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Newsletter

December 17, 2018

Health Headlines – December 17, 2019


Featured Articles

King & Spalding Client Alert: What Next for the ACA after Texas v. U.S.? What the Industry Needs to Know While the Case Is on Appeal – On Friday, December 14, 2018, U.S. District Judge Reed O’Connor ruled that the Patient Protection and Affordable Care Act (ACA) must be struck down.  Specifically, the court held that the individual mandate—which requires most Americans to have basic health insurance—is unconstitutional.  Supporters of the ACA have already expressed an intent to immediately appeal Judge O’Connor’s decision. The ruling did not immediately enjoin the continued functioning of the ACA and White House Press Secretary Sarah Sanders issued a statement shortly after the ruling stating that, “Pending the appeal process, the law remains in place.”  Likewise, CMS promptly added a notice to its website that reads, “Court’s decision does not affect this season’s open enrollment” and individuals were able to sign-up for coverage through the December 15 open enrollment deadline.  Though the ruling does not immediately affect the functioning of the ACA, it does create uncertainty for stakeholders such as insurers, healthcare providers, and patients with pre-existing conditions.  A more detailed review of the case, industry implications, the appeals process, and expected legislative responses can be found in a Client Alert by King & Spalding’s healthcare team, available here.

Eleventh Circuit Upholds District Court Antitrust Ruling Against Blue Cross and Blue Shield – On December 12, 2018, the U.S. Court of Appeals for the Eleventh Circuit issued a short order denying Blue Cross and Blue Shields’ (the Blues) interlocutory appeal of U.S. District Judge R. David Proctor’s ruling that certain business practices, including the use of exclusive territories by the 36 Blues plans, constitutes a per se violation of Section 1 of the Sherman Act (Section 1).

The class action antitrust lawsuit—the largest in the history of U.S. antitrust laws—against the Blues was brought over six years ago by a group of plaintiffs including employers, providers, and other healthcare professionals who alleged, among other things, that the Blues should not be considered a “single entity” under the antitrust laws and therefore are subject to Section 1, which prohibits certain conduct in restraint of trade.  A number of legal issues remain in the litigation before it will go to trial, including class certification.

With that said, this ruling is significant because once it is determined that alleged conduct is a per se violation of the antitrust laws, the plaintiffs no longer bear the burden of having to show the conduct—here arguably the Blues’ core business operations—has an anticompetitive effect. 

Reporter, John Carroll, Washington, D.C., + 1 202 626 2993, jdcarroll@kslaw.com.

CMS Publishes Additional Guidance Regarding the Price Transparency Requirements for Hospitals – In early December, CMS posted on its website a second round of FAQs about the price transparency guidelines the agency adopted earlier this year in the inpatient prospective payment system (IPPS) rulemaking for federal fiscal-year (FFY) 2019.  83 Fed. Reg. 41,144, 41,686 (Aug. 17, 2018).  The new FAQs clarify that hospitals are required to make public all their standard charges for items and services, including drugs and biologicals, even if not reflected on the hospital’s chargemaster.  Furthermore, the FAQs state that IPPS hospitals must report the standard charges for each of their diagnosis-related groups.  The new FAQs are available here

Section 2718(e) of the Public Health Service Act, as amended by the Patient Protection and Affordable Care Act (ACA), requires all hospitals in the United States to annually publish a list of their standard charges in a manner specified by the Department of Health and Human Services (HHS).  In the FFY 2015 IPPS final rulemaking, CMS said that hospitals can comply with section 2718(e) by making public their list of standard charges or their policies for allowing the public to view a list of those charges in response to an inquiry.  79 Fed. Reg. 49,853, 50,146 (Aug. 22, 2014).  Four years later, in the FFY 2019 IPPS final rulemaking, CMS changed its guidelines for complying with Section 2718(e) because the agency was concerned that “challenges continue to exist for patients due to insufficient price transparency.”  83 Fed. Reg. at 41,686.  Under the new guidelines, which took effect on October 1, 2018, hospitals are now required to make available, and update annually, a list of their current standard charges via the internet in a machine-readable format.  Id.

