Healthcare Final and Proposed Rules: Updates

- CMS proposed rule on Medicaid premiums and cost sharing
- CMS proposed rule on state Medicaid flexibility
- CMS final rule on medical necessity determinations
- CMS final rule on Medicare secondary payer amendments
- CMS final rule reducing provider tax rate
- HHS Proposed Rule implementing Patient Safety Act

TN Law Promotes Effective Communications Between Health Care Providers While Rendering Care to Patients

Public Chapter No. 391 (Amends T.C.A. § 68-11-312)

T.C.A. § 68-11-312(b) states: "There is no implied covenant of confidentiality or other restriction that precludes (1) health care providers from communicating with each other in the course of providing care and treatment to a patient, or (2) a health care provider from responding to a request from a hospital regarding entries in the patient's records of the requesting hospital made or reviewed by that health care provider during the course of providing care and treatment to the patient in the hospital . . . ."

Effective date: July 1, 2007

TN AG Opinion: Notice to Bureau of TennCare re: Medicaid/Medicare Benefits Due to Separation Asset Division

Tennessee Attorney General Opinion No. 08-31, February 20, 2008
(Notice to Bureau of TennCare re: Medicaid/Medicare Benefits Due to Separation Asset Division)

Questions:

1. In any case seeking a divorce or legal separation in which the disabled spouse has a conservator and is receiving either Medicare/Medicaid benefits, is notice to the Bureau of
   TennCare required as a prerequisite to granting relief?
2. In cases seeking a divorce or legal separation involving a disabled spouse but where court filings lack information as to whether or not the disabled spouse is receiving TennCare benefits, is notice to the Bureau of TennCare a prerequisite to the maintenance of such complaints?
3. When notice has been provided to TennCare but plaintiff fails to enumerate grounds for divorce or separation pursuant to Tenn. Code Ann. §36-4-102, is there a basis for granting relief under this statute?

Opinions:

1. No. In cases seeking a divorce or legal separation there is no statutory requirement of notice to the Bureau of TennCare as a prerequisite to granting relief to the disabled spouse already receiving TennCare benefits.
2. No. In any case seeking a divorce or legal separation there is no statutory requirement of notice to the Bureau of TennCare as a prerequisite to the maintenance of such complaints when information is lacking about whether or not the disabled spouse is receiving TennCare benefits.
3. While courts are given broad discretion in granting relief in divorce/separation matters, Tenn. Code Ann. §36-4-102 requires that a complaint requesting an order granting legal
   separation must set forth grounds for such relief pursuant to Tenn. Code Ann. §36-4-101. Further, if the other party objects to legal separation, the party seeking such relief must establish grounds under Tenn. Code Ann. §36-4-101.

CMS Proposes Rules to Give States More Flexibility in Designing Medicaid Plans

[Source: Health Lawyers Weekly, February 22, 2008 - AHLA]

The Centers for Medicare and Medicaid Services (CMS) proposed a pair of rules February 22 that would give states more flexibility in designing their Medicaid programs and require increased cost-sharing from beneficiaries.

The rules, which would implement provisions of the Deficit Reduction Act of 2005 and the Tax Relief and Health Care Act of 2006, are the latest in a series of regulations to implement the administration’s goals of aligning Medicaid more closely with private market insurance and giving states more control over their Medicaid benefits packages, CMS said in a press release.

Under one rule, states will have the opportunity to offer beneficiaries healthcare that has the same value as plans that are being offered to other populations in the state, through alternative benefit packages called "benchmark plans," the release said.

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Read the proposed premiums and cost sharing rule, 73 Fed. Reg. 9727.

Read the proposed rule giving states flexibility, 73 Fed. Reg. 9714.

View CMS' press release.

U.S. Supreme Court limits suits targeting makers of FDA-approved medical devices.

[Source: Health and Life Sciences Law Daily, February 21, 2008 - AHLA]

In a front-page story, the New York Times (2/21, A1, Greenhouse) reports that on Wednesday, the U.S. Supreme Court ruled in the case of Riegel v. Medtronic Inc. (PDF) that "[m]akers of medical devices like implantable defibrillators or breast implants are immune from liability for personal injuries as long as the Food and Drug Administration (FDA) approved the device before it was marketed and it meets the agency's specifications."

