Hall Render’s Health Law Year in Review: Here’s What Happened in 2016 as We Launch into 2017

As the health care industry and the related body of health law shift like tectonic plates, Hall Render attorneys are committed to providing practical counsel and insight to health care providers. Below is a compilation of key developments from 2016 that will continue to impact the health care industry in 2017. As the new year begins, our attorneys will continue to monitor, analyze and interpret future developments as they arise.

 

CMS Issued Long-Awaited 60-Day Overpayment Refund Rule

On February 12, 2016, CMS released its long-awaited 60-day overpayment refund rule that requires Part A and Part B health care providers to report and return overpayments by the later of the date that is 60 days after the date an overpayment was identified, or the due date of any corresponding cost report, if applicable.

The rule has eliminated much of the uncertainty faced by providers who prior to the rule’s publication worried that an incorrect interpretation of the term “identified” [an overpayment] could mean ruinous FCA liability, damages and penalties. The 60-day overpayment refund rule became effective on March 14, 2016.

The 2009 FERA amended the FCA to create a new type of false claim known as the “retained overpayment false claim” (a/k/a reverse false claim – a knowing and improper retention of an overpayment). In 2010, the ACA added a 60-day time limit for repayment of an identified overpayment but did not specify what it means to “identify” an overpayment, when the 60-day repayment clock begins to tick and what constitutes a reasonable period of time within which an investigation should be complete. The clarifications in the 60-day repayment refund rule include:

• What does it mean to “identify” an overpayment? “Identified” means a provider has, or should have, through the exercise of “reasonable diligence,” determined that the provider has received an overpayment and quantified the amount of the overpayment. The discovery of a single overpayment could be credible information that other similar overpayments may exist and would warrant an appropriate investigation.
• The “lookback” period is six years. The provider must report and return an overpayment only if the provider identifies the overpayment within six years of the date the overpayment was received.
• The time limit to identify the overpayment amount depends on the facts. Some overpayment situations might be easily and quickly calculable. Others could take time to quantify. CMS stated that a reasonable timeframe for investigation is six months from the date a possible overpayment is flagged, barring “extraordinary circumstances.” This means a provider, generally, would have up to eight months to repay the federal health care programs.
• Tolling. The 60-day repayment rule clock is stopped if an entity has submitted a self-disclosure under OIG’s self-disclosure protocol or under CMS’s self-referral disclosure protocol and only restarts once negotiations are concluded.
• Method of returning overpayments. The provider can use a number of approaches to repayment including claims adjustment, credit balance and self-reported refund. Statistical sampling and extrapolation may be employed to calculate overpayments.

For more information on this topic, visit:

• 60-Day Overpayment Rule Released
• CMS Issues Final Overpayment Refund Rule
• End of the 60-Day Refund Road for One New York Hospital System

 

New Non-Discrimination in Health Care Protections for LGBT Individuals

On May 18, 2016, the HHS OCR published a final rule implementing Section 1557 of the ACA, the first federal civil rights law to prohibit discrimination based on sex, gender identity and sex stereotyping in health programs and activities that receive federal financial assistance. The final rule became effective on July 18, 2016.

Under the prohibition on sex discrimination:

• Individuals cannot be denied health care or health coverage based on  their sex, gender identity or gender stereotyping;
• Categorical coverage exclusions or limitations for all health care services related to gender transition are discriminatory;
• Individuals must be treated consistent with their gender identity including in access to facilities; and
• Providers may not deny or limit treatment ordinarily rendered to one gender based on the fact that that the person seeking such services identifies as another gender, providing the service is necessary or appropriate.

The final rule features important enforcement provisions. HHS may suspend or refuse to continue federal funding to any organization that does not address non-compliance. Individuals who believe their rights have been violated may file individual or class action suits in federal court.

In a separate rulemaking, CMS proposed a rule on June 16, 2016 to amend the CoPs for hospitals and critical access hospitals to establish and implement a policy prohibiting discrimination on the basis of race, color, religion, national origin, sex (including gender identity), sexual orientation, age or disability.

CMS proposed this rule in response to studies showing that the absence of an explicit prohibition on discrimination in the CoPs (specifically a lack of civil rights protections for persons with gender identity concerns) may have created a barrier to securing care by people who fear discrimination.

