st annual health law conference - gray plant mooty€¢ extended the statute of limitations period...
TRANSCRIPT
Welcome!
Gray Plant Mooty’s
21st Annual Health Law Conference
Thursday, July 20, 2017
Where We’ve Been and Where
We’re Going: The Health
Regulatory Year in Review
Jesse A. Berg, Gray Plant Mooty
Gray Plant Mooty
21st Annual Health Law Conference
Agenda
• Fraud and Abuse
• HIPAA
• Medicare and Medicaid Programs
• Liability
• Public Health
• Pharma & Device
• Antitrust
Healthcare Executive Top
Concerns from 2016
1. Financial Challenges
2. Government Mandates
3. Patient Safety and Quality
4. Personnel Shortages
5. Patient Satisfaction
https://www.ache.org/pubs/Releases/2017/top-issues-confronting-hospitals-2016.cfm
My SSN is Where?!?
• Medicare Access and CHIP Reauthorization Act (MACRA) required CMS to remove Social Security Numbers from Medicare cards
• Gone by April, 2019
Fraud & Abuse Developments:
Bad News First
Recoveries
• The Health and Human Services Office of Inspector General (OIG) Expects $5.6B in FY16 Recoveries – 844 criminal actions against individuals or
entities
– 708 civil actions
• Includes false claims, unjust enrichment, CMP settlements, and administrative recoveries
https://oig.hhs.gov/reports-and-publications/archives/semiannual/2016/sar-fall-
2016.pdf
Recoveries
• The Department of Justice recovered
over $4.7B from False Claims Act cases
in FY16
– Third highest annual recovery in False
Claims Act history
– $2.5B from healthcare industry
– $1.7B from the financial industry
https://www.justice.gov/opa/pr/justice-department-recovers-over-47-billion-false-
claims-act-cases-fiscal-year-2016
Recoveries
https://www.law360.com/articles/845515/5-fca-issues-to-watch-as-trump-takes-
power
Recoveries
https://www.bna.com/intervention-false-claims-n73014460786/
Increases in Penalty
Amounts!
• FCA Penalty Increases: – Prior to adjustment: $5,500 - $11,000 per claim range
– After 8/1/2016: $10,781 - $21,563 (6/30/16)
– After 2/3/2017: $10,957 - $21,916 (2/3/17)
• HHS Penalty Increases: – First inflation catch-up adjustments published 9/6/16
(examples): • Willful/knowing certification of false SNF resident adjustment:
+106%
• Improper hospital, CAH, SNF billing: +150%
• Stark self-referral violation: +59%
• Sunshine Act self-reporting violation: +8.7%
– Second inflation update published 2/3/17 – applied additional inflation “multiplier”:
• E.g., penalty for Stark violations increased from $15,000 to $23,863 and then to $24,253
OIG Final Rule Expands
Exclusion Powers
• Effective February 13, 2017
• Incorporates recent statutory changes, early
reinstatement provisions, and recent policy changes
• Updates definitions for common terms
• Expands OIG’s authority to those who refer patients and
those who have been convicted of obstruction or
interference with investigations related to federal
healthcare program funds
• Expands the materials the OIG may consider when
determining the length of exclusion
• Extended the statute of limitations period during which
the OIG may effectuate exclusion to 10 years
https://www.gpo.gov/fdsys/pkg/FR-2017-01-12/pdf/2016-31390.pdf
Holding Individuals
Responsible for Corporate
Wrongdoing
• 2015 DOJ Memo “Individual Accountability for Corporate
Wrongdoing” in action
– Warner Chilcott managers sentenced for HIPAA
violations: forfeitures, fines, home confinement
– DME Co. and co-owners pay more than $12M US
Healthcare Supply DOJ Release 9/7/16
• Used a fictitious entity to make unsolicited phone
calls to Medicare beneficiaries in order to sell
them medical equipment
– Nursing home and executives pay $30M Bloomberg
BNA 9/29/16
Holding Individuals
Responsible for Corporate
Wrongdoing Cont.
• Former non-profit CEO sentenced to 18 years in federal
grant fraud case – DOJ Release 10/14/16
– Funneled millions in federal grant money into private
companies
• Georgia doctor sentenced to prison for healthcare fraud
– DOJ 10/24/16
– Filed over $1M in health insurance claims for surgical
monitoring procedures he never performed
– Sentenced to 2 years, 3 months in prison and
ordered to pay over $1M in restitution
• DOJ’s new website on individual accountability:
https://www.justice.gov/dag/individual-accountability
Did you hear…
• Seth Lookhart, a dentist in Anchorage,
Alaska, has been charged with 17
counts of Medicaid fraud and “unlawful
dental acts”
– Used IV anesthesia unnecessarily
– Let office manager extract teeth
– Filmed himself extracting a patient’s tooth
while riding a hoverboard
https://www.vice.com/en_nz/article/8qp83b/this-dentist-filmed-a-tooth-
extraction-on-a-hoverboard-prosecutors-say
False Claims Act
• New types of whistleblowers: – Competing provider groups
• US ex rel. Johnson v. Golden Gate Nat’l Senior Care, LLC, 2016 BL 410206, D. Minn., No. 08-cv-1194, (12/9/16) (alleged billing issues)
– Pharmacy Vice President • US ex rel. Greenfield v. Medco Health Sys. Inc., 2016 BL 427966, D.N.J., No.
12-cv-522, (12/22/16) (alleged kickbacks in the form of charity donations)
– Sales/marketing reps • US v. Forest Pharmaceuticals Inc., E.D. Wis., No. 12-cv-00366, settlement
12/15/16 (alleged marketing of unapproved drugs, inducements to physicians
– Chemist and Patent Litigator for GSK • Lawton ex rel. US v. Takeda Pharm. Co., 842 F.3d 125 (1st Cir. 2016),
(11/22/16) (alleged off-label promotion)
– Physician/Hospitalist • US ex rel. Oughatiyan v. IPC the Hospitalist Co. DOJ 2/6/17
– Hematologist/Oncologist • Mercy Hospital Springfield No. 15-cv-3283 WD MO, settlement 5/18/17
Escobar Aftermath
• Universal Health Services Inc. v. U.S. et al. ex rel.
Escobar et al resolved a circuit split and established the
requirement that in order to be actionable under the
FCA, a misrepresentation about compliance must be
material to the government’s payment decision. 136 S.Ct
1989 (6/16/16)
– Materiality requirement is “demanding”
• Since Escobar:
– Pharmaceutical company Genentech off the hook
after relator failed to state a claim that was material
to the government’s decision to pay. US ex rel.
Petratos v. Genentech, Inc., 855 F.3d 481 (US Ct.
App. 3rd Cir., 2016)
Use of Statistical Extrapolation
in FCA Cases
US ex rel. Michaels v. Agape Senior Community Inc. No. 15-
2147 (4th Cir. 2/14/17)
• Medically unnecessary nursing home claims
• Relator wanted to use statistical sampling to prove falsity
• Court refused to address whether a sampling of alleged false
Medicare/Medicaid hospice claims can be used to prove
liability across tens of thousands of disputed claims
– Question of fact for the jury trial
• Held that the government has absolute veto power and can
withhold approval of settlement between parties
– Siding with 5th,6th Circuits
Limiting FCA Liability: Not
Everyone can be sued
• The first circuit held that the University of Massachusetts
Medical School is not a person subject to suit under the
FCA because it is an arm of the state. US ex re. Willette
v. University of Massachusetts U.S., No. 15-1437, review
denied (Jan. 9, 2017).
• Oregon federal district court held that Oregon Health
Sciences University (OHSU) is an ‘arm of the state’ and
therefore immune to FCA claims. United States ex rel.
Doughty v. Oregon Health & Scis. Univ., No. 3:13-CV-
01306-BR, WL 1364208 (April 11, 2017).
Is Waiving Co-Pays
Insurance Fraud?
YES:
Aetna v. Bay Area Surg. Mgmt. No.1:12-cv-217943
• $37.5M fraud verdict against ASCs who waived copays – Also sold shares in ASCs to referring MDs at nominal price
Aetna v. Humble Surg. Hospital No. 4:12-cv-01206
• $41M for waiving co-pays and charging Aetna excessive fees
NO:
CIGNA v. Humble Surg. Hospital No. 4:13-cv-3291
• OON provider won $13M counterclaim after CIGNA sued for fraud – CIGNA imposed claims processing methodology that was not part of plan
Kissing Camels Surg. Ctr. v. Centura No. 1:12-cv-03012
• Fee waivers are not fraud; insurers had no obligation to pay inflated rates
Fraud & Abuse Developments:
The Good News
Changes to Civil Monetary Penalties
“Beneficiary” Inducement
CMP – Specific exemptions to “remuneration” rule revised to
include:
• Copayment Reductions for Outpatient Department
Services
• ACA-Mandated Exceptions
– Remunerations that promote access to care and low
risk of harm
– Retailer rewards program
– Financial need-based exception
– Waivers of cost-sharing for the first fill of a generic drug
• Increase in “nominal value” amount exception
Changes to Anti-kickback
Safe Harbors
Anti-kickback Safe Harbor Revisions include:
• Modification to referral services safe harbor (addressing
volume or value)
• Protection for certain types of cost-sharing waivers
• Protection for remuneration between Medicare
Advantage organizations and federally qualified health
centers
• Protection for free or discounted local transportation
options
– Local transport by eligible entities to established patients
– No “luxury”, air or ambulance
– No marketing
Interesting Anti-Kickback
Developments
• Advice of counsel defense: – To assert, must hand over all attorney
communications related to AKS (US ex. rel. Lutz)
• One Purpose Test (U.S. v. Nagelvaart): – 7th Circuit Court of Appeals upheld decision that AKS
violated if “any part or purpose” of payment is to induce referrals
• Percentage-based payments: – Medpricer.com charged 1.5% fee for facilitating
medical supply purchases
– Breach of contract case, CT judge said fee violated AKS where govt. beneficiaries involved
• Discount safe harbor: – U.S. ex. rel. Herman v. Coloplast Corp. involves
claims that DME manufacturer paid suppliers improper discounts to recommend purchase or order of DME from manufacturer
Interesting Stark Law
Developments
• CMS issues new SRDP (Apr. 2017) – Longer lack back period
• Restored ban on per-click and percentage-based leases
• MO hospital pays $34 million to settle FCA claim that “volume or value” standard violated in payments to infusion MDs
• Court blesses “pile of paper” theory of compliance (U.S. ex. rel. Emanuele v. Medicor)
• More attention to “indirect” compensation: – U.S. ex. rel. Bingham v. Baycare FCA case
• Any Advisory Opinions?
