Health Care Law Blog

The Centers for Medicare & Medicaid Services (CMS) have recently released updated guidance regarding hospital co-locations arrangements. After nearly two years of deliberations and revisions, the final Guidance for Hospital Co-location with Other Hospitals or Health Care Facilities (the “Final Guidance”) was released on November 12, 2021 and took effect immediately upon publication. The Final Guidance is meant to address how CMS and other state agency surveyors will evaluate how hospitals share their space, services, and staff.

This article has been updated with new information since it was originally published on November 16, 2020.

As health care providers continue to face new challenges relating to the COVID-19 pandemic, it is important for providers to maintain compliance with the Health Insurance Portability and Accountability Act of 1996 (“HIPAA”). Although the Department of Health and Human Services Office for Civil Rights (“OCR”) has loosened some requirements to allow health care providers flexibility during the COVID-19 pandemic, a majority of the patient protections under the HIPAA Privacy Rule have remained intact.

The U.S. Department of Health and Human Services (“HHS”) recently issued two highly-anticipated final rules (collectively, the “Final Rule”) to modernize and clarify the regulations that interpret the Physician Self-Referral Statute (“Stark”) and the Anti-Kickback Statute (“AKS”). According to HHS, the Final Rule was intended to provide greater flexibility for healthcare providers to participate in value-based arrangements, ease unnecessary compliance burdens, and maintain safeguards to protect patients and Federal healthcare programs from fraud and abuse. The Final Rule will become effective on January 19, 2021.

On October 6, 2020, the Michigan Department of Health and Human Services ("MDHHS") issued an emergency order (the "MDHHS Order") that retains many of the same requirements that apply to residential care facilities under the previously issued executive orders. As noted in a prior blog post, the Michigan Supreme Court recently held that Governor Whitmer did not have authority after April 30, 2020 to issue or renew any executive orders related to the COVID-19 pandemic. Most of the same requirements will continue to apply to residential care facilities under the MDHHS Order. The MDHHS Order became effective immediately, and will remain in effect through October 30, 2020 (and may be renewed through a subsequent order).

Last year, the Centers for Medicare and Medicaid Services (“CMS”) issued long-anticipated draft guidance concerning shared space and co-location arrangements between hospitals and other providers. The guidance is meant to clarify how CMS and state agency surveyors will evaluate a hospital’s space sharing or contracted staff arrangements when assessing the hospital’s compliance with the Medicare Conditions of Participation (CoPs).

Recently, the Department of Licensing and Regulatory Affairs finalized changes to the licensing rules for Family and Group Child Care Homes and the licensing rules for Child Care Centers. The purpose of these changes is to maintain compliance with the recent amendments to the Child Care Organization Act and the new requirements of the federal Child Care and Development Block Grant.

On May 28, 2019, the Centers for Medicare & Medicaid Services ("CMS") finalized a rule (the "Final Rule") to update and modernize requirements for the Programs of All-Inclusive Care for the Elderly ("PACE").

On June 21, 2018, the U.S. Department of Labor (“DOL”) issued final regulations that expanded the availability of association health plans ("AHPs"). Those regulations (the "AHP Rules") were summarized in our previous blog article. An AHP is an arrangement that allows small businesses to band together to obtain healthcare coverage as if they were a single large employer.

The Centers for Medicare & Medicaid Services ("CMS") recently lifted its temporary moratorium on the Medicare enrollment of new home health agencies ("HHAs"), subunits, and branch locations in Michigan, Florida, Illinois and Texas. As of January 31, 2019, there are no active Medicare provider enrollment moratoria in any state.

The Michigan Health Insurance Claims Assessment (“HICA”) tax has been repealed, effective as of October 1, 2018. On June 11, 2018, Governor Snyder signed a series of bills repealing the HICA tax.

The U.S. Department of Labor (DOL) recently issued final regulations that expanded the availability of association health plans ("AHPs").

