Therapists decry layoffs amid skilled nursing reimbursement overhaul

Thousands of physical, occupational and speech therapists have been laid off as skilled-nursing facilities transition to a new payment model that kicked in Tuesday.

Dozens of these therapists have emailed Modern Healthcare saying they have been laid off or had their wages cut as a result of the new patient-driven payment model, which is akin to bundled payments and based on patient assessments and acuity rather than the volume of therapy services. Industry observers expect more fallout as certain providers gamed the system to maximize therapy hours, which are now likely going to be a fraction of what they were under the resource-utilization group model.

One national SNF chain, Genesis HealthCare, is said to have cut its rehabilitation staff by 30%, which translates to more than 4,000 workers, experts said.

Genesis said that is “grossly inaccurate,” claiming that only 585 out of approximately 10,000 rehabilitation employees were affected. Its website lists 14,000 workers.

The company said in a statement that it continues to focus on “clinically appropriate interventions while striving for the best outcomes at the lowest cost.”

“With recent changes in our industry, we have reorganized our therapy gyms, impacting on average less than one person per facility nationally,” Genesis said.

The CMS has said that the patient-driven payment model implementation does not alter patients’ therapy needs, noting that should be the “primary driver of care decisions.”

But several therapists who work in SNFs have alleged that’s not the case.

“Reliant and a few other companies have obviously decided to approach this new payment system financially in a way that does not take into account the patients or their employees. It breaks my heart!” wrote Summer Branch, a speech language pathologist who was laid off by Reliant Rehabilitation on Monday and offered to transition to a per-diem employee.

She said Reliant also expected 95% productivity during her working hours, meaning that time would need to be spent in therapy sessions rather than discussing treatment with patients’ families or completing paperwork.

But Branch is heartened by the stories of many other companies that have approached the new model in the way it was likely meant to be, with a patient-centered approach, she said.

Noblesville, Ind.-based Vertis Therapy has not changed its productivity expectations or laid off any employees, said Jessica Beaudry, vice president of operations.

“What we had as an industry was companies who were overutilizing therapy to get higher reimbursement,” she said. “In the new system, that does not do them any good.”

People should be upset with the companies that are taking advantage of the patient-driven payment model, rather than the model itself, Beaudry added.

“If you are doing the right thing by the patient, everything should be fine,” she said.

Reliant said in a statement that it could not share any details about changes to its day-to-day operations but that its mission remains unchanged—providing the best care to its patients.

Calls and emails to Encore Healthcare regarding its total layoffs were not returned.

The former reimbursement model encouraged potentially unnecessary therapy services, the CMS said, adding that it aims to eliminate that motivation while reducing providers’ administrative burdens. What was intended to be a “budget-neutral” change includes a provision that group and concurrent therapy minutes can account for no more than 25% of the total services provided to the patient.

“There is no question in my mind that therapy hours are going to be a fraction of what they are today,” Gerald Stoll, a vice president with the healthcare division of Hub International Northeast, a global insurance brokerage, told Modern Healthcare last month. “SNFs might not be going after those hip- and knee-replacements anymore. It’s probably not a good time to own a therapy company now. But if you do, you need to adapt and change the business model tremendously.”

In a memo obtained by Modern Healthcare to the therapy staff at a Florida-based SNF, executives said that concurrent and group therapies are “not an option, they are a must.”

The CMS said that the model’s 25% limit on group and concurrent therapy is meant to ensure SNF patients receive quality therapy services and that one-on-one sessions remain the “significant majority.”

The memo went on to say if employees have decreased hours during the week, they may be asked to work on the weekend. Staff may lose their full-time eligibility and benefits if they do not reach 30 hours a week for three consecutive pay periods.

This mandate is similar to memos to therapists at other facilities, according to a Change.org petition to HHS lobbying for patients and therapists to decide the appropriate care plan, rather than follow corporate directives. It has more than 16,000 signatures.

