Top Health Care Regulatory Trends: New Risks and Opportunities

© 2015 Epstein Becker & Green, P.C. | All Rights Reserved. ebglaw.com
Top Health Care Regulatory Trends -
New Risks and Opportunities
Lynn Shapiro Snyder
Ted Kennedy, Jr.
Oppenheimer Conference
December 9, 2015

© 2015 Epstein Becker & Green, P.C. | All Rights Reserved. | ebglaw.com
Disclosures
The information herein is provided for informational purposes only. It is not
intended to be, nor should it be relied upon in any way, as investment advice
to any individual person, corporation, or other entity. This information should
not be considered a recommendation or advice with respect to any particular
stocks, bonds, or securities or any particular industry sectors and makes no
recommendation whatsoever as to the purchase, sale, or exchange of
securities and investments. Any reference to any specific products, process, or
service does not necessarily constitute or imply its endorsement,
recommendation, or favoring by Epstein Becker & Green, P.C. (“EBG”).
2

Presented by
Lynn Shapiro Snyder
Senior Member of the Firm,
Epstein Becker & Green
lsnyder@ebglaw.com
202-861-1806
Ted Kennedy, Jr.
Member of the Firm,
ekennedy@ebglaw.com
203-326-7426
Founder and President, Women
Business Leaders of the U.S. Health
Care Industry Foundation
www.wbl.org
State Senator
Connecticut General Assembly
3

© 2015 Epstein Becker & Green, P.C. | All Rights Reserved. | ebglaw.com 4
• Epstein Becker & Green – EBG is a boutique
national health law firm with over 250 attorneys in 12
offices across the country. EBG was established in 1973 to
serve the health care industry and was at the forefront of
managed care. EBG has stayed at the forefront of
developments in health care law and continues to help
clients in all segments of the health care and life sciences
industry. http://www.ebglaw.com
• EBG Advisors – EBG Advisors is a network of
international attorneys, policy analysts, strategists and
other professionals who specialize in providing
coordinated guidance and solutions across various
segments of the health care and life sciences industry.
http://www.ebgadvisors.com
• National Health Advisors – NHA is a
consultancy dedicated to the provision of legislative and
regulatory advocacy.
http://www.nationalhealthadvisors.com
LEGAL SERVICES | STRATEGY| CONSULTING | COMPLIANCE | ADVOCACY

Elections Matter
NOVEMBER 2017 ELECTION
OMB
DOJ
CMS
FDA
IRS
DOL

Agenda
6
I. Payer Trends – Under 65; Medicaid; Medicare
II. Mental Health Parity
III. Pricing Pressures
IV. CMS/Private Payers – Hot Topics and Trends
V. FDA – Hot Topics and Trends
VI. Looking Ahead

PROJECTED SOURCE OF INSURANCE COVERAGE, YEAR 2023
ESI
162 M
58%
Medicaid
40 M
14%
Nongroup
and Other
Coverage
28 M
10%
Uninsured
52 M
18%
ESI
155 M
55%
Medicaid
54 M
19%
Nongroup
and Other
Coverage
24 M
8%
Exchanges
(Private
Plans)
22 M
8%
Uninsured
27 M
10%
Among 282 million people UNDER AGE 65
Without PPACA With PPACA
•Note: ESI is Employer-Sponsored Insurance
•Note: It is yet to be determined what the ultimate sources of coverage might be since the Supreme Court gave states
discretion on whether to implement Medicaid expansion
•Source: Congressional Budget Office, “Effects of the Affordable Care Act on Health Insurance Coverage—March 2015
Baseline” (Mar. 9, 2015), available at http://www.cbo.gov/publication/43900.
7
I. Payer Trends

