President Trump Releases Drug Pricing Blueprint

By Sheila Burke, Niki Carelli, Tiffani Williams, Jeff Davis, and Amit Rao

On Friday, May 11, President Donald Trump and Department of Health and Human Services (HHS) Secretary Alex Azar presented the Administration’s long-awaited plan to address drug pricing. The proposed framework, entitled, “American Patients First: The Trump Administration Blueprint to Lower Drug Prices and Reduce Out-of-Pocket Costs” aims to achieve four goals:

  • Increase competition for generic and biosimilar drugs;
  • Improve drug price negotiation in Medicare Part B and Part D;
  • Provide incentives for drug manufacturers to lower list prices; and
  • Reduce consumer out-of-pocket spending.

While the blueprint is fairly high-level and will require additional administrative and congressional action over time to implement, the proposed plan represents a pivotal step in the drug pricing debate and opens the door for stakeholders to weigh-in on the proposed policies. To that end, on May 14, HHS issued a Request for Information (RFI) on dozens of drug pricing proposals with a 60-day comment period.


HHS Solicits Comments on Possible 340B Program Changes to Reduce Drug Prices

By Jeff Davis, Sheila Burke, and Amit Rao

The Department of Health and Human Services (HHS) is soliciting comments from the public on the Administration’s proposals to reduce drug prices and is targeting the 340B drug pricing program as an area of focus. The 340B program requires drug manufacturers to sell outpatient drugs at discounted rates to certain public and non-profit hospitals that treat high volumes of low-income patients or are located in rural areas and other safety net providers that receive federal grant funding.

On May 14, 2018, HHS issued a request for information (RFI) to help the agency develop future policies to address high drug prices. HHS will formally publish the RFI in the Federal Register on May 16, 2018 and will allow 60 days for comments. The RFI largely mirrors the Administration’s blueprint issued last week in conjunction with President Trump’s speech on drug prices. See Baker Donelson’s Summary of Trump Administration Drug Pricing Blueprint.

The blueprint questioned whether growth in the 340B program has contributed to higher drug prices, stating that the “additional billions of dollars in discounted sales and the cross-subsidization necessary may have created additional pressure on manufacturers to increase list price[s].” President Trump also alluded to the 340B program in his speech, mentioning that his administration “reformed the Drug Discount Program for safety net hospitals to save senior citizens hundreds of millions of dollars on drugs this year alone.”

The RFI outlines actions the Administration may take to address high drug prices and poses questions related to other actions under consideration. HHS includes a discussion of the 340B program in the section listing other actions under review. Below is a summary of the questions raised related to 340B.


About the Authors

Sheila P. Burke
Washington, D.C.

Nicole D. Carelli
Washington, D.C.

Tiffani V. Williams
Washington, D.C.

Jeffrey I. Davis
Washington, D.C.

Amit Rao
Washington, D.C.

Laboratory Compliance – Intent to Comply Insufficient to Avoid Medicare Enrollment Revocation

Robert Mazer | May 3, 2018

Honest Mistakes Can Result in Loss of Medicare Billing Privileges

For many compliance-related purposes, so-called legal “intent” is key in determining the consequences of an improper action.  An erroneous claim for payment can result in a simple claim for repayment, monetary penalties under the False Claims Act, or imprisonment depending upon whether it reflected an honest mistake, reckless disregard regarding the claim’s accuracy, or knowing and willful behavior.

Read more…

HBMA Washington Report – April Issue

Washington Report – April, 2018
(Covers activity between 4/1/18 and 4/30/18)
Bill Finerfrock, Matt Reiter, Nathan Baugh, Ryan Mash, and Carolyn Bounds

Washington Report – April Issue

  • CMS Mails First Phase of New Medicare Cards
  • Administration Issues Final Rule Giving States Increased Flexibility in Implementing ACA
  • CMS Creates Hardship Exemption from ACA Coverage
  • 2018 MIPS Eligibility Tool Now Available on QPP Website
  • Trump Administration Outlines Proactive Approach to Health IT
  • CMS Interested in Requiring Hospitals to Post Prices Online
  • CMS Considering Testing Direct Contracting Model
  • House E&C Health Subcommittee Approves 57 Bills to Address Opioid Crisis
  • CMS Considering Updates to the HIPAA Administrative Simplification Complaint Form
  • OIG Estimates $3.7 Million in Improper Medicare Telehealth Payments
  • CBO Analysis Indicates Medicare Will Significantly Contribute to Federal Deficit
  • Healthcare Fraud and Abuse Control Program 2017 Annual Report
  • CMS Transmittals

