Delaware Drug-related Regulatory Updates

Written By Joanne Ceballos

Drug-related revisions to the regulations governing nurses and pharmacists practicing in Delaware took effect on March 11, 2015.  For nurses, “unprofessional conduct” that may lead to disciplinary action now expressly includes diverting, possessing, obtaining, supplying or administering illegal drugs.  For pharmacists, a new regulation expressly requires that dispensed medications returned to a pharmacy “by the public” must be disposed of in accordance with Delaware and federal controlled substances laws, and “proposed disposal methods must be authorized by the Delaware Office of Controlled Substances and federal authority.”

There are also changes to both the nursing and pharmacy regulations with respect to educational/training requirements.  For nurses, one Continuing Medical Education hour (60 minutes) now equals one contact hour (as opposed to 1.2 contact hours).  For pharmacists who administer immunizations and other injectable medications, the required CPR certification must be obtained through hands-on education as opposed to an online course.

U.S. Supreme Court Affirms: State Licensing Boards Without Active State Supervision Susceptible to Antitrust Suits for Anticompetitive Behavior

Written By Nate Trexler

On February 25, the US Supreme Court released its decision in North Carolina State Board of Dental Examiners v. Federal Trade Commission, reaffirming the rule that state professional licensing boards controlled by active market participants that are not “actively supervised” by the State do not enjoy state-action immunity from antitrust enforcement.  As a result, both regulators and regulated health care professionals may find a need to reevaluate state licensing board activity.

 

Like most states, including Delaware, the North Carolina legislature created a board—the State Board of Dental Examiners—to regulate the “practice of dentistry.”  By state law, a majority of the Board was comprised of practicing dentists.  In 2003, North Carolina dentists started to complain to the Board about nondentists offering teeth whitening services at lower costs.  The Board appointed a dentist member to lead an investigation into nondentists offering these services.  The investigation led the Board to issue cease-and-desist letters to these nondentists, warning that the unlicensed practice of dentistry was a crime and either strongly implying or expressly stating that teeth whitening constituted “the practice of dentistry.”  The Board also convinced the North Carolina Board of Cosmetic Art Examiners to warn cosmetologists against providing such services and even wrote letters to shopping mall operators to advise them to remove teeth whitening kiosks because that activity violated the North Carolina Dental Practice Act.  The Act did not specify that teeth whitening constituted the practice of dentistry.  As intended, nondentists ceased offering teeth whitening services in North Carolina.

In 2010, the Federal Trade Commission “FTC”) filed an administrative complaint charging the Board with violating Federal antitrust law.  Essentially, the FTC alleged that the Board’s resolute action to exclude nondentists from the market for teeth whitening services was anticompetitive and an unfair method of competition.  An Administrative Law Judge (“ALJ”) rejected the Board’s argument that the Board was immune from antitrust enforcement under the state action immunity doctrine.  Ultimately, the case was decided on the merits in favor of the FTC, and the FTC ordered the Board to stop sending cease and desist letters and to issue notices to all earlier recipients explaining the Board’s proper scope of authority.  The Board filed a petition for review to the Fourth Circuit, which subsequently affirmed the FTC’s decision.  The Supreme Court granted certiorari on the issue of whether the Board enjoyed state action immunity.

The Supreme Court restated the standard for state action immunity set forth in Parker v. Brown, which provides that antitrust laws confer immunity on the anticompetitive conduct of States that are acting in their sovereign capacity.  The Board argued that its members were conferred with the power of the State by virtue of the State creating the Board to regulate the practice of dentistry.  The Court disagreed that creation of the Board was enough.  Where a nonsovereign actor is controlled by active market participants, such as the Board, the actor will only enjoy Parker immunity if: (1) the action is clearly articulated and affirmatively expressed as state policy; and (2) the policy is “actively supervised” by the State.  The second requirement was at the heart of the parties’ arguments.

In its holding, the Court made clear that where a State empowers a licensing board run by a majority of members that practice the profession they regulate, “the need for supervision is manifest.”  Where a board is essentially controlled by active market participants, there is a risk that private interests may lead to anticompetitive regulation.  The Board did not claim that the State of North Carolina exercised any supervision over its conduct regarding teeth whitening.  The Court held that because there was no active supervision of the Board’s actions, the Board was not immune to antitrust laws.