Effective November 28, 2016, the Centers for Medicare and Medicaid Services published a final rule which revised the Medicare Conditions of Participation for Long-Term Care Facilities. There are three different phases of implementation.

Earlier this year, the Michigan Department of Licensing and Regulatory Affairs (LARA) issued proposed administrative rules relating to the licensing of health care facilities. Currently, there are separate sets of rules that apply to each type of health facility, such as hospitals, hospices, and nursing homes.

Earlier this year, the Substance Abuse and Mental Health Services Administration (SAMHSA), a branch of the U.S. Department of Health and Human Services (HHS), finalized updates to the Confidentiality of Substance Use Disorder Patient Records regulation at 42 CFR Part 2 ("Part 2").

Health care systems are eager to adapt to newer technology and widespread network options, all in the name of giving patients the best possible care. However, this comes with a price: more outlets for hackers to breach valuable data. 

The IRS recently began enforcing the employer mandate provision of the Affordable Care Act (“ACA”) by assessing penalties on noncompliant employers for the 2015 calendar year.

Programs of All-Inclusive Care for the Elderly (PACE) organizations provide certain medical and social services to eligible individuals who meet the Long Term Care level of care criteria.

Chemed Corporation and various of its subsidiaries, including Vitas Hospice Services LLC and Vitas Healthcare Corporation (collectively “Vitas”), recently settled allegations brought by the federal government that Vitas violated the False Claims Act by submitting to Medicare false claims for hospice services.

Earlier this year, the Internal Revenue Service (IRS) revoked the tax exempt status of an unidentified hospital for failing to comply with the Affordable Care Act (ACA).

An interesting case is winding its way through the Michigan Court of Appeals that involves the question of whether a layperson, as opposed to a licensed physician, can own a for-profit business that provides medical services.

The U.S. Department of Health & Human Services ("HHS") Office of Inspector General ("OIG") recently issued a preliminary report regarding quality-of-care concerns at skilled nursing facilities ("SNFs"). The report was issued in connection with the OIG's ongoing review of potential abuse and neglect of Medicare beneficiaries in SNFs.

In order to encourage health providers to use electronic medical records (“EHRs”) in lieu of paper records, Congress passed the Medicare and Medicaid Health Information Technology for Economic and Clinical Health Act (“HITECH Act”) in 2009.

The Centers for Medicare & Medicaid Services ("CMS") recently extended the temporary moratorium on the Medicare enrollment of new home health agencies ("HHAs"), subunits, and branch locations in Michigan.

The Centers for Medicare & Medicaid Services ("CMS") recently announced that they will delay enforcement penalties related to Phase 2 of their revised nursing home Requirements for Participation (commonly referred to in the industry as the "Mega Rule").

Governor Snyder recently signed into law Public Act 22 (Senate Bill 213), which revises the 2016 telehealth bill to clarify that health professionals in Michigan may prescribe controlled substances without an in-person examination. Michigan now joins a growing number of states that allow health professionals to prescribe controlled substances via telemedicine.

On April 14, 2017, the Centers for Medicare & Medicaid Services issued its 2018 Medicare Inpatient Prospective Payment System proposed rule (the “Proposed Rule”). The Proposed Rule was published in the Federal Register on April 28, 2017, and comments will be accepted through June 13, 2017.

The Proposed Rule suggests a number of changes that would affect hospital rates, inpatient quality reporting and readmissions reduction programs. Some of the most significant changes are highlighted below.

On January 9, 2017, the Centers for Medicare & Medicaid Services (“CMS”) issued final rules that establish minimum standards for home health agencies (the “Rules”). According to CMS, the Rules are intended to improve the quality of health care services for Medicare and Medicaid patients and strengthen patients’ rights.

The Rules, which were published in the Federal Register on January 13, 2017, come more than two years after a draft proposal was introduced in October 2014. The Rules are mostly adopted as proposed, with a few clarifying changes. The Rules will become effective on July 13, 2017. This means agencies have less than six months to make changes necessary to comply with the revisions.

