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May 22, 2013

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Health Care News


Congressional Activity

Senate Panel Releases Compounding Legislation, Schedules Hearing
Senator Tom Harkin (D-IA) introduced a controversial bipartisan Senatedrug compounding bill on Wednesday, May 15, that would "clarify" that some compounding pharmacies are subject to direct federal oversight by the Food and Drug Administration (FDA). The Senate Health, Education, Labor and Pensions (HELP) Committee, which released drafts of the bill over the past several weeks, is scheduled to take up the legislationWednesday. Representative Ed Markey (D-MA) introduced a compounding bill in the House of Representatives last year.

House GOP Votes to Repeal Health Care Law
The House voted 229-195 on Thursday, May 16, to repeal the Affordable Care Act. It marked the 37 time the GOP-led House voted either to repeal or eliminate funding for the 2010 legislation designed to provide health coverage for millions of uninsured Americans. The vote is the third time House Republicans voted for a full repeal. The vote was largely along party lines, with all 227 Republicans voting for the repeal and all but two Democrats voting against the repeal.

New CBO Budget Projections Show Slower Growth in Health Care Spending
In updated budget figures released by the Congressional Budget Office (CBO) on Tuesday, May 14, CBO analysts projected a deficit this year of $642 billion, about $200 billion less than the agency predicted in February. CBO explained that the lower projection was based upon unexpected increases in revenues and payments from Fannie Mae and Freddie Mac. For the 10-year period from 2014 to 2023, CBO projects a cumulative deficit that is $618 billion less than its $7 trillion projection in February. The decrease is largely a result of outlay reductions for Medicare, Medicaid and Social Security, according to the CBO.

Regulatory Activity

CMS Announces Open Period for Model of Bundling Demonstration 
The Centers for Medicare and Medicaid Services (CMS) announced an opportunity for additional organizations to apply for Model 1 of the Bundled Payments for Care Improvement (BPCI). Under Model 1of the BPCI demonstration, CMS will pay the participating hospitals a bundled Medicare payment for episodes of care in an acute care hospital. Earlier this year, CMS announced that over 450 health care organizations wereparticipating in the BPCI demonstration overall. However, the New Jersey Hospital Association's group of providers is the only participating group of providers in Model 1 thus far. The open period ends on July 31.

CMS Offers $1 Billion in Grants for Second Round of Health Care Innovation
CMS announced on Wednesday, May 15, a funding opportunity that will award up to $1 billion in grants to test service delivery models for Medicaid, Medicare, and the Children's Health Insurance Program. The second round of grant funding under the Health Care Innovation Awardswill go to applicants who can demonstrate they will improve quality of care and decrease costs within three years.

CMS Issues Proposed Rule for Reductions in Payment to Disproportionate Share Hospitals
On May 13, CMS issued a proposed rule for hospitals that serve a disproportionate number of low-income and uninsured populations. CMS will cut $11 billion in payments to Disproportionate Share Hospitals (DSH), beginning with a $500 million reduction in FY 2014. Cuts would increase to $1.8 billion in FY 2017 and $5 billion in FY 2018. Comments are due July 12.

CMS Releases Hospital Charge Data for the First Time
For the first time, CMS released data this month on variations in hospital charges for common inpatient services paid under Medicare in 2011. The data collected represent almost 7 million discharges or 60 percent of total Medicare Inpatient Prospective Patient System discharges.

State Activity


CMS Expecting States to Enforce Standards in Federal Marketplace
As the agency mentioned in previous releases, CMS will look to states participating in the federal exchange to enforce standards mandated under the ACA, according to guidance issued Tuesday, May 14. Where states fail to adequately enforce the new standards, CMS proposes to enforce the standards through civil money penalties and decertification of plans. The marketplace open for enrollment October 1.

CMS Caps Funding for Last Months of High-Risk Pools
CMS recently announced revised CMS contract terms that it would cap the amount of funding ACA high-risk pools receive through the end of the year. The agency requested state Pre-existing Condition Insurance Plans (PCIP) propose a contract amount for the last seven months. Where states choose to close PCIPs, the enrollees will be allowed to move into the federal PCIP. The PCIP program is a temporary program intended to ensure those with pre-existing conditions can access insurance coverage prior to implementation of new health insurance reforms in 2014. 

Court Rulings


Judge Grants Temporary Restraining Order against Phoebe Putney/Palmyra Merger
A federal judge issued a temporary restraining order (TRO) blocking any further consolidation between Phoebe Putney Health System and Palmyra Medical Center, both in Albany, GA, and prohibiting any price changes to existing health-plan contracts. This action comes after the U.S. Supreme Court overturned the Eleventh Circuit in a decision allowing the Federal Trade Commission (FTC) to challenge the hospital merger. The order is expected to remain in effect until there is a ruling following a June 14 hearing on the FTC's Motion for Preliminary Injunction.

Company Petitions SCOTUS to Review Preemption Device Case
Medical technology company Medtronic is petitioning the Supreme Court to determine whether the Medical Device Amendments to the Food, Drug and Cosmetic Act preempt state laws related to requirements for companies to report adverse advents to the FDA. Richard Stengel, a man who became paralyzed after having a Medtronic device implanted,alleges that Medtronic was negligent under Arizona state law because the company didn't file information on certain adverse events to the FDA. The 9th Circuit Court of Appeals ruled in January that federal law does not preempt state law in this case. Medtronic is appealing the case to the Supreme Court as a result.