Interesting Stark Law
Developments
Fraud and Abuse Cases
• Shire will pay $350M to resolve kickback, FCA
allegations
– Dinners, drinks, travel, etc., to induce MDs to use skin graft
product
• Forest Labs to pay $38M to resolve FCA, kickback
allegations
• Tenet Hospitals will pay $513M and admit kickbacks
• eClinicalWorks, an electronic health record vendor, will
pay $155M to resolve FCA allegations
• Albert Einstein Health Network and Einstein Practice
Plan:
– 10/16, following self-disclosure, Einstein agreed to pay $1 million
to resolve issue of billing Medicare for physician services that
lacked documentation and/or not medically necessary
Fraud and Abuse Cases
• Rhine Drug Co. and Andrew Clements Jr. will pay $2.175M to resolve FCA and CSA allegations in the largest FCA settlement with a pharmacist or pharmacy in history
• Genesis HealthCare Inc. will pay $53.6M to resolve allegations of improper billing and medically unnecessary care
Biodiagnostic Laboratory Services • The company pled guilty to violation of the kickback statute
by paying for referrals that netted them roughly $100M
• 43 total convictions, including 29 MDs – Largest number of medical professionals ever prosecuted for bribery
– Most recently, a 79 year old doctor was convicted of accepting $200K in bribes for referring roughly $3M in business to BLS
https://www.law360.com/articles/896629/nj-doc-cops-to-taking-bribes-in-
100m-lab-referral-scheme
Recent Agency Guidance
• DOJ Publication – Criminal Division 2/8/17 – Evaluation of Corporate Compliance Programs
• Series of questions federal prosecutors “may ask in making an individualized determination” of how to judge a corporation’s compliance efforts in a fraud investigation
• HHS-OIG Publication – Compliance Resource Guide 3/27/17 – Not a checklist
– List of common elements to apply when making individualized determination
• Continued focus on Physicians – Alert on HHAs having financial relationships with MDs
– 4 years in a row MD-specific alerts from OIG
– 8 OIG settlements with MDs on their medical director arrangements
• OIG Advisory Opinions – 2 in 2017
– 13 in 2016
– Similar themes as in past years
OCR Cracks Down
Enforcement in 2016:
• $23.5M in fines (previous record was $8M in 2014)
• Average settlement of $1.81M
• 16M patient records potentially affected by breaches
• 33% of reportable breaches related to hacking
• Healthcare providers account for 79% of breach targets
Law360 (1/13/17)
Enforcement in 2017 (as of May 31st):
• $16.7M in HIPAA related fines
https://www.hhs.gov/hipaa/for-professionals/compliance-enforcement/data/enforcement-
highlights/index.html
Hacking Healthcare
• Banner Health hacked, 3.7M affected Bloomberg BNA HLR (8/11/16)
• Ransomware Attacks
– 10M patient records from four providers posted for sale on the dark web; providers refused to pay ransom
– There were an average of 4,000 ransomware attacks per day in 2016 https://www.justice.gov/criminal-ccips/file/872771/download
– HHS issues guidance indicating that ransomware attacks are breaches and entity must comply with HIPAA breach notification procedures. Party can still “overcome” breach presumption, however. https://www.hhs.gov/sites/default/files/RansomwareFactSheet.pdf
– FTC chair threatens companies that leave data vulnerable to ransomware with FTC enforcement Law 350 (9/8/16)
Help!
– A quick response cyber attack checklist is available from the Office of Civil Rights
– Explains all the steps that covered entities should take in response to a cybersecurity incident
https://www.hhs.gov/sites/default/files/cyber-attack-checklist-06-2017.pdf
HIPAA Enforcement
• Metro Community Provider Network FQHC paid $400,000 to settle allegations that it lacked appropriate safeguards for ePHI after hackers accessed the ePHI of 3,200 individuals
• Memorial Hermann Health System will pay $2.4M to resolve allegations that it improperly disclosed PHI through press releases
• Catholic Healthcare Services $650,000 fine against BA (theft of unencrypted smartphone)
• Oregon Health and Science Univ. $2.7 million fine because no BAA with Google
• Advocate Healthcare Network $5.5 million fine for 3 data breaches due to laptop theft (4.4 million patients)
• Presence Health $475,000 fine for slow breach reporting (approx. 100 days)
• Center for Children’s Digestive Health $31,000 for no BAA
Other HIPAA Updates
• OCR Phase 2 Audits
• HHS working on new accounting of disclosures rule and HITECH “reward” for whistleblowers regulation
• OCR engaging in more extensive investigations of breaches affecting fewer than 500 individuals
• Additional FAQs coming (minimum necessary, social media, etc.)
• Various HHS guidance (e.g., cloud computing, public health activities, audit protocols, etc.)
HIPAA Cases – What are
your employees up to?
• Hospital nurse kept a Twitter account of
her patients over 2 year period
– Called herself “diva of death…mistress of
mayhem”
– She had 1300 followers
– Posted picture of bloody treatment room
• Several tweets had potential to id patient
– Family has sued nurse and hospital for
negligence and intentional infliction of
emotional distress
Law 360, August 1 & 5, 2016
Medicare Developments
Is Value and Quality-Based
Payment Really Here to Stay?
• 1991—Medicare Participating Heart Bypass demo
• 1993—Medicare Cataract Surgery Alternative Payment demo
• 2005—Physician Group Practice demo
• 2008—MEDPAC Report: recommends bundles
• 2009—Medicare Acute Care Episode demo
• 2010—Affordable Care Act…
Is Value and Quality-Based
Payment Really Here to Stay?
• 2013—Bundled Payments for Care Improvement Initiative
• 2015—Medicare Access and CHIP Reauthorization Act (MACRA)
• 2015—Oncology Care Model
• 2016—Comprehensive Care for Joint Replacement Model
• 2016—Comprehensive Primary Care + Model
• March, 2016—HHS reached first goal of tying 30% Medicare to quality ahead of schedule
Value-Based: Where is it
happening?
MACRA Implementation
• CMS working to implement MACRA – Repealed Sustainable Growth Rate (SGR)
methodology for updating the Medicare Physician Fee Schedule (MPFS)
– After a period of stable annual updates, MPFS updates will be made according to either:
• Merit Based Incentive Payment System (MIPS) or
• participation in advanced Alternative Payment Models (APMs)
• Transition period begins in 2017:
– Submit data by 3/31/18
– Adjustments occur in 2019
MACRA: Why Does it Matter?
• MIPS: – Default system mandates adjustments to FFS
based on performance in improving quality, reducing costs
– Consolidates existing quality reporting (PQRS, MU and VB modifier) and adds “improvement”
• APM: – Incentives to participate in certain payment
models (ACOs, primary care, oncology care, CCJR, cardiac rehab, other bundles, etc.)
• MIPS = payment method for most practitioners
MACRA Resources
https://www.cms.gov/Medicare/Quality-Initiatives-Patient-
Assessment-Instruments/Value-Based-Programs/MACRA-
MIPS-and-APMs/MACRA-MIPS-and-APMs.html
• Summary of the rule and a variety of resources and training materials
https://www.brookings.edu/blog/up-front/2016/12/15/key-takeaways-from-
the-final-macra-rule-plus-remaining-challenges/
• Key takeaways
http://www.aafp.org/news/macra-ready/20161026macrasummary.html
• An executive summary of the final MACRA rule
Hospital Site Neutrality and
Provider-Based Changes
• 3 Important laws: – 2015 Bipartisan Budget Act
– 21st Century Cares Act
– 2017 OPPS Rule
• No new “off campus” PBDs after 11/2/15
• Limited exceptions: – Off-campus PBD prior to 11/2/15
– On-campus PBD
– “Mid-build” exception
– Others
• Relocation: if PBD moves from physical address, loses exception
• Discretionary exception for natural disasters, health/safety, etc.
• Can expand services in PBD, but CMS monitoring
• 2017/2018 payment: 50% of OPPS rate
• Payment after 2018: TBD
Mandatory Episode Payment
Model Implementation Date moved
to 1/1/18
Bundled episode payment for certain cardiac, orthopedic cases:
• Acute myocardial infarction
• Coronary artery bypass graft
• Surgical hip/femur fractures
Summary:
• Administration delayed effective date
• Episodes begin upon admission to anchor hospital for specific DRGs and end 90 days after discharge.
• Includes almost all related care
• Builds on CCJR Model
https://innovation.cms.gov/initiatives/epm
Hospital Readmission
Penalties
• 2,597 hospitals will be subject to reduced
Medicaid reimbursements due to readmissions
penalties in FY17.