This proposed revision is intended to go farther than the final rule implementing Section 1557 of the ACA, discussed immediately above, by including sexual orientation as a prohibited basis for discrimination. The Section 1557 final rule prohibits discrimination based on “sex” but did not resolve whether discrimination on the basis of an individual’s sexual orientation status alone is a form of sex discrimination under Section 1557. CMS stepped in to fill the gap through its own separate rule-making.

For more information on this topic, visit:

• HHS Final Rule on Nondiscrimination in Health Programs and Activities – Part I: Sex Discrimination

 

The Escobar Case: Supreme Court Upholds Implied Certification Theory of False Claims Act Liability and Enunciates Materiality Standard

On June 16, 2016, the U.S. Supreme Court (“Court”) issued its decision in Universal Health Services, Inc. v. United States ex rel. Escobar (“Escobar”), a case brought under the FCA, 31 U.S.C. §§ 3729-3733, reviewing the viability and scope of the implied certification theory of liability.

Given the circuit court split regarding whether and how to apply the implied certification theory, it was no surprise when the Court granted certiorari in this case. In its decision, the Court upheld the implied certification theory as a basis for an FCA suit but replaced former distinctions between conditions of payment/conditions of participation with a new “materiality” standard. That standard provides that “a misrepresentation about compliance with a statutory, regulatory, or contractual requirement must be material to the Government’s payment decision in order to be actionable under the FCA.”

The FCA provides that any person who knowingly submits a false or fraudulent claim for payment to the U.S. government violates the act and is liable for up to three times the amount of damages sustained by the government plus up to $21,563 per false claim (see Significant Inflation Adjustment-Related Increase in CMPs for a summary addressing the significant increase in civil monetary penalties). Under the implied certification theory, while the claims submitted for payment may have been for legitimate services actually provided, such claims are considered fraudulent because the defendant did not comply with some underlying statutory, regulatory or contractual requirement it impliedly represented or certified it did (e.g., a licensing statute, the Stark Law/Anti-Kickback Statute). Until Escobar, circuit courts were split as to whether the implied certification theory was a viable basis for an FCA case. Circuit courts that did accept the implied certification theory often found that the underlying requirement violated a “condition of payment” for the Medicare program rather than a “condition of participation.”

Under the new materiality standard, the Court stated that implied false certification could form the basis for an FCA case if: (a) the claim both requests payment and makes specific representations about the goods or services provided; (b) failure to disclose statutory, regulatory or contractual violations are “actionable half-truth” knowing failures to fully disclose relevant information; and (c) the violation is “material” to the government’s payment decision, as determined by a fact-based analysis.

A requirement’s characterization as a condition of payment is no longer enough on its own to deem that requirement material to the government’s decision to pay a claim, although the Court said that the designation is still relevant to the analysis. Conversely, a requirement’s characterization as a condition of participation is no longer sufficient to conclude the requirement is not material to the payment decision. Knowledge by the defendant that the government has consistently refused to pay a claim based on noncompliance with statutory/regulatory requirements supports materiality under the FCA. On the other hand, demonstrating that the government has paid certain types of claims despite having knowledge of violation of statutes/regulations provides evidence against materiality.

Circuit courts that have had the opportunity to apply the Escobar materiality standard have taken very different approaches. In United States ex rel. Miller v. Weston Educational Inc., d/b/a Heritage College, the Seventh Circuit used the materiality standard to support its previous narrow interpretation of implied certification claims. Alternatively, upon remand in Escobar, the First Circuit purportedly applied the materiality standard yet continued to emphasize the distinction between conditions of payment and conditions of participation.

Likely, future case law will revolve around interpreting the boundaries of the new materiality standard.

For more information on this topic, visit:

• Supreme Court Accepts Implied Certification – With a Twist
• False Claims Act Lawsuits: “New” Focus on Materiality
• Government Challenges “Materiality” Standard of Escobar
• Seventh Circuit: Implied Certification Claims Remain a Heavy Lift
• Escobar, Back at the First Circuit

 

Aggressive Antitrust Enforcement in 2016

2016 was a year dominated by aggressive federal antitrust enforcement activity in the health care sector, highlighted by a number of significant cases and rulings on both the provider and payer sides of the industry.

