Healthcare is facing an age of disruption from new market entrants and players outside the traditional healthcare paradigm. Unexpected partnerships are bringing fresh solutions to market and changing how business is done and care is delivered.

Many of these new partnerships are arising in conjunction with innovation investments by hospitals and health systems (HHSs). HHSs have always been a source of significant innovation through research and other avenues, but traditionally this work has been largely decentralized. Today, HHSs are formalizing their innovation efforts and finding ways to capitalize on those opportunities—which are abundant, thanks to HHSs’ physician workforce, research infrastructure, and access to patients and their data. These centralized innovation incubators make it easier for non-traditional players, such as tech companies, to pool resources with an HHS and bring game-changing solutions to market in an expedited fashion.

Whether they occur through an innovation center, cross-industry ventures in the healthcare sphere are still in their infancy. As such, they pose a number of challenges that require careful planning and a flexible mindset.

Vet Your Opportunities Thoroughly

In today’s push for value-driven transformation, HHSs and other health industry stakeholders have hundreds if not thousands of opportunities for partnerships knocking on their door. Diverse players, from tech vendors to start-ups to private equity firms, are queuing up for a chance to participate in the burgeoning health sector.

Faced with these abundant—and often novel—opportunities, HHSs have the task of sorting through their options and developing an efficient process to vet, select and pursue them. Too many choices is a good problem to have, but HHSs nonetheless face challenges as they determine the best way to triage potential partnerships and ventures. Key infrastructure components at HHSs include education of and buy-in by governing board, development of investment guidelines that align with mission, and building the innovation structure and team (often with contributors who come from outside of “traditional healthcare”). Once that infrastructure has been established, the HHS will be able to evaluate and pursue innovative ventures better and faster, in turn bringing solutions to market and to patients more quickly.

Continue Reading Getting Cross-Industry Collaborations Right, Part 1: A Transactions Perspective

California Governor Gavin Newsom recently signed into law two bills that expand the delivery of telehealth services in the state. In particular, the legislation:

  • Permits providers to prescribe medications without a synchronous interaction
  • Requires payment parity of telehealth services under commercial plans
  • Loosens restrictions on Medicaid coverage of store-and-forward services.

California healthcare providers and commercial health payers should consider the following key takeaways from these laws.

Remote Prescribing

Assembly Bill No. 1264 (codified at Cal. Bus. & Prof. Code § 2242(a)) took immediate effect on October 11, 2019. This provision alters the standard for prescribing, dispensing and furnishing dangerous drugs (including any prescription medication):

  • Such drugs may be prescribed, dispensed and furnished as long as there is an “appropriate prior examination and a medical indication.”
  • The law specifies that the appropriate prior examination “does not require a synchronous interaction” (e., real-time communication) and can be administered via telehealth as long as the provider abides by the appropriate standard of care.
  • The provision expressly identifies certain asynchronous technologies, including questionnaires and self-screening tools, that are permissible methods for conducting the prior examination.

Previously, the law required an “appropriate prior examination” but gave no detail regarding what that examination entailed. The new provision provides clarity and enables providers to use innovative solutions such as dynamic questionnaires when prescribing medications to patients.

Payment Parity

Although California previously required certain insurers (including commercial payers and Medi-Cal managed care plans) to cover telehealth services, it did not specify that telehealth services have to be reimbursed at the same rate as in-person care. Assembly Bill No. 744 changed that with its addition of two new statutes: Cal. Health & Safety Code § 1374.14 and Cal. Ins. Code § 10123.855. These new provisions do not require reimbursement parity for Medi-Cal managed care plans, however.

These statutes incorporate the following provisions for contracts that are issued, amended or renewed on or after January 1, 2021:

  • Commercial payers must reimburse services appropriately delivered through telehealth “on the same basis and to the same extent” as the services are reimbursed when provided in person.
  • Insurers and providers retain the ability to negotiate reimbursement rates, but healthcare services that are the same, “as determined by the provider’s description of the service on the claim,” will be reimbursed at the same rate, whether provided in person or through telehealth.
  • Telehealth services offered by an out-of-network provider do not need to be covered by a health plan or insurer, unless required under other provisions of law.
  • Insurers can establish copayment or coinsurance requirements for telehealth services if they do not exceed the copayment or coinsurance for in-person services. However, cost sharing is not required for telehealth services.
  • Telehealth reimbursement does not need to be separated from other capitated or bundled risk-based payments.
  • Insurers cannot limit coverage only to corporate telehealth service providers.

Medicaid Coverage of Store and Forward

Previously, Medi-Cal only permitted certain services to be delivered via store and forward without face-to-face contact, including teleophthalmology, teledermatology and teledentistry. However, Assembly Bill No. 744 revised Cal. Welf. & Ins. Code § 14132.725 such that face-to-face contact is not required for any services provided by asynchronous store-and-forward technologies.

Winnie Uluocha, a law clerk in the Firm’s Chicago office, also contributed to this post. 

