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Focus on Regulation

Posted on By Patrick Traylor

EPA Comments on the Keystone NEPA Review—Monetizing the Social Costs of CO2 Emissions

On April 22, 2013, comments filed on the Keystone Pipeline draft supplemental environmental impact statement, EPA unveiled a new approach to evaluating climate change impacts under NEPA—monetizing social costs of CO2. In those comments, EPA’s Assistant Administrator for Enforcement and Compliance Assurance recommended that the State Department use “monetized estimates of the social cost of the GHG emissions from a barrel of oil sands crude compared to average U.S. crude.” What EPA means is that the final EIS should calculate the cost to society of the difference in GHG emissions between using Keystone crude and an average U.S. crude. Over fifty years, the State Department suggests the difference could be as much as 935 million metric tons of CO2.

EPA has an economic tool standing by for this estimate. In 2010, an interagency working group published a report entitled “Social Cost of Carbon for Regulatory Impact Analysis.” The report concludes with a table that estimates the cost per metric ton of CO2 of changes in agricultural productivity, human health, property damages from increased flood risk, and the impact to ecosystem services due to climate change. The costs are high, ranging from $4.7 to $136.2 per metric ton ($2007), depending on discount rates, the year in which the CO2 is emitted, and assumptions about future climate change impacts. One environmental group says the true social cost of carbon is even higher—$55 to 266 per metric ton.

At this time, EPA only recommends comparing the social cost of carbon of Keystone crude versus an average crude slate. But this social cost of carbon estimation method—once used—could also be used in other NEPA analyses, even though the utility of these estimates may be questionable under NEPA. Nonetheless, project opponents could use the cost estimation to argue that the cost of climate impacts outweighs the utility of a particular challenged project.

This is an important new development that warrants close attention by anyone planning a project for which greenhouse gases will be analyzed under NEPA.

Posted on By Trey Hanbury and Phillip Berenbroick

U.S. leads world in distracted driving; governments, mobile carriers, tech companies searching for solutions

In a recent report on “distracted driving” in the United States and Europe, the Center for Disease Control (“CDC”) found that the Americans talk, text, and read e-mail behind the wheel far more than Europeans.  In its study comparing distracting driving in the United States to Belgium, France, Germany, the Netherlands, Portugal, Spain, and the United Kingdom, the CDC found that 69% of American drivers reported talking on phone while driving in the past thirty days, while in Europe the share of drivers using their phone while behind the wheel ranged from 21% in the United Kingdom to 59% in Portugal.

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Posted on By James Wickett and Scott Lilienthal

IRS issues favorable guidance on tax credits for wind and other renewable electric generation developers

The Internal Revenue Service has issued highly anticipated guidance in the form of Notice 2013-29, providing guidelines and a safe harbor to determine when the owner of a renewable electricity generation facility (wind, biomass, or other renewable generation sources) is considered to have “begun construction” on any such facility by the end of 2013, making such taxpayer eligible for the production tax credit under section 45 (PTC), or the investment tax credit under section 48 (ITC), for such facility once it is placed in service.

This guidance largely followed IRS’ guidance for a similar “begun construction” requirement in section 1603 of the American Recovery and Reinvestment Act of 2009 (ARRA). Continue Reading

Posted on By Tom Bulleit, Ronald L. Wisor and Sara A. Kraner

POD Promoter “Spin” Notwithstanding, OIG’s Special Fraud Alert on PODs Puts Current POD-Hospital/ASC/Manufacturer Relationships at Risk

As noted in our recent post, OIG’s recent Special Fraud Alert on Physician-Owned Entities is the strongest statement to date that investing in or doing business with a physician-owned distributor, or POD, is a significant Antikickback law risk, not only for the POD and its physician-investors but for the hospitals and ASCs that purchase from PODs and the manufacturers that sell to them.

Some PODs and their promoters have reacted to the Fraud Alert by attempting to reassure investors, and the hospitals, ASCs, and manufacturers with which they do business, that the Fraud Alert is just predictable “business as usual” from OIG and if a POD was “legal” before the Fraud Alert, it is still legal.  Both of these assertions seriously understate the risks to POD participants, suppliers and customers.