Health Law Alert – April 2018

Health Care Providers Beware: Consumer Finance Regulations Apply to Medical Debt Collection

While the prosecution of consumer banks and other lenders is the type of federal regulation that typically makes the headlines, many of the same debt collection regulations also apply to the collection of medical debts. Formed in the wake of the 2008 financial crisis, the Consumer Financial Protection Bureau (CFPB) began as an agency focused on the collection practices of financial institutions and other lenders. However, as early as 2014, the CFPB began scrutinizing the collection and reporting of medical debt.

In its December 2014 study, the CFPB determined that more than 43 million Americans have overdue medical debt reported on their credit reports. The tremendous volume got the attention of the CFPB, which then placed the medical establishment squarely in its crosshairs. Enforcement actions against collectors of medical debt were initiated shortly thereafter.

Authored by:
Jake Adams, 615.726.5631,
Linda S. Finley, 404.589.3408,


STOP: Text Message Lessons from the Outcome Health Settlement

Outcome Health has agreed to settle a class action lawsuit for $2.9 million for alleged violations of the Telephone Consumer Protection Act (TCPA) arising from the transmission of automated text messages to users who had expressly opted out of receiving such messages. The TCPA prohibits, among other things, the making of certain calls, including SMS text messages, or using an auto-dialer or an artificial or prerecorded voice to a wireless telephone number without prior express consent.

Outcome Health, formerly ContextMedia Inc., provides interactive digital devices to physician offices and hospital systems that are intended to educate patients through viewing videos, photos and other materials. In this case, the lead plaintiff watched a program playing in the waiting room of a doctor’s office and opted in to receiving automated text messages containing nutrition tips. According to the complaint, after receiving several text messages, the plaintiff decided she no longer wanted to receive these messages so she replied “STOP” as requested by the text messages for those individuals wishing to opt out. Despite her numerous attempts to revoke consent, she continued to receive the text messages. Under the TCPA, consumers are permitted to revoke prior express consent to receive text messages and the opt-out can be done in writing such as through a responsive text message. In this case, the plaintiff asserts that her reply of “STOP” to a text message should have been sufficient to cease further communications. Outcome Health denies that it violated the TCPA but has agreed to settle the claims to avoid the cost of continued litigation.

Authored by: Ashley L. Thomas, 202.508.3429,


Is the Health Care Industry Ready for I-9 Audits? What You Need to Know About Compliance

The health care industry accounts for the largest segment of the U.S. labor market and, as such, is positioned for heightened scrutiny from federal agencies tasked with regulating and enforcing rules on employment. That includes the Immigration and Customs Enforcement agency (ICE), which has indicated it will be stepping up the number of I-9 audits targeting U.S. employers.

Late last year, Tom Homan, ICE’s Acting Director, announced that he has instructed his agency to dramatically increase the number of I-9 audits. According to news reports, Director Homan indicated that the scope of the investigations would be to find employers who fail to properly comply with the I-9 Employment Eligibility Verification requirements, thereby enabling undocumented workers, and also to arrest workers found to be undocumented as a result of the investigations.

Authored by: Dilnaz Saleem, 713.210.7435,


OIG April 2018 Work Plan Update

The OIG’s April 2018 Work Plan update added six new items to its active list of scheduled audits, inspections, and evaluations. The OIG indicates its intention to review beneficiary access to drugs under Part D, as well as CMS’s implementation efforts to improve its monitoring, tracking, and collecting of overpayment recoveries. Building on Work Plan audits from several years ago, the OIG will review the flow and utilization of federal matching funds for Medicaid nursing home supplemental payments and related intergovernmental transfers. In addition, the OIG proposes to audit both the Head Start Program and the Refugee Resettlement Program and, based on congressional request, to review HHS email policies. The updates are summarized in this article and listed in the accompanying table.

