California Health Care Update: New Laws Adopted in 2009 and Effective in 2010

This post was written by Daniel A. Cody, Paul W. Pitts and Alison B. Riddell.

Although California legislators devoted a significant amount of time and resources to addressing the state’s budget shortfall and the economic recession, the 2009 legislature debated and passed a surprising number of bills related to health care, many of which will become effective January 1, 2010. New laws impacting California health care providers include:

  • Amendments to the 2008 law requiring certain health care providers to disclose unlawful and unauthorized uses or disclosure of medical information
  • Laws requiring the Department of Public Health [www.cdph.ca.gov] to more timely process and approve applications for new or modified hospital outpatient services
  • Provisions impacting the delivery of radiologic and diagnostic imaging services, such as permitting physician assistants to provide fluoroscopy services under the supervision of a physician
  • Amendments to California’s False Claim Act that expand the types of claims subject to the law, extend the state’s prosecutorial authority, and increase the penalties for violating the statute
  • Laws stating that long-term care providers will be subject to new ownership disclosure requirements
  • Passing Assembly Bill 215, which makes California one of the first states to recognize and incorporate the controversial Five-Star Quality Rating for nursing facilities as created by the Centers for Medicare & Medicaid Services

For the full summary of major legislation impacting California physicians, hospitals, nursing facilities, and other licensed health care facilities, read our client alert.

Senate Committee Meets To Hear From Witnesses Regarding "The Medical Device Safety Act of 2009"

On Tuesday, August 4, 2009, the Senate Committee on Health, Education, Labor and Pensions met for a hearing called "Protecting Patients from Defective Medical Devices" regarding Senate Bill 540, a companion bill to the House bill, H.R. 1346, the "Medical Device Safety Act of 2009." The House Subcommittee on Health, of the Committee on Energy and Commerce also met earlier this year on this issue, with some of the same speakers. 

S. 150 and H.R. 1346 seek to overturn the Supreme Court's important ruling in Riegel v. Medtronic, Inc., 128 S.Ct. 999 (2008), which held that the PMA approval process for Class III devices imposes federal requirements that preempt state tort claims which would impose additional or different "requirements" regarding the safety and efficacy of the device, pursuant to the express preemption clause found in the Medical Devices Amendment of 1976.

Speaking in support of the bill were William Maisel, Director of the Medical Device Safety Institute, Thomas McGarity, Professor at the University of Texas School of Law, and Michael Mulvihill, a patient who was formerly implanted with a medical device. The arguments they presented echoed those of preemption opponents.

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Next Congressional Hearing About Medical Device Safety Announced

On August 4, 2009 at 2:30 p.m., it will be the Senate's HELP Committee's turn to hold a hearing entitled "Protecting Patients from Defective Medical Devices". No witness list is yet posted.

For our coverage on past hearings on this issue, click here.

California E-Discovery Act Signed into Law

This post was written by Meghan Landrum and Renee Feldman.

California's tireless Civil Justice Association of California sponsored an electronic discovery bill that was signed into law on June 29, 2009 by Governor Schwarzenegger. The Electronic Discovery Act (“the Act”) establishes procedures for litigants when obtaining discovery of electronically stored information in California. The Act amends the California Code of Civil Procedure, effective immediately, by adding provisions specifically related to electronic discovery.

Modeled after similar electronic discovery rules in the Federal Rules of Civil Procedure, the Act strives to strike a balance between making ESI available to a requesting party without over-burdening a responding party who utilizes mass quantities of ESI in its normal course of business. For more information, please read Reed Smith's full alert.

Congressional Hearings On Medical Device Regulation, Litigation Protective Orders

Congress has been busy and there is no sign it intends to slow down just because it is summer.

In two weeks, the House Energy and Commerce Health Subcommittee will hold a hearing entitled, "Medical Devices: Are Current Regulations Doing Enough for Patients." The hearing will be on June 18th at 9:30 a.m. in 2322 Rayburn House Office Building and access to the webcast and witness list should be available from this page once available. Information about this subcommittee's May 12th hearing about medical device preemption is in this prior post.

