What Employers Need to Know as Medical Marijuana Comes to Ohio

Employers need to be prepared to address issues with employees regarding possession and use of medical marijuana.

What Does the Law Say?

Ohio’s medical marijuana law, passed in 2016, permits patients with any of 21 specific medical conditions to purchase, use and possess medical marijuana in various forms (including certain dried plant material, oils and edibles). Patients must register with the state Board of Pharmacy and, if the patient is under the age of 18, he or she must also have a registered caregiver to monitor his or her use of the medical marijuana.

Importantly, the law explicitly states that employers do not have to accommodate an employee’s use of medical marijuana. Medical marijuana use or possession is considered just cause for termination under the law. For the purposes of workers’ compensation, if an employee tests positive for marijuana after a workplace accident, the state presumes the marijuana was the cause of the accident, even if the employee is a registered patient. This raises the employee’s burden to receive workers’ compensation benefits.

Also, keep in mind that marijuana for any purpose, including medical use, is still prohibited by federal law. The federal government has declined to enforce many marijuana laws in states that have legalized the drug, but it remains a federal crime to possess, use or distribute marijuana for any purpose. As a result, neither the Americans with Disabilities Act nor the Family and Medical Leave Act require accommodations or leave for patients to use medical marijuana in Ohio.

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Pharmacy Benefit Managers Are Not Subject to the Any Willing Provider Laws in GA, MS, or NC, says Eighth Circuit

The Eighth Circuit has recently reviewed whether a pharmacy benefit manager (”PBM”) is a “health benefit plan” within the meaning of the state statutes in Mississippi, North Carolina, and Georgia such that a pharmacy may bring a claim to enforce the any willing provider laws against PBMs. 

Many states have enacted some version of any willing provider laws, which generally require healthcare plans to accept any qualified provider willing to accept the plans’ terms and conditions.  Some of these laws, such as Colorado’s § 10-16-122, C.R.S., specifically refer to PBMs.  Others, such as Mississippi’s Miss. Code. Ann. § 83-9-6, are much more ambiguous.  For example, Miss. Code. Ann. § 83-9-6 applies “to all health benefit plans providing pharmaceutical services benefits, including prescription drugs…” without specifically mentioning PBMs.

A pharmacy sued a PBM in the Eastern District of Missouri, bringing claims sounding in contract, promissory estoppel, federal antitrust, and violations of Georgia, Mississippi, and North Carolina state any willing provider laws after the PBM terminated its contract with the pharmacy.  In its appellate briefing, the pharmacy argued that the District Court should have afforded it an opportunity to prove that a PBM falls within the purview of the Mississippi, North Carolina, and Georgia any willing provider laws, even in the absence of binding authority holding that these statutes apply to PBMs.  The Eighth Circuit concisely rejected this invitation with a single sentence:  the pharmacy  “has pointed to no case law that suggests that these laws apply to PBMs, and we decline to extend the reach of these laws to PBMs as a matter of first impression.”  The Eighth Circuit’s holding thus rejected the pharmacy’s claims under these statutes. 

Health care entities reviewing state any willing provider laws should perform careful state-specific research as to the applicability of those laws.  Even more generally, the Eighth Circuit opinion cautions litigants against framing claims enforcing state healthcare statutes absent authority supporting the statutes’ application.

Hospital Court Victories Trigger CMS to Walk-Back Rule Lowering Caps on Medicaid DSH Payments

The Centers for Medicare and Medicaid Services (CMS) has withdrawn a controversial policy, first introduced in 2010, which changes how much a Medicaid disproportionate share hospital (DSH) may receive annually in supplemental DSH payments. CMS took this action in response to several court rulings invalidating the agency’s policy. Despite the agency’s walk-back of its policy, hospitals should review their historical Medicaid DSH payments to ensure that they were calculated correctly. Continue Reading

CMS Proposes to Lower Drug Prices and Reduce Out-of-Pocket Drug Spending with Respect to Medicare Coverage

On Friday, November 30, 2018, the US Centers for Medicare & Medicaid Services (CMS) issued a proposed rule (Proposed Rule) to revise Medicare Part D (Part D) and Medicare Advantage (MA) regulations to promote health plan negotiation of lower drug prices and to reduce out-of-pocket spending for enrollees. The Proposed Rule contains four areas of reform focusing on: (1) Plan Flexibility for Coverage of Protected Class Drugs; (2) Real-Time Coverage and Cost Information for Prescribers; (3) Step Therapy by MA Plans for Part B Drugs; and (4) Drug Price Adjustment at Point-of-Sale based on Pharmacy Price Concessions.  You can read more about this here.

Health Care Fraud Leads $2.8 Billion Collected for False Claims

The federal government’s civil recoveries for false claims during FY2018 topped $2.8 billion. Health care fraud claims lead the collection.

Government Rakes in Billions

The Department of Justice (DOJ) recently released statistics for its civil False Claims Act (“FCA”) recoveries during FY2018.   Although that total is lower than in some previous years, the trajectory of recoveries for false claims has risen relentlessly since 1986. The total federal recovery since then exceeds $59 billion. The DOJ also states that it “was instrumental in recovering additional millions of dollars for state Medicaid programs” last fiscal year.