Authored by: Thomas J. Bonura, 713.286.7181,
Reviewed by: William T. Mathias, 410.862.1067,


Upcoming Events

National Institute on Health Care Fraud

May 2 – 4  – Seminar
San Francisco, CA
Learn more


How to Avoid Long Term Care Litigation

Tuesday, May 8 – Webcast
1:00 – 2:00 p.m. Central
2:00 – 3:00 p.m. Eastern
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When the Patient Becomes the Harasser

Thursday, May 10 – Webcast
10:30 – 11:30 a.m. Central
11:30 a.m. – 12:30 p.m. Eastern
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Jonell B. Beeler

Catherine A. Martin

HBMA Washington Report – March Issue

Washington Report – March, 2018
(Covers activity between 3/1/18 and 3/31/18)
Bill Finerfrock, Matt Reiter, Nathan Baugh, Ryan Mash and Carolyn Bounds

Washington Report – March Issue

  • HBMA GR Committee Holds Conference Call with ONC to Discuss EHR Burden Reduction
  • Congress Passes FY 2018 Omnibus Appropriations Bill
  • CMS Announces New Patient Data Initiatives
  • MedPAC Recommends Eliminating MIPS but Congress is Unlikely to Act on Proposal in 2018
  • CMS Holds Listening Session on Updating Evaluation and Management Guidelines
  • Reminder: CMS Will Begin Issuing New Medicare Cards to Beneficiaries in April
  • MedPAC Analysis: Physician Payment Rates and Access to Care are “Adequate”
  • Administration Releases Initial 2018 ACA Enrollment Report
  • CMS Will Automatically Reprocess Claims Impacted By Bipartisan Budget Act of 2018
  • House Health Subcommittee Holds Hearing on MACRA and Physician Payments
  • Cigna Acquiring Express Scripts
  • Arkansas Becomes Third State to Implement Medicaid Work Requirements
  • CMS Transmittals

MedPAC votes to cut payments for free-standing ERs

The Medicare Payment Advisory Commission voted unanimously to cut reimbursement for some stand-alone emergency departments in urban areas. The proposal could save Medicare up to $250 million annually if adopted by Congress.

Hospital industry stakeholders immediately slammed the idea, arguing the cuts could undermine access to care.

When Will Medicare Get Its Priorities Straight?

By Frustrations arise over inconsistent guidance from MACs and CMS.

Every single day, I get numerous email notices from the Centers for Medicare & Medicaid Services (CMS) and the Medicare Administrative Contractor (MAC) for our jurisdiction on a wide variety of “priorities:” correct coding, quality measures, new reporting initiatives, and a never-ending reminder of the myriad things physicians are required to do, document, and report, now and in the future.

Included in these messages are warnings about progressive corrective action, Comprehensive Error Rate Testing (CERT) findings, incorrect coding and billing, and the need to protect the Medicare trust fund from all the improper claims.

Wouldn’t it be nice if CMS and the MACs were held to the same high standards of accurate claims adjudication? Wouldn’t it be nice if the same draconian penalties were applied when they made patterns of errors? I think every physician I know would like to know when accountability will be fair and equal to all parties. To this end, let’s take a look at the first two and a half months of 2018.

CMS has created new modifiers to describe the patient-physician relationship: the so-called X modifiers. Although they are slated to be mandatory in the future, in 2018, reporting is voluntary. Presumably, this constitutes important quality information CMS needs, outlining the details of care by different beneficiary providers.

Our company prepared for this reporting, our physician clients all prepared for this reporting, and on Jan. 1, 2018, we did report to our MAC on every claim. On 100 percent of them, we received a remittance notice that the claims could not be electronically crossed to secondary payers because they could not process the X modifier.

Hundreds of letters from the MAC stating that fact arrived. And so the due diligence began. Only one secondary payer (Medicaid) was unable to process the X modifiers. All other payers had foreseen the issue, and programming was completed in 2017. Not one of the secondary clearinghouses had any issue. Many hours of research resulted in just one consistent answer: it’s a MAC problem. The end result is an unacceptable amount of lost time, delayed payments, and system reprogramming – all so we could stop the voluntary reporting. I wish that was the target of a CERT audit.

CMS requires provider-based, off-campus facilities to report place of service 19. A new problem reared its ugly head when the new CPT® codes for 2018 were billed in that location. Apparently, the MAC incorrectly programmed, resulting in 100 percent of the radiology interpretations for imaging in place of service 19 being incorrectly denied. Yes, they know and have known since January. An estimated date for the fix is sometime in April. I wonder why delaying legitimate, medically necessary physician reimbursement for four months is acceptable? I wish physicians could correct mistakes when they could work it into their busy schedules, without fear of repercussion.

