Legal and Regulatory Compliance
News Briefs: Senate hearing on Steward Health Care depicts consequences of hospital management decisions
October 1, 2024
9:27 am
After the CEO of Steward Health Care, Ralph de la Torre, MD, rebuffed a subpoena to appear Sept. 12 at a Senate committee hearing, members and invited panelists used the occasion to bemoan the company’s hospital ownership record and the private equity (PE) healthcare model.
When de la Torre spurned the summons to appear before the Senate Health, Education, Labor and Pensions Committee, Sen. Bill Cassidy (R-La.), the committee’s ranking member, said he and Chair Bernie Sanders (I-Vt.) would seek a resolution to authorize criminal-contempt proceedings.
The hearing had been organized to examine the impact of Steward’s management strategies on patients, hospital staff and the healthcare ecosystem. Steward once owned 31 hospitals in eight states but has looked to offload all its remaining assets after filing for bankruptcy protection in May with roughly $9 billion in debt. Two Massachusetts hospitals closed in August after no qualified buyer emerged.
Sanders noted that, meanwhile, de la Torre received more than $16 million in annual compensation, the companies he owned made $250 million over a four-year period, and the PE firm that partnered with Steward made an $800 million profit.
Data breach at a Medicare administrative contractor exposes information of close to 1 million beneficiaries
CMS stated Sept. 6 that 946,000 Medicare beneficiaries whose claims go through Wisconsin Physicians Service Insurance Corporation (WPS) are being informed that their protected health information or other personally identifiable information may have been compromised.
Stemming from a security vulnerability in third-party software, the breach also could have affected those with other insurance if their information was collected to support CMS’s audits of healthcare providers, according to a news release.
The data exposure took place over five days in May 2023, allowing unauthorized third parties to gain access to information in files that were transferred using MOVEit software during claims processing.
The exposed information includes names, Social Security numbers/ taxpayer identification numbers, dates of birth, mailing addresses, hospital account numbers, dates of service, Medicare beneficiary identifiers (MBIs) and health insurance claim numbers. Beneficiaries whose MBI may have been exposed will receive a new number from CMS but can continue to use their current Medicare cards in the meantime, according to the notice.
Belying its name, WPS handles Medicare Parts A and B claims spanning Indiana, Iowa, Kansas, Michigan, Missouri and Nebraska (not Wisconsin).
New federal rule means big changes in coverage of behavioral healthcare
Landmark regulations issued by the Biden administration are intended to establish coverage parity for behavioral healthcare services.
Released Sept. 9 as a pre-publication draft, a new final rule prohibits group health plans, along with health insurers offering group or individual insurance coverage, from restricting access to mental-health and substance-use-disorder (SUD) benefits.
The rule, issued by HHS and the Departments of Labor and Treasury, seeks to strengthen principles codified in the Mental Health Parity and Addiction Equity Act of 2008. That statute requires that financial requirements and treatment limitations applicable to mental-health or SUD benefits be “no more restrictive” than the predominant requirements and limitations applicable to “substantially all medical and surgical benefits.”
Starting in 2025, per the new regulations, plans cannot implement “nonquantitative treatment limitations” that are more restrictive than those that generally apply to medical/surgical benefi ts in the same classification (e.g., in-network, out-of-network, emergency care, prescription drugs).
Such limitations frequently have pertained to prior authorization and other medical management techniques, standards related to the composition of provider networks and methodologies to determine out-of-network reimbursement rates.
J&J tries to make a big change in how hospitals obtain 340B price discounts
A leading drug manufacturer opened a new chapter in the fight with hospitals over the 340B Drug Pricing Program, requiring the use of a rebate program to receive discounts.
Following manufacturer eff orts over the past several years to limit the discounts available to providers through contract pharmacies, Johnson & Johnson (J&J) announced Aug. 23 it would off er 340B discounts on its frequently utilized Stelara and Xarelto drugs only in the form of post-purchase rebates beginning Oct. 15.
However, the Health Resources and Services Administration (HRSA) sought to curtail the policy before it took effect, posting a Sept. 17 letter in which it ordered J&J to cease implementation of the policy and notify HRSA by Sept. 30. J&J likely would need to pursue litigation if it wants to go through with the policy.
If the policy takes effect, hospitals would have to pay full price for the drugs before submitting a rebate request and relevant data. The request would need to be sent within 45 days of dispensing the drug, although an initial grace period would allow providers to exceed the deadline through March 10.
Slashed prices on tap for Medicare Part D drugs
In August, CMS announced prices taking effect in 2026 for the first 10 drugs that were selected for negotiation under the authority of the Inflation Reduction Act. Here are the five drugs with the biggest discounts relative to the 2023 price.
FTC’s ‘noncompete’ rule scuttled as a court strikes down new regulations
A Texas federal judge blocked the noncompete final rule issued by the Federal Trade Commission (FTC) from taking effect Sept. 4 as scheduled.
The vacated rule would have established new requirements across industries, banning noncompete clauses for all future hires by covered entities. Noncompetes also would have ceased to be enforceable for all current workers, except for those employees who met the rule’s definition of senior executive.
In a statement, the FTC said it would “strongly” consider appealing the decision and retains authority to address noncompete agreements “through case-by-case enforcement actions.”
The rule would not have applied to not-for-profit (NFP) hospitals but would have covered clinicians and other staff who worked at an NFP hospital while employed by an agency.