In July 2016, the DOJ and a number of states challenged Anthem’s acquisition of Cigna and Aetna’s acquisition of Humana. In a press conference held to announce the challenges, U.S. Attorney General Loretta Lynch said that, “if allowed to proceed, these mergers would fundamentally reshape the health insurance industry” and restrict competition in key markets by consolidating the “multitrillion-dollar health industry into three mammoth insurance companies.” After the court granted a request for an expedited trial, both cases were heard before the D.C. District Court at the end of 2016, and both judges promised to deliver decisions in early 2017. If consummated, these mergers have the ability to reshape the health care landscape for both payers and providers for years to come. For more information, click here.

At the end of 2015, the FTC challenged three different hospital mergers – one in Huntington, West Virginia; one in Harrisburg, Pennsylvania; and one in the North Shore area of Chicago – as violating the federal antitrust laws. In 2016, the FTC faced at least temporary setbacks for the first time in more than a decade when the respective district courts in both the Harrisburg and Chicago cases handed favorable rulings to the hospitals. However, after successfully appealing to the Third Circuit and Seventh Circuit, respectively, the FTC’s winning streak against hospital mergers remains intact, potentially foreshadowing a continued aggressive enforcement environment against hospital mergers in 2017. In the Huntington hospital merger, the FTC was forced to withdraw its challenge after the state of West Virginia passed a certificate of public advantage, or COPA, law, granting antitrust immunity under the state action doctrine to the proposed hospital merger.¹ For more information, visit:

• Common Themes Emerge as FTC Challenges Three Hospital Mergers in Two-Month Period
• FTC Hospital Merger Win Streak Ends: PA Judge Rules in Favor of Hospitals, But FTC Fights On
• Will Consecutive FTC Losses Change the Antitrust Landscape for Hospital Mergers?

While these three cases initially seemed to signal a changing antitrust landscape for hospital mergers, in the end, the provider victories and the FTC’s continued public opposition to provider mergers indicates there may be little to no change in the FTC’s hospital merger enforcement focus or methodology.

¹ The FTC has taken a public stance against the use of COPAs, submitting formal commentary to state bodies in Tennessee and Virginia opposing the use of COPAs to allow the merger of two of the largest health care systems in Northeast Tennessee and Southwest Virginia.

 

HIPAA in 2016: Enforcement, Audits and Guidance, Oh My!

Enforcement

2016 was a banner year for HIPAA enforcement. In 2016, the OCR entered into 13 Resolution Agreements and CMPs, totaling more than $23.5 million and averaging more than $1.8 million per action. The amount of OCR enforcement activity in 2016 was more than double any other single year. This activity included the largest single entity settlement to date ($5.5 million against an Illinois health system) as well as the first settlement directly with a business associate.

In total, there have now been 42 HIPAA enforcement actions, totaling more than $55.2 million and averaging $1.3 million in settlements and CMPs per action.

Consistent with previous years, OCR entered into settlements with a variety of entity types, including health systems, physician practices, hospitals, universities, a business associate, a research company and a medical equipment company. There was likewise a wide variety of circumstances that led to the settlements, but several common factors emerged:

• The failure to conduct an enterprise-wide security risk analysis;
• The failure to timely remediate identified risks and vulnerabilities;
• The failure to implement adequate HIPAA policies and procedures;
• The failure to enter into Business Associate Agreements; and
• The failure to safeguard portable electronic devices.

This active enforcement trend is expected to continue into the foreseeable future.

For more information on OCR enforcement actions, click here.

Phase II Audits

Phase II HIPAA Audits began in 2016. One hundred sixty-seven covered entities received notice in July 2016 that they had been selected for audit.  Later in the year, OCR also chose 33 business associates to be audited. OCR is conducting most of these audits as desk audits, but some of them will involve some on-site activity. Entities subject to an audit will be reviewed for compliance with HIPAA in one or more of the following areas:

• Privacy Rule – Individual Right to Access and Notice of Privacy Practices;
• Security Rule – Risk Analysis and Risk Management; or
• Breach Notification Rule – Content and Timing of Notice.

There is no timetable for completion of this phase of the HIPAA Audit Program. While an audit could lead to an enforcement action, the primary purpose for the audits is to enhance industry awareness of HIPAA compliance obligations and help OCR develop tools and guidance to assist the industry with assessing HIPAA compliance and preventing breaches. For more information on the Phase II Audit Program, click here.