The Los Angeles Times (2/21, Savage) notes, "The 8-to-1 ruling throws out a lawsuit brought by a widow whose husband was badly hurt and later died after a balloon catheter burst in his chest," and represents a broad reading of "federal law...to protect companies from juries or state regulators."

According to the Wall Street Journal (2/21, A8, Bravin), "[l]ower courts in New York dismissed the suit, finding that a 1976 law immunized Minneapolis-based Medtronic, because its catheter had been approved for sale by the FDA." Wednesday's ruling indicated that "state authority surviv[es] only when Congress explicitly permits it a role." The case presented the question of "whether traditional private-product lawsuits, as well as state regulations, may be pre-empted by federal law."

On the front page of its Business section, the Washington Post (2/21, D1, Barnes) details the dissenting argument from Justice Ruth Bader Ginsburg, who wrote that "Congress did not intend the preemption clause...'to effect a radical curtailment of state common-law suits seeking compensation for injuries caused by defectively designed or labeled medical devices.'" Previously, in 1996 the court found "that devices approved by the FDA under a less-rigorous process were not protected from state lawsuits." However, "the government reversed its position" in 2004.

USA Today (2/21, Biscupic) reports that the case was "a victory for business interests and a setback for state efforts to protect citizens in health-related areas when the federal government already has entered the field." And, "[t]he Medtronic decision could signal a favorable outcome for drug manufacturers in two pending Supreme Court cases."

According to Reuters (2/21, Vicini, Richwine), "The decision was the Supreme Court's first ruling on the legal effect of the FDA's approval of a medical device on liability lawsuits, Medtronic said." Other device makers may benefit from the ruling, as they "have argued that the FDA's judgment that a product is safe and effective should protect companies from being sued for liability in state court." In this particular New York case, "Medtronic has said the doctor in the case used the catheter contrary to labeling instructions and in a patient for whom it was not recommended."

The AP (2/21, Sherman, Yost) adds, "The case has significant implications for the $75 billion-a-year healthcare technology industry, whose products range from heart valves to toothbrushes." During "a recent three-month span, federal regulators responded to over 100 safety problems regarding medical devices."

Turning to the implications the case has for patients, Bloomberg (2/21, Stohr) quotes Allison Zieve, the attorney representing the patient's widow, as saying that the ruling is "[p]retty bad for patients, pretty good for industry profits." Zieve added, "Clearly a lot of people will lose their ability to have even the possibility of getting any compensation for injuries caused by medical devices."

Meanwhile, Modern Healthcare (2/21, Blesch) details the reaction of Medtronic CEO Jon Haber, who issued a statement saying that the ruling "ensures that patients continue to have appropriate access to innovative, life-saving medical devices."

Pointing to the broader legal implications of Wednesday's ruling, the Legal Times (2/21, Mauro) reports that "the Supreme Court continued its trend toward freeing companies from the conflicting regulation of 50 different states in favor of one federal regime." The Financial Times (2/21, Waldmeir, Bowe), Forbes (3/10, Fisher), the Wall Street Journal's Health Blog (2/20, Goldstein), and the Boston Business Journal (2/21, Hollmer) also cover the story.

"Amendments To Medicare Secondary Payer Laws Impose Substantial New Reporting Obligations And Potential Civil Monetary Penalties For Non-Compliance"

[Source: Health Lawyers Weekly, February 8, 2008 - AHLA]

By Janice Ziegler, Ramy Fayed, and Katie Pawlitz, Sonnenschein, Nath, and Rosenthal LLP

On December 19, 2007, Congress passed the Medicare, Medicaid and SCHIP Extension Act of 2007* (the Act), which included modifications to the Medicare Secondary Payer (MSP) laws. The Act, which was signed into law on December 29, 2007, imposes significant new obligations on insurers, third party administrators (TPAs), and plan administrators or fiduciaries of group health plans that are both self-insured and self administered (Plan Administrators). Specifically, it requires all of these entities for the first time to (1) secure certain information from group health plan sponsors and plan participants, and (2) share such information with the Secretary of the U.S. Department of Health and Human Services (HHS). It also provides significant penalties for failure to do so. This article discusses the MSP amendments and their impact in further detail.

