Private Parties May Not Sue States over Medicaid Reimbursement Rates

On March 31, 2015, the United States Supreme Court decided Armstrong v. Exceptional Child Ctr., Inc.. At issue was whether a provider of Medicaid-covered services may sue, as a private party, a state over their reimbursement rates. The providers sought to sue states over rates that they believed were too low and not in compliance with Section 30(a) of the Medicaid Act.

Section 30(a) states that reimbursement rates should be “consistent with efficiency, economy, and quality of care and are sufficient to enlist enough providers so that care and services are available under the plan at least to the extent that such care and services are available to the general population in the geographic area.”

The providers argued that the language of the act, coupled with the Supremacy Clause of the United States Constitution, means that providers can sue to enforce the federal law. In doing so, the providers believed they could force states to increase their Medicaid reimbursement rates. The Supreme Court rejected this notion and found that it is up to the Department of Health and Human Services to remedy the state’s rates.

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Beware of Potential Tax Return Fraud

Many doctors and health practitioners around the nation are experiencing tax return fraud issues. Tax return fraud occurs when another person or entity fraudulently files a tax return for another individual, looking to receive the victim’s refund. Across the nation, over the past two tax years, this has been a growing problem targeting doctors and similar health professionals. In Nebraska, it appears that this could also be a growing trend.

If you attempt to file a return and the Internal Revenue Service rejects it because a return has already been filed under your Social Security number, this signals tax return fraud. In this event, please contact an attorney for guidance.

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FDA Invites Public Comments on Drug Compounding

The United States Food and Drug Administration (“FDA”) has been working towards implementing the Drug Quality and Security Act (“the act”) since the laws inception in 2013. They have issued multiple notices for input on a multitude of specific issues under the act, however, they have not invited general comment on the act.

On March 6, 2015, the FDA issued a general invitation to the public for comment on implementation of the act. The invitation for comment is related to regulations on human drug product compounding under section 503A and 503B of the act. However, it is designed to accept comments, recommendations, and information about the entire act, especially for issues that have not been addressed in other public dockets.

The comment period is being held open indefinitely. The invitation in the Federal Register may be found at the following link: https://s3.amazonaws.com/public-inspection.federalregister.gov/2015-05376.pdf

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IRS Issues Notice Regarding PPACA Excise Tax

Part of the Patient Protection and Affordable Care Act (“PPACA”) efforts to reduce healthcare costs include an excise tax on health insurers that provide benefits to employees above a threshold limit. This tax is designed to discourage insurance programs that allow employees to receive unusually generous benefits under the insurance plan, which is believed to encourage heavy usage of healthcare. By reducing the overall usage, it will decrease costs. Moreover, it is expected that this tax will help fund the PPACA and off-set the cost of healthcare for those who are not enrolled in a qualified welfare plan. The 40% excise tax is set to take effect in 2018 for the cost of an applicable coverage plan that is above the threshold limit.

In preparing for the implementation of the excise tax, the Internal Revenue Service (“IRS”) has issued Notice 2015-16. This notice serves to clarify “the definition of applicable coverage,” “the determination of the cost of applicable coverage,” and “the application of the annual statutory dollar limit to the cost of applicable coverage.” The notice also seeks input on these issues.

This notice is only the start of implementing the new excise tax and the IRS anticipates issuing further notices. Eventually, the IRS intends to propose regulations and will invite further comments. For details regarding Notice 2015-16, the notice may found at the following link: http://www.irs.gov/pub/irs-drop/n-15-16.pdf .

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Potential Employer Requirements Due to Anthem, Inc. Data Breach

On February 4, 2015, Anthem Inc., one of the largest U.S. health insurers, notified the public that their data systems were breached. This breach potentially left customer names, social security numbers, and other personal information vulnerable. Subsequently, Anthem Inc. has already seen a customer lawsuit filed in California over the breach, with many more expected.

Health plan participants that have been affected will be notified in compliance with federal law. However, as this investigation continues, this may place additional burdens on employers. Depending upon the nature of the breach, of which further details are expected soon, employers may have to issue breach notifications under the Health Insurance Portability and Accountability (HIPAA). Until it becomes clear what information was taken, specific notification requirements are unclear. For example, a key question is whether protected health information was taken.

