This digest covers key virtual and digital health regulatory and public policy developments during December 2024 and early January 2025 from the United States, United Kingdom, and European Union.
In this issue, you will find the following:
U.S. News
- Health Care Fraud and Abuse Updates
- Corporate Transactions Updates
- Privacy and AI Updates
- Policy Updates
U.S. Featured Content
The U.S. Department of Health and Human Services recently proposed significant modifications to the security regulations implementing the Health Insurance Portability and Accountability Act (the HIPAA Security Rule). The proposed modifications would impose numerous new requirements on HIPAA-regulated entities to enhance their protection of the confidentiality, integrity, and availability of electronic "protected health information" (ePHI). These requirements will impact the flow of ePHI by hospitals, clinics, health insurers, and entities acting as "business associates" of those "covered entities," affecting digital health at numerous levels. Comments on the proposed rule are due no later than March 7, 2025.
EU and UK News
EU/UK Featured Content
The emerging trends in digital health in 2024 have been highlighted in IQVIA's recent report. The IQIVA report is a yearly summary of digital health trends and gives a good snapshot of the market. The latest report notes that Germany continues to lead in its approval and reimbursement of digital therapeutics, followed by the United States and UK. There are also interesting differences in countries' preferences for standalone therapies versus blended therapies and care solutions. The report also notes increases in sensor-based digital measures and digital endpoints in clinical trials.
U.S. News
Health Care Fraud and Abuse Updates
Telehealth Company Agrees To Pay $386,000 To
Resolve Medicare Overbill Allegations. On January 3,
2025, the United States Attorney's Office for the Western
District of Kentucky announced that CompreCare Health LLC, and its
affiliates, doing business as Meditelecare LLC, agreed to pay
$358,514 to resolve overbilling allegations. The U.S. Department of
Justice (DOJ) alleged that between January 2017 and November 2022,
Meditelecare submitted and caused submission of claims to Medicare
of telehealth services which failed to meet minimum time
requirements for payments. The DOJ also alleged that Meditelecare
relied on false time reports in support of these claims for
telehealth services. The settlement agreement arises from a federal
whistleblower suit filed in Bowling Green, Kentucky.
Montana Doctor Sentenced to Six Months in Prison
for Medicare Telemedicine Conspiracy. On December 13,
2024, Ronald David Dean, a Montana physician, was sentenced to six
months in prison followed by six months of home confinement after
admitting to defrauding Medicare and other federal government
health programs through a telemedicine conspiracy. The DOJ alleged
that between January 2022 and July 2022, Dean was paid by a
telemedicine company to sign orders for durable medical equipment,
including braces and COVID-19 tests, that patients did not need.
The defendant then charged Medicare, CHAMPVA, and the Railroad
Retirement Board programs for telemedicine visits that did not
occur. Dean's scheme resulted in $31,432,000 of fraudulent
claims being billed to Medicare, CHAMPVA, and the Railroad
Retirement Board programs, of which $13,785,724 was paid.
These charges are a part of the DOJ's 2024 National Health Care
Fraud Enforcement Action, as described in further detail in our July 2024 digest.
Corporate Transactions Updates
New Year, New Mergers Funded by Digital Health Venture
Capital Power Players. On January 8, 2025, Denver-based
digital health company Transcarent announced it would acquire on-demand health benefits platform
Accolade (NASDAQ:ACCD) for approximately $621 million, or $7.03
per share, in a take-private deal backed by General Catalyst and 62
Ventures, a fund created by Transcarent's CEO. The combination
of Transcarent, a digital health company known for its use of
generative artificial intelligence (AI) to streamline health care
benefits and physician guidance, and Accolade, a digital health
platform that focuses on connecting employees to health benefits
and affordable health care providers, promises to enhance
Transcarent's mission to provide a single platform for patients
to access benefits navigation, clinical guidance, and care
delivery. After the acquisition, the new combined company and
platform will boast over 18 million members. The purchase price
represents a value of more than twice Accolade's market value
on the day prior to the announcement and is expected to close in
the second quarter of 2025.
Also on January 8, 2025, New York-based health care analytics
company H1 closed its acquisition of Ribbon Health, a
startup backed by General Catalyst that helps patients find doctors
who participate in their insurance. Ribbon Health's platform
will "join the H1 family of products as H1 for Health Plans
& Digital Health," which provides insurers, providers, and
digital health companies including Transcarent, a customer of
Ribbon Health, with provider data. While the deal's specific
financial terms have not been disclosed, the transaction involved a
mix of cash and stock options.