Guidance

OCR issued guidance in several important areas during 2016. In February, OCR issued guidance on Individuals’ Right to Access Their PHI. The primary goal of this guidance was to eliminate barriers or delays to access by individuals to their PHI, which remains one of the most common HIPAA complaints received by OCR. This guidance discusses the many different areas where potential barriers or delays to access can occur. A significant topic within this guidance is what covered entities can charge for copies of medical records. OCR expressed its belief that covered entities should provide individuals with copies of their medical records for free but permits covered entities to charge a reasonable, cost-based fee based on either actual or average costs so long as the costs used in those calculations are limited to the labor cost for creating and delivering the electronic or paper copy and the cost of supplies. OCR also approved a $6.50 flat fee as an alternative.

In July, OCR issued Your Money or Your PHI: New Guidance on Ransomware in response to the significant spike in health care ransomware incidents in 2016.  OCR recommends that entities back up their data regularly and segregate data within the entity’s network so that it would be more difficult for an attacker to prevent the entity from being able to access the entity’s own information. (See Ransomware Hits Hospitals Hard for more information.).

In October, OCR issued Guidance on HIPAA & Cloud Computing to address arrangements where ePHI is stored by cloud service providers. OCR clarified in the guidance that covered entities are permitted to use cloud service providers to store ePHI and that overseas storage of ePHI is permitted. OCR also clarified that cloud service providers that store ePHI are business associates, even if the ePHI is encrypted and the cloud service provider does not have the decryption key. OCR reminded covered entities and cloud service providers that a Business Associate Agreement must be in place prior to transferring ePHI and that cloud service providers should be required to provide documentation of IT security safeguards or audits as a condition of storing the data.

 

 

Ransomware Hits Hospitals Hard

The year 2016 will be remembered as the year cybercriminals perpetrated ransomware attacks against the nation’s hospitals. While ransomware and its underlying technology has been around for some time,¹ the number of daily attacks against various types of organizations increased 300 percent from about 1,000 incidents per day in 2015 to 4,000 incidents per day in 2016.²

Hospitals are especially attractive targets of this vicious scourge because: (i) there is a lucrative market for stolen PHI; (ii) hospitals are often a “hodgepodge of outdated systems and rushed employees with little cyber training”;³ and (iii) not only do hospitals rely on the critical information in electronic health records to deliver care making them more vulnerable to ransom demands, ransomware can also affect the high-tech infrastructure used by health care providers.

Ransomware is a type of malware that infects computer systems, restricting access to systems or to data until a ransom is paid. The ramifications are enormous. Ransomware attacks can significantly impact a hospital’s ability to deliver safe care and can compromise PHI triggering the HIPAA breach notification rules in some cases. Ransomware attacks are expensive. Although there is controversy concerning whether hospitals should pay to unlock their data (usually in “Bitcoin,” a type of digital payment system that fosters anonymity), hospitals desperate to get back to the business of caring for patients have in some instances paid ransom. The disadvantage of acquiescing to a hacker’s demand is that it emboldens further attacks, and in some cases the hacker may refuse to return the files even after receiving payment.

A hospital’s best defense consists of preventing, detecting and reporting cyberattacks to minimize impact.

Ransomware attacks can be prevented through use of good “cyber hygiene” and best practices. Hospitals and other health care organizations should:

• Conduct a cybersecurity risk analysis and perform a penetration (self-hacking) test;
• Back up all critical information, store back-up systems offline and test the ability to revert to backed-up systems before an incident occurs;
• Train staff on cybersecurity best practices (don’t click that fake URL link!);
• Patch known system vulnerabilities; and
• Prepare a security incident response plan.

For more guidance on prevention and action steps in the event of an active ransomware attack, click here.

Besides disruption to computer systems, hospitals that are hacked are faced with understanding and appropriately reacting to matters at the intersection between a ransomware attack and the security requirements of HIPAA. For example, an attack triggers the application of the hospital’s security incident procedure, including responding to and reporting “security incidents” defined as the attempted or successful unauthorized access, use, disclosure, modification or destruction of information or interference with system operations in an information system. Then there is the matter of determining whether the presence of ransomware is a breach under the HIPAA rules and, related, whether any breach notification obligations are triggered. For more information, click here.

Hopefully, in 2017, more hospitals will employ successful robust prevention programs and have effective security incident response plans in place for the worst case scenario.

