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CMS Proposes Revised Definition of Medicare Part D Drug “Negotiated Prices”: Rule Could Increase Predictability for Pharmacies and Lower Medicare Enrollee Drug Cost-Sharing but Increase Premiums

On January 6, 2022, the Centers for Medicare & Medicaid Services (“CMS”) issued a proposed rule entitled “Medicare Program; Contract Year 2023 Policy and Technical Changes to the Medicare Advantage and Medicare Prescription Drug Benefit Programs” (the “2022 Proposed Rule”). Of great significance to Medicare Part D plan sponsors, pharmacies, and beneficiaries, the 2022 Proposed Rule includes proposed changes to the way Medicare determines the “negotiated price” (i.e., the price upon which beneficiary cost-sharing is based at the pharmacy counter), and consequently could affect Part D plan sponsors’ reporting of costs to CMS. If finalized in its current form, the 2022 Proposed Rule could enhance predictability of cash flow for pharmacies, reduce out-of-pocket prescription drug costs for Medicare Part D enrollees, and lead Part D plan sponsors to raise premiums, thereby causing increased competition among Part D plan sponsors for beneficiaries. The 2022 Proposed Rule would take effect on January 1, 2023. Comments on the rule are due by March 7, 2022.

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New York Office of the Medicaid Inspector General Issues Proposed Compliance Plan Regulations

Time to Read: 2 minutes Practices: Health Care

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On January 14, 2009, New York’s Office of the Medicaid Inspector General (OMIG) published long-anticipated proposed regulations requiring providers that participate in the state’s Medicaid program to have “effective compliance plans.” When issued in final form, the regulations will implement—after a delay of several years—the OMIG’s obligation to establish compliance program guidance under its 2006 enabling statute (i.e., Section 363-d of New York’s Social Services Law). The proposed rule is subject to a public comment period of 45 days. After taking into account comments, OMIG will issue a final rule, which, in turn, will become binding only when 90 days have elapsed from publication of the final rule.

The proposed rule mandates adoption of a compliance program meeting the OMIG’s specifications by any facility licensed under Articles 28 or 36 of the Public Health Law (including general hospitals, nursing homes and home care agencies); agencies that serve the mentally ill or the developmentally disabled under Articles 16 or 31 of the Mental Hygiene Law; and any “other persons, providers or affiliates who provide care, services or supplies” under the Medicaid program to the extent that Medicaid payments constitute “a substantial portion of their business operations.” (Emphasis added). “Substantial portion” is defined expansively to include any entity that receives, claims or orders $500,000 or more from Medicaid in any consecutive 12-month period, either directly or on behalf of another person. Therefore, the OMIG intends its guidance to apply to a vast number of providers, suppliers, practitioners and even third-party billing companies—covering, according to its estimate, approximately 95% of Medicaid billings in the state.

Mandatory Compliance Program Elements
The proposed rule sets forth the following eight elements, closely modeled on the HHS Office of Inspector General’s long-standing hospital guidance, that a compliance program must contain to be deemed “satisfactory” by the OMIG and avoid sanction:

  1. Written policies and procedures, including a code of ethics for employees;
  2. A designated compliance officer with direct reporting to the entity’s chief executive officer or another senior administrator designated by the chief executive;
  3. Periodic training and education for all affected employees, senior executives and members of the governing body;
  4. Open lines of communication for addressing employees’ compliance concerns;
  5. Disciplinary policies that are fully and fairly enforced to encourage participation in the compliance program;
  6. Internal auditing and monitoring of compliance risks;
  7. Procedures for promptly identifying, investigating and correcting compliance problems when raised, including self-reporting to the OMIG or the State Department of Health and refunding overpayments; and
  8. Non-intimidation and non-retaliation policies for employees who report compliance program elements.

Background and Additional Information
In commentary to the rule, the OMIG states that it is developing “compliance guidance for various types of providers” to be posted on the OMIG’s website when completed. In contrast with the generic, high-level guidance of the proposed rule, this website information is expected to be provider-specific and thus may prove more detailed and prescriptive. In any case, given the severe sanctions that the OMIG may visit on providers whose compliance programs are found to be deficient—up to and including revocation of their Medicaid numbers—all Medicaid-participating providers in New York are well advised to take a fresh look at their current compliance efforts. Providers will be required to certify that a satisfactory compliance program is in place as part of the Medicaid provider application process and each December thereafter.

If you have questions about the proposed OMIG regulations or the adequacy of your compliance program, please contact the Ropes & Gray attorneys listed at the top of this page.

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