Exploring Critical Business and Legal Issues across the Healthcare and Life Sciences Industries
Exploring Critical Business and Legal Issues across the Healthcare and Life Sciences Industries
Hospitals & Health Systems
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CMS Issues FAQs to Aid Pharmacies in Preparing for Medicare Part B Coverage of PrEP Medications

As we previously advised, the Centers for Medicare & Medicaid Services (CMS) is preparing to issue a national coverage determination (NCD) for pre-exposure prophylaxis (PrEP) using antiretroviral drugs to prevent HIV under Medicare Part B. In response to questions from stakeholders, CMS released FAQs on June 25, 2024, to guide pharmacies through certain enrollment and billing intricacies.

Specifically, pharmacies are instructed that no new Medicare enrollment is needed if pharmacies are already enrolled in Medicare as a Part B pharmacy or a durable medical equipment, prosthetic, orthotics and supplies (DMEPOS) supplier. However, if the pharmacy is not currently enrolled in Medicare, they should consider enrolling as a Part B pharmacy rather than a DMEPOS supplier so that they are not subject to the supplier standards, accreditation and surety bond requirements.

CMS also provides pharmacies with appropriate ICD-10 CM diagnosis codes and J-codes to include with claims and instructs pharmacies that the date the drug is picked up or mailed should be entered as the date of service. Finally, recognizing that some pharmacies will fill orders for injectable PrEP to be administered by qualified practitioners, pharmacies may include a claim for the supplying fee along with a claim for the drug where appropriate. CMS anticipates that the final NCD will be posted and effective in late September 2024. The NCD is expected to be similar to the proposed NCD published on July 12, 2023.

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HHS, DOL and Treasury Issue a Proposed Rule Increasing Federal IDR Fees

On September 20, 2023, the US Departments of Health and Human Services (HHS), Labor (DOL) and the Treasury (collectively, the departments) issued a proposed rule related to the No Surprises Act’s (NSA’s) federal independent dispute resolution (IDR) process. The proposed rule would amend existing regulations to provide that the two fees associated with the IDR process—the administrative fee amount charged by the departments, and the ranges for the IDR entity fees for single and batched determinations—be established by the departments through notice and comment rulemaking. The proposed rule outlines the methodology for calculating the fees and proposes the fees/fee ranges for disputes initiated on or after January 1, 2024. The proposal comes in response to a court order in the recent Texas Medical Association (TMA IV) case, which requires the departments to establish such fees through formal rulemaking.



The NSA’s nonrefundable IDR administrative fee is paid by both parties to cover the cost of their participation in the IDR process. For 2022, the administrative fee was $50 per party. The fee was expected to remain the same for 2023. However, in December 2022, the departments issued revised guidance increasing the fee from $50 to $350 for 2023. Plaintiffs in TMA IV challenged the increase as being unlawfully issued via guidance. The US District Court for the Eastern District of Texas agreed and vacated the portion of the guidance that increased the fee.

In light of the court’s order, the [...]

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Top Takeaways | 2023 Value-Based Care Symposium | Health System Innovation in Value-Based Care

In this session, panelists focused on the unique challenges and opportunities facing health systems as they move into value-based care (VBC).

Session panelists included:

  • Kate E. Koplan, MD, MPH, FACP, CPPS, Chief Quality Officer, Associate Medical Director of Quality and Patient Safety, The Southeast Permanente Medical Group, Kaiser Permanente Georgia
  • Tony Malcoun, Vice President, Advisory Services, Strategy and Growth, Premier Inc.
  • Aashish Shah, Corporate Vice President, Strategy, Product Innovation, Payer Contracting and Alignment, HCA Healthcare
  • Terri Welter, Partner, ECG Management Consultants
  • Moderator: Gary Scott Davis, Partner, McDermott Will & Emery

Top takeaways included:

  • From the perspective of a hospital or health system, value-based care means cost reduction, innovation and quality improvement.
  • Fee-for-service and valued-based care (i.e., risk payment models) can co-exist. A hospital or health system must consider its patient populations, lines of business and payor mix when determining which model or combination of models to implement.
  • Moving forward with the shift to VBC, although non-profit systems have struggled they can still succeed. However, success will depend on a non-profit system’s ability to properly use data and form the right partnerships.
  • Patients must be the driver in the transformation of hospitals and health systems into VBC-focused models. A hospital or health system can create patient-centric VBC models by operating from the perspective of patients and empowering patients with information.
  • Considerations for building any new partnership models include the use of data, relationship with physicians, communication and payment models.
  • Moving forward, a strong sense of partnership (including physician [...]