I. Payer Trends
FEDERAL GOVERNMENT WILL EXERCISE MORE CONTROL OVER
MEDICAID AS MEDICAID GROWS
8
0
10
20
30
40
50
60
70
80
1975 1985 1995 2005 2010 2014 2015 2017 2020 2025 2030 2035 2040
Enrollment(millions)
Calendar Year
Total Enrollment Medicaid Managed Care Traditional Medicaid Medicaid Expansion
Medicaid expanded with 100% cost coverage (2014)
Source: Centers for Medicare & Medicaid 2013 Statistical Supplement, Table 13.4; AIS Medicare and Medicaid Market Data, 2015; Kaiser Family Foundation, Total Monthly Medicaid and CHIP Enrollment for May 2014
and May 2015; CMS, Medicaid Managed Care Penetration Rates as of December 31, 2010; CMS National Summary Of Medicaid Managed Care Programs And Enrollment as of July 1, 2010; CMS, Total Medicaid
Enrollees - VIII Group Break Out Report, March 2015, Reported on the CMS-64. Coverage Gains Under Recent Section 1115 Waivers: A Data Update, S. Artiga and C. Mann, Kaiser Family Foundation, August 2005.
*Enrollment was above zero but under 500,000, thus was rounded down.
Medicaid Enrollment

I. Payer Trends
OVER 65 POPULATION – SOURCE OF COVERAGE
9
Key fact: Former President George W. Bush’s birthday: July 6, 1946 & Former President Bill Clinton’s birthday: August 19,
1946
Note: Enrollment numbers are based on Part A enrollment only. Beneficiaries enrolled only in Part B are not included.
Source: CMS Office of the Actuary. 2014
20.398
28.433
34.251
39.688
47.72
64.471
82.005
89.666 93.368
99.907
107.454
114.244
121.248
0
20
40
60
80
100
120
140
1970 1980 1990 2000 2010 2020 2030 2040 2050 2060 2070 2080 2089
Enrollment(inMillions)
Calendar Year
Actual and Projected Medicare Enrollment
Bush/Clinton turn 65 People born in 1956 and die at age
80 (average life expectancy)

I. Payer Trends
INNOVATIVE HYBRID MEDICARE PROGRAM LEADS TO INCREASED
INTEGRATION AND COLLABORATION
10
Original Medicare Medicare Advantage
Innovative Hybrid
Medicare Program
• A La Carte Medicare
• “Bill Payer”
• “Public Plan”
• Utilization Management
• Disease Management
• Episodes of Care
• Bundle of Owned Services
• Bundle of Network Services
• Pay for Performance
• Customization
• Managed Care
• “Consumer Protection”
• “Outsourcing
Public/Private
Partnership”

 The Mental Health Parity and Addiction Equity Act (MHPAEA) requires
insurers that offer mental health and substance use disorder benefits to
provide those benefits in no more restrictive way than other covered
medical.
• The New York State Attorney General has entered into settlement agreements with multiple
health insurance plans that were found to have violated the MHPAEA. (Fifth settlement
announced in March 2015.)
• EBG Advisors has a free webinar available that addresses the challenges and rewards of
integrating behavioral health into primary care.
http://www.ebgadvisors.com/complimentary-webinar-addresses-challenges-rewards-
integrating-behavioral-health-primary-care/
• Look for expansion into developmental disability care.
 The days of separating mental health and physical health are OVER.
 But, what is “parity” and when will additional regulations be published?
II. Mental Health Parity
MENTAL HEALTH PARITY LAWS FINALLY MERGE
11

III. Pricing Pressures
Government
• Entitlements Effect
• Deficit Reduction
• Debt Ceiling
Commercial
• Cadillac Tax
• 10% Rule
• Federal Department of Insurance
Payers – Providers – Pharmaceutical and Device Firms
Is your company part of the problem or part of the solution?
Even with increasing demand, will your company have attractive margins?
12

IV. CMS/Private Payers Hot Topics and Trends
Regulatory Trend Need Potential Solutions
Pricing Pressure • Healthier Population
to Reduce Costs
• Other Costs
Reduction Initiatives
at the Insurer,
Provider, and
Pharm/Device Levels
• Premium Level – Competition
for coverage inside the
premium; additional wellness
spending; narrow networks;
integration; risk transfers
• Provider Level – Integration;
collaboration; outsourcing
(staffing, back office, etc.)
• Pharmaceutical / Device Level –
Outsourcing functions
(engineering, manufacturing,
testing); compliance support
vendors

Government as the
Dominant Purchaser
Greater Compliance
Resources to Reduce
Risk
• Firms that outsource
compliance functions
• Firms that monitor for updates
and advocacy
• Firms that perform mock audits
and billing guidance

