News & Insights


February 10, 2020

Health Headlines – February 10, 2020

CMS Issues Medicare Advantage and Part D Proposed Rule for Contract Year 2021 and 2022 – On February 5, 2020, CMS issued a proposed rule advancing multiple updates and changes to Medicare Advantage (MA) and Medicare prescription drug benefit (Part D) programs (Proposed Rule).  Unlike in past years, CMS will not publish a “Call Letter” guidance for MA and Part D programs in 2020.  Therefore, the Proposed Rule contains much of the annual guidance and technical changes for contract years 2021 and 2022.  Among the proposals in the Proposed Rule, CMS proposes to implement the statutory provisions authorizing plan sponsors to suspend payments to pharmacies based on a credible allegation of fraud and report such suspensions to the Secretary.  Comments are due no later than 5:00 p.m. on April 6, 2020. [

Key proposals in the Proposed Rule include the following:

  • Implement sections 2008 and 6063 of the Substance Use-Disorder Prevention that Promotes Opioid Recovery and Treatment (SUPPORT) Act, which will:  (1) require Part D plan sponsors to notify the Secretary of the imposition of a payment suspension on pharmacies that is based on a credible allegation of fraud, impose such payment suspensions consistent with the manner in which CMS implements payment suspensions in fee-for service Medicare, and report such information using a secure website portal, upon the implementation of the portal (effective January 1, 2020); (2) define inappropriate prescribing with respect to opioids (effective January 1, 2021); (3) require plan sponsors to submit to the Secretary information on investigations and other actions related to inappropriate opioid prescribing (effective January 1, 2021); (4) define “substantiated or suspicious activities” related to fraud, waste, or abuse (no later than October 24, 2020); and (5) establish a secure portal which would enable the sharing of data and referrals of “substantiated or suspicious activities” related to fraud, waste, or abuse among plan sponsors, CMS, and CMS’s program integrity contractors (no later than October 24, 2020).  
  • Pursuant to section 17006 of the 21st Century Cures Act, (1) remove the prohibition for beneficiaries with end-stage renal disease from enrolling in an MA plan, beginning January 1, 2021; and (2) require that Medicare fee-for-service cover the kidney acquisition costs for MA beneficiaries, also effective January 1, 2021.
  • Codify the SUPPORT Act requirement making it mandatory that Part D sponsors implement Drug Management Programs, starting in plan year 2022.
  • Allow Part D sponsors to establish second, “preferred,” specialty tiers at a lower cost-sharing threshold than the current specialty tiers.
  • With respect to network adequacy rules for MA and cost plans, (1) codify existing network adequacy methodology and standards, with some modifications; (2) allow MA plans to receive a ten percent credit towards the percentage of beneficiaries residing within published time and distance standards when they contract with certain telehealth providers; and (3) reduce the required percentage of beneficiaries residing within maximum time and distance standards in certain county types.
  • Discontinue contracting with “look-alike” Dual Eligible Special Needs Plans (D-SNPs), effective January 1, 2021.  These plans are defined as any plan that either (1) projects in its bid that 80 percent or more of the plan’s total enrollment are enrollees entitled to Medicaid; or (2) has actual enrollment consisting of 80 percent or more of enrollees who are entitled to Medicaid, unless the MA plan has been active for less than one year and has enrollment of 200 or fewer individuals at the time of such determination.  MA plans exceeding this threshold would be able to transition their membership into a D-SNP or another zero-premium plan offered by the MA organization.

The Proposed Rule is available here.  CMS’s “fact sheet” on the Proposed Rule is available here.

Reporter, Igor Gorlach, Houston, +1 713 276 7326,

House Committees Release Competing Surprise Medical Billing Legislative Proposals – On February 7, 2020, two House committees released competing proposed bills designed to shield patients from “surprise” medical bills.  These bills, like others that were proposed last year, would protect patients from liability for fees charged by out-of-network physicians when patients receive care at in-network emergency departments.  The proposal from the House Ways and Means Committee includes a provision to establish an independent mediated negotiation process for reimbursement disputes between providers and insurers, instead of allowing insurers to decide the reimbursement amounts in the first instance.  The competing proposal from the House Education and Labor Committee, by contrast, resembles prior proposals that allow insurers to decide reimbursement for out-of-network providers in the first instance.  The House will need to reconcile all versions of any bills that pass committee before any vote is taken. 

