HEALTH & LIFE SCIENCES NEWS
HEALTH & LIFE SCIENCES NEWS
Exploring Critical Business and Legal Issues across the Healthcare and Life Sciences Industries
HEALTH & LIFE SCIENCES NEWS
Exploring Critical Business and Legal Issues across the Healthcare and Life Sciences Industries
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CMS Sneaks 340B Billing Proposals into Medicare Physician Fee Schedule: What 340B Stakeholders Need to Know

On July 10, the Centers for Medicare & Medicaid Services (CMS) released the 2025 Medicare Physician Fee Schedule (MPFS) proposed rule, which includes proposals related to identification of Medicare Part B and Part D claims for 340B drugs in order to exclude them from inflation-related Medicare drug rebates established under the Inflation Reduction Act. Because MPFS is not often on the radar for 340B stakeholders, we want to make sure that folks are aware of the 340B-related provisions in the proposed rule and the deadline for submitting comments. We have excerpted the relevant pages of the MPFS proposed rule for ease of reference (the entire proposed rule is well over 2,000 pages and available here. The proposed rules are generally consistent with guidance materials previously released by CMS.

As described in more detail below, the CMS proposals would eventually require claims-level information reporting to exclude Medicare Part D 340B claims and use claim modifiers to exclude Part B claims. ALL 340B-covered entities are now expected to report claim-line modifiers for separately payable Medicare Part B drugs under guidance that was effective January 1, 2024.

Comments are due on September 9, 2024. We note that in light of the recent US Supreme Court decision in the Loper Bright case and the end of the Chevron doctrine, 340B stakeholders should consider submitting comments (both in support of the proposals and with alternatives that CMS should implement). Legal challenges to whatever rules CMS ultimately implements should be expected, and the [...]

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CMS Issues FAQs to Aid Pharmacies in Preparing for Medicare Part B Coverage of PrEP Medications

As we previously advised, the Centers for Medicare & Medicaid Services (CMS) is preparing to issue a national coverage determination (NCD) for pre-exposure prophylaxis (PrEP) using antiretroviral drugs to prevent HIV under Medicare Part B. In response to questions from stakeholders, CMS released FAQs on June 25, 2024, to guide pharmacies through certain enrollment and billing intricacies.

Specifically, pharmacies are instructed that no new Medicare enrollment is needed if pharmacies are already enrolled in Medicare as a Part B pharmacy or a durable medical equipment, prosthetic, orthotics and supplies (DMEPOS) supplier. However, if the pharmacy is not currently enrolled in Medicare, they should consider enrolling as a Part B pharmacy rather than a DMEPOS supplier so that they are not subject to the supplier standards, accreditation and surety bond requirements.

CMS also provides pharmacies with appropriate ICD-10 CM diagnosis codes and J-codes to include with claims and instructs pharmacies that the date the drug is picked up or mailed should be entered as the date of service. Finally, recognizing that some pharmacies will fill orders for injectable PrEP to be administered by qualified practitioners, pharmacies may include a claim for the supplying fee along with a claim for the drug where appropriate. CMS anticipates that the final NCD will be posted and effective in late September 2024. The NCD is expected to be similar to the proposed NCD published on July 12, 2023.




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HHS, DOL and Treasury Issue a Proposed Rule Increasing Federal IDR Fees

On September 20, 2023, the US Departments of Health and Human Services (HHS), Labor (DOL) and the Treasury (collectively, the departments) issued a proposed rule related to the No Surprises Act’s (NSA’s) federal independent dispute resolution (IDR) process. The proposed rule would amend existing regulations to provide that the two fees associated with the IDR process—the administrative fee amount charged by the departments, and the ranges for the IDR entity fees for single and batched determinations—be established by the departments through notice and comment rulemaking. The proposed rule outlines the methodology for calculating the fees and proposes the fees/fee ranges for disputes initiated on or after January 1, 2024. The proposal comes in response to a court order in the recent Texas Medical Association (TMA IV) case, which requires the departments to establish such fees through formal rulemaking.

IN DEPTH

ADMINISTRATIVE FEE TO INCREASE TO $150

The NSA’s nonrefundable IDR administrative fee is paid by both parties to cover the cost of their participation in the IDR process. For 2022, the administrative fee was $50 per party. The fee was expected to remain the same for 2023. However, in December 2022, the departments issued revised guidance increasing the fee from $50 to $350 for 2023. Plaintiffs in TMA IV challenged the increase as being unlawfully issued via guidance. The US District Court for the Eastern District of Texas agreed and vacated the portion of the guidance that increased the fee.