Earlier this week, the House Judiciary Committee held a hearing on a bill to curtail the discretion of federal judges in issuing litigation protective orders under Federal Rule of Civil Procedure 26(c ) and limiting the use of confideniality provisions in litigation settlement agreements subject to court approval or filed with the court. Proponents of this bill, the "Sunshine in Litigation Act of 2009", H.R. 1508, suggest that it is needed to help keep defendants in civil litigation from "hiding" health and safety hazards.

As the Supreme Court recognized in Seattle Times Co. v. Rhinehart, 467 U.S. 20, 33 (1984), discovery materials are not public components of a civil trial. Until information produced in discovery is filed with the court or introduced into evidence for determination of a merits issue (such as on a motion for summary judgment or at trial), protective orders routinely protect the confidential and proprietary information of parties to civil litigation.

Testimony by the Hon. Mark R. Kravitz of the District of Connecticut, on behalf of the Conference’s Committee on Rules of Practice and Procedure and its Advisory Committee on Civil Rules, opposed the bill on the ground that it effectively amends the Federal Rules of Civil Procedure outside the rulemaking process, contrary to the Rules Enabling Act (28 U.S.C. §§ 2071-2077). He testified that the bill is not needed (emphasis added):

In 1994, the Rules Committees asked the Federal Judicial Center (FJC) to do an empirical study on whether discovery protective orders were operating to keep information about public safety or health hazards from the public. The FJC completed the study in April 1996. . . . The FJC study showed that discovery protective orders were requested in only about 6% of the approximately 220,000 civil cases filed in federal courts in that time period. Most of the requests are made by motion. Courts carefully review these motions and deny or modify them in a substantial proportion. Less than one-quarter of the requests are made by party stipulations and the courts usually accept them. In most civil cases in which discovery protective orders were entered, the empirical study showed that the orders did not impact public safety or health. . . . The empirical data showed no evidence that protective orders create any significant problem of concealing information about public hazards.
* * * *
Even when a protective order is entered, it usually does not result in the sealing of all, or even many, documents or information submitted to the court. Case law shows that courts are rightly protective of the public’s right to gain access to information and documents submitted to the courts.
* * * *
Requiring courts to review discovery information to make public health and safety determinations in every request for a protective order, no matter how irrelevant to public health or safety, will burden judges, further delay pretrial discovery and inevitably increase the cost of civil litigation in federal courts.

We've attached a copy of the Federal Judicial Center's Report.  Additional testimony on the bill is available here.

House To Hold Hearing On Patent Settlements Involving Generics And Impact On Competition

On June 3, 2009, the House Judiciary Courts and Competition Policy Subcommittee will hold a hearing, "Pay to Delay: Are Patent Settlements That Delay Generic Drug Market Entry Anticompetitive?", sure to interest all prescription drug manufacturers. No witness list is posted yet.

Significant Amendment to the Federal False Claims Act

This post was written by Scot T. Hasselman, Andrew C. Bernasconi and Nathan Fennessy.

On May 20, 2009, the President signed into law the Fraud Enforcement and Recovery Act of 2009 (“FERA”), which will implement significant changes to the federal False Claims Act (“FCA”). The amendments to the FCA will significantly expand the scope of FCA liability, provide for new investigative tools, and make it easier for qui tam relators to bring and maintain FCA suits on behalf of the government.

The House and Senate both passed the bill with overwhelming majorities before the President signed FERA into law. While the new law is primarily targeted at potential fraud involving recipients of economic stimulus funds in the financial services industry, it also includes some very significant changes to the liability provisions of the federal False Claims Act affecting members of the health care industry.  To read Reed Smith's full alert, please click here.

