Bipartisan Health Care On Pause

President Trump released a new Executive Order on October 12, 2017, entitled, Promoting Healthcare Choice and Competition Across the United States. The Order sent a clear message to members of the U.S. Senate Committee on Health, Education, Labor, and Pensions, especially Chairman Lamar Alexander (R-Tenn.) and Ranking Member Patty Murray (D-Wash.). President Trump personally called both Senators Murray and Alexander and directed them to, ‘Come to a solution.’ However, once they came to a bipartisan solution, President Trump was no longer a supporter of the short-term fix, and neither was House Speaker Paul Ryan. Thus, with no support from the leadership, the bill died shortly after its release on October 18, 2017.

According to the nonpartisan Congressional Budget Office, the Bipartisan Health Care Stabilization Act of 2017, which was authored and negotiated by Senator Alexander and Senator Murray, would have (1) changed “the state innovation waiver process established by the ACA,” (2) “require[d] many insurers to pay rebates to individuals and the federal government related to premiums in the nongroup health insurance market for 2018, while allowing anyone in the nonmarket group to purchase a catastrophic plan,” and (3) “require[d] some existing funding for health insurance marketplace operations to be used specifically for outreach and enrollment activities for 2018 and 2019.” Ultimately, the bill was expected to change rules that insurers must meet as long as consumers are still offered “comparable” affordability.

Although 2018 Open Enrollment began on November 1, 2017, the future of bipartisan legislation on health care remains unclear. With tax reform efforts now in full swing, both the House and Senate are seemingly preoccupied, pausing all heath care efforts. While the tax legislation in the House differs from the Senate’s proposed legislation, both bills still share the same priorities – cutting corporate and individual taxes. Despite the proposed tax breaks for mortgage interest and medical expenses, some have maintained that reform is in essence, serving as “a back door to killing heath care, Medicare, and more.”

Moreover, ex-legislators from both parties have scrutinized the GOP’s plan to accomplish both tax and health care reform this year, but other sources have supported the possibility that heath care may still be addressed by the end of the year through the year-end spending package. Since the current government spending deal only lasts until December 8, 2017, Congress must pass an Omnibus spending package, or the government will face another shutdown. Speculations are stirring that if tax reform goes through, then bipartisan health care changes to the state innovation waiver process, and pay-as-you-go procedures could be swiftly added into the Omnibus bill voted on in December, potentially causing it to fly under the public’s political radar. This may be ideal for many conservative members that seek to avoid voting in favor of legislation that upholds any part of the Affordable Care Act (ACA). However, if health care were not addressed until 2018, then the legislation would convert ACA funding into block grants, and be authored by Senator Bill Cassidy (R-La.) and Senator Lindsey Graham (R-S.C.).

Nonetheless, proposed health care changes may serve as a legislative roadblock sooner than expected. Although the House passed major tax reform legislation on November 16, 2017, the Senate’s pending bill has a key difference. The Senate’s tax plan includes a provision that eliminates the legal requirement that nearly all Americans buy health insurance or pay a penalty. Since the legislation passed by the House kept the ACA’s individual mandate, the two chambers may have to resolve their different versions of the tax bill. So, stay tuned because the proposed health care changes will likely be addressed before the end of this year.

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What About The Children?: Saving the Children’s Health Insurance Plan (CHIP)

On November 3, 2017, in a vote cast primarily along party lines, the United States House of Representatives passed a five-year extension of funding for the Children’s Health Insurance Plan (CHIP).

The vote on November 3 is Congress’ most substantial move toward reauthorization of the Program since its expiration on September 30. Although a state-run program, funding for CHIP is approved by the federal government, then disbursed to the states, which subsequently administer healthcare services pursuant to policies crafted by each state. While every state has adopted the expansion of health coverage to include kids who qualify for CHIP, how the Program is implemented varies. Many states process CHIP funding through Medicaid expansion; some maintain a system thoroughly separate from Medicaid; while others utilize a mixed system.

For twenty years, CHIP has covered children and pregnant women from low- to moderate-income families that typically earn too much to qualify for Medicaid and too little to afford private insurance, providing these populations with prescription medicine, checkups, and hospital care.

In 2016, roughly nine million children were insured under CHIP. In Utah, where 20,000 children are covered, the Division of Medicaid and Health Care projects that federal funding of the program would be exhausted by the end of December, and the state would probably end the program altogether if Congress does not act. Similarly, Arizona anticipates it will run out of federal funding by December 31, 2017; its officials announcing that if Congress does not reauthorize federal funding prior to that date, the state will be forced to consider various policy alternatives, since state statute mandates the freezing of enrollment if the federal match goes below its current level. Likewise, in Ohio, where 200,000 children are covered under CHIP and 97% of the program is supported by federal funds, state officials estimate complete depletion of funds by the end of the year. Unsurprisingly, California, the nation’s most populous state, covers the most CHIP beneficiaries with over 1.9 million children participants, and estimates the program will also exhaust funds by the fourth quarter of 2017. In all, as many as eleven states have given notice that funds will likely run out by year’s end.