Hospice care is intended to help terminally ill beneficiaries continue living with minimal disruptions and to provide support for a beneficiary’s family and caregivers. In a recent report, the Department of Health and Human Services Office of Inspector General (OIG) found that hospices are not always meeting two key coverage requirements for the Medicare hospice benefit: (1) that beneficiaries sign an election statement and (2) that a physician certifies that the beneficiary is terminally ill. The purpose of these requirements is, among other things, to properly inform beneficiaries of the implications of hospice care and to prevent Medicare fraud.

Recently, the Centers for Medicare & Medicaid Services (“CMS”) issued a final rule (“Final Rule”) updating the Medicare Conditions of Participation (“CoPs”) for long-term care (“LTC”) facilities. It is the first time in over 15 years that substantial LTC CoP revisions have been released.

LTC facilities affected by the Final Rule include skilled nursing facilities for Medicare and nursing facilities for Medicaid, or those facilities that are duly certified. The Final Rule took effect on November 28, 2016, however CMS has planned for a phased implementation. LTC providers must complete the three implementation phases by November 28 in the years 2016, 2017 and 2018, respectively. CMS has estimated that the costs of compliance will be $62,900 in the first phase of implementation, and $55,000 per year for phases two and three.

Healthcare executives and physicians take note: The Department of Justice is now cracking down on individuals, and not just companies, for False Claims Act, Stark law, and anti-kickback statute violations.

The Final Rule on Reporting and Returning of Overpayments (“Final Rule”), which became effective on March 14, 2016, requires Medicare providers to report and return Medicare overpayments by the later of (i) 60 days after the date on which the overpayment was identified, or (ii) the date on which any corresponding cost report was due. This 60-day deadline for returning overpayments is suspended when any of the following occurs:

The march to transform Medicare from a quantity-based to a value-based system continues unabated - and the pace is quickening. Over the past several months, the Centers for Medicare & Medicaid Services (“CMS”) issued several final rules to update certain Medicare reimbursement rates and quality reporting requirements that impact vast numbers of healthcare providers.

A recent Memorandum issued by the Centers for Medicare & Medicaid Services ("CMS") to state survey agency directors (the "Memorandum") discusses a nursing home's responsibility to protect residents' privacy, particularly with regard to social media. The Memorandum was issued following a series of media reports documenting the inappropriate posting of residents' photographs on social media by nursing home staff. 

Advocate Health Care Network (Advocate), one of the nation’s largest health care systems, recently reached a $5.55 million settlement with the Department of Health and Human Services (HHS) Office for Civil Rights (OCR) for potential violations of the Health Insurance Portability and Accountability Act (HIPAA). The $5.55 million settlement is the largest HIPAA settlement in history against a single entity.

OCR's investigation arose after Advocate reported three separate data breaches to OCR that occurred between July and November of 2013. The first breach occurred when four desktop computers were stolen from an Advocate administrative building. Another breach occurred when an unencrypted laptop was stolen from an Advocate employee's unlocked vehicle. A third breach occurred when an unauthorized third party accessed the network of a company that provides billing services to Advocate. A total of more than 4 million patient records were affected by the breaches. 

The Centers for Medicare & Medicaid Services ("CMS") recently announced the statewide expansion of its temporary moratorium on the Medicare enrollment of new home health agencies ("HHAs"), subunits, and branch locations in Michigan.  As a result of the moratorium expansion, effective as of July 29, 2016, new HHAs in Michigan are precluded from enrolling in Medicare until the moratorium is lifted. The temporary moratorium also precludes the Medicare enrollment of new HHAs in Florida, Illinois, and Texas.  

The U.S. Department of Health & Human Services ("HHS") recently issued a final rule that implements the nondiscrimination provisions under Section 1557 of the Affordable Care Act (the "Final Rule"). The Final Rule becomes effective July 18, 2016.