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House Subcommittee Holds Hearing To Overturn Riegel: H.R. 1346, the "Medical Device Safety Act of 2009"

On May 12, 2009 the Subcommittee on Health, of the Committee on Energy and Commerce, House of Representatives, held a hearing on H.R. 1346, the "Medical Device Safety Act of 2009".  If passed, it would overturn the Supreme Court decision, Riegel v. Medtronic, Inc., 128 S.Ct. 999 (2008), which held that under the express preemption clause of the Medical Devices Amendment of 1976 (MDA), the federal requirements created by the premarket approval process for Class III devices preempted state law tort claims that added or differed from the federal requirements.  This hearing comes at the heels of public and media scrutiny of this decision, including last year's House Committee on Oversight and Government Reform preemption hearing held May 14, 2008 and the Senate Judiciary Committee's preemption hearing held June 11, 2008.

Before the invited panel of witnesses spoke, numerous members of the subcommittee provided opening remarks, which reflected the division among those who argued that the Supreme Court's analysis in Riegel departed from the legislative intent of the MDA, and those who agreed that the pending legislation would prevent innovation and access to medical devices that are life-saving. Arguments against the bill also noted that moving against preemption would otherwise place safety concerns in the hands of juries across the country, instead of on the FDA's safety and efficacy evaluations. Some focus was also placed on the FDA's effectiveness in policing the manufacturers, with several congress members such as Representative John Dingell, MI and Henry Waxman, CA arguing that the FDA has not been able to identify and take action on defective products, therefore calling into question their effectiveness in ensuring safety, while other congress members such as Representatives Steve Buyer, IN and Michael Burgess, TX argued that if the FDA is underfunded and without resources, the Committee should focus on the FDA, not on tort reform.

Most of the invited witnesses were repeat appearances from last year's hearing. David Vladeck, J.D., Professor of Law, Georgetown University Law Center presented his case in support of the bill, and repeated his concerns about the Riegel court's alleged deviation from congressional intent as reflected in legislative history. He also argued that manufacturers brought the express preemption defense to fore and that it was a more recent phenomena since the mid 1990s, after the Cipollone v. Liggett Group, Inc., 505 U.S. 504, 517, 112 S.Ct. 2608, 2618 (1992) decision.

William H. Maisel, M.D., M.P.H., Director, Medical Device Safety Institute, Department of Medicine, Beth Israel Deaconess Medical Center, Boston also testified, as both a practicing cardiologist and as a consultant and advisory committee member for the FDA. He provided anecdotal background with what he represented as an example of a man who was implanted with a St. Jude pacemaker that allegedly was subjected to a recall and resulted in additional surgical procedures.  In making this example, Dr. Maisel argued that the self-interest of companies are at odds with the congressional goal of ensuring public safety. Gregory Curfman, M.D., Executive Editor, New England Journal of Medicine also echoed similar sentiments, and discounted the arguments made about innovation and safety for consumers being mutually exclusive.

Richard Cooper of the law firm Williams & Connolly LLP provided a big-picture review of what it would mean to have 50 state juries take the place of the FDA and seasoned clinicians when determining what constitutes a "defect" meriting liability. Mr. Cooper also emphasized that innovation would be hampered should preemption be denied to medical device companies, noting how many smaller companies that are focused on under-served areas of practice would be litigated out of their market share.

Bridget Robb of Pennsylvania and Michael Kinsley of Washington both presented anecdotal history with medical devices. Ms. Robb testified about her experience with a cardiac lead that she claimed unnecessarily shocked her and caused grievous subsequent emotional and physical injury, while Mr. Kinsley presented his story of how deep brain stimulation and other implanted medical devices has allowed him to lead a productive life despite a Parkinson's Disease diagnosis. Both presented different takes on the limits of how much risk a patient should face when balanced with the potential benefits offered by their medical devices.

Prior to the hearing, the Energy & Commerce Committee also published a letter asking the FDA to reexamine its decision to approve a medical device called the "collagen scaffold" that is used to reinforce and repair the meniscus, which is a natural cushion in the knee. This letter, as addressed to the FDA Principal Deputy Commissioner, seeks reexamination of the approval decision that the authors argue was made over the objection of FDA scientists.

