Category: News

Justin C. Linder Quoted in February 9, 2018 Bloomberg Pharmaceutical Law & Industry Report Article on 340B Reimbursement Reduction

Lobbying on behalf of biopharmaceutical manufacturers and 340B covered entities is spiking as the 340B discount drug program draws increased scrutiny from Congress and regulatory agencies.  In a February 9, 2018 Bloomberg article: Safety-Net Hospital Lobbying Surges as Medicare Slashes Payments, Justin Linder discusses the circumstances contributing to the increased pressure on Capitol Hill and the impact on Medicare beneficiaries of the recent CMS final rule redistributing 340B reimbursement dollars.

Read the complete article: Safety-Net Hospital Lobbying Surges as Medicare Slashes Payments

New Year’s Changes to the 340B Discount Drug Program Raise Compliance Concerns as New Billing Modifiers and Payment Reductions Take Effect

By Justin C. Linder, Dughi Hewit & Domalewski PC

Judge Rudolph Contreras of the U.S. District Court for the District of Columbia on December 29,
2017 dismissed a lawsuit filed by the American Hospital Association (AHA) and various hospitals
and industry groups seeking declaratory judgment and a preliminary injunction blocking
implementation of a dramatic cut in Medicare Part B reimbursement to certain hospitals participating
in the 340B discount drug program (340B Program).[1] The dismissal of the action on jurisdictional
grounds—none of the plaintiffs had yet presented a claim reimbursed at the reduced payment rate—
is the latest setback for adversely impacted hospitals attempting to halt the reduced payment regime
and ensured that the reductions would go into effect January 1, 2018.
The Centers for Medicare & Medicaid Services (CMS) on November 1, 2017 released the 2018
Hospital Outpatient Prospective Payment System (OPPS) and Ambulatory Surgical Center Payment
System Final Rule (Final Rule), which finalized a controversial proposal to significantly reduce
reimbursement for most drugs purchased through the 340B Program by disproportionate share
hospitals (DSHs) and rural referral center hospitals (RRCs).[2]
In the Final Rule, CMS cut the applicable payment rate for separately payable, non-pass-through
drugs (excluding vaccines) purchased by DSHs and RRFs through the 340B Program, including the
Prime Vendor Program, by approximately 27%, from the average sales price (ASP) plus 6% to ASP
minus 22.5% (collectively, the Payment Reduction).[3] For hospitals affected by the Payment
Reduction, a drug with an ASP of $1,000 would be reimbursed at $775 starting January 1, 2018,
down from the calendar year 2017 reimbursement rate of $1,060.
The Payment Reduction does not apply to 340B eligible entities classified as rural sole community
hospitals, children’s hospitals, or PPS-exempt cancer hospitals, nor does it affect critical access
hospitals, which are reimbursed outside of the OPPS.
Articulating the rationale for the $1.6 billion payment cut in a press release accompanying the Final
Rule, CMS Administrator Seema Verma explained that “Medicare beneficiaries would benefit from
the discounts hospitals receive under the 340B Program by saving an estimated $320 million on
copayments for these drugs in 2018 alone.”[4] This account is disputed by affected hospitals and
340B advocacy groups, including 340B Health, which, in a release following Judge Contreras’ ruling,
shot back: “If these cuts remain in place, many safety net hospitals will be forced to cut back on
services, close service sites, and let go clinicians and other caregivers. These payment cuts do
nothing to lower drug prices, do not save Medicare a dollar, and won’t reduce costs for seniors and
other patients.”[5]
To distinguish 340B hospitals that are subject to the Payment Reduction from those that are exempt,
the Final Rule establishes two new modifiers to identify whether a drug billed under the OPPS was
purchased under the 340B Program—”TB” for use by hospitals that are not subject to the Payment
Reduction and “JG” for those impacted by the Payment Reduction.[6]
The Final Rule itself left many details regarding operationalization of the new modifiers unaddressed,
hindering efforts by hospitals to implement billing system modifications prior to the Final Rule’s
effective date of January 1, 2018. However, on December 13, 2017, CMS released a Frequently
Asked Questions (FAQs) memorandum, at AHA’s request, to clarify the agency’s new modifier policy
for billing 340B-acquired drugs under the OPPS.[7]
The FAQ publication addresses a wide range of implementation issues, such as identifying drugs
that must be billed with modifier “JG,” the use of modifiers by non-excepted off-campus providerbased
departments, the billing of waste for 340B-acquired drugs and the definition of rural sole
community hospitals. Notably, the guidance clarifies that hospital-owned retail pharmacies that bill
340B-eligible claims under Part B are exempt from the Payment Reduction because they are not
reimbursed under OPPS.
