CMS Prohibits Arbitration Clauses in Long-Term Care Facility Contracts

By Wendy S. Salkin

On Wednesday, the Centers for Medicare and Medicaid (CMS)—an agency within the Department of Health and Human Services (HHS)—released a final rule that “will revise the requirements that Long-Term Care facilities [LTCs] must meet to participate in the Medicare and Medicaid programs” (1). (Almost all LTCs receive funds from Medicare or Medicaid.) This is the first time that these requirements have been “comprehensively reviewed and updated since 1991” (6)—that is, in the past 25 years. One of the most striking changes to the regulation is found in §483.65, where CMS “require[es] that facilities must not enter into an agreement for binding arbitration with a resident or their representative until after a dispute arises between the parties” (12) which means that CMS is “prohibiting the use of pre-dispute binding arbitration agreements” (12). Among the reasons provided by CMS for this change is a recognition of the notable power differential between LTCs and their residents:

There is a significant differential in bargaining power between LTC facility residents and LTC facilities. LTC agreements are often made when the would-be resident is physically and possibly mentally impaired, and is encountering such a facility for the first time. In many cases, geographic and financial restrictions severely limit the choices available to a LTC resident and his/her family. LTC facilities are also, in many cases, the resident’s residence. These facilities not only provide skilled nursing care, but also everything else a resident needs. Many of these residents may reside there for a prolonged period of time, some for the rest of their lives. Because of the wide array of services provided and the length of time the resident and his/her family may have interactions with the LTC facility, disputes over medical treatment, personal safety, treatment of residents, and quality of services provided are likely to occur. Given the unique circumstances of LTC facilities, we have concluded that it is unconscionable for LTC facilities to demand, as a condition of admission, that residents or their representatives sign a pre-dispute agreement for binding arbitration that covers any type of disputes between the parties for the duration of the resident’s entire stay, which could be for many years. (402-403)

As The New York Times reported, when the rule was first proposed in July 2015, it was “aimed at improving disclosure.” But, this final version of the rule “went a step further than the draft, cutting off funding to facilities that require arbitration clauses as a condition of admission.”

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PhRMA Sues HHS (Again) For Trying To Expand 340B Discounts To Orphan Drugs

By Rachel Sachs

For all those who have been following the ongoing fight between pharmaceutical companies and HHS over the 340B Program’s coverage of orphan drugs (I know you’re out there), last week PhRMA filed a new complaint challenging HRSA’s interpretive rule on the subject under the APA. For all those who are not (but should be) paying attention to this battle, here’s what’s happening.

The 340B Program allows certain health care organizations (such as disproportionate share hospitals) to purchase drugs for their patients at significant discounts. The Affordable Care Act expanded the number and kind of organizations that can participate in the 340B Program, but it also added an exception stating that most of the covered organizations could not obtain 340B discounts for orphan drugs — or, as the statute puts it, for “a drug designated … for a rare disease or condition.” 42 U.S.C. § 256b(e).

The battle between PhRMA and HHS is over is whether this statutory exclusion applies to orphan drugs or orphan indications. There are many drugs which have received an orphan designation for certain indications but are also FDA-approved and prescribed more generally for non-orphan indications. In such a case, can a 340B facility purchase the drug at a discount if it is being prescribed for a non-orphan indication?  Read More

Tomorrow: Conversation with the HHS Office of the Inspector General

pills_white_closeup_slideA Conversation with the HHS Office of the Inspector General

Tuesday, September 30, 2014 12:00 PM – 1:00 PM

Wasserstein Hall, Room 3018, Harvard Law School, 1585 Massachusetts Ave.

Please join the Petrie-Flom Center for a conversation with the Boston office of the U.S. Department of Health and Human Services Office of the Inspector General (OIG), Office of Evaluation and Inspections.  OIG has for decades served as the foremost government watchdog of federal healthcare programs, overseeing Medicare, Medicaid, the Food and Drug Administration, the National Institutes of Health, and the Centers for Disease Control and Prevention.  Among other topics, the Boston office’s recent work has focused on the labeling of dietary supplements and human subjects protections, including the informational risks associated with biospecimen research and other topics.

Come hear about the work of the OIG, its role in the Department of Health and Human Services, and some of its current and past projects.  We will be joined by Joyce Greenleaf, MBA, Regional Inspector General, and Jessica Fargnoli, MPH, Program Analyst (biographical details below).  Matthew Lawrence will moderate.

Lunch and refreshments will be served.  Co-sponsored by the Petrie-Flom Center and Harvard Catalyst.

Upcoming Event: A Conversation with the HHS Office of the Inspector General

pills_white_closeup_slideA Conversation with the HHS Office of the Inspector General

Tuesday, September 30, 2014 12:00 PM – 1:00 PM

Wasserstein Hall, Room 3018, Harvard Law School, 1585 Massachusetts Ave.

Please join the Petrie-Flom Center for a conversation with the Boston office of the U.S. Department of Health and Human Services Office of the Inspector General (OIG), Office of Evaluation and Inspections.  OIG has for decades served as the foremost government watchdog of federal healthcare programs, overseeing Medicare, Medicaid, the Food and Drug Administration, the National Institutes of Health, and the Centers for Disease Control and Prevention.  Among other topics, the Boston office’s recent work has focused on the labeling of dietary supplements and human subjects protections, including the informational risks associated with biospecimen research and other topics.

Come hear about the work of the OIG, its role in the Department of Health and Human Services, and some of its current and past projects.  We will be joined by Joyce Greenleaf, MBA, Regional Inspector General, and Jessica Fargnoli, MPH, Program Analyst (biographical details below).  Matthew Lawrence will moderate.

Lunch and refreshments will be served.  Co-sponsored by the Petrie-Flom Center and Harvard Catalyst.

9/30/14: A Conversation with the HHS Office of the Inspector General

pills_white_closeup_slideA Conversation with the HHS Office of the Inspector General

Tuesday, September 30, 2014 12:00 PM – 1:00 PM

Wasserstein Hall, Room 3018, Harvard Law School, 1585 Massachusetts Ave.

Please join the Petrie-Flom Center for a conversation with the Boston office of the U.S. Department of Health and Human Services Office of the Inspector General (OIG), Office of Evaluation and Inspections.  OIG has for decades served as the foremost government watchdog of federal healthcare programs, overseeing Medicare, Medicaid, the Food and Drug Administration, the National Institutes of Health, and the Centers for Disease Control and Prevention.  Among other topics, the Boston office’s recent work has focused on the labeling of dietary supplements and human subjects protections, including the informational risks associated with biospecimen research and other topics.

Come hear about the work of the OIG, its role in the Department of Health and Human Services, and some of its current and past projects.  We will be joined by Joyce Greenleaf, MBA, Regional Inspector General, and Jessica Fargnoli, MPH, Program Analyst (biographical details below).  Matthew Lawrence will moderate.

Lunch and refreshments will be served.  Co-sponsored by the Petrie-Flom Center and Harvard Catalyst.