For more information, please see the previous post "Will The May 12 Hearing On The "Medical Device Safety Act of 2009" Recognize The Costs Of Eliminating Preemption?"

Senate Finance Committee Options for Expanding Health Care Coverage (Comment Deadline May 22, 2009)

On May 11, 2009, Senate Finance Committee Chairman Max Baucus (D‐Mont.) and Ranking Member Chuck Grassley (R‐Iowa) released their policy options for expanding health care coverage, including options for designing a government-run public health insurance plan. Members are scheduled to meet to discuss these options on May 14, and public comments will be accepted on the options through May 22, 2009. An overview of the document is reprinted after the jump. This is the second of three options papers scheduled for release by the Committee, with the third options paper on financing health care reform planned for release before a May 20 meeting of Finance Committee members.

For the full post, please see our sister blog, HealthIndustryWashingtonWatch.com.

Sweeping Changes to the Federal False Claims Act are on the Horizon

This post was written by Scot T. Hasselman, Andrew C. Bernasconi, and Nathan R. Fennessy.

On April 28, both the U.S. Senate and the U.S. House of Representatives took steps that would provide sweeping changes to the federal False Claims Act ("FCA"). The bills would significantly expand the scope of FCA liability while at the same time make it easier for qui tam relators to bring and maintain FCA suits on behalf of the government.

In short, the bills are answers to a DOJ and relator’s counsel "wish list" that would eliminate 20 years of hard-fought defense jurisprudence. In addition, the House bill, for example, would eliminate the public disclosure jurisdictional bar and defense, which could allow a sworn federal agent to utilize information obtained in the course of official investigations to file FCA lawsuits as a relator, and to receive a portion of any financial recovery. The House bill would also eliminate any basic pleading standards by relators and allow relators’s attorneys to file fishing expeditions without any substantive basis of allegation. 

For additional information, please see Reed Smith's full alert.

Senators Seek June 2009 Markup of Health Reform Legislation

On April 20, 2009, Senate Finance Committee Chairman Senator Max Baucus and Senate Health, Education, Labor, and Pensions Committee Chairman Edward M. Kennedy reaffirmed their intention to move forward on major health care reform this year. In a letter to President Barack Obama, Baucus and Kennedy announced that their committees will mark-up comprehensive health care reform legislation in early June. 

HIPAA Privacy and Security Changes in the American Recovery and Reinvestment Act

This post was written by Brad M. Rostolsky, Gina M. Cavalier, Debra L. Hutchings, Kerry A. Kearney, and Mark S. Melodia.

On Feb. 17, 2009, President Obama signed into law H.R. 1, the American Recovery and Reinvestment Act (the “ARRA”).1 This memorandum outlines significant changes and additions to the landscape of federal privacy and security law set forth in Subtitle D of the ARRA. In general, the privacy and security portions of the ARRA become effective 12 months after the enactment of the ARRA, which is approximately February 2010. It is also important to note that the ARRA directs the Secretary of the U.S. Department of Health & Human Services (“HHS”) to amend the HIPAA Privacy and Security Rules to implement the legislative changes. As such, the effective dates associated with the rulemaking process will vary.

Click here to read the full alert.

FDA Globalization Act Of 2009 And Preemption

As Point of Law pointed out on February 3, a move is afoot to "Revers[e] Preemption, One Bill At A Time," starting with industries regulated by the FDA.

Section 2 of the FDA Globalization Act OF 2009, H.R. 759, merits the attention of the life sciences industry. It provides:

This Act and the amendments made by this Act may not be construed as modifying or otherwise affecting any action or the liability of any person (as defined in section 201 of the Federal Food, Drug, and Cosmetic Act) under the law of any State.
 

 

UPDATE:  Drug and Device Law has posted Bert Rein On The Politics Of Preemption on this issue, and it is definitely worth a read.