The FAQs confirm that all hospitals that bill for separately payable, non-pass-through drugs (i.e.,
drugs assigned status indicator “K”) acquired with a 340B discount must use either the “JG” or “TB”
modifier, depending on whether they are subject to the Payment Reduction. Each drug should be
billed on a separate claim line with the appropriate 340B modifier, and for claims with multiple drug
lines, the appropriate 340B modifier is required on each line of a 340B-acquired drug. The only
hospitals excepted from these requirements are critical access hospitals and Maryland Waiver
Hospitals.
The implementation of the Payment Reduction and modifiers less than six months after first
proposed, two months after release of the Final Rule, and just weeks after CMS’ release of subregulatory
guidance delineating the proper use of the new claim modifiers,[8] has left hospitals
scrambling to perform billing system upgrades necessary to comply with the Final Rule.
One of the most daunting obstacles confronting hospitals subject to the new modifier requirements is
the timely identification of which drugs were acquired at a 340B discount to determine whether a
modifier applies. Due to complex rules imposed on 340B Program participants by the Health
Resources and Services Administration (HRSA), which administers the 340B Program, not all drugs
purchased by a 340B eligible provider can be purchased at the 340B discounted price. Rather, drugs
not eligible for a 340B discount must be acquired by 340B Program participants at Wholesale
Acquisition Cost or at other price points exceeding the 340B ceiling price.[9]
Determining whether a drug prescribed at a 340B-participating hospital is considered a “Covered
Outpatient Drug” eligible for 340B discount pricing requires a fact-specific inquiry into multitudinous
interplaying elements, including service location, the outpatient status of the patient at the time of
prescription or administration, the relationship between the hospital and the prescriber, whether the
hospital maintains the patient’s medical records, whether the patient is Medicaid eligible and the
particular hospital’s policy for defining “Covered Outpatient Drug,” among other factors.
On account of these complexities, many hospitals utilize virtual inventory accumulation and/or split
billing software to aid in determining whether a particular prescription is eligible for a 340B discount.
These drug inventory and purchasing systems are distinct from hospitals’ patient billing systems and
there often exists a lag time of a few days or more before a hospital is aware of whether a particular
prescription qualifies for a 340B discount. The latency inherent in 340B inventory accumulation
software, coupled with the lack of integration between such software and hospital patient billing
systems, presents a multifaceted challenge to operationalization of the new modifier system.
Though it is unclear whether CMS took these factors into account when devising the modifier
provisions in the Final Rule, the FAQs released December 13 strongly suggest that CMS intends to
enforce the modifier requirements with minimal flexibility. For example, with respect to the
inadvertent reporting of a “JG” modifier (resulting in reduced reimbursement) rather than a “TB”
modifier (resulting in reimbursement at the normal OPPS rate) due to provider error, CMS exhorts
that “It is a provider’s responsibility to submit correctly coded claims,” explaining that such a mistake
would result in a lower reimbursement.[10] Accordingly, inadvertent coding of a drug with modifier
“JG” (indicating it was acquired at a 340B discounted price) may result in an underpayment.
Of greater concern, failure by a provider to properly code a drug purchased at a 340B discount with
the “JG” modifier could result in an overpayment, which must be returned to Medicare. In the event a
provider receives “credible information” of an overpayment, overpayment disclosure obligations are
triggered under the Affordable Care Act and its implementing regulations.[11] Subsequent failure to
disclose and repay an overpayment within 60 days of its “identification” could subject a provider to
crippling False Claims Act penalties. To this end, the FAQs affirm that: “Federal law permits
Medicare to recover its erroneous payments. Medicare requires the return of any payment it
erroneously paid as the primary payer. Providers are required to submit accurate claims . . . .”[12]
The FAQs offer little comfort to hospitals concerned about their inability to upgrade billing software
by January 1, 2018 to integrate the new modifiers, stating that: “providers have 12 months after the
date of service to timely file a claim for payment. If a hospital believes that it will not be able to
properly identify and bill accurately for 340B acquired drugs, it should contact its [Medicare
Administrative Contractor] to discuss whether holding claims or rebilling claims may be an
option.”[13]
