Defending Competitive Harm with Efficiencies: A Fire Swamp of Trouble

gavelThe use of efficiencies as a defense remains without a firm footing in law when a transaction has demonstrable and substantial anticompetitive effects.

In Rob Reiner’s classic fantasy adventure The Princess Bride, Princess Buttercup and her true love, Westley, stand at the edge of the notoriously deadly Fire Swamp, chased there by enemies and with only that path forward. “We’ll never survive,” Princess Buttercup darkly intones. “Nonsense,” Westley responds cheerfully, “you’re only saying that because no one ever has.” As recently illustrated by the unsuccessful attempt to join two of the nation’s largest healthcare insurers, pursuing an efficiencies defense against anticompetitive findings regarding a healthcare merger presents every bit as daunting a task and as discouraging a track record. Continue Reading

No More Tears: A Few Recommended Steps in Response to WannaCry Ransomware

Hacker wearing black glove clicking on ransomware buttonThe attack resulted in some hospitals canceling operations and appointments because critical patient data could not be accessed.

On May 12, 2017, thousands of companies across the globe saw the first signs of a prolific malware outbreak. The malware, a ransomware variant labeled WannaCry, is capable of encrypting files on a device and moving laterally to encrypt files on associated file shares. On average, the ransom amount that is demanded is the equivalent of $300 in bitcoin. Early reports indicate the ransomware, which may function in 27 different languages, encrypted data on more than 75,000 systems in 99 countries. Russia, Ukraine, India and Taiwan appear to have been the hardest hit. The attack resulted in some hospitals canceling operations and appointments because critical patient data could not be accessed. Continue Reading

Capitol Hill Healthcare Update

CBO Score of House Health Bill Set for This Week

Congress’s official budget scorekeepers this week will release analysis of the House-approved bill repealing most of the Affordable Care Act (ACA), and that data will inform Senate Republicans on a path for passing their version of the legislation.

The Congressional Budget Office (CBO) and the Joint Tax Committee on Wednesday are scheduled to release analysis – known on Capitol Hill as a “score” – of the House bill, including how much the bill reduces government spending and revised projections of how many Americans could lose insurance coverage.

Under Senate budget rules, that chamber’s bill must reduce spending by at least as much as the House’s bill. That may create complications for senators who want to provide more generous tax subsidies for people who buy insurance or if the lawmakers want to keep the ACA’s Medicaid expansion. Senate Republicans could get around increases in spending by phasing in changes or delaying the repeal of some of the ACA provider taxes and fees – though each of those decisions would provoke other political complications. Continue Reading

Capitol Hill Healthcare Update

hlu photoSenate Panel OKs FDA User Fees

Legislation reauthorizing FDA user fees for prescription and generic drugs, biosimilars, and medical devices won wide bipartisan approval last week in a Senate committee, teeing up approval by the full Senate, likely after the Memorial Day recess. The Senate HELP Committee approved the five-year renewal on a 21-2 vote. Sens. Bernie Sanders (I-Vt.) and Rand Paul (R-Ky.) voted against it. Taking the agreement negotiated by the FDA and industry stakeholders, the committee added multiple provisions – including pediatric drugs, regulation of hearing aids sold without prescriptions, and device inspections and regulation – that enjoyed bipartisan support within the committee.

Sen. Orrin Hatch (R-Utah) won approval for an amendment requiring the FDA and National Institutes of Health (NIH) to review both the accessibility and barriers to clinical trials for patients who don’t respond to approved medications. The language was an effort to bridge differences between advocates of so-called right-to-try legislation and others concerned about giving patients early access to unapproved medicines. The panel also approved an amendment requiring the FDA to prioritize generic drug applications when only one company is approved to manufacture a drug. Continue Reading

EMTALA Laboring Along 30 Years Later

hospital buildingThe Emergency Medical Treatment and Active Labor Act (EMTALA), despite being enacted more than 30 years ago, has produced a case examining the applicability of malpractice damages limitations that bears watching.

In Scott v. Ruston Louisiana Hospital Company, the court examined whether state medical malpractice caps are applicable to an EMTALA case. A young patient came to Northern Louisiana Medical Center’s emergency room for treatment. The physician ordered an MRI around 9 a.m. However, the MRI was not performed until after 3 p.m. The delay was alleged to be the result of a hospital policy “that requires that emergency room requests for MRIs be summarily denied and delayed until reimbursement from the insurance company has been certified.” The parents of the patient alleged that if the MRI had been timely performed, the patient’s hematoma would have been identified and treated in enough time to prevent the permanent paralysis that later developed, or that the severity of the patient’s symptoms would have been reduced.

EMTALA regulates the procedural aspects of the provision of emergency medical services and establishes a private cause of action for a violation of its terms. However, EMTALA does not address the substantive quality of care provided to a patient. Any person who suffers harm as a direct result of a participating hospital’s violation of EMTALA may, in a civil action, obtain those damages available for personal injury under the laws of the state in which the hospital is located, and obtain such equitable relief as is appropriate. Continue Reading

IPPS Proposed Rule Increases Hospital Payment; Solicits Ideas for Achieving Transparency, Relieving Administrative Burden

Swollen and Bandaged Hands of a Little Girl Patient in HospitalThe Centers for Medicare & Medicaid Services (CMS) recently issued its proposed rule updating fiscal year (FY) 2018 payment policies and rates under the Medicare inpatient prospective payment system (IPPS). As highlighted below, the proposed rule aims to reduce regulatory burdens for providers and to promote transparency and flexibility in the delivery of care. Comments on the proposed rule are due June 13, 2017. Once finalized, the updated IPPS will apply to all discharges on or after October 1, 2017.

