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Melissa Gertler is an associate in the Corporate Practice Group and a member of the Healthcare team in the firm's Century City office.

The Biden Administration’s American Rescue Plan Act of 2021 (H.R. 1319) (the “Act”) could present an opportunity for the growth of utilization of ambulatory surgery centers (“ASCs”), continuing the trend of migration of inpatient procedures to the outpatient setting.  This shift toward the outpatient setting initially began prior to the COVID-19 public health emergency, but was accelerated by the pandemic’s effect on hospitals, likely continuing the substantial increase in investment in the ASC marketplace.
Continue Reading Biden’s American Rescue Plan Follows Trend Toward Outpatient Setting, Increase in ASC Investment

On April 1, 2021, the California Department of Health Care Services (“DHCS”) will be transitioning all Medi-Cal pharmacy benefits from managed care to fee-for-service (“FFS”).  This
Continue Reading Medi-Cal Rx: California to Transition Medi-Cal Pharmacy Benefits to Fee-For-Service

On December 3, 2020, Centers for Medicare & Medicaid Services (“CMS”) announced key details concerning a new value-based reimbursement and patient care model – the Geographic Direct Contracting Model (the “Model” or “Geo”). Geo is a geographic-based approach to value-based Medicare reimbursement and patient care that focuses on improving health outcomes and decreasing the cost of care across an entire geographic region. Direct contracting entities (“DCEs”) participating in the Model will be taking responsibility for the total cost of care of Medicare fee-for-service beneficiaries in their region.  Accountable care organizations (ACOs), health systems, health care provider groups, health plans, and other potential applicants will be permitted to participate in the Model as DCEs.  The Model intends to encourage care coordination across a physical, geographic area and to deliver care that considers a region’s particular local needs.[1]
Continue Reading CMS Announces New Geographic Direct Contracting Model: Letters of Interest Due by December 21, 2020

On November 30, 2020, the United States Department of Health and Human Services (“HHS”) Office of Inspector General (“OIG”) issued a final rule (“Final Rule”) that makes significant changes to the federal Antikickback Statute (“AKS”) safe harbor regulations as such regulations relate to the cost of prescription drugs as covered by the Medicare and Medicaid programs.  More specifically, the Final Rule amends the AKS discount safe harbor (“Discount Safe Harbor”) at 42 C.F.R. §1001.952(h) to eliminate safe harbor protection for drug discounts and rebates offered by pharmaceutical manufacturers to pharmacy benefit managers (“PBMs”) and  Medicare Part D prescription drug plan (“Medicare Part D”) sponsors.  In addition to making significant changes to the Discount Safe Harbor, the Final Rule creates two new pharmaceutical-related safe harbors: (i) a safe harbor applicable to certain prescription drug point-of-sale discounts as offered to Medicare and Medicaid beneficiaries to reduce their direct out-of-pocket prescription drug costs (the “Point-of-Sale Safe Harbor”) and (ii) a safe harbor applicable to flat fee arrangements paid by drug companies directly to PBMs for PBM services (the “PBM Service Fees Safe Harbor”).

Continue Reading Eleventh Hour Rulemaking: HHS Eliminates Safe Harbor Protections for PBM Drug Rebates and Creates Two New Safe Harbors for Point-of-Service Discounts and PBM Fixed-Fee Arrangements

On November 10, 2020, the U.S. Supreme Court heard oral arguments for California v. Texas, a case that will potentially decide the fate of the Patient Protection and Affordable Care Act (“ACA”).
Continue Reading Texas v. California: SCOTUS Hears Oral Arguments About the Constitutionality of the ACA

As highlighted in a May 2020 Milbank Memorial Fund white paper titled, “How Payment Reform Could Enable Primary Care to Respond to COVID-19,” the COVID-19 public health emergency has driven transformation in the provision of primary care services across the country.  Whether it’s the use of telehealth technology to facilitate “virtual visits” or the development of new treatment protocols to identify and treat patients who need behavioral health support to manage the emotional challenges endemic to the public health emergency, changes in primary care delivery have drawn increased attention to the need for concomitant changes in the way primary care is financed.
Continue Reading Primary Care First: CMS’s New Value-Based Approach to Primary Care