The New Consumer Product Safety Improvements Act -- Implications for Pharmaceutical Manufacturers

This post was written by Stephen P. Murphy.

On Aug. 14, 2008, the President signed the Consumer Product Safety Improvements Act (the Act) into law. By an unfortunate and possibly unintended consequence of poor drafting by the Congress, all of the statutes enforced by the U.S. Consumer Products Safety Commission were brought within the coverage of the new Act. One of those statutes is the Poison Prevention Packaging Act, which requires a wide range of pharmaceuticals to be packaged in child-resistant packaging. Under the new Act, all such pharmaceuticals manufactured after Nov. 12, 2008 are now required to have general conformity certificates by which either the importer or the domestic manufacturer, on the basis of a reasonable testing program, attests that the products comply with the PPPA. These certificates are required to "accompany" each lot or batch of products manufactured. The CPSC has construed that an electronic certificate readily available to the CPSC or to the Customs and Border Patrol complies with the new Act. But the products must have on the shipping documents or the shipping package, a unique identifier and a URL to the website in order to facilitate review. The certificates are intended to be available through the chain of distribution, but not to patients. There are some exceptions to this statute. These rules become effective Feb. 19, 2009.

The CPSC has publicly stated that it does not have the resources to specifically enforce the new Act now, but will do so in the ordinary course of its regular activity. The CPSC expects to get supplemental funding for enforcement and other activities toward the middle of the second quarter of 2009. However, Customs is authorized by the Act to detain and destroy products that do not have the required general conformity certificate. Along with this new authority, the Act has increased the fines that CPSC can impose from $5,000 per violation to $1.25 million, and for a series of violations from $1.825 million to $15 million. In addition, the new Act introduces criminal penalties for knowing violations of the new Act and of the other statutes enforced by the CPSC.

Massachusetts Releases Proposed Restrictions on Drug and Device Marketing Activities, Annual Financial Disclosure Requirement

This post was written by Matthew E. Wetzel.

On Dec. 10, 2008, the Massachusetts Department of Public Health released proposed regulations that would impose aggressive restrictions on pharmaceutical and medical device manufacturers’ sales and marketing activities that exceed similar restrictions in other jurisdictions. The proposed regulations—intended to implement section 14 of the Massachusetts Act to Promote Cost Containment, Transparency and Efficiency in the Delivery of Quality Health Care—would also require companies to file annual disclosures of all fees, payments and economic benefits paid to health care professionals that total $50 or more. If the Department finalizes these regulations as proposed, Massachusetts will join the ranks of seven other jurisdictions that have issued similar requirements.

Click here to read the full Client Alert.

Health Care Reform During the Obama Presidency: The Impact on Hospitals

Reed Smith partner Karl Thallner just published "Health Care Reform During the Obama Presidency: The Impact on Hospitals" in BNA's Health Care Policy. Karl discusses several aspects of the Obama plan, including access to coverage, individual mandates, delivery and payment, and transparency. As the article notes, "[t]o the extent that health care reform reduces the uninsured population, hospitals could benefit through a reduction in uncompensated care and bad debts. In addition, hospitals may see increases in patient volumes with the reduction in the uninsured."

California's New HIPAA-Like Requirements Impose New Data Privacy & Security Duties - and Create New Potential Liabilities

Data breaches can occur in any industry, but those that involve medical information create unique problems. Starting January 1, they also will carry unique penalties, at least in California. The new California laws, Senate Bill 541 (SB 541) and Assembly Bill 211 (AB 211).

Health care providers clearly need to take heed of the laws' directives that they take additional affirmative steps to prevent “unauthorized access” to patient information. But AB 211 is particularly broad in scope, covering “any person or entity" that "negligently discloses" or "knowingly or willfully obtains, discloses, or uses medical information," which mean other players in the life sciences industry probably should take note as well. A full discussion of SB 541 and AB 211, written by Janet H. Kwuon and Rachel A. Rubin, is here.
 