Judge Contreras’ December 29 ruling did not reach the merits of the AHA’s complaint, which asserts
under the Administrative Procedure Act that the Final Rule exceeds the Department of Health and
Human Services’ statutory authority. AHA and other petitioners will have the opportunity to refile their
lawsuit after the Payment Reduction goes into effect. In a statement following the ruling, AHA
President and Chief Executive Officer Rick Pollack vowed to “continue our efforts in the courts and
the Congress to reverse these significant cuts to the 340B program.”[14]
On the legislative front, H.R. 4392, a bill that would reverse the Payment Reduction, was introduced
by Representatives David B. McKinley (R-WV) and Mike Thompson (D-CA) on November 14, 2017
and has generated bipartisan support and 165 co-sponsors in the House. Whether Republican
opposition to the Payment Reduction is sufficient to pass a bill overturning a policy promoted by
CMS Administrator Seema Verma as “part of the President’s priority to lower the cost of prescription
drugs”[15] remains to be seen.
Though the litigation and pending legislation potentially could reverse the Payment Reduction,
neither offers relief from the provisions of the Final Rule requiring utilization of the new modifiers.
Moreover, it does not appear from the FAQs that CMS is inclined towards leniency regarding
enforcement of the modifier requirements.
For the time being, the options available to affected providers unable to integrate the new modifiers
by January 1 appear limited to working with 340B accumulation and patient billing software vendors
to quickly implement the new modifiers and collaborating with legal counsel and Medicare
Administrative Contractors to devise acceptable mechanisms for mitigating the consequences of
delayed operationalization of the modifiers.
Continued pressure by 340B stakeholders on legislators also may incent Congress to prioritize the
340B Program in the midst of a busy legislative season.
In the wake of the Final Rule, providers subject to the Payment Reduction would be prudent to
reassess whether the benefits of continued participation in the 340B Program justify the increased
burdens and costs of compliance, a determination that may very well be contingent on whether or
not the Payment Reduction is ultimately reversed.
Justin C. Linder (jlinder@dughihewit.com), Of Counsel at Dughi, Hewit & Domalewski in Cranford,
NJ, is a seasoned Health Care and Life Sciences attorney with extensive experience representing
an array of stakeholders across the full spectrum of the health care industry. His practice is
dedicated to counseling health care entities in a range of transactional matters and negotiating
complex vendor, pharmaceutical distribution, GPO, and health technology agreements. A recipient
of an Advanced 340B Operations Certificate, Mr. Linder also provides practical regulatory and
compliance counsel, specializing in the 340B discount drug program and state and federal fraud,
abuse, and privacy laws. Prior to joining Dughi, Hewit & Domalewski, Mr. Linder served as General
Counsel for a specialty pharmacy services and technology company and Associate General Counsel
for a multi-hospital regional health system.
[1] American Hosp. Ass’n v. Hargan, No. 17-2447 (D.D.C. Dec. 29, 2017).
[2] See Medicare Program: Hospital Outpatient Prospective Payment and Ambulatory Surgical
Center Payment Systems and Quality Reporting Programs, 82 Fed. Reg. 52356 (Nov. 13, 2017).
[3] 82 Fed. Reg. at 52362.
[4] CMS, Press Release, CMS Finalizes Policies that Lower Out-of-Pocket Drug Costs and Increase
Access to High-Quality Care, available at
https://www.cms.gov/Newsroom/MediaReleaseDatabase/Press-releases/2017-Press-releasesitems/
2017-11-01-2.html (last visited Jan. 1, 2018).
[5] Statement by 340B Health Regarding U.S. District Court on 340B Case, available at
http://www.340bhealth.org/news/statement-by-340b-health-regarding-u.s.-district-court-on-340bcase/
(last visited Jan. 2, 2018).
[6] 82 Fed. Reg. at 52495-96, 52503-09.
[7] CMS, Medicare-FFS Program, Billing 340B Modifiers under the Hospital Outpatient Prospective
Payment System (OPPS), Dec. 13, 2017, available at https://www.cms.gov/Medicare/Medicare-Feefor-
Service-Payment/HospitalOutpatientPPS/Downloads/Billing-340B-Modifiers-under-Hospital-
OPPS.pdf [hereinafter, Billing 340B Modifiers].
[8] Id.
[9] See 42 U.S.C. § 256b; 42 C.F.R. § 10.1 et seq.
[10] Billing 340B Modifiers, supra note 7, at 5-6.
[11] 42 U.S.C. 1320a-7k(d); 81 Fed. Reg. 7654, 7654-84 (Feb. 12, 2016).
[12] Billing 340B Modifiers, supra note 7, at 6.
[13] Id. at 6.
[14] AHA, Press Release, Hospital Groups to Continue to Pursue Lawsuit to Reverse Cuts for 340B
Hospitals, available at https://news.aamc.org/press-releases/article/hospital-groups-appeal-340bruling/
(last visited Jan 2, 2018).
[15] CMS Finalizes Policies that Lower Out-of-Pocket Drug Costs and Increase Access to High-
Quality Care, supra note 4.
© 2017 American Health Lawyers Association. All rights reserved.