For more information on this topic, visit:

• Your Money or Your PHI: New Guidance on Ransomware

¹ Kim Zetter,  Why Hospitals Are the Perfect Targets for Ransomware, (3/30/16); Kalev Leetaru, Hacking Hospitals and Holding Hostages: Cybersecurity in 2016 (3/29/16)

² U.S. Government Interagency Technical Guidance Document, How to Protect Your Networks from Ransomware

³ Leetaru op. cit.

 

Significant Inflation Adjustment-Related Increase in CMPs

On September 6, 2016, HHS issued an interim final rule providing for a “catch-up” inflation adjustment of the CMPs issued by various CMP authorities within HHS as required by the FCPIAA. The purpose of the FCPIAA is to improve the effectiveness of CMPs and maintain their deterrent effect. The FCPIAA also requires agencies to make annual inflation adjustments over and above the big initial “catch-up” adjustment.

The adjusted CMPs are applicable only to CMPs assessed after August 1, 2016, whose associated violations occurred after November 2, 2015, the date of enactment of the FCPIAA.

Below is a table setting forth a sampling of the numerous CMP increases now in effect for HHS CMP authorities.

Description of Violation	Previous CMPs	Current Maximum Inflation-Adjusted CMPs
Penalty for remuneration offered to induce program beneficiaries to use particular providers, practitioners or suppliers	$10,000	$15,024
Penalty for employing or contracting with an excluded individual.	$10,000	$14,718
Penalty for knowing and willful solicitation, receipt, offer or payment of remuneration for referring an individual for a service or for purchasing, leasing or ordering an item to be paid for by a federal health care program.	$50,000	$73,588
Penalty for knowing of an overpayment and failing to report and return.	$10,000	$10,874
Penalty for payments by a hospital or critical access hospital to induce a physician to reduce or limit services to individuals under direct care of physician or who are entitled to certain medical assistance benefits.	$2,000	$4,313
Penalty for failure to report any final adverse action taken against a health care provider, supplier or practitioner.	$25,000	$36,794
Penalty for a hospital or responsible physician dumping patients needing emergency medical care, if the hospital has 100 beds or more.	$50,000	$103,139
Penalty for submitting or causing to be submitted claims in violation of the Stark Law’s restrictions on physician self-referrals.	$15,000	$23,863
Penalty for circumventing Stark Law’s restrictions on physician self-referrals.	$100,000	$159,089
Penalty for each February 18, 2009 or later violation of a HIPAA administrative simplification provision in which it is established that the violation was due to reasonable cause and not to willful neglect.	Min. $1,000 Max.$50,000 Calendar Year Cap $1,500,000	Min. $1,100 Max. $55,010 Calendar Year Cap $1,650,300

The FCPIAA applies not just to HHS but to all other federal administrative agencies. In June 2016, the DOJ provided for a massive increase in FCA CMPs from a minimum $5,500/maximum $11,000 to a minimum $10,781/maximum $21,563. Such penalties could be ruinous in an FCA case if applied.

With respect to the CMP increases, an ounce of prevention is worth a pound of cure. Effective compliance programs are essential.

For more information on this topic, visit:

• Massive Penalty Spike Darkens the FCA Landscape

 

 

CMS Issues Final Rule Implementing MACRA Quality Payment Program – Time for Docs to Board the Quality Acela

On October 14, 2016, CMS published a Final Rule with comment period implementing the new MIPS and AAPMs (together the “QPP”), performance-based payment pathways introduced by the MACRA of 2015 and applicable to qualifying physicians and mid-level practitioners (“Clinicians”). The QPP represents CMS’s efforts to shift Clinicians towards a quality-based payment system under Medicare.

MIPS consolidates and replaces three existing quality programs: the Physician Quality Reporting System; the Physician Value-Based Payment Modifier; and the Medicare EHR Incentive Program. Under MIPS, beginning in 2019 for performance data submitted in 2017, CMS will apply a positive or negative adjustment to Clinicians’ Medicare Part B reimbursement based on performance in four categories: quality; cost; advancing care information; and improvement activities.

CMS acknowledged the burdens Clinicians face in transitioning to payment for quality and has provided for flexible participation options under the MIPS for transition year 2017. Option 1 allows physicians to opt out of MIPS data submission entirely for that year but with a 4 percent reduction on payment consequence. Options 2, 3 and 4 provide for varying levels of data submission with the possibility of a positive, neutral or negative payment adjustment in 2019 depending on Clinician performance. Clinicians electing the MIPS option should choose their preferred reporting option in part based on their reporting capabilities and past performance on quality measures.

