Health Care Reform Legislation Is Taking Shape
This week the Senate Finance Committee and the Senate Health, Education, Labor and Pensions Committee continued their efforts to develop federal health care reform legislation for consideration later this summer. On June 2, leading Democrats on the Senate Finance Committee and the Senate Health, Education, Labor and Pensions Committee met with President Obama and discussed their progress in crafting reform legislation. Following the meeting, President Obama sent a letter to Senators Edward M. Kennedy (D-Mass.) and Max Baucus (D-Mont.) in which he states in part: "I strongly believe that Americans should have the choice of a public health insurance option operating alongside private plans. This will give them a better range of choices, make the health care market more competitive, and keep insurance companies honest." The President's letter is available here. On June 4, leaders of these two committees met and discussed the controversial subject of whether to include in the legislation a public health insurance plan option to compete with the private plans. General points of agreement include that any public plan option should not establish prices, should not have a competitive advantage over private plans, and should have limited federal involvement. In a June 1 letter, health care trade associations including the American Hospital Association, AdvaMed, the American Medical Association and PhRMA described in some detail their pledge to reduce health care costs by about $2 trillion over the next ten years. This letter is available here. Finally, earlier today, the Obama Administration held another Health Care Stakeholder Discussion, this time with women's groups. Information regarding this meeting is available here. Tom Dowdell

Obama Seeks Increased Authority for MedPAC
In a June 3, 2009 letter to Senators Max Baucus (D-Mont.) and Edward Kennedy (D-Mass.), President Obama expressed interest in an expanded role for the Medicare Payment Advisory Commission (“MedPAC”). Under the proposal, MedPAC would perform not merely an advisory role, but would have authority to enact Medicare reimbursement policies. “To identify and achieve additional savings, I am also open to your ideas about giving special consideration to the recommendations of [MedPAC]… [u]nder this approach, MedPAC’s recommendations on cost reductions would be adopted unless opposed by a joint resolution of the Congress.” The full text of the letter may be found here. Mark Faccenda

Revised Conditions for Coverage for Ambulatory Surgical Centers Take Effect
On May 18, 2009, a series of revisions to the Conditions for Coverage (“CfCs”) for Ambulatory Surgical Centers (“ASCs”) took effect. The revisions, which were included in the Hospital Outpatient Prospective Payment System final rule that was adopted by CMS on November 18, 2008, address various aspects of the CfCs, including the Governing Body and Management CfC (relating to quality assurance and disaster preparedness); the definition of an ASC (adding language that the expected duration of ASC services would not exceed 24 hours); the Surgical Services CfC (relating to anesthetic risk and evaluation); and the Quality Assessment and Performance Improvement CfC (adding regulatory standards). The final rule also added CfCs on Patient Rights, Infection Control, and Patient Admission, Assessment and Discharge. To read the updated State Operations Manual for ASCs, click here. Peter Leininger

HHS Proposes Regional Centers to Assist with HITECH Implementation
On May 28, 2009, the U.S. Department of Health and Human Services (“HHS”) announced and requested comment on a proposal to establish regional centers to assist providers seeking to adopt and become meaningful users of health information technology as required under the Health Information Technology for Economic and Clinical Health Act (“HITECH”). “The major focus for the [centers’] work with most of the providers that they serve will be to help to select and successfully implement certified electronic health records (“EHR”s)… All regional centers will assist adopters to effectively meet or exceed the requirements to be determined a ‘meaningful user’ for purposes of earning the incentives authorized” by HITECH. The regional centers, as proposed, will be coordinated and facilitated by the Health Information Technology Research Center (“HITRC”), also created by HITECH. “Whereas research and analysis of best practices regarding health IT utilization rests primarily with the HITRC, dissemination and implementation of those best practices learned from the HITRC will rest with the regional centers.” Comments on the proposal are due by June 11. For more information, click here. Mark Faccenda

Horizon BCBS of NJ Files Lawsuits Against Two Out-of-Network Hospitals for Waiving Member Costs
In May 2009, Horizon Blue Cross Blue Shield of New Jersey (“BCBS”), filed lawsuits in New Jersey state court against two out-of-network hospitals alleging that the hospitals violated the state’s Insurance Fraud Protection Act when they submitted claims to BCBS that did not factor in waivers of member costs, including copayments, coinsurance, and deductibles (Horizon Blue Cross Blue Shield of N.J. v. IJKG, LLC, N.J. Super. Ct., No. ESX-C-125-09; Horizon Blue Cross Blue Shield of New Jersey v. Newton Mem’l Hosp., N.J. Super. Ct., No. ESX-C-141-09). The BCBS complaints also allege that the hospitals had recently terminated their BCBS contracts and had begun soliciting subscribers, one hospital allegedly telling subscribers they could continue to receive care “at no added cost” and the other hospital allegedly agreeing to accept the amounts reimbursed by BCBS as “full payment.” The BCBS complaints also include claims for common law fraud, negligent misrepresentation, tortious interference with member contracts, unjust enrichment, and conversion. BCBS seeks declaratory judgment that it is not responsible for paying the claims for which the hospitals waived member liability. The complaints also seek return to BCBS all amounts paid on the allegedly improper claims, compensatory damages, treble damages, punitive damages, attorneys fees and costs, costs of investigation and a permanent injunction prohibiting the hospitals from, among other things, waiving member liability. Also, on May 28, 2009, BCBS filed counterclaims for tortious interference and breach of contract in a lawsuit that one of the hospitals had filed against it last month (Newton Mem’l Hosp. v. Horizon Healthcare Services, N.J. Super. Ct., No. SSX-L-302-09). In that case, the hospital had alleged, inter alia, that BCBS was retaliating against it after the hospital terminated its contract. To read the complaints filed against Bayonne Medical Center click here, and Newton Memorial Hospital click here. To read Horizon's answer and counterclaims in the lawsuit filed by Newton Memorial Hospital click here. Lisa Thompson

