FDA Establishes CDER Center for Drug Innovation (C3TI)

On April 15, 2024, the US Food & Drug Administration (FDA) announced the establishment of the Center for Drug Evaluation and Research (CDER) Center for Clinical Trial Innovation (C3TI). C3TI will serve as the central support hub for innovative approaches to clinical trials designed to improve the quality and efficiency of drug development and regulatory decision-making. Following a public solicitation of comments on the barriers of clinical trial designs, FDA determined that the establishment of C3TI would enhance CDER’s ability to address those barriers and foster innovation.

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Finalized Nursing Staff Standards Will Impact Most Long-Term Care Facilities

On April 22, 2024, the Centers for Medicare and Medicaid Services (CMS) released a final rule that will require long-term care facilities (LTCFs) to satisfy minimum nurse staffing standards with the goal of addressing patient quality of care and safety concerns. The final rule is anticipated to result in approximately 80% of LTCFs needing to add nursing staff. LTCFs will also be required to conduct periodic assessments of their resources and capabilities and to make staffing adjustments as needed to address residents’ acuity.

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New York State Budget Institutes Revenue-Neutral Health Plan Tax

The New York State fiscal year 2024 – 2025 budget institutes a new tax on health plans, including insurers and managed care organizations. This tax has been garnering attention for its promise to yield $4 billion for New York State. The expected revenue from the tax, however, is set to come not from the health plans operating within the state but from the federal government. California implemented a similar scheme last year.

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OPM Urged to Commit to Protecting IVF in Federal Health Insurance

Democratic lawmakers recently sent a letter to the US Office of Personnel Management urging the Biden administration to enhance the Federal Employees Health Benefits Program’s in vitro fertilization coverage. The letter comes as some states have signaled an interest in enforcing personhood rights in treatments involving embryos, according to this Federal Times article.

“When you can’t receive the services within a state, obviously it doesn’t do you much good if your [insurance] plan still technically covers them,” said Sarah Raaii.

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The ACA 1557 Final Regulations: Plans and Plan Sponsors as Covered Entities

In a recent On the Subject (available here), we reported on the impact of the final rule (final rule) interpreting Section 1557 of the Affordable Care Act (ACA) on self-funded group health plans that contract with licensed health insurance issuers to provide administrative services. That article considered instances in which neither the plan sponsor nor the group health plan was a covered entity for Section 1557 purposes. This post starts by assuming that either the plan sponsor or the group health plan is or at least may be a covered entity.

Section 1557 prohibits discrimination on the basis of race, color, national origin, sex, age or disability, or any combination thereof, in a health program or activity, any part of which is receiving federal financial assistance. The final rule makes clear an employer’s employment practices, including the sponsorship of a group health plan, are not generally subject to the rule. Thus, an employer does not become subject to Section 1557 by simply offering a group health plan, and a group health plan is not a covered entity where it does not receive federal financial assistance. The preamble cites examples of plans that may (or may not) receive federal financial assistance: Employer Group Waiver Plans (EGWPs), Medicare Advantage plans and Medicare Part D plans.

Plan Sponsor/Covered Entity

There are clearly instances in which a plan sponsor is itself a covered entity for Section 1557 purposes. This is the case wherever the plan sponsor is itself principally engaged in providing or administering health programs and activities (e.g., a hospital that accepts Medicare). Where that is the case, all the entities’ operations are also subject to Section 1557. The reference to “all” an entities’ operations usually conjures up images of separate legal entities under common control (e.g., a subsidiary or affiliate of the plan sponsor). But is the covered entity’s group health plan part of the covered entity’s operations? (See, e.g., T.S. v. Heart of CarDon, LLC, holding that Section 1557 applies to all the activities of a covered entity plan sponsor, including its group health plan, regardless of whether the group health plan itself received federal financial assistance.) In the context of the final rule, we are not sure that it matters. The plan sponsor is itself a covered entity that is subject to, and will need to comply with, Section 1557 irrespective of the status of the plan.

Part D and EGWPs

According to the preamble to the final rule, EGWPs, Medicare Advantage plans and Part D plans are covered entities where the plan receives federal financial assistance. EGWPs are types of Medicare Advantage plans or Part D prescription drug plans that qualify for waivers of certain Medicare regulations. Prior to the 2003 Medicare Modernization Act, employer-sponsored Part D coverage was the primary source of coverage for retirees. EGWPs, which came later, provided a more flexible alternative for employers seeking the benefits that could be captured through waivers. Whether the EGWP, Medicare Advantage plan or [...]

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