Three Key Things in Health Care

November 17, 2020

  • FTC brings another action challenging hospital mergers and highlights ongoing concerns about state Certificate of Need restrictions.
    • On November 13, 2020, the Federal Trade Commission (FTC) announced that it was filing a complaint to block the proposed $350 million acquisition by Methodist Le Bonheur Healthcare of two Memphis-area hospitals owned by Tenet Healthcare.
    • The FTC made clear early on in the COVID-19 pandemic that it intended to continue to apply the same scrutiny it has in the past with respect to healthcare mergers, and this has proven to be an active year for enforcement actions against potential anticompetitive mergers among health care systems.
      • The FTC brought a challenge to block the proposed merger of Jefferson Health and Albert Einstein Healthcare Network, two leading providers in the Philadelphia-area market, in February and the Department of Justice Antitrust Division brought an action to block Geisinger Health’s acquisition of a minority interest in Evangelical Community Hospital in August.
    • In announcing its challenge to the Methodist Le Bonheur transaction, the FTC also released a statement from several Commissioners expressing their continued concern about the barriers to hospital competition that exist in statements with Certificate of Need (CON) laws, such as Tennessee.
      • The statement notes that the FTC has advocated against CON laws for decades, premised on research indicating that displacing free market competition with CON laws has been associated with higher costs, lower quality of service and increased mortality.
      • The statement also points to new illustrations during the COVID-19 pandemic where CON restrictions on supply of hospital beds have prompted authorities in many states to repeal, waiver or suspend CON restrictions.
    • While the FTC’s opposition to CON laws is nothing new, it may gain some further traction as a result of the challenges highlighted by the COVID-19 pandemic as well as the recent push for greater transparency in hospital pricing that could provide more data for arguments against higher costs resulting from state CON restrictions. The CMS price transparency rule, which we have discussed in a prior issue, will require hospitals to publish payer-specific negotiated charges for 300 “shoppable services” starting in January 2021.
    • Key Takeaway: Providers should expect the FTC to continue to maintain its focus on policing potential anticompetitive transactions among health care systems and should be paying attention to a stronger push to reduce or limit state CON restrictions in connection with the challenges seen during the COVID-19 pandemic and an increased focus on healthcare price transparency.
  • Long-term care (“LTC”) facilities continue to bear the brunt of the recent surge in COVID-19 cases, leading some LTC facilities to demand additional liability protections.
    • According to data from the Kaiser Family Foundation, as of November 11, 2020, approximately 22,788 LTC facilities have reported cases of COVID-19. Approximately 616,646 residents and staff of LTC facilities have been infected with COVID-19, and 91,578 residents and employees have died as a result of the COVID-19 pandemic. Although LTC facility cases account for only 7 percent of total COVID-19 cases in the United States, LTC facility deaths account for approximately 40 percent of the total number of COVID-19 deaths. In the face of such staggering numbers, it is unsurprising that many LTC facilities are worried about a potential torrent of lawsuits against the facilities and their management, owners, and employees.
    • In July 2020, the American Bar Association reported that more than half of all states enacted some form of liability protection for LTC facilities and other health care providers. Many states conferred such liability shields thorough executive order, while others enacted liability laws through legislation.  The scope of liability shields differs from state to state, with a handful of states going so far as to cover some level of criminal liability. As the pandemic continued, however, several states began to narrow the scope and duration of liability shields for LTC facilities and other health care providers. 
    • As COVID-19 cases surge once again, LTC facilities in certain states are asking lawmakers for renewed or heightened liability protections to help providers treat COVID-19 patients during the “second wave.” In states where hospitals are struggling to treat increasing numbers of new cases, LTC facilities that operate or plan to operate special coronavirus units may face heightened pressure to take on a greater number of recovering patients to allow hospitals to focus their resources on the most serious cases. If these LTC facilities are not satisfied with existing liability protections, such facilities may be wary to take on more patients. Similarly, if LTC facilities do not currently operate special coronavirus units, they may be hesitant to expand services to COVID-19 patients without additional liability protection.
    • Key Takeaway: As the number of COVID-19 cases continues to rise, LTC facilities should monitor closely any executive action or legislative activity relating to the creation of, or changes to, civil and criminal liability protections.
  • As the United States enters its third and worst wave of the COVID-19 pandemic, the Centers for Medicare and Medicaid Services (“CMS”) continues to take steps to ensure Medicare beneficiaries have access to new treatments and, once available, COVID-19 vaccines.
    • On November 10, 2020, just one day after the Food and Drug Administration (“FDA”) issued an emergency use authorization (“EUA”) for the investigational monoclonal antibody therapy bamlanivimab to treat COVID-19, CMS announced the Medicare program would cover the therapy, with no beneficiary cost sharing obligation, during the COVID-19 public health emergency (“PHE”). Details of the coverage are set forth in a CMS Program Instruction.
    • CMS’s Program Instruction states that Medicare will cover and pay for the investigational antibody therapy “in the same way it covers and pays for COVID-19 vaccines (when furnished consistent with the EUA).”
    • Pursuant to Section 3713 of the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”), COVID-19 vaccine and administration is covered under Medicare Part B without any cost-sharing obligations for beneficiaries “beginning on the date that such vaccine is licensed under Section 351 of the Public Health Services [PHS] Act (42 U.S.C 262).”
    • In a November 6th interim final rule, CMS clarified that coverage would extend to any COVID-19 vaccine for which the FDA has issued an EUA. “Given the high risk nature of the Medicare population, the circumstances of this nationwide pandemic, and FDA’s guidance that an EUA may be appropriate for a COVID-19 vaccine prior to its licensure if there is a demonstration of safety and efficacy in a clear and compelling manner from at least one Phase 3 clinical trial, we believe it is appropriate for Medicare to consider any EUA under section 564 of the FD&C Act issued for a COVID-19 vaccine during the PHE to be tantamount to a license under section 351 of the PHS Act for the sole purpose of considering such a vaccine to be described in section 1861(s)(10)(A) of the Act. That is, even though section 3713 of the CARES Act refers to a COVID-19 vaccine ‘licensed under section 351 of the PHS Act,’ CMS could consider any vaccine for which FDA issued an EUA during the PHE, when furnished consistent with terms of the EUA, to be eligible for Medicare coverage and payment. We consider our interpretation of section 3713(d) of the CARES Act to be consistent with Congress’ intent to provide for Medicare coverage without deductible or coinsurance of any COVID-19 vaccine (and its administration) that FDA has authorized to be introduced into interstate commerce, which would be the case both for a vaccine for which emergency use is authorized under section 564 of the FD&C Act and for a vaccine that is licensed under section 351 of the PHS Act.” (emphasis added)
    • The intent behind covering the antibody therapy in the same way Medicare will cover and pay for COVID-19 vaccines is to “allow a broad range of providers and suppliers, including freestanding and hospital-based infusion centers, home health agencies, nursing homes, and entities with whom nursing homes contract for this, to administer this treatment in accordance with the EUA.”
    • As skilled nursing facility (“SNF”) residents, in particular, are among the most vulnerable to COVID-19, the Program Instruction further provides that CMS will exercise its enforcement discretion with regard to SNF consolidated billing rules to permit Medicare-enrolled immunizers (e.g., pharmacies, infusion centers, and home health agencies) to bill directly for COVID-19 vaccinations of SNF residents.
    • Key Takeaway: As of November 12, 2020, the Centers for Disease Control and Prevention (“CDC”) reported more than 241,000 COVID-19 deaths in the United States. For those deaths for which age information was available, almost 80 percent were age 65 or older. To combat the disproportionate impact of COVID-19 on the elderly, CMS is taking proactive steps to ensure treatments and vaccines are available to the Medicare population.