“No one knows or could even understand the depth of the devastation of this,” said Jill Sadler, a physical therapist assistant who was laid off on Oct. 1 by Genesis’ Oak Grove Center, a skilled-nursing home in Waterville, Maine, where she worked 14 years. “It affects way more than the therapists. Our elderly deserve the best at the end of life but are always last for all services.”

The wave of unemployed therapists will likely outweigh the demand for their services, Vertis Therapy’s Beaudry said.

“They will likely struggle for a while,” she said. “It is definitely a very scary thing right now for our industry.”

https://www.modernhealthcare.com/payment/therapists-decry-layoffs-amid-snf-reimbursement-overhaul

Durect gets Jan. FDA panel meeting date

DURECT Corporation (Nasdaq: DRRX) announced today that the U.S. Food and Drug Administration (FDA) has notified the Company that its Class 2 NDA resubmission for POSIMIR^® (bupivacaine extended-release solution) will be discussed at a meeting of the Anesthetic and Analgesic Drug Products Advisory Committee (AADPAC). The meeting is tentatively scheduled for January 16, 2020. The FDA had previously assigned a user fee goal date of December 27, 2019; a new user fee goal date has not been assigned.
DURECT commissioned the advisory services of Dr. Lee S. Simon to lead the Company’s preparation efforts to prepare for the advisory committee meeting. Dr. Simon is a physician and research scientist who served as the FDA’s Division Director of Analgesic, Anti-inflammatory and Ophthalmologic Drug Products from 2001 to 2003, and is now a Principal at SDG, LLC, an FDA advisory firm.
“We look forward to a productive discussion with the advisory committee,” stated James E. Brown, President and CEO of DURECT. “If approved, we believe that POSIMIR could help address an important need for new long-acting, non-opioid pain products in the post-operative pain setting.”
https://www.prnewswire.com/news-releases/durect-announces-fda-advisory-committee-meeting-to-review-posimir-for-the-treatment-of-post-surgical-pain-300929450.html

J&J opioid settlement should help return focus to fundamentals: Credit Suisse

Johnson & Johnson (JNJ +1.4%) is the only Dow stock sporting a gain amid today’s broader market rout, after surprising investors by announcing a settlement with two Ohio counties ahead of an upcoming opioid trial.

Credit Suisse’s Matt Miksic reiterates an Outperform rating on JNJ with a $156 price target, saying while the settlement does not clear the company of all potential opioid-related litigation liability, increased clarity on liability should shift focus to the company’s fundamentals, and the latest news is “a solid step” in the right direction.

Miksic says his recently updated analysis of sales and prescription trends for July and August points to $570M upside to its U.S. pharmaceuticals estimates for Q3.

https://seekingalpha.com/news/3503467-j-and-j-opioid-settlement-help-return-focus-fundamentals-analyst-says

Ambulatory Surgery Center Inspections Lag: OIG

Dozens of states, some of them very large, didn’t meet Medicare’s requirement that they survey their ambulatory surgery centers (ASCs) at required intervals to assure they met safety protocols, such as infection control or anesthesia administration, and many facilities went without any state survey for at least 6 years.
That’s the finding of a recent report from the U.S. Department of Health and Human Services’ Office of Inspector General (OIG). The agency took some states to task for not following two rules during fiscal years 2013-2017 — made more imperative now that Medicare and commercial insurers reimburse ASCs for increasingly risky procedures.

The two Medicare rules at issue apply to 3,722 of the 5,603 ASCs that were not surveyed by a Medicare-approved “deeming” agency, such as The Joint Commission, and must be surveyed by their state health agency.
Red ink
The first rule is that the state health agency review at least 25% of the “non-deemed” ASCs annually. The OIG found that 15 states, including California, New Jersey, New York, Nevada, Colorado, Rhode Island, and Wisconsin — which the report highlighted in red ink — surveyed fewer than 25% of its ASCs in 2017. These states had a total of 764 ASCs in 2017. California had the most at 414.
The second rule requires states to inspect all of their non-deemed ASCs at least once every 6 years. Some 28 states failed to meet that second requirement, although 19 states surveyed more than 95%.
Again in red ink, the report singled out four states, with a total of 291 ASCs requiring inspection, showing exceptionally low rates over that 6-year review period: Nevada (48%), Hawaii (64%), North Carolina (72%), and New Jersey (85%). In those states, according to the OIG, 75 ASCs went uninspected by the state for at least 6 years.