In its decision, the Court established the parameters for what a State must do in order for its agencies controlled by active market participants to enjoy immunity from antitrust laws.  At the very least, the inquiry is whether the State provides “realistic assurance” that an agency’s anticompetitive conduct promotes state policy, rather than the actor’s self-interest.  The Court stated that to satisfy the requirement, a “supervisor,” who may not be an active market participant, must look at a board’s decision and review its substance, and act on the power, if necessary, to veto or modify decisions to ensure such decisions achieve state policy.

The Court’s decision in North Carolina State Board of Dental Examiners v. Federal Trade Commission should prompt states to review the composition and conduct of their licensing boards.  Where a board is controlled by a majority of individuals who practice the profession they seek to regulate, states should seek to actively supervise the board decisions if immunity is desired.

OIG Issues New Advisory Opinion that Sheds Additional Light on How the Government Views Beneficiary Inducements

Written By Joanne Ceballos 

The federal Civil Monetary Penalties statute, 42 U.S.C. 1320a–7a, allows the government to impose Civil Money Penalties “(“CMPs”) when it determines that a health care provider has offered remuneration to a federal health care program beneficiary to influence the beneficiary to select the provider for services paid for by Medicare or Medicaid.  Similarly, the federal Anti-Kickback Statute, 42 U.S.C. 1320a–7b(b), prohibits offering remuneration in exchange for referrals of federal health care program business.  These statutes generally prevent a health care provider from advertising or offering free goods or services to federal health care program beneficiaries to induce them to obtain services from the provider that are payable by federal health care programs.  However, exceptions to this general prohibition do exist, and earlier this month the OIG issued  Advisory Opinion No. 15-01, which sheds light on how the OIG evaluates arrangements where non-cash inducements are provided to federal health care program beneficiaries. 

The Opinion was issued in response to a request by a provider of care coordination and intervention services (“Provider”) under a state’s Medicaid-funded Maternal Infant Health Program (the “Program”). To advance the Program’s goal of promoting healthy pregnancies, positive birth outcomes, and infant health and development, the Provider’s services include psychosocial and nutritional assessments, coordination with other medical care providers and Medicaid Health Plans, and family planning education.  The state sponsoring the Program directed Program providers to market their services to the target population and to medical care providers who would be potential referral sources, including advertising and offering incentives, such as free diapers, to Medicaid beneficiaries participating in the Program. Accordingly, the Provider advertised and offered one free pack of diapers (with a value of less than $5.00) to Program-eligible Medicaid beneficiaries who attended an initial consultation with the Provider, and beneficiaries who enrolled in the Program continued to receive a pack of free diapers at each visit with the Provider up to the Program maximum of ten visits.  The Provider also advertised and offered a free play yard, valued at approximately $50.00, to each beneficiary who completed all ten visits.

The OIG concluded that while the arrangement could potentially generate prohibited remuneration under the AKS if the requisite intent to induce or reward referrals of federal health care program business was present, it would not impose administrative sanctions under the CMP statute for two reasons.  First, the OIG noted that the free diapers, with a value of less than $5.00 per item and $50.00 in the aggregate (assuming a beneficiary attended and received a package of diapers at all ten Program visits) are “nominal value” incentives that are permissible under the OIG’s long-standing interpretation of the CMP statute permitting non-cash incentives to a federal health care program beneficiary of no more than $10 per item, or $50 in the aggregate on an annual basis. Second, the OIG noted that both the diapers and the play yards satisfy the requirements of the Preventive Care Exception in the CMP statute, 42 U.S.C. 1320a–7a(i)(6)(D). 

The regulatory criteria for preventive care incentives to be excluded from the definition of remuneration for purposes of the CMP statute are: (1) the incentive must be given to promote preventive care services, defined as  “prenatal service or a post-natal well-baby visits or a specific clinical service described in the current U.S. Preventive Services Task Force's Guide to Clinical Preventive Services;” (2) the incentive cannot be cash or an instrument convertible to cash; (3) the value of the incentive cannot be disproportionately large in relationship to the value of the preventive care service; and (4) the delivery of the preventive care service is not tied (directly or indirectly) to the provision of other services reimbursed in whole or in part by Medicare or Medicaid.  42 C.F.R. 1003.101.  The OIG concluded that the free play yards, whether offered alone or in combination with the free diapers, satisfied all the regulatory criteria of the Preventive Care Exception.  While it is easily understood how the Provider’s incentives comported with the first three regulatory requirements, it is less apparent how the Provider’s delivery of prenatal and post-natal counseling could be considered “not tied (directly or indirectly) to the provision of other services (namely, prenatal and post-natal well baby visits) reimbursed” by Medicaid, since a primary purpose of the Provider’s services is to encourage pregnant Medicaid beneficiaries to obtain proper prenatal and post-natal medical care.  The OIG reasoned, however, that even though the Provider’s preventive services are “intended to supplement the medical care that Program beneficiaries receive, Program services are not tied, directly or indirectly, to the provision of that care.”  In other words, Medicaid beneficiaries could avail themselves of the Provider’s services whether or not they obtained the recommended medical services.