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* Medicare, Medicaid, and SCHIP Extension Act of 2007, Pub. L. No. 110-173, § 111(a)(7)(A), 121 Stat. 2492, 2497-2498, available here

Compliance Series - OIG/AHLA

Corporate Responsibility and Corporate Compliance: A Resource for Health Care Boards of Directors (4/2003)

This educational resource is designed to help health care organization directors ask knowledgeable and appropriate questions related to health care corporate compliance. These questions are not intended to set forth any specific standard of care. Rather, this resource will help corporate directors to establish, and affirmatively demonstrate, that they have followed a reasonable compliance oversight process.

An Integrated Approach to Corporate Compliance: A Resource for Health Care Boards of Directors (7/2004)

This document addresses the roles of the in-house corporate general counsel (“General Counsel”) and an organization’s Chief Compliance Officer in supporting the compliance oversight function of health care organization governing boards (“Boards of Directors” or “Boards”). This supplemental educational resource addresses issues raised by recent developments in the law with respect to corporate responsibility and lawyers’ professional ethics, the modifications to the Federal Sentencing Guidelines for Organizations (“Sentencing Guidelines”), and the recommendations of the American Bar Association Task Force on Corporate Responsibility (“ABA Task Force”). It addresses these issues in the unique context of health care compliance and health care law, particularly in light of the expressed view of the OIG regarding the risk of structuring an organization’s compliance function as subordinate to the General Counsel function.

Corporate Responsibility and Health Care Quality – A Resource for Health Care Boards of Directors (9/2007)

The guide will provide insight into the OIG’s priorities and practical tools for healthcare organization boards to carry out their fiduciary responsibilities.

Owens v. National Health Corporation [Corrected Opinion]

Here is the corrected opinion, which replaces the opinion filed on November 8, 2007.

39 States Have Begun to Enact Comprehensive Healthcare Access Reform

According to a study, A Progress Report On State Health Access Reform, published in Health Affairs, enactment of ambitious health reform laws in Massachusetts and Vermont in 2006 helped instigate a wave of state legislative activities to expand coverage to uninsured people. The study identifies thirty-nine states that have enacted laws in at least one access category since 2006. At least thirteen states have begun processes to enact comprehensive reforms to cover at least half of their uninsured residents. Key activities involve coverage expansions for uninsured children and for uninsured adults; regulatory changes in small-group and individual insurance markets; and individual and employer mandates. The future extent and durability of this wave are uncertain.

While at least 10 states have proposed legislation involving individual or employer mandates or both, only three have enacted such measures (Massachusetts, Vermont, and Rhode Island), the report noted.

Health Affairs 27, no. 2 (2008): w105-w115 (published online 29 January 2008; 10.1377/hlthaff.27.2.w105)

Hospital Investments in Competitiveness: Financing Options

Waller Lansden publishes its 2007 Hospital Investments in Competiveness: Financing Options survey.

Tennessee Court Rejects False Certification Claim

In Waller Lansden's Healthcare blog, attorneys Jim Mathis and Josh Collins note that the U.S. District Court for the Western District of Tennessee recently dismissed a qui tam suit brought against Baptist Medical Center in Memphis, Tenn., which alleged that Baptist violated the False Claims Act (FCA) by falsely certifying compliance with Medicare’s Conditions of Participation (CoPs). The court noted that, unlike Conditions of Payment, CoPs are not a prerequisite to a particular reimbursement. Alleged non-compliance with CoPs could lead to corrective action, but because the government would not have immediately withheld Medicare payments as a result of such deficiencies, they were neither material to payment nor so deficient as to constitute worthless services. Under the FCA, a false statement within a claim only makes the claim fraudulent if that statement influences the decision making body.

United States ex rel. Landers v. Baptist Mem’l Health Care Corp., No. 2:99-cv-2097 (W.D. Tenn. Dec. 17, 2007).

Venture Capital Activity Expected to Rise in 2008, Survey Finds

FierceBiotech reports that according to a recent survey of more than 350 venture capitalists, entrepreneurs, corporate buyers, investment bankers and research analysts, KPMG, LLP (the U.S. audit, tax and advisory firm) found that 51 percent of respondents expected venture capital activity to continure rising in 2008. Of those surveyed, 24 percent indicated that greentech/cleantech sectors will likely receive the most capital over the next two years, followed by biotech/pharmaceuticals (15%), Internet services (13%), and mobile technology (11%).