• Conditions at issue: heart attacks, heart failure,
chronic lung disease, pneumonia, hip and knee
replacements, CABG
• Total yearly withholdings to equal $528 million
CMS Emergency
Preparedness Requirements
• Deadline for compliance: November 15,
2017
• Four Core Elements:
– Risk Assessment and Emergency Planning
– Communication Plan
– Policies and Procedures
– Training and Testing
https://www.cms.gov/Medicare/Provider-Enrollment-and-
Certification/SurveyCertEmergPrep/Emergency-Prep-Rule.html
Medicare Appeals
Backlog
• HHS must clear Medicare claim appeals
backlog in Four Years
– AHA v. Burwell, No. 14-851 (JEB) WL
7076983 (Dec. 5, 2016)
• HHS says backlog targets are
unattainable without additional
resources
– HHS filed motion for reconsideration
12/15/16; denied 1/4/17
Medicare LTC Developments
• Medicare coverage is still being denied for failure to improve, despite the improvement standard no longer being in effect https://www.nytimes.com/2016/09/13/health/medicare-coverage-denial-improvement.html
• CMS’ June 5th proposal finalizes overhaul of LTC regulations; drops pre-dispute arbitration ban after the ban was blocked by district court AHCA 6/9/17
• Pending: CMS issues advance notice of proposed rulemaking (ANPRM) to revise the SNF PPS case mix methodology
– In March 2017 MedPAC urged lowering Medicare skilled nursing facility (SNF) payments and revising payment system to link payments to patients’ characteristics and costs of care; comment period extended by 60 days on 6/13/17
Nursing Home Conditions of
Participation
• Final Rule 81 Fed. Reg. 68688 (10/4/16)
First major overhaul of nursing home regulations in 25 years
– Projected cost per facility: $63K first year; $55K subsequent years
Highlights/Lowlights
• Prohibits pre-dispute binding arbitration agreements – This portion temporarily enjoined by Amer. Health Care Assn. v.
Burwell, 2016 WL 6585295 (N.D. Miss. 11/17/16)
• Grants state and federal auditors access to various internal quality assurance records
– Confidentiality issues?
• Problematic language “willful infliction of injury” could be interpreted to include unintended results
• Must develop and implement baseline care plan for each patient within 48 hours of admission
DMEPOS Developments
• CMS cuts Medicare DMEPOS rates – Reductions range from 50-80%
– Cures Act delayed full implementation
• OIG Report: Substantial increases in Medicare for noninvasive pressure support ventilators OEI 9/22/16
• OIG estimates that removing the lump sum purchasing option for all power mobility devices (PMDs) would have saved Medicare Part B $10.2M from 2011-2014. 5/31/17
Clinical Lab Developments
• Protecting Access to Medicare Act
(PAMA)
– New method of setting CLFS rates
• Finalized 2017 Medicare lab payment
determinations posted 11/16
• CMS announced 60-day extension of
PAMA clinical lab reporting deadline to
5/30/17
• Pathologists subject to MACRA?
EMTALA Investigations
• The number of hospitals investigated or
cited for EMTALA violations has
declined over the last decade
2005 2014
% of hospitals investigated 10.8% 7.2%
% of hospitals formally cited 5.3% 3.2%
http://www.annemergmed.com/article/S0196-0644(16)30201-3/abstract
EMTALA Developments
• Penalties have doubled: – $103,000 per violation (100 + beds)
– $52,000 per violation (<100 beds)
• Clarified the definition of ‘responsible physician’ to include on call physicians
• Case Law Developments: – Patient died of misdiagnosed stroke, court granted
summary judgment because no expert testimony was presented at trial to establish whether the hospital’s treatment altered the course of the condition. Scott v. Memorial Health Care System, 660 Fed. Appx. 366 (6th Cir. 2016)
– Hospital owned urgent care centers must comply with EMTALA. Friedrich v. South County Hospital Healthcare System, 221 F.Supp.3d 240 (D.R.I. 2016)
Liability
Did you know…
• A recent observational study found that
patients treated by foreign medical
graduates had lower mortality rates than
those treated by US medical graduates
at the same hospital.
http://www.bmj.com/content/356/bmj.j273
Class Action Filed Over
EpiPen Pricing
• A putative class action was filed in federal district court in Minnesota on June 2, 2017
• Alleges that Pharmacy Benefit Managers (PBMs) Prime Therapeutics LLC, CVS Health Corp., Express Scripts, Inc., and Express Scripts Holding Co. violated their fiduciary duties under ERISA by contributing to the inflation of EpiPen pricing from $100 to $600 since 2007
Apology Laws
• A recent report found that state apology
laws have not limited medical malpractice
liability.
– Apology laws increased the risk of
malpractice lawsuits against non-surgeons by
46%
• Increased probability of higher payouts per claim
– Had no effect on the probability of lawsuit or
the amount of payout claim for non-surgeons
https://ssrn.com/abstract=2883693
Unsolicited Marketing Calls &
Faxes
• Telephone Consumer Protection Act prohibits automated calls to cellphones without “prior express consent”
• 42 U.S.C. §1395m(a)(17) prohibits marketing calls to Medicare patients without consent or prior customer relationship
Recent Settlements & Cases
• US Healthcare Supply & Oxford Diabetic Supply – $12M for unsolicited calls to Medicare patients to sell medical equipment
• Jefferson Rad. Oncol. v. Advanced Care, No. 2:15-cv-01399 (E.D. La.)
– $9.3M to settle class action over junk fax campaign
• Dakota Medical v. RehabCare Group, No. 1:14-cv-02081 (E.D.Cal. 4/19/17)
– $25M for unsolicited junk faxes promoting various health services
Public Health
Did you know…
A recent, comprehensive, outcomes-based
survey found that:
• The mortality rate is 3X higher at the worst
hospitals than it is at the best hospitals, and
• Patients are 13X more likely to have
complications at the worst hospitals than at the
best
http://journals.plos.org/plosone/article?id=10.1371/journal.pone.0166762
CDC’s 7 Major Threats to
Public Health in 2017
• Zika and Pregnancy
• Antibiotic Resistance
• Cancer
• Prescription Drug Overdose
• Global Health Security
• Tobacco Use
• Rapid Response to Outbreaks
http://www.beckershospitalreview.com/quality/cdc-s-7-public-health-threats-in-
focus-for-2017.html
Opioid Crisis
Opioid Crisis News
Roundup
• HHS announced $70M in grants to communities and healthcare providers to combat the opioid addiction epidemic https://www.hhs.gov/about/news/2017/05/31/hhs-announces-over-70-million-in-grants-to-address-the-opioid-crisis.html
• FDA has asked pharmaceutical company Endo to withdraw the drug Opana ER from the market https://www.fda.gov/NewsEvents/Newsroom/PressAnnouncements/ucm562401.htm?source=govdelivery&utm_medium=email&utm_source=govdelivery
• A former doctor was sentenced to 25 years in prison after being convicted of running a pill mill and causing a patient’s death. https://www.law360.com/articles/935184/ex-pa-doctor-sentenced-to-25-years-for-running-a-pill-mill
• The Missouri Attorney General has filed suit against three large drug manufacturers for fraudulently misrepresenting the risks posed by the drugs they manufacture and sell AHLA 6/21/17
Opioid Epidemic Increases
Hospital Visits
Pharma & Device
Open Payments/Sunshine
Data from CMS for CY15
Open Payments/Sunshine Data
from CMS for CY15
• Drug, Device Co. Payments to Doctors
Top $7B for Second Year
– Bloomberg BNA 1/26/17
• Study Shows Physician Prescribe Fewer
brand name drugs when teaching
hospitals restrict access to reps
– ProPublica 5/2/17
Other Pharma & Device
Developments
• Chicago will require pharmaceutical rep licenses in spite of industry objections Chicago Tribune 11/16/16
• CMS, FDA will continue parallel reviews of innovative medical devices
• FDA delays controversial off-label communications rule
• HHS further delays rule on 340B CMPs, ceiling prices
• Cardinal Health and subsidiary agree to pay $44M for failure to report suspicious orders from pharmacies to authorities http://www.techtimes.com/articles/190063/20161226/cardinal-health-agrees-to-pay-44m-to-settle-allegations-of-suspicious-painkiller-shipments.htm
FTC v. Penn State Hershey
Med. Ctr.
• The FTC sought a temporary injunction to
complete administrative investigation into
whether the merger of Penn State Hershey
Medical Center and PinnacleHealth would
substantially lessen competition in the area
• The district court denied the injunction on the
grounds that the FTC’s geographic market was
“unrealistically narrow” (5/9/16)
• The Third Circuit reversed and ordered the
injunction, pending FTC proceedings (9/27/16)
• The parties called off the merger (10/2016)
US v. Aetna, et al., 2017 WL 325189 (D.D.C. 1/23/17)
• Enjoined Aetna/Humana merger, ruling that it would substantially reduce competition for Medicare Advantage Plans in 364 countries and 21 states
• Declared that MAPs are a distinct market from original Medicare plans
• Criticized insurers for abandoning some ACA exchanges in retaliation of merger challenge – Aetna’s departure from exchanges in FL, GA,
MO
• February 14, 2017: Parties abandon the merger
US v. Anthem, 2017 WL 685563 (D.D.C. 2/21/17)
• Ruled that Anthem/Cigna merger would substantially reduce competition in national accounts (5000+ employees) in 14 states
• Claimed savings from provider discounts were not merger specific since carriers had already obtained them on their own
• CIGNA’s witnesses undermined Anthem’s projection of future savings
Feb. 14, 2017: Cigna sued Anthem to terminate merger and recover $13B in stockholder restitution and $1.85B breakup fee
April 28, 2017: D.C. Cir affirmed based on failure to show extraordinary efficiencies needed to offset anticompetitive effects (2017 WL 1521578)
May 12, 2017: Anthem abandons merger, asserts that Cigna is not entitled to breakup fee since it sabotaged deal
US v. Charlotte-Mecklenburg
Hospital Authority, No. 3:16-cv-00311 (W.D.N.C. 3/30/17)
• Alleges that North Carolina’s healthcare
system uses its market dominance to
steer patients away from lower cost
hospitals
• Survived a motion for judgment on the
pleadings
Break
Tales from the Front Line:
Dueling Perspectives on Health
Care Enforcement
A Panel Discussion Featuring:
Carolyn Ham, Minnesota Department of
Human Services
Jon Hopeman, Gray Plant Mooty
Susan Gaertner, Gray Plant Mooty
Gray Plant Mooty
21st Annual Health Law Conference
Carolyn Ham | DHS Inspector General
July 20, 2017
1
Dueling perspectives on health care enforcement
Overview
• Introduction to the Office of the Inspector General (OIG)
• Introduction to the Inspector General
• Medical Assistance Spending in Minnesota
• The Future of Fraud, Waste and Abuse Detection at OIG
Minnesota Department of Human Services | mn.gov/dhs 80
OIG overview
OIG
Background Studies Licensing
Financial Fraud Abuse
Investigations
Minnesota Department of Human Services | mn.gov/dhs 81
Background Studies
• Sylvia is interested in becoming a personal care assistant (PCA) so she applies with one of the personal care provider organizations in town.
