Health Care Law Blog
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 May 7, 2014, the Centers for Medicare and Medicaid Services (“CMS”) issued a Final Rule to reform Medicare regulations identified as “unnecessary, obsolete, counterproductive or excessively burdensome” to hospitals and other health care providers. The changes are part of the Obama administration’s “regulatory lookback” in connection with Executive Order 13563, “Improving Regulation and Regulatory Review.” The Final Rule makes a number of clarifications and revisions to policies set forth in both the May 16, 2012 final rule and the February 7, 2013, proposed rule. CMS estimates the reforms could save providers nearly $660 million annually and $3.2 billion over five years.
Below is a brief summary that highlights some of the issues CMS is attempting to address. Please refer to the Final Rule, or contact us, to explore the full extent of the changes in more detail.
Foster Swift health care attorneys are getting ready to attend the 20th Annual Health Law Institute March 6 and 7. The Institute provides attorneys with the opportunity to learn about the most recent statutory, regulatory, and case law developments in the health care industry. Co-sponsored by the Health Care Law Section of the State Bar of Michigan, this educational opportunity offers a range of presentations from numerous leaders in the health care legal community.
On September 23, 2013, the U.S. Food and Drug Administration (FDA) issued final guidance governing the development of mobile medical apps. The FDA will focus its oversight on apps that it deems potentially harmful to consumers if they do not function properly. This, therefore, largely excludes the majority of medically-oriented mobile apps currently on the market as they pose minimal risk to consumers.
In early July, we updated our readers regarding the status of the Medicaid expansion debate in Michigan. At that time, a House-passed bill - supported by Governor Snyder - languished in a Senate committee because it was blocked by Senate Republicans who opposed the measure.
On June 17, 2013, the U.S. Supreme Court ruled that brand name drug makers can be sued for paying generic drug makers to delay the introduction of low-cost versions of popular medicines to the marketplace. The Court's 5-3 ruling is a victory for the Federal Trade Commission (“FTC”), and reverses a lower-court ruling that shielded drug makers from liability.
So-called "pay-for-delay" or reverse payment arrangements between brand name and generic drug makers result in payments being made to generic drug makers in order delay the launch of competing generic drugs. These settlements often stem from litigation, or threatened litigation, brought by brand name drug makers against generic drug makers who try to sell products prior to the patent expiration period. In this case, the FTC argued that pay-for-delay agreements cost consumers as much as $3.5 billion per year, while the pharmaceutical industry alleged that such deals are legitimate means of settling patent disputes.
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.
A key component of the Patient Protection and Affordable Care Act ("PPACA") involves expanding Medicaid to anyone who earns up to 133 percent of the poverty level. In its landmark ruling last year the Supreme Court, while upholding PPACA, ruled that states could not be compelled to expand the joint federal-state Medicaid program.
State legislatures and governors across the country have considered whether to expand Medicaid, with only 23 states and the District of Columbia implementing an expansion according to the (We have identified that the following link is no longer active, and it has been removed.) Under the PPACA, 100 percent of the cost of the Medicaid expansion will be covered by the federal government from 2014 through 2016. The federal government's contribution will gradually decline until reaching 90 percent in 2022 and beyond.
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.
The Treasury Department and IRS continue to roll out new regulations related to the implementation of the Patient Protection and Affordable Care Act ("PPACA"). On May 10, 2013, the Treasury Department and IRS released the draft regulations, "Computation of, and Rules Relating to, Medical Loss Ratio", which are intended to help Blue Cross and Blue Shield ("BCBS") organizations comply with the Medical Loss Ratio (“MLR”) rules created by the PPACA.
California is the only state in the country that has mandated nurse-to-patient ratio requirements for hospitals. If the Michigan Nurses Association and Democratic lawmakers are successful in their current legislative efforts, Michigan will be the second.
House Bill 4311 and Senate Bill 228 are identical bills recently introduced in each chamber by Representative Jon Switalski and Senator Rebekah Warren, respectively. The proposed legislation would require hospitals, including state-owned hospitals and state-owned facilities, to develop staffing plans that provide “sufficient, appropriately qualified nursing staff…in order to meet the individualized needs” of patients.
Significant provisions of the legislation include the following:
While many thought the Blue Cross Blue Shield of Michigan ("BCBSM") conversion bills would be signed into law at the end of 2012, it was not until March 18, 2013 that Governor Snyder signed the proposed legislation into law. The BCBSM conversion bills convert BCBSM from "a tax exempt charitable and benevolent institution" into a nonprofit mutual health insurance company. BCBSM has been operating as a tax-exempt nonprofit since Public Act 350 was signed into law in 1980. (This Public Act is referred to as the previous BCBSM statute.) The previous BCBSM statute made BCBSM Michigan’s “insurer of last resort,” requiring it to accept all customers regardless of their health.