Ghosts Of Product Liability Legislation Past

Over at Drug and Device Law Beck and Herrmann muse on the possible impact of a win by Sen. Obama on drug and device law. This blog takes no sides on the election - and this may mean nothing for the future development of the law - but it is interesting to note that in the past, Sen. McCain has supported the criminalization of product liability in certain circumstances, as Victor Schwartz explains in this March 2006 testimony before the Senate Judiciary Committee.
 

Health Industry Washington Watch Regulatory and Legislative Developments

Regulatory and legislative developments posted on Health Industry Washington Watch include:

  • Regulatory Developments.  The Agency for Healthcare Research and Quality (AHRQ) and the HHS Office for Civil Rights have announced the availability of an interim guidance document entitled “Implementing the Patient Safety and Quality Improvement Act of 2005, Including How to Become a Patient Safety Organization.'' The Centers for Medicare & Medicaid Services (CMS) has published a notice soliciting comments on the Medicare Part D/Medicare Advantage Calendar Year (CY) 2010 Bid Pricing Tool and the CY 2010 Plan Benefit Package software and formulary submission.
  • Other CMS Developments.  CMS has released details on the scoring methodology it uses to identify those nursing homes that become candidates for the “Special Focus Facility” initiative by virtue of their more serious history of severe and persistent quality of care problems. The agency also is soliciting comments regarding an interim study of options for revising geographic location adjustments under the Medicare physician fee schedule. In addition, CMS has posted Medicare Part D prescription drug plan and Medicare Advantage health plan information for 2009 online.
  • Legislative Developments.  President Bush recently signed into law a number of health bills, including legislation to restrict internet pharmacy sales, increase funding for health centers, and expand disease research, among others.
  • Odds & Ends.  The Food and Drug Administration (FDA) has released a draft guidance document on “Potency Tests for Cellular and Gene Therapy Products.” The Government Accountability Office (GAO) has issued reports examining the FDA’s advisory committee processes and reviewing how nonprofit hospitals meet community benefit requirements. The AHRQ's Technology Assessment Program will be posting draft reports on its website, including an upcoming report on "Potential Conflict of Interest in the Production of Drug Compendia." In addition, CMS is encouraging hospitals and other health care providers to review a new publication, “Community Pan-Flu Preparedness: A Checklist of Key Legal Issues for Healthcare Providers."
  • Upcoming Events.  CMS is hosting a Special Open Door Forum for physicians on the Medicare Medical Home Demonstration project. The agency also is holding a Prescription Drug Event Symposium at CMS headquarters in Baltimore for researchers and other interested parties. In addition, CMS will host a series of national provider calls regarding issues associated with the adoption of the ICD-10 coding system.

New Postings on the Reed Smith Health Industry Washington Watch Blog

The Reed Smith Health Industry Washington Watch blog has been updated to discuss a variety of regulatory and legislative developments of interest to the life sciences and health industry, including the following:

  • Legislative Developments: President Bush signed into law mental health parity legislation and funding for HHS and other federal agency programs through March 6, 2009. Congress also has cleared online pharmacy and organ transplant bills that now await the President's signature.
  • CMS Developments: A new CMS initiative to combat Medicare DMEPOS and home health fraud and abuse; CMS guidance on Medicare payment of certain routine costs associated with clinical trials; CMS release of “Medically Unlikely Edits” used by Medicare contractors to prevent payment for excessive services; and waiver of certain hospital quality reporting requirements in hurricane areas.
  • Regulatory Developments: Revised FY 2008 Medicare hospital inpatient PPS rates; solicitation of members for the DMEPOS competitive bidding advisory committee; a final rule on Medicaid self-directed personal assistance services; a final rule revising the Medicaid definition of "multiple source drug"; and FDA reporting requirements for authorized generics.
  • OIG and GAO Developments: The OIG has released its FY 2009 Work Plan, supplemental compliance program guidance for nursing facilities, and reports on nursing home deficiencies. The GAO has issued reports on trends in Medicare imaging services and hospital-associated infections.
  • Upcoming Events: CMS is hosting a conference on DMEPOS supplier accreditation and provider calls on adoption of the ICD-10 coding system.

