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Planning for Preparedness and Response: COVID-19 Response for the Health and Life Sciences Industry

Health & Life Sciences Alert Meghan C. O'Connor, Simone Colgan Dunlap, Nicholas H. Meza

The Coronavirus Disease (COVID-19) outbreak has created a number of novel issues, challenges, and opportunities for stakeholders in the health and life sciences industry. Quarles & Brady's Health Law Practice Group is closely monitoring industry developments related to COVID-19 and can offer guidance to clients facing immediate questions or seeking to prepare for potential impacts stemming from the outbreak.

The health care industry has responded in a variety of ways to navigate existing concerns and prepare for an increased demand on the country's health care system. Following are some of the significant responses by the health and life sciences industry as the COVID-19 situation continues to unfold.

Eased Licensure Obligations for Out-of-State Providers
California Governor Gavin Newsom declared a state of emergency in California on March 4. Under the Governor’s proclamation, the Director of the Emergency Medical Services Authority is authorized to permit health care providers (of any specialty and licensure designated by the Director) licensed in another state to provide services in California during the state of emergency.

The Director has not operationalized this authority, but providers should be aware of this authority should the situation develop to the point of needing to engage out-of-state providers (e.g., significant increase in patient volume, existing workforce unavailability due to illness or overtime limitations). Providers who wish to support licensure reciprocity in other states should confirm compliance with state licensure requirements in their home state and non-resident states, staff availability, and insurance availability.

Pharmacy Licensure Waivers and Work-from-Home Arrangements
In addition to permitting temporary provider licensure reciprocity, California’s state of emergency allows the Board of Pharmacy to waive certain pharmacy licensure and regulation obligations as needed to aid in protection of public health or provision of patient care. The Board of Pharmacy is now accepting waiver requests. This may allow expanded work from home options as the situation processes.

Similarly, on March 10, the governor of Kentucky declared a state of emergency and issued an executive order relating to the dispensing of pharmaceuticals. The order permits pharmacists in Kentucky to dispense emergency refills up to a 30-day supply for any noncontrolled medication and "operate temporarily a pharmacy in an area not designated on a pharmacy permit." The order will expire on April 8, unless extended by the governor. As the situation evolves, we can expect other states to take similar measures.

Notwithstanding declared states of emergency, many states already permit work-from-home arrangements. However, states vary widely with respect to the permissibility of pharmacy technician work-from-home models, which may be more desirable as companies employ social distancing measures among their workforces. If your pharmacy is exploring similar measures, our team can assist with any compliance and operational questions you may have.

COVID-19 Medicare Coverage, Benefits, and Billing
The Centers for Medicare and Medicaid Services (CMS) released fact sheets on March 5 regarding COVID-19 coverage and benefits and announced Healthcare Common Procedure Coding System (HCPCS) codes for billing COVID-19 diagnostic tests. The fact sheets address quarantine, vaccines, waiver of cost-sharing, and waiver of prior authorization requirements.

For Medicare Parts A and B, CMS will provide increased flexibility for diagnosis-related group (and any cost outlier) payments for COVID-19 quarantine hospital stays even if patients do not meet inpatient admission criteria through the quarantine (i.e., acute inpatient care is no longer medically necessary). Patients who would have otherwise been discharged but are instead remaining in a hospital under quarantine will not have to pay any additional deductible for the time in quarantine.

Medicare Advantage organizations (MAOs) may waive or reduce enrollee cost-sharing related to COVID-19 lab tests provided MAOs waive or reduce cost-sharing for all plan enrollees on a uniform basis. CMS advised, after consultation with the Office of Inspector General (OIG), that MAOs’ voluntary waivers or reductions in enrollee cost-sharing for COVID-19 lab tests will satisfy the managed care plan safe harbor to the federal Anti-Kickback Statute.

Medicare Advantage plans may also provide enrollees with access to Part B services via telehealth (discussed below).

Consistent with current Part B coverage, should a COVID-19 vaccine become available, Part D plans will be required to cover the vaccine.

MAOs and Part D plans may also choose to waive plan prior authorization requirements that would otherwise apply to tests or services related to COVID-19.

Coverage of COVID-19 Testing Under Commercial, Medicare Advantage, and Medicaid Plans
Many insurers are now covering the cost of COVID-19 tests, waiving prior authorization requirements associated with FDA-approved diagnostic testing, as well as co-pays, co-insurance, and other payments associated with testing. These commitments are largely limited to plans fully paid for by the insurer and are unlikely to apply to self-insured employer plans.

However, the Internal Revenue Service announced on March 11 that high-deductible health plans (HDHP) may pay for COVID-19-related testing and treatment before plan deductibles have been met without jeopardizing their status as HDHPs.

Prescription Refills, Home Delivery, and Prior Authorization
In its March 5 fact sheet, CMS noted that for Part B drugs, Medicare contractors will take into account the nature of the particular drug (including immunosuppressive drugs), diagnosis, the extent and likely duration of disruptions to the drug supply chain during an emergency, and other relevant factors that would be applicable when making a determination as to whether an extended supply of the drug is reasonable and necessary.

Extended drug supplies may put additional pressure on the entire drug supply chain, particularly considering FDA response (outlined below). Manufacturers and pharmacies should begin planning for a disruption in the refill process and related operational considerations, including the potential need for additional safety and adherence communication for patients and availability of care coordination resources.

In its March 10 memo for Part D and Medicare Advantage Plans, CMS noted that Part D sponsors may make a number of discretionary edits to plan operations, including relaxing "refill-too-soon" edits, allowing enrollees to obtain the maximum extended day supply, relaxing plan policies that discourage home delivery, and waiver of prior authorization requirements. When these edits are turned back on and plans return to normal plan requirements, pharmacies and payers should be prepared for an influx of questions from patients.