Movement Away from
Inpatient Facility-
Based Procedures
• CMS has removed
knee reconstruction
from “inpatient only
list” and added
arthroscopy of joint to
list of ASC covered
surgical procedures.
(Nov. 2015)
Shift Care to Less
Expensive Sites of
Services
• Outpatient facilities and ASCs
• Home health providers that can
facilitate recovery at home

New Payment
Methods for Value
• Mandatory bundle
under the
Comprehensive Care
for Joint Replacement
(CJR) model (Nov
2015)
• Bundled Payments for
Care Improvement
(BPCI) is still ongoing
Metrics and other data
collection and analytics
services to assure that
value payments create
adequate margins and
avoid losses
• Vendors that help providers
adopt and manage pay for value
compensation systems and
assume risk

Integration,
Consolidation and
Collaboration
• Quicker and faster
integration
• IT platforms to
accommodate
collaboration
• Firms that facilitate
consolidation and management
• Health IT platforms to facilitate
collaboration

Mental Health Parity Payer compliance
More providers
integrating mental
health services
• Telehealth
• Psychiatric nursing
• Outpatient programs
• Residential treatment
• Vendors that offer services and
products to help plans integrate
the benefit offerings

Shortage of Health
Professionals for
Changing
Demographics
• More health
professionals
• Each health
professional to
practice their
profession at the
highest level of their
license
• Staffing companies
• Companies that support
licensed professionals
(accreditation, continuing
education, initial training for
licensed and unlicensed
workers, ongoing online
training)

 New FDA Guidance
• Mobile Medical Applications (Feb. 2015)
• Clinical Decision Support Guidance (Scheduled for this year)
 Potential Legislation to Limit FDA Regulation of Certain Health Software
• The SOFTWARE Act (H.R.2396)
• The MEDTECH Act (S.1101)
 Will FDA continue to take an innovator-friendly approach to regulation?
 How heavily will FDA regulate in the Clinical Decision Support Guidance?
 Will Congress take the ball out of FDA’s hands for some software?
 How will mobile health affect regulation & innovation in pharma?
• Pharma is starting to pair “mobile apps” with drugs to improve patient outcomes
– new territory for FDA
V. FDA Hot Topics and Trends
FDA REGULATION OF MOBILE HEALTH
20

 Still a lot of work being done on the policy development and application side
EBG Coalitions
FDA REGULATION OF MOBILE HEALTH
21
mHealth Coalition
http://mhealthregulatorycoalition.org/
The Coalition’s purpose is to serve as a
thought leader in the mHealth ecosystem to
provide its expertise on what mHealth
technologies should be regulated and how
they should be regulated.
Clinical Decision Support Coalition
http://cdscoalition.org
The Coalition’s mission is to ensure that
clinical decision-making software does not
become overregulated while still ensuring
patient safety and enabling the advancement
of innovative decision support tools that
improve patient care.

Characteristics LDT IVD
What are they? Diagnostic Tests Diagnostic Tests
Who regulates right now? CMS (under CLIA) FDA (under FDCA)
Who makes them? Clinical Labs Manufacturers
Path to Market? • Validate internally
• Start offering the test
• Spends years dealing
with FDA to get approval
On-going Requirements Limited A real pain
Two Broad Categories of Tests
• Laboratory Developed Tests (LDT): Developed for in-house
(single lab) use
• In Vitro Diagnostics Tests (IVD): Developed to sell to multiple
laboratories
DIAGNOSTIC TESTS

 Will “industry disrupters” lead to greater competition?
• Billions of dollars at stake
• Most high value genetic tests, advanced diagnostics for cancer, etc. are LDTs
• Many large and small labs rely heavily on LDTs for revenue
 Will FDA move forward with its LDT regulation proposal?
 Will Congress step in?
• Congress is weighing several options for LDT regulation
• Some would also change FDA regulation of IVDs (tests FDA currently regulates)
 How would FDA regulation of LDTs affect IVD companies?
• Labs that make LDTs are both competitors and customers of IVD companies
• LDT regulation takes away labs’ competitive advantage, but could also changes labs’ business
models and affect how they buy products from IVD companies
LAB DEVELOPED TESTS (LDT)
23

 Changing the paradigm for “lab” testing
• Old way: Collect a patient sample, send to a lab, and waits days/weeks for results
• New way: Test in the exam room or clinic, get results, and treat right away
 FDA regulation of Point-of-Care Tests creates a big barrier to innovation
• Standards being applied are biased against point of care
• Standards don’t give due consideration to its benefits to patients
 Huge market potential exists if we can fix regulatory problems
• Huge demand and large customer base for products if we can get them to market
 Change may be coming in the next few years
• Great response from Capitol Hill (bills are pending calling for review of standards),
and dialogue with FDA continues
24
CLIA Waiver Coalition
(www.cliawaiverreform.org)
EBG launched the CLIA Waiver Coalition last year: an
industry-public interest group coalition advocating for
point-of-care reforms.
POINT OF CARE TESTING

 All of these areas tie into Personalized Medicine
• The Holy Grail of medical care – treatment is personalized to every
individual patient, giving them the best health care
 Will the federal government price personalized medicine products
and services at the marginal cost or will the government allow higher
prices due to the significant research and development costs?
 Will companies be able to adequately acquire, store, and use the vast
quantity of data needed to develop effective personalized medicine
products?
 How will the FDA regulate these products in the future? Will
Congress pass laws implicating personalized medicine research and
pricing?
 Will providers embrace and advocate for personalized medicine?
PERSONALIZED MEDICINE
25

VI. Looking Ahead – Cadillac Tax
Will Congress eliminate or amend the Cadillac Tax?
Pressure from employers
Pressure from unions
26

VI. Looking Ahead – Drug Prices
Will Congress regulate drug prices?
• Bipartisan concerns about recent spike in drug prices (hearings,
investigations)
Various proposals to address drug prices:
• Allow Medicare to negotiate drug prices?
• Rebates for drugs for low-income beneficiaries?
• Re-importation?
• Ban pay-for-delay settlements between brands and generics?
• Requirement to disclose research costs?
• Eliminate tax benefits for consumer drug ads?
• Cut the period of exclusivity for biologics to seven years
• Cap out of pocket costs in drug plans?
• Speed up FDA review for certain biosimilars?
Will the private market help solve the problem? (e.g. Express Scripts)
27

VI. Looking Ahead – Medicare Advantage
Will insurers offering Medicare Advantage plans continue
to see increased payment?
On Dec. 1, 2015, CMS announced that the Medicare fee-for-
service baseline rate will increase by 3.1% in 2017. This figure is a
component of the formula to calculate Medicare Advantage
payments.
28

VI. Looking Ahead – Enforcement
False Claims Act and other fraud liability still exists even with
pay for value and with Medicare Advantage and Medicaid
Managed Care
Increased individual criminal and civil fraud liability due to
the Yates Memo (September 9, 2015)
• A new DOJ initiative designed to combat corporate
misconduct and seek accountability from individuals involved
in suspected corporate wrongdoing
• Board members and executives must remain attuned to
corporate activities
29

VI. Looking Ahead – Role of the Federal
Government
The government will increasingly be the dominant payer and dominant regulator of health care
goods and services. So, . . .
30
The Political Landscape Matters
The Federal Enforcement Landscape
Matters
Advocacy Risk Management and Compliance
Health care companies should monitor and/or engage in the federal political,
regulatory, and enforcement landscapes.

 Visit the www.ebglaw.com website for the various alerts we have published on a wide
range of issues related to health reform and the Medicare and Medicaid programs
 Our attorneys are active in blogging. For insights, commentary, and conversation on a
broad range of topics that affect your business, visit our blogs below.
31
www.healthlawadvisor.com www.techhealthperspectives.com www.pharmamedtechinsights.com

Presented by
Lynn Shapiro Snyder
Senior Member of the Firm,
lsnyder@ebglaw.com
202-861-1806
Ted Kennedy, Jr.
Member of the Firm,
ekennedy@ebglaw.com
203-326-7426
Founder and President, Women
Business Leaders of the U.S. Health
Care Industry Foundation
www.wbl.org
State Senator
Connecticut General Assembly
32
Questions

Top Health Care Regulatory Trends: New Risks and Opportunities

More Related Content

What's hot

Viewers also liked

Similar to Top Health Care Regulatory Trends: New Risks and Opportunities

More from Epstein Becker Green

Recently uploaded

Top Health Care Regulatory Trends: New Risks and Opportunities