• She fills out the application and is told that she must submit to a criminal background study with fingerprints before she can be hired.
• Sylvia has her fingerprints taken.
• Sylvia was convicted of misdemeanor theft in Minnesota, 15 years ago, and is worried she may be disqualified from working as a PCA.
• A few days later, she receives notice she is eligible to work as a PCA.
Minnesota Department of Human Services | mn.gov/dhs 82
Licensing
• Sylvia’s nephew, Raul, was in a serous car accident and suffers from a traumatic brain injury, which makes him unable to independently care for himself. Raul’s mother, Gillian, cares for him, but she takes him to an adult day center(ADC) several days a week to give herself respite.
• Sylvia offers to pick up Raul one day from the ADC, Careful Hands. When she visits she notices the bathrooms are filthy and there do not seem to be very many staff to care for all of the people receiving services.
• She is concerned about Raul’s well being so she calls DHS Licensing and describes what she observed.
Minnesota Department of Human Services | mn.gov/dhs 83
Licensing
• Sylvia’s call is handled by Licensing Intake. After determining the complaint did not center on allegations of maltreatment of a vulnerable adult but instead seemed to involve licensing violations, the complaint is forwarded to a licensing investigator for follow up.
• Derrick, the licensor, makes an unannounced visit to Careful Hands and observes several licensing violations.
• The Licensing Division issues a written correction order that details the deficiencies and requires Careful Hands to correct the problems. If Careful Hands doesn't make the necessary corrections, the Licensing Division may take further licensing actions, such as impose a fine, place conditions on its license or even revoke its license.
Minnesota Department of Human Services | mn.gov/dhs 84
Fraud
• Raul’s mother Gillian, removes him from Careful Hands due to her concerns about health and safety at the center.
• While she is visiting another licensed ADC, Watchful Care, the owners of the center approaches her and tells her that if Gillian will state that Raul gets care five days a week instead of three, he will pay her $300 a month.
• This arrangement seems fishy to Gillian so she calls the DHS fraud hotline and reports what the owner told her.
Minnesota Department of Human Services | mn.gov/dhs 85
Fraud • Gillian’s tip is triaged in SIRS and the assigned investigator, Julie,
determines that this is the third tip received about Watchful Care paying kickbacks.
• A case is opened and Julie visits Watchful Care to collect the attendance records for the past three months.
• While there, Julie notices there are only two patients present. After one hour, 25 additional people arrive in a couple of vans. The owner of Watchful Care says the attendance records are not available.
Minnesota Department of Human Services | mn.gov/dhs 86
Criminal prosecution
• After completing the investigation and determining that it has a credible allegation of fraud, SIRS suspends payment to Watchful Care.
• SIRS, as required by state and federal law, also refers the case to the Medicaid Fraud Control Unit of the Minnesota Attorney General’s Office for potential criminal prosecution.
Minnesota Department of Human Services | mn.gov/dhs 87
Inspector General Carolyn Ham
• Appointed DHS inspector general in March
• Previously, associate general counsel for Optum; more than 10 years in the payment integrity unit, specializing in health care fraud prevention
• Assistant Ramsey County attorney
• Eleven years as assistant attorney general for the state Attorney General’s Office, specializing in consumer and business fraud.
Minnesota Department of Human Services | mn.gov/dhs 88
Medical Assistance actual SFY2016
179,923
[VALUE]
209,379
Average monthly enrollees
$6.3B $3.0B
$1.6B
Total expenditures (state and federal) = $10.9
billion Elderly &disabled(inc. LTC)
Children& families
89 Minnesota Department of Human Services | mn.gov/dhs
More detail on MA spending
• Home and Community Based Services totaled $3.57 billion; PCA services were $912 million.
• About 49 percent of MA expenditures are for managed care; the remainder – 51 percent – are fee-for-service
• About 77 percent of 1.1 million enrollees are in managed care organizations (MCOs)
• MCOs represent half the spending and serve about three quarters of the enrollees.
Minnesota Department of Human Services | mn.gov/dhs 90
2016 SIRS completed investigations by provider type
Minnesota Department of Human Services | mn.gov/dhs 91
22 29 21 16 9
189
8 10 12
45
0
20
40
60
80
100
120
140
160
180
200
The future of fraud, waste and abuse in health care
New tools and resources
• Provider self audits; survey of claims
• Expanded use of extrapolation
• Focus on other health care providers – out of more than 100 provider types, SIRS currently investigates 17 types.
• Focus on waste and error as well as fraud and abuse.
Minnesota Department of Human Services | mn.gov/dhs 92
Additional SIRS staff
• Currently, 14 SIRS positions
• Plans are to add 10 FTEs
• Will investigate additional provider types
• Focus on providers that have demonstrated noncompliance with requirements and those identified as having fraud risk indicators
Minnesota Department of Human Services | mn.gov/dhs 93
Contact information
Carolyn Ham
DHS Inspector General
651-431-2798
Minnesota Department of Human Services | mn.gov/dhs 94
Thank You
95
Carolyn Ham
Minnesota Department of Human Services
Jon Hopeman
Gray Plant Mooty
612.632.3256
Susan Gaertner
Gray Plant Mooty
612.632.3355
Bob Johnson, Minnesota Department of Health
Timothy Johnson, Gray Plant Mooty
Julia Reiland, Gray Plant Mooty
Land of 10,000 Barriers:
Tips and Tools for Exchanging
Health Information in
Minnesota
The Foundations in Privacy Toolkit
96
Agenda
• Minnesota Department of Health e-Health Initiatives and Privacy and Security Activities
• Privacy, Security, and Consent Management for Electronic HIE Grant
• Overview of the Foundations in Privacy Toolkit
– What, When, and Where?
• Using the Toolkit
– Implementation and customization
– Upcoming in-person trainings and webinars
– Hypotheticals
97
Trivia!
98
Question #1
• How many times does your heart beat
per day?
1) 250,000
2) 476,500
3) 103,459,00
4) 100,000
99
Question #1
And the answer is…
1) 250,000
2) 476,500
3) 103,459,00
4) 100,000
100
Minnesota e-Health Initiative Privacy & Security Activities
Bob Johnson, MPP
Office of Health Information Technology
July 20, 2017
Minnesota e-Health Initiative
A public-private collaboration established in 2004
Legislatively chartered
Coordinates and recommends statewide policy on e-Health
Develops and acts on statewide e-health priorities
Reflects the health community’s strong commitment to act in a coordinated, systematic and focused way
102
“Vision: … accelerate the adoption and effective use of Health Information
Technology to improve healthcare quality, increase patient safety, reduce
healthcare costs, and enable individuals and communities to make the best possible health decisions.”
Minnesota e-Health Initiative
Participate in the Minnesota e-Health Initiative
Sign up to receive Weekly e-Health Update
Participate in Workgroups
Privacy and Security
Health Information Exchange
Bob Johnson, MDH Office of Health Information Technology [email protected], 651-201-4856
103
HIE Supports Individual, Population, and Community Health
104
Access Patient Information Manage Patients
Support
Community
Health
Key
Ele
men
t
A. Engage and
Activate
Individuals
and
Caregivers
B. Engage and
Activate all
Health
Providers
C. Extend Care
Coordination
into the
Community
D. Monitor
Cohorts and
Attributed
Populations
E. Manage
Population
Health
Key
Pre
mis
e
(De
sire
d O
utc
om
es)
Individuals who
have access to
their health
information are
more engaged,
more responsible
for their health
and have better
health outcomes.
Providers who
are engaged,
with access to all
necessary
information at
the point of care,
help contribute
to better health
outcomes for
patients.
Individuals are
healthier when
health care and
related services are
coordinated across
providers.
Cohorts and
attributed
populations have
better health and
financial outcomes
when program
decisions are made
using information
generated with
enhanced data
analytics.
Health policy,
emergency
preparedness, and
public program
decisions are
improved when
based on accurate
& timely
population health
information.
http://www.health.state.mn.us/e-health/hie/docs/hieframework.pdf
Recap: 2017 MHRA Legislative Report
• Direct: Study the impacts and costs of the Minnesota Health Records Act
• Public request for information: September 2016
• Submitted to Legislature in February 2017
• Collected both patient and provider/payer perspectives (86 responses)
• Patient responses reflected a range of opinions, with little agreement on the positive or negative impacts of the MHRA.
• Providers indicated consensus that MHRA negatively impacts patients due to:
• Interrupted care coordination
• Duplicative labs, test and imaging; delays in care
• Signing many forms
• In general going against patient expectations that providers share relevant health information with the patient’s other providers.
105
http://www.health.state.mn.us/e-health/legrpt/docs/rfi-health-record-act2017.pdf
Considerations from Findings
• The MHRA does not adequately support the majority of patients whose preference, as reported by providers, is to share their health information with their providers.
• Some clarifications to operationalize the current MHRA intentions are needed.
• Providers need education, resources and legal assistance to understand MHRA requirements, especially providers in smaller practices. Patients also need education and resources.
• Implementing MHRA often requires a manual work around process for obtaining patient consent outside of the electronic health record system digital workflow.
• It will be difficult for Minnesota to achieve its goals related to coordination of care for complex patients, improved quality of care, and cost savings due to varied interpretations of the consent requirements in the MHRA.
106
HIE Legislative Study Directive
• To assess MN's legal, financial, and regulatory framework for HIE, including the requirements the MN Health Records Act;
• Make recommendations for modifications that would strengthen the ability of Minnesota health care providers to:
• securely exchange data
• in compliance with patient preferences, and
• in a way that is efficient and financially sustainable.
• Due February 2018
107
Project Timeline
Legal analysis of MN laws and workgroup review Mar – Aug
Environmental scan of HIE models in other states Apr - May
Stakeholder interviews to learn where organizations are at, where they are going, and how they will get there
Apr – Jun
Key stakeholder meetings to share preliminary findings and develop proposed HIE framework
Jul - Aug
Develop themes and recommendations with input from the project’s Steering Team and MN e-Health Advisory Committee
Aug - Sep
Public comment period October
Compile report and recommendations Oct – Nov
MDH internal review process Dec – Jan
108
Key Elements
• Initial themes around which recommendations may be framed:
• Governance
• Financing / sustainability
• Compliance (i.e., full participation)
• MN Health Records Act
• Population health and value-based care
• Services needed to support different purposes (continuity of care between providers, manage attributed patients, population/community health)
109
HIE Study Information
• Updates posted at: http://www.health.state.mn.us/e-health/hie/study/
• MN HIE Framework and Guidance to Support Accountable Health: http://www.health.state.mn.us/e-health/hie/docs/hieframework.pdf
• Contact: Karen Soderberg, [email protected] or 651-201-3576
110
MN e-Health privacy & security tools
www.health.state.mn.us/e-health/privacy
111
Standard Consent Form to Release Health Information
112
Minnesota Model Notice of Privacy Practices
113
Summary of Proactive Monitoring Procedures
114
Security Risk Analysis Tip Sheet
115
HIPAA, Minnesota’s Health Records Act, and Psychotherapy Notes
116
Other Community Resources
• U.S. Department of Health and Human Services (HHS)
• Health Information Privacy
• Office of the National Coordinator for Health IT
• Guide to Privacy and Security of Health Information
• Substance Abuse and Mental Health Services Administration (SAMHSA)
• Health Information Technology
• Your professional associations
117
Question #2
118
What is the longest nose documented on
a living person, according to the Guinness
Book of World Records?
1) 3.46 inches
2) 4.52 inches
3) 6.02 inches
4) 8.12 inches
Question #2
And the answer is…
119
1) 3.46 inches
2) 4.52 inches
3) 6.02 inches
4) 8.12 inches
GPM & MDH Partnership: Privacy, Security, and
Consent Management for Health
Information Exchange Grant
120 Source: Hi3 Solutions: Accelerating HIE standards conformance
The Foundations in
Privacy Toolkit
121
Foundations in Privacy Toolkit
What and When
• What: Compilation of material that can
be used to address common barriers to
exchanging information in Minnesota
– Available to providers free of charge
– Contains:
• Template Policy and Procedure Documents
• Flow Charts
• Template Agreements
• When: Full Toolkit is now available!
122
Foundations in Privacy Toolkit
Table of Contents
• Definitions
• Alcohol and Drug Abuse Records
– Policy: Disclosures of Alcohol and Drug Abuse Records
– Flowchart: Confidentiality of Alcohol and Drug Abuse Patient Records - Am I Subject to 42 CFR Part 2?
• Breach
– Policy: Breach of Unsecured PHI
• Business Associates
– Policy: Disclosing Information to Business Associates
– Flow Chart: How to Identify a “business Associate” For Health Care Providers
– Checklist: Business Associate Checklist – Required and Optional Terms
– Template Agreement: Business Associate Agreement
– Template Agreement: Subcontractor Business Associate Agreement
• Data Use Agreements
– Template Agreement: Data Use Agreement
123
Foundations in Privacy Toolkit
Table of Contents (Continued)
• Emergency Situations
– Policy: Disclosing Information in a Medical Emergency
• Fundraising
– Policy: Use and Disclosure of PHI for Fundraising
• Government Providers
– Policy Overlay: The Data Practices Act
• Health Care Operations
– Policy: Using and Disclosing Information for Health Care Operations
• HIPAA Authorization
– Policy: Authorization for Use and Disclosure of PHI
– Checklist: HIPAA Authorization Checklist
• Judicial and Administrative Proceedings
– Policy: Disclosures for Judicial and Administrative Proceedings
• Marketing
– Policy: Use and Disclosure of PHI for Marketing
124
Foundations in Privacy Toolkit
Table of Contents (Continued)
• Mental Health Records
– Policy: Using and Disclosing Mental Health Records
– Flow Chart: Are the Notes “Psychotherapy Notes” Under HIPAA?
• Minimum Necessary Standard
– Policy: Minimum Necessary for Requests for, or Uses or Disclosures of, PHI
• Minnesota Law
– Policy: Consent to Disclose Health Information Under Minnesota Law
• Out-of-State Providers
– Policy: Exchanging Information with Out-of-State Providers
• Payment
– Policy: Using and Disclosing Information for Payment Purposes
• Research
– Policy: Use and Disclosure of PHI for Research
125
Foundations in Privacy Toolkit
Where is it?
• Electronic Versions available on the
Gray Plant Mooty website – http://www.gpmlaw.com/Practices/Health-
Law/Foundations-in-Privacy-Toolkit
126
Question #3
True or False: You burn more
calories sleeping than you do
watching television.
1) True
2) False
127
Question #3
And the answer is…
1) True
2) False
128
129
Using the Toolkit
Implementation and Customization
Disclaimer: Gray Plant Mooty and MDH are not providing legal advice
• Documents should be customized prior to use – Toolkit is a foundation for HIPAA, MHRA, Data
Practices Act, and Part 2 compliance—does not address every scenario
– Add in legal requirements/standards that are not yet addressed but applicable to your organization
– Remove and replace template language (e.g., “[Organization]”)
• You will need to update and amend the Toolkit documents as the law changes
130
Using the Toolkit
Hypotheticals
131
Using the Toolkit
Hypo 1: Business Associates
Scenario: A provider engages an independent
individual to perform medical transcription
services
The provider could use the following Toolkit
documents: • Flowchart: How to Identify a “Business Associate” For
Health Care Providers
– Use to determine if the individual qualifies as a “Business
Associate”
132
133
Using the Toolkit
Hypo 1: Business Associates
Once BA relationship
is confirmed, the
provider could use the
Template Business
Associate
Agreement
134
Review GPM notes and customize as appropriate
Example:
Using the Toolkit
Hypo 1: Business Associates
135
Using the Toolkit
Hypo 1: Business Associates
Finally, use Toolkit Policy: Disclosing Information to Business
Associates
– Use to educate workforce on how information may be
disclosed to the medical transcriptionist
– Don’t forget to customize and implement!
136
Question #4
According to a study by Microsoft, what
percentage of household computers in
the United States are unprotected (i.e.
no antivirus software)?
1) 33%
2) 26%
3) 17%
4) 42%
137
Question #4
And the answer is…
1) 33%
2) 26%
3) 17%
4) 42%
138
Using the Toolkit
Hypo 2: HIPAA Breach
Scenario: An employee at a health plan with access to health records has a sticky note on her laptop with her login information. The employee’s laptop is stolen from the employee’s home as part of a routine break-in. Laptop uses single factor authentication (log in
and password).
139
Using the Toolkit
Hypo 2: HIPAA Breach
• Use Toolkit Policy: Breach of Unsecured
PHI to guide assessment of situation
• Policy implemented, and workforce trained,
prior to situation (Hopefully!)
140
Using the Toolkit
Hypo 2: HIPAA Breach
Steps:
1. Notification of Privacy/Security Official
2. Conduct documented risk assessment to
determine if privacy incident is a breach.
Includes:
1. Determining and documenting if the violation meets
any of the regulatory exceptions to the definition of
Breach
2. Analyzing four risk assessment factors
3. Notification to patients, HHS, and media as
appropriate
• Ensure the notice satisfies the content requirements
141
Regulatory Exceptions
• 2013 Omnibus Rule Preserved 3
Exceptions to “Breach”:
– Unintentional use by a workforce member at
CE/BA, done in good faith, within scope of
authority and no further impermissible
use/disclosure
– Inadvertent disclosure within CE/BA, with no
further impermissible use/disclosure
– Disclosure where unauthorized recipient not
reasonably able to retain unsecured PHI
142
“Low Probability” Assessment
• Under Final Rule, no notification necessary if CE/BA demonstrates low probability that unsecured PHI has been compromised
• CE/BA has burden to prove this low probability based on four factors:
1. Nature and Extent of Unsecured PHI Involved
2. The Unauthorized Person Who Used The Unsecured PHI / To Whom Unsecured PHI Disclosed
3. Whether Unsecured PHI Actually Acquired / Viewed
4. Extent To Which Risk to Unsecured PHI Has Been Mitigated
143
Hypo 2: HIPAA Breach
Is there a “breach”?
– Apply the four factors:
• A huge extent of PHI is likely available in the
health plan’s system
• We don’t know who might access it with the
stolen credentials, but it could be someone
with malicious intent
• There is no indication any unauthorized
person actually viewed the PHI
• Can the CE quickly mitigate the loss by
changing the employee’s login credentials?
144
Hypo 2: HIPAA Breach
• The key likely depends on: – How quickly the employee discovered and
reported the theft
– What kind of access controls are maintained by CE
– How quickly CE responded to the report
• The Security Rule requires CEs to implement procedures to regularly review system activity. For example, the CE could create audit logs and access reports. – Thus, a compliant CE could determine if an
unauthorized user accessed PHI after the theft
145
Timing of Notification
• All notifications must be made without unreasonable delay – No later than 60 calendar days after discovery,
or date breach would have been discovered with reasonable diligence
– Burden on notifying entity to demonstrate that:
• All required notifications were made
• Explain any delays
• 60 day period not tolled by time spent in analysis or investigation
• Limited delay permitted if requested by law enforcement
146
Using the Toolkit
Hypo 2: HIPAA Breach
• Template Breach policy contains
additional helpful guidance
– Creation of a Privacy Response Team
– Delay requested by law enforcement
– Document retention
– Guidance on Minnesota law, “Breach of the
Security of the System”
• Remember to customize this policy to
your organization
147
Future Trainings
• Webinars – Will be available on certain topics
• Currently Available: – Toolkit Overview
– HIPAA Breach Analysis
– Preparing for a HIPAA Audit: How to Improve Compliance Before It’s Too Late
– Check Gray Plant Mooty website: http://www.gpmlaw.com/Practices/Health-Law/Foundations-in-Privacy-Toolkit
– Sign up for mailing list
• In-Person Events: – September 13, 2017: Minnesota Association of
Community Mental Health Programs (MACMHP) Conference
– November 14, 2017: Care Providers of Minnesota Annual Convention
148
Question #5
• During your lifetime, how many pounds
of food will you eat?
1) 60,000
2) 26,000
3) 49,000
4) 77,000
149
Question #5
And the answer is…
1) 60,000
2) 26,000
3) 49,000
4) 77,000
150
Comments or Questions?
151
Bob Johnson
MDH Office of Health IT
651.201.4856
Timothy Johnson
Gray Plant Mooty
612.632.3208
Julia Reiland
Gray Plant Mooty
612.632.3280
Lunch
A plated lunch will be served in
the atrium. Out the doors and to
the right – past registration.
Integration Across the Health Care
Delivery Continuum:
Past, Present and Future
Jennifer Reedstrom Bishop, Gray Plant Mooty
Sarah Duniway, Gray Plant Mooty
Gray Plant Mooty
21st Annual Health Law Conference
Overview
• Consolidation trends
• Current issues
• Key considerations in a consolidation
transaction
154
Hospital Merger Activity
Staying Strong
155
Ownership of Minnesota
Hospitals, 2014 132 Total Hospitals
156
Largest Minnesota Hospital
Systems, 2004-2014
157
MN Health Care Affiliations
158
MN Health Care Affiliations
159
Essentia Health Invests $14 Million in Grand Rapids
Community Health
Posted Date: 7/1/2017
By
Essentia Health will invest $14 million dollars by expanding its Grand
Rapids Clinic and becoming partner of Lakewood Surgery Center. The
project is designed to offer more health choices to the residents of Itasca
County and surrounding areas
Outpatient Care/Physician Clinics
160
Clinic Consolidations/Affiliations(Willmar MN-) ACMC Health and Rice
Memorial Hospital in Willmar announced Wednesday they have taken
the initial steps to create a new, regional health system in partnership
with CentraCare Health, based in St. Cloud. Earlier this month Rice
officials denied there was any effort to be sold to CentraCare. In a
news conference Wednesday, Rice CEO Mike Schramm said the
proposed partnership does not involve any sale or change of
ownership...
161
Rice Memorial Hospital, ACMC
and CentraCare announce
intention to create partnership
May 25, 2017
Clinic Affiliations/Acquisitions
Health System
Consolidations: Wisconsin
162
SSM Health will acquire Congregation
of Sisters of St. Agnes' Wisconsin
hospitals Beth Jones Sanborn, Managing Editor SSM Health has signed a letter of intent with The Congregation of Sisters
of St. Agnes to acquire two of their sponsored Wisconsin entities, the
systems announced Wednesday.
Terms of the deal for SSM to acquire Agnesian HealthCare based in Fond
du Lac and Monroe Clinic based in Monroe were not disclosed. Due
diligence is expected to take several months
Payor Consolidation
• Aetna - Humana
& Anthem –
Cigna: 2 Major
Insurer Mergers
Blocked in 2017
163
Long Term Care
• Trend in senior housing consolidation which began
around 2011 is beginning to slow down nationally with
transaction dollar volume decreasing into Q1 2017.
164
Senior Housing New
Growth
165
Current Issues What drives the discussion
today? • Containing costs and improving value
• Improving quality
• Long-term goals – Can both parties get to where their vision is
without a partner?
• Capital/technology investments
• Specialist recruiting
• Payor/Medicare drive to outcome-based reimbursement – Need for coordination of care across the
continuum
166
Other common reasons
• Generational shift – Leadership retirements
• Efficiencies in administration and use of resources
• Elimination of duplicate program services
• Expansion of services
• Enhanced image or reputation
• Perceived improved financial stability
• Geographic expansion
167
Looking forward What makes a
consolidation/affiliation work?
• Shared vision/mission
• Clearly articulated expected outcomes of
Plan A (consolidation/affiliation)
– State them in measurable terms such as
• “30% increase in overall revenue”
• “10% decrease in administrative expense”
• “serve an additional 500 people next year”
• Clearly defined Plan B
– Plan A is only as good as Plan B is understood
– Need to compare negotiation positions with Plan
B at every step
168
What makes a
consolidation/affiliation
work?
• Consistency with mission – Mission is not services, so expansion or
reduction in services could be consistent with mission
– Test negotiations against mission regularly
• Strong and steady leadership – Both executive and board
– Willing and able to act against self-interest
• Knowing when to walk away – If deal isn’t as good as Plan B, it isn’t the
right approach
169
170
A Range of Available
Relationships
Joint
Venture
Purchased
Services –
Shared Services
Agreement –
Management
Agreement
Acquisition of
Entity
Merger Collaboration/
Affiliation
Agreement
Independence Interdependence Dependence
Independent
Operations
Service Line Co-
Management
Key Deal Terms in a
Consolidation/Affiliation
• Shared Vision/Mission – Both near-term and long-term
– Imperative that each party has a clear “end state” in mind
• Deal should be close enough to that end state to make the operational changes worth it
• Money – Identify expectations
• Purchase price
• Capital investment
• Enhanced balance sheet
• Other funding needs
171
Key Deal Terms in a
Consolidation/Affiliation
• Governance – balancing the past with the future – Philosophy of governance
• Size and role of the Board in management
• Committee structure
– Legacy representation vs. more integrated governance
• Short-term; Long-term
– Honoring past traditions and values • e.g., past religious affiliation to non-
denominational system
• Members with voting rights?
172
Key Deal Terms
• Leadership – Structure
• Who will lead?
• What roles will existing leaders have? – Defining competencies and job descriptions
• Who gets to decide what? – Hire/Fire decision-making of leaders
– Compensation and Benefits • Retention agreements
• Change of control bonuses
• Severance agreements
• Assuring reasonable compensation (if nonprofit)
• Termination – Can parties walk away? When? Why?
173
Key Deal Terms
• Naming
• Control and on-going support of existing
programs and agreements
• Stakeholder interests
• Continuation of staff/layoffs
• Physical location of entity, headquarters
174
Key Deal Terms
• Who will have ability to enforce deal
terms after closing?
– Committee of legacy board members?
– Third party community foundation?
– Former hospital foundation?
• How long should deal term
commitments continue?
175
Issues to Consider in the
Transaction
• Due diligence – Get to know the other party
– Identify legal liabilities and compliance issues to be addressed and resolved
– Identify all the assets being consolidated
– Identify consents and notices that may be needed
• Lenders
• Landlords
• Contracting parties
• Staff notices/WARN Act
• Licensing and regulatory authorities
176
Issues to Consider
• Antitrust implications – Triggered?
– Strategy if so
• Ensure 501(c)(3) analysis, if applicable – Bond financing compliance
– 501(r) analysis
• Licensing – Are licenses transferable?
– Can new licenses be obtained?
– Compliance with CHOW
177
Issues to Consider • Payor relationships
– Will payors agree to contract with consolidated entity?
– Are assumptions about rates as to combination realistic
– Are payors supportive or hostile
• Publicity and stakeholder concerns – Public announcements
– Who will object?
• Insurance – Consolidated coverage going forward
– Tail coverage for past
178
Issues to Consider
• IT and operational systems integration
• Staffing
– Benefits implications
– Harmonizing compensation and incentive
systems
• If nonprofit/for-profit:
– Transferability of grants, programs, assets
– Compliance with state laws re: change in
use
– Ensuring FMV deal terms
179
Conclusions
• Consolidation continues to be significant trend in health care landscape – Shifting from high-cost to lower costs sites of
service • Hospitals/health systems to outpatient clients, long-
term care
– Lots of activity in rural communities, regional hubs
– Big drivers are need to reduce costs, reduce duplication, share technology, expand capital, and smarter use of specialists
– Generational shift also growing factor • Causes significant payor mix issues (what was
private pay is now Medicare)
180
181
Questions?
Jennifer Reedstrom Bishop
Gray Plant Mooty
612.632.3060
Sarah Duniway
Gray Plant Mooty
612.632.3055
What’s New and What Now?
Update on Employment and Labor Law
for Health Care Employers
Megan Anderson, Gray Plant Mooty
Mark Mathison, Gray Plant Mooty
Gray Plant Mooty
21st Annual Health Law Conference
Year in Review
• New Administration Developments
• Local Sick Time and Minimum Wage
Ordinances
• Expansion of LGBTQ Rights
• Other Key Employment Law Developments
• Key Labor Law Developments
183
Developments Under
the New Trump Administration
184
FLSA Overtime Rule
• Rule was to be effective 12/1/16
– Would have increased minimum “white collar” exempt
salary from $455 to $913 per week ($47,476 annually)
– Would have increased exempt “highly compensated”
annual salary to $122,148
• TX federal court judge enjoined enforcement in
late November 2016; DOL appealed, but sought
multiple extensions due to administration change
• June 2017 - DOL announces it will issue a
Request for Information (RFI) on overtime rule
and seeks limited appellate review of TX case
185
Other Administration Roll-Backs
• April 2017 – “Blacklisting” rule retracted
– Would have required federal contractors / bidders
on $500,000+ contracts to disclose all “violations”
(adjudicated or not) of 14 labor / employment laws
– Restricted use of arbitration provisions for sexual
harassment, assault or discrimination claims
– Required increased pay reporting
• April 2017 - “Volks” rule retracted
– Would have extended OSHA’s enforcement
authority over recordkeeping violations from six
months to five years
186
OSHA Developments
• August 2016 – New Anti-Retaliation
Standards
– Standards target safety incentive programs and
drug testing that could deter injury reporting
• May 2017 – US DOL suspends OSHA
Electronic Reporting Rule
– Rule, if it becomes effective, will require
employers with 250 or more employees to
submit annually in electronic form (currently,
submission is upon request) and OSHA will
publish employers’ de-identified data
187
Administration Predictions??