For those Clinicians who are in a position to participate in an AAPM, CMS has identified the following as AAPMs for the 2017 performance year: Shared Savings Program Tracks 2 and 3; Comprehensive End Stage Renal Disease Care Model (two-sided risk arrangements); Comprehensive Primary Care Plus; Next Generation ACO Model; and Oncology Care Model (two-sided risk arrangement). CMS recognizes that additional AAPMs may be available as QPP is expanded in future years.

Clinicians determined to be “Qualifying Participants” under an AAPM are eligible to earn five percent lump sum incentive bonuses and are exempt from MIPS payment adjustments.

For more information on this topic, visit:

• Final MACRA Rule Issued: It’s Time For Providers To Pick Their Pace

 

 

CMS Responds Favorably to Industry Commentary in Implementing Site-Neutral Payment for New Off-Campus Hospital Departments

As part of the CY 2017 OPPS Final Rule released on November 1, 2016,¹ CMS finalized its implementation of Section 603 of the BBA.

Section 603 effectively reduced Medicare reimbursement for certain off-campus hospital departments (as defined under the Medicare “provider-based rule”) by eliminating eligibility for payment under the OPPS effective January 1, 2017 unless the provider billed Medicare under the OPPS for services at the site prior to November 2, 2015 (“Grandfathered Sites”), the services are provided in a dedicated emergency department or at or within 250 yards of a remote location of the hospital.

In June 2016, CMS issued a proposed rule implementing Section 603 that included draconian restrictions on service mix changes at Grandfathered Sites and would have required non-hospital billing for services at non-Grandfathered Sites, effectively ending provider-based status for such sites.  The billing and resulting financial arrangements that would have been required under CMS’s proposal would have been complex and raised many compliance issues under the Anti-Kickback Statute and Stark Law.  Fortunately, in response to industry commentary, CMS backed off of its proposal.  As a result, non-Grandfathered Sites can continue to be billed as hospital services (with a modifier), be eligible for 340B drug pricing discounts and will not need to enter into different types of financial arrangements with physicians working in such departments.  CMS also removed limitations on service mix changes and did not finalize a policy on expansions of Grandfathered Sites.  Although Medicare payment will be less at non-Grandfathered Sites – 50 percent of OPPS – it will not necessarily be site neutral relative to freestanding or ASC payment levels.

To implement payment for non-Grandfathered Sites, CMS also issued an interim final rule to establish new payment rates (technically under the MPFS but billed as hospital services) for CY 2017.

For purposes of the CY 2017 OPPS Final Rule, CMS did not believe it had the statutory authority to include a “mid-build” exemption to the new site-neutral payment changes ushered in by Section 603 of the BBA.  However, as part of the 21^st Century Cures Act (see 21^st Century Cures Act Signed Into Law in the Waning Days of 2016), Congress amended the BBA to extend grandfathered status to some mid-build facilities meeting specific criteria.

¹CMS Finalizes Outpatient Prospective Payment Changes for 2017 (11/01/16)

 

 

Trump Wins

Donald Trump’s victory in what may be the most vitriolic presidential election of all time ushers in change and uncertainty for health care reform in 2017 and beyond. Here’s what the impending Trump presidency portends.

• On November 29, President-elect Trump announced his choice to lead the top federal health care agencies. Trump nominated Rep. Tom Price, M.D., a former orthopedic surgeon to head HHS, and health care consultant Seema Verma as the next CMS Administrator. Both Price and Verma will need to be confirmed by the Senate once President-elect Trump takes office. Senate hearings will likely begin in late January, and a simple majority vote will be required for confirmation.

• Dr. Price has been a staunch critic of the ACA but has worked across the aisle on Medicare and Medicaid issues. Last year, Dr. Price introduced the Empowering Patients First Act, which would fully repeal the ACA and replace it with a detailed plan that would include individual health pools, expanded health savings accounts and the termination of the health care exchanges.

• Ms. Verma worked under former Indiana Governor Mitch Daniels to create the Healthy Indiana Plan (“HIP”) for low income adults and under Governor, now Vice President-elect, Mike Pence to develop the HIP 2.0 waiver proposal pursuant to the ACA. If confirmed, Ms. Verma will oversee the Trump administration’s efforts to unwind the ACA and replace it with more free market-based health care policies.

