Silence is Golden for Dentist Suspended Without Pay


Healthcare practices often employ doctors under formal employment agreements that set forth the parties’ respective rights and obligations. As illustrated by a recent case involving a Florida dentist, such employment agreements not only define what the practice can do, but also implicitly define what the practice cannot do under the agreement.  

Nancy Havens is a dentist who had a five year employment agreement with Coast Florida, P.A. (“Coast”). Three years into the agreement, Coast suspended her without pay pending an internal investigation. Havens demanded that her compensation be reinstated during her suspension.  When Coast refused, Havens resigned her employment and sued Coast.  

The trial court dismissed the complaint, but the Second District Court of Appeal, in Nancy Havens, D.D.S. v. Coast Florida, P.A., Case No. 2D12-1047 (June 12, 2013), reversed and remanded the case to the trial court, ruling that Havens stated a claim for breach of the agreement.  The result is that Coast may have to pay Havens out for the remaining two years of the agreement.

The reason? The agreement was silent on the issue of suspension. Ruling that the substantive right to suspend could not be read into the contract, the Second DCA noted that if there was an ambiguity on the right to suspend, the ambiguity must be construed against Coast, the drafter of the agreement.  

So what did Dr. Havens do to prompt an internal investigation? The Second DCA’s opinion does not say, and it does not matter. Even if Dr. Havens engaged in egregious wrongdoing, her employment agreement did not give Coast the right to suspend her without pay.  It is that simple.  The employment agreement contained a “cause” termination provision.  If Coast had cause to terminate Havens, it could have invoked that provision rather than suspending her without pay.  Alternatively, Coast could have proposed to Havens that, with her consent, she would be suspended without pay while her behavior was investigated. Coast’s decision to suspend Havens without pay despite the agreement’s silence on this issue may cost the dental practice dearly.

For Florida healthcare employers, the lesson of the Coast Florida case is clear. Employers should not assume they have contractual rights that are not spelled out in their employment agreements.

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Florida Legislature Limits Scope of Hasan v. Garvar


Just six months after the Florida Supreme Court decided Hasan v. Garvar, 2012 WL 6619334 (Fla. 2012), Governor Rick Scott signed into law SB 1792. The new law partially reverses the holding in Hasan that Florida's patient confidentiality statute, §456.057, Florida Statutes, bars ex-parte communication between a non-defendant subsequent treating physician and the physician's attorney. Hasan also prohibited non-party physicians from independently hiring and consulting with a lawyer on certain subjects including deposition or trial procedure, the physician's potential for legal exposure in the lawsuit as a Fabre defendant, and the potential for giving testimony that could affect board certification.

SB 1792 amends §456.057, Florida Statutes, to explicitly permit a physician to consult with his or her lawyer where the physician reasonably expects to be deposed, called as a witness or to receive discovery requests in a medical negligence action, including the presuit investigation, or an administrative proceeding. The physician may tell his or her lawyer information disclosed by a patient to the physician and show the lawyer records created by the physician while treating the patient.

However, the new law does not completely undo Hasan. The physician's lawyer may not be a conduit for communications between the physician and the defendant in the medical malpractice case or the defendant's insurer. If the liability insurer for the physician also represents a defendant or prospective defendant in the malpractice action, there are important limitations on these consultations.:

  1. The insurer for the physician may not contact the physician to recommend that the physician hire a lawyer. 
  2. If the physician contacts his or her insurance company about the matter, the insurer may not select a lawyer for the physician.  The insurance company may recommend lawyers who do not represent a defendant or prospective defendant in the matter. 
  3. The lawyer selected by the physician may not disclose any information to the insurer, other than categories of work performed or time billed. 

These restrictions do not apply if physician is or reasonably expects to be named as a defendant in the malpractice case. 

Because SB 1792 prohibits insurers from alerting physicians of their right to seek the advice of a lawyer, it is critical that physicians and other health care practitioners understand when to ask for the assistance of a lawyer consistent with  the above limitations since plaintiffs will seek to prevent prohibited attorney consultations during a medical negligence action.