The U.S. Court of Appeals for the Sixth Circuit recently affirmed a district court’s dismissal of a whistleblower lawsuit alleging violations of the False Claims Act based on an individual security breach. The case, United States ex rel. Sheldon v. Kettering Health Network, arose after the relator (or whistleblower) received letters from Kettering Health Network (KHN) informing her that KHN employees, including her now ex-husband, impermissibly accessed her medical records.

The Michigan CARE Act, recently signed into law by Governor Snyder, is set to take effect on July 12, 2016. Michigan becomes the 29th state to enact the CARE Act, which is intended to support and equip family caregivers with information and training when loved ones go into the hospital and as they transition home. A copy of Public Act No. 85 is available here (We have identified that the following link is no longer active, and it has been removed).

On March 31, 2016, the United States District Court for the Northern District of Alabama granted summary judgment for AseraCare in one of the largest False Claims Act (FCA) lawsuits against a hospice provider. In this whistleblower case, the government sought over $200 million, alleging that defendant AseraCare overbilled Medicare for hospice services by falsely certifying that patients were eligible for hospice care.

The litigation began when six AseraCare employees in Alabama, Wisconsin and Georgia (the "relators") filed whistleblower cases under the FCA. The employees alleged that AseraCare knowingly submitted false claims to Medicare by falsely certifying that patients met the Medicare eligibility requirements for the hospice benefit. In order to be eligible for the Medicare hospice benefit, a patient's physician must certify that "the individual's prognosis is for a life expectancy of 6 months or less if the terminal illness runs its normal course." 42 C.F.R. § 418.22(b)(1). The Department of Justice (DOJ) intervened in January 2012.

The Department of Health and Human Services (HHS) Office for Civil Rights (OCR) recently announced that it reached resolution agreements and corrective action plans with two health care entities - a health system and a research institution - in connection with alleged violations of the Health Insurance Portability and Protection Act of 1996 (HIPAA). These cases underscore the importance of ongoing HIPAA compliance vigilance by covered entities and business associates, particularly in light of OCR’s recent announcement that it has commenced Phase 2 of its audit program.

On February 11, 2016, the Centers for Medicare & Medicaid Services (“CMS”) issued its long-awaited Final Rule on Reporting and Returning of Overpayments (the “Final Rule”). The Final Rule, which will become effective on March 14, 2016, implements section 1128J(d) of the Affordable Care Act (“ACA”). This Section of the ACA requires that Medicare providers report and return Medicare overpayments by the later of (A) the date that is 60 days after the date on which the overpayment was identified; or (B) the date any corresponding cost report is due, if applicable (the “60-day rule”). According to CMS, the purpose of the Final Rule is to provide “needed clarity and consistency in the reporting and returning of self-identified overpayments.”

CMS issued a Proposed Rule on Reporting and Returning of Overpayments (the “Proposed Rule”) on February 16, 2012. The Final Rule includes some important changes to the provisions of the Proposed Rule. A summary of the major provisions of the Final Rule appears below.

The Office of Civil Rights (“OCR”) recently issued new guidance (“Guidance”) concerning the right of individuals to access their protected health information (“PHI”) under the HIPAA Privacy Rule. The OCR explained in the Guidance that based on its enforcement experience and recent studies, individuals continue to have difficulty accessing information - even from entities required to comply with the HIPAA Privacy Rule. This is also despite improvements in technology that make access more readily available. Bottom line is that individuals must have access to their PHI and health providers need to be providing such access.

However, the Guidance further clarifies a number of issues, including permissible charges for providing information to patients, security issues, submission of requests for information, and the manner for providing access to information.

