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Articles Posted in Health Law News

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For health care providers concerned about the effect the Covenant Medical Center v. State Farm ruling would have on their right to receive insurance payments for undisputed services, the University of Michigan Regents v. Victor P. Valentino, J.D. decision is a victory. The Michigan Supreme Court upheld the right of no-fault insurers to directly pay medical providers, reversing the earlier Michigan Court of Appeals decision.

The Court of Appeals ruling had awarded Victor P. Valentino, a personal-injury attorney, a portion of more than $98,000 from his client’s no-fault auto insurance settlement that was designated for medical treatment. The client, Larry Reed, later filed for bankruptcy and was subsequently unable to pay the University of Michigan’s University Hospital’s health care bills.

Reed had agreed upon a 1/3 contingency fee “of the net recovery…received through suit, settlement, or in any other manner” in Valentino’s retainer agreement. Therefore, when Reed’s insurance company began sending two-party checks listing both the hospital and Reed as payees, Valentino would take his portion of the check. Only after the hospital filed a five-count complaint alleging conversion, tortious interference with a contract, claim and delivery, declaratory relief, and injunctive relief, did Valentino forward the remainder of the insurance proceeds to the University Hospital in order to cover Reed’s medical bills.

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In her Federation of American Hospitals’ 2019 Public Policy Conference speech, CMS Administrator Seema Verma indicated the Stark Law would be receiving a major overhaul sometime in 2019. This update, according to Verma, will “represent the most significant changes to the Stark Law since its [1989] inception.”

One of the primary goals of this update is to ensure the policy maintains relevance in the modern health care world with the relatively recent implementation of electronic health records and cybersecurity. This includes the clarification of certain areas of noncompliance as well as reflection of the shift from a fee-for-service model to a value-based care model.

These regulatory modifications come in response to CMS’ public Request for Information (RFI) in June 2018 concerning adjustments that may be necessary in order to lessen any undue impact or burden brought about by the Stark Law. Specifically, CMS solicited responses regarding “the structure of arrangements between parties that participate in alternative payment models or other novel financial arrangements, the need for revisions or additions to exceptions to the physician self-referral law, and terminology related to alternative payment models and the physician self-referral law.”

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Maintaining compliance with all HIPAA Rules has never been more important for a health care business’s success than it is now. Last year, the Office for Civil Rights (OCR) at the U.S. Department of Health and Human Services (HHS) concluded an all-time record in Health Insurance Portability and Accountability Act (HIPAA) enforcement activity. In 2018, ten cases were settled by OCR, with an additional case that was granted summary judgement before an Administrative Law Judge (ALJ). The total of these eleven cases exceeded $28.6 million, surpassing the 2016 record of $23.5 million.

HHS’s February 7, 2019 press release regarding the settlements can be found here.

January 2018

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Tomorrow, March 1, 2019, is the deadline for reporting small data breaches (<500) that occurred in calendar year 2018 to the Department of Health and Human Services’ Office for Civil Rights (OCR).

Any HIPAA-covered entities and their business associates are required by the HIPAA Breach Notification Rule to, at least once yearly, report data breaches of fewer than 500 individuals to OCR on or before 60 days after the end of the prior calendar year (March 1). Breaches of over 500 individuals must be reported to the OCR at the same time as patients and the media are notified.

Breaches can be reported online here. Contact your attorneys at The Health Law Partners for assistance reporting, or evaluating if you need to report.

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California has joined a number of other states, including Vermont and Washington, in requiring pharmacy benefit managers (PBMs) to register with a state department. Assembly Bill 315 (AB 315), Pharmacy Benefit Management was signed by California Governor Jerry Brown on September 29, 2018 and became effective January 1, 2019. The bill includes several new requirements detailed below. A complete list of legislation affecting PBMs across the country can be found here.

Pharmacy benefit managers ostensibly exist as middlemen seeking to reduce prescription drug prices and to negotiate contracts on behalf of their clients. PBMs are now responsible, among other things, for administering the various pharmacy benefits for health plans, conducting drug utilization reviews, and negotiating rebates and reimbursement amounts. Although professionals in PBM positions, as the California Assembly analysis writes (available as PDF download here), “have one of the most prominent roles in determining coverage and payment for drug products, despite never taking physical possession of the drug”, they have largely “escaped scrutiny of regulation and licensure.” With the large purchasing power they wield, their arguably conflicting interests, and the increasingly aggressive stance of PBMs when dealing with those they interact with, it is important that the business dealings of PBMs are transparent and that the managers are held accountable.

This new bill now requires PBMs to register with the California Department of Managed Health Care (DMHC) and to “exercise good faith and fair dealing” by requiring PBMs to provide quarterly disclosures to the purchasers of their services, including revealing both direct and indirect conflicts of interest. Additional disclosures containing certain information can be requested by the purchaser at any time. These disclosures can include information such as rates negotiated with pharmacies, drug acquisition cost, and rebates received from pharmaceutical manufacturers.

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In response to the current opioid crisis sweeping across the country, Congress passed the Substance Use-Disorder Prevention that Promotes Opioid Recovery and Treatment for Patients and Communities Act (commonly referred to as the SUPPORT Act). President Trump signed the Act on October 24, 2018, which will take full effect on January 1, 2022.

The Act included over 120 provisions. One of these provisions, Section 6111 (“Fighting the Opioid Epidemic with Sunshine”), expands the reporting obligations that are required as part of the Physician Payments Sunshine Act. The Sunshine Act, which the Center for Medicare and Medicaid Services (CMS) refers to as the Open Payments Program, was passed in 2010 as part of the Patient Protection and Affordable Care Act. This made it mandatory for pharmaceutical and medical device manufacturers to disclose to CMS any payments or other transfers of value, such as consulting fees or research grants, made to physicians or teaching hospitals. This payment information is then made publicly available in a searchable online database.

