What’s in the Bottle? FDA Announces New Blockchain Pilot Program for Tracking Drug Distribution

Where does my prescription come from? Has it been altered or diluted? Can I trust the label? With millions of prescriptions filled each year, quality control and security across the pharmaceutical supply chain seems like a herculean task. In an attempt to slay this proverbial hydra, the Food and Drug Administration (FDA) developed a new pilot program – the DSCSA Blockchain Interoperability Pilot (the “Blockchain Pilot”) – which aims to use blockchain to create a secure electronic, interoperable system that tracks and traces certain prescription drugs as they are distributed in the United States. Continue Reading

Cross-Plan Offsetting in the Balance: UnitedHealth Group, Inc. Petitions the Supreme Court to Allow Cross-Plan Offsetting; Response to be Filed on or before July 31, 2019

In its decision, the Court concluded that UnitedHealth Group, Inc. (“United”) was not authorized to engage in “cross-plan offsetting.” What is cross-plan offsetting? It is a “self-help” practice that third party administrators (“TPAs”) of employer-funded health plans (“ERISA Plans”) engage in by offsetting alleged overpayments made to an out-of-network provider under one TPA-administered ERISA Plan by withholding payments to the same provider under a different TPA-administered ERISA Plan. Cross-plan offsetting is not an issue for in-network providers since most, if not all, in-network contracts include very specific definitions of what an overpayment is and how it may be resolved. However, for out-of-network providers, there is no contract in place and this often leads to disagreements about what should be considered an overpayment and how overpayments may be resolved. From the TPA’s perspective, cross-plan offsetting alleviates the need to wait for the resolution of an overpayment dispute to recapture overpayments made by the TPA to the provider. From the provider’s perspective, cross-plan offsetting is the TPA version of “robbing Peter to pay Paul.”

Sound complicated? Cross-plan offsetting is complicated! However, notwithstanding its complications, cross-plan offsetting is effective. In fact, it is so effective that on May 30, 2019, United filed a Petition for Writ of Certiorari asking the United States Supreme Court to overturn the Eighth Circuit’s decision and allow United and other TPAs to continue using cross-plan offsetting as a way to recover alleged overpayments. Continue Reading

Medical Devices – Artificial Intelligence and Reactions to FDA’s Proposed Oversight

Originally posted on the Sheppard Mullin FDA Blog on June 25, 2019.

In April of this year, the US Food and Drug Administration (FDA) released a discussion paper, Proposed Regulatory Framework for Modifications to Artificial Intelligence/Machine Learning (AI/ML) – Based Software as a Medical Device (SaMD), which proposed a novel regulatory framework for artificial intelligence (AI)-based medical devices.  The public docket closed on June 3, 2019, and FDA received over one hundred comments from manufacturers, industry associations, and other interested parties. The comments vary in support of FDA’s framework and largely urge FDA to align with external stakeholders that are already developing industry standards and clarify the agency’s expectations under the proposed framework. Continue Reading

CMS Proposes Changes to Medicare Wage Index that Would Increase Reimbursement Rates to Rural Hospitals at the Expense of Urban Hospitals

On May 3, 2019, the Centers for Medicare & Medicaid Services (“CMS”) published a comprehensive proposed rule (“Proposed Rule”) to revise the Medicare payment structure for inpatient prospective payment systems (“IPPS”) hospitals. According to the preamble of the Proposed Rule, the purpose of the Proposed Rule is to bump up Medicare’s reimbursements to rural hospitals, some of which receive the lowest rates in the country.

Unfortunately for urban hospitals, any proposed changes in the Medicare reimbursement system must be budget-neutral; therefore, any increase in rural hospital reimbursement must be matched with an equal and offsetting decrease in urban hospital reimbursement.[1] As reported in the Kaiser Health News on June 3, 2019, the Kaiser Family Foundation likens this to a Robin Hood-like effect – robbing from the rich to give to the poor. Like in Sherwood Forest, there are winners and losers in the world of Medicare reimbursement. Continue Reading

More Data. More Choices. Better Care? New Executive Order Relies on Market Principles to Improve American Healthcare

On June 24, 2019, President Trump signed an executive order that purports to create a more transparent health care market for both patients and providers. The order attempts to decrease the prevalence of opaque pricing, while increasing the amount of health care data available to health care users and stakeholders alike.