Hawaii, Nevada, and New Jersey met neither requirement by large margins, the report said.
The OIG noted that inspections are increasingly important because ASCs are now approved for a growing number of invasive, complex surgeries. To meet Medicare rules, the facilities must pass muster on 14 conditions of participation, such as assuring that a registered nurse is available for emergency treatment for any patient in an ASC, and must track patient health outcomes with quality indicators that identify medical errors and adverse events.
State agencies “play critical roles in ensuring the health and safety of Medicare beneficiaries who receive medical procedures, including invasive surgeries, from ASCs,” and because “periodic surveys are an essential tool for ensuring that ASCs meet the minimum standards for health and safety,” the report said.
Asked for a comment, Kay Tucker of the Ambulatory Surgery Center Association, noted that the study was part of the OIG’s routine work plan. “It did note that, although more improvement is warranted, significant improvement has been made over time,” she said.
The last OIG report on this topic was published in 2002.

Tucker emphasized that while these 3,722 ASCs were not inspected by a Medicare deeming agency, some that weren’t inspected by their states at these intervals may have been by another organization, such as the Accreditation Association for Ambulatory Health Care. She estimated that one-third take that route. Those that do are expected to receive 3-year inspections from agencies other than the state.
ASCs make a decision to go with another accreditation organization because they may “want insights from different entities … or they might simply choose to avoid the additional expense involved in seeking deemed status from one of the accrediting organizations,” Tucker said. It also means they subject themselves to two inspections instead of one, since states are still required to inspect them under Medicare rules.
More and riskier procedures
Not only are ASCs growing in number – Tucker said there are now at least 200 more than in 2017 — surgical procedures that just a few years ago were only performed in an inpatient hospital setting are now moving to ASCs, where patients are discharged in 24 hours. For example, Medicare plans to allow total knee replacements and a half-dozen types of percutaneous cardiovascular interventions to be reimbursed in an ASC setting in 2020, although that policy could change with the agency’s final rule.
Tucker emphasized that this has been a fast-moving trend. In 2015, 2016, and 2017, she said, the Centers for Medicare and Medicaid Services added 38 procedures to the ASC payable list, including spine, vascular, and gynecologic procedures. She said the association wants parity for “all procedures” that Medicare has approved for reimbursement in a hospital outpatient department, so they are approved for payment in an ASC as well.

Two states that responded to questions about the report denied that they were in violation of Medicare rules. New Jersey Department of Health spokeswoman Dawn Thomas disputed the OIG’s findings as “not accurate,” and said that on average, Medicare certified ASCs are inspected every 4 years in that state.
And a spokesman for the California Department of Public Health said that a June 2018 update of the data OIG used for the current report showed that California met all of the federal thresholds, and the report is simply wrong.
Beth LaBouyer, executive director of the California Ambulatory Surgery Center Association, called the report confusing and noted it did not mention that many of California’s 414 non-deemed ASCs are inspected every 3 years by another accreditation agency whose procedures mirror those of a deeming accreditation organization like The Joint Commission.
“I know the deemed survey is significantly more expensive,” she said.
Serious problems found

The inspections are not merely a bureaucratic exercise: states that did conduct them often found problems, some of which posted significant threats to patient safety.
Just over three-fourths of the facilities inspected during 2013-2017 had at least one deficiency and 25% had serious deficiencies. The most common one were lapses in infection control, which made up about 20% of the deficiencies. “Serious deficiencies” are those grave enough to indicate what the report called “pervasive noncompliance” and posing “a serious threat to patient health and safety.”
“These findings underscore the importance of timely surveys so that deficiencies do not go unaddressed even longer,” the report said.
Other report findings:

• During 2013-2017, complaints were filed on just 4% of ASCs, but the share of those complaints that required an onsite survey, including those considered an “immediate jeopardy” — those likely to cause serious injury, harm, impairment, or death — more than tripled, from 15% to 54%.
• In general, ASCs “appear to struggle” with infection control requirements. When states did inspect their ASCs, they found more than half were deficient in infection control procedures, such as making sure surgical equipment was properly sanitized.
• Of the 732 complaints that states received about ASCs during 2013-2017, nearly half were substantiated. They included a finding that the ASC “failed to properly assess patients pre-operatively, did not have medical records for some patients, and did not follow its own procedures.”
• Of the ASCs inspected, roughly a third had deficiencies in observing pharmaceutical requirements, environmental controls, or patient rights, and some failed to meet all three.
• For those surveys done by state agencies, the mean number of deficiencies dropped from 2013 to 2017, from 6.1 to 4.2, but that may not mean the facilities were providing safer or higher quality care. “These decreases could reflect improvements in ASC performance and/or changes in how states assessed compliance,” the report said.

Assuring ASC quality is also important because of the increasing sums Medicare pays to them, from $3.4 billion in 2011 to $4.6 billion in 2017.
https://www.medpagetoday.com/publichealthpolicy/healthpolicy/82522

Sanders Suffers Chest Pain, Gets Two Stents

Sen. Bernie Sanders (I-Vt.), a candidate for the Democratic presidential nomination, underwent a cardiac stenting procedure after experiencing chest pains during a campaign event on Tuesday, media outlets are reporting.
“During a campaign event yesterday evening, Sen. Sanders experienced some chest discomfort. Following medical evaluation and testing he was found to have a blockage in one artery and two stents were successfully inserted,” said Sanders’ senior adviser Jeff Weaver on Wednesday in a statement, according to ABC News.

Sanders, 78, has canceled his campaign events and will be resting for the next several days, the campaign said, adding that it will provide updates as needed.
Shortly after announcing his presidential campaign in February, Sanders appeared on the campaign trail with a bandage on his head after being treated at a walk-in clinic for a minor injury while campaigning in South Carolina in mid-March, the story noted. Sanders cut his head in the shower, according to the Associated Press, and after receiving a half-dozen stitches, the senator was given a “clean bill of health.”
https://www.medpagetoday.com/washington-watch/electioncoverage/82523

Trump administration to modernize flu vaccines via government buying power

The U.S. government is laying plans to harness its buying power and applied research capabilities to pull influenza vaccine development and manufacturing into the 21st century. The goals are to enhance protection against seasonal flu, and in the process create infrastructure that could provide rapid, effective responses to pandemic strains.

An Executive Order (EO) on modernizing influenza vaccines signed by President Donald Trump on September 19, and a Council of Economic Advisers (CEA) report released with it, outline the public health, national security and economic imperatives to change the way flu vaccines are manufactured.

Based on existing vaccine manufacturing capabilities, a virulent influenza pandemic could affect millions of Americans and “high rates of illness, missed work, hospitalizations, and deaths” could disrupt the defense and security functions and inflict trillions of dollars in costs on the U.S. economy, the CEA concluded.

“We know of no other virus that spreads as quickly and causes as much death as a pandemic influenza virus,” Rick Bright, HHS deputy assistant secretary for preparedness and response and director of the Biomedical Advances Research and Development Authority (BARDA), told BioCentury.

Bright, the EO and the CEA report all point to the same problem: over-reliance on a 70 year-old manufacturing process that incubates flu viruses in chicken eggs and that cannot produce vaccines quickly enough to blunt a pandemic.

https://www.biocentury.com/biocentury/politics-policy-law/2019-09-27/trump-administration-wants-use-government-buying-power-

Three new IPO filings broaden fall queue

A trio of biotechs filed for NASDAQ listings late Monday, with Phathom, 4D Molecular Therapeutics and Cabaletta each proposing to raise up to $100 million. A fourth, Vir, set terms for an IPO that could price as soon as this week.