As part of the continuing transition toward a physician payment system based more on quality than quantity, the Centers for Medicare & Medicaid Services (“CMS”) recently released a draft Quality Measure Development Plan (the “Plan”). The Plan is authorized by the Medicare Access and CHIP Reauthorization Act of 2015 (“MACRA”), which mandated that CMS post a draft plan for the development of quality measures by January 1, 2016. The Plan explains how CMS will support the transition to the new Merit-Based Incentive Payment System (“MIPS”) and Alternative Payment Models (“APMs”).

On October 29, 2015, the Centers for Medicare & Medicaid Services (CMS) issued the final home health prospective payment system (PPS) rule for calendar year (CY) 2016. CMS projects that the impact of the final rule will result in a 1.4 percent (or $260 million) reduction in Medicare payments to home health agencies (HHAs) from 2015 payment levels. 

Recent guidance issued by the U.S. Department of Justice (“DOJ”) reveals the government’s renewed focus on individual accountability during corporate investigations. On September 9, 2015, Deputy U.S. Attorney General Sally Quillian Yates issued a memorandum to DOJ attorneys (the “Yates Memo”) that emphasizes the importance of seeking accountability from the individuals who are responsible for corporate wrongdoing.

The Yates Memo outlines six measures that should be taken by federal prosecutors during any investigation of corporate misconduct in order to hold accountable the individuals who are responsible for the conduct. A discussion of each measure appears below.

On July 31, 2015, the Centers for Medicare & Medicaid Services (“CMS”) issued final Medicare payment rules for federal fiscal year 2016 (the “Rules”). The Rules affect hospitals, hospices, psychiatric facilities, and rehabilitation facilities. 

The Department of Health and Human Services (“HHS”) recently released a HIPAA overview called “HIPAA Basics for Providers: Privacy, Security, and Breach Notification Rules” (the “Overview”). The Overview is intended to provide HIPAA Covered Entities such as physicians, hospitals, and other health care providers with a basic overview of HIPAA’s rules and responsibilities. The fact sheet also provides an overview to Business Associates (such as law firms and accounting firms who receive protected health information ("PHI") from Covered Entities). The Overview can be found here.

The Overview explains that the HIPAA Privacy Rule protects individually identifiable PHI, which includes information such as an individual’s past, present, or future physical or mental health condition.

On Tuesday, August 18, the Michigan Department of Insurance and Financial Services (“DIFS”) announced that it has approved health insurance rate increases that average 6.5 percent for the individual market and 1 percent for the small group market. 

Each year, DIFS is responsible for reviewing rate changes proposed by health insurers to determine whether such changes comply with state and federal laws. As part of its review this year, DIFS considered public comments that were submitted after the requested rate changes were posted. DIFS approved all rate changes as requested after determining that such changes were actuarially supported.

Talk about adding insult to injury. A Virginia man woke up after his colonoscopy to learn that the surgical team had mocked, belittled and insulted him throughout the procedure.

Fearful that he would not remember the doctor’s post-op instructions, the man pressed record on his smartphone before receiving anesthesia. Upon listening to the recording after the procedure, he realized that the members of the surgical team began their rant as soon as he drifted off to sleep.

Rural hospitals across the United States struggling to stay open

According to the National Rural Health Association, approximately 50 hospitals in the rural United States have closed since 2010. The number of annual closures is growing. Congressional healthcare budget cuts and policy changes significantly affect rural hospitals because rural hospitals often have a disproportionate number of patients who are covered under Medicare, Medicaid or who are uninsured. A number of factors affect and pose challenges to rural hospitals. One challenge is the difficulty of attracting talent, which often means paying more to healthcare professionals in order to recruit them for employment at a rural hospital.  Other challenges facing rural hospitals include:

• changing demographics;
• advances in medical practice that the hospital may be unable to implement;
• new federal regulations and standards that create additional compliance related pressure; and
• lower reimbursement rates for Medicare and Medicaid.

Closures of rural hospitals may force individuals to travel long distances for medical care, which may lead to an increase in mortality rates. The closures may discourage business ventures in rural areas due to the increased costs associated with not having a healthcare facility nearby. Metropolitan hospital closings have increased recently, but the existence of medical care alternatives in metropolitan areas typically reduces the effects that closures have on patients. 

