On December 10, 2020, the U.S. Department of Health and Human Services (“HHS”) Office for Civil Rights (“OCR”) issued a Notice of Proposed Rulemaking (“NPRM”) to modify the HIPAA Privacy Rule. HHS stated that the proposed modifications, which are being issued as part of HHS’s “Regulatory Sprint to Coordinated Care,” are aimed at removing barriers to coordinated care, strengthening individuals’ access to their own medical information, and reducing unnecessary administrative burdens. Proposed changes to the HIPAA Privacy Rule in the NPRM include: Continue reading “HHS Issues Proposed Changes to the HIPAA Privacy Rule”
Considerations for Seniors Housing Communities and COVID-19 Vaccines
More than nine months after start of the coronavirus pandemic, the beginning of the end finally appears to be within sight. Novel vaccines have shown tremendous promise in clinical trials, and the United States Food and Drug Administration (FDA) has granted Emergency Use Authorizations (EUAs) to the first two COVID-19 vaccines—one developed by a collaboration between Pfizer and BioNTech SE and the other developed by Moderna. The first Americans received initial doses of the Pfizer-BioNTech vaccine on Monday, December 14, 2020—a remarkably quick turnaround from the initial identification of the SARS-CoV-2 virus at the end of 2019 to the delivery of the first doses of a vaccine one year later.
While the efforts to bring vaccines to long-term care communities will not begin in earnest until December 21 or December 28, residents of long-term care communities in a handful of states have begun to receive COVID-19 vaccines. To that end, although companies in the seniors housing industry are likely well on their way to preparing for the upcoming vaccinations in their communities, this Special Issue Brief provides some background on the COVID-19 vaccine approvals and an overview of some of the key issues operators should make sure to consider.
To read the full text of this article by Duane Morris attorney Alison T. Rosenblum, please visit the American Seniors Housing Association website.
Office of Inspector General Issues Special Fraud Alert on Speaker Programs
On November 16, 2020, the Department of Health and Human Services Office of Inspector General (OIG) issued a Special Fraud Alert addressing speaker programs presented by pharmaceutical and medical device companies. Such programs, at which companies may pay physicians or other health care professionals (HCPs) for speeches or presentations about drugs and devices in addition to providing remuneration to attendees, are frequently sponsored by pharmaceutical and device companies seeking to provide education regarding their products. Highlighting what it called “inherent fraud and abuse risks,” OIG’s Special Fraud Alert expressed concerns surrounding the offer or payment of remuneration from pharmaceutical and device companies to physicians or other HCPs associated with such programs.
To read the full text of this Duane Morris Alert, please visit the firm website.
Could Medical Device Manufacturers Accelerate the FDA Approval Process by Using COVID-19 Data?
Medical device shortages and shortcomings during the COVID-19 pandemic have led the Food and Drug Administration (FDA) to grant Emergency Use Authorization (EUA) to many medical devices manufacturers. Were it not for these EUAs, these manufacturers would be unable to market their devices, as their FDA applications would still be pending. Once the present “emergency” ends, these EUAs will expire, and manufacturers will again be unable to market their devices for the indications cleared under the EUA.
Still, the real-world evidence (RWE) gained about these devices while marketed under the EUA need not be lost with the passing of the pandemic. Once the pandemic ends, manufacturers should be able to use the data collected to support their pending applications for market clearance and for new indications for already-cleared devices.
To read the full text of this article by Duane Morris partners Frederick R. Ball and Erin M. Duffy, please visit the Wharton Health Care Management Alumni Association website.
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.
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
- Third-Party Availability re
- Financials
- If delayed, focus on potential extension of various previously set deadlines:
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.