Nursing Homes Under Siege from More than COVID-19

U.S. nursing homes would benefit from a less punitive approach to performance improvement, according to Doctors Without Borders, the international medical humanitarian organization that has been assisting U.S. nursing homes with their response to COVID-19. The organization recently conducted in-person infection prevention and control trainings and provided technical support and wellness sessions to staff and residents in over 50 Michigan nursing homes and adult care facilities, and now is doing the same in Texas. Continue reading Nursing Homes Under Siege from More than COVID-19

Healthcare Employers Who Have Excluded Employees from COVID-related Leave Benefits under FFCRA Must Reconsider after USDOL Amends Temporary Regulations

By Jennifer Long and Nicholas J. Lynn

The United States Department of Labor’s (DOL) initial temporary regulations that interpreted and implemented the Families First Coronavirus Response Act (FFCRA) permitted employers to elect to exclude healthcare provider employees from eligibility for the COVID-related leave benefits made available under FFCRA. The initial DOL regulations provided a broad definition of healthcare provider, allowing most employees working for a healthcare provider employer to be excluded from FFCRA leave benefits, including Paid Sick Leave (PSL) and Extended Family and Medical Leave (EFMLA). After a federal district court decision struck down parts of the DOL’s prior final rule, the DOL now has issued revised regulations, which became effective on September 16, 2020, and expire along with the FFCRA on December 31, 2020. For a detailed discussion of the FFCRA requirements and the DOL’s revised temporary regulations, see our April 3, 2020 Alert and our September 17, 2020 Alert. Continue reading Healthcare Employers Who Have Excluded Employees from COVID-related Leave Benefits under FFCRA Must Reconsider after USDOL Amends Temporary Regulations

An Executive Order’s Potential for Setting a Precedent With Regard to the Reimbursement Rate for Out-of-Network Emergency Services

Emergency Order Issued by Governor Baker of Massachusetts

On April 9, 2020, Governor Baker issued an emergency order (the “Order”), mandating that insurers cover all medically necessary emergency department and inpatient services costs of COVID-19 treatment at both out-of-network (“OON”) and in-network hospitals and other medical facilities, without any cost to the patient, setting the OON reimbursement rate at 135% of Medicare, and prohibiting providers from balance billing.  The Governor appears to have relied on § 7 of the Massachusetts emergency preparedness and response law in issuing the Order.  Section 7 gives the Governor broad powers during a state of emergency, including “[r]egulation of the business of insurance and protection of the interests of the holders of insurance policies and contracts and of beneficiaries thereunder and of the interest of the public in connection therewith.”

Provider Concerns with the Emergency Order

From a provider perspective, the Order raises at least three concerns.  First, the OON payment is based on the Medicare rate, a rate set by the government, not intended to reflect market rates.  Second, the Order does not include the right to resolve payment disputes between an insurer and a provider.  Third, the excessively low reimbursement rate is problematic because emergency departments, and the physicians staffing them, face unprecedented financial strain because of the ongoing COVID-19 pandemic.  To address and allay these concerns, physician groups generally advocate a commercially reasonable payment, based on local charges as determined through a known independent, transparent, and verifiable database (such as FAIR Health), using baseball-style binding arbitration to resolve payment disputes between the insurer and the provider.

Continue reading An Executive Order’s Potential for Setting a Precedent With Regard to the Reimbursement Rate for Out-of-Network Emergency Services

Long-Term Care Facilities Reopening After COVID-19 Lockdown

States, counties and cities nationwide are currently at varying levels of reopening their economies after the coronavirus outbreak. Some states, such as Texas and Florida, have backtracked by closing off various businesses again after a surge of COVID-19 cases in those areas. Such instances have made governors wary of reopening too quickly, especially in the states that were hit the hardest at the onset of COVID-19’s entry to the U.S. – New York and New Jersey. Given the tragic loss experienced in nursing homes and the known impact that this virus has on seniors, long-term care facilities (including nursing homes and assisted living facilities) may be among the last business to undergo a “reopening.” Strict adherence to the federal, state and local precautions will be required, as well as close monitoring for outbreaks in the facility. This article discusses what “reopening” means for these facilities since they were not technically closed in the way that most other businesses were. Then, it will cover the recent CMS recommendations to state and local officials on reopening nursing homes as states progress through the phases of the White House Guidelines for Opening Up America Again.