Nevertheless, although the new law does not restore the pre-Hasan status quo, it goes a long way toward ensuring that physicians are afforded adequate legal representation.

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The Myriad Decision: A Win-Win?


In a long-awaited decision June 13, 2013, the Supreme Court of the United States ruled in Association for Molecular Pathology et al v. Myriad Genetics, Inc. et al that DNA and genes that are found in the human body and merely "isolated," are not eligible for patenting, while synthetic DNA, known as cDNA, could be eligible for patenting.
The Supreme Court’s decision in Myriad is likely to lower some medical research costs for life science companies, while still affording such companies patent protection needed to justify investments in such research. As such, many medical professionals and researchers view the Court’s ruling that isolated genes are unpatentable as positive. They can now generally isolate genes, study their effects, and detect harmful genes in the human body without the same concerns over infringing patents as before.
On the other hand, various claims of the Myriad patents at issue, including certain method claims related to the breast cancer genes, remain patentable despite the Court's decision, as were cDNA compositions necessary to create tests and therapies that fight a gene’s harmful effects. Thus, the Court’s ruling lowers research costs while preserving incentives for investment into research for gene therapy. 



Tuomey Standing Firm in Face of "Stark" Penalties


The next round in United States ex. rel. Drakeford v. Tuomey Healthcare System, Inc., is underway and Tuomey Healthcare keeps fighting.  As previously reported, on May 8, 2013, a federal jury found that Tuomey Healthcare System, a non-profit system in South Carolina, violated the Stark law and the False Claims Act in connection with its compensation structure for specialists on its medical staff.  The jury also found that Tuomey submitted over 21,000 improper claims, totaling $39 million.  Including penalties and treble damages, Tuomey faces a maximum judgment of $357 million.

On May 22, 2013, the Government filed a motion asking the Court to enter judgment against Tuomey in the amount of $237,454,195. In a footnote the Government acknowledged that this was the minimum recovery authorized by law.  The Government also acknowledged that Tuomey's resources "may be inadequate to fully satisfy this judgment."  In an unusual move, the Government stated that it remains open to discussing a settlement at some amount less than $237 million.

Late last week, Tuomey fired back, filing multiple motions arguing that the Government failed to prove: (1) the existence of any Stark-prohibited referrals or the presentment of any false claims, and (2) that the Government suffered any financial loss as a result of anything Tuomey did.  Tuomey also asserted in its motions that it consulted with lawyers when structuring the employment agreements with the physicians and followed that advice.  As a consequence, Tuomey maintains that it is not liable for any of the penalties sought by the Government.

Tuomey also argued that the excessive fines provision of the Eighth Amendment and the due process provisions of the Fifth Amendment preclude the Court from imposing penalties against the health system.  In support of its position, Tuomey acknowledged that the Government's suggested judgment amount of $237 million would "destroy the only hospital in Sumter County" and provided the Court with a resolution from the Sumter County Legislative Delegation and letters from local economic development agencies confirming that the closure of Tuomey Hospital would be catastrophic for the community.

It is clear that all parties agree that the minimum judgment the Government is seeking, based on the jury verdict, will bankrupt the hospital.  However, the FCA does not give the Court discretion to reduce the statutory fines below the minimum of $5,500 per penalty. Stay tuned to see if Tuomey's aggressive position results in a negotiated settlement with which the hospital can live or causes the Government to harden its stance.

Jury Returns Mixed Verdict in Complicated Medicaid Fraud Trial


Over five years after law enforcement agents raided the Tampa, Florida headquarters of WellCare Health Plans, a federal jury delivered a mixed verdict in the criminal trial of the company's former top executives. The verdict, which was delivered on Monday, came after a nearly two and a half month trial and lengthy jury deliberations that were interrupted for a 10-day vacation break.

