Health Care Law Blog

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").

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.

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.

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. 

On July 6, 2016, the Centers for Medicare & Medicaid Services ("CMS") released the 2017 Outpatient Prospective Payment System ("OPPS") Proposed Rule (the "Proposed Rule"). The Proposed Rule explains how CMS plans to implement Section 603 of the Bipartisan Budget Act of 2015 ("Section 603"), which established a new site neutral payment policy for certain off-campus hospital outpatient departments.

Section 603 provides that, as of January 1, 2017, certain items and services provided by off-campus hospital outpatient departments will no longer be reimbursed under the more favorable OPPS, and will instead be paid under another "applicable payment system."

Michigan’s tax on paid health care claims is not preempted by ERISA, according to a decision by the United States Court of Appeals for the Sixth Circuit. On remand from the United States Supreme Court, the federal appellate court held that the Health Insurance Claims Assessment Act does not impermissibly interfere with the uniform administration of group health plans or impose additional burdens on self-insured plans and third-party administrators.

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 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 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.

In the last few days of 2015, the Internal Revenue Service ("IRS") published welcomed relief for employers who are struggling to understand their reporting obligations under the Affordable Care Act ("ACA"): extended deadlines. 

The U.S. Department of Justice (DOJ), and a handful of states, recently reached a settlement agreement with Adventist Health System (Adventist), resolving Stark Law issues, as well as allegations in two separate qui tam actions that included false claims. Generally speaking, the Stark Law limits physician referrals of designated health services or “DHS” for Medicare and Medicaid patients in instances where the physician - or an immediate family member of the physician - has a financial relationship with the DHS entity. 

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.

In a first-of-its-kind and closely followed case, a U.S. district court denied a New York health system's (Healthfirst’s) motion to dismiss the U.S. government's and State of New York's complaints in intervention under the federal False Claims Act (FCA) and New York state counterpart. This case represents the first time that the government has intervened in an FCA case based upon an allegation that a party violated the "60 day rule." The 60 day rule came into existence with the passage of the Affordable Care Act (ACA) in 2010 and subjects parties to FCA liability for failing to report and refund an overpayment within 60 days of identification, even if the defendant received the payment through no fault of its own.

The case, Kane ex rel. United States et al. v. Healthfirst et al., involves three hospitals that were part of the Healthfirst health system network and provided care to patients that were part of Healthfirst's Medicaid managed care plan. Healthfirst received payments from the New York State Department of Health (DOH) in return for services provided to Medicaid eligible enrollees.

The government's allegations stem from overpayments to Healthfirst as a result of a software glitch. Healthfirst was first questioned about the possible overpayments by the New York State Comptroller's office in 2010. The health system tasked Kane, an employee and the eventual whistleblower in the case, to look into the payments. Five months later Kane emailed Healthfirst management a spreadsheet listing over 900 claims totaling more than $1 million that contained an erroneous billing code that may have led to the overpayments.

The U.S. Department of Justice (“DOJ”), together with the Michigan Attorney General (“AG”), recently filed a lawsuit alleging that four hospital systems located in Southern Michigan violated antitrust laws by agreeing not to compete with one another.

The civil lawsuit was filed in the U.S. District Court for the Eastern District of Michigan and alleged that the four hospitals agreed not to market or advertise themselves in each others’ territories, which constitutes “unreasonable restraints of trade that are per se illegal” under the Sherman Act and the Michigan Antitrust Reform Act.

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.

Dr. Farid Fata was sentenced to 45 years in a federal prison by U.S. District Judge Paul Borman. The sentence was greater than the 25 years that the defense advocated for, but well under the 175-year maximum requested by the prosecution. Dr. Fata, who had built an empire of upscale cancer clinics, intentionally misdiagnosed patients and illegally billed Medicare for the treatment. He grossly over-treated, under-treated, and misdiagnosed hundreds of patients by telling them they had cancer when they did not, giving too much or improper treatment to others who did have cancer, and continuing to give chemotherapy to terminal patients who no longer needed it. 

Last month, for the first time in over a decade, the Centers for Medicare & Medicaid Services (CMS) published proposed revisions to the Medicaid managed care regulations. According to CMS, the proposed rule aims to reflect the changes in delivery systems, strengthen the system’s ability to serve diverse populations, and promote greater alignment of Medicaid managed care policies with those of other payers. A summary of the key provisions of the proposed rule appears below.

A very long legal battle may be nearing its final chapter after the U.S. Court of Appeals for the Fourth Circuit upheld a $237 million judgment against Tuomey Healthcare System in South Carolina. The judgment is an enormous sum for the regional health system and hospital, with even one of the Court of Appeals judges calling it a "death sentence." A three-judge panel heard the case at the Court of Appeals, so Tuomey could still seek reconsideration from all the judges of that Court or take the case to the U.S. Supreme Court. It may also opt to find a new partnership to keep the hospital afloat.