In light of the court’s order, the [...]

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Top Takeaways | 2023 Physician Practice Management & ASC Symposium 2023 | Fraud & Abuse Risk Mitigation and Enforcement Trends

In this session, McDermott Will & Emery Partners Denise Burke, Tony Maida and Monica Wallace discussed top issues and enforcement trends that physician practice management companies (PPMs) and ambulatory surgery centers (ASCs) should watch to mitigate their fraud and abuse risk. The panel also discussed the potential impact of recent regulatory changes on future enforcement priorities.

Session panelists included:

  • Denise Burke, Partner, McDermott Will & Emery
  • Tony Maida, Partner, McDermott Will & Emery
  • Monica Wallace, Partner, McDermott Will & Emery

Top takeaways included:

  1. The federal government recently released False Claims Act recovery data for 2022. While the recovery amounts went down, the number of reported cases actually went up. We anticipate seeing more COVID-19-related enforcement actions. We are also seeing continued government focus on financial arrangements with physicians, including transactions involving physicians receiving preferential investment terms, such as below-fair-market-value purchase prices.
  2. In the most recent revision to the Stark rules, there is a new ability to cure compensation errors. Specifically, if a designated health services (DHS) entity has a compliant written compensation arrangement with a physician and discovers a payment error during the term of the arrangement or within 90 days of termination, the entity can correct or reconcile the compensation error and there is no need to submit a self-disclosure. The US Centers for Medicare & Medicaid Services (CMS) recently said that errors could even be fixed after 90 days from termination, but this requires a close analysis of the facts.
  3. The federal government has started [...]

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VBC Symposium 2023 | Weathering The Storm: A Data-Driven Perspective on Value-Based Care, by Bain & Company

In this session, Erin Ney and Jason Slocum of Bain & Company provided data-driven insights on the current state of the value-based care industry. The session provided a look at the factors influencing provider adoption of risk-based adoption, the most promising investment opportunities in value-based care, and how likely the value-based care industry is to weather an economic downturn.

Top takeaways included:

  1. Nearly 60% of healthcare payments in 2021 had at least some element tied to quality and value. However, the majority of these payments were upside risk, with less than 20% incorporating down-side risk. At the same time, nearly 40% of healthcare payments are not in value-based care models.
  2. Around 80% of physicians surveyed are interested in participating in value-based care arrangements. However, that interest significantly decreases as the level of risk to the provider increases.
  3. Providers continue to face financial, operational and administrative hurdles to adopting value-based care. Providers’ sense of preparedness across the financial, operational and administrative dimensions have decreased since 2017, with providers surveyed feeling less equipped to adopt and succeed in value-based care models.
  4. To make providers more inclined to adopt value-based care, providers stated that they needed more sufficient financial resources, more effective coding and billing processes, and investments in additional staff to manage data, reporting and outreach. Similarly, providers reported they needed three key groups of enablers in order to transition from fee-for-service to risk-based models: (1) clinical care model enablers, (2) data and technology enablers, and (3) payor contracting enablers.
  5. There [...]

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McDermott and EY at the 2022 J.P. Morgan Healthcare Conference: Acceleration Capital

Digital health has never been hotter, and investor interest is surging across all stages. From early- to late-stage investments, lines are blurring with increased disruption in the digital health landscape. Traditional private equity and growth investors are moving earlier in the cycle in an attempt to capture the next unicorn, and venture capital investors are doubling down on their own portfolio. In this forum, private equity and venture capital leaders reviewed the state of the market and shared their approaches to investing in 2022 and beyond.




Below are the top takeaways for McDermott Will & Emery and EY at the 2022 J.P. Morgan Healthcare Conference: Acceleration Capital

Download the PDF here.

According to statistics from Rock Health, 2021 was the largest funding year for digital health to date, with $29.1 billion raised across 729 deals. Not only did 2021 see a record number of digital health deals, but the deals were larger than ever before: The average deal size in 2021 was $39.9 million, and the number of deals worth more than $100 million doubled from 2020 to 2021. In 2021, the six
top-funded value propositions were research and development, on-demand healthcare, treatment of
disease, fitness and wellness, healthcare marketplace and nonclinical workflow. The six top-funded
clinical indications were mental health, diabetes, cardiovascular, primary care, musculoskeletal and
oncology.

Two key trends are driving this massive influx of [...]