CMS published the first round of FAQs about the new price transparency guidelines in early October (available here).  Those instructions clarified, among other things, that a “machine-readable” format is one that can be easily imported and read into a computer system.  XML and CSV are acceptable formats, but PDF is not.  The first FAQs also state that participation in a state online price transparency initiative does not satisfy the price transparency guidelines.  As mentioned above, the second FAQs make clear that the guidelines apply to all items and services provided by the hospital, including drugs and biologicals, and that IPPS hospitals must report their standard charges for each diagnosis-related group.

One question not fully answered is what practical consequences, if any, will result if a hospital fails to comply with the new price transparency guidelines.  This is one of the several questions raised in the second round of FAQs.  CMS’s response is that “[t]he hospital will not be in compliance with the law,” and that “specific additional future enforcement or other actions that we may take with the guidelines will be addressed in future rulemakings.”  

Reporter, Alek Pivec, Washington D.C., + 1 202 626 2914, apivec@kslaw.com.

HHS Requests Public Input on Modifying HIPAA – On December 14, 2018, the Department of Health and Human Services (HHS), Office for Civil Rights (OCR), issued a Request for Information (RFI), for assistance in identifying provisions of the Health Insurance Portability and Accountability Act (HIPAA) privacy and security regulations, that may discourage coordinated, value-based care.  The RFI is available here.

Regulations issued pursuant to HIPAA and the Health Information Technology for Economic and Clinical Health (HITECH) Act of 2009, protect patients’ medical records and other protected health information (PHI), created by or on behalf of covered entities.  These regulations provide individuals rights with respect to their PHI, including the right to access their medical and billing records and receive notice of a healthcare provider’s privacy practices.  In addition, these regulations limit the circumstances under which covered entities may disclose PHI and provide requirements for how a covered entity must notify patients and OCR regarding breaches of PHI privacy.

OCR seeks public comment on the HIPAA regulations to reach four specific goals, including: (1) promoting information sharing for treatment and care coordination and management by amending privacy rules to encourage or require covered entities to disclose PHI to other covered entities; (2) encouraging covered entities, specifically providers, to share PHI with family members and caregivers of adults facing health emergencies, especially of patients struggling with opioid addictions; (3) implementing the HITECH Act requirement to include an accounting of disclosures for treatment, payment and health care operations from electronic health records in a manner that providers helpful information, while minimizing regulatory burdens; and (4) eliminating or modifying the requirement for covered health care providers to make a good faith effort to obtain individuals’ written acknowledgment of receipt of providers’ Notice of Privacy Practices, to reduce burden, without compromising transparency or an individual’s awareness of his or her rights.

In seeking insight from healthcare providers and the public in general, OCR has propounded numerous questions related to each goal.  Example questions include: 1) the length of time that healthcare providers are required to produce requested medical records; 2) whether covered entities should be required to disclose PHI when requested by another covered entity for treatment purposes; 3) whether parents or spouses should be allowed greater access to treatment information of children or spouses who have reached the age of majority; and 4) the amount of time that covered entities take to respond to an individual’s request for an accounting of disclosures.  OCR further requests that the public provide information regarding any relevant state, or other law, containing standards that differ from existing HIPAA requirements.

Comments on the RFI are due by February 11, 2019.  All submissions received must include “Department of Health and Human Services, Office for Civil Rights RIN 0945-AA00.”

Reporter, Jennifer Siegel, Los Angeles, +1 213 443 4389, jsiegel@kslaw.com.

Aurora Health Care to Pay $12 Million To Resolve Allegations Regarding Illegal Compensation Arrangements – On December 12, 2018, Aurora Health Care (Aurora), a Wisconsin-based healthcare system, entered into a settlement agreement with the United States and the State of Wisconsin to pay $12 million to resolve allegations that Aurora violated the False Claims Act by submitting claims to Medicare and Medicaid in violation of the Stark Law. The investigation that led to the discovery of the allegedly improper physician compensation arrangements resulted from a qui tam lawsuit filed under the False Claims Act, in which the whistleblowers had alleged different violations than those that were the basis for the government’s settlement with Aurora. 

The government alleged that over the course of several years, Aurora entered into compensation arrangements with two physicians that violated the Stark Law and then submitted claims to the government for services ordered by those physicians in violation of the False Claims Act.  According to the government, the physicians’ arrangements did not comply with the Stark Law because they were not commercially reasonable.  The government also alleged that the physician compensation exceeded the fair market value of the physicians’ services, took into account the physicians’ anticipated referrals, and was not for identifiable services. 