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Reforms to the Florida Patient Self-Referral Act: A Closer Look at the Impact of SB 768

Florida Senate Bill 768 (SB 768) amends the Florida Patient Self-Referral Act of 1992 (PSRA), which regulates referrals from healthcare providers, including physicians, to entities in which they have ownership and other investment interests. This amendment, which became effective July 1, 2023, has important implications for Florida physicians subject to the PSRA by making the physician supervision requirements less onerous. Although this change offers potential benefits, Florida physicians, including those who do not currently participate in the Medicare program but are subject to the PSRA, must ensure they understand and implement the revised supervision requirements, which are identical to Medicare’s supervision requirements.

Read the full On the Subject.

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Departments Release Update on No Surprises Act Independent Dispute Resolution Process

On April 27, 2023, The Departments of Health and Human Services (HHS), Labor, and the Treasury (the Departments) released a status update on the Federal Independent Dispute Resolution (IDR) Process, which covers the period from April 15, 2022 through March 31, 2023, as well as the initial report on the fourth quarter of 2022. Below are some of the key statistics shared.

Status Update

  1. Between April 15, 2022 and March 31, 2023, 334,828 disputes were initiated through the Federal IDR portal. This caseload is 14 times greater than what the Departments initially anticipated.
    • Non-initiating parties challenged the eligibility of 122,781 of the disputes and nearly 40,000 were deemed ineligible and closed.
  2. IDR entities have rendered payment determinations in 42,158 disputes to date.
  3. Initiating parties have been the prevailing party in ~71% of the disputes.

Fourth Quarter Report

  1. During Q4 2022, disputing parties initiated 110,034 disputes through the Federal IDR process. This represented a 53% increase over Q3.
  2. IDR entities made over three times more payment determinations in Q4 compared to Q3. IDR entities also closed fewer disputes as ineligible during Q4. Non-initiating parties challenged 40% of the disputes initiated.
  3. Over two-thirds of the disputes submitted to the Federal IDR portal involved items or services furnished in bifurcated states (i.e., states where some items/services may be subject to a specified state law or All-Payer Model Agreement).
  4. The report includes a summary of the Top 10 Initiating and Non-Initiating Parties.
  5. [...]

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McDermott and EY at the 2022 J.P. Morgan Healthcare Conference: Hospitals and Health Systems Forum

A series of panels co-hosted by EY and McDermott Will & Emery during the 2022 J.P. Morgan Healthcare Conference examined how hospitals and health systems continue to weather the pandemic. Leaders from the health system perspective looked at heightened cost pressures, resource strains and demands for better technology experiences, as well as innovative and collaborative responses to challenges. Policy experts spoke to the needs of providers, the antitrust landscape, and what Congress and the Biden administration might try to accomplish in the year ahead.

Below are the top takeaways for McDermott and EY at the 2022 J.P. Morgan Healthcare Conference: Hospitals and Health System Forum

Download the PDF here.

Speaking about the current state of the pandemic, H. Mallory Caldwell, US health leader at EY, reflected on the earlier days of the pandemic. At that time, the common sentiment among health system leaders was that the arrival of a vaccine would upend the trajectory of the virus. However, availability of the vaccine hasn’t fulfilled that expectation, and the effects of COVID case waves have been reflected in health systems, specifically with increases in deferred elective procedures. Still, health services are hovering around pre-pandemic levels. The major crisis health systems are confronting is staffing. Although healthcare generally builds in a 3% wage inflation, in light of the “great resignation,” Caldwell said it is costing hospitals and health systems three [...]

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Five Reasons You Can’t Miss HPE New York 2021

McDermott’s signature HPE New York event is right around the corner on October 15, 2021. This year more than ever, it’s a must-attend for private equity investors, healthcare executives, lenders, consultants and leaders across the industry.