Justin C. Linder Quoted in January 3, 2018 Bloomberg Health Care Daily Report Article on 340B Reimbursement Reduction

Judge Rudolph Contreras of the United States District Court for the District of Columbia on December 29, 2017 dismissed a lawsuit filed by the American Hospital Association and various hospitals and industry groups seeking declaratory judgment and a preliminary injunction blocking implementation of a dramatic cut in Medicare Part B reimbursement to certain hospitals participating in the 340B discount drug program. The dismissal of the action on jurisdictional grounds – none of the plaintiffs had yet presented a claim reimbursed at the reduced payment rate – is the latest setback for adversely impacted hospitals attempting to halt the reduced payment regime, and ensured that the reductions would go into effect January 1, 2018.

In addition to cutting the applicable reimbursement rate for high cost drugs purchased by certain hospitals through the 340B Program by approximately 27%, a CMS Final Rule issued November 1, 2017 and effective New Years’ Day, imposes burdensome new coding modifiers on affected providers, requiring them to separately track and bill 340B-acquired drugs. Failure to properly do so could result in compliance issues and lost reimbursement.

In a January 3rd Bloomberg article: Hospitals Face Medicare Drug Pay Cuts as Court Fight Looms, Justin Linder discusses the implications of the rule on affected providers and the likelihood that legal and legislative efforts to roll back the payment reduction will succeed.

Justin C. Linder Joins Dughi, Hewit & Domalewski, P.C.

Dughi, Hewit & Domalewski, P.C. is pleased to announce that Justin C. Linder, Esq. has joined the firm.  Justin will be leading the firm’s Healthcare Transactional and Regulatory Practice Group.

