With the brand new 12 months underway, the ArentFox Schiff Well being Care crew highlights 10 of probably the most urgent authorized points going through the business in 2023.
- Finish of the COVID-19 Public Well being Emergency. After being in impact for greater than three years, the US Division of Well being and Human Companies’ (HHS) declaration of a nationwide public well being emergency (PHE) concerning the COVID-19 pandemic will lastly come to an finish. The choice to terminate the PHE was first revealed in a January 30, 2023 coverage assertion by the Biden Administration’s Workplace of Administration and Funds and was later confirmed in a letter that HHS Secretary Xavier Becerra despatched to state governors on February 9, 2023. In keeping with Secretary Becerra’s letter, the PHE will persist by way of Could 11, 2023, and never be additional renewed thereafter. As we’ve got beforehand reported, quite a few federal well being insurance policies, starting from waivers of sure provisions of the Stark Regulation to relaxed enforcement of HIPAA privateness and safety necessities for telehealth, are tied to the PHE and can terminate when the PHE terminates. Over the approaching months, well being care suppliers ought to assess how they’ve relied on the PHE’s regulatory flexibilities and the way they may navigate the post-pandemic terrain as soon as the PHE ceases.
- The Supreme Courtroom Tackles the False Claims Act. No federal statute brings larger anxiousness to the well being care business than the False Claims Act (FCA), with its treble damages, civil penalties, and massive investigation and litigation prices. As beforehand mentioned right here, the US Supreme Courtroom will handle the “figuring out” normal and whether or not a number of affordable interpretations of a statute or regulation precludes FCA legal responsibility. Relators’ counsel contends there’s a circuit break up and a defendant’s subjective understanding that she or he is violating the legislation ought to meet the “figuring out” normal underneath the FCA, even when the authorized normal is ambiguous. Protection counsel counters that the FCA’s scienter requirement just isn’t met when there are affordable interpretations of a authorized obligation. The US Division of Justice (DOJ) has weighed in on the aspect of the relators, arguing that defendant’s mind-set when submitting the declare issues and the identification of “wrong-but-reasonable justifications after the very fact” mustn’t permit individuals to flee FCA legal responsibility. Oral arguments are set for April 18, 2023. Keep tuned.
- Dobbs and Reproductive Well being. Following the June 2022 Supreme Courtroom determination in Dobbs v. Jackson Ladies’s Well being Group, to overturn Roe v. Wade, the authorized panorama associated to reproductive well being continues to evolve, notably in states which have carried out abortion restrictions beforehand prohibited by Roe. The place a federal proper as soon as existed, there may be now a 50-state patchwork of legal guidelines associated to surgical and medicine abortions and reproductive well being that impression well being care suppliers and employers alike. Many of those legal guidelines are topic to litigation which may end up in momentary enforcement bans. As well as, in a number of states, poll initiatives have or shall be put to voters. To date, the adopted poll initiatives have resulted in favor of defending reproductive well being rights. The ArentFox Schiff Reproductive Well being Process Drive is intently monitoring the event of latest abortion legal guidelines, the implementation of present legal guidelines, and future poll initiatives in addition to different developments involving different reproductive well being points equivalent to personhood legal guidelines and entry to contraception.
- Turmoil with Implementation of the No Surprises Act. Federal litigation regarding the No Surprises Act (NSA) is growing uncertainty for payers and well being care suppliers. On February 10, 2023, HHS introduced a short lived halt to reimbursement choices underneath the NSA pending evaluation of a courtroom ruling that vacated vital parts of the implementing rules. The ruling held that the rules governing Unbiased Dispute Decision (IDR) between suppliers and payers for reimbursement of out-of-network providers unfairly favored payers by giving undue weight to the Qualifying Fee Quantity (QPA), the in-network price calculated by payers. HHS has instructed IDR entities to not situation any new fee determinations, and to “recall” any determinations made after February 6, 2023, whereas HHS and the opposite federal businesses resolve learn how to “adjust to the courtroom’s order.” As well as, doctor teams have challenged rules concerning calculation of the QPA, in addition to CMS’s latest sevenfold improve in nonrefundable IDR administrative charges. Even earlier than the latest HHS discover halting reimbursement choices, IDR entities have been swamped with considerably extra IDR requests than anticipated, leading to a backlog of circumstances and delays in funds. There seems to be no decision in sight. ArentFox Schiff stays energetic within the pending litigations, in addition to in representing well being care suppliers within the IDR course of.
