Legislative and Litigation Update

For more information about this blog post, please contact Khaled J. KleleLatoya Caprice Dawkins, or Ryan M. Magee.

New Jersey State Regulatory Issues

51 N.J.R. 1806(a) – Notice of Action on Petition for Rulemaking

The Department of Health received a petition to make amendments to N.J.A.C. 8:43G, the Hospital Licensing Standards, in Subchapter 14 Infection Control, at N.J.A.C. 8:43G-14.9, Sepsis protocols.  We previously reported that the Department confirmed receipt of the petition.  At this time, the Department has not decided on the petition and has referred the petition to the Division of Certificate of Need and Licensing to evaluate, and make recommendations as to the appropriateness of granting the petition.

Federal Statutory Update

H.R. 3 – Passed the House – As we previously reported, this proposed statute requires CMS to negotiate prices for certain drugs, which current law forbids CMS from doing.  Under the proposed statute, CMS must negotiate maximum prices for (1) insulin products and (2) at least 25 single source, brand-name drugs that do not have generic competition and that are among the 125 drugs that account for the greatest national spending. The negotiated prices must be offered under Medicare and Medicare Advantage, and may also be offered under private health insurance unless the insurer opts out.  The statute provides that the negotiated maximum price may not exceed (1) 120% of the average price in Australia, Canada, France, Germany, Japan, and the United Kingdom or (2) if such information is not available, 85% of the U.S. average manufacturer price.  The proposed statute also makes a series of additional changes, among other things, reducing the annual out-of-pocket spending threshold, and eliminates beneficiary cost-sharing above this threshold.  The proposed statute will now make its way to the Senate.

Federal Litigation

Recently, in Averett, M.D. et al vs. the United States Department of Health and Human Services, et al,  the U.S. Court of Appeals for the Sixth Circuit affirmed a lower court order invalidating CMS’s Medicaid Final Payment Rule and ultimately said a state’s Medicaid program cannot reclaim approximately $2.3 million in payments it made to 21 family medicine doctors.  The Affordable Care Act (“ACA”) temporarily increased payments in 2013 and 2014 for physicians “with a primary specialty designation” in primary care areas like family medicine, internal medicine, and pediatrics.  The Final Payment Rule incorporated a requirement for Medicaid doctors that Congress omitted in the ACA.  The Court found that the rule was “flatly inconsistent” with the ACA.   Physicians qualified for increased Medicare payments if they certified that they provided primary care services and that those services were at least 60% of their Medicare billings.   The court said CMS improperly interpreted the term “primary specialty designation” and attached two different meanings in the Medicare provision and in the Medicaid provision.  The court opined that Congress intended to treat Medicaid doctors differently from Medicare doctors by omitting the 60% requirement from the Medicaid provision.