For details on these and other health industry developments, please visit healthindustrywashingtonwatch.com.

Senate Hearing on DTC Advertising for Medical Devices

The United States Senate Special Committee on Aging heard testimony Sept. 17, 2008, to consider recommendations on whether increased regulation of direct-to-consumer (“DTC”) advertising is needed for restricted medical devices regulated by FDA, such as heart stents, replacement hips, and other implanted medical devices. (The Federal Trade Commission regulates advertising for non-restricted medical devices.) 

Describing its inquiry as “Marketing or Medicine: Are Direct-to Consumer Medical Device Ads Playing Doctor?” the hearing was another in the committee’s on-going, 15-month series of oversight hearings on medical device and pharmaceutical marketing practices. Committee Chairman Sen. Herb Kohl (D-Wis.) observed in his opening remarks that the pharmaceutical industry has spent “billions of dollars advertising their products directly to consumers” since the mid-1990s, while the medical device industry is “just beginning to get into the game.” (According to AdvaMed’s President and CEO, Stephen J. Ubl, pharmaceutical companies spent $2.46 billion on DTC ads in 2005 while medical device companies spent $116 million.) 

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The Medicare Improvements for Patients and Providers Act of 2008

This post was written by Debra A. McCurdyRobert J. Hill, Jacqueline B. PenrodCatherine Durkin, Jamie L. Schreiber, and Nancy A. Sheliga.

I.  Introduction

On July 15, 2008, the House and Senate overrode President Bush’s veto of H.R. 6331, the “Medicare Improvements for Patients and Providers Act of 2008” (“MIPPA”). [1] MIPPA rescinds a 10.6 percent cut in Medicare physician payments, delays a controversial medical equipment competitive bidding program, and makes numerous other Medicare and Medicaid policy changes. Highlights of the new law include the following:

  • Physician Fee Schedule: MIPPA repeals a 10.6 percent cut in Medicare physician fee schedule rates that was briefly triggered on July 1, 2008, and provides a 1.1 percent increase for 2009 (rather than the forecasted 5.4 percent cut). The law also expands the Physician Quality Reporting Initiative (“PQRI”), promotes electronic prescribing, and requires non-hospital advanced imaging providers to be accredited by 2012.
  • DMEPOS Competitive Bidding. MIPPA delays and reforms the Centers for Medicare & Medicaid Services’ (“CMS”) competitive bidding program for certain categories of durable medical equipment, prosthetics, orthotics and supplies (“DMEPOS”). The delay is financed by cutting fee schedule payments for items included in round one by 9.5 percent nationwide beginning January 1, 2009, followed by a 2 percent increase in 2014 (with certain exceptions).
  • Therapy Caps Exception Process. MIPPA extends through December 31, 2009 the exceptions process relative to the annual per-beneficiary limitations on outpatient therapy services.
  • Clinical Laboratory Services. The act repeals the competitive bidding demonstration project for clinical laboratory services and instead reduces the fee schedule update for lab services by 0.5 percent in each of the next five years.
  • Medicare Advantage (“MA”) Provisions. MIPPA makes a series of payment and policy changes affecting MA plans, including a $1.8 billion cut in the MA stabilization fund for regional preferred provider organizations in 2012 and a phase-out of the adjustment for indirect medical education.
  • Medicare Part D Drug Plans. MIPPA establishes timeframes for plan payments to pharmacies and long-term care pharmacy submission of claims; codifies coverage of certain “protected classes” of drugs; limits certain sales and marketing activities; and makes other Part D reforms.
  • End-Stage Renal Disease Provisions. The law provides a 1.0 percent update to the composite rate for renal dialysis services for 2009 and 2010, requires the establishment of a fully-bundled ESRD payment system by January 1, 2011, and establishes a quality incentive payment program for ESRD providers.
  • Medicaid Drug Reimbursement.  MIPPA delays the adoption of Medicaid payment based on average manufacturer price (“AMP”) for multiple source drugs and prevents publication of AMP data until October 1, 2009.