The press release from the U.S. Attorney’s Office, Eastern District of Wisconsin, is available here.  

Reporter, Jennifer S. Lewin, Atlanta, + 1 404 572 3569, jlewin@kslaw.com.

Increasing Attention on Physicians Failing to Disclose Financial Relationships with Drug Companies in Medical Journal Publications – On December 8, 2018, ProPublica and The New York Times published an article describing failures by several prominent physicians to disclose their financial relationships with drug companies in studies they published in medical journals.  This development is the latest high-profile example of the increasing scrutiny on the lack of transparency into potential conflicts of interest related to medical research and publications.

The December article follows another article published by ProPublica and The New York Times in September 2018.  That article highlighted the failure of a leading cancer researcher, Dr. José Baselga, to disclose significant ties to drug companies with interests in the subject of his medical research in studies he published in medical journals, including The New England Journal of Medicine.  Dr. Baselga ultimately stepped down from his position as Chief Medical Officer of Memorial Sloan Kettering Cancer Center because of the article.

Physicians are not the only target of this increased scrutiny.  ProPublica and The New York Times also emphasize deficiencies in the practices of medical journals, noting that medical journals have given confusing advice to physicians and do not routinely vet disclosures by researchers even though many relationships can be easily detected on CMS’s Open Payments database.  Further, ProPublica and The New York Times note that, historically, medical journals have done little to reprimand physicians who fail to disclose relevant industry ties. 

Reporter, Isabella E. Wood, Atlanta, + 1 404 572 3527, iwood@kslaw.com.

Also in the News 

King & Spalding Client Alert: Trump Administration Calls for Heightened Scrutiny of Competition in the Healthcare Industry - The Department of Health and Human Services (HHS) in conjunction with the Treasury Department, the Federal Trade Commission, and the Department of Labor, recently issued a report describing a number of concerns regarding competition in the healthcare industry and recommending certain reforms to address those concerns.  The report, titled “Reforming America’s Healthcare System Through Choice and Competition” identifies several issues, including: (1) reduced competition due to increasing concentration; (2) state regulations affecting competition; and (3) limits on FTC jurisdiction. More detailed information on these issues and takeaways from the report can be found in a Client Alert by King & Spalding’s antitrust team, available here. 

King & Spalding Roundtable Regarding Service Animals, Robots and Immigrants in Healthcare Settings – Diverse Emerging Issues and How to Operationalize – King & Spalding will host a webinar on Tuesday, December 18, 2018, from 1:00 – 2:00 p.m. ET, focused on emerging issues in the healthcare setting that do not necessarily make splashy headlines but nevertheless present real, practical challenges in the daily life of a healthcare service provider.  In this webinar, Kathy Poppitt and Catherine Greaves from our Austin office will discuss some diverse, emerging issues that our hospital, physician practice, ambulatory surgery center and other healthcare clients are experiencing in the workplace and provide tips for developing policies and procedures to address them.  The discussion will include both legal and practical considerations for these issues, including the following:

  • What are the relevant requirements for accommodating service animals?
  • How can robots be used in the non-surgical ambulatory care setting?
  • What obligations apply to providing non-emergency care to illegal immigrants?

To register, please click here.

King & Spalding Roundtable Regarding The Opioid Epidemic: What Hospitals Need to Know – On Tuesday, January 15, 2019, from 1:00 – 2:00 p.m. ET, King & Spalding’s John Horn, Shannon Cox, Steve Cummings, Amy Jones, and Amy Boring will host a webinar focusing on important developments and practical tips for ensuring compliance and effectiveness with regard to controlled substances in the hospital context, including:

  • Recent DEA activity demonstrating elevated concern with regard to controlled substance security, oversight and management in the hospital context;
  • Unique risks present in the hospital setting, especially with regard to healthcare workers;
  • Legal framework and key issues hospitals need to consider in evaluating their compliance programs and monitoring tools; and
  • Best practices with regard to a hospital’s controlled substance compliance program and diversion prevention. 

To register, please click here.