Depending upon the type of health plan an employer offers, it will have a varying impact upon the obligations for each company. The requirements will become clearer once further information is released. Beyond the federal HIPAA requirements, 47 states have unique breach notification laws that may impose obligations.

If you have questions pertaining how this may impact your requirements under the law, please contact Houghton Vandenack Williams for further information.

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Improvements in FDA Approval Timelines

According to a third party report by Pricewaterhouse Coopers (PwC), the Food and Drug Administration (FDA) has decreased the standard review time for new drugs, biologics, and devices. The report indicates the standard review time in 2009 was 14 months, but in 2012, it had decreased to 7 months.

Although low-priority new drug applications continue to require multiple review periods, high-priority applications were approved in the first review process at a rate of 81% in 2012. That represents a substantial increase in approval rates during the first review process. Similarly, as part of the Food and Drug Administration Safety and Innovation Act of 2012, the breakthrough therapy pathway has proven successful. Since its inception, it has received 260 applications, designating 74, and approving 17.

A full copy of the report regarding the FDA can be obtained at the following link: http://www.pwc.com/us/en/health-industries/health-research-institute/hri-pharma-life-sciences-fda.jhtml

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HHS Announces Goal of Tying Medicare Payments to Quality of Service

On January 26, 2015, Health and Human Services (HHS) announced a new goal of tying Medicare payments to the quality of service provided through the use of alternative payment models. According to HHS, this is the first time Medicare has ever set explicit goals for payment to providers based upon value and quality. The alternative-payment goals include tying 30% of traditional fee-for-service payments to quality. The 30% goal is set for the end of 2016, with a 50% goal by the end of 2018.

In addition to the traditional fee-for-service payments, HHS has set a goal of tying 85% of all traditional Medicare payments to quality by 2016 and 90% in 2018. HHS points to the value-based purchasing and hospital readmission reduction programs as examples of tying fees and payments to quality.

HHS also hopes to make these goals scalable and created the Healthcare Payment Learning and Action Network. This network will work with all areas of the healthcare industry to advance alternative payment models.

The HHS announcement may be found at the following link: http://www.hhs.gov/news/press/2015pres/01/20150126a.html

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FDA Center for Drug Evaluation and Research Starts New Office for Monitoring Drug Quality

On January 12, 2015, the Food and Drug Administration (FDA) Center for Drug Evaluation and Research (CDER) started a new office for monitoring drug quality. The Office of Pharmaceutical Quality (OPQ) will focus on drug application reviews, post-approval improvements, and monitoring pharmaceutical manufacturing.

This new office will primarily focus on ensuring that patients receive safe, quality products. In doing so, the OPQ will evaluate all aspects of drug quality to ensure consumer safety. Having established the new office, the FDA hopes to streamline quality control and monitoring processes for the benefit of the industry and consumer alike.

More information and answers to some specific questions may be found at the FDA website by following the link:

http://www.fda.gov/AboutFDA/CentersOffices/OfficeofMedicalProductsandTobacco/CDER/ucm429869.htm

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FDA Proposed Guidance for 2015

The U.S. Food and Drug Administration (FDA) released a list of all the planned guidance for issuance in 2015. This list includes new guidance for items within Biopharmaceutics, Drug Safety, Pharmaceutical Quality, and other categories.

The full list of proposed guidance for 2015 by the FDA may be found at the following link:

http://www.fda.gov/downloads/Drugs/GuidanceComplianceRegulatoryInformation/Guidances/UCM417290.pdf

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Medicare Adds Payment for Chronic Care Management

By M. Thomas Langan II.

Beginning January 1, 2015, health care providers can submit claims to Medicare for staff time used for developing and implementing a care plan for a patient with at least two chronic conditions. This addition is in response to complaints from providers that they have to spend a lot of time coordinating care with numerous healthcare contacts that the patient has – time that was previously not billable. The applicable code can be submitted once per patient per calendar month. It is recommended that staff members document their time coordinating the care to support the claim.

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