Tag Archives: Affordable Care Act

Final Medicaid Drug Rebate Program AMP Rule: Some Technical Highlights

We reported yesterday that the Centers for Medicare & Medicaid Services (CMS) Final Average Manufacturer Price (AMP) Rule (the “Final Rule”) was released and will be published in the Federal Register on February 1.  If you are still reading, despite the fact that we included “Technical Highlights” in today’s title, we will assume a certain level of familiarity with the Medicaid Drug Rebate Program in our discussion below.  However, although the issues addressed in the Final Rule are technical, the business implications are very real, and the Final Rule is significant to all manufacturers with marketed drug products participating in the Medicaid Drug Rebate Program (or who hope to participate someday).

Those of you who have been anxiously awaiting a final AMP rule for years now will be pleased to learn that some long-standing questions raised by CMS’s controversial 2012 proposed AMP rule have been answered (and, of course, some new questions have been raised).  Some highlights of the Final Rule, in no particular order:

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Filed under 340B, Compliance, Corporate Compliance, Coverage and Reimbursement, Fraud and Abuse, Government Pricing, Health Care, Health Reform, Medicaid, The Affordable Care Act

Final MDRP AMP Rule is Out! Will be Effective on April Fools Day 2016. (No joke.)

If you were looking for something fun to read while snow shuts down our nation’s capital tomorrow, the Centers for Medicare & Medicaid Services (CMS) just released the long-awaited Final Medicaid Drug Rebate Program Rule on Average Manufacture Price (AMP) (et al.)!  The publication of this Final AMP Rule follows the 2012 publication of CMS’s highly controversial proposed policies implementing various changes to the Medicaid Drug Rebate Program enacted under the Affordable Care Act.  This rule has significant potential to impact drug manufacturers’ calculations and policies regarding the Medicaid Drug Rebate Program and pricing more generally, and should be carefully reviewed by all interested parties.   It is being issued as a final rule with comment period.

We are currently reviewing the 657 pages of material, and plan to provide more substantive commentary in a subsequent post.  For those of you playing along at home, the rule is expected to appear in the February 1, 2016, Federal Register, and comments are expected to be due by 5:00 PM Eastern April 1, 2016 (which is also the effective date of the rule).  Separately, State Medicaid Agencies must comply with certain rule requirements by submitting a State Plan Amendment (SPA) by June 30, 2017 to be effective no later than April 1, 2017.

Stay tuned…

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Filed under 340B, Corporate Compliance, Coverage and Reimbursement, Fraud and Abuse, Government Pricing, Health Reform, Medicaid, The Affordable Care Act

Key Health-Related Provisions Tucked into Year End Spending Bill

Last week, Congress passed and the President signed into law the Consolidated Appropriations Act of 2016 (“the Omnibus”).   This legislation contains both $1.1 trillion in government spending for FY16 as well as $650 billion in tax breaks.  The Omnibus includes several health care related provisions, both on the funding and tax sides.  This post highlights some of the more significant items.

Key Appropriations Provisions

Title II, Division H, contains the funding and other provisions for the Department of Health and Human Services (HHS).  Some of the key provisions are summarized below.  The explanatory text for this title of the Omnibus has a description of the numerous HHS funding line items, along with directives and some specifics for each agency within the Department.

340B Drug Program: HRSA is requested to provide a briefing to update the Committees on Appropriations of the House of Representatives and the Senate on the status of 340B guidance, the secure website, and covered entities in the 340B drug program.

National Institutes of Health (NIH):   The Omnibus provides a $2 billion increase in funding from fiscal year 2015.  The total spending level for FY16 for NIH is $32 billion. Some of the initiatives receiving increased and/or new funding include:

  • $936 million for Alzheimer’s research (an increase of $350 million)
  • $200 million for Precision Medicine

Centers for Disease Control (CDC):  Overall, CDC receives a $300 million increase in funding for a total of $7.2 billion for FY16, as follows:

  • $1.2 billion for Chronic Disease Prevention and Health Promotion
  • $70 million for the prevention of prescription drug abuse
  • $579 million for Emerging and Zoonotic Infectious Diseases

Centers for Medicare & Medicaid Services (CMS): CMS receives $3.6 billion, the same amount appropriated in FY2015.

Prescription Drug Report –Of particular note is that the Omnibus directs the Secretary of HHS, in consultation with the Secretary of the Department of Veterans Affairs, to submit a report to the Committee on Appropriations of the House of Representatives and the Senate, using non-proprietary data, which is only available under current law. The report must be delivered in a time period not later than 180 days after the date of enactment of the Omnibus — December 18, 2015. This report must discuss the following topics: (1) price changes of prescription drugs (net of rebates) since 2003; (2) access to prescription drugs by patients in the four programs listed below; (3) health outcomes and patient satisfaction with care that addresses the four programs listed below; and (4) an analysis of the current cost and length of time necessary to bring new drugs to market. The report “should” include prescription drug prices (net of rebates) paid by Federal programs for the 10 most frequently prescribed drugs and the 10 highest cost drugs under Medicare Part B, Medicare Part D, Medicaid and the Department of Veterans Affairs.