Not surprisingly, the code updates for National Coverage Determinations (NCDs) again had issues. The October 2017 ICD-10 updates of breast mass codes were finally correctly updated on Jan. 1, 2018 – again, three months after implementation. However, the 2018 new anesthesia codes for upper and lower gastrointestinal endoscopic procedures, including screening for colonoscopy, were not updated correctly for Jan. 1, 2018 dates of service. Perhaps of more concern is that all these incorrectly processed claims were adjudicated as being entirely the patient’s responsibility. As above, a correction is estimated for sometime in April.

Last on our 2018 list is the fact that the MAC has just notified us that they will reprocess all the new 2018 mammography codes that also were incorrectly denied due to their system update errors.

So, let’s recap. If you are CMS or a MAC, it is perfectly acceptable to make high-volume patterns of errors that incorrectly negatively impact provider payment, without penalty or provider recourse. There is no definitive timeline to correct the revenue disruption the errors caused. We know that in some cases, it took more than a year to resolve. Perhaps if the priority was on getting it right, testing programming, and validating accuracy, less burden would be unfairly placed on providers.

I wonder what would happen if CMS and its contractors were held to the same level of scrutiny and accuracy providers are? Maybe physicians need the equivalent of CERT: progressive corrective action and integrity auditors to evaluate CMS and MAC performance and initiate penalties for errors.

I wonder what would happen if the focus was on getting what we have now right, rather than issuing a tsunami of new requirements and initiatives? I wonder what would happen if the focus was really on correctly paying physicians for medically necessary services instead of building confusing, complex payment systems of dubious validity?

CMS, when will you get your priorities straight?

MedPAC Recommends Elimination of MIPS

Report to the Congress • March 2018

The Medicare Payment Advisory Commission (MedPAC) is required by law annually to review Medicare payment policies and make recommendations to the Congress. In the March 2018 report, MedPAC makes payment policy recommendations for nine provider sectors in fee-for-service (FFS) Medicare and reviews the status of Medicare Advantage (MA) and Medicare’s prescription drug benefit (Part D). MedPAC also recommends changing the way Medicare pays for clinician services in FFS by moving beyond the Merit-based Incentive Payment System (MIPS), recommends changes to MA and Part D to improve the equity and efficiency of those programs, and responds to a Congressional mandate on telehealth in Medicare. In the Bipartisan Budget Act of 2018, Congress enacted several policies that are similar to recommendations contained in this report.

View the report summary here.

View the entire report here.

HBMA Washington Report – February Issue

Washington Report – February, 2018
(Covers activity between 2/1/18 and 2/28/18)
Bill Finerfrock, Matt Reiter, Nathan Baugh, Ryan Mash and Carolyn Bounds

Washington Report – February Issue

  • Short-Term Government Funding Bill Includes Many Medicare Policy Changes
  • White House Releases President’s FY 2019 Budget Request to Congress
  • Administration Proposes Requiring Registration/Enrollment of Medical Billing
    Companies with Medicare
  • MIPS Quality Performance Data Now Available on QPP Website but ECs Still Have Time to Report
  • CMS Will Begin Including QMB Status in Remittance Advice on July 1st
  • Trump Administration Proposes Rule to Expand Short-Term Insurance Plans
  • CMS Announces Opportunity for Eligible Clinicians to Participate in MIPS Burden Reduction Study
  • Deadline to Express Interest in a Low Volume Appeal Settlement March 9th or 12th Depending on NPI
  • GAO Studies Ways to Redesign Medicare Cost-Sharing
  • Administration’s Burden Reduction Initiatives Continue to Take Shape
  • CMS Office of the Actuary Releases National Health Expenditures Projections
  • CMS Transmittals

Health Law Alert – February 2018 #2

New DOJ False Claims Act Guidance Delivers More Questions than Answers for Health Care Industry

The U.S. Department of Justice (DOJ) kicked off the new year by issuing two internal memoranda that are directly relevant to actions brought under the False Claims Act. The January 2018 memoranda offer valuable insight into how the DOJ intends to prosecute, or opt to dismiss, pending and future civil enforcement actions. These memoranda may have their biggest impact in the health care industry, with its plethora of qui tam matters and heavy reliance on manuals and other sub-regulatory guidance. Each memorandum is discussed more fully in “A New Year, a New, Firmer DOJ: Recently Released Parameters for DOJ in False Claims Act Litigation.”