Similarly, some commercial insurers have announced that they will relax limitations on "pre-fills" by waiving early prescription refill limits on certain prescription medications (primarily maintenance medications), offering 90-day maintenance medication prescriptions, and home delivery on prescription medications.

Relaxed Telehealth Requirements for Medicare Beneficiaries
On March 6, the President signed the Coronavirus Preparedness and Response Supplemental Appropriations Act, 2020 (P.L. 116-123). Among other things, the Act gave the Secretary of the US Department of Health and Human Services (HHS) the authority to waive certain Medicare telehealth restrictions in response to the COVID-19 public health emergency. Under the Act, telehealth services remain a Medicare covered service if the telehealth services are furnished in an emergency area during an emergency period by a qualified provider regardless of whether the beneficiary is physically present in a rural area.

This increased flexibility paves the path for seniors to receive telehealth services in their homes. However, operational difficulties remain. The Act was drafted to require providers to have a previous Medicare relationship with the patient, which limits new Medicare beneficiary access and the ability for providers to leverage outsourced telehealth relationships and technology. In addition, providers and IT developers must still comply with existing state laws governing telehealth (e.g., consent, licensure, scope of practice, etc.) and telehealth reimbursement obligations. When moving forward with telehealth services, providers should consider the cybersecurity implications of increased reliance on technology as well as the availability and limitations of information technology, including license requirements for increased use, server capacity, and updated security patches

Home Health and Dialysis Providers Guidance
On March 10, CMS released guidance to home health agencies and dialysis facilities based on frequently asked questions CMS has received about interacting with patients amid COVID-19. The guidance discussed when it is safe for home health agencies to treat patients at home, when patients should be considered for hospitalization, and recommendations for family member exposure. The guidance also recommended dialysis facilities take additional measures to screen high-risk patients as well as visitors.

FDA Stops Overseas Inspections and Announces First Supply Chain Issue
On March 10, the U.S. Food and Drug Administration (FDA) announced that it is postponing most foreign inspections through April 2020. The FDA will consider mission-critical inspections on a case-by-case basis but will implement additional tools, including product sampling at borders, reviewing a firm’s compliance history, and using information sharing from foreign governments.

On February 27, FDA announced the first human drug shortage attributed to COVID-19. The shortage stemmed from an issue with a manufacturing site for an active pharmaceutical ingredient (API) used in the drug. The FDA did not identify the drug, but made it clear that there are other alternatives that can be used by patients. To date, FDA has identified 20 other drugs which solely source their APIs from China; all are considered to be "noncritical." The FDA has stated that it is closely monitoring the medical product supply chain and is taking proactive steps to prevent disruption.

Data Sharing, Technology, and Incident Response
In February, the US Department of Health and Human Services, Office for Civil Rights (OCR) issued a bulletin about Health Insurance Portability and Accountability Act of 1996 (HIPAA) privacy in light of COVID-19. OCR emphasized the need to balance patient privacy and use and disclosure to protect public health and provided a reminder regarding patient information sharing in an outbreak of infectious disease or other emergency situation like the COVID-19 outbreak. OCR provided guidance on a number of disclosure situations, including treatment, public health purposes, media/others not involved in patient care, and family members/others involved in patient care.

Given the growing public and media interest in COVID-19, providers should be prepared to educate patients regarding applicable state mandatory reporting obligations as well as the ability to share patient information for public health purposes. Providers should also consider implementing additional access controls (e.g., "break the glass" functionality) for COVID-19 patient records and continued monitoring of appropriate access by workforce members.

As the COVID-19 situation unfolds, it is also important to consider the capabilities of organizational incident response and emergency mode operation plans to ensure remote work functionality and technology availability for essential functions, redundancy in system functions, and continued vigilance for cybersecurity incidents and phishing attacks in a faster-paced environment than standard operations.

It is an opportunity to confirm adequate remote work capabilities, network bandwidth, appropriate software, certificates, patches, and multi-factor authentication on personal or work devices. It is also an opportunity to remind workforce members regarding necessary vigilance when accessing company systems remotely through unsecured networks.

Is COVID-19 a Force Majeure Event?
We expect to see an increasing number of entities attempt to characterize some aspects of the COVID-19 outbreak (e.g., supply chain disruptions) as an event that triggers the force majeure provisions of their contracts. Whether a given force majeure provision is broad enough to cover COVID-19-related events will depend on the specific language in the agreement, the course of dealing between the parties, and the law governing dispute. We predict a growing number of contract laws disputes over interpretation of these provisions, and the rights the parties have with respect to "Acts of God" events in the absence of specific force majeure provisions.

Additional Actions
We have also been following these actions taken in support of the health and life sciences industry:

  • CMS issued a memorandum on March 10 outlining protective mask guidance for health care workers to align CMS policy with recent guidance from the Centers for Disease Control and Prevention (CDC) and FDA expanding the types of face masks health care workers may use in situations involving COVID-19 and other respiratory infections.
  • During his March 11 speech, President Trump echoed prevention measures being taken by nursing homes in multiple states, encouraging such facilities to suspend all medically unnecessary visits to prevent the spread of COVID-19 among vulnerable elderly populations.

As the COVID-19 situation continues to unfold, we will continue to monitor additional efforts and modifications to existing responses. For additional questions on COVID-19 considerations affecting the health and life sciences industry contact your Quarles & Brady health law attorney or: