Monthly Archives: March 2010

BC Hydro Makes Additional Awards Under Clean Power Call

Today, BC Hydro added an additional 451 GWh/year of firm energy from four new renewable energy projects awarded EPA’s under BC Hydro’s Clean Power Call. Here is the press release.

The selected projects are:

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HEALTH REFORM: Medicaid Drug Rebate Program ‘Reform’: Key Considerations and Implementation Tips for Pharmaceutical and Biotech Manufacturers

On March 23, 2010, President Obama signed H.R. 3590, the “Patient Protection and Affordable Care Act” (“PPACA”), into law. This legislation includes significant revisions to Section 1927 of the Social Security Act (42 U.S.C. § 1392r-8), which governs the Medicaid Drug Rebate Program (“MDRP”). Following the enactment of PPACA, H.R. 4872, the “Health Care and Education Reconciliation Act of 2010” was enacted into law on March 30, 2010, “reconciling” and revising portions of PPACA. The term “PPACA” used herein shall refer to PPACA as amended by H.R. 4872. We have set forth below some key considerations and implementation tips to assist pharmaceutical and biotech manufacturers in understanding the impact of this legislation with respect to the MDRP. In addition, we have outlined the significant changes to the MDRP in the sidebars, organized by their respective effective dates.

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HRSA Finally Publishes Final Contract Pharmacy Guidelines For 340B Program

On March 5, 2010, the Health Resources and Services Administration (“HRSA”) published the final Contract Pharmacy Guidelines, nearly three years after the close of the comment period to its proposed guidelines.[1] The final guidelines now formally recognize the ability of a 340B covered entity to enter into a broader range of arrangements with contract pharmacies.

To what extent can covered entities enter agreements with contract pharmacies?

Prior to the issuance of these final guidelines, a covered entity was allowed to use only a single point of service for pharmacy such that it could not supplement an in-house pharmacy with a contract arrangement. Also, prior to the issuance of these final guidelines, a covered entity could only enter into an agreement with one contract pharmacy. A limited variety of other arrangements could be approved as Alternative Methods Demonstration Projects. These final guidelines now expand the types of permissible contract pharmacy arrangements. 

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Supreme Court Holds That County and State Reports, Not Only Federal Ones, Trigger The Public Disclosure Bar of the Federal False Claims Act

Suits in the name of the United States under the Federal False Claims Act (“FCA”) brought by private individuals known as qui tam relators are among the most common forms of whistleblower action in the federal system. The Supreme Court today rendered its much-anticipated decision in Graham County Soil and Water Conservation District et al. v. United States ex rel. Wilson, No. 08-304. 2010, imposing a significant limitation on the ability of these relators to satisfy an important jurisdictional bar.

The FCA authorizes both the Attorney General and private qui tam relators to bring actions against persons who make or facilitate fraudulent claims for payment from the United States. However, in the absence of the government, a relator will be barred from proceeding on his own if the action is based upon the public disclosure of allegations or transactions in, inter alia, “a congressional, administrative, or Government Accounting Office [(GAO)] report, hearing, audit, or investigation.” 31 U. S. C. §3730(e)(4)(A). TheGraham County case involved federal contracts and funding for the repair of flood damage. The relator, Wilson, a local government employee, alerted both federal and county and state officials to irregularities in performance. Both the county and the state issued reports making findings about these potential irregularities and Wilson thereupon filed a qui tam action against the county conservation districts administering the contracts. The District Court dismissed for lack of jurisdiction because the allegations publicly disclosed in the county and state reports constituted “administrative” reports under the FCA’s public disclosure bar. The Fourth Circuit reversed, holding that only federal administrative reports may trigger the public disclosure bar. 