Here are the top five reasons you don’t want to miss this exclusive event:

  • To help you navigate the current market’s unprecedented deal volumes and stiff competition, we’ll equip you with the latest analysis of the hottest investment sectors and game-changing deal strategies.
  • We’ve gathered the best and brightest minds in healthcare private equity to share their real-world insights into today’s market and the trends shaping tomorrow’s opportunities. Click here to view our roster of elite speakers.
  • Early risers have an opportunity to start their day right with our bonus Big Bankers Breakfast Discussion, where leading investment bankers will examine the current state of play and the dealmaking outlook for 2022.
  • This premier event is ultra-convenient. In light of ongoing safety and logistics challenges posed by COVID-19, we’re simplifying matters by streaming this year’s event right to your personal computer or device.
  • Registration is complimentary. In response to those continued challenges around COVID-19, we’re happy to offer complimentary registration this year and hope many of you are able to join us for this timely slate of sessions.

We look forward to virtually welcoming you to HPE New York in just a couple weeks. Click here to register today.

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5 Questions with a Health Lawyer: Travis Jackson

Travis Jackson
Practice Focus Area: Hospital and Health System M&A
Office: Los Angeles
Years at Firm: Joined in May 2021

  1. What is your favorite part about practicing healthcare law at McDermott? 

The people are my favorite part of being at McDermott. I am not just repeating some “corporate speak” I learned in orientation when I say that. Each person recognizes that we are part of the same team. Our collective success depends on our ability to meet and exceed our clients’ goals. Doing that consistently takes a selfless approach that we exemplify. As a firm, McDermott has unique capabilities across the healthcare industry, regardless of what the issue might be; we work with a commitment of being prepared to assist one another whenever necessary to bring that collective experience to bear on a unique transaction question or regulatory issue. I think that shared philosophy distinguishes us from many of our peers.

  1. What is the biggest opportunity and greatest challenge facing clients in your area of focus today?


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Regulatory Disputes With HHS: When to Negotiate and When to Litigate

For healthcare and life sciences companies, regulatory disputes with the US Department of Health and Human Services (HHS) and its operating divisions can present significant economic and reputational risks. Efficient resolution of such disputes is always preferable and requires a thorough grasp of both the law and the institutional relationships among the relevant HHS operating divisions, other parts of the Executive Branch, and agency personnel. When a company cannot reach an efficient resolution through negotiation and litigation is the only option, the company must vindicate its rights in a principled way that mitigates reputation risks.

In this webinar, McDermott partners Brian R. Stimson and Brian J. Malkin draw on their backgrounds with HHS and the US Food and Drug Administration, respectively, to help in-house healthcare and life sciences lawyers successfully navigate regulatory disputes with HHS and its operating divisions. Read on for select highlights from this insightful discussion.

  1. The Administrative Procedure Act (APA) sets out the operating principles around which HHS is organized and gives litigators a lens through which they can assess agency efforts to implement policy. Among other things, the APA defines the parameters and procedures for bringing an action against the agency.
  2. Stakeholders generally have the best chance of successfully litigating under the APA when they can challenge an agency action as contrary to the law. “Once you veer into the agency’s deference in interpreting the law, or the agency’s deference in administering a statute, it becomes very difficult under the APA to prevail, because the [...]

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340B in 2021: What Covered Entities and Their Partners Need to Know Now

Since March 2010, increased growth in the 340B Program has been accompanied by increased scrutiny from state and federal governments and conflicts between various 340B Program stakeholders. A transition in U.S. Department of Health & Human Services (HHS) and Health Resources & Services Administration (HRSA) leadership may lead to changes in 340B Program policy, but the ongoing conflicts, particularly around contract pharmacies, will not likely be resolved quickly.

In this webinar, we discussed the current issues affecting 340B Program stakeholders, the tools (and their limitations) that may be employed by stakeholders and government agencies to resolve those issues, and what covered entities can expect in future developments affecting the 340B Program.

  1. Covered entities will likely be unable to resolve contract pharmacy issues quickly through either the current litigation or the ADR panels. While there are a number of pending cases related to the 340B Program, litigation can be inherently slow process. The Administrative Dispute Resolution (ADR) Final Rule that was published in December 2020 was recently enjoined and additional injunctions may follow. While HHS appears to be moving forward with operationalizing the ADR process, the ADR Panel members who would hear the disputes remain under review by the Biden Administration. If and when the ADR panels are finally implemented, decisions of those panels may be litigated too.
  2. Covered entities should review and monitor their state Medicaid program’s billing requirements for 340B drugs. State Medicaid programs must have a mechanism to identify 340B drugs when required to exclude them from [...]

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