On March 7 and 8, 2013, the members of Foster Swift’s Health Care Law Group attended the 19th Annual Health Law Institute. This two-day institute, which is co-sponsored by the Institute for Continuing Legal Education and the Health Care Law Section of the State Bar of Michigan, focused on recent legal developments in health care law. Specific topics addressed at this year’s Health Law Institute included:
Under the Patient Protection and Affordable Care Act, companies that provide drugs, medical devices, biologicals or other medical supplies covered by certain government programs (Medicare, Medicaid or the Children's Health Insurance Program) are required to annually report certain payments they make to physicians. According to a recently issued final rule, payment categories will include:
Michigan’s Right to Work legislation (“Legislation”) was signed into law by Governor Synder on December 12, 2012. The Legislation will become effective on the 91st day following the final adjournment of the 2012 regular session of the Michigan legislature (December 27, 2012). Unions are attempting to either renew or extend current collective bargaining agreements (“CBAs”) prior to the Legislation becoming effective, in an effort to avoid impact that the Legislation would have on union dues and participation.
On January 30, 2013, the Departments of Treasury, Labor, and Health and Human Services (collectively, the “Departments”) jointly released proposed rules related to the coverage of preventive services under the Patient Protection and Affordable Care Act (“PPACA”). When initially enacted, PPACA required certain health plans to provide benefits for particular preventive health services, including coverage of contraceptives, without the imposition of cost sharing measures (i.e., individuals covered by the plan would not be required to pay anything for the services). This coverage requirement became effective on the first day of the plan year that followed August 1, 2012. For calendar year plans, the effective date was January 1, 2013.
As previously discussed, the Patient Protection and Affordable Care Act requires employers to provide notice to their employees related to Health Insurance Exchanges (the “Notice”). The specifics concerning the Notice may be found here. The Notice was required to be given to each current employee not later than March 1, 2013.
The Office for Civil Rights of the Department of Health and Human Services recently released its final rule (the "Rule") modifying the Health Insurance Portability and Accountability Act ("HIPAA") and implementing the statutory requirements of the Health Information Technology for Economic and Clinical Health Act (“HITECH”). (The Rule was originally expected to be released in February of 2010 when HITECH became effective.) In short, the Rule: modifies HIPAA’s privacy, security and enforcement rules; changes HIPAA’s enforcement rules to increase penalties consistent with HITECH; provides a final rule on breach notification; and modifies HIPAA as required by the Genetic Information Nondiscrimination Act.
The new rule is approximately 563 pages and can be accessed here. If you have any questions about how the Rule may impact your health care practice, please contact Nicole Stratton at (517) 371-8140 or by using the form below.
The Michigan Board of Dentistry has adopted several new rules governing the handling and disposal of amalgam waste for dentists and dental practices.
There are some exceptions for oral and maxillofacial surgeons; oral and maxillofacial radiologists; oral pathologists; orthodontists; periodontists; and dentists providing services in a dental school or hospital, or through a local health department.
Employers with 50 or more full time equivalent employees (“FTEs”) will be subject to a penalty tax for: (1) failing to offer health care coverage to all full time employees; ( 2) offering minimum essential coverage that is unaffordable; or (3) offering minimum essential coverage where the Plan pays less than 60% of cost. This is often referred to as the Employer Mandate of PPACA.
Changes to the health insurance market in Michigan may soon be changing due to the Michigan House of Representatives’ approval of Senate Bills 1293 and 1294 (the “Senate Bills”) on December 6, 2012. The introduction of the Senate Bills follow Governor Snyder’s proposed overhaul of BCBSM discussed here and directly address the corporate organization and continued operation of Blue Cross Blue Shield of Michigan (“BCBSM”) in our state. In brief, the Senate Bills authorize BCBSM to establish, own, operate and merge with a nonprofit mutual disability insurer. They also generally prohibit BCBSM from using “Most Favored Nation Clauses” in provider contracts beginning February 1, 2013. While the Senate Bills are not final until Governor Snyder signs them into law, given his previous support it is likely he will give his approval. A more detailed analysis of the Senate Bills will be provided if the Governor does indeed sign them into law.
