Recent Guidance by ONC and SAMHSA Sheds Light on Compliance Requirements for 42 CFR Part 2

In the face of the ongoing opioid crisis in the United States, the Office of the National Coordinator for Health Information Technology (“ONC”) and the Substance Abuse and Mental Health Services Administration (“SAMHSA”) recently released two fact sheets to clarify how the requirements of 42 CFR Part 2 apply in different provider contexts, including via electronic health information exchange (“HIE”). The Part 2 regulations were initially promulgated in 1975 to ensure the confidential treatment of records relating to the identity, diagnosis, prognosis or treatment of patients in federally assisted programs for substance use disorders (“SUD”). SAMHSA attempted to modernize the regulations in 2017, in part to account for the many advances in healthcare technology and care delivery models that impact how patient records are transmitted and maintained. However, many stakeholders continue to call for further changes, and a number of bills have been introduced in the House and Senate to further align the Part 2 regulations with HIPAA for the purposes of healthcare treatment, payment and operations.

The new Fact Sheets are intended to help remove barriers to choosing or providing appropriate SUD treatment and to guide stakeholders on how to access and securely share SUD-related health information with the patient’s consent. They are the first guidance documents that SAMHSA has issued since the Part 2 regulations were amended last year. Although they largely restate material in the Preamble of the Final Rule, they contain a series of useful fact patterns that illustrate when and how patient consent should be obtained, including by clarifying how a general designation in a patient consent form works in practice. The key takeaways and insights from the Fact Sheets, which are particularly helpful for stakeholders in mixed-use facilities, integrated care settings, or utilizing HIEs, are summarized below. Continue Reading

CMS “Regulatory Sprint to Coordinate Care” Seeks Input to Lessen the Regulatory Burden of the Stark Law

Late last month, the Centers for Medicare & Medicaid Services (“CMS”) issued a request for information (“RFI”) seeking input regarding the Medicare physician self-referral law and its implementing regulations (“Stark Law”) and how it may prevent or inhibit care coordination amongst healthcare providers. As part of CMS’s broader “Regulatory Sprint to Coordinated Care” initiative, the RFI’s goals are, in part, to help identify the Stark Law’s regulatory requirements or prohibitions that may impede coordinated care, and to help CMS assess the necessity of these obstacles. To be assured of consideration, comments must be received by CMS no later than 5:00 p.m., August 24, 2018. Continue Reading

DC Circuit Rejects HHS Rule Barring Hospital Medicare Appeals Challenging Longstanding Erroneous “Predicate Facts”

On June 29, 2018, the DC Circuit ruled that HHS could not apply in PRRB appeals a 2013 “reopening” regulation, which purports to bar the adjudication of “predicate facts” beyond 3 years after the facts had been determined. St. Francis Medical Center v. Azar (D.C. Cir. June 29, 2018). The court held that the agency’s reopening regulation, although stating that such predicate facts could not be considered outside the 3-year window, applies only where agency decision makers revisit their own determinations and does not apply in appeals from one level of the agency to another. A concurrence by Judge Kavanaugh found further that “it would seem to be the very definition of arbitrary and capricious for HHS to knowingly use false facts when calculating hospital reimbursements. That is particularly so when those erroneous facts cost hospitals hundreds of millions of dollars. That is real money.” This DC Circuit decision applies nationwide to restore hospital procedural rights to seek correction of baseline errors that may repeatedly cause underpayments years down the line. Continue Reading

DOL Issues Final Rule Expanding Access to Association Health Plans

On June 21, 2018, the US Department of Labor (DOL or the Department) published its final rule, amending the definition of “employer” under section 3(5) of the Employee Retirement Income Security Act (ERISA) to allow for the establishment of group or association health plans (AHPs) (Final Rule). Similar to a corresponding proposed rule issued earlier this year (the Proposed Rule,), the Final Rule broadens the criteria under ERISA for determining when and how employers may form associations to offer group health plans to multiple employers and self-employed individuals.

According to the DOL, the Final Rule is intended to expand access to group health coverage by permitting businesses, sole proprietors and self-employed to form associations to sponsor AHPs based on common geography, industry or trade, if certain criteria are met.

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How To Avoid Paying $2,000 A Day To Encrypt ePHI

Let’s hope you don’t pay that much to encrypt electronic Protected Health Information (ePHI). How about a total of $4.3 million over two years? Well, that’s the total penalty for encryption violations assessed by Health and Human Services (HHS). An Administrative Law Judge found the penalty could have been much worse. The facts are sobering. The message is clear.

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Squire Patton Boggs Attorneys Publish Practical Law Practice Note on State Legalized Marijuana Businesses and Access to the Bankruptcy Code

The June 13, 2018 publication of Practical Law features a Practice Note co-written by Squire Patton Boggs attorneys Mark A. Salzberg, Elliot M. Smith, John E. Wyand and Sarah H. Stec titled “State Legalized Marijuana Businesses and Access to the Bankruptcy Code”. The Practice Note discusses the federal statutory scheme governing marijuana, its tension with state laws governing marijuana businesses, and the ability or inability of marijuana related businesses to access the relief provided under federal bankruptcy law.




Majority Of Federal Communications Commission (FCC) Supports 40%+ Annual Increase In Rural Health Care Program Funding – Following on a proposal to review annual funding for the FCC’s Rural Health Care Program (RHCP), which currently provides $400 million in annual subsidies for telecommunications and broadband services to eligible rural healthcare providers (HCP), a majority of the Commission now support a proposed 40+% increase to $571 million per year.