The SUPPORT Act extends the Sunshine Act to now include additional health professional affiliates – physician assistants, nurse practitioners, clinical nurse specialists, certified nurse-midwives, and certified registered nurse anesthetists. In addition, CMS is now authorized to post National Provider Identifier numbers (NPIs) on the public database, something that was previously barred by the Sunshine Act.

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This is a summary of the article Courts Recognize Irreparable Injury Caused by Medicare Appeals Backlog written by Jessica L. Gustafson, Esq. and Abby Pendleton, Esq., published in the January/February 2019 issue of BC Advantage.

Presently, there are 426,594 appeals pending and awaiting OMHA adjudication. Despite a statutory mandate to “conduct and conclude a hearing…and render a decision on such hearing by not later than the end of the 90-day period beginning on the date a request for hearing has been timely filed,” the average processing time for OMHA appeals is presently 1,142 days (over 3 years). Unfortunately for appellants, there are significant financial repercussions resulting from adjudicators’ failures to adhere to their statutory mandates for timely appeals adjudication. Delays in appeals processing not only violate the Social Security Act, but also create financial hardship for appellants.

Specifically, Medicare contractors are allowed to begin recouping an alleged overpayment after a reconsideration decision is issued. Following issuance of a partially favorable or unfavorable reconsideration decision, CMS will begin recoupment activities while an appellant awaits an Administrative Law Judge (ALJ) hearing and decision.

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As of January 29, 2019, a total of 38 hospitals have joined a lawsuit against the Department of Health and Human Services (HHS) over the new site-neutral payment policy that went into effect beginning January 1, 2019. The final rule that modified the Outpatient Prospective Payment System (OPPS) will result in a reduction of $380 million in Medicare reimbursements for hospital outpatient clinic visits. Half of the total reduction will apply next year, following a two-year phase-in period.

The American Hospital Association (AHA) and the Association of American Medical Colleges (AAMC) led the December 4, 2018 lawsuit, which has now grown to include 36 other hospitals or associations that are in opposition to the rule. The 2019 OPPS modifications will make payments for clinic visits site-neutral by reducing the payment rate for hospital outpatient clinic visits provided at off-campus provider-based departments (PBDs) by 60%. Previously, Section 603 of the Bipartisan Budget Act of 2015 ensured off-campus PBDs that began operations on or after November 2, 2015 were exempt from site-neutral payments. Now, however, the HHS has fundamentally overwritten Section 603, subjecting the PBDs that were originally protected to the lower OPPS rate.

Rick Pollack, president and CEO of the AHA said in a December press release, “These cuts directly undercut the clear intent of Congress to protect hospital outpatient departments because of the real and crucial differences between them and other sites of care…It is alarming that CMS continues to propose cuts that will harm the teaching hospitals that provide care to the most vulnerable patients, including Medicare beneficiaries.”

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The Center for Medicare and Medicaid Services (CMS) has published a 957-page final rule that confirms changes made to the Medicare Shared Savings Program (MSSP). This new rule will be expected to have a substantial impact on Accountable Care Organizations (ACOs) that rely on one-sided risk models, in so far as ACOs in the program will be forced to assume a larger amount of financial risk than under the current landscape. CMS’s new program, “Pathways to Success”, will afford smaller, physician-led ACOs a period of three years to remain in a one-sided risk model. All new ACOs will have two years, while existing ACOs with one-sided risk models will only have solely a year to adopt the new program and assume the additional financial risk.

CMS has also reduced the shared savings rate to 40% for ACOs that do not assume risk for health care costs, but the 50% rate for ACOs at all other levels of financial risk remains unchanged. With this new rule, announced December 21, 2018, CMS projects $2.9 billion in savings over the next ten years as ACOs take on more risk.

In CMS’s current program, which has been in effect for six years, ACOs were eligible to receive a portion of any savings that were generated, provided that they met quality standards for the care they provided to their patients. Currently, only a limited number of ACOs are subject to any sort of financial penalties in cases in which costs increase. However, from the experience running MSSP, CMS has been able to determine that ACOs that are required to take responsibility for costs tend to perform better than those that do not. This new rule provides incentives for ACOs to provide high-quality care in order to generate additional savings for themselves.

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The Patient Test Result Information Act – commonly referred to as Act 112 – now requires Pennsylvania imaging entities to directly communicate with patients if the entity finds “significant abnormalities” in the patient’s test results, as well as to continue to follow normal reporting procedure to inform the ordering physician. The catalyst for this legislation, signed by PA Governor Tom Wolf on October 24, 2018, was the perceived risk that the increased workload of health care providers increases the prospects that test results may be overlooked or misread. PA State Representative Marguerite Quinn, who introduced the bill, expressed worry over “two situations in which abnormal test results were not communicated to the patient, resulting in the unnecessary death of both people” in a February 20, 2015 memo. These circumstances caused her to press for better communication between imaging centers and any person who receives outpatient diagnostic imaging services.

A “significant abnormality” is defined by the Pennsylvania Medical Society (PAMED) as “a finding by a diagnostic imaging service of an abnormality which would cause a reasonably prudent person to seek additional or follow-up medical care within three months.”

Act 112 became effective on December 23, 2018 and will require imaging entities who provide outpatient services to notify their patients within 20 days of the date their results were sent to the ordering physician. The notification does not need to include a copy of the test results, but does need to include certain information, described below:

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