The following is a summary of the major provisions of the new law.  We would be pleased to provide additional information upon request.

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Health Law Monitor

Articles in This Issue:

  • Provider Networks and Joint Ventures: Avoiding Antitrust Scrutiny Through Clinical Integration
  • Stark II, Phase III Final Rule
  • In the Spotlight:  Fraud and Abuse
  • Health Law 101:  Fraud and Abuse
  • Recent Reed Smith Publications

Click here to read the Spring 2008 issue of Health Law Monitor.

Proposed Stark Law Changes in CMS's 2009 IPPS Proposed Rule

This post was written by Karl A. Thallner, Jr., Gina M. Cavalier, Daniel A. Cody, Heather M. Zimmerman, and Suzanne K. Yurk.

I. INTRODUCTION

On April 30, 2008, the Centers for Medicare & Medicaid Services (“CMS”) published a proposed rule to implement the Fiscal Year 2009 Hospital Inpatient Prospective Payment System (the “IPPS proposed rule”). 73 Fed. Reg. 23528. The IPPS proposed rule includes possible changes to certain provisions of the federal Physician Self-Referral Law, or “Stark Law,” regulations. Under the Stark Law, if a physician or a member of a physician’s immediate family has a financial relationship with an entity, the physician may not make referrals to that entity for the furnishing of certain “designated health services” (“DHS”) under Medicare, unless an exception applies. A DHS entity is prohibited from seeking or keeping payment for services furnished as a result of a prohibited referral. The IPPS proposed rule’s changes to the Stark Law regulations come on the heels of two other significant Stark Law regulatory developments – the July 2007 proposed Stark Law changes contained in the proposed 2008 Medicare Physician Fee Schedule (“2008 proposed MPFS”) regulations and the September 2007 final Phase III Stark Law regulations1. CMS will accept comments from the public on these proposed regulations until June 13, 2008.

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Operating Notes: Developments Surrounding Outpatient Surgical Facilities Continue to Unfold in 2008

Calendar year 2008 has begun where 2007 ended, by presenting us with a number of legal developments impacting the provision of outpatient surgical care. Keeping up with such developments is a challenge for those of us whose careers revolve around representing outpatient surgical facilities. Keeping up for those who actually own and/or operate such facilities as part of their practices may simply be impossible.

Accordingly, this post details our discussion of selected recent developments in the outpatient surgery arena to be useful. This alert and others that we will forward do not purport to be exhaustive accounts of legal developments impacting ASCs or physician-owned hospitals nationally. Rather, we have identified developments that we found particularly interesting in that they address common themes or questions that we frequently encounter.

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California Assemblyman Introduces Legislation to Require Notice of Defective Foreign Products

It seems like a rare day when there is not a notice of a foreign-made defective product being recalled in the United States. In recent months, there have been more than 500 recalls of a variety of products including millions of toys coated with lead paint, thousands of illegal fireworks, contaminated meats, and tainted medicines.

The issue has become so enormous that the U.S. Government has created a website—www.recalls.gov—that provides information about recalls coordinated by a variety of agencies including the Consumer Product Safety Commission, the Food and Drug Administration, U.S. Department of Agriculture, the Environmental Protection Agency, and others.

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Medicare, Medicaid, and SCHIP Extension Act of 2007 Enacted into Law

President Bush has signed into law S. 2499, the “Medicare, Medicaid, and SCHIP Extension Act of 2007." Most notably, the legislation postpones for six months a 10.1% across-the-board cut in Medicare physician payments that was scheduled to go into effect January 1, 2008.

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