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Matthew Goldman is an associate in the Corporate Practice Group in the firm's Century City office and is a member of the firm's healthcare practice team.

After a protracted comment period, the California Department of Managed Health Care (the “Department”) formally adopted its much anticipated “global risk” regulation (the “Regulation”), which will go into effect on July 1, 2019. As more specifically set forth in Section 1300.49 of the California Code of Regulations (“CCR”) and as described below, the Department has formalized its long-standing policy that any person that assumes “global risk” must obtain a license to operate a health care service plan and has added a process whereby such a person can seek an exemption from such licensure. As a result of new definitions for the terms “global risk” and “prepaid or periodic charge,” the Regulation marks a significant expansion of the Department’s oversight activity, and is likely to have a substantial impact on a variety of entities and arrangements in the State.
Continue Reading New Regulation Clarifies DMHC’s Position Regarding Knox-Keene Licensing

On December 27, 2018, the U.S. District Court for the District of Columbia issued an opinion that ruled against the Trump Administration in its plan to cut funding from the 340B Drug Pricing Program (“340B Program”).[1]

Background

As discussed in a November 17, 2018 posting on this blog, the reimbursement rates for the 340B Program were significantly reduced when the Centers for Medicare & Medicaid Services (“CMS”) promulgated the “Medicare Program: Hospital Outpatient Prospective Payment and Ambulatory Surgical Center Payment Systems and Quality Reporting Programs” (the “Final Rule”). The Final Rule decreased the reimbursement rates for participating hospitals purchasing medicine through the 340B Program from 6% above the average sales price to 22.5% below the average sales price.[2]

After the Final Rule was published on November 13, 2017, the American Hospital Association, America’s Essential Hospitals and the Association of American Medical Colleges (the “Plaintiffs”) sued the Department of Health and Human Services (“HHS”) and sought a preliminary injunction to stop the enforcement of the Final Rule.[3] The motion for the preliminary injunction was denied, so the Final Rule’s reimbursement cuts went into effect on January 1, 2018.
Continue Reading 340B Drug Pricing Program Litigation Update: Court Rejects CMS Drug Pricing Cuts

On Friday, December 14, 2018, a federal district court judge in Texas issued a widely anticipated opinion that struck down the entire Patient Protection and Affordable Care Act (“ACA”) as unconstitutional. The judge ruled in favor of the plaintiffs by determining that the “individual mandate”[1] is no longer a tax and is therefore an unconstitutional exercise of congressional authority. The judge also found that the individual mandate was inseverable from the rest of the ACA, which makes the entire ACA, not just the guaranteed issue and community rating provisions, unconstitutional.
Continue Reading Texas v. United States: Texas Federal Court “Strikes Down” the ACA

On December 3, 2018, the U.S. Department of Health and Human Services (“HHS”), in collaboration with the Departments of the Treasury and Labor, the Federal Trade Commission, and several offices within the White House, produced a 119-page report outlining recommendations to reform the healthcare system. This report is in response to Executive Order 13813, in which President Donald Trump directed the Administration, to the extent consistent with law, to facilitate “the development and operation of a healthcare system that provides high-quality healthcare at affordable prices” through the promotion of choice and competition.
Continue Reading Reforming America’s Healthcare System Through Choice and Competition: The Trump Administration Recommends Healthcare De-Regulation

Tuesday’s midterm elections showed that healthcare is now a top issue among voters, according to exit polls. In an NBC News poll, healthcare was the top issue for a plurality of voters, ahead of the economy, immigration, and gun policy. [1] As voters made their voices heard, they also helped to solidify the position of the Affordable Care Act (“ACA”) nationwide. While the country waits for final vote counts to be tallied, three key takeaways have emerged:
Continue Reading Midterms Bring New Focus to Healthcare

On September 7, 2018, Governor Jerry Brown signed into law Assembly Bill No. 595, A.B. 595, which amends the California Health and Safety Code to increase oversight by the California Department of Managed Health Care (“DMHC”) of health care service plan mergers and acquisitions (M&A). (See, Cal. Health & Safety Code §§1399.65 and 1399.66). The law allows DMHC to reject M&A transactions that DMHC determines will have an adverse impact on, among other things, competition, subscribers and enrollees, and the stability of the health care delivery system. In addition, DMHC will be empowered to impose conditions that it believes will protect subscribers and enrollees and the public interest as a condition of approval of the transaction (as further described below).
Continue Reading New California Law re HMO M&A

On October 2, 2018, the CEOs of more than 700 hospitals and health systems representing healthcare providers in all fifty states sent a letter to Congress (the “Letter”) in a collective effort to protect the 340B Drug Pricing Program (the “340B Program”).[1] The CEOs expressed their view that recent governmental actions have reduced the reach of this vitally important program and that recently proposed legislation will undermine decades of bipartisan work to preserve access to prescription medication for the nation’s most vulnerable citizens.
Continue Reading More Than 700 CEOs of Hospitals and Health Systems Write to Congress to Stop Cuts to the 340B Drug Pricing Program

As discussed in our previous blog, “CMS Pushes for Hospital Price Transparency in Proposed Rule”, on April 24, 2018, the Centers for Medicare & Medicaid Services (“CMS”) announced a proposed rule (CMS-1694-P) aimed at empowering patients through better access to hospital charge information. In an effort to fulfill the proposed rule’s objective, CMS suggested an amendment to the requirements previously established by Section 2718(e) of the Affordable Care Act.
Continue Reading CMS Continues to Push for Hospital Price Transparency in Final Rule

On Wednesday, August 1, 2018, the Trump Administration issued the Short-Term, Limited-Duration Insurance Final Rule (the “Final Rule”), expanding the coverage length of “short-term, limited-duration insurance” policies under the Patient Protection and Affordable Care Act (“ACA”).
Continue Reading The Trump Administration Allows for Longer “Short-Term” Health Insurance Policies, but Coverage Stays the Same

On February 26, 2018, twenty states (the “Plaintiffs”) jointly filed a lawsuit[1] in the U.S. District Court for the Northern District of Texas requesting that the court strike down the Patient Protection and Affordable Care Act (“ACA”), as amended by the Tax Cuts and Jobs Act of 2017 (the “TCJA”), as unconstitutional. The Plaintiffs’ suit gained support from the White House last week, when Attorney General Jeff Sessions delivered a letter to House Speaker Paul Ryan on June 7, 2018 (the “Letter”), indicating that the Attorney General’s Office, with approval from President Trump, will not defend the constitutionality of the individual mandate – 26 U.S.C. 5000(A)(a) – and will argue that “certain provisions” of the ACA are inseverable from that provision.[2] The Letter indicates that this is “a rare case where the proper course is to forgo defense” of the individual mandate, reasoning that the Justice Department has declined to defend statutes in the past when the President has concluded that the statute is unconstitutional and clearly indicated that it should not be defended.
Continue Reading Following Repeal of the Individual Mandate, Twenty States Challenge the Affordable Care Act