Health Law Advisor

A post on the Health Law Advisor blog will be of interest to many of our readers: "HHS Office for Civil Rights Bulletin on Civil Rights Issues During the COVID-19 Crisis," by attorneys Helaine I. Fingold, James S. Frank, Frank C. Morris, Jr., Ashley Creech & Tzvia Feiertag of Epstein Becker Green.

Following is an excerpt:

The Office for Civil Rights (“OCR”) at the U.S. Department of Health and Human Services (“HHS”) issued a bulletin on March 28, 2020 to remind entities covered by federal civil rights statutes of their continued obligation to prohibit ...

On Friday, March 27, 2020, FDA issued an update to previous guidance titled, “FDA Guidance on Conduct of Clinical Trials of Medical Products during the COVID-19 Pandemic” (the “Guidance”), adding an Appendix with ten questions and answers for specific topics based on feedback received on the initial March 18^th Guidance. To supplement our prior blog post, we identify some key takeaways from the updated Guidance below:

Prioritize Safety of Clinical Trial Participants

• Ongoing Clinical Trials. Sponsors, investigators, and IRBs should work together to assess whether the participants’ safety is better served by continuing the study as is, discontinuing administration or use of the product, or by ending participation in the trial. The Guidance provides a number of key factors for consideration. FDA also recognizes that there may be an investigational product that is providing benefit to a trial participant, and the sponsor must decide whether to continue administration during the COVID-19 pandemic. This is a context-dependent choice, and sponsors should consider whether there are any reasonable alternative treatments available, the seriousness of the disease or condition, the risks involved in switching treatment, supply chain disruptions, and whether discontinuing administration would pose a substantial risk to the participant.
• New Clinical Trials. With respect to initiating a new clinical trial, other than one to investigate treatments or vaccines related to COVID-19 infection, FDA advises sponsors to consider the ability to effectively mitigate the risks of a trial in order to preserve safety of the participants and trial integrity. Any new trial must also be designed in a way to comply with the Federal and State public health measures implemented in response to COVID-19.

WHO: The Secretary of the Department of Health and Human Services (HHS)

WHAT: Issued nationwide “blanket waivers” of the federal Stark Law (Section 1877 of the Social Security Act) pursuant to his authority Section 1135 of the Social Security Act.

WHEN: Although issued on March 30, 2020, the waivers are retroactively effective as of March 1, 2020.

WHY: HHS is waiving sanctions under the Stark Law and its underlying regulations to ensure that: (1) sufficient health care items and services are available to meet the needs of individuals enrolled in federal healthcare programs, and (2) health care providers that furnish such items and services in good faith, but are unable to comply fully with the Stark Law’s requirements as a result of the consequences of the COVID-19 pandemic, may be reimbursed for such items and services and exempted from sanctions for noncompliance.

HOW: The waiver is available to protect financial relationships that satisfy two criteria: (1) the remuneration and referrals must be solely related to “COVID-19 Purposes”; and (2) the referrals and claims must be related to a defined set of financial relationships, as set forth below.

Numerous media reports concern the shortage of medical resources, personal protective equipment, and qualified professionals during the growing COVID-19 medical emergency.  As a result, providers may ultimately have to make choices regarding resource allocation among hospitalized patients suffering from COVID-19.  Disability rights and other advocacy groups have expressed concern about resource allocation from the point of view of how individuals with pre-existing disabilities and other individuals may have been treated in the past by the medical system.  While bioethicists may work to address the ethical issues involved with treating patients under conditions of resource scarcity, providers rightfully may worry about potential legal liability in distributing scarce resources among those in need.  While both the Trump Administration and Congress have acted to allay some of these worries, concerns remain for both individual practitioners and the facilities with which they work.

On March 13, 2020, President Trump issued a proclamation that the novel coronavirus (“COVID-19”) outbreak in the United States constituted a national emergency. Following this proclamation, pursuant to section 1135(b) of the Social Security Act, the Secretary of the Department of Health and Human Services (“HHS”), Alex Azar, invoked his authority to waive or modify certain requirements of titles of the Act as a result of the consequences of the COVID-19 pandemic, to the extent necessary, as determined by the Centers for Medicare & Medicaid Services (“CMS”), to ensure that sufficient health care items and services are available to meet the needs of individuals enrolled in the Medicare, Medicaid, and Children’s Health Insurance Programs (“CHIP”). This authority took effect on March 15, 2020, with a retroactive effective date of March 1, 2020 and will terminate at the conclusion of the public health emergency period.[1] Pursuant to this authority, HHS announced a number of nationwide blanket waivers, including a waiver related to telehealth, in order for providers to respond to the COVID-19 public health emergency.[2]

Separate from and in addition to the blanket waivers, the Secretary’s authority under Section 1135 also allows CMS to grant Section 1135 waivers to states that request CMS to temporarily waive compliance with certain statutes and regulations for its Medicaid programs during the time of the public health emergency. So far, many states have requested these additional flexibilities in order to focus their resources on combatting the outbreak and providing the best possible care to Medicaid enrollees in their states. CMS has been rapidly approving these Section 1135 waiver requests, but it is important to recognize that not all state requests are created equal with respect to utilizing telehealth / telemedicine services during the public health emergency. Based on a review of the publicly available state request letters, it is clear that some states have prioritized use of telehealth in order to respond to COVID-19, while other states have not, or have not yet requested similar flexibilities related to provision of telehealth services. Examples of states that have prioritized greater use of telehealth include:

• California: The state requested flexibility for telehealth and virtual communications to make it easier for providers to care for people in their homes. Specifically, California requested flexibility to allow telehealth and virtual/telephonic communications for covered State plan benefits, such as behavioral health treatment services, and waiver of face-to-face encounter requirements for Federally Qualified Health Centers and Rural Health Clinics, among others. The state also sought reimbursement of virtual communication and e-consults for certain providers. CMS approved this waiver request on March 23, 2020.
• Illinois: The Illinois Department of Healthcare and Family Services waiver request, approved on March 23, 2020 by CMS, sought flexibility of documentation requirements, including the lack of documentation of consent for a telehealth consult. Like several other states, Illinois also requested CMS to allow providers to use non-HIPAA compliant telehealth modes from readily available platforms, such as Facetime, WhatsApp, Skype, etc., to facilitate a telehealth visit or check-in at the location of the patient, including the patient’s home.

A post on the Workforce Bulletin blog will be of interest to many of our readers: “The Race to Embrace Remote Online Notarization (“RON”) in Response to the COVID-19 Pandemic,” by attorney Theodora McCormick of Epstein Becker Green.

Following is an excerpt:

As employees are required to work remotely and practice social distancing due to the COVID-19 pandemic, the federal government and several state governments (including New York and New Jersey) are moving (New York more quickly than New Jersey) to enable remote online notarization and keep businesses operating.

Read ...

• Lease arrangements – Landlords may be willing to accept a temporary reduction in rent rather than risk losing a good, long-term tenant, and otherwise reliable income stream, altogether. This can usually be accomplished by a simple amendment to the lease agreement.
• Debt covenants – Companies that have credit facilities often are subject to debt covenants in favor of the lender that are tested periodically.  Typical debt covenants that could be violated in times of financial crises include minimum financial tests, or ratios, based on a company’s income, assets, working capital, net worth and equity.  Covenants that consist of operational milestones could be impacted as well.  It’s good practice for companies to approach their lenders and seek amendments (or temporary waivers) to their covenants before those covenants are tripped, rather than afterwards, when the company is in default.

The ongoing pandemic caused by the novel coronavirus has upended the American health care system in many ways. One of the many effects of COVID-19 will likely be substantial disruption in value-based payment arrangements between health plans and providers. Though this is an issue that is not on the top of providers or payors minds as the health care system prepares to respond to the crisis, there are some simple steps that providers can take now to avoid issues in the future.

Any iteration of value-based payments (“VBP”) is likely to be disrupted by COVID-19; be it shared savings, shared risk, or full risk arrangements. Quality targets and reporting deadlines are likely to be missed as providers move many routine and preventative services to telehealth services or suspend them entirely for the time being, as well as turn the bulk of their clinical focus to COVID-19. Under some VBP arrangements, providers may be ineligible for any savings due to their inability to meet “quality gates” (i.e., certain quality metric thresholds that must be met before any savings payments are made) in the current climate. Cost savings targets are likely to be missed or at least distorted as providers focus on building out their capabilities to address the pandemic. How will these sudden and substantial changes affect the parties participating in value-based arrangements?

CMS has already announced that it will amend its quality reporting requirements from the fourth quarter of 2019 through the end of the second quarter of 2020.[1] The announcement covers a variety of quality reporting requirements and payment programs with the stated purpose of alleviating reporting requirements and disregarding unrepresentative data created during the emergency. CMS has also stated that it intends to prorate any losses incurred by Medicare accountable care organizations (“ACOs”) in 2020 for the duration of the public health emergency (e.g., if the public health emergency lasts for six months, the annual losses an ACO incurs in 2020 would be halved). Many – including a bipartisan group of Senators – have argued that this approach is insufficient to truly address the pandemic-related costs incurred by ACOs.[1] CMS has also stated that it will disregard all costs associated with care related to COVID-19 when performing benchmark calculations.[2] States may make similar changes for VBP arrangements in Medicaid programs. How these government steps would flow down into VBP agreements between managed care plans and providers is not clear and requires analysis of the specific agreements.

Imagine these scenarios:

• Your company cannot perform a contract because of the COVID-19 pandemic.
• A vendor informs you that she cannot provide your company with necessary goods because of supply chain issues caused by a governmental emergency declaration.
• A subcontractor cannot perform because its employees are self-quarantining.

These are not hypotheticals. Scenarios like these are playing out around the country. The real-world impact of the COVID-19 pandemic is colliding with contractual requirements, and there is new attention to the legal doctrines of “impossibility,” “frustration of purpose,” “impracticability, and “force majeure.”

What do they mean? In a nutshell, traditional contract law says that an unforeseeable event occurring after the contract was formed can excuse contract performance, and determining whether an event was unforeseeable will depend heavily on the specific facts and the language of the contract.