Obama Reverses Limitations on Stem Cell Research

President Barack Obama has issued Executive Order (EO) 13505, returning reversing the previous administration’s prohibition on federal funding for human embryonic stem cell research. Stem cells are primordial “master cells” derived from days-old embryos that are capable of evolving into many kinds of tissues. Scientists believe they can direct the cells into providing replacement cells and cure a variety of ailments, from juvenile diabetes to Parkinson’s disease, as well as some cancers. Opponents, however, argue that because stem cell research involves the destruction of embryos, the research is immoral and the federal government should not in any way facilitate this type of research. Opponents argue that research involving adult stem cells holds more potential for therapies than those involving embryonic stem cells. Some opponents have vowed to lobby Congress to preserve some restrictions.

The National Institutes of Health (NIH) must decide in the next 120 days which types of studies will be funded. NIH will consider issues such as whether to fund studies involving embryos made for the sole purpose of research, those by created by cloning or only the extra embryos donated by patients of in-vitro fertilization clinics.

Funding will begin by July, when the administration will issue guidelines for federally funded projects involving stem cell research. The guidelines will be open for public comment prior to issuance. For more information, please click here.

Disclosure Requirements for Physician Ownership of Hospitals

A transmittal recently published by the Centers for Medicare and Medicaid Services (CMS) requires Medicare administrative contractors (MACs) to inform hospitals about disclosure requirements when a referring physician (or his or her immediate family member) has an ownership interest in the hospital. The transmittal implements the 2009 inpatient prospective payment regulations that require physicians to disclose ownership interests to patients when a physician owner refers a patient to the hospital. The disclosure of physician-ownership information must be given to patients at the beginning of their hospital stay or outpatient visit.

Every hospital must also require each physician on its medical staff to agree, as a condition of continued privileges, to disclose in writing to all patients the physician refers to the hospital any ownership or investment interest in the hospital by the physician or immediate family members. Physicians must make the disclosure at the time of the referral. The purpose of the rule is to allow patients to make informed decisions about their treatment and to decide whether the existence of a financial relationship suggests a conflict of interest that may not be in their best interests.

If a hospital fails to require physicians to make the disclosures of physician ownership, CMS may terminate its provider agreement with the hospital. Hospitals that do not have any physician owners are exempt from these disclosure requirements.

The implementation date of this transmittal is June 8, 2009. The CMS transmittal can be found here.

House Bill Could Pave Way for FDA Approval of Bio-Generics

A newly introduced House Bill, H.R. 1427, the “Promoting Innovation and Access to Life-Saving Medicine Act,” would amend the Public Health Services Act to provide a framework for the Food and Drug Administration (FDA) to approve and license generic versions of biologic medicines. The bill would allow the FDA broad discretion to approve bio-generics, including determining what clinical and safety studies would be necessary for their approval. H.R. 1427 would also give makers of original biologic medicines a five-year market exclusivity period, the same as is currently given for traditional chemical medicines. Similar House bills have been introduced and defeated in recent years, and H.R. 1427 has already elicited strong responses from industry and other groups, both in support of and against the bill. Click here to read the House Committee on Energy and Commerce press release regarding the bill.

NIH Announces Stimulus Package Grant Opportunities

The NIH has provided details on new funding opportunities for construction work on biomedical or behavioral research facilities in the recently enacted stimulus package, the American Recovery and Reinvestment Act (ARRA). The ARRA allocated $1 billion to NIH for awards to institutions seeking to construct, renovate or repair biomedical or behavioral research facilities. The National Center for Research Resources (a part of NIH) will administer the grants. Funding will be awarded in two categories of facility construction and improvement grants. 

  • Core Facility Renovation, Repair and Improvement. Funding is intended to upgrade extramural core facilities to support biomedical and/or behavioral research funded by the U.S. Public Health Service (PHS). Extramural research is conducted nationwide, off the NIH campus, by NIH-funded institutions and organizations. A core facility is defined as a centralized, shared resource that provides access to instruments, technologies or services, as well as expert consultation to NIH-funded investigators. The deadline for applications is Sept. 17, 2009. Budgets between $1 million and $10 million may be requested. For more information, visit here.
  • Extramural Research Facilities Improvement Program. Funding is designed for the construction, renovation or repair of biomedical or behavioral research extramural facilities. The major objective is to facilitate and enhance the conduct of PHS biomedical and behavioral research by providing the costs of improving non-federal basic research and clinical research to meet the research, research training or research support needs of an institution. Deadlines are May 6, June 17 and July 17, 2009, depending upon the funding amount requested. Amounts can range from $2 million to $15 million. For more information about applying, see here.