One of the most important responsibilities that governing boards of healthcare organizations (“Boards”) have is carrying out their compliance oversight obligations. Recently the U.S. Department of Health and Human Services Office of Inspector General (OIG) released a new guide to assist Boards in carrying out their compliance duties. The guide is titled “Practical Guidance for Health Care Governing Boards on Compliance Oversight” (“Guidance”) and was developed in collaboration with the American Health Lawyers Association (AHLA), the Association of Healthcare Internal Auditors (AHIA) and the Health Care Compliance Association (HCCA). 

On June 25, 2015, the Supreme Court of the United States issued a ruling related to the Patient Protection and Affordable Care Act (the "Act") in the case of King v Burwell. The issue that the Court addressed was whether tax credits were available to individuals who purchased health insurance coverage through a Health Insurance Exchange ("Exchange") that was established by the Federal government.

An Exchange serves as a marketplace where individuals can compare various health insurance plans and ultimately purchase health insurance coverage. The Act requires an Exchange to be established in each State. If a State fails to establish its own Exchange, the Federal government is required to step in and establish the Exchange for that State. The Court's decision had the potential to preclude tax credits for individuals purchasing insurance through the Federal Exchanges in 34 States, including Michigan.

This issue was of significant importance because of its implications for the Act's Employer Mandate, which generally requires large employers to offer health insurance coverage to their full-time employees. The tax credits provided under the Act serve as the lynchpin for liability under the Employer Mandate. Despite the fact that a large employer may fail to offer health insurance coverage to its full-time employees, it will not be penalized if those employees do not obtain coverage through the Exchange and receive a tax credit. Therefore, large employers located in States that have a Federal Exchange could arguably avoid penalties for their failure to offer coverage to their full-time employees; such employees would not receive a tax credit when purchasing health insurance coverage on the Exchange and would not trigger the penalty.

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. 

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. 

The DHHS Health Resources and Services Administration (“HRSA”) has finally published the new National Practitioner Data Bank (“NPDB”) Guidebook.  The original Guidebook had not been updated since September 2001. 

The updated April 2015 NPDB Guidebook is available here.

The new Guidebook extensively covers the changes resulting from the 2013 merger of the NPDB and the Healthcare Integrity and Protection Data Bank (“HIPDB”).  The HIPDB was a separate data bank that received and disclosed reports of final adverse actions by federal and state agencies and health plans against practitioners, entities, providers, and suppliers.  After the merger, there were significant changes in the entities eligible to query and report, as well as the individuals and entities subject to reports. 

The Michigan Supreme Court has issued an important decision on the scope of peer review protection. In Krusac v Covenant Med Ctr, Inc, the court held that “objective facts gathered contemporaneously with an event” are protected when “contained in an otherwise privileged incident report.” Krusac overruled a Court of Appeals opinion, Harrison v Munson Healthcare, which ruled that peer review protection only applied to the evaluative content in an incident report. Krusac reinforces the broad protections for “records, data and knowledge” that is collected by or for peer review committees.

While Krusac clarifies the scope of the statutory protection, it also highlights the need for hospitals and health facilities to carefully structure and properly document their peer review processes. It will be especially important in litigation to establish that a committee or individual has been assigned a peer review function and that information is being collected for the purpose of reducing morbidity and mortality and improving patient care.

Richard Kraus of Foster Swift filed an amicus curiae brief on behalf of the University of Michigan Health System in Krusac.

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 February issue of the American Health Lawyers Association’s AHLA Connections features a list of the top ten issues that will impact healthcare law in 2015. We summarized the first five topics in a previous blog. (Miss our summary of the first five? Please click here.)

Here are the remaining trends to think about: 

The February issue of the American Health Lawyers Association’s AHLA Connections features a top-ten list of the issues that will impact healthcare law in 2015. This two-part series discusses these important trends.

Here are the first five:

Since the approval of the Affordable Care Act in 2010, hospital consolidation has been on the rise and according to a report detailed in a recent Chicago Tribune article, 2014 followed suit with a “flurry of mergers, acquisitions and joint ventures.” The article features findings from a report issued by healthcare consulting firm Kaufman Hall, including that in 2014 95 deals were announced, down slightly from 98 in 2013 but up from 66 in 2010.

Passage of the Affordable Care Act (ACA) in 2010 increased pressure on hospitals to operate more effectively and efficiently, which has driven industry consolidation. The ACA favors a service model that rewards organizations for producing quality outcomes – not quantity – and many providers believe that compliance will be easier with the greater scale and integration enabled by mergers. Through consolidation, many also hope to be better positioned to attract new patients with expanded services and medical specializations.

Additionally, the ACA’s introduction of a massive wave of new patients into the healthcare system, combined with diminishing Medicaid and Medicare reimbursements, means that the business of healthcare is becoming increasingly expensive, especially for independent hospitals. Another challenge – and driving force behind consolidation – has been the need to upgrade IT systems and facilities to comply with rules and regulations beyond the ACA.

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.”

Thank you so much for checking out the Foster Swift Health Care Law Blog. We are taking a short break from posting and look forward to providing you the latest news and information in 2015. Happy Holidays!