other numbered federal highway;
  • A numbered state highway with two or more lanes each way; or
  • A road shown on a map prepared in accordance with the U.S. Geological Survey’s Federal Geographic Data Committee (FGDC) Digital Cartographic Standard for Geologic Map Symbolization as a “primary highway, divided by median strip.”

Seymour Hospital (“Seymour”) in Seymour, Texas, is 31.8 miles away from the nearest hospital, and U.S. Highway 183/283 – which Seymour characterized as a two-lane rural road with no shoulders and conditions akin to a poor quality farm road – accounts for 28.4 of those miles. When CMS determined, based on its definition of primary and secondary roads, that Seymour was not a CAH, Seymour challenged those definitions as unreasonable, arbitrary and capricious. After an ALJ, an HHS Appeals Board, and a federal district court all sided with CMS, Seymour appealed to the Fifth Circuit.

The Fifth Circuit found that CMS’s determination that federal highways (like U.S. Highway 183/283) “are likely to be bigger, better-maintained, and more well-traveled than state highways” was neither arbitrary nor unreasoned and noted that, although bright line rules will inevitably treat some similar cases differently, CMS’s differentiation between primary and secondary roads “is valid in the vast majority of cases.” Id. at *6.

Please click here for a copy of the Fifth Circuit’s decision.

Reporter, R.J. Cooper, Sacramento, +1 916 321 4809,


OIG Exclusion Regulations Go Into Effect This Month – On January 20, 2017, Assistant to President Trump and Chief of Staff Reince Priebus directed Federal agencies to temporarily postpone the effective date of such regulations for sixty days (March 21, 2017) unless such action would impact health, safety, or financial or national security. Among the regulations postponed was the Final Rule regarding OIG’s exclusion authorities that was to go into effect on February 13, 2017. The Final Rule will now go into effect March 21, 2017, and will expand OIG’s authority to exclude certain individuals and entities from participating in Federal health care programs under Section 1128 of the Social Security Act. A summary of the Final Rule’s key provisions is available here.

Upcoming Webinar – Please join us for Help! Patient Assistance Programs and Co-Pay Cards: Hot Topics, Recent Enforcement, and Post-Election Politics on Wednesday, March 15, 2017 12:30 – 1:30 Eastern Time. We will discuss issues relating to the ongoing industry-wide investigation related to Patient Assistance Programs (PAPs) and donations to charitable PAPs. Given the intense enforcement scrutiny over the last six months on charitable patient assistance donations, this will make for timely discussion of government enforcement as well as related congressional investigations and political considerations. We will also highlight how scrutiny related to drug pricing has exacerbated compliance challenges related to PAPs. Finally, we will outline strategies for pharmaceutical companies to manage risk proactively. Registration information is available here.

King & Spalding to Host 26th Annual Health Law & Policy Forum – Join us on Monday, March 20, 2017, 8:00 a.m. – 5:30 p.m. ET, for the 26th Annual Health & Law Policy Forum at the St. Regis Hotel, in Atlanta, Georgia. Our keynote speaker will be Fox News host Tucker Carlson. As in previous years, Forum sessions will cover a variety of health law and policy topics. Attendance is $95 per person (lunch included). Capacity is limited. Register here.

Save the Date: King & Spalding Reception at HCCA Compliance Institute – Please join Sara Kay Wheeler, Immediate Past President of the Health Care Compliance Association (HCCA), and the King & Spalding team at a reception during the 21st annual HCCA Compliance Institute. The reception will be held at the Gaylord National Resort & Convention Center in National Harbor, Maryland, on Sunday, March 26, 2017, from 6:00 p.m. - 8:30 p.m. ET. Register here.

Save the Date: King & Spalding Reception at the AHLA Institute on Medicare and Medicaid Payment Issues – Please join King & Spalding at a reception during the AHLA Institute on Medicare and Medicaid Payment Issues. The reception will be held at the Baltimore Marriott Waterfront Laurel Room in Baltimore, Maryland, on Thursday, March 30, 2017, from 7:00 - 9:30 p.m. Register here.

Save the Date – Please mark your calendars for Thursday, April 6, 2017 and join us a webinar on Managed Care Contracting Risks: An Antitrust, Government Pricing, and Fraud and Abuse Analysis for pharmaceutical companies. More information is available here.

Save the Date: 2017 Cybersecurity & Privacy Summit – On Monday, April 24, 2017, King & Spalding will host its 2017 Cybersecurity & Privacy Summit via webinar and in person in Atlanta, Georgia. The Summit will cover the latest developments and strategies for data protection. Additional details to follow.