Update to Prospective Payment Rate and Uncompensated Care Payments

Overall, CMS estimates the proposed rule will increase IPPS operating payments by approximately 1.7 percent in FY 2018. CMS also proposed changes to uncompensated care payments resulting in an additional 1.2 percent increase. The agency plans to distribute close to $7 billion in uncompensated care payments, a $1 billion increase from the previous year. This increase results from CMS’s proposal to change its data source for calculating the uninsured rate, by utilizing its National Health Expenditures Account (NHEA) data as opposed to the Congressional Budget Office data. Agency officials believe the NHEA is a more complete data source and estimate that this change will reflect a decrease in the uninsured rate.

Quality Reporting and Incentive Programs

Even as CMS ramps up the Quality Payment Program and initiatives under the Medicare Access and CHIP Reauthorization Act (MACRA), the agency continues using the IPPS rule to introduce new proposals for its legacy quality programs. Most notably, as part of ensuring overall quality of care and patient health, CMS is requesting comment on how to account for social risk factors such as income, education, race and ethnicity, employment, disability, community resources, and social support. CMS wants public input on which social factors are most appropriate to consider, how to statistically account for them and how to operationalize a strategy to include these measures in various programs. Continue Reading

Capitol Hill Healthcare Update

House approval last week of legislation repealing and replacing most of the Affordable Care Act (ACA) sets up a showdown in the Senate, where GOP leaders will confront a familiar web of political, policy and procedural obstacles that took House Republicans five months to navigate.

Majority Leader Mitch McConnell and key committee chairmen must reconcile differences between conservatives who say the House bill didn’t go far enough to end the ACA and moderates who want additional protections on pre-existing conditions and concessions to states that expanded Medicaid. Other senators also are demanding changes to the House bill’s provision ending federal funding for Planned Parenthood.

The coming weeks will feature both behind-the-scenes negotiating and public declarations as the competing factions jockey to shape the Senate legislation. Given the policy differences and procedural hurdles, a vote before Memorial Day isn’t likely. Instead, senators are sketching out a time line for a potential vote in June – but even that could slip to later in the summer. Continue Reading

Capitol Hill Healthcare Update

hlu photoHouse Passes ACA Repeal and Replace

Eight weeks after its introduction, legislation to “repeal and replace” the Affordable Care Act (ACA) won House approval today by a 217-213 vote. Vice President Mike Pence on Sunday said a vote in Congress to repeal the ACA was “just around the corner,” even as key House moderates continued to balk at changes they fear could undermine coverage for people with pre-existing conditions. In the end, the GOP leadership successfully kept up the pressure for a vote on the American Health Care Act (AHCA) before the House went on recess this week.

Now that the AHCA has passed the House, the Senate faces a similar ideological divide between conservatives and moderates – but with a narrower governing majority than the House. With only two votes to spare, Senate leaders could try to change the bill to cobble together at least 50 votes, sending the legislation back to the House. But House Majority Leader Kevin McCarthy, who spoke at BakerHostetler’s 28th Annual Legislative Seminar last week, said he believes Senate Republicans could approve the House-passed bill without any changes. Continue Reading

We Cured the Breach of Contract! Oh No, You Didn’t

Close-up image of contract form on a deskA recent decision from a North Carolina federal court raises interesting lessons for providers surrounding contractual cure and damages provisions. Cone Health entered into a contract with Conifer Physician Services for the provision of revenue management, health information management and billing services. Cone Health has spent a great deal of effort since – litigating whether or not breaches of the agreement with Conifer had been cured and when the agreement could be terminated – all because the issues were not fully set out and clearly addressed in the agreement with Conifer.

Breach of contract and right to cure

Approximately two years into the agreement, Cone became dissatisfied with Conifer’s services and sent notice of termination, stating “[t]he specific conduct that constitutes [Conifer’s] breach [includes], without limitation,” six specific violations of the agreement. Cone thereafter contended that it had the right to assert breaches in the litigation beyond the six specifically enumerated in the notice of termination. Continue Reading

Darwinian Insurance

Insurance policy contract and penThis case demonstrates the need for providers to know and follow the notification provisions set forth in their insurance policies in order to avoid an inadvertent loss of coverage.

Once again, the terms of a hospital’s insurance policy coverage have evolved to a hospital’s detriment. Darwin National Assurance provided first-layer excess liability coverage to a hospital. The hospital provided notice of a potential claim, and in response Darwin stated, “[I]t appears no claim has been made. … Accordingly, we will not be investigating this matter … and Darwin reserves all rights and defenses under the Policy and applicable law.” Despite Darwin’s inaction, the hospital’s primary carrier investigated and defended the claim.

The injured patient later filed suit against the hospital and third parties seeking recompense for his injuries, and made a settlement demand of $1.7 million to the hospital. Counsel for the primary carrier notified Darwin of the patient’s legal action nearly two years after the initial lawsuit had been served on the hospital and 15 months after the filing of a second lawsuit. The hospital did not provide any notice to Darwin after its initial notification of a potential claim. Continue Reading

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