- Enhanced Federal Scrutiny of the Nursing Dwelling Trade. The nursing house business confronted nice scrutiny from the Biden Administration and Facilities for Medicare & Medicaid Companies (CMS) in 2022 within the wake of COVID-19. This scrutiny will proceed into 2023. The Biden Administration’s focus has been to make sure that nursing houses have sufficiently skilled employees; poorly performing nursing houses are held accountable; and the general public is knowledgeable about nursing house situations. In October 2022, CMS revamped its Particular Focus Facility (SFF) program, which oversees nursing houses with vital histories of non-compliance, to deal with services remaining within the SFF program for too lengthy or that regress after graduating. The impression of those program modifications is predicted to be felt this 12 months. CMS additionally simply launched a proposed rule that will require disclosure of further possession and administration data of nursing houses, together with whether or not nursing house house owners are personal fairness traders and actual property funding trusts. CMS will undoubtedly proceed to launch initiatives focusing on nursing house high quality of care and compliance this 12 months.
- Telehealth: An Open Panorama. Use of telehealth and different digital well being modalities elevated dramatically over the course of the PHE due, partially, to statutory and regulatory waivers of sure pre-existing telehealth necessities that have been limitations to adoption. The waivers ensured protection for telehealth providers supplied to sufferers of their houses and concrete areas, broadened the scope of practitioners that would invoice for telehealth providers, and licensed using audio-only expertise as a reimbursable therapy modality. The telehealth waivers are scheduled to run out 151 days after the federal PHE ends. Now, as that date attracts nearer, regulators are wrestling with learn how to keep acceptable entry to telehealth providers within the post-PHE world. Different points regarding supplier licensing and the therapy of sufferers throughout state traces will doubtless be areas of focus in 2023 as nicely. We predict Massive Tech’s growing curiosity in telehealth, and Meta’s entry into the Metaverse, will result in elevated company development, deal circulation, and innovation within the business.
- Pharmaceutical Producers and Drug Pricing Reform. The Inflation Discount Act (IRA) was handed into legislation on August 16, 2022 with large bi-partisan assist. The drug pricing reform part of the IRA represents a sweeping change with respect to how the Medicare program can pay for prescribed drugs sooner or later. The legislation additionally options vital Medicare Half D profit design modifications that may straight profit Medicare sufferers on the pharmacy counter. A part of the IRA went into impact in January 2023 (particularly, the $35 cap on insulin prices for Medicare sufferers, the brand new requirement for drug producers to pay Medicare rebates if sure drug costs rise sooner than inflation, and the elimination of all price sharing and deductibles underneath Half D for vaccines). The rest of the IRA drug pricing provisions shall be phased in by 2029. One “situation to look at” for 2023 is how Medicare will negotiate a “most truthful worth” straight with producers for the costliest medicine coated underneath Medicare Half B and Medicare Half D. The business can anticipate issuance of steering paperwork and proposed rules regarding the particular parameters of how medicine are chosen for negotiation, the negotiation course of itself, and associated points. Lastly, the business can anticipate steering associated to the brand new inflation-based rebates. CMS has already printed steering, reality sheets and incessantly requested questions on a brand new net web page devoted to all issues IRA and Medicare, discovered right here: Inflation Discount Act and Medicare | CMS.
- Elevated Antitrust Enforcement within the Well being Trade. The DOJ and Federal Commerce Fee (FTC) have been aggressively pursuing the appliance of the antitrust legal guidelines to the well being care sector, and corporations are heeding that warning by revisiting their antitrust compliance applications. The newest salvo from the federal government got here on February 2, 2023, when the DOJ introduced the withdrawal of three coverage statements on data exchanges which were the spine of antitrust compliance applications within the well being care business for practically 30 years: Antitrust Enforcement Coverage Statements within the Well being Care Space (1993), Statements of Antitrust Enforcement Coverage in Well being Care (1996), and Assertion of Antitrust Enforcement Coverage Concerning Accountable Care Organizations Collaborating within the Medicare Shared Financial savings Program (2011). In withdrawing these coverage statements, the DOJ acknowledged that the antitrust “security zones” in these insurance policies could not mirror the fact that the well being care business has turn into extra consolidated over time, and developments in technological instruments equivalent to knowledge aggregation, machine studying, and pricing algorithms have elevated the aggressive worth of knowledge. This has prompted many business members to contemplate refreshing their insurance policies and procedures for antitrust compliance and having a look on the threat profile of their actions.
