backHouse Committee Issues Letter to HRSA Requesting Audit Documentation Regarding 340B Drug Pricing Program – The House Committee on Energy and Commerce (Committee) sent a letter dated June 1, 2017, to the Health Resources and Services Administration (HRSA) Administrator expressing concerns about the growth and oversight of the 340B Drug Pricing Program (the Letter). The Letter requested by June 15, 2017, documents collected by HRSA “referring to covered entity audits conducted during FY 2015 and FY 2016.”
The 340B program enables eligible organizations, referred to as covered entities, to receive outpatient drugs from manufacturers at significantly reduced prices. Covered entities include Medicare/Medicaid Disproportionate Share Hospitals, Rural Referral Centers, children’s hospitals, federally qualified health centers, Ryan White HIV/AIDS program grantees, and other safety net providers. Drug manufacturers are required to provide these discounts in order to remain eligible for Medicare and Medicaid reimbursement.
The Committee notes in the Letter several concerns commonly voiced by the pharmaceutical industry regarding oversight of the growing 340B program. The Committee points out that HRSA does not track the amounts saved by covered entities under the 340B program or how the covered entities use the savings, nor does it require hospitals to use the savings in a specific way. Thus, the Committee expresses concern that uninsured and underinsured patients pay the full price of drugs in the 340B drug program when the hospital pays for the same drugs at a substantially discounted prices. Moreover, the Letter alleges that HRSA’s audits reveal that some covered entities occasionally bill for duplicate discounts on the same drug and divert, resell, or transfer 340B drugs to ineligible patients, but that HRSA does not follow up on its audit findings when it finds violations.
For a copy of the Letter, please click here.
Reporter, Kate Stern, Atlanta, +1 404 572 4661, kstern@kslaw.com.
CMS Requests Dismissal of Its Nursing Home Arbitration Appeal – On June 2, 2017, CMS filed a motion to dismiss its appeal to the U.S. Circuit Court for the Fifth Circuit of a U.S. District Court decision blocking the agency’s ban on mandatory nursing home arbitration. CMS’s motion did not provide an explanation. However, since the request for appeal was filed under the Obama Administration, it appears that the motion for dismissal reflects a difference in policy positions between the Administrations. CMS’s proposed policy going forward is likely set forth in its draft proposed rule addressing mandatory nursing home arbitration agreements, which has been under review at the Office of Management and Budget since April this year.
As reported previously, CMS proposed to address mandatory nursing home arbitration agreements in response to concerns that patients’ consent to arbitration is not fully informed or voluntary. The proposal was included in a broader July 2015 rule to reform the requirements for long term care facilities that participate in Medicare or Medicaid. In October 2016, CMS published a final rule, prohibiting long term care facilities that participate in Medicare or Medicaid from entering into a pre-dispute agreement for binding arbitration with any resident or resident’s representative or require that a resident sign an arbitration agreement as a condition of admission to the facility.
The applicable regulations were set to take effect on November 28, 2016, but the American Health Care Association (AHCA) – an industry group that represents most nursing homes in the U.S. – filed a lawsuit requesting that CMS’s rule be blocked. AHCA argued that CMS exceeded its authority in promulgating the rule and that the rule was preempted by the Federal Arbitration Act. The U.S. District Court for the Northern District of Mississippi agreed and issued a preliminary injunction, barring CMS from implementing the prohibition on mandatory arbitration agreements.
On January 5, 2017, CMS filed a Notice of Appeal with the Fifth Circuit. However, it was not clear whether the incoming Administration would continue to pursue the appeal. Following the transition in Administrations, CMS requested additional time to file an opening brief. Ultimately, the brief filing deadline, CMS filed a motion to dismiss the appeal, and the Fifth Circuit granted the motion. The case remains active at the District Court, which halted the case in January, pending a decision on the interlocutory appeal.
Reporter, Igor Gorlach, Houston, +1 713 276 7326, igorlach@kslaw.com.
Electronic Health Records Vendor Agrees to $155 Million Settlement to Resolve FCA Allegations, Required to Make Free Upgrades to Affected Products – On May 31, 2017, the DOJ announced a $155 million settlement with eClinicalWorks (ECW), one of the nation’s largest electronic health records (EHR) vendors, to resolve a False Claims Act lawsuit brought by a whistleblower. The lawsuit alleged that ECW misrepresented capabilities of its software allowing it to falsely obtain EHR certification. The settlement also resolves allegations that ECW paid kickbacks to some customers to promote its EHR software. As part of the settlement, ECW entered into a corporate integrity agreement (CIA).
The Medicare and Medicaid EHR Incentive Programs encourages healthcare providers to adopt and “meaningfully use” certified EHR technology. Under the program, HHS provides incentive payments to providers that implement certified EHR technology and meet certain requirements. Software companies certify their EHR software by attesting that their products satisfy criteria promulgated by HHS and by passing a test administered by an accredited independent certifying entity approved by HHS.
In the complaint-in-intervention, available here, the Government alleges that ECW concealed from its independent certifying entity that its EHR software failed to comply with certification requirements. For example, the government contends that ECW modified its software to “hardcode” only the 16 drug codes required for testing, rather than the software’s complete drug code database. Additional allegations include that ECW’s software did not accurately record user actions in audit logs, did not meet data portability requirements, failed to perform required drug interaction verification, and did not always accurately record diagnostic imaging orders.
Under the settlement, ECW entered into a CIA, available here, with the HHS OIG. The five-year CIA requires ECW to retain an Independent Software Quality Oversight Organization to review and assess ECW software and report its findings and recommendations to both ECW leadership and the OIG. ECW must also notify customers, through its online portal, of any safety related issues and procedures customers should undertake to mitigate such risks. Under the CIA, ECW is obligated to upgrade customer software free of charge and provide customers the option to transfer their data to another EHR vendor without penalty or at any cost to the provider. Finally, ECW must retain an Independent Review Organization to ensure ECW’s provider arrangements comply with the Anti-Kickback Statute.
Reporter, Catherine Silas, Washington, D.C., +1 202 626 8976, csilas@kslaw.com.
OIG Report Details Decline in Healthcare Fraud Recoveries – Last week OIG released its semiannual report to Congress, which details the results of OIG’s operations for the first half of the 2017 federal fiscal year. Healthcare fraud recoveries by OIG totaled $2.04 billion during the period of October 1, 2016 through March 31, 2017, a decline of roughly $730 million from the $2.77 billion reported during the same period of the preceding year. The report also details certain priority areas where OIG has focused its enforcement efforts.
OIG highlighted the following priority areas:
- Prescription Drug Abuse. OIG emphasized its commitment to pursuing providers who knowingly engage in drug diversion.
- Home Health Services. OIG is increasing its enforcement efforts against alleged improper payments in non-institutional settings, including Medicare home health services and personal care services.
- Grant Programs. OIG specifically highlighted its efforts with respect to program integrity for the Head Start program and the Child Care and Development Fund program.
- State Medicaid Fraud Control Units. During the reporting period OIG partnered with State Medicaid Fraud Control Units on 714 criminal investigations.
Please click here for a copy of the OIG report.
Reporter, J. Gardner Armsby, Atlanta, +1 404 572 2760, garmsby@kslaw.com.
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