A Collaborative Transformation Perspective on Digital Health

Healthcare is facing an age of disruption from new players and new market entrants from outside the traditional healthcare paradigm. These disruptors have varying degrees of experience in the highly regulated and closely scrutinized healthcare landscape. How can these parties work together across different cultures and regulatory environments to fashion better, faster, more accessible healthcare? In this episode of the Of Digital Interest podcast, Stephen Bernstein and Kerrin Slattery discuss:

  • Exciting new collaborations in the healthcare space
  • Challenges companies face as they work through cross-industry ventures, from diligence to regulatory mapping
  • Key considerations for data sharing and the use of de-identified data in digital health solutions
  • Navigating cultural differences between traditional providers and new non-traditional parties
  • Best practices for companies working to enter the healthcare space through collaborative ventures

Click here to listen to this episode.

A recent update to the Office of Management and Budget (OMB) website suggests that the answer is “yes”—though that depends on how one defines “soon.” According to its website, OMB received the Office of the National Coordinator for Health Information Technology’s (ONC’s) final rule, entitled 21st Century Cures Act: Interoperability, Information Blocking, and the ONC Health IT Certification Program, for review on October 28, 2019.

Based on the rule title, it appears that ONC is ready to finalize its proposals concerning information blocking and related exceptions. Earlier this year, ONC issued a proposed rule that, among other things, proposed to define information blocking and establish seven exceptions to the broad prohibition for reasonable and necessary activities that should not be considered information blocking. For more information about the information blocking provisions of ONC’s proposed rule, see our On the Subjects here and here.

OMB review is one of the final steps in the process before a rule is published in the Federal Register. OMB did not identify a deadline for completing its review. The agency generally has up to 90 days to complete its review and while it can take less time, OMB took longer with ONC’s proposed rule.

ONC received more than 2,000 public comments on its proposed rule, many of which related to information blocking topics such as the broad scope of the proposed definitions for certain covered actors—e.g., health information exchanges and health information networks—as well as the scope of the definition of “electronic health information.” Several large industry stakeholders recently wrote a letter to Chairman Lamar Alexander and Ranking Member Patty Murray of the Senate Committee on Health, Education, Labor and Pensions raising concerns about ONC’s rulemaking efforts to date and recommending, among other things, that ONC issue a Supplemental Notice of Proposed Rulemaking (SNPRM) to seek further input from stakeholders on various information-blocking-related issues. While we do not know the ultimate contents of ONC’s final rule, it does not appear that ONC has pursued the SNPRM path to gain additional public input.

While we wait for ONC to publish its final rule on key policy decisions that will shape the information blocking enforcement landscape moving forward, please do not hesitate to contact your regular McDermott lawyer or any one of the authors of this blog post if you have questions or need assistance related to information blocking.

The 21st Century Cures Act, enacted in December 2016, amended the definition of “medical device” in section 201(h) of the Federal Food, Drug, and Cosmetic Act (FDCA) to exclude five distinct categories of software or digital health products. In response, the US Food and Drug Administration (FDA) issued new digital health guidance and revised several pre-existing medical device guidance documents. FDA also stated that it would continue to assess how to update and revise these guidance documents as its thinking evolved.

Late last week, FDA issued five final guidance documents and re-issued a draft guidance document to better reflect FDA’s current thinking on software as a medical device (SaMD) and other digital health products:

Most of the guidance documents reflect modest changes to prior draft guidance documents that describe categories of low-risk health and wellness devices that FDA does not intend to regulate. FDA’s new draft Clinical Decision Support (CDS) Software guidance, however, provides a new and more detailed analysis of risk factors that FDA will apply to determine whether a CDS tool is a medical device. FDA updated its previously issued draft CDS guidance without finalizing it. Although the new guidance does not explain why FDA is reissuing the CDS guidance in draft, the new draft guidance seems to reflect the agency’s attempt to better align its definition of non-device software with the often misunderstood and misinterpreted statutory definition of CDS in section 520(o)(1)(E) of the Cures Act. The chart below summarizes the key provisions and changes to these guidance documents.

Digital health products can present a particular challenge for developers and regulators in assessing the appropriate regulatory pathways for a new product. The updated guidance documents reflect the need for a more flexible, risk-based approach to regulation that accommodates a rapidly evolving technological landscape. These documents also reflect what appears to be the new normal for digital health regulation—the need for iterative thinking and ongoing revisions to interpretive guidance documents to keep pace with a constantly changing marketplace.

Click here to read the full client alert on this issue. 

The demand for healthcare innovation is driving collaboration between formerly disparate healthcare companies and bringing in new players, such as technology companies and start-ups, into an already complex space. As companies build partnerships and pool resources – particularly healthcare data – data ownership presents numerous challenges that need to be addressed throughout the lifecycle of the collaboration. In this episode of the Of Digital Interest podcast McDermott partners Jiayan Chen and Jennifer S. Geetter explore:

  • Key concerns for companies executing data-driven collaborations
  • Consumer expectations surrounding data use, data privacy and their impact on digital health collaborations
  • The role of HIPAA and federal and state regulators in regulating data use
  • Common questions about secondary use and identifiable and deidentified data
  • Commercialization strategies and “green flags” for identifying the right collaboration partner

Click here to listen to this episode.