Privacy and AI Updates
The U.S. Department of Health and Human Services (HHS) has
proposed major updates to the HIPAA Security Rule to strengthen
protections for electronic protected health information. These
changes aim to address growing vulnerabilities in digital health
systems, including hacking and ransomware, by closing gaps in
existing data protection measures. The proposed rule impacts
hospitals, clinics, health insurers, as well as service providers
("business associates") of those "covered
entities" handling ePHI. Public comments on the proposed rule
are due by March 7, 2025.
Key proposed changes include requiring HIPAA-regulated entities
to:
- Maintain a technology asset inventory and a network map, updated annually or sooner to address operational changes affecting ePHI.
- Encrypt and decrypt ePHI using prevailing cryptographic standards.
- Establish contingency plans to restore critical electronic systems and data within 72 hours of loss.
- Implement anti-malware protection and removing extraneous software.
- Use multi-factor authentication for access to ePHI, with limited exceptions.
- Conduct vulnerability scans every six months and penetration testing annually.
HHS is also seeking input on how emerging technologies such as
quantum computing, AI, and virtual/augmented reality impact the
security and integrity of ePHI. The department has requested
feedback on, for example, whether the proposed rule adequately
addresses these technologies, what modifications may be needed, and
what additional tools could protect ePHI in future technological
landscapes.
The proposed updates reflect the evolving cybersecurity landscape
and aim to enhance measures to protect ePHI from unauthorized
access, exfiltration, destruction, manipulation, or other tampering
in light of new technologies. Comments can be submitted
electronically via regulations.gov by the March 7, 2025
deadline.
Policy Updates
Trump Administration Promises Shift in AI Policies and
Regulations. President Trump has pledged to rescind President Biden's October 2023 executive order on AI, signaling
significant changes to AI policy under the new administration and
Republican-controlled Congress. In November 2024, House Energy
& Commerce Chair Brett Guthrie (R-KY) and other Republicans urged HHS to reduce federal AI regulation. On
December 30, 2024, the Congressional Research Service published a
report on AI in health care, addressing key
topics like AI's role in prior authorization, patient privacy,
and regulatory requirements for AI-developed products.
Congress Averts Federal Shutdown, Passes Funding Bill and
Telehealth Flexibilities. In December 2024, bipartisan
negotiations led by House Speaker Mike Johnson (R-LA) failed to
pass a Continuing Resolution (CR) that included health care
provisions like Medicare telehealth flexibilities and pharmacy
benefit manager reforms. A revised CR with a two-year debt limit
increase also failed in a House vote. However, on December 20,
2024, Congress passed the American Relief Act, a CR funding the
government through March 14, 2025, and extending telehealth
flexibilities until March 31, 2025. The bill was signed into law by
President Biden, averting a government shutdown.
HHS Releases Regulatory AI Framework. On January
10, 2025, HHS released the AI Strategic Plan, outlining priorities for
responsible AI use in health care, public health, and medical
research. The plan emphasizes collaboration with federal agencies,
industry, and academia while addressing workforce and privacy
challenges. Key domains include medical research, product
development, and health care delivery.
HHS Hires New Chief AI Officer. HHS appointed Dr. Meghan Dierks as Chief AI
Officer on January 13, 2025. Previously with the FDA and Komodo
Health, Dr. Dierks will lead efforts to align AI initiatives across
federal agencies and advance AI-driven innovations in health
care.
EU and UK News
Regulatory Updates
MHRA Publishes a Revised MedTech
Roadmap. The roadmap highlights policy areas that the
Medicines and Healthcare products Regulatory Agency (MHRA) would
like to develop, including in relation to Software as a Medical
Device and AI. In relation to new regulations for post-market
surveillance, the roadmap states that this is targeted to come into
force around July 2025, with guidance being published in
June.
The roadmap also sets out that the focus for the new regulations on
pre-market requirements in the first quarter of 2025 will be on
publishing responses to assimilated EU law, laying down the
Statutory Instrument and bringing this into law, as well as
publishing responses to the consultations. The Parliamentary
debates are expected to occur at the end of the year, with the new
regulation entering into force early 2026.
Further, in the first half of 2025, the MHRA aims to publish
separate guidance regarding Good Machine Learning Practice, AI
development and deployment, Software as a Medical Device for
Cybersecurity, and digital mental health technologies.
UK National Health Service Using AI to Assist in
Ensuring Patients Receive Help at an Earlier Stage.
This program aims at identifying individuals who are frequent users
of emergency services to assess why they are presenting for care so
frequently and to help resolve the situation by offering immediate
preventative care. The AI-powered prediction software uses
routinely collected hospital data to identify patients who require
immediate preventative support to avoid future, unplanned visits to
the hospital.