The executive order lays out a series of deadlines by which regulations, proposals and recommendations must be completed that intend to generate: (i) more informed patient choices, (ii) enhanced health care analytics, and (iii) greater financial options for individual payment. Continue Reading

The VA Mission Act: Expanding Access to the VA Telemedicine System

On June 6, 2018, President Trump signed the “John S. McCain III, Daniel K. Akaka, and Samuel R. Johnson VA Maintaining Internal Systems and Strengthening Integrated Networks Act” a.k.a. the VA MISSION Act of 2018 (“VAMA”) into law, a $52 billion reform bill aimed at improving access to, and the quality of, medical services provided to veterans by the Department of Veterans Affairs (the “VA”). We explored the pros and cons associated with VAMA in a June 12, 2018 blog article that we have linked here. Continue Reading

NLRB Limits Union Access Rights to “Public Spaces” of Employers

On June 14, 2019, the National Labor Relations Board (NLRB or Board) issued an important decision clarifying whether and when an employer may lawfully exclude union organizers from its privately owned public spaces. Under then extant Board caselaw, where an employer had invited the public to enter or use space on its private property, the employer could not lawfully exclude union organizers from entering and using that same “public space” because that exclusion was considered to be unlawful discrimination in violation of Section 8(a)(1) of the National Labor Relations Act (NLRA or Act). The Board’s decision in UPMC, 368 NLRB No. 2, rejects this generalized “public area” doctrine, redefines what is and isn’t unlawful discrimination for the purposes of determining a union’s right of access to an employer’s public spaces and, broadens employer’s legal options under the NLRA.  Continue Reading

Blockchain and Healthcare Innovation: A City, Academia, and Technology Firms Join Forces to find Blockchain Solutions to Address Public Health Challenges

As the excitement around blockchain technology continues to grow in the healthcare sector, there is an increasing realization that blockchain has the capability of addressing many of the data and information-related challenges that the healthcare world has been focused on for years – such as providing access to comprehensive interoperable electronic health records and ensuring data continuity for patients who receive treatment in multiple healthcare settings. As this realization has taken hold, healthcare stakeholders and constituents are seemingly trying to “make up for lost time” with new blockchain initiatives being announced on a regular basis seeking to turn theoretical applications into real-world blockchain solutions.[1] Continue Reading

SCOTUS Rejects CMS DSH Policy, Calls CMS Guidance Practices Into Question

Earlier this week, the Supreme Court upheld a D.C. Circuit Court decision vacating a policy of the Centers for Medicare and Medicaid Services (“CMS”) that would have “dramatically – and retroactively – reduced payments to hospitals serving low-income patients.” Azar v. Allina Health Services, 587 U.S. __ at 1 (2019). The Supreme Court’s Allina opinion (“Op.” or the “Decision”) is critically important for hospitals that rely on Medicare disproportionate share (“DSH”) payments and has broader implications for the way that CMS issues the voluminous guidance that the agency applies to Medicare-participating providers and suppliers and other CMS-contracted entities. Continue Reading

Supreme Court Addresses False Claims Act Statute of Limitations

On May 14, 2019, the Supreme Court issued a decision in the case of Cochise Consultancy, Inc. v. United States ex rel. Hunt, No. 18-315, 2019 WL 2078086 (U.S. May 13, 2019). In its decision, the Supreme Court essentially added four years on the time available for private suits to be brought by whistleblowers/relators under the False Claims Act (“FCA”), regardless of whether the Government decides to intervene. As a result of this decision, entities that submit claims to the Government for payment – including Medicare, Medicaid and other Federal healthcare program-participating providers and suppliers – may find themselves facing a private whistleblower complaint more than six years after the alleged conduct took place. As described in the following article, “Supreme Court Addresses False Claims Act Statute of Limitations,” that was previously posted on the Sheppard Mullin False Claims Act Defense Blog on May 14, 2019, the Court decision now allows for the possibility that a whistleblower could inform an appropriate U.S. official of material facts relating to an alleged FCA violation after the whistleblower’s own six-year statute of limitations has already tolled, so long as the action is brought within 10 years of the alleged violation. Continue Reading

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