Key Tax Provisions

Two Year Moratorium on the Medical Device Tax:   Section 174 of the tax proposals creates a two year moratorium of the 2.3 percent excise tax on the sale of medical devices that took effect in 2013.  The tax will not apply in 2016 or 2017.

Delay of the Tax on High Cost Health Plans a/k/a/ the Cadillac Tax: Title 1 of Division P contains a provision that delays the Cadillac Tax for two years (2018 and 2019). This makes the tax on high cost, health insurance plans effective in 2020.

One-Year Moratorium on the Health Insurance Tax (HIT).   Title 1 of Division P also includes language setting a one-year moratorium on the annual HIT (2016), making the tax effective in 2017. The annual HIT is, in essence, a sales tax on health insurance premiums.

Contact the Cooley Health Care & Life Sciences Regulatory Practice if you have  questions on these or other provisions of the Omnibus.

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by | December 23, 2015 · 4:02 pm

HRSA 340B Drug Discount Program “Omnibus” Regulation Published – Comment Period Open Until October 27, 2015

On Friday, August 28, 2015, the U.S. Department of Health and Human Services (HHS) Health Resources and Services Administration (HRSA) proposed its long-awaited “Omnibus” regulation for the 340B Drug Discount Program in the Federal Register (the “Proposed Rule”).  The 340B Drug Discount Program is the program by which drug and biologic manufacturers are generally required to offer their products at potentially steeply discounted prices to certain purchasers, generally “safety net” entities such as certain hospitals (called “covered entities”).  Public comments on the Proposed Rule will be accepted by HRSA until October 27, 2015.  Pharmaceutical and hospital industry stakeholders are encouraged to review the proposals carefully to evaluate whether there are areas of particular concern. Continue reading

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Filed under 340B, Compliance, Coverage and Reimbursement, Government Pricing, Health Care

First Court Decision Interpreting the Overpayment Rule Issued This Week

Earlier this week, a key decision denying defendants’ motion to dismiss was issued in the case, Kane v. Healthfirst Inc., et al. and United States v. Continuum Health Partners Inc., et al. (case no. 1:11-cv-02325, S.D.N.Y.). This is the first court decision to interpret a provision of the Affordable Care Act that requires a person who has received an overpayment of Medicare or Medicaid funds to report and return the overpayment by the later of: (i) 60 days after the date on which the overpayment was “identified”; or (ii) the date any corresponding cost report is due, if applicable. 42 U.S.C. § 1320a-7k(d). Although the Centers for Medicare and Medicaid Services (CMS) issued a Proposed Rule in 2014 related to the process for reporting and returning overpayments, the deadline for issuing the Final Rule has been extended  until February 2016.

In Kane, the relator was a former employee of the company who allegedly provided to management a spreadsheet of over 900 potential overpayments caused by a software glitch. The employee was fired four days later and the company failed to return all of the overpayments due until it subsequently received a civil investigative demand in connection with the qui tam lawsuit that had been filed by the former employee under the False Claims Act (FCA). The Court determined that defining “identified”, and thus starting the 60-day clock, when a “provider is put on notice of a potential overpayment, rather than the moment when an overpayment is conclusively ascertained”, is consistent with FCA legislative history.  The Court further stated that the defendants’ position that its obligation to pay would not be triggered until after it had “done the work necessary to determine conclusively the precise amount owed to the Government”, thereby “relegating the sixty-day period to merely the time within which they would have to cut the check”, would create an “absurd result.”

We will continue to monitor this important case and provide significant updates. 



Filed under Fraud and Abuse, Government Enforcement, Health Reform

Congress Takes Step Towards Scrapping Device Tax

Yesterday, the House of Representatives voted 280-140 to pass H.R. 160, a bill that eliminates the 2.3 percent medical device tax. The vote was strongly bipartisan with 46 Democrats joining all Republicans voting in favor of scrapping the tax. The vote came amid the threat of a veto from the White House, citing the bill’s cost of $24 billion over ten years, among other reasons.

The size and margin of yesterday’s vote has two potentially significant impacts. First, securing 280 “yes” votes is close to the amount necessary to override a Presidential veto. Second, the broad support in the House could give repeal proponents in the Senate hope that they can move a bill with similar bipartisan (and veto-proof) support. Recall that the Senate passed a non-binding proposal in 2013 with a veto-proof majority backed by 34 Democrats. Majority Leader Mitch McConnell (R-KY) has repeatedly stated that device tax repeal is a priority and the ball is firmly in his court to make the next move.

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Filed under Health Care, Health IT, The Affordable Care Act

CMS Reopens Open Payments System After Rejecting One-Third of Reported Payments

The Centers for Medicare & Medicaid Services (CMS) announced last week that the Open Payments system was available again after it was taken off-line on August 3, 2014 to “resolve a data integrity issue.”  Because the Open Payments system was taken off-line during a critical period in which physicians and teaching hospitals were able to review data reported by manufacturers and group purchasing organizations (GPOs) and, if necessary, dispute incorrect information, CMS extended the review and dispute process by the number of days that the system was off-line until September 9, 2014.  Manufacturers and GPOs will have until September 23, 2014 to resolve disputed payments before the data is posted publicly by CMS on September 30, 2014.

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