The Affordable Care Act ("ACA") authorizes the innovative payment model referred to as direct primary care, and more commonly known as “concierge medicine.” Under the direct primary care model, patients can access comprehensive coverage of basic healthcare services for a flat monthly fee.  Such services generally include guaranteed same-day or next-day visits with no waiting times. Concierge medicine is becoming increasingly popular in states where it is allowed.

On April 30, 2015, the Centers for Medicare & Medicaid Services (“CMS”) issued a proposed rule that would update fiscal year (“FY”) 2016 Medicare payment rates and the wage index for hospices serving Medicare beneficiaries (the “Proposed Rule”). CMS estimates that the Proposed Rule would result in a 1.3 percent ($200 million) increase in hospice payments for FY 2016. The highlights of the Proposed Rule are summarized below. 

On March 12, 2015 Foster Swift Attorney Jennifer Van Regenmorter co-presented the Michigan Health Law Update (“Annual Update”) at the 21^st Annual Health Law Institute. The Annual Update provides an overview of the most significant Michigan-specific health law developments from the past year, many of which have been covered on this blog. This article will summarize the highlights from this year’s Annual Update.

Foster Swift health care attorneys recently attended and presented at the 21^st Annual Health Law Institute on March 12 and 13, 2015. The two-day institute, which was co-sponsored by the Institute for Continuing Legal Education and the Health Care Law Section of the State Bar of Michigan, included presentations on recent statutory, regulatory, and case law developments in the health care industry.

Foster Swift Attorney Jennifer Van Regenmorter co-presented the “Michigan Health Law Update,” which provided an overview of Michigan’s most significant health law developments from the past year. This was Van Regenmorter’s third time presenting this yearly update at the Institute.

The Michigan Court of Appeals recently decertified a class action suit against Henry Ford Health System (HFHS) and its subcontractor, a medical transcription service, for inadvertently disclosing sensitive patient information online. On December 18, 2014, a unanimous three-judge panel reversed the trial court’s denial of summary judgment in favor of the defendants. The court held that an invasion of privacy claim requires an intentional act rather than mere negligence and that the plaintiff’s claims for negligence and breach of contract require proof of an actual injury.

The class consisted of 159 patients who visited HFHS between June 3, 2008 and July 18, 2008. The case arose when the defendant subcontractor made a configuration change to its server which left certain patient records unsecured. As a result, Google’s automated web server, “Googlebot,” indexed the information and made it available for users to search online. The information included each patient’s name, date of service, and diagnoses. The unnamed lead plaintiff alleged that her records revealed a sexually transmitted disease. 

The Medicaid program, a public insurance program serving approximately 66 million low-income Americans, is at risk for losing participating providers who claim they are not being compensated fairly for their services. On January 19, 2015, the Supreme Court heard arguments in Armstrong v. Exceptional Child Center, a case that could impact the rights of healthcare providers to sue states for higher Medicaid payments. Five private companies brought suit against the director of Idaho’s health department, arguing that the state unfairly reimbursed them at rates set in 2006, despite the fact that higher rates have since been approved by the Centers for Medicare and Medicaid Services (“CMS”).

Federal law provides that state Medicaid programs must ensure payments are “sufficient to enlist enough providers,” but states have discretion to decide what that means. 42 U.S.C. § 1396a(a)(30)(A) (the “Medicaid Statute”).  Central to this case is whether providers have a cause of action that allows them to seek enforcement of a federal statute.

Reduced reimbursements. A shift toward global payment. A demand for integration, quality of care and medical specializations. In order to compete amidst today’s healthcare market pressures, independent hospitals in Michigan and around the nation are increasingly deciding that they cannot go it alone. A recent Detroit News article reveals how this trend is playing out in Metro Detroit, with one of the region’s last two independent hospitals poised for acquisition.   