Mr. Linder is a seasoned and highly-accomplished Healthcare and Life Sciences attorney with extensive experience representing stakeholders across the healthcare industry.  He handles sophisticated healthcare M&A negotiations, performing due diligence and drafting transaction and organizational documents, and negotiates complex vendor, pharmaceutical distribution, GPO and healthcare technology agreements. Mr. Linder also provides practical regulatory and compliance counsel, specializing in state and federal fraud, abuse and privacy laws, and collaborates directly with business leaders and C-Suite executives at a variety of healthcare entities to close joint venture and physician practice acquisition transactions.

For nearly forty years, Dughi, Hewit & Domalewski, P.C. has provided high-quality legal services to hospitals, physicians and other healthcare providers.  The firm’s healthcare practice is supported and complemented by its state-wide practice in medical malpractice cases, which has earned the firm its reputation as one of New Jersey’s premier medical malpractice defense firms.

To meet the varied needs of our hospital and healthcare clients, the firm broadened its practice areas over a decade ago to provide a wider range of services to its healthcare clients on transactional, regulatory, and litigation matters.  The addition of Mr. Linder to the firm’s Healthcare Transactional and Regulatory Practice Group will greatly expand and enhance the firm’s existing level of service to the healthcare industry.

A detailed description of Mr. Linder’s areas of expertise and accomplishments can be found on the firm’s website by clicking the following link:  Justin C. Linder

FREE SEMINAR – Everything You Need To Know About Divorce…

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EVERYTHING YOU NEED TO KNOW ABOUT DIVORCE

Whether you are thinking about getting divorced, going through a divorce, or already divorced, there is
important information that you should know! This is your opportunity to have your questions answered by
four experienced attorneys who devote their entire practice to family law.

Mario C. Gurrieri, Esq., Chair of the Family Law Department of Dughi, Hewit & Domalewski, P.C., and his team of attorneys, Kristin M. Capalbo, Esq., Jennifer L. Young, Esq., and Kristin N. Badalamenti, Esq. will review the law, explain the legal process and answer your questions concerning prenuptial agreements, separation, divorce, custody and parenting time, division of assets, alimony, child support, domestic violence, post-divorce Court review of changed financial and child-related circumstances, and how the current economic climate, recent alimony and child support legislation and possible changes to the tax code will impact divorce and post-divorce matters. Information will also be provided on Divorce Mediation, an alternative to the traditional contested proceeding.

 

A FREE Personal Consultation will be offered to All Attendees.
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Call: (908) 272-0200
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THURSDAY, NOVEMBER 30, 2017
7:00 p.m. to 9:00 p.m.

THE WESTWOOD
438 North Avenue
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908-789-0808 
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SATURDAY, DECEMBER 2, 2017
1:00 p.m. to 3:00 p.m.

HOLIDAY INN
36 Valley Road
Clark, New Jersey 07066
732-574-0100
www.hiclarknj.com

Craig A. Domalewski Ranked in 2018 Best Lawyers

Dughi, Hewit & Domalewski, P.C. is proud to announce that Craig A. Domalewski has been selected for inclusion in the 2018 edition of Best Lawyers®, the oldest and most respected peer-review publication in the legal profession.

About Best Lawyers®

Best Lawyers is the oldest and most respected peer-review publication in the legal profession. A listing in Best Lawyers is widely regarded by both clients and legal professionals as a significant honor, conferred on a lawyer by his or her peers. For more than three decades, Best Lawyers lists have earned the respect of the profession, the media, and the public, as the most reliable, unbiased source of legal referrals anywhere.

Dughi, Hewit & Domalewski hosts breakfast for the Union County Bar Young Lawyer’s Division

On May 24, 2017, Dughi, Hewit & Domalewski hosted a breakfast for the Union County Bar Young Lawyer’s Division. More than 25 young lawyers joined us for coffee and bagels. We were thrilled to have such a wonderful crowd of young attorneys and to spend time discussing different issues affecting the practice of law, as well as catch up on some of the victories won by the group. The YLD hopes to make these types of breakfasts a regular occurrence and Dughi, Hewit & Domalewski looks forward to hosting everyone again sometime soon.

