Healthcare Legal

News Briefs: TMA returns to court over concerns about the No Surprises Act’s arbitration process

November 18, 2022 7:01 pm

The Texas Medical Association (TMA) has gone to court for a second time in less than a year over the independent dispute resolution (IDR) process that’s part of the No Surprises Act.

The TMA in late February prevailed in a federal case over a 2021 interim final rule (IFR) that established procedures for the IDR process. This time, the dispute is about an August final rule that updated those procedures, but not in a way that the physician association and other provider groups deemed satisfactory.

Following the earlier court decision, the final rule excluded IFR provisions that set forth the qualifying payment amount (QPA) as the overriding criterion in deciding out-of-network payment disputes between providers and health plans. The QPA is the insurer’s median in-network rate for a given service in a given market.

But the TMA wrote in its latest court filing that the updated provisions in the final rule will “have the same effect” as the guidance in the IFR. Among the association’s concerns are that the final rule instructs arbitrators to:

  • Start the decision-making process by considering the QPA before taking into account additional information submitted by either party
  • Dismiss additional information that is already accounted for in the QPA, which may preclude from consideration factors such as patient acuity and complexity of service

Court ruling increases Medicare payments for 340B drugs but leaves unanswered questions

A recent court decision meant hospitals were in line to receive an immediate and substantial increase in Medicare payments for drugs purchased through the 340B Drug Pricing Program.

A federal judge issued a Sept. 28 opinion stating that the U.S. Department of Health and Human Services (HHS) must increase the payment rate from average sales prices (ASP) minus 22.5% to ASP plus 6%, effective immediately. HHS had been planning to implement the increase at the start of 2023 after the Supreme Court in June unanimously ruled that the department inappropriately reduced the payment rate beginning in 2018.

“The prospective portion of the 2022 reimbursement rate shall be vacated because it is defective,” wrote Judge Rudolph Contreras, an Obama appointee to the U.S. District Court for the District of Columbia. In addition, he wrote, implementing a higher rate right away “will not cause substantial disruption.”

Still pending when hfm went to press was a decision on what sort of remedies hospitals will receive, given that payments dating back to 2018 are now considered unlawful underpayments.

The expansion of information-blocking rules under the 21st Century Cures Act has arrived

Hospitals and health systems were among industry stakeholders impacted by expanded rules on information blocking that took effect Oct. 6.

As defined in 2016 legislation known as the 21st Century Cures Act, information blocking refers to practices that interfere with access to, exchange of or use of electronic health information (EHI). Among the goals of the legislation are to enhance patient access to health data and improve interoperability.

Since April 2021, EHI in the context of the regulations has been limited to elements contained in the United States Core Data for Interoperability (version 1). But going forward, EHI can mean any electronic protected health information included in the HIPAA definition of a designated record set, such as billing records, claims and case management records.

Enforcement remains uncertain. When hfm went to press, the U.S. Department of Health and Human Services still had not announced the penalties for providers that violate information-blocking rules.

UnitedHealth Group closes Change Healthcare purchase after a favorable decision in an antitrust case

UnitedHealth Group (UHG) completed its $7.8 billion acquisition of Change Healthcare after a federal judge ruled against the U.S. Department of Justice (DOJ) in an antitrust suit. In addition to the cash price, UHG assumed more than $5 billion in debt as part of the deal.

“The court concludes that the government has not met its burden of proving that the transaction is likely to substantially lessen competition in the relevant markets,” Judge Carl J. Nichols stated in a Sept. 19 written opinion.

Change Healthcare will be integrated with Optum Insight, a UHG subsidiary company that offers first-pass claims-editing services. DOJ had sought an injunction to stop the combination, arguing, in part, that it could create a monopoly in the market for first-pass claims-editing solutions.

However, the court noted that UHG previously had reached a formal agreement to divest ClaimsXten, Change Healthcare’s first-pass claims-editing product, to a private equity firm for a reported $2.2 billion after completing the acquisition. Evidence at the trial established that the firm would invest substantially in the ClaimsXten business, wrote Nichols, a Trump appointee to the U.S. District Court for the District of Columbia.

A national provider directory could be in store as CMS seeks feedback

CMS has sent out a request for information (RFI) on the feasibility of establishing a government-run national directory of healthcare providers and services.

Current directories are fragmented and limited in usefulness, according to CMS: “Directories often contain inaccurate information, rarely support interoperable data exchange or public health reporting, and are overall costly to the healthcare industry.”