Observers of Detroit’s healthcare environment are reportedly not surprised by the news that Crittenton Hospital Medical Center has signed a letter of intent to join St. Louis-based Ascension Health, the largest Catholic and nonprofit health system in the nation. With Monroe-based Mercy Memorial Hospital announcing on January 6 that it is joining the ProMedica health care company, the Crittenton deal will leave Doctors’ Hospital in Pontiac as the region’s last remaining independent hospital.

Laura Wotruba, spokeswoman for the Michigan Health and Hospital Association, said that this is not a Michigan issue, but rather a widespread pattern. “[It is] a national trend [and] something we’ve been seeing around the country.”

On Friday, October 17, Governor Rick Snyder signed the Right to Try Act, which allows patients to try experimental drugs and other treatments before they have been approved by the Food and Drug Administration (FDA). The law gives patients with advanced illnesses access to drugs that successfully cleared Phase 1 of an FDA approval. Phase 1 testing seeks to establish a drug's safety and profile and evaluates possible side effects. It involves 20-80 volunteers and lasts approximately one year.

Last month, the U.S. Department of Health and Human Services (“HHS”) Office for Civil Rights (“OCR”) issued guidance addressing the treatment of same-sex spouses under the HIPAA Privacy Rule in light of the Supreme Court’s decision in United States v. Windsor.

In Windsor, the Supreme Court held Section 3 of the Defense of Marriage Act (“DOMA”) to be unconstitutional. Section 3 of DOMA had excluded same-sex marriages from recognition under federal law.

As a result of the Windsor ruling, legally married same-sex spouses are entitled to additional rights under several federal regulations, one of which is the HIPAA Privacy Rule ("Rule"). The Rule provides certain protections to family members of patients.  In its guidance, OCR clarifies that legally married same-sex spouses are family members for the purposes of the Rule, regardless of where they live. 

On October 3, 2014, the Department of Health and Human Services (HHS) Office of Inspector General (OIG) released a proposed rule to amend the safe harbors to the anti-kickback statute as well as the civil monetary penalty (CMP) rules. While much of the proposed rule codifies changes to the anti-kickback statute safe harbors already established by the Affordable Care Act (ACA) and Medicare Modernization Act of 2003 (MMA), it also proposes two new safe harbors and makes technical corrections to an existing safe harbor. The OIG also proposes to narrow the definition of "remuneration" in the Beneficiary Inducement CMP laws as well as codify and interpret the gainsharing CMP rules set forth in section 1128A(b) of the Social Security Act.

The proposed changes to the safe harbors and CMP laws would give providers greater flexibility to enter into beneficial arrangements with the assurance that they will not be subject to penalties under these laws. The proposed rule reflects the OIG's continued effort to adapt its regulations to the changing health care landscape.

For more details on these proposed changes, please visit our newsletter article, which provides an in-depth analysis of the proposed rule. If you have any questions on the proposed rule and how you are affected, please contact an attorney in our Health Care Practice Group.

Julie C. LaVille authored this article as a Law Clerk.

While the healthcare industry has historically been knocked as slow to adapt to emerging technologies, the technological modernization of the industry is now occurring at a furious pace. From the digitization of health care records, to improved means of communications between doctors and patients, technology is transforming healthcare.

Tech behemoths like IBM, as well as scrappy Silicon Valley startups, have recognized the potential and are pouring resources into healthcare IT. According to data from investment company Rock Health, venture capital funding to healthcare information technology companies for 2014 reached $2.3 billion as of mid-year 2014. That's more than 10 times the nearly $200 million that was invested in healthcare IT in 2007.

One of the healthcare industry's newest tech innovations, called Figure 1, is the brainchild of a doctor named Josh Landy. Figure 1 is an Instagram-style app that allows doctors to share photos of patient conditions with other medical professionals in order to get their opinions regarding diagnosis and treatment.