 

Brandon Minde elected Secretary of the Criminal Law Section of the New Jersey State Bar Association for 2017-2018

Dughi, Hewit & Domalewski, PC, is pleased to announce that Brandon Minde, a partner with the firm, was elected Secretary of the Criminal Law Section of the New Jersey State Bar Association for the 2017-2018 term at the NJSBA Annual Meeting.  This places Mr. Minde on track to be Chair of the Criminal Law Section for the 2020-2021 term.  The Criminal Law Section deals with information and education concerning the improvement of the criminal justice system, and takes an active role in responding to developments which affect its membership and in suggesting methods through which the legal system can more effectively serve the interests of section members and their clients.

Brandon D. Minde to be Speaker for New Jersey Criminal Trial Preparation at New Jersey Basic CLE Marathon 2017

Brandon D. Minde will be the speaker on Criminal Trial Preparation at the PLI’s New Jersey Basic CLE Marathon 2017.  The PLI Basic CLE Marathon is designed to help newly admitted New Jersey lawyers comply with their New Jersey mandatory continuing legal education requirements.  Mr. Minde’s presentation will serve as a general introduction for attorneys practicing in criminal defense matters, seeking to learn about New Jersey Criminal Trial Preparation, including handling matters related to Arrest, indictment and arraignment.

  • Discovery
  • Status conferences, pre-trial conferences and pre-trial hearings
  • Plea negotiations and agreements
  • Trial – presentment of evidence and witnesses
  • Post-trial motions

The presentation will take place at the PLI New York Center on May 8, 2017.

For more information or to register: New Jersey Basic CLE Marathon

Louis John Dughi, Jr. obtained a second defense verdict in the controversial Cho v. Trinitas Regional Medical Center matter.

In Cho vs. Trinitas Regional Medical Center, a significant medical malpractice case reported at 443 NJ Super. 461 (App. Div. 2015), Mr. Dughi recently retried the case before the Hon. Thomas Walsh in Union County.  The Appellate Division had overturned a prior dismissal at trial on the basis that in limine motions were improperly utilized as dispositive motions by the defense. After the second trial, which concluded on February 2, 2017, the outcome remained the same with the defense prevailing.

The widely commented upon appellate decision regarding the use of in limine motions is now seen as a bar to the use of in limine motions when a summary judgement motion could have been filed regarding previously known facts and issues. Although it appears that the Appellate Division believed this ruling would avoid motion practice at the time of trial, it will likely have the opposite effect by forcing defense lawyers to hold their application for a dismissal until after plaintiff has rested its case at trial.

As many trial judges permit plaintiffs to reopen discovery to cure defects (even after the discovery end date) raised by the filing of a summary judgment motion, the in limine motion was an effective tool when used to frame the issues for dismissal at a time when the case was on the threshold of trial and no further discovery would be permitted in the usual circumstance. Now, the defense lawyer must carefully weigh whether to bring a summary judgment motion before trial or await the empanelment of a jury and the presentation by plaintiff before raising the dispositive motion which will likely result in many more questionable cases going to trial.

Mr. Dughi has tried over 230 cases over the course of his career and has successfully tried to a second no cause for action defense verdict other highly publicized cases including, Komlodi vs. JFK Medical Center reported at 217 NJ 387 (2014) overturning a prior defense verdict on the basis of an improper application of the Scafidi pre-existing injury doctrine and Canesi vs. Wilson reported at 149 NJ 139 (1997) overturning a prior dismissal regarding a congenital limb reduction defect failure to warn case determining the weight of Physicians’ Desk Reference and FDA warnings.

Trying complicated and difficult medical malpractice cases is his specialty and winning the same cases again after the appellate courts have reviewed them demonstrates an additional level of expertise.

Attorney Profile: Louis John Dughi, Jr.