Over the past several weeks, the nation has seen a flurry of announcements issued by states as to how such states will implement and operate the health insurance exchanges (“HIE”) required by the Affordable Care Act. States have three options as to how they may run their HIEs:
On Monday, November 26, 2012 the Department of Health and Human Services ("DHHS") issued proposed rules on: (1) standards related to essential health benefits, actuarial value and accreditation, and (2) health insurance market rules and rate review. The Department of Treasury, the Department of Labor, and DHHS issued combined proposed rules for the incentives of wellness programs. Comments on these proposals must be received no later than December 26, 2012. So those interested in commenting have a short window to examine the three sets of rules. For more on these topics and how they will impact you, stay tuned to the Foster Swift Health Care Blog.
As President Obama moves into his second term, health care reform moves forward with him. Wholesale repeal of the Patient Protection and Affordable Care Act (PPACA) now seems highly unlikely. With the majority of the PPACA provisions slated to go into effect in 2014, employers need to be ready.
Foster Swift has developed guides to aid employers with their preparation efforts. Click the links below to download these guides.
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EMPLOYER & INDIVIDUAL
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PPACA PROVISION
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Documents updated 07-12-2013
If you have any questions regarding health care reform, please contact a member of the Foster Swift Health Care Law Group.
On October 11, 2012, the Lansing Regional Chamber of Commerce hosted its annual Healthcare Forum. A half-day event, the Healthcare Forum brings together mid-Michigan leaders in the health care industry to provide updates on the latest issues. This year’s forum, titled “Countdown to 2014 – The Tools to Conform to Healthcare Reform,” drew nearly 100 attendees and featured topics including:
At the end of August, Governor Rick Snyder announced that Michigan will be pursuing a federal-state partnership for its health insurance exchange. Health insurance exchanges are a requirement of the federal Health Care Reform law. Health insurance exchanges are designed to facilitate the purchase of health insurance by consumers through an online, cost-competitive forum. Each state has the option to: (1) operate its own health insurance exchange; (2) partner with the federal government; or (3) allow the federal government to manage its health insurance exchange.
Foster Swift lawyers were well represented at the Annual Meeting of the State Bar of Michigan's Health Care Law Section held on September 19th. Gilbert Frimet, Gary McRay, Jennifer Kildea Dewane, and Nicole Stratton, members of Foster Swift Health Care Law Practice Group, all traveled to Detroit to attend the meeting.
The Board of Medicine and the Board of Osteopathic Medicine have proposed amendments to the administrative rules governing the delegation of prescribing authority to physician assistants. Under the existing rules, a physician may only delegate to physician assistants the authority to prescribe controlled substances that are listed in the Federal Drug and Enforcement Administration’s (“DEA’s”) Schedules 3 to 5. The proposed amendments would eliminate that limitation and allow physicians to authorize physician assistants to prescribe Schedule 2 controlled substances.
Governor Rick Snyder in a press conference this morning proposed a total overhaul of Blue Cross Blue Shield of Michigan ("BCBSM"). Governor Snyder's proposal would:
- covert BCBSM to a non-profit mutual company;
- end its tax exemption; and
- remove Attorney General review of requested rates.
In essence, Michigan would treat BCBSM as it would any other health insurer as BCBSM would be regulated by the Insurance Code. While this proposal may seem drastic, it is not surprising given recent regulation orders by the Office of Financial and Insurance Regulation ("OFIR") curtailing BCBSM's use of most favored nation clauses ("MFN Clauses") and rejecting the low rates that it charges to hospitals and other providers.
The Health Information Technology for Economic and Clinical Health Act ("HITECH Act"), passed in 2009, imposed new requirements on health care providers (among others) related to the privacy and security of Protected Health Information ("PHI"). Included in the HITECH Act's requirements was a mandate that the Department of Health and Human Services’ ("HHS") Office for Civil Rights ("OCR") conduct audits to analyze the processes, controls and policies of certain covered entities. The pilot program for such audits began in 2011 and will conclude in December, 2012.
Foster Swift health care law attorney, Johanna Novak, was recently interviewed on Michigan Business Network radio concerning the United States Supreme Court's long-anticipated decision on the Patient Protection and Affordable Care Act (the "Act"). The interview aired on July 6, 2012, and was separated into two parts. Podcasts for both parts of Johanna's interview can be accessed here.