In preparation for GDPR compliance, organizations around the globe worked months in advance of the deadline to ensure compliance. But what happened after the date of effectiveness? McDermott set out to learn how companies fared across the United States, Europe, China and Japan.

In digging deeper, we discovered valuable findings, including:

  • Countries and regions are at different points in their GDPR compliance awareness and execution journeys.
  • Businesses across the globe continue to face challenges in understanding and responding to EU data breaches, despite making investments in new personnel and changing business practices.

In partnership with the Ponemon Institute, we released our latest study, “Keeping Pace in the GDPR Race: A Global View of GDPR Progress in the United States, Europe, China and Japan.” This report sheds new insight and provides ways to improve resiliency and mitigate risk for your company.

Click here to see our key findings and download the report. 

 

In response to the rapid pace of innovation in the health and life sciences arena, the US Food and Drug Administration (FDA) is taking a proactive, risk-based approach to regulating digital health products. Software applications and other transformative technologies, such as artificial intelligence and 3D printing, are reshaping how medical devices are developed, and FDA is seeking to align its mission and regulatory obligations with those changes.

FDA’s digital health software precertification program is a prime example of this approach. Once fully implemented, this voluntary program should expedite the path to market for software as a medical device (SaMD), and promote greater transparency between FDA and regulated entities.

Under the program, FDA will conduct a holistic review of the company producing the SaMD, taking into account aspects such as management culture, quality systems and cybersecurity protocols, to ascertain whether the company has developed sufficient infrastructure to ensure that its products will comply with FDA requirements and function safely as intended. Companies that fulfill the requirements of the excellence appraisal and related reviews will receive precertification that may provide for faster premarket reviews and more flexible approaches to data submissions at the outset.

Continue Reading To Market, To Market: FDA’s Digital Health Precertification Program

As the telemedicine regulatory and reimbursement environment becomes more cohesive and providers and patients alike embrace technology, opportunities for telemedicine collaborations are likely to grow. Like any collaboration, finding the right partner is crucial for success, particularly at the highly-scrutinized intersection of healthcare and technology. This post explores the factors to address when evaluating service providers and vendors for your next telemedicine collaboration.

Service Provider Evaluation

  • Ask around “town” – What is the collaborator’s reputation? What independent feedback is provided in references?
  • Determine if the service provider’s stage in the organizational “life-cycle” and its affiliated relationships are the best fit for the strategic goals of your partnership (e.g. should you partner with an early-stage company or a longstanding organization?)
  • Assess the capabilities of potential collaboration partners for meeting your organization needs, and pressure test their ability to come up with back-up options, should the need arise throughout the course of the collaboration.
  • Determine whether collaborator has state specific and service specific policies and procedures governing the provision of telemedicine services, including: Continue Reading Vetting Relationships for Telemedicine Collaborations

Telemedicine collaborations, whether between technology companies and providers, health systems and patients, or other creative partnerships we have yet to see in the industry, can present numerous benefits to our healthcare delivery system and patient outcomes. However, such collaborations present a variety of regulatory, logistical and operational concerns that should be strategically addressed from the ideation stage of the collaboration onward.

Early-Stage Considerations

The strategy behind the collaboration should be developed with an eye towards the duration of the relationship and the development of mutually beneficial goals and objectives that are clear and measurable. Each party should be transparent about their capabilities and strategic vision at the outset of the collaboration talks to avoid any surprises or disappointments deeper in the future. Questions for potential collaboration partners include:

  • Is this an experimental partnership or a long-term plan?
  • What do I bring to the table? How can this partner supplement or support my capabilities?
  • How will this relationship be branded and marketed? Do I need greater visibility than my partner, or will we come together under a new brand?
  • Do we have the IT infrastructure and vendor relationships in place to execute this collaboration? If not, how will secure what we need?
  • Do we have the resources to meet the regulatory requirements of the partnership?
  • How will we measure the success or failure of the collaboration?

Considerations in the RFP Stage

After the initial strategy discussions have taken place, the proposal period raises its own series of considerations. After ensuring that the arrangement proposed can address the goals and objectives of the collaboration, regulatory and transactional issues take center stage. Rights and responsibilities of each party, reporting and compliance mechanisms, fees, credentialing, licensing and privacy compliance and liability issues, to name a few concerns, are addressed at this point in the process. Fees structures and compliance with the evolving federal and state laws regulating telemedicine providers are particularly complex issues that should be addressed at this point.

Questions to address regarding fees include:

Continue Reading Telemedicine Collaborations and Partnerships: Key Considerations for Success