- Monetary Misery for Hospitals and Different Suppliers. Massive well being sector bankruptcies rose dramatically in 2022, bringing the sector again to pre-pandemic Chapter 11 submitting ranges. Whereas these filings have been concentrated within the pharmaceutical and senior care markets, the 2023 outlook for hospitals exhibits unfavorable projections on each the expense and income sides, with labor prices a continued supply of stress. A fall 2022 report commissioned by the American Hospital Affiliation (AHA) incorporates numerous startling findings, together with projected unfavorable margins for over half of US hospitals. Over 600 rural hospitals—about 30% of all such hospitals—are prone to closing. This monetary misery seems to be extra basic than short-term expense will increase, and should mirror sustained systemic challenges related to the continued shift towards outpatient, in-home and value-based care, together with post-acute care shortages which might be leading to inpatient discharge delays. For well being sector purchasers, it will likely be vital to anticipate monetary headwinds in 2023, and to take proactive measures to make sure acceptable governance and govt motion. This monetary administration plan could embrace evaluation of economic covenants, contingency planning for organizational monetary stress, and sustained consideration to each labor and different bills in addition to income technology alternatives. For a lot of well being care organizations, sturdy strategic planning shall be so as, together with merger, acquisition and three way partnership exercise, focused downsizing, longer-term workforce approaches, and expanded in-home and post-acute care alternatives. And for these in extreme monetary misery, it might be acceptable to discover Chapter 11 submitting or different types of debtor reduction. In fact, any monetary administration plan will have to be compliant with federal and state legislation associated to licensure, Medicare/Medicaid certification, worker rights, chapter, and antitrust legal guidelines and to acknowledge that the FTC is scrutinizing the well being sector.
- The FTC’s Non-Compete Clause Ban and Affect on Well being Care. In January 2023, FTC proposed a brand new rule that will ban employers from imposing non-competes on their employees and require employers to rescind present non-competes. As we beforehand reported, the FTC is looking for public touch upon the proposed rule by way of March 20, 2023. We expect it’s doubtless that employers will problem the rulemaking. If the proposed rule goes into impact, it might have a major impression on well being care suppliers, equivalent to hospitals, surgical procedure facilities, doctor practices and others, that routinely use non-competes of their operations. Importantly, non-profit entities, equivalent to non-profit well being techniques, are usually exempt from the FTC Act and thus wouldn’t be topic to the brand new rule. It’s going to even be attention-grabbing to see if the FTC’s proposed rule causes extra states to restrict the enforceability of non-competes or additional limit their present bans.
Particular Bonus: The Rise of AI in Well being Care. Lastly, we anticipate synthetic intelligence (AI) will proceed making vital positive aspects in well being care in 2023. In simply the previous 4 years alone, the US Meals & Drug Administration permitted lots of of the greater than 520 medical algorithms that have been market cleared as of January 2023. But, for all of the transformative potentialities of AI in well being care, indicators have been evident in 2022 that many well being policymakers and regulators are nervous about AI’s unintended penalties. For instance, in December 2022, the HHS Workplace for Civil Rights (OCR) issued a bulletin to warning that due to the proliferation of monitoring applied sciences, equivalent to AI-driven Google Analytics and Meta Pixel, gathering delicate data, “now greater than ever, it’s essential for regulated entities to make sure that they disclose [protected health information] solely as expressly permitted or required by the HIPAA Privateness Rule.” This bulletin adopted a brand new regulation that OCR proposed earlier in 2022 explicitly prohibiting well being care suppliers enrolled in Medicare from discriminating based mostly on race, intercourse, and different protected traits “by way of using scientific algorithms in [their] decision-making.” In the meantime, related regulatory oversight actions are starting to happen on the state degree. In California, as an illustration, the Legal professional Normal initiated an ongoing probe into how algorithmic instruments are exacerbating racial and ethnic disparities. As requires extra oversight proceed in 2023, well being care suppliers ought to proactively monitor and assess their AI expertise practices and their potential impacts on deprived affected person populations.