Potential Supreme Court Class Action Ruling May Impact Health Care Manufacturers
Two cases pending before the U.S. Supreme Court could have implications for drug and device companies. The Supreme Court will decide later this month if it will hear cases regarding whether lawsuits brought by state attorneys general on behalf of residents should be heard in state court or federal court. Typically, cases such as these have been heard at the state level, but the Class Action Fairness Act allows cases to be moved to federal court if the case involves more than 100 people. Because there is a clear split between the circuit courts, the Supreme Court is expected to hear the case. Both cases involve alleged price fixing of liquid crystal displays, but attorneys said the question at issue in the cases will have far reaching implications. State attorneys general have increasingly brought lawsuits against pharmaceutical, device, tobacco and other FDA-regulated industries for violations of state consumer protection laws. These types of actions could be affected by the high court's decision.

Generic Drug Manufacturer Settles False Claims and FDA Allegations
In the largest drug safety settlement to date with a generic drug manufacturer, the company Ranbaxy USA Inc. pleaded guilty to felony charges relating to the manufacture and distribution of adulterated drugs. The manufacturer also settled civil claims to resolve allegations that it caused false claims to be submitted to government health care programs as a result of the adulterated claims.


Other Health Care News


Muscular Dystrophy Group Urges FDA to Make Orphan Drug Changes
Advocacy group Parent Project Muscular Dystrophy published a white paper detailing suggestions on how the group thinks the Food and Drug Administration (FDA) could improve its review process of drugs for serious and life-threatening diseases that currently lack treatments. The group recommends that the FDA accelerate approval for therapies to treat rare diseases; issue clear guidance regarding the level of evidence required to approve the treatments; use existing authority to pilot adaptive approval for serious and life-threatening disorders with significant unmet medical need; and weigh more seriously the patient's and caretaker's benefit and risk preferences when making risk benefit determinations. 

Powers in the News

Publications, Appointments & Speaking Engagements

POWERS Co-Founder and Principal Jim Pyles authored an article at the request of the American Bar Association on the class action lawsuit against the IRS for seizing 60 million health records. "If the allegations are true, the IRS is in trouble," wrote Jim Pyles in a statement toHealthcare IT News. "[Under] both constitutional law and HIPAA, then I think we have a problem." Pyles added that the Fourth Amendment was drafted in response to the General Warrants issued by the King of England under which his officers could search for any evidence of crime without showing probable cause. "The drafters expressly sought to curb that practice in the 4th Amendment which guarantees the 'right of the people to be secure in their persons, houses, papers, and effects against unreasonable searches and seizures,'" he added. If the allegations are true, "they way overstepped the limits of the search warrant." "The Right to Obtain Restrictions under the HIPAA/HITECH Rule: A Return to the Ethical Practice of Medicine," will be available in an upcoming publication of the ABA.

POWERS Associate Amita Sanghvi was re-appointed to serve on theAmerican Health Lawyers Associations' Advisory Council on Diversity for fiscal year 2014. AHLA's Advisory Council on Diversity serves as a resource to AHLA in achieving its goal of diverse and inclusive participation of its members and leaders by advising, recommending, and developing programs and initiatives that will encourage members from diverse backgrounds to become more involved in the Association's activities.

POWERS Principal Bobby Silverstein will deliver the keynote speech at the first annual Nancy Crewe Memorial Symposium - Future Directions in Disability Policy and Strategies to Impact Employment of People with Disabilities: A Call to Action on May 22 in Lansing, MI. The symposium provides an opportunity for Michiganders of varied experiences to participate in a dialogue on disability policy and employment with national leaders in the field. The full-day event is sponsored by Michigan State University's Office of Rehabilitation and Disability Studies and Peckham Inc. Limited seating is available, registration required.

POWERS Principal Robert M. Portman will lead a live, 90-minute CLE - Strafford Legal Webinar with interactive Q&A on Wednesday, May 22, 2013 at 1PM EST, entitled: Concierge Medicine Legal Considerations - Complying With Medicare Regulations, Insurance Laws and the Anti-Kickback Statute.

POWERS Co-Founder and Principal Jim Pyles will lead three Clearwater Compliance 3-hour sessions, entitled: HIPAA Virtual Audit Prep BootCamp on May 29, June 5 & 19. Additionally, Clearwater Compliance is offering several complimentary HIPAA-HITECH Compliance Webinars.

POWERS Principal William von Oehsen is slated to participate in several upcoming SNHPA 340B Regional Roundtables, dates will be announced shortly for TN, LA, IA, and WI. SNHPA is hosting a series of complimentary, three-hour regional roundtables throughout the country. These events, facilitated by SNHPA 340B experts, are a great way to keep updated on current developments within the 340B program and learn how to utilize and ensure compliance with this complex federal program. Roundtables are open to both current and prospective hospital members and SNHPA Corporate Partners. Due to their smaller size, they also offer a valuable opportunity for networking and dialogue.

For More Information

For further information on any topics discussed or publications listed, or to get copies of the alert, please call (202) 466-6550 and ask for Sara Rosta of the Legislative Practice Group.


Powers Pyles Sutter & Verville (POWERS) P.C. is a full service law firm specializing in health care and education law and located at 1501 M St., NW 7th
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