Because some families of CHIP recipients are eligible for Medicaid, many children and pregnant women may obtain health insurance by other means. However, of the current CHIP enrollees, nearly four million children are still at risk of losing their health coverage altogether. As with all populations lacking healthcare, this shift will likely result in heavier burdens on the system, exacerbating emergency room occurrences, and increasing the overall healthcare costs.

While CHIP has enjoyed popularity among both Democrats and Republicans in the past, the legislation is expected to be met with great resistance as it moves to the Senate. In addition to reauthorizing CHIP for five years, the bill passed on November 3 would also provide funding for community health centers for two years. The legislation would simultaneous make changes to the Affordable Care Act policies such as “grace periods” for premium non-payments, changes in income determination rules and other measures, which are very unpopular with Democrats.

CHIP falls under the statutory authority of the Social Security Act of 1965. Originally sponsored by Senator Orrin Hatch (R-UT) and the late Senator Edward Kennedy (D-MA), the legislation was signed into law in 1997. Since then, after a number of extensions and a budget increase that expanded insurance to more than four million children, Congress’ current inaction has brought CHIP closer to the brink of extinction than it has been since its enactment two decades ago.

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Derma Fraud with a Side of Greed

South Florida represents a hotbed of health care fraud and abuse and is often referenced as “ground zero” for Medicare fraud. Indeed, South Florida has garnered national attention for the pervasiveness of health care fraud schemes. Recently, the largest ever health care fraud enforcement action by the Medicare Fraud Strike Force involved charging seventy-seven defendants in the Southern District of Florida. Unfortunately, this is a mere snapshot of the long-term consequences for health care fraud in the South Florida Community.

Since 2003, Gary L. Marder, D.O., has enrolled his clinic in Medicare, a federal health care program. Dr. Marder, the owner and operator of the Allergy, Dermatology & Skin Cancer Centers in Port St. Lucie and Okeechobee, treated Medicare beneficiaries via radiation oncology and other clinical laboratory services. Notably, Marder was the sole physician to render services to patients in both offices. During Marder’s absences, no other physician was present.

On December 13, 2013, Theodore A. Schiff, M.D., brought a qui tam action under the False Claims Act (FCA) on behalf of the government. 31 U.S.C. § 3730(b)(1). In the whistleblower suit, Marder allegedly violated the FCA by knowingly creating and submitting false claims to Medicare for reimbursement of dermatology and pathology services. Dr. Schiff noticed an alarming trend in patients that came to him after seeing Marder at one of his offices because many lacked a serious dermatological condition. On October 14, 2014, the United States intervened in the Civil Action.

More recently, on October 18, 2017, Dr. Marder was charged with obstruction of a federal criminal investigation of a health care fraud scheme by delivering falsified and altered patient files subpoenaed by a federal grand jury. Prosecutors claim that Marder submitted false and fraudulent claims to insurance companies for the services of a medical physicist to advise on dosages for radiation treatments from about January 2011 through January 2016. However, at no time did Marder actually have a medical physicist working in his offices. A Qualified Medical Physicist is an individual who is competent to practice independently in one or more of the subfields in medical physics. Instead, Marder instructed his employees to create false patient files with fabricated radiation dosages and calculations with the forged signature of a medical physicist in attempts to hide the alleged fraud.

According to statements made by Marder’s lawyer, the dermatologist will give up his medical license as part of a plea deal that is expected to be finalized later this month. As part of the plea deal, Marder agreed to post a $1 million bond using his $28 million oceanfront property in Palm Beach, Florida as collateral.

In September 2016, the Court granted summary judgment in favor of the United States finding that Dr. Marder knowingly submitted false claims to Medicare by requesting reimbursement for services that he never actually performed or directly supervised. Marder’s frequent absence, including expansive periods of foreign travel, amounted to days corresponding to over fifty percent of the payments he received from Medicare. United States ex rel. Schiff v. Marder, 208 F. Supp. 3d 1296 (S.D. Fla. 2016). According to the qui tam action, Medicare was billed over $69 million and $15.8 million was paid from January 2008 through September 2014. The United States have stipulated to a consent final judgment of over $18 million to settle False Claims Act allegations against Dr. Marder. Prosecutors noted at the time that “outright fraud of the scope and magnitude seen in this case is rarely seen, especially when supported by such irrefutable evidence,” and that “the pervasiveness of Marder’s practices resulted in virtually every reviewed claim being false.”


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Understanding Escobar: Gilead to petition SCOTUS to address circuit split

On October 3, Gilead Sciences, Inc. filed a motion to stay a Ninth Circuit Court of Appeals’ decision pending the filing of Gilead’s petition for a writ of certiorari with the United States Supreme Court. In a unanimous decision announced on July 7, the Ninth Circuit reversed and remanded a trial court’s dismissal of a qui tam action against that the South San Francisco-based biotechnology company.

In the initial suit of 2015, two former Gilead employees brought a qui tam suit against Gilead. They accused the biotech company of retaliation, hiding information about adulterated and misbranded active ingredients, and alleging that the noncompliant drugs, on which the Government spent billions in 2008 and 2009, were not eligible for payment by federal health care programs because the company knowingly made false statements that the drugs passed internal testing in violation of the Federal False Claims Act. Gilead argued that the Government’s continued reimbursement for medications in light of knowing of Gilead’s regulatory violations proved that the discretions did not meet the “materiality” prong required to implicate the FCA. In the 2016 landmark case Universal Health Services v. Escobar, SCOTUS held that, “if the Government pays a particular claim in full despite its actual knowledge that certain requirements were violated, that is very strong evidence that those requirements are not material.” 136 S. Ct. 1989, 1995 (2016). While the Ninth Circuit conceded the existence of issues involving the Government’s continued payments to Gilead, notwithstanding, “there are many reasons the FDA may choose not to withdraw a drug approval, unrelated to the concern that the government paid out billions of dollars for nonconforming and adulterated drugs.”

The present issue is whether Gilead breached the FCA by covertly changing to a Chinese active ingredient supplier after winning approval for several HIV drugs and by concealing information about contaminated ingredients when it later sought approval to use that supplier.

In this latest attempt at petitioning SCOTUS to further discern the parameters of its decision in Escobar, Gilead announced that its petition for writ of certiorari will present two questions: (1) whether, under Escobar, a complaint fails the materiality requirement of the False Claims Act when the allegations demonstrate the Government continued paying claims despite knowledge of the alleged misconduct; and (2) whether the Food and Drug Administration’s continued approval of a drug after learning of alleged regulatory violations is fatal to an FCA complaint premised on those violations. Gilead contends that the Ninth Circuit created a Circuit split by virtue of its reversal, stating that the appellate court, “expressly acknowledged its departure from three circuits [interpretations of Escobar].’”

Enacted in 1863, the Federal False Claims Act combatted the influx of fraudulent claims submitted to the federal Government during the Civil War. To aid the Government in its fight against fraud and abuse, Congress empowered whistleblowers to bring suit on behalf of the Government, known as qui tam actions, offering individuals a percentage of the amounts recovered from FCA violators. The FCA imposes liability on persons who: make false or fraudulent statement; with requisite scienter (having actual knowledge, acting in deliberate ignorance, or acting with reckless disregard); that is material; and that caused the Government to pay out money.

In fiscal year 2016, the United States Department of Justice recovered over $4.7 billion in settlements and judgments from civil cases involving fraud and false claims against the federal Government. About $2.5 billion came from the health care industry, including drug companies, medical device companies, hospitals, nursing homes, laboratories, and physicians – this number does not reflect the settlements and judgments from cases filed under similar state FCA causes of action.

If Gilead’s writ of certiorari petition is denied, and the trial court finds for the plaintiffs, the biotech company could be required to pay as much as three times the amount of damages plus $10,957 to $21,916 per claim for violations of the FCA.

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The Costly Treatment for HCV

FDA has now approved Hepatitis C (HCV) drugs for children ages 12 to 17, which speed recovery and treatment. HCV is a blood-borne infection, causing inflammation to the liver, which can lead to liver failure, cancer and ultimately death. While HCV is attributed to sharing needles, which results in transferring contaminated blood, 20% of children get it from drug use. With HCV, one can become infected and not notice the symptoms until much later.

Research indicates that around 23,000 to 46,000 children are infected with HCV.  A baby only has a 6% chance of getting it while in their mother’s womb, and most children can clear the virus on their own by the age of 7. Those who do not clear the virus by the time they are two years old are chronically infected with HCV. Two drugs that the FDA has approved, and which have been highly effective thus far, are Harvoni and Solvadi. Harvoi and Solvadi are direct anti-acting antiviral drugs that prevent the virus, HCV, from multiplying, basically curing HCV. In clinical trials used on affected children, the two drugs have managed to eliminate all traces of the virus in the time frame of twelve weeks. Initially, the drugs were not even meant for children, causing doctors to be very hesitant in prescribing them before FDA approval.

As great as this may seem, the price for the drugs are costly. When the drugs first came out, the price was up to 100,000 dollars in the course of treatment. Medicaid restricted access to the drugs, and approved access to only those who had liver damage before treatment. Luckily, federal law states that Medicaid programs must cover “early and periodic screening, diagnostic, and treatment services” for children under 21.

HCV drugs treat a large population and there should be better access to expensive treatments. Because President Trump advocates for lowering drug prices, patients affected with HCV get the chance to access the otherwise expensive treatment. In 2015 alone, federal health programs spent more money on drugs for HCV than for any other drug. The Center for Medicaid and Medicare reported that Medicare Part D spent at least 7 billion dollars on the drug Harvoni, and Medicaid spending 2.2 billion.

The American Liver Foundation states that children with HCV should be receiving hepatitis A and B vaccinations, along with an annual influenza vaccine. Because children with HCV don’t usually exhibit obvious symptoms, their pediatricians should continue to monitor their growth and nutrition, and should have periodic screening of liver function through blood tests. Approving the drugs that cure HCV will significantly help children who might otherwise end up suffering from it; however, it’s important to keep in mind that the cost for the drugs are still expensive, and it cannot be given to children under the age of 12.


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