Association Claims Charity Care Standards Could Hurt Nonprofit Hospitals
On June 1, 2009, the Senate Finance Committee released a comment letter from the Association for Healthcare Philanthropy (“AHP”). The letter stressed that requiring non-profit hospitals to meet minimum charity care benchmarks could increase the financial challenges surrounding these facilities. The charity care benchmarks are part of a financial comprehensive healthcare reform proposed by Senators Max Baucus (D-Mont.) and Chuck Grassley (R-Iowa). The proposed reform would codify organizational and operational requirements for determining whether a hospital is eligible for exemption under the Internal Revenue Code Section 501(c)(3). The AHP letter highlights that the policy options considered by Senators Baucus and Grassley put too much emphasis on charity care, while ignoring that most non-profit hospitals’ services extend beyond charity care to include community benefit programs and services, as well as capital and technology improvements. In addition, AHP noted that limiting the tax rate for itemized deductions will cause financial strain on non-profits. AHP stresses that this would devalue charitable gifts and may severely limit the amount of substantial donations made to these hospitals. Charitable gifts are vital to the survival of non-profit hospitals and reducing tax deductions would impair the financial future of these hospitals. For the full text of the letter click here. India Brim

Tenth Circuit Denies Laboratory’s Request to Review CLIA Revocation
On June 2, 2009, the United States Tenth Circuit Court of Appeals issued an opinion denying a laboratory’s petition for review regarding the one-year revocation of its Clinical Laboratory Improvement Amendments (“CLIA”) certificate because the laboratory checked its proficiency test answers with those of another lab before submitting the test results to the government. The Court found that this action violated the plain terms of 42 U.S.C. § 263a(i)(4), which forbids an intentional “referral” of a proficiency testing sample for analysis in another lab. The Court stated that “[w]hile consultation between labs may be permissible in other circumstances before or after a proficiency test, asking an outsider for help during a test corrupts the process and defeats its purpose.” For more information, please see the Tenth Circuit’s opinion, here. Lara Parkin

Bill Prohibiting Reverse Payment Settlements for Generic Drugs Passes House Subcommittee
On June 3, 2009, the Commerce, Trade and Consumer Protection Subcommittee of the U.S. House of Representatives Energy and Commerce Committee voted 16-10 in favor of legislation prohibiting reverse payment settlements, in which branded pharmaceutical manufacturers pay generic manufacturers to refrain from marketing competitive products. The Protecting Consumer Access to Generic Drugs Act of 2009 (“H.R. 1706”) prohibits “any person to directly or indirectly be a party to any agreement resolving or settling a patent infringement claim in which an ANDA filer receives anything of value; and the ANDA filer agrees not to research, develop, manufacture, market, or sell, for any period of time, the drug that is to be manufactured under the ANDA involved and is the subject of the patent infringement claim.” H.R. 1076 seeks to impose penalties under Section 5 of the Federal Trade Commission Act related to such activity. The full text of H.R. 1706 may be found here. Mark Faccenda

UPCOMING EVENTS

Tuesday, June 9th, 3:50 - 4:45 p.m.: Fulbright Speaker: R. Joel Slomoff will participate in a panel discussion entitled "Overcoming Challenges in Conducting Clinical Trials to Minimize Fraud and Abuse Claims During and After Trial," which will take place at the American Conference Institute's National Conference on Reducing Legal and Compliance Risks in the Sales and Marketing of Medical Devices in Chicago, Illinois. For more information or to register, click here.

Monday, June 29th, 6:30 - 9:30 p.m.: Fulbright is a proud sponsor of the American Health Lawyers Association's Reception at the Newseum, during their 2009 Annual Meeting. If you are planning to attend the Reception and/or the Annual Meeting, please let us know so we can keep an eye out for you and say hello. Also during the Annual Meeting, Fulbright partner Andrew J. Demetriou will speak on "Legal Ethics of Protecting Attorney-Client Privileges." For more information, click here.