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The Timeline for Accountable Care

Now that we have sweeping new health care legislation, the Patient Protection and Affordable Care Act (“the Act”), let’s look at the rollout of the accountable care provisions–i.e., those changes to the payment and delivery system that hold the most long-term promise of improving quality and cost-efficiency. They are discussed in my most recent article: “The Timeline for Accountable Care: The Rollout of the Payment and Delivery Reform Provisions in the Patient Protection and Affordable Care Act and the Implications for Accountable Care Organizations,” published last week in the BNA’s Health Law Reporter.  Click here to read the full article (PDF).


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The Federal HIRE Act: It Can Pay To Hire The Unemployed

On March 18, 2010, President Obama signed into law the Hiring Incentives to Restore Employment Act (the “HIRE Act”) PL111-147—a possible precursor to other legislation in the pipeline to decrease unemployment.

In brief, under the HIRE Act, an employer that hires a new “qualified employee” will be able to save on certain payroll taxes for each such new hire who:

1. Begins employment after February 3, 2010, and before January 1, 2011;

2. Certifies, by a signed affidavit, that he or she has not been employed for more than 40 hours during the 60-day period prior to the beginning of employment; and

3. Is not hired to replace another employee (unless that former employee voluntarily quit or was fired for cause).

If an employer (other than a governmental employer) hires a qualified employee who commences employment on or after February 4, 2010, and not later than December 31, 2010, the employer need not pay the employer’s portion of the FICA (Social Security) tax (6.2 percent of the first $106,800 of earnings per year) during the employment period from April 1, 2010, to January 1, 2011. From the period of February 4, 2010, through March 31, 2010, an employer must continue to pay its portion of the FICA tax on wages paid to a qualified employee. Such payments, however, will be credited against the employer’s portion of the FICA tax due in the second quarter relating to all of its employees.

It is also important to note that employers will still need to withhold the employee’s portion of the FICA tax. Further, the employer and employee share of Medicare taxes will still be due on all wages paid to qualified employees.

In addition, if the qualified employee is retained for at least 52 consecutive weeks, the employer may be entitled to an additional tax credit of the lesser of $1,000 or 6.2 percent of the wages paid to the individual during the 52-week period. But to qualify for this credit, the employee’s wages for the last 26 weeks must equal at least 80 percent of his/her wages during the first 26 weeks of the 52-week period. This tax credit would be taken on the employer’s 2011 tax return.

What the HIRE Act Means to Employers

The HIRE Act is intended to encourage employers to hire the unemployed, and the savings can be significant. An employer who hires a qualified new hire can save thousands of dollars in taxes. Assume that a qualified employee is hired effective April 1, 2010, at a salary of $60,000 per annum. Between April 1, 2010, and January 1, 2011, the employee’s earnings will be $45,000 and the employer will save 6.2 percent of $45,000 in FICA contributions (or $2,790). In addition, if the employee remains steadily employed with the employer after April 1, 2011 (a full year), the employer will be entitled to an additional $1,000 credit against payroll taxes.

What Should Employers Do Now?

1. Ascertain whether any new hire who starts work on or after February 4, 2010, had been out of work more than 60 days prior to employment and/or was not employed for more than 40 hours during that period;

2. Have the employee sign an affidavit to that effect;

3. Confirm that the new employee did not replace an employee who was terminated “without cause” or otherwise involuntarily left his or her position; and

4. Alert your Payroll Department or payroll service to take the following actions with respect to qualified new hires:

a) do not to pay the employer-paid portion of FICA with respect to each such new hire for the period April 1, 2010, through December 31, 2010; and
b) take a credit for the employer-paid portion of FICA paid for the period February 4, 2010, through March 31, 2010, in the second quarter of 2010.

We fully expect that there will be future guidance that interprets the HIRE Act, but employers should begin to document their qualification for these credits and benefits, and perhaps consider whether they are able to structure their hiring needs to take advantage of these incentives.

For more information about this Client Alert, please contact:

Peter M. Panken
New York

Scott M. Drago
New York

Susan Gross Sholinsky
New York

Steven Swirsky
New York


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What Does CMS’ Realignment Really Mean?