RHCP Components – The telecommunications component of the RHCP, established in 1997, allows eligible providers to obtain rates on telecommunications services in rural areas that are reasonably comparable to rates charged for similar services in corresponding urban areas. The broadband component, established in 2012 and known as the Healthcare Connect Fund (HCF), provides a flat 65% discount on services such as Internet access, dark fiber, business data and private carriage services. Both components include a competitive bidding process.

Need For Increased Program Funding Levels – During the last two funding years, the Program has been oversubscribed at the $400 million level, requiring proration of support available. To address that development, the FCC authorized carry forward of unused funds from prior funding years to ameliorate these cutbacks for funding year 2017. In addition, in December, the FCC sought comment on increasing the current $400 million cap. Thereafter, the Schools, Health and Libraries Broadband Coalition sought emergency relief because of the potential funding cuts affecting health care providers as a result of oversubscription.

FCC Chairman Reacts – Faced with creating continued uncertainty for patients, health care providers and communications companies, the Chairman has proposed adding $171 million to the fund annually and applying the additional funding to the current funding year “to immediately address a critical funding crisis and enable rural health care providers to continue offering telemedicine services.” The proposal also would adjust the $571 million cap annually for inflation and allow unused funds from prior years to be carried forward to future years. That could mean even more resources available.

Majority Support and Next StepsSince releasing the proposal, Commissioners Carr and O’Rielly have joined in voting for the initiative, which means it will ultimately be formally approved. Congressional and other reaction has been highly positive. The Executive Vice President of the American Hospital Association noted that the increase was “critical to improve the lives or rural Americans…since innovations in health care demand connectivity for telehealth, remote monitoring, patient engagement and daily operations.”

The increase in funding resources should offer additional opportunities for eligible entities who would seek RHCP support to “help health care providers get the connectivity they need to better serve patients throughout rural America.”

Entities interested in in taking advantage of the enhanced Rural Health Care Program should follow these and other developments that the FCC is considering closely so that they are fully informed as to their options.

Right to Try Investigational Drugs Signed Into Law

Right to Try Investigational Drugs Signed Into Law

On May 30, 2018, S. 204, the Trickett Wendler, Frank Mongiello, Jordan McLinn, and Matthew Bellina Right to Try Act of 2017 (Pub. L. No. 115-176, “Right to Try Act”) was signed into law. The Right to Try Act amends the Federal Food, Drug, and Cosmetic Act (the “FD&C Act”) to establish national standards and rules by which certain investigational drugs may be provided to terminally ill patients. Under the Right to Try Act, a patient diagnosed with a life-threatening disease or condition, who has exhausted approved treatment options and is unable to participate in clinical trials involving certain investigational drugs, may seek the opportunity to drug treatments that are not approved by the U.S. Food & Drug Administration (FDA).

The Right to Try Act exempts the provision of eligible investigational drugs to eligible patients from a number of requirements and restrictions under the FD&C Act and other laws. The manufacturer or sponsor of an eligible investigational drug must report annually to the FDA on any use of drugs dispensed under the Right to Try Act. The FDA will post an annual summary report of such use on its website.

The Right to Try Act incorporates the regulatory definitions of “life-threatening” diseases that are: (1) a disease or condition where the likelihood of death is high unless the course of the disease is interrupted, and (2) a disease or condition with potentially fatal outcomes, where the end of clinical trial analysis is survival.

Under the new law, a sponsor or drug manufacturer may only recover the direct costs of making its investigational drug available. Direct costs are costs that can be specifically and exclusively attributed to providing the drug for the investigational use under the Right to Try Act. Direct costs include costs per unit to manufacture the drug (e.g., raw materials, labor, and non-reusable supplies and equipment used to manufacture the quantity of drug needed for the use for which charging is authorized) or costs to acquire the drug from another manufacturing source, and direct costs to ship and handle (e.g., store) the drug. Direct costs exclude costs incurred primarily to produce the drug for commercial sale (e.g., costs for facilities and equipment used to manufacture the supply of investigational drug, but that are primarily intended to produce large quantities of drug for eventual commercial sale) and research and development, administrative, labor, or other costs that would be incurred even if the clinical trial or treatment use for which charging is authorized did not occur.

The FDA announced that it stands “ready to implement this legislation in a way that achieves Congress’ intent to promote access and protect patients. The FDA is dedicated to achieving the goals that Congress set forth in this legislation, so that patients facing terminal conditions have an additional avenue to access promising investigational medicines.”

UK Competition Appeal Tribunal Quashes Fines in First Pure Excessive Pricing Case

On 7 June, the UK’s Competition Appeal Tribunal (CAT) annulled in part a decision by the UK’s Competition and Markets Authority (CMA) imposing fines of nearly £90 million on two pharma companies, Pfizer and Flynn, for charging excessive prices for the anti-epileptic drug, phenytoin sodium capsules. The case is notable as it marks the first time that the CAT has ruled on a pure excessive pricing case in the pharma sector.

In its decision, the CMA had found that both Pfizer and Flynn held a dominant position in their respective markets and that each company had abused that position by significantly raising the prices of phenytoin sodium capsules from £2.83 to £67.50 – corresponding to a price increase of 2,600%. The price increase followed from Flynn’s decision in 2012 to genericise the drug with a view to effectively removing it from the sectoral pricing regulation that applies to branded medicines. Continue Reading