• Revised Overtime Rule
• Paid Family Leave
• Immigration Changes; E-Verify Expansion
• Fewer New Laws and Regulations
• Regulation and/or Enforcement Rollback
– Federal contractors - sick pay order
– Government audits and lawsuits
– Shift in agency agendas (e.g. DOL,
EEOC, NLRB)
188
Minneapolis and St. Paul
Ordinances
189
Paid Sick and Safety
Leave
• Covered employee accrues one hour of job-
protected sick/safe leave time for every 30 hours
worked (in whole hour increments) in city
• Employer may front-load hours at start of year
• Employer may cap accrual at 48 hours per year,
but must allow rollover of up to 80 hours of
accrued, unused time
• Employees must start accruing upon hire and can
use accrued time after 90 days of employment
• No retaliation
• City workplace posters
• Must include policy in Handbook 190
Fight for $15 (Minimum Wage)
• Fall 2016 – Minneapolis City Council loses
battle to place $15 / hour minimum wage
charter amendment on November ballot
• June 30, 2017 – Minneapolis City Council votes
in favor of local $15 minimum wage
– 5 year gradual increase for businesses with over 100
employees
– 7 year gradual increase for businesses with less than
100 employees
– Exempt: State, federal, county, school district, and
University of MN employees
• St. Paul contemplating similar initiative
191
LGBTQ+ Rights in the Workplace
192
LGBTQ State and Local Laws
• 20 states (including MN) and Washington D.C.
prohibit employment discrimination based on
sexual orientation and/or gender identity
• About 225 cities/counties prohibit LGBTQ
employment discrimination
• Religious employer exemption may apply
193
Sex Orientation and Gender Identity Sex Orientation
CA, CO, CT, D.C., DE, IA, IL, HI, MA,
MD, ME MN, NM, NJ, NV, NY, OR, RI,
UT, VT, WA
NH, WI
Federal LGBTQ+ Developments
• Under Obama, EEOC made expansion of Title VII
to prohibit LGBTQ+ discrimination a priority
• EEOC agenda unchanged, for now, pending filling
of vacant appointments
• President Trump has preserved executive order
prohibiting LGBTQ+ discrimination by federal
contractors
• Mixed federal case results on whether Title VII
prohibits LGBTQ+ discrimination and on restroom
access issues
• Recent restroom access case based on ADA
“gender dysphoria” accommodation
194
Other Key Employment Law
Developments
195
New Forms / Posters
• EEO-1 Form – March 2018 for 2017 data
– https://www.eeoc.gov/employers/eeo1survey/u
pload/component-1-and-2-sample-2017-eeo1-
report.pdf
• I-9 Form – September 18, 2017
– https://www.uscis.gov/news/alerts/revised-
form-i-9-now-available
• MN Minimum Wage Poster – August 2016 – https://www.dli.mn.gov/LS/Pdf/posters/minwag
e_poster.pdf
• Minneapolis and St. Paul sick pay posters
196
Harassment Developments
• Sexual Harassment in the News
– Uber; Fox News
• Proposed EEOC Harassment Guidance
– https://www1.eeoc.gov/eeoc/newsroom/releas
e/1-10-17a.cfm
• Peterson v. City of Minneapolis, 2017 Minn.
LEXIS 195 (Apr. 12, 2017)
– Employer’s internal reporting and investigation
process tolls statute of limitations on MN
Human Rights Act claim
197
Retaliation
Developments
• Most commonly filed EEOC charge in 2016
– 45.9% of all charges (up from 44.5%)
• August 2016 – Final EEOC Guidance https://www.eeoc.gov/laws/guidance/retaliation-
guidance.cfm
• Frielander - MN Supreme Court to rule on job
duty exception to state whistleblower act
• EEOC v. No. Memorial Health Care (D. Minn.
7/6/17) - accommodation request under Title
VII is not legally protected activity for retaliation
purposes
198
Labor Law Developments
199
Joint Employer Still in Spotlight
• In 2015 and 2016, DOL issued new guidance
regarding joint employment and independent
contractor misclassification
• New guidance expanded both concepts
• June 7, 2017 – DOL retracts guidance but
made clear it didn’t alter FLSA regulations and
case law
• Browning Ferris (2015 NLRB case) pending on
appeal
200
Labor Law Update 2017
• Focus: NLRB
• What to Expect When You’re Expecting
. . . Change
– New Republican Chair
– Two New Republican Nominees
• Marvin Kaplan, Counsel at Occupational Safety
and Health Review Commission
• William Emanuel, Shareholder at management-
side labor law firm
– General Counsel term expiring
201
Labor Law Update 2017
• What is DOA Now? – DOL “Persuader Rule”
– DOL Overtime Rule
– Blacklisting
– NLRB Position on Class Action Waivers
• What is not DOA? – Joint Employer
– “Ambush” Election Rules
– Policy Reviews
– Pacific 9: Misclassification = ULP
– Jurisdiction Extensions • Religion
• Charter Schools
• Tribal Casinos
202
NLRB Joint Employer
Issues: 2017
• Browning Ferris: Directly or indirectly affect employment terms or conditions or have the power to do so even if not exercised
– This affects
• Franchises
• Staffing companies
• Organizations using contractors
• Affiliated organizations/parent-subs
• One company providing staff to another
203
Labor Law Forecast
• What’s in Store?
– Time Will Tell
– Pace of Change Depends on Cases
– Tempering Policy Reviews by NLRB
– New Test for Supervisory Status
– Revise Joint Employer Test Again
– Confidentiality of Investigations
– Broaden Religious Exemptions
– “And Much More”
204
Questions?
Megan Anderson
Gray Plant Mooty
612.632.3004
Mark Mathison
Gray Plant Mooty
612.632.3342
205
Break
Washington Update: The Debate over How to “Repeal
and Replace” the Affordable Care Act
Monica Kelley, Gray Plant Mooty
Greg Larson, Gray Plant Mooty
Gray Plant Mooty
21st Annual Health Law Conference
Agenda
• Where Are We Now?
• Overview of Repeal and Replace Plans
– House: American Health Care Act
– Senate: Better Care Reconciliation Act
• Version 1 vs. Version 2
– Senate: Repeal and Delay
• Medicaid Reform
• Drug Pricing Reform (if time)
State of the Exchanges
State of the Exchanges
What does “Repeal and
Replace” mean?
• Ten titles in the ACA I. Quality and Affordable Health Care for All
Americans
II. Role of Public Programs
III. Improving Quality and Efficiency of Health Care
IV. Prevention of Chronic Disease and Improving Public Health
V. Health Care Workforce
VI. Transparency and Program Integrity
VII. Improving Access to Innovative Medical Therapies
VIII. CLASS Act
IX. Revenue Provisions
X. Strengthening Quality, Affordable Health Care for All Americans
Reconciliation
• Reconciliation allows majority vote for
spending, tax, debt limit bills (or
combination), under 2-step process
– Step One: Budget Bill with Instructions
(Done)
– Step Two: Reconciliation Bill Making
Changes
• Limited set of tools in constrained
process
Timeline—The Bill is
Dead! Long Live the Bill!
• March 6—House Republicans unveil American Health Care Act (AHCA) bill
• May 4—AHCA passed by House
• June 14—President Trump calls AHCA “mean”
• June 22—Senate Republicans release draft Better Care Reconciliation Act (BCRA)
• June 26—Updated BCRA
• June 30—President Trump revives “Repeal Now, Replace Later” debate
• July 13—Senate Republicans unveil revised BCRA (incl. Cruz/Lee sponsored amendment)
• July 17—Senators Lee and Moran defect
Timeline—The Bill is
Dead! Long Live the Bill!
• July 17, 9:17 p.m.—Repeal!
Timeline—The Bill is
Dead! Long Live the Bill!
• July 17, 9:48 p.m.—“In the coming
days,” the Senate will do what it has
already done in 2015: repeal with two-
year delay.
Timeline—The Bill is
Dead! Long Live the Bill!
• July 18, 6:58 a.m.—Let it fail!
Timeline—The Bill is
Dead! Long Live the Bill!
• July 19, 5:46 a.m.—Better at lunchtime.
Timeline—The Bill is
Dead! Long Live the Bill!
Repeal & Delay—
McConnell Template
• Restoring Americans’ Healthcare Freedom Reconciliation Act, H.R. 3762 (2015) – Eliminated penalty for individual and employer
mandates, rather than eliminating the mandates (immediately)
– Eliminated medical device tax, insurance premium taxes, tanning tax, increased Medicare payroll and capital gains taxes (immediately)
– Ended premium tax credits, cost-sharing assistance, Medicaid expansion, small business tax credits, and repealed tax on high premium employer plans (“Cadillac tax”) (delayed)
– Did not repeal ACA reforms requiring insurers to provide specific benefits, not deny coverage based on preexisting conditions, vary premiums based only on age, tobacco use, and location
Repeal & Delay—
McConnell Template
• CBO scored H.R. 3762 in Dec. 2015 and updated it in Jan. 2017 – Estimated 18 million add’l uninsured in first
year following enactment, increased to 27 million after elimination of Medicaid expansion and insurance subsidies, and then to 32 million by 2026
– Estimated premiums in nongroup market would increase by 20 to 25% relative to projections under current law in first year, 50% after elimination of Medicaid expansion, and then to 100% by 2026
Repeal & Delay—What’s
the Replacement?
Time is a Flat Circle
July 13 BCRA – What
Changed?
• Increased funding for opioid epidemic – Was $2B in 2018
– Now $4.9B per year 2018 – 2026 in state grants plus $50M per year 2018 – 2022 for research on addiction
• The Cruz “Consumer Freedom Amendment”– beginning in 2020: – Allows insurers to offer non-ACA-qualified plans
on the individual insurance exchanges if they offer at least one qualified plan
– Provides $70B to help insurers cover high risk patients
Mandates and Penalties
ACA AHCA (House) BCRA (Senate)
Individual mandate
penalty—greater of
$695 or 2% of
income
Penalty zeroed out.