 

While the AKS and CMP statutes generally prohibit health care providers from offering Medicare and Medicaid beneficiaries incentives to seek their services, the Preventive Care Exception is one of a number of statutory exceptions to the definition of remuneration in the CMP statute.  Providers seeking to market and promote their services to federal health care program beneficiaries are well-advised to take into consideration the parameters set by these statutes and their related regulations for such activities. 

U.S. Supreme Court Considers Whether Providers May Sue State Medicaid Officials for Failing to Raise Reimbursement Rates

Written By Joanne Ceballos  

On Tuesday, January 20, 2015, the United States Supreme Court heard oral argument in a case brought by providers of residential rehabilitation services to Medicaid eligible individuals against the Director and Deputy Director of Idaho's Department of Health and Welfare (IDHW) challenging IDHW's failure to raise Medicaid reimbursement rates that had been in effect since July 1, 2006.  The question the Supreme Court is considering is whether Medicaid providers may sue state officials under Section 30(A) of the Medicaid Act, 42 U.S.C. §1396a(a)(30)(A), which requires states accepting federal Medicaid funding to establish a “state plan,” which, among other things, provides “methods and procedures relating to the utilization of, and the payment for, care and services available under the plan … as may be necessary to assure that payments are consistent with efficiency, economy, and quality of care.”  

The case, Armstrong v. Exceptional Child Center, Inc., was instituted by the residential rehabilitation service providers in 2009 after the IDHW failed to raise reimbursement rates consistent with studies commissioned by IDHW because Idaho's Legislature did not appropriate $4 million in funding necessary to cover the increased rates.  The providers sued the IDHW for maintaining the July 2006 reimbursement rates on the ground they did not take into account providers’ actual costs, and, accordingly, violated Section 30(A)’s requirement that “payments [to providers] are consistent with efficiency, economy, and quality of care.”  The United States District Court for the District of Idaho granted summary judgment to the providers, citing precedent from the Ninth Circuit Court of Appeals, which had previously held that Section 30(A) requires a state Medicaid agency to consider actual provider costs when setting rates. 

The Ninth Circuit upheld the district court’s judgment, and the IDHW petitioned the U.S. Supreme Court, which granted the petition solely on the question of whether the providers could even bring an action against the state Medicaid agency to enforce Section 30(A) when Congress had not expressly authorized such an action in the federal Medicaid statute.  The providers take the position that the Supremacy Clause of the United States Constitution affords them a private right of action to enjoin a state law or regulation that is inconsistent with federal law, in this case Section 30(A) of the Medicaid Act.  The Attorneys General of 27 states, including Delaware, filed an amicus brief with the Supreme Court urging it to reject the providers’ position, arguing principally that private rights of action to enforce federal law must be created by Congress.

 

The Supreme Court’s decision is expected to have an impact, one way or the other, on providers’ ability to bring legal challenges against state Medicaid agencies regarding reimbursement rates.  DE Health Law Blog will report on the Supreme Court’s opinion when it is issued.

CMS Issues Proposed Revisions to Medicare Regulations and State Survey Agency Guidance with Respect to Same-Sex Spouses

Written By Joanne Ceballos

On December 12^th the Centers for Medicare and Medicaid Services issued a proposed rule to revise Medicare regulations to afford same-sex spouses equal rights in Medicare and Medicaid participating facilities.  The proposed changes to Medicare conditions of participation (CoPs) for providers, conditions for coverage (CfCs) for suppliers, and requirements for long-term care facilities, follow the U.S. Supreme Court’s decision in United States v. Windsor, 570 U.S.12, 133 S.Ct. 2675 (2013), finding unconstitutional a section of the federal Defense of Marriage Act that prohibited recognition, in federal statutes and regulations, of same-sex marriages lawfully entered into or recognized under state law.  The proposed revisions to certain regulatory definitions and patient rights’ provisions are intended to clarify that where state law or facility policy provides or allows certain rights or privileges to a patient’s opposite-sex spouse, a patient’s same-sex spouse must be afforded equal treatment if the marriage is valid in the jurisdiction in which it was celebrated.  With a majority of states recognizing same-sex marriage, the proposed rule places same-sex spouses on equal footing with opposite-sex spouses when dealing with Medicare and Medicaid providers in most circumstances.  The text of the proposed regulations can be viewed by clicking here. 