Continue reading Long-Term Care Facilities Reopening After COVID-19 Lockdown

Distribution of Drug Samples During COVID-19: FDA Issues Temporary Policy

In response to the ongoing COVID-19 public health emergency, the United States Food and Drug Administration (FDA) issued a temporary policy related to the distribution of drug samples. Recognizing the unique challenges currently facing manufacturers that distribute drug samples as part of marketing efforts and the healthcare providers requesting those samples for patients, the FDA is temporarily easing certain requirements of the Prescription Drug Marketing Act.

To read the full text of this Duane Morris Alert, please visit the firm website.

Healthcare M&A Corner – COVID-19 and M&A Transactions: Key Considerations and a Beacon of Light

Normally, my posts describe and analyze specific niche aspects of an M&A deal in order to provide what I hope readers deem as helpful advice.  While the material below initially follows the same roadmap, I also wanted to take this unique opportunity during the COVID-19 pandemic to raise a glass to all of the frontline healthcare, grocery, transit, and other workers risking their lives on a daily basis to save ours, as well as those working in the M&A sphere, including my colleagues and clients, and their advisors and representatives (and dare I say even opposing parties and their teams) who have stepped up their game with respect to collegiality.

As mentioned above, the COVID-19 pandemic has upended the world in countless ways, with healthcare M&A transactions of course having not been spared.  Many promising deals have been placed on hold and the ones powering through will now encounter new hurdles to clear before closing.  Here are some quick issues that M&A parties should consider with the current state in mind.

The Deal Itself

  • Should the parties delay or push forward?
    • If delayed, focus on potential extension of various previously set deadlines:
      • Confidentiality
      • Letter of Intent (binding provisions)
      • Due Diligence Periods, Scope, and Access (also applicable below)
    • If moving forward, consider necessary or resultant changes to (either pre-signing or through a post-signing amendment):
      • Financials
        • Company Results; Valuation
        • Purchase Price
        • Working Capital Adjustments
        • Earn-outs
      • Disclosure Schedules
      • Closing Conditions
        • Third-Party Availability re
          • Regulatory Approvals/Permits
          • Consents to Assignment/Change of Control
        • Material Adverse Effect (Change) Definition
        • Representations and Warranties
        • Indemnification Provisions
        • Force Majeure
        • Operations Between Signing and Closing; Ordinary Course of Business Definition
          • Buyer Consents
          • Seller Carve-Outs for Contingency Measures
        • Termination Provisions

Again, I am happy to report that in my experience, the players behind the deal have largely exhibited a much more cordial and empathetic tone during the COVID-19 pandemic, and I have noticed some very encouraging signs recently.  In addition to a generally softer and more understanding or forgiving tenor, the typical greeting or sign off has resembled some variation of the following: “I hope all is well on your end, and you and your family are staying safe and healthy during these challenging times.”  While it is true that this clause is often stated in response to something similar initiated on my end, I have also observed several opening iterations from all of the M&A players.

It is easy to brush these interactions off, but providing professional services and doing business in a high stakes and fast paced industry is stressful enough (especially at this point in time) so when your “adversaries” become a little less so it makes life that much easier; not to mention treating people with respect is the right thing to do, of course.  My hope is that this type of behavior will last beyond the current state of affairs, but only time will tell.  Have you noticed similar changes in the world of M&A?  If so, do you think such conduct will survive beyond the COVID-19 pandemic?

David Kahn practices in the area of healthcare law, concentrating on Mergers and Acquisitions.