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McDermott Will & Emery and EY during the 2021 J.P. Morgan Healthcare Conference: Digital Health Pioneers Forum

 

 

Top industry executives BJ Moore, Executive Vice President and Chief Information Officer, Providence St. Joseph Health; Dr. Ali Parsa, Chief Executive Officer, Babylon Health; and Lucia Savage, Chief Privacy and Regulatory Officer, Omada Health, discussed the evolving doctor-patient relationship and the digitized data and technology convergence with healthcare delivery and payment along with moderators Dale C. Van Demark, Partner, McDermott Will & Emery; Rachel S. Hall, Partner, Digital Health Leader, EY; Stephen W. Bernstein, Partner, McDermott Will & Emery; and Lisa Schmitz Mazur, Partner, McDermott Will & Emery. They also provided insight into 2021’s regulatory considerations affecting healthcare innovation and its solutions.

Below are the top takeaways for McDermott Will & Emery and EY during the 2021 J.P. Morgan Healthcare Conference: Digital Health Pioneers Forum, click here to access the full webinar.

Access the PDF here.

CARE OF THE FUTURE
We are only seeing the beginning of the decentralization of care through information technology; but that shift is how scalable solutions to our health care challenges will develop. “Care delivery at home, where we can send patients home and remotely monitor them—eventually that will evolve to things like wearables -IoT devices- that we may have in our clinical settings. We’re seeing the [...]

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Hospital and Health System Innovation Summit: Lessons Learned: Diligence, Detours and Data, Oh My

Industry leaders shared first-hand lessons learned from their work on recent innovation related projects. We covered a range of case studies, highlighting lessons learned around mission alignment, conflicts of interest, diligence considerations, data ownership and de-identification, and strategies for protecting a minority investor.

Below are the top takeaways for Hospital and Health System Innovation Summit: Lessons Learned: Diligence, Detours and Data, Oh My, click here to access the full webinar.

Access the PDF here.

Mission Alignment
It is essential for a hospital and health systems to adopt a formal innovation strategic
plan that aligns with its overall strategic mission and vision and clearly articulates it
specific innovation goals and prioritizes focus areas. Hospital and health systems
pursue innovation initiatives largely to support the clinical mission and drive revenue
growth and diversification. “I think that alignment with the strategic mission of the
organization is key because that really drives and helps shape the culture of innovation
as an organization. We define innovation in terms of in three buckets, the research
based, hospital based and external or open innovation,” said Kolaleh Eskandanian,
Vice President and Chief Innovation Officer, Children’s National. “So research based
is the traditional model of [...]

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What Impact has Coronavirus had on Doing Healthcare Deals?

In the fifth and final installment of McDermott’s HPE Europe 2020 Summer Webinar Series, McDermott partner Tom Whelan hosted a discussion with Marc Benatar of Apax Partners, Markus Peterseim of Alvarez & Marsal, and fellow McDermott partner Dr. Nikolaus von Jacobs to examine how the Coronavirus (COVID-19) pandemic is affecting deal making in the healthcare industry.

Whelan led the group through a wide-ranging conversation centered on five key pandemic deal impact areas: pricing, process, timing, regulation and future prospects. Read on for discussion highlights, and click here to access the full webinar.

Pricing

“You’ve clearly seen a polarization,” Benatar said. “Nonessential businesses were hit hard by the lockdown effect and remain impacted, while those that were related to essential elements of healthcare were hit but started to experience a catch-up at the beginning of May and are already getting close to the normal run rate volume. I think that businesses that demonstrated that they are related to an essential part of the healthcare offering and that they can survive this type of crisis have almost strengthened their value. Those businesses that we know have experience with this first wave and those that are getting even more prepared for the next one will probably attract the highest valuations.”

COVID-19 has had a significant impact on the due diligence process, Peterseim noted. “When you’re advising investors on commercial or operations due diligence, there are always questions such as, ‘What will be the new normal of profitability? Will it be a swift [...]

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Tips for Winning Competitive Health Care Auctions

The current environment for healthcare transactions is fiercely competitive with high prices, tough deal terms and limited time for proper due diligence. In terms of both value and number of deals, 2018 was the biggest year for health care private equity (PE) since the financial crisis. More large cap PE firms are moving into the small and mid-cap space, increasing competition. At the same time, non-health-care entrants are competing with US and international PE, especially in the area of physician practice management and other related health care services.

Faced with this stiff competition, sponsors are getting more creative in their healthcare partnerships, whether that means partnering with management teams on new strategies, partnering with large strategics or even with one another.  These innovative collaborations can open up more investable opportunities, including public to privates and secondary trades among sponsors.

Even with these creative new opportunities, submitting a winning bid for a health care services business in a hotly contested auction can be a Herculean task. When outbidding the competition is not an option, here are some tips to help differentiate your offer:

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