  

On the same date CMS’s proposed rule was published in the Federal Register, CMS issued guidance to state survey agency directors clarifying references in certain sections of the State Operations Manual as follows:

“spouse” means an individual who is married to another individual as a result of marriage lawful where it was entered into including a lawful same-sex marriage, regardless of whether the jurisdiction where the provider or supplier providing health care services to the individual is located, or in which the spouse lives, permits such marriages to occur or recognizes such marriages;

“marriage” means a marriage lawful where it was entered into, including a lawful same-sex marriage, regardless of whether the jurisdiction where the provider or supplier providing health care services to the individual is located, or in which the spouse lives, permits such marriages to occur or recognizes such marriages;

“family” includes, but is not limited to, an individual’s “spouse” (see above); and

“relative,” when used as a noun, includes, but is not limited to an individual’s “spouse” (see above).

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[W]here CMS regulations explicitly require an interpretation in accordance with State law, wherever the text of a regulation or associated guidance uses the above terms or includes a reference to a patient’s or resident’s “representative,” “surrogate,” “support person,” “next-of-kin,” or similar term in such a manner as would normally implicitly or explicitly include a spouse, the terms are to be interpreted consistent with the guidance above.

The text of CMS’s guidance to state survey agency directors can be viewed by clicking here.

While CMS is accepting comments on the proposed rule through February 10, 2015, the guidance to surveyors states that is effective immediately, so the affected providers, namely, hospitals, psychiatric hospitals, critical access hospitals, long term care facilities, hospices, and organ procurement organizations, must promptly revise their policies and procedures to conform to CMS guidance.   

New Rule Expands Bases on Which Providers Can Be Excluded from Participation in Medicare

Written By Melony Anderson 

On December 3, the Centers for Medicare & Medicaid Services (“CMS”) issued a new rule that enhances CMS’s ability to exclude or remove providers from participation in Medicare.  According to a press release issued by CMS, the new rule is designed to “prevent physicians and other providers with unpaid debt from re-entering Medicare, remove providers with patterns or practices of abusive billing, and implement other provisions to help save more than $327 million annually.”

The new rule has several provisions.  The first, and most significant given CMS’s stated purpose for the rule, is as follows:

CMS may now deny enrollment if the provider, supplier or owner thereof was previously the owner of a provider or supplier that had a Medicare debt that existed when the latter’s enrollment was voluntarily terminated, involuntarily terminated or revoked AND

·   The owner left the provider or supplier that had the Medicare debt within 1 year of that provider or supplier’s voluntary termination, involuntary termination, or revocation;

·   The Medicare debt has not been fully repaid; AND

·   CMS determines that the uncollected debt poses an undue risk of fraud, waste or abuse.

There are terms under which the provider, supplier or owner thereof can avert the denial, including repaying the debt in full, or agreeing to a repayment schedule for the entire debt if the provider meets the criteria for an extended repayment schedule provided by 42 C.F.R. §401.607.

 

To illustrate how this rule may be applied, consider the following example.  Provider ABC is owned by Owner X.  ABC terminates its enrollment in Medicare.  At the time of the termination, ABC had an outstanding Medicare debt.  Owner X leaves ABC less than a year after the termination.  Thereafter, as long as ABC’s debt remains unpaid, Owner X may be excluded from participating in Medicare, either as a provider or supplier or as an owner thereof, if CMS determines that the outstanding debt poses an “undue risk of fraud, waste or abuse.”  It is not clear from the rules what CMS considers to constitute an “undue risk”, and whether that is based on a dollar figure, or some other criteria.  Owner X may avoid denial if he/she agrees to a repayment schedule for the debt, or pays the debt in full. 