Don’t Leave CARES Act Dollars on the Table (or in the Wrong Pocket)

As part of a suite of COVID-19 relief programs, the CARES Act appropriated $100 billion into a Provider Relief Fund meant for “hospitals and other healthcare providers on the front lines of the coronavirus response.” Medicare providers and facilities should have seen funds appear in their accounts between April 10 and April 17 when the first $30 billion of the $50 billion general allocation was distributed. Further, eligible recipients should begin to see funds from the remaining $20 billion of the general allocation as well as additional targeted allocations for hospitals in hot zones or rural areas.

The initial distribution was based on providers’ proportional share of Medicare Fee-For-Service reimbursements in 2019. For the sake of efficiency, these distributions were made based on the Tax Identification Numbers used when submitting bills. This approach, while expeditious, has also resulted in several potentially undesirable consequences. For example, practices or facilities that experienced a change of ownership during 2019 may notice that their distribution excluded the proportional share of reimbursement for the period prior to the change of ownership when the prior owner’s TIN was still in place. In fact, the prior owner may have received those funds attributable to that time period. Additionally, the interests of facilities and group practices may not align with the providers for whom they bill as they face the dilemma of how to appropriately allocate relief funds and whether credit should be given for compensation based on collections. The resolution of these issues will likely hinge on the terms of the contracts that govern these employment relationships.

Hospitals, facilities, providers, and all other affected parties are advised to consult with legal counsel when faced with the nuances of CARES Act funding. Further, as Congress debates additional funding packages, stakeholders should have a plan in place that suits their particular and unique needs. The Health Law Practice Group at Duane Morris is prepared to guide clients through the intricacies of these programs and advise on the most advantageous approach for future relief fund packages. Facilities and providers should contact Neville Bilimoria, Erin Duffy, Kirk Domescik, Ryan Wesley Brown, or your usual contact within the Health Law Practice Group with any questions regarding CARES Act funding.

FDA Takes Steps to Enhance Availability of Safe and Effective Face Masks

Over the past week, the U.S. Food & Drug Administration (FDA) has taken a number of steps to enable manufacturers and distributors of face masks to more efficiently make their products available to the marketplace. FDA has accomplished this by establishing criteria that would allow manufacturers to bypass normally required (and often time-consuming) regulatory review.

To read the full text of this Duane Morris Alert, please visit the firm website.

CARES Act Provider Relief Fund $30 Billion Distribution Announced by HHS

Immediate funds are now available for providers to receive a cash influx at a critical time. The challenge will not be receiving the funds, but rather keeping the funds after a future audit of compliance with the terms and conditions.

On April 10, 2020, the United States Department of Health and Human Services (HHS) announced the immediate distribution of an initial $30 billion in relief funding to providers in support of the nationwide COVID-19 response. The distribution is part of the $100 billion provider relief fund included in the Coronavirus Aid, Relief and Economic Security (CARES) Act recently passed by Congress. Importantly, HHS has noted that these are payments, not loans, to healthcare providers, and will not need to be repaid unless the provider does not comply with the terms and conditions.

To read the full text of this Duane Morris Alert, please visit the firm website.

Expansion of Immunity Protections for Covered Countermeasures and Healthcare Volunteers Under CARES Act

As discussed in our March 18 Alert, the Secretary of Health and Human Services has issued a declaration authorizing drugs, devices and biologics used to treat or mitigate COVID-19 as covered countermeasures under the Public Readiness and Emergency Preparedness (PREP) Act. Following Secretary Azar’s declaration of a public health emergency, covered persons may obtain immunity under federal law for all claims arising from manufacturing, distributing or administering covered countermeasures, subject to the conditions laid out at 42 U.S.C. § 247d-6d, the declaration and other applicable regulations.

Subsequent to our previous Alert, President Trump signed into law the Coronavirus Aid, Relief and Economic Security Act (CARES Act), which expanded the covered countermeasure protections offered by the PREP Act.

To read the full text of this Duane Morris Alert, please visit the firm website.