340B Litigation, Nursing Home Visitation and other Updates

For more information about this blog post, please contact Khaled J. KleleRyan M. MageeLabinot Alexander Berlajolli, Brianna J. Santolli, or Connor Breza.

Conflicting Rulings in 340B Contract Pharmacy Challenges

On November 8, 2021, federal judges from the District of New Jersey and District of Columbia issued conflicting opinions as to whether pharmaceutical companies are required to offer discounts to third-party pharmacies under the 340B federal drug-pricing program. As to New Jersey, the Court concluded that “drug companies cannot unilaterally restrict sales of products discounted under the 340B program to contract pharmacies.” However, that same day, in D.C., the Court held that the Department of Health and Human Services (HHS) “lacks the authority” to force drugmakers to provide discounts.

These conflicting opinions are merely the latest in an ongoing legal struggle among HHS, drugmakers, and pharmacies. By way of background, in December 2020, HHS issued an advisory opinion stating that drugmakers must extend 340B discounts to drugs dispensed by third-party pharmacies. When several pharmaceutical companies announced that they would not follow the advisory opinion due to concerns over fraud, in May 2021, HHS sent letters to six companies declaring them in violation of the federal statute.  Several lawsuits soon followed, with no clear, uniform answer from the federal courts just yet.

CMS Relaxes Nursing Home Visitation Restrictions

The Centers for Medicare & Medicaid Services (CMS) recently issued revised guidance for visitation in nursing homes during the COVID-19 public health emergency, including the impact of COVID-19 vaccination. Namely, the revised guidance now permits nursing home visitation for all residents at all times. Under earlier guidance, CMS restricted nursing home visitation to mitigate the opportunity for visitors to introduce COVID-19 into the nursing home. However, current nursing home COVID-19 data shows approximately 86% of residents and 74% of staff are fully vaccinated, and the number of new COVID-19 cases each week has been dramatically reduced. The revised guidance maintains a number of restrictions such as pre-visitation symptom screening, social distancing, face coverings, and frequent cleaning and disinfecting of the facility.

The 2021 Merit-based Incentive Payment System Automatic Extreme and Uncontrollable Circumstances Policy

CMS announced that it will apply an automatic extreme and uncontrollable circumstances policy to all clinicians participating as individuals in the Quality Payment Program’s Merit-based Incentive Payment System (MIPS) for the 2021 performance period due to the ongoing COVID-19 public health emergency. Under the policy, clinicians will automatically have all performance categories weighted at 0 percent, meaning they will receive a neutral payment adjustment. The automatic policy, however, does not apply to groups, virtual groups, or alternative payment model entities, who may apply through December 31, 2021 at 8 p.m. for an extreme and uncontrollable circumstances exception. More information on the policy change can be found here.

 CY 2022 End Stage Renal Disease Prospective Payment System Final Rule

CMS issued a final rule, 86 FR 68594, that updates payment rates under the End-Stage Renal Disease (ESRD) Prospective Payment System (PPS) for renal dialysis services furnished to beneficiaries on or after January 1, 2022. Under the rule, Medicare will pay a base rate of $257.90 – a $5.00 increase from the current base rate - CMS will update wage index values and the outlier services fixed-dollar loss amounts for both pediatric and adult beneficiaries. The rule also finalizes updates to the Acute Kidney Injury (AKI) dialysis payment rate for renal dialysis services furnished by ESRD facilities.  Additionally, the rule finalizes modifications to the ESRD Treatment Choices (ETC) Model policies to encourage certain health care providers to decrease disparities in rates of home dialysis and kidney transplants among ESRD patients with lower socioeconomic status. This makes the model one of the agency’s first CMS Innovation Center models to directly address health equity.

CMS issued a fact sheet on the final rule.