Outside the U.S., investors are looking to the emerging markets in China and India as investment favorites. Over 64 percent of respondents indicated that China and India are the most attractive locations for entrepreneurs to find funding, while 61 percent of those surveyed expect both to have increased IPO activity over the next two years.

The investors surveyed also expect rising merger and acquisition activity in the next year. Forty-nine percent expect an increase, with 33 percent believing it will be about the same levels, and only 11 percent foreseeing a decrease in deals during the period.

. . . . .
KPMG LLP, the audit, tax and advisory firm (http://www.us.kpmg.com/), is the U.S. member firm of KPMG International. KPMG International's member firms have 123,000 professionals, including more than 7,100 partners, in 145 countries.

Employment Edges Up at Hospital and Physician Offices

Modern Healthcare Online reports: Hospitals added roughly 10,000 workers in January, climbing 0.2%, to bring total hospital employment to about 4.58 million, according to seasonally adjusted figures from the Bureau of Labor Statistics. All figures are preliminary. For the 12 months ended in January, hospital payrolls added nearly 112,600 workers, an increase of 2.5%.

Physician office employment grew by about 8,400 workers, or 0.4%, last month to total 2.25 million employees. For the 12 months ended in January, physician offices added roughly 74,100 workers, an increase of 3.4%.

Vanderbilt To Ban Gifts from Drug Reps

The Tennessean reports: Vanderbilt Medical Center has decided to stop doctors, faculty members and others who work on campus from accepting meals or gifts from the drug industry in a bid to reduce the companies' influence on patient care and trim spending on drugs (the drug industry spends $25 billion a year on promotions to influence patients and doctors who write prescriptions). The plan will also preclude drug companies from sponsoring or attending conferences or continuing medical education classes on Vanderbilt's campus.

Its latest policy applies to the more than 400 pharmaceutical representatives and about 1,300 device and equipment representatives that frequent the medical center.

Vanderbilt's plan, however, does not include penalties for violaters.

The new conflicts of interest policy is set to be phased in by July 1.

Details

U.S. Supreme Court Agrees to Hear Five Preemption Cases

Corporate Counsel reports: Corporate America has generally argued that the federal government should prevail over the states when they have conflicting laws and regulations. The question of who trumps whom is now before the U.S. Supreme Court, which has agreed to hear five cases involving preemption. The five preemption cases before the Supreme Court involve product liability, transportation of dangerous substances, labor, and other issues.

New York University law professor Catherine Sharkey is one of those who hope that the high court can settle the debate. "Almost every scholar and litigant calls [the existing standards on preemption] a muddle, a mess," Sharkey says. In her view, the Supreme Court "is poised to begin to fashion a kind of framework for preemption jurisprudence."

First out of the box is Riegel v. Medtronic Inc., which was argued before the justices on December 3. At issue: whether a provision in the federal Food, Drug, and Cosmetic Act forecloses suits that claim injury from a medical device approved by the Food and Drug Administration if the actions are based on state law.

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New York Times reports on the product liability cases before the Supreme Court, which consider preemption issues relating to drug and cigarette labeling requirements.
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From the FDA News Drug Daily Bulletin (Jan. 29, 2008): The U.S. Supreme Court will hear a second drug preemption case to decide whether the FDA’s authority to regulate labeling of a Wyeth drug preempts Vermont state law for product liability.

The court granted Wyeth’s request for writ of certiorari for Wyeth v. Levine. The company filed the request after the Vermont Supreme Court awarded $6.8 million to Diana Levine, a professional musician who received Wyeth’s antinausea drug Phenergan (promethazine) in a hospital during treatment for a migraine headache.

The drug was mistakenly injected into an artery, causing injuries that “quickly and irreversibly” led to the amputation of her right arm, according to the Public Citizen Litigation Group, Levine’s co-counsel.

Public Citizen said the court should deny review because Levine’s claim was not preempted by FDA drug labeling regulations and there is no conflict among appellate courts.

For Wyeth v. Levine, the petitioner’s brief is due Feb. 25, and the respondent’s brief is due March 24.