The jury found WellCare's former CEO and CFO, as well as the vice president of a wholly-owned subsidiary, each guilty of two counts of health care fraud.  The CFO was also convicted of two counts of making false statements relating to health care matters, and the company's former vice president of medical economics was found guilty of making false statements to a law enforcement officer.  At sentencing, the defendants face a maximum of 10 years in prison on each of the health care fraud counts and a maximum of five years on the false statement charges. WellCare's former general counsel was also implicated in the government's investigation, but his case was severed from the trial of the executives and will be conducted at a later date.

Despite obtaining the executives' convictions, the jury verdicts were not a complete victory for the government.  With respect to several other counts alleged against the executives, the Tampa jury returned verdicts of not guilty and were unable to reach verdicts on others.  United States District Court Judge James S. Moody, Jr. declared a mistrial on the deadlocked counts, which the government may bring for retrial at a later date. When it comes time for the sentencings of the convicted executives, however, the fact that they escaped convictions on some of the government's charges may prove to be a hollow victory because under the United States Sentencing Guidelines, acquitted conduct may still be considered by the judge in determining the sentences notwithstanding the jury's verdict.  Under current law, imposition of the sentence called for in the sentencing guidelines is no longer mandatory, but the applicable sentencing guidelines continue to be the most significant consideration of federal judges in determining sentences.

WellCare itself has been under new leadership for several years.  In 2009, the company entered into a deferred prosecution agreement that required it to pay $40 million in restitution and forfeit another $40 million to the United States.  As part of the agreement, the company also agreed to cooperate with the government's investigation of its former executives.  Later, in 2010, WellCare also entered into a civil settlement with the Department of Justice in which it paid $137 million.  The facts behind the WellCare case were brought to the Department of Justice by a whistleblower who received nearly $21 million as part of the civil settlement paid by WellCare.

The government's theory of the case was that WellCare and its former executives falsely and fraudulently submitted inflated expenditure information in order to reduce the amount of money that the company was contractually obligated to pay back to the Florida agency that oversees Medicaid in the state. Under Florida law, Medicaid HMOs are required to expend 80% of the Medicaid premium paid for certain behavioral health services and return any difference if the HMO expended less than 80% of the premium. A former WellCare analyst who admitted to participating in the alleged scheme provided extensive testimony for the government at trial, which at times was very complicated.

The defense presented evidence that the expenses challenged by the government were legitimate and that the state Medicaid agency, despite knowing of WellCare's practices, failed to provide appropriate guidance necessary to navigate through complicated Medicaid program rules. These issues, as well as the judge's decision to allow the jurors to take a 10-day break during deliberations, are likely to be the subject of extensive appeals by the former executives.

Justice Department Continues to Target Healthcare Providers with "Barrier Free Initiative"


The U.S. Department of Justice (DOJ) has stepped up its pursuit of healthcare providers for failing to provide adequate service to persons who are deaf or hearing-impaired. In May, the DOJ announced multiple settlements with healthcare providers including a hospital, rehabilitation centers, an ear, nose, and throat practice, and a sports medicine center. The DOJ investigations were in response to patients' complaints after healthcare providers denied the patients' requests for American Sign Language interpreters at the providers' expense during treatment. 

These settlements follow the DOJ's "Barrier Free Health Care Initiative" instituted in summer 2012, aimed at ensuring that healthcare providers provide effective communication to people who are deaf or have significant hearing loss. In partnership with the Civil Rights Division and more than 40 U.S. Attorney's offices across the country, the Initiative is aimed at enforcing provisions of the Americans with Disabilities Act and the Rehabilitation Act which require healthcare providers (and others) to ensure that their communications with people with hearing disabilities are as effective as their communication with people without disabilities. To meet this obligation, healthcare providers must provide appropriate auxiliary aids and services unless:

  1. it would create an undue burden; or
  2. it would fundamentally alter the service being provided.   

Healthcare providers may not charge the individual with a disability for the cost of auxiliary aids or services, including sign language interpreters.

The eight settlement agreements reached to date require each provider, among other things, to:

  • provide appropriate auxiliary aids and services unless it would result in an undue burden or fundamental alteration of the service;
  • document the determination of what auxiliary aids or services are appropriate in consultation with the person with the disability, using established factors and a defined timeline; 
  • perform a communications assessment and document the results in the patient's chart; 
  • post conspicuous notices about the availability of qualified interpreters free of charge for patients, family members and companions 
  • log each request for auxiliary services;
  • provide mandatory training to personnel annually; and
  • submit to three years of DOJ oversight.