The RFI cites data showing that physician practices spend $2.76 billion per year on directory maintenance. Moving to a single streamlined platform could mean annual savings of $4,746 for the average practice and $1.1 billion collectively.

A national directory, developed and maintained by CMS and enabled by an HL7 FHIR application programming interface, “could serve as a ‘centralized data hub’ for directory and digital contact information containing the most accurate, up-to-date and validated data in a publicly accessible index,” the RFI states.

Various stakeholders could benefit from such an arrangement, according to the RFI: “In addition to helping patients locate providers that meet their individual needs and preferences, a modern healthcare directory should enable healthcare providers, payers and others involved in patient care to identify one another’s digital contact information for interoperable electronic data exchange.”

Comments on the RFI can be submitted at through Dec. 6.

Government report puts numbers behind ongoing concerns over drug price increases

More drugs increased in price over the past year compared with recent years, and generally by higher amounts, according to federal data.

More than 3,800 drugs increased in price in January or July 2022, according to a report from the office of the Assistant Secretary for Planning and Evaluation (ASPE) at the U.S. Department of Health and Human Services. The number was about 400 more than in any year going back to 2016.

List-price increases in 2022 were nearly $150 per drug in January and $250 in July. Both averages were greater than in any year going back to 2016. Percentagewise, however, the increases of 10% in January and 7.8% in July were lower than in many recent years.

Among individual drugs, the largest 2022 increases in dollar amounts were $25,000 each (to $424,000) for TECARTUS and YESCARTA, both manufactured by Kite as CAR-T cell therapies to treat blood cancers. The largest percentage increase — more than 1,100% — was seen for Greenstone’s Fluconazole, a pill used to treat fungal infections. It increased from $2 to $28 per dose.

Price increases between July 2021 and July 2022 for more than 1,200 drugs exceeded the inflation rate of 8.5%, the report found, with an average increase among that subset of 31.6%. ASPE used the finding to tout passage in August of the Inflation Reduction Act, which requires that manufacturers of Medicare Part D drugs pay rebates if their price increases exceed inflation starting in FY23.

2 Medicare funding programs get last-minute extensions

A short-term federal spending bill that cleared Congress in September included a continuation of funding for the Medicare-Dependent Hospital (MDH) program and designated low-volume hospitals. Funding for both would have expired Sept. 30 but now can be sustained at least through mid-December.

The MDH program is for hospitals that are in designated rural areas, have 100 or fewer beds and have at least 60% of inpatient days or discharges attributable to Medicare beneficiaries. The low-volume payment adjustment is available for hospitals with fewer than 3,800 Medicare Part A discharges based on their most recent cost report.

Drafted bills in Congress would extend the programs permanently, and advocates hope such a bill can be attached to a longer-term FY23 spending package that Congress will need to pass before the end of the year.

Study findings illustrate the impact of a QPA-like benchmark in arbitration

A new study offers context as to why federal regulators are seeking to emphasize the qualifying payment amount (QPA) in arbitration cases under the No Surprises Act (see the lead news item above).

As published in Health Affairs, researchers with the health insurer Elevance Health and Bentley University examined billed charges for out-of-network care in California, which in 2017 implemented rules prohibiting surprise billing. The state does not use an arbitration process, with payment instead based on the median contracted rate for similar services in the market — which essentially is the definition of the QPA in the federal process.

Looking at nonemergency inpatient hospitalizations where patients received care from out-of-network providers, the researchers reported that out-of-network charges in California dropped by $752 (24% below trend) compared with charges in seven states that had no surprise-billing laws.

Mayo Clinic tops global list of ‘best smart hospitals’

U.S. hospitals claimed most of the top spots on the second-annual list of the “World’s Best Smart Hospitals” as compiled by Newsweek and Statista and published in September.

The list ranks hospitals based on their use of AI, digital imaging, telemedicine, robotics and electronic functionalities.

Mayo Clinic’s Rochester, Minnesota, campus ranks first, followed in the top five by Massachusetts General Hospital (Boston), The Johns Hopkins Hospital (Baltimore), Cleveland Clinic and The Mount Sinai Hospital (New York City).

The rest of the top 10 includes Brigham and Women’s Hospital (Boston), MD Anderson Cancer Center (Houston), Memorial Sloan Kettering Cancer Center (New York City), Karolinska Universitetssjukhuset (Sweden) and Houston Methodist Hospital. The list totals 300 hospitals, with the U.S. taking 87 places.


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