On Sunday, September 13, 2020, President Trump signed an Executive Order, the next in a series of Executive Orders targeting the pharmaceutical industry, which aims to lower prescription drug prices in the United States (the “Order”).  The order repealed and replaced a similar Executive Order, which was previously signed on July 24, 2020 but was held back from release by the Trump administration, and follows the signing of the Buy American Executive Order mandating the purchase of U.S.-manufactured drugs that we analyzed here.
Continue Reading The Next in the Series of Executive Orders Affecting the Pharmaceutical Industry

On Thursday, August 6, 2020 President Trump signed an Executive Order, mandating that certain drugs and medical supplies purchased by federal agencies, including the Department of Health and Human Services, Department of Defense, and Department of Veteran’s Affairs must be US-manufactured (the “Buy American Order” or the “Order”). The list of “essential medicines, medical countermeasures and critical input” that fall under this Order will be determined by the Food and Drug Administration (“FDA”). The Order also calls on the FDA to conduct a greater amount of unannounced inspections of overseas drug plants to ensure that production of drugs is compliant with safety standards and to encourage more advanced drug manufacturing techniques.
Continue Reading President Trump’s Executive Order Mandating the Purchase of U.S. Drugs Evokes Criticism

On June 24, 2020, House Democrats proposed the Patient Protection and Affordable Care Enhancement Act (H.R. 1425) (the “Proposed Act”), legislation aimed at reinforcing the Affordable Care Act (the “ACA”) by: (i) lowering American’s health coverage costs; (ii) allowing Medicare to negotiate lower prescription drug prices; (iii) expanding coverage by incentivizing 14 holdout states to accept the ACA’s Medicaid expansion; (iv) expanding affordable coverage to vulnerable populations; (v) honing in on “junk” health plans that provide inadequate coverage; and (vi) strengthening protections for people with pre-existing health conditions. A fact sheet on the provisions of the Proposed Act is available here.
Continue Reading House Democrats Propose New Legislation to Bolster the ACA

According to a recent study (Study) published in Nature Reviews Drug Discovery on May 10, 2020 regarding the impact that the COVID-19 pandemic has had on the conduct of oncology clinical trials,[i]  the COVID-19 pandemic has materially disrupted the conduct of clinical research and trials in much of the world.  The observed disruptors include an observed decrease in patient enrollment in clinical trials and the operational challenges arising from the need to protect patient safety and comply with the social distancing, shelter-in-place and other rules and regulations that have become key elements of the public health response to the pandemic.  As a result of these and other disrupters, investigators who participated in the Study reported that they are, “adopting or planning to adopt technology-based interventions aimed at reducing on-site monitoring visits and in-person patient visits to minimize potential viral exposure and spread, including telemedicine, remote electronic medical record access for monitors and virtual monitoring of data and study documentation.”
Continue Reading Going Virtual: Clinical Trials, Telemedicine, Electronic Medical Records, And All That.

On May 18, 2020, California  Senate Bill 977 (“SB-977”) was passed out of the California Senate Health Committee and is now scheduled for its first hearing before the Senate Appropriations Committee on June 1, 2020.   SB-977 as written would subject all acquisitions and affiliations on and after January 1, 2021 by larger health systems, private equity funds and hedge funds of (i) hospitals, (ii) other health facilities, (iii) physicians, (iv) clinics, (v) ambulatory surgery centers or  (vi) laboratories to prior approval by the California Attorney General.  In its current form, SB-977 would require the California Attorney General to withhold his approval from a proposed transaction unless the transaction would (i) increase clinical integration and/or (ii) increase access or availability of healthcare services to underserved populations, and would not otherwise be anti-competitive.  SB-977 would also give the Attorney General the discretion to hold a public hearing on a proposed transaction.  In short, with SB-977, the California Legislature is going far beyond earlier proposals or legislation in other states – including Connecticut and Washington State – that have prior approval requirements for healthcare transactions.

In this article, we consider the forces behind SB-977 – a decade or more of healthcare consolidations and the financial distress being experienced by hospitals and other healthcare providers as a result of the current healthcare emergency – and the potential impact that SB-977 could have on the California healthcare marketplace if it were signed into law in its current form.
Continue Reading Getting Ahead of California’s Post-Pandemic M&A Surge: California Senate Bill 977 Seeks to Expand Attorney General Oversight of Healthcare Acquisitions and Affiliations involving Hospitals, Health Systems, Private Equity Groups, and Hedge Funds