The main disputes regarding the different versions of the surprise medical billing legislation concern the amounts insurers will have to pay out-of-network physicians when the patient is taken out of the process and the mechanisms available to providers for disputing reimbursement amounts.  Leaders of the House Energy and Commerce Committee, in coordination with the Senate Health, Education, Labor, and Pensions Committee, reached an agreement on a compromise proposal in December 2019 to set the payment to physicians at the median in-network negotiated rate in the geographic area, with an option of pursuing arbitration for bills in excess of $750.  That bill has the support of the White House.  Doctors and hospitals have lobbied against the House Energy and Commerce bill on the grounds that they believe it would lead to damaging cuts on provider reimbursement.  The House Education and Labor Committee released a bill on Friday, sponsored by Chairman Robert Scott (D. Va.) and Ranking Republican member Virginia Foxx (R. N.C.), that closely resembles that from the Energy and Commerce Committee, and a vote on that bill is planned for markup on Tuesday, February 11. 

The House Ways and Means Committee bill, by contrast, gives the decision on how much the insurer should reimburse physicians to an outside arbiter in the first instance, rather than the insurer, although that arbiter will have to consider the median rate usually paid for that service in making its decision.  This bipartisan legislation is sponsored by the Chairman Richard Neal (D. Mass.) and Ranking Republican member Kevin Brady (Texas).  Reps. Neal and Brady released a joint statement on Friday defending their bill as “a more balanced negotiation process.”  The House Ways and Means Committee is planning to vote on the legislation on Wednesday, February 12.  Rep. Donna Shalala (D. Fla.), a former secretary of Health and Human Services and member of the Education and Labor Committee, said on Friday that she supports the Ways and Means approach and criticized the bills from Energy and Commerce and Education and Labor as giving insurance companies too much power. 

Both parties are incentivized to finalize a deal by May 22, 2020—the deadline for Congress to pass a bill funding government healthcare programs.  The differences between the bills that pass out of committee would have to be resolved for any bill to move forward. 

The text of the House Ways and Means Committee bill is here, and the press release from Ways and Means can be found here.  The Education and Labor bill is here, and the press release on that bill can be found here.

Reporter, Ariana Fuller, Los Angeles, +1 213 443 4342,  


CMS Accepting Public Comments on Survey of 340B Hospitals’ Drug Acquisition Costs – On February 7, 2020, CMS published a notice in the Federal Register seeking public comments on a survey of hospitals to determine payment rates for drugs purchased under the 340B Drug Discount Program.  The deadline to provide comments is March 9, 2020. This notice is significant because the agency appears to be laying the groundwork potentially to reduce payment rates for 340B-purchased drugs using a survey of hospital acquisition costs.  Prior attempts to reduce payment rates without this data have been struck down by the United States District Court for the District of Columbia and are now on appeal before the United States Court of Appeals for the District of Columbia Circuit. 

CMS Releases Part II of Calendar Year 2021 Advance Notice of Methodological Changes for Medicare Advantage Capitation Rates and Part C and Part D Payment Policies – On February 5, 2020, CMS released Part II of the Advance Notice for Medicare Advantage capitation rates and Parts C and D payment policies. The Advance Notice proposes updates and changes to payment methodologies for Medicare Advantage Plans and Part D sponsors. CMS previously released Part I of the Advance Notice on January 6, 2020. CMS is accepting comments on its proposals in the Advance Notice through March 6, 2020, before publishing the final Rate Announcement by April 6, 2020. The Advance Notices are available here.

King & Spalding Webinar: HIPAA Compliant – and Revenue Generating – Responses to Subpoenas and Medical Records Requests After Ciox Health– On February 25, 2020, at 1:30 p.m. EST, a panel of attorneys from King & Spalding LLP will host a webinar to discuss the issues raised by the production of medical records and other documents containing protected health information following the U.S. District Court for the District of Columbia’s decision in Ciox Health, LLC v. Azar, et al., No. 18-cv-0040 (D.D.C. January 23, 2020).  The panel will describe the various types of federal and state requests and demands for medical records that covered entities and business associates may receive, how to determine whether the law enforcement exception applies, how to deal with attorneys and others to ensure a request is valid while avoiding unnecessary burden and expense, and how to comply.

Participants will also receive:

  • Checklists;
  • Step-by-step response processes;
  • Examples of how state laws may interact with these federal requirements; and
  • Recommendations for ensuring that policies and procedures adequately describe the requirements and ensure compliance.

There is no charge to attend the webinar.  For more information and to register, please click here.

King & Spalding 29th Annual Health Law & Policy Forum – On March 16, 2020, King & Spalding LLP will host its annual forum in Atlanta, GA, focusing on the foremost legal and political developments impacting the healthcare industry.  This year’s Keynote Speaker is George F. Will, America’s foremost political columnist.  He will speak on healthcare’s role in the 2020 political campaign.  Other Forum highlights include:

  • Leading practitioners providing policy and regulatory enforcement updates, and other industry developments;
  • Special considerations healthcare providers face in pandemics; and
  • Developments in telehealth.

Registration closes on March 2, 2020, and capacity is limited.  For more information and to register, please click here.