• According to the Wall Street Journal, the Republican Party plans to employ a risky two-stage repeal and replace strategy to dismantle the ACA. First, the GOP may attempt to repeal most of the ACA by using budget reconciliation (allowing deficit reduction measures to bypass a Senate filibuster with only 51 votes).¹ Then, it will provide for a two- or three-year sunset for the ACA’s subsidies during which time Congress will attempt to develop a new health reform system that will have enough support to get the necessary votes to passage. ²

There is risk that the far right will reject a proposed replacement plan as “Obamacare light” and that Democrats will oppose negotiations on a new plan, putting Republicans in the position of owning any new plan they come up with for better or for worse.³

The GOP, likely, will retain certain popular provisions of the ACA such as the provision that prohibits insurers from denying coverage to those with pre-existing conditions and the provision that allows parents to keep their young adult children on their health insurance policies until age 26.

• As to the antitrust landscape (see Aggressive Antitrust Enforcement in 2016), it is very hard to predict what a Trump presidency will mean for health care antitrust enforcement. On one hand, President-elect Trump has clearly stated that he wants to decrease government regulation of business. Given this stance, it is certainly possible that Trump along with his nominee for the DOJ AG position, Senator Jeff Sessions, will direct a less vigorous pursuit of health care-related antitrust cases. On the other hand, however, Trump has identified Amazon as well as the proposed AT&T-Time Warner merger as having antitrust problems signaling his willingness to support strong antitrust enforcement. Career staff in the DOJ Antitrust Division and in the FTC play an important role in managing antitrust investigations and would have no problem following a Trump lead on continued aggressive enforcement of the antitrust laws.

Yet another factor to consider is President-elect Trump’s nomination of former Republican FTC Commissioner Josh Wright to lead his transition team for antitrust. Mr. Wright is known for advocating the use of economics and empirical evidence to make antitrust decisions rather than relying on economically irrelevant factors. This approach to antitrust enforcement can yield different results depending on the particular facts and circumstances of the combination, merger or acquisition being examined.

In summary, we will have to wait and see what the future holds for health care-related antitrust enforcement under President-elect Trump. Various factors make an accurate forecast elusive.

Hall Render will be following these developments carefully. Stay tuned for future articles.

¹ Editorial, The GOP’s ObamaCare Moment, WSJ, Dec. 27, 2016, at A14. ² Id. ³ Id.

 

 

21^st Century Cures Act Signed into Law in the Waning Days of 2016

On December 13, 2016, President Obama signed into law the 21^st Century Cures Act (the “Act”), composed of 19 core pieces of legislation designed to expedite FDA approval for new medicines and devices while maintaining the same standards for safety and effectiveness, increase medical research funding and achieve major mental health reform.

The Act will provide the NIH with $4.8 billion in new funding that is fully offset and will help advance the “Precision Medicine Initiative” designed to apply genomic technologies and gather information to better understand health and disease.   Money will also be spent on “Cancer Moonshot” research, the BRAIN initiative to advance our understanding of such diseases as Alzheimer’s and traumatic brain injury and to fund young researchers.

Under the Act, the FDA is encouraged to develop clearer guidelines for designing clinical trials for fewer patients and for securing the help of public-private conglomerates to confirm certain biomarkers to customize drugs for small patient sub-groups. The Act also would allow sponsors of genetically targeted drugs for rare diseases to rely on data for the same or similar technology from previously approved applications.

The mental health reforms in the Act are extensive and include:

• Creating a new Assistant Secretary for Mental Health and Substance Use to coordinate federal government mental health programs;
• Improving mental health care for mentally ill children and adults and improving the coordination of behavioral health and primary care;
• Strengthening the mental health workforce through training grants, loan repayment programs and medical liability protections;
• Enforcing mental health and substance abuse parity;
• Extensive funding for state opioid treatment and prevention programs; and
• Reauthorizing and updating treatment programs for the homeless and jail diversion programs for the mentally ill.

For more information on this topic, visit:

• 21^st Century Cures Act Passes Congress
• Division A: 21^st Century Cures

Happy (Health Law) New Year from the health law attorneys of Hall Render.  If you would like more information about any of these topics, please contact Eric Birdzell at 317.977.1558 or hallrender@hallrender.com to be put in touch with a Hall Render health law attorney.

Please visit the Hall Render Blog at http://blogs.hallrender.com/ or click here to sign up to receive Hall Render alerts on topics related to health care law.