Healthcare providers should implement many of these steps now, including training staff on dealing with patients with hearing disabilities in compliance with the law. Those who are using electronic health records should adapt their EMR systems to allow for appropriate documentation of the initial and ongoing assessment, the patient's preferred mode of communication, and the auxiliary aids provided.

Preparing for the Affordable Care Act: New Law Authorizes Florida to Review Insurance Policies for Compliance, Report Violations


The 2013 Florida Legislature passed a number of healthcare-related bills that may impact your business or practice. The bills make changes to Medicaid and affect healthcare providers, hospitals, health insurers, HMOs, and pharmacies.

Most recently, Florida Governor Rick Scott signed one of the bills, Florida Senate Bill 1842, into law on May 31.  The new law conforms parts of the Florida Insurance Code with the federal Patient Protection and Affordable Care Act ("PPACA"). It makes the following changes: 

  • Provides that the Florida Insurance Code applies unless it conflicts with PPACA.
  • Authorizes the Florida Office of Insurance Regulation to review insurance policies and determine whether the policies comply with PPACA.  Allows the Office to report violations to the federal Department of Health and Human Services.
  • Requires individuals working as navigators (i.e., individuals designated by PPACA to help consumers find and sign up for health coverage) to register with the Department of Financial Services.
  • Exempts certain individual and small group health plans from having to get their premiums approved by the Florida Office of Insurance Regulation for 2014 and 2015 (although the health plans still must file their premium information with Florida for informational purposes). Requires certain health plans to provide a specific notice to their customers describing the estimated impact of PPACA on monthly premiums.

The provisions became effective on May 31.

For a more complete summary of the healthcare-related bills passed during the 2013 Florida Legislative Session, see Akerman's recent Practice Update.

Health Care Solution Network Inc. Fraud Case Continues to Generate Lengthy Prison Terms


Healthcare providers continue to receive lengthy sentences from federal district court judges in the Sothern District of Florida in the wake of the Health Care Solutions Network Inc. (HCSN) community mental health center fraud. From 2004 to 2011, HCSN billed Medicare and the Florida Medicaid program approximately $63 million for purported mental health services. Fifteen individuals have been charged for their roles in the fraud at HCSN and twelve have pleaded guilty, including HCSN's owner who was sentenced in February 2013 to 168 months in federal prison.

According to court documents, HCSN paid illegal kickbacks to owners and operators of assisted living facilities for patient referral information to be used to submit false and fraudulent claims to Medicare and Medicaid. Because many of these referral patients suffered from mental retardation, dementia and Alzheimer's disease, they were ineligible for Partial Hospitalization Program services. HCSN personnel fabricated therapy notes and other medical records to make it appear that legitimate and reimbursable services were provided to these patients in order to receive payment from the government. In many instances, these records were created weeks or months after patients were admitted to HCSN in an effort to justify the improper claims.  According to the government, instead of receiving the therapy that was billed, patients often watched Disney movies, played bingo and had barbeques. Therapists at HCSN were directed to remove from medical records references to these recreational activities to avoid detection and facilitate payment of the false claims.

The latest sentences to arise from this case are as follows:

  • After pleading guilty in March to conspiracy to commit healthcare fraud, a former therapist and clinical director of HCSN was sentenced last week to 111 months in federal prison. During the course of the conspiracy, the therapist worked full time at multiple HCSN locations in Florida, serving in various capacities including, substance abuse counselor and therapist as well as clinical director of HCSN's Partial Hospitalization Program. 
  • Another therapist and program coordinator of HCSN's Partial Hospitalization Program received a sentence of 70 months in federal prison for routinely fabricating medical records for purported mental health treatment for patients that were ineligible for the services billed. Additionally, that therapist admitted that when she was an unlicensed clinical social worker intern, she provided unlicensed therapy while licensed therapists were not present.

