Health Headlines – January 2, 2024

CMS Makes Several Updates to the Federal Independent Dispute Resolution (IDR) Process

Over the past month, CMS announced several updates to the Federal No Surprises Act IDR Process. On December 15, 2023, the Federal IDR portal was re-opened for all remaining disputes. The portal is now open for all disputes including single disputes involving air ambulance services and new and previously initiated batched disputes. On December 18, 2023, the Department of Health and Human Services, Treasury, and Labor (the Departments) issued a final rule that set forth the fees for participating in the Federal IDR Process. On December 22, 2023, the Departments issued a notice that they would reopen the comment period for submitting comments on the Federal IDR Operations proposed rule. 

Federal IDR Portal Reopening. The Federal IDR portal has been reopened to process all dispute types. The Departments are also extending the IDR deadlines for selecting a certified IDR entity, initiating certain disputes, and resubmitting improperly batched disputes. The new deadlines are available here. If a party’s IDR initiation deadline fell between August 3, 2023 and December 14, 2023, the party will have until March 14, 2024 to initiate a new dispute. March 14, 2024 is also the deadline for any party whose IDR initiation deadline falls between December 15, 2023 through March 13, 2024. If a party’s initiation deadline falls on March 14, 2024 or after, the usual deadlines will apply. This is the second extension that the Departments have granted due to the backlog of actions that parties could not file while the portal was suspended.

Federal IDR Fees. The Departments issued a final rule to establish new fees that will go into effect on January 22, 2024. Between August 3, 2023 and January 21, 2024, each party will pay $50 per dispute. For disputes initiated on or after January 22, 2024, the administrative fee will increase to $115 per party per dispute. The rule also sets the certified IDR entity fee range for single determinations ($200-$840) and for batched determinations ($268-$1,173). This new rule is being issued because the Texas Medical Association, et al. v. U.S. Department of Health & Human Services, et al., No. 6:23-cv-00059-JDK (TMA IV) order and memorandum vacated portions of the previous rule on August 3, 2023. The CMS Fact Sheet with more details about these fees is available here.

Extensions Available Through March 14, 2024. The Departments also announced a few other extensions that are available through March 14, 2024. A party may request additional time to respond to a Certified IDR entity’s request for information. A Certified IDR entity may grant a party’s request for a 10-business day extension to submit an offer after the original offer deadline. Finally, if parties initiate a dispute before March 15, 2024, the parties will have 10 business days to jointly select a certified IDR entity.

Re-Opening the Comment Period. CMS posted a notice on the No Surprises Act website announcing that the Departments intend to re-open the comment period for submitting comments on the proposed rule “Federal Independent Dispute Resolution (IDR) Operations.” Additional information on the IDR Operations Proposed Rule is available in a prior issue of Health Headlines. Interested parties should monitor the Federal Register for a notice with details about the comment period reopening.

Reporter, Taylor Whitten, Sacramento, +1 916 321 4815, twhitten@kslaw.com.

OIG Issues Favorable Advisory Opinion Regarding the Subsidization of Certain Medicare Cost-Sharing Obligations in the Context of a Clinical Trial

On December 21, 2023, the OIG issued a favorable advisory opinion (Advisory Opinion 23-11) regarding the proposed subsidization of certain Medicare cost-sharing obligations in the context of a clinical trial.

The requestor was a manufacturer of a medical device that is designed to modulate the strength of cardiac muscle contraction in patients with heart failure (Device), which has been approved by the FDA for use in patients with heart failure who meet certain criteria. The requestor is also sponsoring a clinical trial designed to determine the effectiveness and safety of the Device in a different population of heart failure patients—those with a higher ejection fraction between 40% and 60%. The Device is intended as a one-time treatment.

Under the proposed arrangement (Proposed Arrangement), the requestor would pay cost-sharing obligations that Medicare beneficiaries participating in the clinical trial would normally owe for clinical trial-related Medicare-reimbursable items and services provided during the clinical trial up to a maximum of $2,000 per clinical trial participant. The purposes of these payments, according to the requestor, are to (i) reduce financial barriers to enrollment and prevent attrition from the clinical trial due to financial reasons; (ii) facilitate socioeconomic diversity of the clinical trial population, and (iii) preserve blinding of participants. The requestor stated that Medicare beneficiaries would likely incur cost-sharing obligations for billable items and services associated with appointments required as part of the clinical trial.

OIG concluded that the Proposed Arrangement would implicate the Federal anti-kickback statute (AKS) because the subsidies could induce Federal health care program beneficiaries to participate in the clinical trial where they would receive health care services reimbursable by a Federal health care program. OIG also concluded that the Proposed Arrangement would implicate the civil monetary penalty provision prohibiting inducements to beneficiaries (CMP) because the remuneration would be likely to influence a beneficiary to receive Medicare-billable items and services from a particular provider.

Although OIG concluded that the Proposed Arrangement would not fall squarely within one of the AKS exceptions to the definition of “remuneration” for the CMP or any safe harbor to the AKS, OIG concluded that it would not impose sanctions for the following reasons:

1. OIG concluded that the Proposed Arrangement was a reasonable means of promoting enrollment in the clinical trial. OIG explained that the cost-sharing expenses would be cost prohibitive for many Medicare beneficiaries who otherwise would participate in the clinical trial, and the requestor’s subsidy could help ensure enough participants are enrolled for the clinical trial. OIG also explained that the requestor’s subsidy was reasonable to facilitate enrollment of a socioeconomically diverse set of clinical trial participants.
2. OIG concluded that the Proposed Arrangement would pose a low risk of overutilization or inappropriate utilization of services payable by a Federal health care program. OIG explained that although the Proposed Arrangement might increase utilization of items and services, there is nothing to suggest that such an increase would be inappropriate.
3. OIG concluded that the Proposed Arrangement is distinguishable from problematic seeding arrangements where manufacturers initially offer subsidies to lock in future utilization of a reimbursable item or service. OIG reasoned that because the Device is intended to be a one-time treatment, and the requestor does not anticipate that use of the Device would prompt future utilization by participants in the clinical trial of any other products manufactured by the requestor, the Proposed Arrangement poses a low risk of abuse.

OIG’s Advisory Opinion 23-11 can be read here.

Reporter, Brittany Tandy, Austin, +1 512 457 2071, btandy@kslaw.com.