Health Care Counsel

Arent Fox's health care law blog offers news, analysis, and insights for the health care industry.

Health Care Counsel
ERISA
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Examining State Law Claims Under ERISA At Second Circuit

Medical providers seeking to pursue state law claims for payment from health care payers scored a win in the Second Circuit last month in a holding that affirms providers’ ability to hold health care insurers and other payers to their payment representations and promises.

In McCulloch Orthopaedic Surgical Services PLLC v. Aetna Inc., No. 15-2150, 2017 (2d Cir. May 18, 2017), the Second Circuit set out to decide “whether [the Employee Retirement Income Security Act] ERISA completely preempts an out-of-network health care provider’s promissory estoppel claim against a health insurer where the provider (1) did not receive a valid assignment for payment under the health care plan and (2) received an independent promise from the insurer that he would be paid for certain medical services provided to the insured.” The court held that ERISA does not completely preempt this type of claim.

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E-Health, HIPAA / Health Privacy & Security, Telemedicine & E-health
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Congress on Notice: Health Care Cybersecurity is in Critical Condition

Earlier this month, the Health Care Industry Cybersecurity Task Force sent to Congress the Report On Improving Cybersecurity in the Health Care Industry. The Report provided a grim assessment that “health care cybersecurity is a key public health concern that needs immediate and aggressive attention.” Consistent with its mandate under the Cybersecurity Act of 2015, the Task Force included in the Report “six high-level imperatives” to address cybersecurity issues in health care with a total of 21 recommendations and 104 suggested action items to implement those recommendations.

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Prescription Drug Pricing & Government Price Reporting
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Pharma Industry Take Note: Maryland Passed Price-Gouging Prohibition
Alleged price gouging by drug manufacturers and distributors has been in the news the past several years, causing many lawmakers to threaten to take action. Maryland has become the first state to do so – on May 26, 2017, Governor Larry Hogan of Maryland informed the Maryland Speaker of the House that he would permit H.B. 631, also known as the “Prohibition Against Price Gouging for Essential Off-Patent or Generic Drugs”(437th Gen. Assemb., Reg. Sess. (Md. 2017)) to become law. The Act takes effect October 1, 2017, and makes Maryland the first state in the nation to prohibit “price gouging” by manufacturers or wholesale distributors of generic prescription drugs. Of note, Governor Hogan did not sign the bill into law, rather he decided not to veto it, rendering the bill law after 30 days.
 
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ERISA
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Church-Affiliated Benefit Plans Exempt from ERISA: What the Supreme Court’s Ruling Means for Healthcare Providers

The Supreme Court issued a stunning ERISA decision on Monday, overturning the law in the three federal circuits as to what constitutes a “church plan” that is exempt from ERISA’s requirements. In Advocate Health Care Network v. Stapleton, 581 U. S. ____ (2017), issued June 5, 2017, the Court held that ERISA’s “church plan” exemption applies to plans sponsored by hospitals that are affiliated with churches, regardless of whether or not those plans were actually established by a church. This decision reverses contrary rulings by the Third, Seventh, and Ninth Circuits.  While this case arose out of pension plans sponsored by church-affiliated entities, the decision will apply equally with respect to health and welfare plans. 

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Prescription Drug Pricing & Government Price Reporting
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Reminder to Generic Manufacturers: Q1 2017 Unit Rebate Amounts Billed by State Medicaid Programs Will NOT Include Additional Discounts

Pursuant to the Bipartisan Budget Act of 2015, manufacturers participating in the Medicaid Drug Rebate Program must pay an Additional Discount on Non-Innovator products to the extent the Average Manufacturer Prices (“AMPs”) of their products are rising faster than inflation when compared to a base line period. However, the Centers for Medicare & Medicaid Services (“CMS”) stated in April 14, 2017 e-mail correspondence to manufacturer technical contacts listed for the Drug Data Reporting for Medicaid System (“DDR”) that DDR system updates needed to automate the Additional Discount calculation on Non-Innovator products were not finalized in time and, as such, first quarter 2017 Unit Rebate Amounts for Non-Innovator products will NOT include the calculated Additional Discount, if any.

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E-Health, False Claims Act, Telemedicine & E-health
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Not Just for Health Care Providers Anymore: Health IT Vendor Pays $155 Million to Settle False Claims Act Case
Last week, eClinicalWorks (ECW)—an electronic health records (EHR) vendor—settled an intervened False Claims Act case with the Department of Justice for $155 million. This novel FCA settlement illustrates that health care fraud prosecution extends far beyond just the health care providers and payors that directly submit claims to Medicare, Medicaid and other federal health care programs, and can extend liability to subcontractors, agents, and vendors.
 

EHR Tech Must Meet “Meaningful Use” Standards

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Pharmaceutical & Device Compliance
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How FDA’s Program Alignment Initiative Will Impact Industries: An Insider’s Perspective

In his first major announcement since taking office, FDA Commissioner Scott Gottlieb, M.D. finalized a major reorganization plan that had been under development since 2013. The reorganization, termed “Program Alignment,” reassigns field staff based on product type rather than geographic regions. Under the new organizational model, inspection and compliance staff in FDA’s Office of Regulatory Affairs will specialize in the five commodities and two enforcement areas:

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Pharmaceutical & Device Compliance, Prescription Drug Pricing & Government Price Reporting, Wholesaler & Pharmacy Benefits Compliance
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HRSA Delays Effective Date of 340B Final Rule…Again

In a notice published in the Federal Register on Friday, May 19, 2017, the Health Resources and Services Administration announced that it would further delay the effective date of a final rule applicable to all drug manufacturers participating in the 340B Drug Pricing Program.

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E-Health, mHealth, Telemedicine & E-health
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Tally-ho! Flurry of Legislative Activity Signals Ease on Federal Barriers to Telehealth

What’s New?

In recent months, a number of bills have been introduced or passed in Congress that would ease federal health care programs’ restrictions on telehealth. Currently, Medicare has strict limitations on telehealth. But bipartisan groups of Senators have introduced two bills seeking to expand telehealth services covered by Medicare.

Similarly, bipartisan groups in both the Senate and House introduced bills to eliminate the Department of Veterans Affairs’ restrictions on telehealth across state lines. Introduction of these bills comes just a few months after Congress approved a defense bill making telehealth services available under the US Defense Department’s TRICARE program, the health plan for active duty military members and their families.

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