Reimbursement Updates
IQVIA Publishes Report Outlining the
Digital Health Trends of 2024. The report examines key
trends in digital health, including in relation to digital
therapeutics (DTx). It found that DTx are offered as standalone
products in some countries, whereas in others there is a preference
for digital care solutions. Germany is leading globally in the
approval and reimbursement of prescription DTx as standalone
products. In the UK, digital care solutions seem to be preferred as
a blended therapy, several of which have been endorsed by the
National Institute for Health and Care Excellence (NICE). DTx have,
for example, been applied in relation to weight management programs
alongside obesity medication, and digital care programs have been
used to reduce waiting lists for traditional care for obesity by
distributing patients to various levels of care.
In relation to digital tools for disease assessment, risk screening
tools are expected to have the greatest impact in enabling a faster
diagnosis as they have potential to reach large numbers of
patients. NICE has recommended AI-based tools for detecting skin
cancers in primary care to assess whether referral to a specialist
is appropriate. NICE found that AI has a proven track record of
improving accuracy in detecting melanoma compared to the standard
of care. At the same time, it recognizes that more real-world
practical testing and further data in relation to minority groups
is needed. Remote monitoring tools have grown significantly, and
have proven valuable for health providers to remotely track chronic
and high risk condition patients, and personalize their care. This
increase has led to developing accelerated reimbursement pathways
for remote monitoring tools in Germany and France.
The report also examines trends in consumer health apps,
sensor-based digital measures, digital diagnostics and health
assessment tools, and uptake of digital health technologies.
Privacy and Cybersecurity Updates
UK's Information Commissioner's Office
(ICO) Publishes Report Based on Responses to Its Consultations on
Generative AI. The report primarily focuses on the
ICO's policy positions in relation to the legal basis for data
scraping on the web in order to train generative AI models and the
integration of data subjects' rights into generative AI models.
The ICO revised its position regarding legitimate interest as a
legal basis for web scraping when training generative AI,
emphasizing the need for transparency by AI developers. Any Terms
of Use with deployers of AI will need to contain effective data
protection measures and must demonstrate that these measures are
met. Further, the ICO updated its stance on how individual's
rights are integrated into generative AI, including that
organizations relying on Article 11 of UK's General Data
Protection Regulation regarding processing that does not require
identification, will need to justify that this is appropriate, and
demonstrate that people cannot in fact be identified. People must
also be given the chance to provide further information in order to
enable identification.
Seven Sites Have Been Selected To Host the First
European AI Factories. The selection of the sites was
made by the European High Performance Computing Joint Undertaking,
a joint initiative between the EU, EU countries, and private
partners. Set to be deployed during 2025, the AI factories are
expected to drive innovation by fostering new industrial
applications of AI in sectors such as health care. They will also
provide industry access to AI-optimized high-performance computing
resources, experimental platforms, and other advanced AI tools.
IP Updates
Unified Patent Court Revokes Third Dexcom Patent in
Ongoing Continuous Glucose Monitoring Dispute. On December
11, 2024, the Paris Local Division of the Unified Patent Court
(UPC) dismissed Dexcom Inc.'s infringement claim against
Abbott, revoking Dexcom's patent EP3831282, titled "Remote
Monitoring of Analyte Measurements." The court found the
patent obvious and rejected auxiliary amendment requests for added
matter. Adopting a "whole-content approach," the court
assessed whether a skilled person would find new technical
information beyond what was directly and unambiguously derivable
from the original application. It concluded that amended claim 1
extended beyond the earlier application. This marks the third
Dexcom patent revoked in the global continuous glucose monitoring
dispute with Abbott, showcasing the UPC's growing influence on
medical device patent litigation strategies. This dispute, which we
reported on in our July 2024 and September 2024 digests, highlights the
emerging role of the UPC in reshaping global patent litigation
strategy for medical device patents.
UK Government Launches Consultation on Copyright and
AI. The UK government has launched a consultation for views on how to
deliver a copyright and AI framework solution that balances AI
developer's access to copyright content with rights
holders' protections. Proposals will be evaluated on their
ability to: (1) give rights holders control, (2) enable lawful AI
development, and (3) improve trust and transparency between AI
sector and rightsholders. This consultation is significant for
industries using AI in health care, including diagnostics, patient
management, and drug discovery. The consultation will run until
February 25, 2025.
European Patent Office (EPO) Publishes Patent Insight
Report on Assistive Robotics. On December 3, 2024, the
International Day of Persons with Disabilities, EPO published a report analyzing trends in
assistive robotics patents for individuals with special needs.
Based on over 25,000 inventions filed in over 80 countries, the
report highlights a 20-fold growth in patent filings since 2000,
far outpacing other technical fields.
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