On March 24, 2010, the Secretary of the Department of Health and Human Services announced a major reorganization of the Centers for Medicare & Medicaid Services (CMS).[1] This announcement finalized a previous issuance dated February 16, 2010, from Charlene Frizzerra, Acting Administrator of CMS. This restructuring is CMS’ first major reorganization in approximately ten years. Its timing is no accident: with the historic passage of federal health reform, a new CMS is needed. Traditionally, CMS’ organizational chart (see below) reflected a disproportionate emphasis on operations and policy. Going forward, topics such as strategic planning and program integrity become of equal importance to operations. The realignment’s goal is to allow CMS to better focus on three areas: beneficiary services, program integrity, and strategic planning.

CMS’ restructuring established the position of Principal Deputy Administrator (formerly Deputy Administrator) and created the Office of External Affairs and Beneficiary Services as well as four centers to be led by Deputy Administrators (formerly known as Directors): the Center for Medicare, the Center for Medicaid, CHIP and Survey & Certification, the Center for Program Integrity, and the Center for Strategic Planning. CMS has not had a Senate-confirmed CMS Administrator since June 2006. President Obama is expected to nominate Donald Berwick, MD, MPP, as CMS Administrator to fill the vacant position. Dr. Berwick is a Clinical Professor of Pediatrics and Health Policy at Harvard Medical School and founder of the Institute for Healthcare Improvement (IHI). Ms. Frizzera will continue to serve as Acting CMS Administrator and Chief Operating Officer until President Obama’s nominated individual is confirmed by the Senate.

As part of CMS’ reformation, CMS hired three new senior staff:

  • In early March, Marilyn Tavenner joined CMS as the Principal Deputy Administrator. Ms. Tavenner most recently served as the Secretary of Health and Human Resources for the Commonwealth of Virginia. She spent most of her previous career with Hospital Corporation of America (HCA), starting as a staff nurse, becoming CEO of both Johnston-Willis and Chippenham hospitals, and finishing as Group President of Outpatient Services. She also served as Chairman of the Virginia Hospital Association and was a member of the Board of Trustees of the American Hospital Association.
  • CMS has hired Peter Budetti as Deputy Administrator for the Center for Program Integrity. Mr. Budetti was an aide to Rep. Henry Waxman (D-Calif.) from 1984 to 1990, when Waxman was Chairman of the Energy and Commerce Committee’s Health and the Environment Subcommittee. Mr. Budetti founded and directed the Center for Health Policy Research at George Washington University from 1990 to 1995, and most recently was Chairman of the Department of Health Administration and Policy in the College of Public Health of the University of Oklahoma Health Sciences Center. He also was formerly Chair of Taxpayers Against Fraud, a Washington, D.C., nonprofit agency that supports False Claims Act cases. Mr. Budetti is a pediatrician and a lawyer.
  • Anthony “Tony” Rodgers has been appointed Deputy Administrator for Strategic Planning. Mr. Rodgers came to CMS from Health Management Associates, Inc., where he served as the principal consultant on health system strategic planning, health information technology, and health plan and system operations. He also previously directed Arizona’s Medicaid agency, known as the Arizona Health Care Cost Containment System (AHCCCS). Prior to being appointed Director of AHCCCS, Mr. Rodgers was General Manager for WellPoint Health Networks, State Sponsored Programs. As general manager, he was responsible for both the Medicaid and the State Children’s Health Insurance Program (SCHIP) product lines.

Although not confirmed yet, the following is a brief summary of Dr. Donald Berwick.