The Final HIPAA Omnibus Rule ("Final Rule"), published January 25, 2013, contains several new requirements for business associate ("BA") agreements. While the requirements went into effect on September 23, 2013, grandfathered BA agreements that were in place prior to January 25, 2013 were deemed to be in compliance for one year. Now that the one year expiration of the deemed compliance is quickly approaching, covered entities and business associates must ensure that their grandfathered BA agreements are updated to comply with the Final Rule before the September 22, 2014 deadline.

To meet the deadline, covered entities and business associates should review and update all existing BA agreements to determine whether they are HIPAA-compliant. The Final Rule also requires business associates to have written BA agreements with their subcontractors that comply with the new requirements.

Michigan legislators Gretchen Whitmer (D- East Lansing) and Gretchen Driskell (D-Saline) plan to introduce a bill in the Senate and House this week entitled the "Reproductive Health Coverage Information Act," which would require employers to provide both prospective and current employees with information about health insurance coverage relating to reproductive health.

So far, July has been a busy month for health care fraud enforcement across the country.

On July 18, Divyesh Patel, owner of Alpine Nursing Care Inc. in North Randall, Ohio, was sentenced to two years in prison after pleading guilty to one count of conspiracy to commit health care fraud and four counts of health care fraud. Patel was also ordered to pay total restitution of $1,939,864 to the Medicaid Program in Ohio. According to court documents, Patel hired Belita Mable Bush as the office manager despite knowing that Bush had been convicted of a health care-related felony and excluded from involvement in billing federal health care programs. From June 1, 2006 to October 18, 2009, Patel conspired with Bush to defraud Medicaid by billing for services that had never been performed or that had been performed by excluded individuals. The conspiracy resulted in losses of approximately $1.9 million to the Medicare and Medicaid programs. Bush was convicted on similar charges and will be sentenced next month.

The Michigan Department of Licensing and Regulatory Affairs (LARA) Corporations Division has recently implemented a new policy for professional service corporations requiring that the purpose clause in the articles of incorporation includes the type of license held. Previously, only the type of services provided was required.

For example, the purpose clause for a dental practice must now state that the purpose of the corporation is to provide "dental services through a licensed dentist."

This new policy is not stated in any of the LARA materials. However, Foster Swift attorneys and paralegals frequently work with LARA and can help streamline the creation of a professional services corporation by knowing these LARA policy insights.

If you have questions about the new policy or would like assistance with starting a professional services corporation, please contact an attorney at Foster Swift.

Julie C. LaVille authored this article as a Law Clerk.

On Tuesday, June 11, members of the House Committee on Energy and Commerce sent a letter to acting IRS Commissioner Daniel Werfel requesting information regarding how the IRS handles confidential medical information. The letter comes after a recent lawsuit alleging that the IRS illegally seized over 60 million medical records in 2011.

The lawsuit, a class action filed by an unnamed health care provider against 15 unnamed IRS agents, alleges that the agents improperly seized the medical records in violation of the Fourth Amendment during a search executed on March 11, 2011. According to the complaint, the agents seized more than ten million medical records despite knowing that the records were not within the scope of their warrant, (which authorized only the seizure of financial records related to a former employee). The seized records allegedly contained "intimate and private information . . . including psychological counseling, gynecological counseling, [and] sexual or drug treatment." The complaint further alleges that the agents threated to "rip out" the servers containing the medical data if the company's IT personnel did not voluntarily transfer the information to the IRS. 

On Tuesday, June 11, 2013, the Drug Enforcement Administration (“DEA”) announced that it had reached an $80 million civil settlement agreement, the largest in DEA history, with Walgreen Co. (“Walgreens”) to resolve allegations involving an “unprecedented number” of record-keeping and dispensing violations under the Controlled Substance Act (“CSA”). According to the DEA’s Press Release, Walgreens negligently allowed controlled substances, including Oxycodone and other prescription painkillers, to be diverted into the black market.