In response to growing concerns about prescription drug abuse, there has been a significant increase in investigative and enforcement activities by state licensing authorities as well as local, state and federal law enforcement. We have been contacted by physicians who want to care for patients with chronic or intractable pain but are concerned about the consequences to their licenses and practices that might result if investigators question their decision to prescribe controlled substances. Given the current environment, it is a good idea for physicians to refresh themselves on the legal requirements for effective pain management.
On April 16, 2012, the Office of Regulatory Reinvention (“ORR”) issued a report to Governor Snyder proposing the deregulation of 18 occupations and the elimination of 9 occupational boards. Of particular interest to Michigan health care providers are the recommendations for deregulation of dieticians and nutritionists; ocularists; respiratory care providers; and speech pathologists. The report also recommended elimination of the following, health-care relevant occupational boards: Board of Dietetics and Nutrition, Board of Occupational Therapy, Board of Respiratory Care, Board of Speech Language Pathology, and Osteopathic Medicine Advisory Board.
The Departments of the Treasury, Labor and Health and Human Services (collectively, the "Departments") recently published the final regulation (the "Regulation") with regard to the Summary of Benefits and Coverage ("SBC") requirements under the Patient Protection and Affordable Care Act ("PPACA"). The Regulation implements certain disclosure requirements in order to help individuals and health plans better understand their medical coverage as well as other coverage options. Many liken the SBC to the summary plan description for retirement plans.
The current issue of AHLA Connections, which is published by the American Health Lawyers Association (AHLA), features a list of the top ten issues affecting the health law field in 2012. The AHLA Connections “hot topic” list includes issues that our clients are raising with us. We have covered several of these topics in previous newsletters and blogs and we plan to discuss more in the upcoming months.
Here is the AHLA’s top-ten list:
On March 8 and 9, 2012, the members of Foster Swift's Health Care Law Group attended the 18th Annual Health Law Institute. This two-day institute, which is co-sponsored by the Institute for Continuing Legal Education and the Health Care Law Section of the Michigan State Bar, focused on recent legal developments in health care law. Specific topics addressed at this year's Health Law Institute included:
In late 2011, the Supreme Court of the United States announced that it would take up four issues regarding the Patient Protection and Affordable Care Act ("PPACA"). The Court is expected to hear oral arguments in late March of 2012 and provide a decision in June of 2012.
Three of the four issues to be reviewed by the Court center around PPACA's Individual Mandate. The Individual Mandate (also known as the minimum coverage provision) requires that, beginning in 2014, individuals who fail to maintain a minimum level of health insurance coverage for themselves and their dependents pay a penalty, calculated in part on the basis of the individual's household income as reported on the individual's federal income tax return. This is likely the most controversial provision of PPACA.
The four issues to be considered by the Court are as follows:
If you are already a subscriber to Foster Swift's health care law blog, you might be interested in Foster Swift's Health Care Law E-News as well. These newsletters provide an in-depth discussion on specific issues that are of interest to those in the health care industry. See what the latest Health Care Law E-News has to offer.
Licensure of Massage Therapists will become mandatory in Michigan in the near future. Proposed rules related to the requirements of such licensure were recently published in the Michigan Register. The actual licensure requirement will become effective two years from the effective date of the final rules (which will likely be published later in 2012).
On December 7, 2011, the final rules for Speech-Language Pathology were filed with the Michigan Secretary of State. Among other things, the final rules require that any person who intends to practice speech-language pathology in Michigan must be licensed by December 7, 2013. The rules also detail the requirements for licensure and give deference to individuals who have been certified by the American Speech-Language-Hearing Association.
For more information about the licensure requirements for speech language pathologists and to obtain a copy of the current licensure application packet, please contact one of the health care law attorneys at Foster Swift.
Members of the Foster Swift Health Care Law Practice Group attended the Annual Meeting of the State Bar of Michigan's Health Care Law Section on Wednesday, September 21, 2011. A highlight of the day was when Gary McRay was inaugurated to the Health Care Law Section's first Class of Fellows. The Class of Fellows recognizes distinguished practitioners for their professional contributions and dedication to the practice of health care law. McRay was one of only 10 attorneys inducted as a Fellow. Grateful to receive such an honor, McRay expressed that he "would like to thank the State Bar of Michigan for the award" and noted that he was "honored to be included with the other lawyers in the first class of fellows."
The 4th Circuit Court of Appeals has issued two opinions related to the Patient Protection and Affordable Care Act ("PPACA"), also commonly referred to as Health Care Reform. What is interesting in these two decisions is that the appellate court refrains from ruling on the constitutionality of PPACA. Instead, it does not even address the issue because it found adequate grounds to dismiss both cases based on lack of jurisdiction.