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Federal Court Held HHS Lacks the Authority to Impose Dramatic 340B Reimbursement Rate Reduction

On December 27, 2018, the provider community scored a major victory when the U.S. District Court for the District of Columbia held that the Medicare statute did not authorize the Department of Health and Human Services (“HHS”) to impose a nearly 30% reduction in 340B Reimbursement rates. The legal implications of this decision may be far reaching as the court held for the first time that HHS “acted outside of [its] authority to make adjustments to any Medicare reimbursement rates.” AHA v. Azar, 1:18-cv-02084-RC, ECF No. 25, at 27 (Dec. 27, 2018). However, the exact practical implications are still to be determined as the court ordered further briefing on the appropriate scope of relief. Id. at 36.

Providers participating in the 340B Program have traditionally purchased 340B drugs at steeply discounted rates, and when those hospitals prescribe the 340B drugs to Medicare beneficiaries, HHS reimbursed them at a much higher rate. Providers have relied on this gap between the purchase and reimbursement price to help them provide critical services to their communities, especially the underserved populations. However, HHS views the gap as “profit margin” that may lead to unnecessary utilization and potential overutilization of these 340B drugs.

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Cracks in the Façade—Supreme Court to Reconsider “Auer Deference” Rule and Possibly Shrink Agency Leeway In Interpreting Regulations

The playing field in a lawsuit challenging agency action is tilted toward the agency, largely by means of various deference doctrines. One of the most important has been deference to an agency’s interpretation of its own regulations. Courts have been deferring to those interpretations for decades, following a 1940s Supreme Court case, Bowles v. Seminole Rock & Sand Co.[1] The ground really shifted in 1997, when in Auer v. Robbins,[2] the Supreme Court said a court should generally defer to an agency’s interpretation developed for the first time in court briefing. The Supreme Court has occasionally walked that back, suggesting that an agency only gets this deference for interpretations that reflect the “fair and reasoned judgment” of the agency. But today, in many courts, the agency can craft a new interpretation of its regulation in litigation, directly targeted to the arguments that arise in the case.

However, the playing field might get a bit more level, as this week, the Supreme Court accepted a case expressly asking the Court to overrule Auer and Seminole Rock. The case under review involves a Vietnam veteran’s claim for retroactive disability benefits for service-related post-traumatic stress disorder. The claim had been rejected in 1983 due to an erroneous disqualifying diagnosis, but was reopened in 2006 with new evidence of PTSD. The Board of Veterans’ Appeals granted the veteran benefits from 2006 forward, but rejected the claim for retroactive benefits, because it deemed additional service records, which had been available in 1983 with the original request, not “relevant.” “Relevant” was a key term in the agency’s regulations about retroactive benefits, and the Board interpreted the term to encompass only evidence that directly addressed the basis of the 1983 decision. The Federal Circuit, denying a challenge to that decision, deferred to the Board’s interpretation under Auer. Now, the Supreme Court will now revisit its position that judges should accept an agency’s interpretation of its own ambiguous regulation rather interpret the meaning of the regulation on their own.

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Yates Memo Softened

Department Of Justice In Washington DCDeputy Attorney General Rod J. Rosenstein announced a revision of the “Yates Memo” concerning credit a company will receive for cooperating with an investigation.   Instead of an “all or nothing” approach, the new policy permits a company to “identify all individuals substantially involved in or responsible for the misconduct at issue.” More about this change can be found at the Anticorruption blog here.

CMS Proposes Invalidating Adjuster Methodology and Recouping Past Improper Payments From Medicare Advantage Organizations

On October 26, 2018, the Centers for Medicare and Medicaid Services (“CMS”) issued a proposed rule that will, among others initiatives, allow CMS to recover higher dollar amounts of improper payments made to Medicare Advantage Organizations.  Improper payments are identified through Risk Adjustment Data Validation (“RADV”) audits, which are audits conducted to determine whether the risk adjusted payments submitted by Medicare Advantage Organizations are for diagnoses supported by proper documentation. If there are any improper payments based on these audits, CMS is able to recover those payments.

To read more about this ruling and what it might mean for you, click here to read a recent Squire Patton Boggs alert on the subject.

Digital Health Update: Recent FDA Cyber Initiatives

The Food and Drug Administration (“FDA”) has greatly increased its activity around cybersecurity initiatives and medical devices. As we approach the end of the year, this is a great opportunity to review recent developments.

FDA Medical Device Cybersecurity Guidance

On October 18, 2018, the FDA published draft guidance, “Content of Premarket Submissions for Management of Cybersecurity in Medical Devices.” This draft replaces prior guidance from 2014, and the outlines recommendations for device design, data confidentiality, labeling conventions, and cybersecurity documentation. Key requirements include:

  • Risk-based categorization of devices into two tiers (based primarily upon device connectivity and risk of cybersecurity incidents);
  • Preparation of a cybersecurity bill of materials listing device components that could be vulnerable to cybersecurity incidents;
  • Recommendations such as requiring authentication before software or firmware updates; and
  • Application of the NIST Cybersecurity Framework.

The public comment period will end on March 18, 2019, and there will be a workshop open to the public on January 29-30. Industry professionals should take this opportunity to determine the effects this guidance could have on device approval in the future and consider commenting.

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