Additionally, in April 2013, an HCSN supervisor was convicted of conspiracy to commit healthcare fraud by a jury sitting in the Southern District of Florida after a five-day trial. Shortly thereafter, in early May, another HCSN therapist and clinical director pleaded guilty to one count of healthcare fraud and one substantive count of healthcare fraud. The sentencing of those individuals are scheduled to occur soon.

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Second Time Around Tuomey Healthcare System is Found to Have Violated Stark Law and False Claims Act; Faces Penalties of up to $357 Million


In the ongoing saga of U.S. ex. rel. Drakeford v. Tuomey Healthcare System, Inc., on May 8, 2013, a South Carolina jury found that Tuomey violated the Stark Law and the False Claims Act.  The jury determined that Tuomey submitted over 21,000 improper claims, totaling $39 million. When penalties and treble damages of up to $11,000 per claim are included, Tuomey could be facing a maximum judgment of $357 million. The verdict was issued in a retrial ordered by the United States Court of Appeal for the Fourth Circuit in U.S. ex. rel. Drakeford v. Tuomey Healthcare System, Inc., 675 F.3d 394 (4th Cir. 2012).

In 2005 and 2006, Tuomey entered into compensation agreements with specialists on its medical staff to prevent them from performing outpatient services at facilities not owned by Tuomey Hospital. The agreements required the specialists to perform outpatient procedures at Tuomey Hospital. Tuomey was responsible for billing and collecting both the professional and technical components of the procedures performed. Tuomey paid the physicians a base salary that fluctuated with Tuomey's net cash collections for the outpatient procedures. In addition, the physicians received a productivity bonus equal to a percentage of net collections and were eligible for an incentive bonus that was based on a percentage of the productivity bonus.

The jury found that the compensation structure violated the Stark Law because the compensation took into account the anticipated referrals from the specialists to the Tuomey outpatient facilities by basing physician pay on not only the professional component of the services, but also the technical component. In its 2012 opinion, the Fourth Circuit held that if a hospital provides fixed compensation to a physician that is not based solely on the value of the services the physician is to perform, but also takes into account additional revenue the hospital anticipates will flow from the physician's referrals, that compensation takes into account the volume or value of such referrals.

Post-trial motions and hearings will occur over the next months, with a major issue being the total amount that Tuomey must pay to the government. If the government seeks the maximum penalty of $357 million, the future of the hospital could be in jeopardy. In the meantime, hospitals should review their compensation arrangements to be sure the amounts paid to physicians represent only the professional services provided by the physicians and do not include anticipated referrals to the hospital.   

For more information on the case, please see the Akerman Practice Update, The High Cost of Paying Physicians for Referrals:  Tuomey Healthcare System Faces Penalties of up to $357 Million.

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Employers Receive Sample Exchange Notice and Face October 1 Deadline to Send to Employees


Employers have long been anticipating sample notices from the Department of Labor ("DOL") that are required under the Affordable Care Act, informing employees (i) of the existence of the health care exchange (“Exchange”) and certain information about the services provided through the Exchange; (ii) of the possibility that in certain circumstances the employee may be eligible for a premium tax credit if the employee purchases a qualified health plan through the Exchange; and (iii) that the employee may lose the employer contribution, if any, to any health plan offered by the employer if he or she purchases health care coverage through the Exchange.

On May 8, 2013, the DOL issued Technical Release 2013-02 (the “Release”), which applies to any employers covered under the Fair Labor Standards Act (“FLSA”). The Release sets forth the form and content requirements for the notice. It also provides that the notice must be provided to all current employees no later than October 1, 2013.

To assist employers, the DOL provided model notices for employers who do not offer a health plan and another model notice for employers that do offer a health plan to some or all of its employees. Employers may use the appropriate model notices, or a modified/supplemented version of either, provided that it meets the content requirements set forth in the Release.

The DOL also released an updated model COBRA election notice, which informs qualified beneficiaries of other coverage options available through the Exchange.

Although the Release only provides temporary guidance, and further guidance may be issued in the coming months, employers should proceed expeditiously with plans to notify their employees of the availability of the Exchange and the coverage options offered through the Exchange no later than  October 1, 2013.

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New Challenge to Medicare Requirement that Ancillary Providers Obtain Physician Records to Justify Medical Necessity


For years now, ancillary providers ranging from durable medical equipment providers (DMEs), independent diagnostic testing facilities (IDTFs), and home health agencies have been required under Medicare regulations to obtain copies of referring physicians' medical records to prove medical necessity for the items and services the physician ordered. Providers are to utilize a template "Dear Physician" letter created by CMS that explains the need for the ancillary provider to obtain the physician's records. This issue typically arises during audits, prepayment reviews, and other program integrity activities by MACs and ZPICs. The requirement has drawn the ire of ancillary providers because physicians are not required by Medicare to provide the documentation, not sanctioned if they fail to provide the documentation, and have no financial incentive to do so. Physicians view such requests as is just one more uncompensated service they are being asked to perform. Furthermore, even when the documentation is obtained by the ancillary provider, it is often found by Medicare contractors to lack information justifying medical necessity, making the provider ultimately responsible for the physician's own poor record keeping or decision making.

The issue of the physician documentation requirement has finally been legally challenged. The American Orthotic & Prosthetic Association recently filed suit against the Department of Health and Human Services, asserting that the physician documentation requirement is an invalid rule because it was never adopted through the formal rulemaking process, and that it violates the Medicare Act and other statutes. The lawsuit seeks a court order prohibiting Medicare from continuing to rely on the "Dear Physician" letter as a basis for denying claims, and ordering Medicare to reopen and pay all claims denied based on the physician documentation requirement. If successful, this case may be used as a basis for other types of ancillary providers to challenge these requirements.

Recent Judicial Activity on the Pharmacy Front


Reimbursement for the Difference Between the Brand and Generic Drug

Graphic Communications Local 1B Health & Welfare Fund “A”, et al., Appellants, vs. CVS Caremark Corporation, et al.,  State of Minnesota Court Of Appeals, Case No. A12-1555 (May 6, 2013).

A recent decision by the Minnesota Court of Appeals reversed the dismissal of a case against pharmacies for not providing the financial benefit of generic substitution. The case was brought by certain union health benefit plans but initially dismissed by the lower court finding no private right of action under the generic substitution statute. The Minnesota Court of Appeals held that the plaintiffs could bring the case under Minnesota's consumer fraud statute. Minnesota, like many states, has a provision in its generic substitution statute that requires pharmacies to pass on the difference between the cost of the brand and the generic drug.  Thus, we may see cases like this arise in other states.

What may limit this from occurring is that most pharmacy provider agreements have differential pharmacy reimbursement rates depending on whether a brand name drug or generic is dispensed by the pharmacy. Thus, if the health plan or pharmacy benefits manager ("PBM") has already contracted for a lower rate, it is difficult to see how these entities could bring such a challenge, or if they did, because the pharmacies have already agreed to a lower reimbursement scheme, the damages would likely be minimal.

Drug Manufacturer Coupon Programs

Plumbers and Pipefitters Local 572 Health and Welfare Fund v. Merck & Co. Inc. U.S. District Court, District of New Jersey, Case No. 12-137912-365212-7027 (April 29, 2013).

Merck & Co., Inc. had offered coupons to patients to off-set the cost of the co-payments for certain drugs dispensed. Union health plans challenged this practice in federal court in New Jersey on a number of grounds, essentially complaining that the coupons removed the co-payment incentive to patients to cost-shift to lower priced drugs. The plaintiffs brought claims under RICO, tortious interference with contracts and commercial bribery.  The court found that the plaintiffs lacked standing to bring these claims, but it appeared to be that the complaint lacked sufficient allegations for the most part, so this case may be refiled with a different result.

An ironic twist regarding these drug manufacturer coupon programs is that the patients often have to provide their names and addresses in order to receive either the coupon or the payment from the drug manufacturer. After all the steps pharmacies take to keep this protected health information ("PHI") confidential, and face stiff fines and penalties if they fail to do so, the patient willingly provides this PHI to the drug manufacturer, often in exchange for a $10 coupon. The drug manufacturers end up receiving much desired marketing and tracking information which would otherwise be PHI if provided by the pharmacies.

Medicare Part D Preferred Provider Rule Challenge Dismissed for Failure to Exhaust Administrative Remedies

Southwest Pharmacy Solutions Inc. v. Centers for Medicare and Medicaid Services, U.S. Court of Appeals, Fifth Circuit, Case No. 12-40097 (May 1, 2013).

Plaintiff, a coalition of independent pharmacies operating in Texas, Arkansas, Louisiana, New Mexico, Oklahoma, Missouri, Mississippi, and Tennessee ("Pharmacies") brought a federal court challenge to the preferred pharmacy provisions in Medicare Part D that allow plan sponsors to allow reduced co-payments and co-insurance if a preferred pharmacy is utilized. The federal district court determined that the Pharmacies had to first bring the claims with CMS and "exhaust their administrative remedies" before bringing the claim in federal court. The appellate court agreed, though it appears that there may be other avenues for the Pharmacies to bring the challenge.  The Pharmacies had essentially contended that allowing the preferred pharmacy provisions in Medicare Part D was inconsistent with the "any willing provider" provisions of Medicare Part D. The challenge may not be over, and the Pharmacies could regroup and try another strategy.

EMR Market Continues to Grow While Practitioner Satisfaction Decreases


According to a new report from healthcare market research firm Kalorama Information, the market for Electronic Medical Records (EMRs) was $20.7 billion in 2012, up 15 percent from $17.9 billion in 2011. The EMR market includes revenues from EMR and Computerized Physician Order Entry (CPOE) systems as well as directly-related services such as installation, training, servicing and consulting. A significant driver of the growth in the EMR market continues to be the push to upgrade systems to comply with 'meaningful use requirements' set by the Centers for Medicare & Medicaid Services (CMS). As part of the American Recovery and Reinvestment Act of 2009, Congress set aside nearly $20 billion in incentives for hospitals and physicians that adopt EMR systems that meet specified criteria. These incentives are provided by CMS to those providers who self-report compliance with the EMR meaningful use requirements. As of March 1, 2013, more than $12.3 billion in meaningful use incentive payments have been made to over 200,000 eligible healthcare providers.

Although business is booming for the EMR industry, indications are that healthcare providers have grown increasingly dissatisfied with EMRs. A recent study of over 4,000 physicians conducted by AmericanEHR Partners found that between 2010 and 2012, provider satisfaction and usability ratings of their EMR systems dropped across a broad range of practice specialties, settings, and products of multiple vendors. Metrics such as the percentage of clinicians who would not recommend their EMR system to a colleague increased 15%, from 24% in 2010 to 39% in 2012. Other notable findings include a 14% increase in dissatisfaction with EMR ease of use, which increased from 23% in 2010 to 37% in 2012. The increased productivity expected to result from the adoption of EMRs also continues to remain elusive with 32% of respondents indicating that they had not returned to pre-EMR levels of productivity, compared to 20% in 2010.

As the study above references, the healthcare system in the US continues to grapple with the challenges of implementing EMRs. However, a recent Pricewaterhouse Coopers study of the experience among family doctors in Canada who were implementing EMRs suggests there are significant potential benefits to the implementation of EMRs. The study found that the Canadian Health System saved $800 million Canadian Dollars in administrative efficiencies and $584 million Canadian Dollars in health system efficiencies during the time period between 2006 and 2012.

Whether the US healthcare system will come close to realizing the same level of benefits from EMRs as the Canadian system remains to be seen. What is clear, however, is that despite increased dissatisfaction among health providers in the US, the implementation of EMRs will likely continue at a rapid pace for the foreseeable future.