The Department of Health and Human Services ("DHHS") is moving forward with its HIPAA auditing program, which will launch in late 2011 or in 2012. After the audit protocols have been created, they will be field-tested through approximately 20 audits. Once the field tests are completed, up to 150 on-site audits will take place through the end of 2012. It is not clear which types of entities will be selected for audit. It is also not yet clear whether the DHHS Office for Civil Rights ("OCR") will audit only covered entities, or whether business associates will be audited as well. In addition, the OCR has not yet determined whether or how it will publish its audit results. Given the significance of being subject to a HIPAA audit, organizations should take this time to review their policies and procedures for HIPAA privacy and security compliance. Moreover, with the newness of electronic health record ("EHR") systems, those with EHR will especially want to make sure that these systems are compliant. Please contact me at 517.371.8231 or 906.226.5501 if you would like assistance with any review.
The Centers for Medicare and Medicaid Services ("CMS"), like other federal agencies, generally has 20 days (plus a 10 day extension) to respond to requests for information under the Freedom of Information Act ("FOIA"). However, CMS responses seem to take quite a bit longer.
Last week, I received a response to a FOIA request that I filed with CMS in March of 2010. That's right: 2010. In its response, CMS explained that when it is busy, it utilizes a "first-in, first-out" approach when responding to requests.
The 2010 health reform act, the Patient Protection and Affordable Care Act ("PPACA"), provides for the creation of health insurance "exchanges." Exchanges are programs designed to make it easier for eligible consumers and small businesses to compare and purchase health insurance coverage in a one-stop shopping format. An Exchange is essentially a set of state regulated and standardized private health care plans, from which individuals may purchase health insurance that is eligible for federal subsidies. States choosing to create Exchanges are required to have them up and running by 2014.
The Centers for Medicare and Medicaid Service's (CMS) recently published Final Rule related to Civil Money Penalties for Nursing Homes implements provisions of the Patient Protection and Affordable Care Act related to the nursing home enforcement process.
The Office of Federal Contracts Compliance Programs ("OFCCP"), a branch of the Department of Labor, has targeted the healthcare industry for increased enforcement with regard to affirmative action. The OFCCP issued, though not publically, a December 16, 2010 directive which affirmed its position that merely receiving reimbursement from most Medicare programs or federal grants is not enough to create federal contractor status (which requires compliance with affirmative action). The OFCCP directive stated, however, that the following do establish federal contractor status: direct contracts between health care providers and TRICARE (the Department of Defense health care program for active and retired military members), Federal Employees Health Benefit Plan ("FEHBP"), or Medicare Advantage or Part D programs.
The Centers for Medicare & Medicaid Services ("CMS") has recently proposed the much anticipated Long Term Care regulations related to Hospice Services. These proposed rules mirror the hospice regulations that went into effect on December 2, 2008, and establish requirements that facilities must meet in order to qualify to participate in the Medicare and Medicaid programs. Specifically, the proposed rules obligate Long Term Care facilities to (1) enter into an agreement with a Medicare-certified hospice to arrange for the provision of hospice services to residents, or (2) assist in transferring residents to a facility that will arrange for the provision of hospice services when requested by the residents. If an arrangement between a Long Term Care facility and Hospice is established, CMS has also strictly regulated the content of the agreements between the two. Traditionally, the content of such agreements receives significant attention and scrutiny from surveyors.
If you would like assistance in drafting new agreements or reviewing your current contracts to ensure compliance with the proposed rules, please contact one of the experts in Foster Swift's Health Care Practice Group.
In conjunction with a step-up in other fraud and abuse enforcement activities, CMS recently announced new screening procedures, which will be applicable to newly enrolling providers and suppliers as well as to providers and suppliers who are currently enrolled in Medicare, Medicaid and CHIP who revalidate their enrollment information.
The Red Flags Rule requires "creditors" to address the risk of identity theft by implementing and updating identity theft programs that identify, detect, and respond to potential identity theft problems. While the definition of "creditor" under the Red Flags Rule was previously broad enough to include healthcare providers, the recently passed Red Flag Program Clarification Act of 2010 (the "Act") narrowed the definition of "creditor" to include only entities that use consumer reports or furnish information to consumer reporting agencies or to others who extend credit.
The Act, therefore, exempts doctors, dentists, orthodontists, pharmacists, nurse practitioners, and other healthcare providers from the Red Flags Rule. This is timely news as compliance with the Red Flags Rule is set to begin on December 31, 2010.