  • In addition to his aforementioned positions of Harvard professor and founder of the Institute for Healthcare Improvement, Dr. Berwick was Chair of the Health Services Research Review Study Section of the Agency for Health Care Policy and Research (now AHRQ) and Chair of the National Advisory Council of the Agency for Healthcare Research and Quality. He served as Vice Chair of the U.S. Preventive Services Task Force and as the first “Independent Member” of the Board of Trustees of the American Hospital Association. Dr. Berwick is an elected member of the Institute of Medicine of the National Academy of Sciences and since 2002 has served on the IOM’s Governing Council and as the liaison to the IOM’s Global Health Board.

CMS Realignment

CMS’ reorganization shifts its focus from placing operational priority on traditional fee-for-service and managed care to creating five centers, all with operational significance. This effort not only aligns with the federal health reform, but it also positions CMS to implement change as quickly as possible. Additionally, the realignment supports the CMS Administrator’s office management efforts by bolstering the number of political staff members overseeing career employees. Specifically, the new structure created the following Centers and Offices:

Center for Medicare

The Center for Medicare combines the operations of Medicare fee-for-service, Medicare managed care, and the Medicare prescription drug benefit. The Center will report directly to the Administrator and be led by the Deputy Administrator, Jonathan Blum, and two Deputy Center Directors. Existing groups/staffs of the current Center for Medicare Management and Center for Drug and Health Plan Choice will be realigned intact under the new Center.

Center for Medicaid, CHIP and Survey & Certification

The Center for Medicaid and State Operations (CMSO) is renamed the Center for Medicaid, CHIP and Survey & Certification. The Center will report directly to the Administrator and be led by the Deputy Administrator, Cindy Mann, and two Deputy Center Directors. Existing groups/staffs will remain in the renamed Center except for the Medicaid Integrity Group, which will be realigned under the Center for Program Integrity.

Center for Program Integrity

The Center for Program Integrity realigns the (Medicare) Program Integrity Group of the Office of Financial Management (OFM) and the Medicaid Integrity Group of the CMSO. The consolidation of Program Integrity could suggest a sharing of insights and more standardization around fraud and abuse issues related to both programs. The Center for Program Integrity will report directly to the Administrator and be led by the Deputy Administrator, Mr. Budetti, and the Deputy Center Director. The two groups will move intact under this Center and be renamed the Medicare Program Integrity Group and the Medicaid Program Integrity Group, respectively.

Center for Strategic Planning

The Center for Strategic Planning realigns the Office of Research, Development, and Information (ORDI) and the Office of Policy (OP). This Center will report directly to the Administrator and be led by the Deputy Administrator, Mr. Rodgers. Existing groups/staffs in ORDI and OP will be realigned intact under this new Center.

Office of External Affairs & Beneficiary Services

The Office of External Affairs & Beneficiary Services realigns the Office of Beneficiary Information Services (OBIS) with the Office of External Affairs (OEA), thereby allowing CMS to integrate and better leverage its communication, call center, and Web resources; ombudsman services; and extensive network of partners to enhance service to beneficiaries. This Office will report directly to the Administrator and be led by the Office Director, Teresa Niño, and two Deputy Office Directors. Existing groups/staffs in OBIS and OEA will be realigned intact within the new Office.

Freestanding Offices

The following five Offices will remain intact and continue to report directly to the Administrator: the Office of Equal Opportunity and Civil Rights (OEOCR) responsible for issues of equal employment opportunity and civil rights; the Office of Legislation (OL) responsible for congressional and legislative interaction, evaluation and analysis; the Office of the Actuary (OACT) responsible for CMS’ actuarial program and analysis of health care financing issues; the Office of Clinical Standards and Quality (OCSQ), which serves as the focal point for all quality, clinical and medical science issues and policies; and the Office of Strategic Operations and Regulatory Affairs (OSORA), which manages CMS’ decision-making and regulatory process, and which will be renamed the Office of Executive Operations and Regulatory Affairs (OEORA) to more accurately reflect the work of that organization. In addition, the realignment formalizes the current role of the Chief Operating Officer (COO) and the Deputy Chief Operating Officer (DCOO) with responsibility over all CMS operations—namely, information systems, contracts and grants, finance, e-health standards and services, human capital management, and the Consortia.