Entities awarded ARRA funds will be required to prepare and submit progress reports detailing jobs created as a result of the funding and the environmental impact of their facilities.

New Jersey Proposed Budget Revealed

Gov. Jon S. Corzine’s proposed New Jersey state budget for fiscal year 2010 includes significant cuts to compensate for projected reductions in state revenue, including a 2.5 percent reduction in funding to health care practices. Significantly, the Governor avoided cutting charity care funding, which will remain at FY2009’s level of $605 million. The Hospital Asset Transformation Program, which provides financial assistance to nonprofit hospitals in the process of closing, was one of the few programs that received an increase in funding (by $4 million).

Funding for graduate medical education, however, is slated to be reduced by $8 million to $60 million. The Health Care Stabilization Fund, which provides grants to ensure continuity of access and availability of services to communities in which hospitals are closing or reducing services, would be cut $4 million to $40 million if the proposal were enacted. The Hospital Relief Subsidy Fund, which supports hospitals with high caseloads of HIV, mental health, tuberculosis, substance abuse and addiction patients, would be reduced by more than $6 million, to $166.6 million. The Mental Health Subsidy Fund of $20 million is slated to remain the same.

The Assembly and Senate will hold hearings in the next couple of months as they debate the proposed budget. The budget must be passed by the legislature and signed by the Governor by June 30, 2009. The budget will be effective July 1, 2009.

New Jersey Senate Passes Adverse Event Bill

The New Jersey Senate unanimously passed Senate Bill 2471, requiring the Department of Health and Senior Services to publicly report 14 patient safety indicators by hospital on an annual basis (e.g., postoperative hemorrhage or hematoma, postoperative sepsis, transfusion reaction and birth trauma). The bill also would prohibit hospitals and physicians from billing a patient or third party for certain hospital-acquired conditions subject to the hospital-acquired condition payment provisions of the Medicare program, including: surgery performed on the wrong body part, side or person, a foreign body accidentally left in a patient during a procedure, air embolism, and catheter-associated urinary tract infections.

The bill clarifies that its payment prohibitions will not modify the requirement for expert testimony for any civil malpractice action against a general hospital or physician. The bill also requires the Commissioners of Health and Senior Services, and Banking and Insurance, and the Director of the Division of Consumer Affairs to collaborate in developing standards for health care providers and third-party payors to implement the billing prohibitions.

The bill is headed to the Assembly for consideration.

New York Medicaid Inspector General Releases Provider Self-Disclosure Guidance

The New York Office of Medicaid Inspector General (OMIG) has released the Provider Self-Disclosure Guidance (the Guidance) that establishes the process for participating in its self-disclosure program. The Guidance, which replaces the New York Department of Health disclosure protocol, encourages providers to identify, disclose and return any Medicaid overpayments to OMIG. In most circumstances, self-disclosure will result in more favorable outcomes for providers, according to OMIG. While repayment amounts will be credited toward the final settlement amount, OMIG will not accept money as full and final payment for self-disclosures prior to finalizing its own investigation. According to the Guidance, disclosure is appropriate for a broad range of matters, including substantial routine errors, systematic errors, patterns of errors and potential violations of fraud and abuse laws.

Potential benefits to providers who self-disclose include: (a) forgiveness or reduction of interest payments (for up to two years); (b) extended repayment terms; (c) waiver of penalties and/or sanctions; (d) timely resolution of the overpayment; (e) recognition of the effectiveness of the provider’s compliance and a decrease in the likelihood of imposition of an OMIG corporate integrity agreement; and (f) possible preclusion of subsequently filed New York State False Claims Act qui tam actions based on the disclosed matters.

When a provider makes a disclosure it must supply OMIG with the basis for the initial disclosure, the Medicaid program rules potentially implicated, any corrective action taken and the contact information for the individual making the report on behalf of the provider. OMIG will then consult with the provider and request any additional information it requires to conduct an investigation. OMIG estimates that the disclosure process should be completed within a six-month period.

Source: Health Law Regulatory Update