Legislative Weekly

July 8, 2024

1. No Surprises Act (NSA) and Transparency Rules (TinC)
2. Cybersecurity, AI, & Tech 1
3. DC and Federal Update
4. The States
5. The Industry

HIGHLIGHTS: IDR open negotiation initiation period extended; Congress wants more oversight of AI use in MA; SCOTUS overturns Chevron; 3rd-party web tracking tech prohibition vacated; ACA’s nationwide coverage mandate upheld…for now; Walmart and Amazon make diverging healthcare moves.

No Surprises Act & TinC

In response to the Change Healthcare cyberattack, the Biden Admin. has extended the time period to initiate open negotiations under the NSA’s IDR process for items/services furnished this year. Providers have until Oct. 12 to initiate, regardless of when the payment or notice of denial was transmitted (as long as it was on or after Jan. 1, 2024).

• The provider must also include an attestation, provided by CMS, stating that their ability to timely initiate open negotiations was “impacted” by the incident.

Cybersecurity, AI, & Tech

Over 50 members of Congress sent a bicameral, bipartisan letter to CMS urging the agency to increase oversight of AI and algorithmic software tools used to guide MA plan coverage decisions. The letter says that several MA insurers are using unregulated algorithms and AI tools to determine when to cut off payment for patient treatments.

The FDA recently published its best practices for AI machine learning-enabled medical devices, while an agency regulator reveals details about how the agency is looking at AI development/quality assurance.

Axios explores how AI will change the future of medicine, while Stat News questions who should have oversight of AI in healthcare: the gov’t, academics, or big tech?

DC and Federal Update

The Supreme Court recently overturned the “Chevron deference,” ruling that the courts, not gov’t agencies, are tasked with interpreting vague laws and aspects of law that Congress didn’t address. The Chevron deference says effectively the opposite – that federal gov’t agencies, not the courts, are principally responsible for interpretation of laws passed by Congress, unless regulation is extremely unwieldy.

The court’s ruling will likely have an extensive impact on the healthcare sector. Check out the following article roundup for more on specifics:

Ruling Analysis

·         Bloomberg Law - Chevron Death Puts Agencies on Notice for Tougher Legal Brawls

·         Bloomberg Law - Lobbyists Brace for ‘Earth-Moving’ Change After Chevron Ruling

·         Healthcare Dive - SCOTUS strikes down Chevron doctrine, curbing federal agency power

·         McDermott - US Supreme Court Overturns Chevron Deference

Implications for Healthcare

·         Washington Post - What the Chevron decision means for health policy

·         Fierce Healthcare - Supreme Court overrules Chevron, diminishing healthcare agencies

·         Becker’s - How the Supreme Court's Chevron deference ruling could affect healthcare

·         KFF - The Supreme Court Just Limited Federal Power. Health Care Is Feeling the Shockwaves

·         MedPage Today - Supreme Court Decision May Have Sweeping Effects on Healthcare

A federal judge in Texas ruled that HHS’ guidance prohibiting the use of third-party tracking technologies on hospital websites is unlawful, calling it a case about “our nation’s limits on executive power.”

• The judge found that HHS exceeded its authority, agreeing with plaintiffs the American Hospital Association and Texas Hospital Association, as well as 17 state hospital associations and 30 hospital/health systems that filed supporting briefs.

The US Court of Appeals for the Fifth Circuit ruled that the ACA’s nationwide mandated coverage of certain preventive services can continue for now, but a future appeal to the Supreme Court is likely.

• Two Christian-owned companies sued back in 2020 over the coverage requirement for preventive HIV medicines and asked for a nationwide injunction.
• The judge ruled that a nationwide injunction went too far, but that the companies did not have to comply with the mandate, suggesting that a future ruling could exempt more entities from the mandate.

The DOJ announced charges against 193 defendants for losses of $1.6B due to healthcare fraud.

• 76 of the defendants were healthcare providers.
• The fraud schemes included unnecessary wound grafts, unlawful distribution of controlled substances, adulterated medications, telemedicine fraud, and more.

The very busy DOJ’s recently created Health Care Monopolies and Collusion Task Force indicates the Biden Admin’s increasing focus on collusion and anticompetitive practices within the healthcare industry.

The States

Arizona passed legislation authorizing insurers to create a shared savings incentive program for insureds in the state.

• SB 1402 provides that insureds who receive a covered service for less than the “usual” reimbursement the insurer provides can be reimbursed a portion of the difference.

The Industry

Community Health Systems (CHS) becomes the first health system to directly purchase drugs from Mark Cuban’s Cost Plus Drugs. The companies originally partnered on high-demand, generic injectables and will now do the same with 12 common medications, with CHS receiving the meds at a “deeply discounted” rate.

Walmart has agreed to sell its telehealth business MeMD to a healthcare tech startup after announcing it was closing all of its 51 Walmart Health centers and virtual care services.

• The startup Fabric will expand its reach in the employer market with MeMD’s 30,000 employers and 5M customers.
• Elsewhere in retail health, Amazon is combining its Amazon Clinic telehealth service into its primary care platform and naming the service Amazon One Medical (AOM). The company also announced a separate initiative to expand its pharmacy subscription services (RxPass) to Medicare enrollees.

Healthcare worker compensation actually grew in 2023, according to a new report.

• Median total compensation for healthcare management positions grew 7% between 2022 and 2023 amidst increased demand for workers, while RN median compensation has increased almost 20% in the last 5 years.
• However, 8 out of 10 employers stated that they spent more time trying to hire in 2023 than previous years.

This update is solely for informational purposes and should not be relied upon as legal advice.