The first such memorandum, issued January 10, 2018, emphasizes the DOJ’s “important gatekeeper role” in preserving resources, protecting government interests, and avoiding unfavorable precedent caused by weak cases. While the False Claims Act contains a dismissal provision, 31 U.S.C. § 3730(c)(2)(A), which explicitly gives the DOJ the power to seek to dismiss a case over the objection of a relator (who stands to gain financially if their lawsuit leads the government to recover money), the DOJ historically has been hesitant to exercise that authority. The January 10 memorandum, however, encourages DOJ attorneys to consider not only their power to seek dismissal, but also their responsibility to do so, and outlines seven common, but not exclusive, factors for U.S. attorneys to consider in deciding whether to dismiss a qui tam.

Authored by:
Thomas H. Barnard, 410.862.1185,
Marisa Rosen Dorough, 407.367.5406,


OIG February 2018 Work Plan Update

The OIG added three items to its Work Plan with the February 2018 update, as listed in the chart below. Two of the items concern annual reports, one addressing the performance of Medicaid Fraud Control Units and the other reporting on the use of price substitution in Medicare Part B drug purchasing. The third item relates to statistical sampling in Medicare fee-for-service administrative appeals of findings by program integrity contractors.

Program integrity contractors utilize statistical sampling to review payments to providers and to identify payments that may be improper. If the contractor identifies “a sustained or high level of payment error,” the contractor may use statistical sampling to extrapolate a total overpayment based on a larger population of claims. The statistical estimate for the sample is subject to challenge on appeal. Medicare Administrative Contractors (MACs) and Qualified Independent Contractors (QICs) are responsible for the first two levels of the appeals process, and, according to the OIG, “thus play a critical role in deciding which extrapolations will be upheld.”

Authored by:
Meredith N.
Reviewed by:
 William T.


Key Health Care Provisions of Bipartisan Budget Act of 2018

The wide-reaching Bipartisan Budget Act of 2018 (BBA), passed by Congress and signed by the President on February 9, 2018, extends and modifies dozens of health care programs, including extending funding for two years for community health centers and extending the Children’s Health Insurance Program (CHIP) for an additional four years through Fiscal Year (FY) 2027. The bill also provides funding for a number of Medicare extenders and incorporates policy reforms from the CHRONIC Care Act and the Medicare Part B Improvement Act – affecting Stark Law compliance, physician payment plans, telehealth, home health services, and other programs. The bipartisan legislation also includes funding for the National Institutes of Health (NIH) and for efforts to combat the opioid crisis. Finally, the legislation repeals the Affordable Care Act’s (ACA) Independent Payment Advisory Board (IPAB) and eliminates the Medicaid Disproportionate Share Hospital (DSH) reductions scheduled for FY18 and FY19. Of note, the legislation does not include ACA market stabilization measures to address ongoing uncertainty and turmoil in the individual insurance market. Congress will now turn to enacting a full-year omnibus appropriations measure for FY18 under the newly passed BBA.

Authored by:
Sheila P.
Sam E.


President’s Budget on Health Care: Entitlement Reform, Opioid Funding, and Cuts to Health Programs

The President’s fiscal year 2019 (FY19) budget proposal for the Department of Health and Human Services (HHS) reflects the Trump Administration’s priorities to repeal and replace the Affordable Care Act (ACA) and implement significant reductions in federal spending for health care entitlements and domestic health programs. The budget assumes Congress will replace the ACA’s Medicaid expansion funding and insurance exchange subsidies with market-based block grants to the states (citing the Graham-Cassidy-Johnson-Heller proposal), generating $679 billion in net savings over the ten-year budget window. Like last year, the budget includes a proposed restructuring of Medicaid from an open-ended federal and state entitlement program to a per capita cap or block grant system beginning in FY20, projected to save approximately $1.4 trillion over ten years. However, unlike last year’s budget proposal, this year’s budget calls for substantial reforms and cuts in Medicare, producing $532 billion in total savings over ten years. The budget proposes reductions in Medicare reimbursements to post-acute care providers, graduate medical education programs, hospitals providing uncompensated care, and hospital-owned physician practices. The budget also proposes savings through efforts to lower Medicare payments and beneficiary out-of-pocket cost sharing for prescription drugs.

Related Resource: President’s FY19 budget Medicare legislative proposals and estimated budget impacts

Authored by:
Sheila P. Burke, 202.508.3457,
Amit Rao, 202.508.3472,


Co-Chairs, Health Care Regulatory Group

Jonell B. Beeler

Catherine A. Martin