(2016)
30% premium
surcharge for
individual policy if
coverage gap of 63
days+. (2019)
Penalty zeroed out.
(2016)
6 month waiting
period for individual
policy if coverage
gap of 63 days+.
(2019)
Employer mandate
penalty—$2,000 per
employee for failure
to offer
coverage/$3,000 per
employee for
unaffordable
coverage
Penalty zeroed out. Same as AHCA.
Subsidies
ACA AHCA (House) BCRA (Senate)
Premium assistance
subsidies between 100
and 400% of Federal
Poverty Level—enough
to buy second lowest
cost silver plan
Age-based tax
credit. (2020)
Below 30: $2K
60+: $4K
Capped at
$14K/family, phased
out at $75K/$150K.
Changes to subsidies
effective 2020: available
for 0-350% of FPL;
individual contribution
based on income and
age; enough for low
level plan
Cost sharing subsidies
to those below 250% of
FPL
Eliminated in 2020.
Cost sharing not
funded through
2019.
Eliminated in 2020. Cost
sharing funded through
2019.
Age rating limited to 3:1 Age rating allowed
up to 5:1 (2018).
States can apply for
waiver for different
ratio.
Age rating 5:1. (2019)
States can choose
different ratio.
Taxes
ACA AHCA (House) BCRA (Senate)
Cadillac tax effective 2020 Delayed until 2026. Same as AHCA.
Health insurance provider
tax (suspended 2017)
Repealed. Same as AHCA.
Medical device tax
(suspended 2016, 2017)
Repealed 2017 Repealed 2018
Medicare tax on investment
income (for high earners)
Repealed 2017 Tax retained
Medicare payroll tax for
high-income individuals
Repealed 2023 Tax retained
Tanning tax Repealed 2017 Same as AHCA
Fee on branded prescription
drugs
Repealed 2017 Same as AHCA
$500K limit on deduction of
health insurance executive
compensation
Repealed 2017 Limit retained
Small business tax credit Repealed 2020 Same as AHCA
Consumer-Driven Health
Care Accounts
ACA AHCA (House) BCRA (Senate)
Health Flexible
Spending
Arrangements
limited to $2,600 (in
2017)
Limit lifted beginning
2017.
Limit lifted beginning
2018.
Health Savings
Account contribution
maximum
$3,400/$6,750 (in
2017)
20% penalty for non-
qualified distribution
Maximum increased
to be same as out-
of-pocket limit
$6,650/$13,300 (in
2018)
Penalty reduced to
10% (2017)
Same as AHCA,
plus allows HSAs to
be used (for the first
time) to pay health
insurance premiums.
Over-the-counter
medication not
payable without
prescription
OTC payable
without prescription
(2017)
Same as AHCA.
State Waivers—ACA
• ACA included Innovation waivers of
exchanges, subsidies, and mandates if
state plan:
– covers as many residents
– coverage is as affordable and
comprehensive
– Plan doesn’t increase federal deficit
State Waivers—AHCA
States could seek limited waivers for:
• Essential Health Benefits
• Community Rating Rules *, except for – gender
– age (other than 5:1 ratio) and
– health status (unless high risk pool established)
Purpose must be to:
• Reduce premiums
• Increase number of persons covered
• Advance another benefit in public interest (including guarantee of coverage for persons with preexisting conditions)
State Waivers—BCRA
• To change or eliminate exchanges, or to
make premium subsidies available for
plans sold outside exchanges
• Maintains ACA waivers, but modifies
standards:
– must cover as many residents (repealed)
– must be as affordable (repealed)
– must be as comprehensive (repealed)
– must not increase federal deficit (retained)
State Stability and
Innovation Program—
BCRA
• Short-term funding (through 2021) for state reinsurance programs
• Long-term funding (through 2026) for: – State reinsurance programs
– reducing cost of insurance for high-risk individuals
– funding to reduce out of pocket cost sharing on coverage through individual market
– direct payments to providers
• State matching funding required for long-term program
• Additional reinsurance funding to bring down cost of compliant plans
What About Employer-
Provided Coverage?
Who is covering most Americans?
• Employer-provided plans: 49%
• Individual plans: 7%
• Medicaid: 20%
• Medicare: 14%
• Other public: 2%
• Uninsured: 9%
Changes proposed for employer plans:
• Eliminate penalty for mandate
• Delay Cadillac tax
• Eliminate small business tax credit
• Encourage HSAs and Health FSAs
Medicaid – Who’s on it?
• 74 million Americans (1 in 5)
• ¼ are seniors or disabled adults
• ½ are children
• ¼ are poor adults w/out disabilities
– 6 in 10 of these are employed/in school
– 78% of these are part of a household with at
least one person working full time
Medicaid – Who’s on it?
• Medicaid Expansion: Under ACA, states may receive enhanced federal funding if they expand Medicaid coverage to adults w/out dependent children with incomes up to 133% of FPL – 2017 FPL is $11,880 for single person
– 133% of FPL is $15,800
• Under all of the Republican proposals to date, the Medicaid Expansion is phased out (AHCA, BCRA, “Clean Repeal”)
Medicaid Expansion
BCRA Medicaid Funding
Reform
• States will be assigned a Medicaid funding limit on a per capita basis for each population group: – Seniors (65 and up)
– People with disabilities
– Non-disabled children, parents
– Medicaid expansion enrollees
– Other adults
• Cap in each state calculated based on prior spending levels for each population over a defined “base period”
• From 2020 to 2024, caps will be trended forward using the medical component of CPI (or CPI plus 1% point in case of seniors and people w/ disabilities)
• Starting 2025, caps tied to CPI-Urban
BCRA Medicaid Funding
Reform
• Exempts some populations from the caps – CHIP enrollees
– Indian Health Services Medicaid recipients
– Children w/ disabilities under age 19
• States that spend over cap will have federal funding reduced by the federal share of the amount overspent in the next fiscal year
• Additional financial penalties for states w/ per capita spending of 25% or more above national average
• States have option to select block grant funding instead of per capita cap formula
BCRA Medicaid Funding
Reform
• BCRA phases out enhanced federal
funding for Medicaid Expansion
• BCRA provides new federal support for
non-Medicaid Expansion states by
creating a new safety net funding pool of
$2B to support providers serving this
population
Medicaid Expansion and
Opioid Addiction
Medicaid Expansion and
Opioid Addiction
Medicaid Expansion and
Opioid Addiction
BCRA Medicaid Eligibility
Reform
• Under current law, states are required to
allow hospitals to presume Medicaid
eligibility for uninsured low-income
patients receiving services, providing
them with temporary coverage. BCRA
eliminates this requirement starting in
2020.
• BCRA would allow states option to
redetermine eligibility every 6 months
(down from 12 under current law).
BCRA Medicaid Eligibility
Reform
• Under current law, states are required to
provide up to 3 months of retroactive
coverage to Medicaid-eligible patients. As
of October 1, 2017, Medicaid would no
longer cover this pre-application period.
• Starting October 1, 2017, states could
impose work requirements for Medicaid
– Not on seniors, people w/ disabilities, or
pregnant women
– Allows states to create some add’l exceptions
BCRA Effects on
Medicaid Program in MN
• Minnesota projected to lose $2B in federal funds in first 18 months of implementation
• Over ten years, funding losses would total $31B
• Would affect coverage of more than 1 million Minnesotans
• MinnesotaCare would lose all federal funding in 2020 unless MN obtained a waiver
Drug Pricing Reform –
The Issue
• Prescription drug expenditures make up 15-20% of total health care spending
• Spending on specialty medicines (drugs that require special handling, administration, or monitoring and used to treat chronic or complex disease) accounted for 73% of all medication spending growth 2010 to 2015
• Four of the top ten common prescription drugs have increased in price by more than 100% since 2011.
Drug Pricing Reform –
Policy Discussion
• President Trump Promised Action – Criticized industry for price gouging; lack of
competition and “getting away with murder”
– Voiced support for price negotiation; reimportation; regulatory relief; FDA reform and tax reform
• Bipartisan Criticism Continues in Congress – Oversight and calls for action on both sides of
aisle
– Wide range of legislation introduced by both sides (currently 16 HR and Sen bills in 115th Congress)
– Republicans more wary of price controls while Democrats want more government intervention
Drug Pricing Reform –
Range of Options
• Reimportation – Allows for the reimportation of drugs manufactured in
the U.S. that have been sold in other countries (often at significantly lower prices) to be purchased there and brought back to U.S.
– HHS would have to certify the safety of such drugs, which agency has not been willing to do
• Medicare Price Negotiation – Would allow federal government to directly negotiate
prices for drugs purchased under the Part D program (currently prohibited by the non interference clause)
– CBO has said would have “negligible effect on federal spending” unless gov’t also authorized to establish formulary or preferred drug tiering
– Could have impact on other markets and programs (Part B, etc.)
Drug Pricing Reform –
Range of Options
• Value-Based Pricing – Modify regulatory barriers and/or directly utilize
payment models that tie drug prices to outcome measurement
• Extension of Medicaid Rebate to Medicare – Require manufacturers to provide a set rebate
on drugs purchased for Medicare beneficiaries; similar to Medicaid
• FDA Reform – Establish new methods for FDA to empower
market competition by expediting certain types of approvals (ANDA, etc.) to address monopoly or shortage issues
Drug Pricing Reform –
Range of Options
• Transparency
– Increase transparency in the market by requiring
more disclosure on price setting; price
increases; contract arrangements; use of
rebates & coupons; R&D costs
• Pay for Delay
– Restrict or prohibit brand manufacturers’ ability
to pay generic competitors to delay market entry
• Increased Enforcement
– Encourage FTC, DOJ to more aggressively
enforce antitrust laws
Comments or Questions?
250
Greg Larson
Gray Plant Mooty
612.632.3276
Monica Kelley
Gray Plant Mooty
612.632.3367
Thank You!