Newly Prominent Centers

The realignment effectively elevates program integrity as well as innovation, research, and demonstration activities to an agency operational level. This change suggests an increased focus on fraud and abuse as well as demonstration efforts that could take on a new level of importance in broader CMS policymaking. With the newly appointed political leadership, these Centers can anticipate greater political oversight.

CMS’ choice to lead the Center for Program Integrity, Mr. Budetti, an individual with extensive health care fraud experience and a background that includes formerly chairing Taxpayers Against Fraud, demonstrates that the Center’s activities may shift emphasis from education to combating fraud and abuse.

Furthermore, CMS’ selection for leadership of the Center for Strategic Planning, Mr. Rodgers, correlates with language in the federal health reform legislation authorizing CMS to develop innovative payment models and pilots under the Medicare program. These new pilot arrangements are very similar to traditional Medicaid waivers, providing for customization and budget neutrality. As someone experienced with and instrumental to state-based efforts to develop novel Medicaid payment and delivery arrangements, Mr. Rodgers’ expertise is expected to help guide CMS as it works to implement new Medicare payment models.

Before and After

To depict these changes, below are the former and current CMS organizational charts.(Click the images to enlarge.)

CMS Former Organization



CMS New Organization










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This Client Alert was authored by Lynn Shapiro Snyder, Leslie Norwalk and Stephanie Fox. For additional information about the issues discussed in this Client Alert, please contact one of the authors or contributors or the EpsteinBeckerGreen attorney who regularly handles your legal matters.

The EpsteinBeckerGreen Client Alert is published by EBG’s Health Care and Life Sciences practice to inform health care organizations of all types about significant new legal developments.


Lynn Shapiro Snyder, Esq.


If you would like to be added to our mailing list or need to update your contact information, please contact, Kristi Swanson, at or 202-861-4186.


[1] 75 Fed. Reg. at 14,176


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March 25, 2010 – Boston, MA
For more information contact: Jeanie Griggs
(617) 589-3895;

On March 22, Davis Malm attorney David Rapaport spoke on a panel with Justice Giles of the Massachusetts Superior Court, along with other experience trial lawyers, at a Boston Bar Association program titled “Is the Civil Justice System in Need of Serious Repair: Part II.” The program focused on the Final Report of the American College of Trial Lawyers Task Force on Discovery, which recommended significant changes to the rules of discovery in civil cases, and the basis for its conclusions, as well as two of the more controversial recommendations. Mr. Rapaport discussed problems presented by the proposed new rules for employment plaintiffs who need full and fair discovery in order to prove their cases.

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March 25, 2010 – Boston, MA
For more information contact: Jeanie Griggs
(617) 589-3895;
On March 11, Davis Malm attorney James E. Gallagher acted as a mock trial judge at the Boston Regional National Appellate Advocacy Competition sponsored by the American Bar Association’s Law Student Division. Student competitors participated in a hypothetical appeal to the United States Supreme Court, which required them to write a brief, as either respondent or petitioner, then argue their case in front of the mock court. Mr. Gallagher judged oral arguments of four teams. The NAAC is one of the largest moot court competitions in the country and emphasizes the development of oral advocacy skills through a realistic appellate advocacy experience. This year’s competition was the largest in its history, with 198 teams from 119 schools throughout 15 states competing.
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March 25, 2010 – Boston, MA
For more information contact: Jeanie Griggs
(617) 589-3895;

On March 23, Davis Malm attorney David Rapaport led a Boston Bar Association Continuing Legal Education program titled, “Current Challenges In Disability Discrimination Cases And The Interrelationship Between Disability Benefits And Discrimination Claims.” In this roundtable discussion, Mr. Rapaport focused on challenges facing plaintiffs in disability discrimination cases and the effects of recent changes in the Americans with Disabilities Act.

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