Simply put, by identifying as “inherently suspect” features that are present in all PODs, the Fraud Alert puts to rest any myth that the POD business model can be pursued safely or lawfully.

• Not Business As Usual

• Not Predictable or Ordinary

  • Prior OIG advice identified certain “suspect features,” but never before has OIG called a physician-owned business model “inherently suspect” under the AKL.
  • Prior Fraud Alerts have identified characteristics that are indicative of unlawful intent but that often can be avoided with proper business structuring, thereby providing a roadmap for constructing at least a presumptively lawful business by omitting the suspect characteristics.
  • Here, OIG says specifically that its listing of “inherently suspect” features does not provide a roadmap to a lawful POD. To emphasize that point, it identifies as “inherently suspect” characteristics that are inherently present in all PODs, such as serving the physician-investors’ patient base nearly exclusively, obtaining a shift of substantially all of the physician-investors’ business in connection with their investment, and investor-physicians referring their implant cases nearly exclusively to hospitals and ASCs who purchase through the POD.

• If You Thought it Was Legal Before, You Can’t Think That Anymore.

  • Because all PODs provide investor-physicians with “remuneration,” the defense against illegality under the AKL has always been simply about whether the requisite unlawful intent to induce referrals was present.
  • The Fraud Alert makes clear that the intent to induce is inherent in the basic features of any POD’s business: if you are involved with a POD that looks like any other POD, that is enough to show that you have the intent that violates the AKL.
  • By putting the industry on notice that it interprets the law in this way, OIG essentially has eliminated the only defense available to PODs, and the investor-physicians, hospitals/ASCs, and manufacturers that deal with them.
  • This open and notorious statement that evidence of unlawful intent exists in the very nature of the POD business model also effectively eliminates any comfort that previously might have been derived from a legal opinion advising otherwise.

The Special Fraud Alert should be viewed as a game-changer, not only for the future of the POD business model, but for those who have basked in the belief that because OIG had not specifically said “no,” their current dealings with PODs must be permissible.   No one who has read the Fraud Alert can think that any longer.

For a fuller discussion, see our Health Alert on this topic.

Posted on By Paul Dacam

Grayling announces Judicial Review reforms

Secretary of State for Justice, Chris Grayling, has today announced a package of judicial review reforms targeting “weak, frivolous and unmeritorious cases, which congest the courts and cause delays.”

Most of the proposals that were set out in the consultation on the reform of Judicial Review (the “Consultation“) are to be implemented, despite the majority of responses expressing their opposition to the reforms. The driving factor behind the proposals is the exponential rise in the number of Judicial Review applications over the last decade which has resulted in overburdened courts struggling to clear a backlog of cases. The Government’s perception is that the increasing delays in concluding Judicial Review claims have led to a lack of certainty in the decisions made by public bodies.

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Posted on By Charles Brasted

Friends of the Earth: how ECJ judges have smoothed the way for applicants to bring claims in environmental cases

R (on the application of Edwards and Pallikaropoulos) v Environment Agency (C260/11)

The European Court of Justice (ECJ) has ruled that in deciding whether the costs of bringing a claim on an environmental matter are “prohibitively expensive” it is not enough for national courts simply to consider the applicant’s financial situation, it must engage in an objective analysis of the costs.

The ECJ delivered its judgment last week following a referral from the Supreme Court in relation to a domestic environmental claim. Ms Pallikaropoulos (the “Applicant“) was one of two local residents of Rugby who unsuccessfully challenged the Environment Agency’s decision to grant a permit allowing a local cement company to burn chipped tyres as fuel. Having failed at the Court of Appeal the Applicant appealed to the House of Lords but sought, unsuccessfully, to limit her costs. Continue Reading

Posted on By Stuart M. Langbein

CMS Releases Preliminary Code Decisions for Drugs, Biologicals and Radiopharmaceuticals

Today, CMS released preliminary Healthcare Common Procedure Coding System (HCPCS) code decisions for drug, biological and radiopharmaceutical products that will be discussed at a May 8, 2013 public meeting.  The release addresses 30 different agenda items and, for each application, CMS describes the request and offers its preliminary decision.  Applicants may submit a response to the preliminary decision and designate a Primary Speaker to address the preliminary decision at the upcoming meeting.  According to the Federal Register notice announcing the May 8, 2013 public meeting, the deadline for registering to be a Primary Speaker and submitting materials to support such a presentation is April 24, 2013.  CMS also released guidelines for participating in a HCPCS public meeting that interested parties may want to review. 

After the public meeting is held, CMS will consider the submissions and statements made at the public meeting.  Final decisions are typically released on or about November 1.

Posted on By Beth Halpern, Charles Clapton and Lindsey Murtagh

Obama Releases Budget Proposal

On April 10, 2013, President Obama released his Fiscal Year (FY) 2014 budget proposal.  As reported widely in the days leading up to the budget’s release, it included numerous health proposals that would together generate approximately $400 billion in savings over the next 10 years.

Many of these proposals also appeared in the President’s FY 2013 budget proposal.  The new proposals to reduce the deficit are below (the anticipated deficit decreases over the next 10 years are in parentheses).

  • Move up to 2015 the closure of the Medicare Part D coverage gap (“donut hole”) that was set to occur in 2020.  This would increase manufacturer discounts for brand name drugs from 50 to 75% in 2015. ($4.5 billion)
  • Adopt bundled payment for post-acute care providers, including long term care hospitals, skilled nursing facilities, inpatient rehabilitation facilities, and home health providers starting in 2018 ($8.2 billion).
  • Change Medicaid drug rebate and payment policies by (a) excluding authorized generic drugs from average manufacturer price calculations; (b) making a technical correction to the Affordable Care Act’s alternative rebate for new drug formulations; and (c) calculating Federal upper limits based only on generic drug prices ($8.8 billion).
  • Exclude radiation therapy, therapy services, and advanced imaging services from the in-office ancillary services exception to the Stark law ($6.1 billion).
  • Reduce Part B payments for physician administered drugs from average sales price (ASP)+6% to ASP+3% and require manufacturers to provide specified rebates in certain instances ($4.5 billion).
  • Revise payments for clinical laboratory services, including lowering the Clinical Laboratory Fee Schedule (CLFS) payment rates to make Medicare payments more comparable to the private sector, providing the HHS Secretary with authority to adjust CLFS payment rates, and supporting policies to promote electronic reporting of laboratory results. ($9.5 billion).
  • Reduce payments to Medicare Advantage by increasing the minimum Medicare Advantage coding intensity adjustment, and aligning employer group waiver plan payments with average Medicare Advantage plan bids ($19.4 billion).
  • Modernize the Federal Employees Health Benefits Program ($6.8 billion).

In addition to these new proposals, the Budget includes several notable recycled proposals.  These include:

  • Authorizing the Federal Trade Commission to block reverse settlements (also known as pay for delay settlements).
  • Applying the Medicaid drug rebate policies to drugs provided under Medicare to low-income beneficiaries.
  • Introducing a Part B premium surcharge for new Medicare beneficiaries who purchase Medigap policies with first-dollar or close to first-dollar coverage.
  • Shortening the length of exclusivity for brand name biological to 7 years from 12 years.
  • Limiting Federal reimbursement for state Medicaid spending on certain DME services.

Detailed information about President’s Proposed Budget for the Department of Health and Human Services (HHS) is available here.

A high level summary of the Proposed Budget’s provisions relating to the HHS is available here.

 

Posted on By Melissa Bianchi, Tom Bulleit, Helen Trilling, Ronald L. Wisor, Eliza Andonova and Danielle Drissel

Protecting EHR Donations 2.0

In today’s Federal Register, OIG and CMS propose three discrete revisions to existing regulations protecting the donation of electronic health records and solicit comments for potentially more far-reaching changes.  The current safe harbor to the federal Anti-Kickback Statute (AKS), 42 C.F.R. § 1001.952(y), and the exception to the Physician Self-Referral Law (Stark), 42 C.F.R. § 411.357(w), protect certain nonmonetary donations of software, information technology and training services necessary and used predominantly to create, maintain, transmit, or receive electronic health records (EHR) if the donation is made prior to December 31, 2013.  The proposed changes give additional time to make donations, allow greater flexibility in selecting the items or services to donate, and refine how to assess if a proposed donation satisfies the regulatory functionality requirements.  In addition, CMS and OIG solicit comments on other potential revisions, most notably on excluding laboratories, durable medical equipment (DME) suppliers, and other ancillary service providers from the scope of permissible donors.

OIG and CMS are proposing parallel revisions to the AKS safe harbor and Stark exception.  First, they propose to extend the sunset provision to December 31, 2016, which corresponds to the last year providers may receive Medicare EHR incentive payments under the Health Information Technology for Economic and Clinical Health Act of 2009 (HITECH Act) and the last year in which providers can initiate participation in the Medicaid EHR incentive program under the HITECH Act.  In the alternative, OIG and CMS are considering, and solicit comments on, other sunset dates such as December 31, 2021, which corresponds to the end of the Medicaid EHR incentive payments.  Second, they propose to remove the requirement that the EHR software contain electronic prescribing capability based on their conclusions that alternate mechanisms, such as the Medicare Improvements for Patients and Providers Act of 2008 (MIPPA) and HITECH Act, are driving the adoption of electronic prescribing capabilities and that removal of this requirement would not increase fraud and abuse risks.  Third, they propose to revise the mechanism donors can use to evaluate whether donated EHR meets interoperability standards.  Current regulations require donated EHR to be interoperable, meaning “able to communicate and exchange data accurately, effectively, securely, and consistently with different information technology systems, software applications, and networks, in various settings, and exchange data such that the clinical or operational purpose and meaning of the data are preserved and unaltered.”  EHR software “is deemed interoperable if a certifying body recognized by the Secretary has certified the software within no more than 12 months prior to the date it is provided to the recipient.”  The proposed rules update two aspects of this deeming provision:  1) to be a certified body “recognized by the Secretary” an entity must complete an authorization process established by the Office of the National Coordinator for Health Information Technology (ONC); and 2) the current 12-month timeframe is replaced with a provision consistent with the ONC certification program.  Specifically, if software is certified as meeting any edition of the then-current Certified EHR Technology regulation, that certified software would be deemed interoperable.

In addition to the specific changes proposed, OIG and CMS solicit comments on three other areas of potential revision.  Most notably, in response to complaints that the current regulations protected abusive donations, OIG and CMS seek comments on proposals to narrow the scope of protected donors and specifically propose to exclude laboratories, DME suppliers, and other providers of ancillary services.  The most restrictive option presented would limit the regulatory protections to donations by hospitals, group practices, prescription drug plan sponsors and Medicare Advantage organizations.  OIG and CMS explicitly solicit comments on the particular types of providers and suppliers that should or should not be protected donors.   Moreover, in response to concerns that currently protected donations are used to lock in referrals, OIG and CMS seek comments on what new or modified conditions can be added to the safe harbor and Stark exception to prevent “data and referral lock-ins” and “encourage the free exchange of data.”  They suggest that such new or modified conditions can be an alternative to limiting the scope of permissible donors.  Finally, they solicit comment on whether the regulatory provisions should be amended to expressly incorporate text from the preamble to the EHR safe harbor Final Rule which defines the term “software, information technology and training services necessary and used predominantly” for EHR purposes.

Comments to the proposed rules will be accepted until June 10, 2013. 

 

Posted on By C. Kyle Simpson and James Wickett

Senate Energy Committee Schedules Forums on Natural Gas

The Senate Energy and Natural Resources Committee has announced it will hold a series of roundtable forums on natural gas issues in May. Each of the three forums, which follow a February Committee hearing on natural gas challenges and opportunities, will focus on specific policy issues facing the country’s growing natural gas resources. Continue Reading