The new rule also expands the bases on which CMS can deny enrollment or revoke billing privileges based on prior felony convictions.  Under the prior rule, CMS could deny enrollment to any provider, supplier or owner who was convicted of a state or federal felony in the prior 10 years.   The new rule expands that to include “managing employees”. 

CMS can now revoke Medicare billing privileges if the provider or supplier has a “pattern or practice of submitting claims that fail to meet Medicare requirements”, including the requirement that the service be reasonable and necessary.  Many commenters to the proposed rule suggested that the provision was arbitrary and subjective, granting too much discretion to CMS.  CMS responded by stating that “sporadic billing errors would not result in revocation”.  CMS does not define “pattern or practice”, but listed several factors that would be considered, including:  (1) percentage of submitted claims that were denied; (2) total number of claims denied; (3) the reason(s) for the claim denials; (4) whether there is a history of final adverse actions; (5) the time period over which the pattern has continued; and (6) how long the provider has been enrolled in Medicare.  With respect to factors (1) and (2), CMS declined to establish objective numerical thresholds. 

The new rule also provides that revoked providers must submit all remaining claims within 60 days after revocation.  Revoked providers and suppliers may now only submit a corrective action plan where the revocation was based on noncompliance with the enrollment requirements, or the enrollment application.  In other words, a revocation based on provider or supplier conduct is no longer eligible for a corrective action plan.

The new rule goes into effect on February 3, 2015.

Physical Therapists’ Board Proposes Telehealth and Dry Needling Regulations

Written by Joanne Ceballos 
In August of this year Governor Markell signed a bill overhauling Chapter 26 of Title 24 relating to the practice of physical therapy and athletic training.  Among other things, the legislation expanded the scope of practice to include telehealth and dry needling.   Further to the legislation, the Examining Board of Physical Therapists and Athletic Trainers has proposed regulations regarding standards and requirements for the practice of telehealth by physical therapists, athletic trainers, and physical therapist assistants, as well as prerequisites for the performance of dry needling by physical therapists.  Proposed Regulation 14.0 restates the statutory definition of “telehealth” as “the use of electronic communications to provide and deliver a host of health-related information and health-care services, including physical therapy and athletic training-related information and services, over large and small distances.  Telehealth encompasses a variety of health care and health promotion activities, including education, advice, reminders, interventions, and monitoring of interventions.”  The proposed regulation provides that a Delaware-licensed physical therapist, athletic trainer or physical therapist assistant may conduct a telehealth session with a patient who is located in Delaware at the time of the session after obtaining the patient’s written informed consent specifying at a minimum the risks and limitations of the use of electronic communications in the provision of care, the potential disruption of electronic communication during the telehealth session, and the potential for breach of confidentiality of protected health information using electronic communications.  The proposed regulation requires the licensee to “ensure that the electronic communication is secure to maintain confidentiality … as required by HIPAA and other applicable Federal and State laws.”  Finally, the proposed regulation specifies that all evaluations (initial, reevaluations, discharge), and every other supervisory visit, must be performed in person as opposed to via telehealth.    

Proposed regulation 15.0 related to dry needling quotes the statutory definition, i.e., "an intervention that uses a thin filiform needle to penetrate the skin and stimulate underlying muscular tissue, connective tissues and myofascial trigger points for the management of neuromusculoskeletal pain and movement impairments; is based upon Western medical concepts; and requires a physical therapy examination and diagnosis," and clarifies that dry needling is not within the scope of practice of  athletic trainers, physical therapy assistants or physical therapy aides.  To perform dry needling, a physical therapist must have no less than two years of active clinical experience as a PT and must complete 54 hours of in-person dry needling education in a Board-approved program (PTs who have completed 25 hours of such education at the time the regulation is enacted may continue to practice dry needling but must complete the required 54 hours of education within two years).  The proposed regulation requires a physician’s referral specific for dry needling, specifies the minimum contents for written informed consent (which must include the PT’s “level of education regarding supervised hours of training in dry needling”), and addresses documentation requirements. 

A complete version of the proposed regulations can be viewed by clicking here. 

A public hearing on the proposed regulations will be held on January 27, 2015 at 4:30 p.m. in the second floor conference room A of the Cannon Building, 861 Silver Lake Boulevard, Dover, Delaware.  Written comments may be submitted to Sandra Wagner, Examining Board of Physical Therapists and Athletic Trainers, 861 Silver Lake Boulevard, Dover, Delaware 19904, by February 11, 2015.