The filings fatten a queue that is growing again following a late-summer lull. “We’re seeing more IPOs,” WBB Securities’ Steve Brozak told BioCentury. “People are now rushing to get money” (see “Fall IPO Flurry”).

Frazier Healthcare Ventures and Takeda Pharmaceutical Co. Ltd. (Tokyo:4502) launched Phathom Pharmaceuticals Inc. in May to seek regional approval of gastrointestinal drug vonoprazan, to which it holds a license from Takeda in the U.S., EU and Canada. The company intends to start Phase III trials this quarter of the small molecule potassium-competitive acid blocker to treat erosive esophagitis and Helicobacter pylori infection. The drug is approved in nine countries, and generated more than $500 million in 2018 net sales in Japan (see “Phathom Launches With $90M”).

Phathom’s chairman is former Takeda CMO and CSO Tachi Yamada. Its CEO, David Socks, is a venture partner at Frazier; he intends to relinquish the CEO position to Phathom director Terrie Curran once Bristol-Myers Squibb Co. (NYSE:BMY) closes its acquisition of Celgene Corp. (NASDAQ:CELG), where she is president of the global immunology and inflammation franchise. Socks will then become Phathom’s interim CFO.

Frazier holds 41.1% of Phathom’s equity, while Socks and Yamada hold 14.2% each and Takeda 9.1%. Underwriters on the deal are Goldman Sachs, Jefferies, Evercore and Needham.

4D Molecular Therapeutics Inc. (4DMT) is developing a pipeline of gene therapies based on next-generation adeno-associated viral (AAV) vectors, including three scheduled to enter the clinic next year. Of those, Roche (SIX:ROG; OTCQX:RHHBY) holds rights to a treatment for choroideremia and has an option to another to treat X-linked retinitis pigmentosa; 4DMT’s program for cystic fibrosis is unpartnered.

4DMT has raised $108.6 million to date, including a $90 million series B round led by Viking Global Investors in September 2018. Viking is its largest outside shareholder with 16%, the same size as the stakes of Chairman and CEO David Kim and co-founding Chief Scientific Adviser David Schaffer, while Pfizer Inc. (NYSE:PFE) holds 11.8%. Underwriters are Goldman Sachs, Evercore, William Blair and Chardan (see “4D Raises $90M”).

Cabaletta Bio Inc.’s pipeline consists of chimeric autoantibody receptor (CAAR)-mediated cell therapies, which are autologous T cells that express an autoantigen to treat B cell-mediated autoimmune diseases. The company intends to begin its first clinical study next year of DSG3-CAART to treat pemphigus vulgaris (see “CAAR Ts For Autoimmunity”).

The company’s top three shareholders are 5AM Ventures, Adage Capital Management and Baker Bros. Advisors, each with about 19%. Cabaletta has raised $86.4 million to date, including $50 million in a series B round announced in early January. Morgan Stanley, Cowen and Evercore are underwriters.

Cabaletta’s President and CEO, Steven Nichtberger, teaches a class in biotech company formation at the Wharton School at the University of Pennsylvania. He established the company with scientific co-founders Aimee Payne and Michael Milone, who are both Penn professors.

Vir Biotechnology Inc. proposed to sell 7.1 million shares at $20-$22. At the $21 midpoint, a sale of that many shares would raise $150 million at a postmoney valuation of $2.3 billion. Underwriters are Goldman Sachs, J.P. Morgan, Cowen and Barclays

Three-year-old Vir, which is led by led by former Biogen Inc. and Exelixis Inc. CEO George Scangos, is taking an immunological approach to combating infectious diseases such as HBV, influenza, HIV and tuberculosis (see “Vir Plots IPO”).

https://www.biocentury.com/bc-extra/financial-news/2019-10-01/three-new-ipo-filings-broaden-fall-queue