Federal Update: From Proposed Rules to Litigation

CMS Delays Best Drug Price Reporting Rule

Pursuant to 86 FR 28742, the Centers for Medicare and Medicaid Services (“CMS”) seeks to delay for 6 months the January 1, 2022 effective date of a final rule that requires drugmakers to report the best prices for drugs when offered as part of a value-based purchasing (“VBP”) arrangement. CMS stated that the delay was necessary to provide CMS, states, and manufacturers more time to make necessary system changes to implement the new best price and VBP program.

Supreme Court Declines to Hear HHS Site-Neutral Policy

On Monday, the U.S. Supreme Court declined to hear a challenge to the U.S. Department of Health and Human Services’ (“HHS”) site-neutral payment policy, allowing Medicare reimbursement cuts to hospitals to continue.

The case stemmed from a final rule issued in 2018 that made $600 million in cuts to hospitals when services are provided at off-site outpatient clinics. Before the final rule, the Centers for Medicare and Medicaid Services (“CMS”) would pay hospitals a hospital rate, as opposed to the lower physician office rate, for services that are provided in an office setting operated by a hospital. In an attempt to overturn the final rule, the American Hospital Association (“AHA”) and dozens of hospitals sued CMS, arguing that it exceeded its authority when it finalized the cuts.

Recent New Jersey Decision on MSOs and Succession Agreements

A recent decision issued by the New Jersey Appellate Division addressed the issue of the corporate practice of dentistry and succession agreements. 

In Galkin, et al. v. SmileDirectClub, LLC, et al., Docket No. A-2867-19, the New Jersey Appellate Division considered whether the nature of the defendants’ relationship violated the New Jersey Dental Practice Act. 

New Jersey Legislation From Nursing Homes to COVID-19 Task Forces

New Nursing Home Legislation Regarding Statewide Assessment

S3032, which passed both the Senate and Assembly, requires the Department of Health (“DOH”) to conduct a statewide nursing home infection control and prevention infrastructure assessment and, based on that assessment, develop a statewide nursing home infection control and prevention infrastructure improvement plan. The statute expressly requires the DOH to request recommendations from the New Jersey Task Force on Long-Term Care Quality and Safety established pursuant to P.L.2020, c.88. 

NJDOH Eliminates COVID-19 Testing Requirement For ASCs and Hospitals, but DCA Has Not For Surgical Practices

On June 16, 2021, the New Jersey Department of Health (“NJDOH”) updated its guidance, Executive Directive 20-016, on the resumption of elective surgeries at licensed Ambulatory Surgical Centers (“ASC”).  Among other changes, pursuant to the updated guidance, patients no longer have to obtain COVID-19 testing or self-quarantine prior to a surgical procedure at an ASC if the patient has been fully vaccinated for two weeks.  Similarly, patients who tested positive for COVID-19 in the last ninety (90) days before their procedure, completed the appropriate isolation and are asymptomatic no longer have to obtain COVID-19 testing or self-quarantine.

Telemedicine and the End of New Jersey's Public Health Emergency

As noted in our June 9, 2021 Health Care Law Update, Governor Murphy signed A5820 into law, ending the COVID‑19 public health emergency. With the exception of fourteen executive orders specifically identified in A5820, all executive orders issued in response to the public health emergency are set to expire 30 days following the effective date of the law, i.e., July 4, 2021.  With certain exceptions, under A5820, any administrative orders, directives, or waivers issued by a State agency that relied on the existence of the public health emergency are extended until January 11, 2022.

Court Rules That HHS Must Recalculate Hospitals’ Medicare Pay for Training Physicians

Following a recent federal court ruling, hospitals can expect an increase in Medicare reimbursements for training physicians in their residency programs. 

In Milton S. Hershey Medical Center v. Becerra, No. 19-2680, the United States District Court for the District of Columbia (the “DDC”) ruled that the Department of Health and Human Services (“HHS”) unlawfully changed the statutorily‑assigned weighting factors used to calculate reimbursements to hospitals for resident stipends, supervisory physician salaries, and administrative costs related to training residents and fellows. These reimbursements, known as direct graduate medical education (“DGME”) payments, are, in part, determined by the weighted average number of full-time equivalent (“FTE”) residents employed by the hospital. 

New ADT Guidance from CMS, and Other Federal Updates

Centers for Medicare & Medicaid Services (“CMS”) recently released guidance for hospitals outlining the new requirements for admission, discharge, and transfer (“ADT”) electronic patient event notifications. These requirements originally stemmed from the Interoperability and Patient Access Final Rule published on May 1, 2020, and require health care providers to send electronic patient event notifications of a patient’s admission, discharge, and/or transfer to another healthcare facility or to another community provider or practitioner.