After OIG Report, EHR Meaningful Use Audits Are Coming


The Office of Inspector General (OIG) for the Department of Health and Human Services released a report late last year claiming that the Centers for Medicare and Medicaid Services (CMS) was not doing enough to verify that only eligible providers were receiving electronic health records (EHR) incentives. Until now, CMS relied on self-reported information to decide which providers were eligible for EHR incentive payments. The OIG stated that CMS did correctly identify which providers met meaningful use requirements based on the self-reported information, but according to the OIG, CMS did little to verify the self-reported information. The OIG stated that CMS did not have enough external information to use to verify the self-reported information. Additionally, the OIG reported that a potential audit was the only control that was in place to stop potentially fraudulent participation in the EHR meaningful use incentive payment program. However, those audits do not take place until after a provider entered into the program and incentive payments were made.

CMS has seemingly responded to the OIG report as follows. The agency has announced that approximately 5% of participants in EHR can expect to be audited. Robert Anthony, deputy director of the Health Information Technology Initiatives group with CMS stated that "…[A]bout one in 20 participants in the federally funded electronic health-record incentive payment program can expect to be audited for compliance with meaningful use and other program criteria." Mr. Anthony stated that CMS will focus equally on pre-payment and post-payment audits, with the goal of reviewing 5% of program participants. This new initiative shows a departure from the previous position of only utilizing post-payment audits. Further, this round of audits is in addition to the post-payment audit process that was announced by CMS last year.

In order to prepare for possible future audits, CMS recommends that providers save all documentation that supports the data they submitted when applying for the EHR incentive program. Moreover, providers should work with their compliance counsel to have their compliance program pre-audited as part of the preparation process.

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Move to Amend HIPAA Privacy Rule to Allow Firearm Background Check Reporting


The Department of Health and Human Services Office for Civil Rights (OCR) recently announced via an Advance Notice of Proposed Rulemaking (ANPRM) that it is considering amending the Health Insurance Portability and Accountability Act of 1996 ("HIPAA") Privacy Rule. The proposed amendment would expressly permit covered entities holding information about the identities of individuals who are prohibited under federal law from owning firearms to disclose limited information to the National Instant Criminal Background Check System ("NICS") database. OCR is also soliciting comments from the public to better understand any problems the HIPAA Privacy Rule may pose to reporting to NICS the identities of persons who may be prohibited by law from possessing a firearm due to mental health issues and how these problems may be corrected.

Existing federal gun control laws identify several categories of individuals who are prohibited from receiving or possessing firearms ("prohibitors"). The mental health prohibitor applies to individuals who have been (1) involuntarily committed to a mental institution; (2) found incompetent to stand trial or not guilty by reason of insanity; or (3) otherwise adjudicated as having a serious mental condition that results in the individuals presenting a danger to themselves or others or being unable to manage their own affairs. Federal law does not require State agencies to report to NICS the identities of individuals who are prohibited from purchasing firearms, and according to OCR, many States do not report complete information to the NICS, making the database incomplete. 

Currently, the only information reported to the NICS is demographic information about the individual (name, date of birth, Social Security number) and the fact that the individual is subject to the mental health prohibitor. The individual's underlying diagnosis, treatment records, and other identifiable health information is not provided to or maintained by NICS.  When a federal firearm licensee queries the NICS database to see if he or she may complete the sale of a gun, he or she is told only that the transaction is denied and not if it is denied due to a mental health prohibitor. OCR Director Leon Rodriguez said in the press release accompanying the publication of the ANPRM that the NICS is not a mental health registry and that the proposed rulemaking will not create such a registry. 

In the ANPRM, OCR states that, when crafting the elements of an express permission allowing covered entities to disclose the identity of persons subject to a mental health prohibitor, it will consider limiting the information to the minimum amount necessary.  Such information potentially would include the name of the individual subject to the mental health prohibitor, demographic information about the person such as his or her date of birth, and codes identifying the reporting entity and the relevant prohibitor. OCR will not consider allowing disclosure of an individual's treatment record or any other clinical or diagnostic information. The agency would consider allowing disclosures for NICS purposes only by those covered entities that order involuntary commitments, perform relevant mental health adjudications, or are otherwise designated as State repositories for NICS reporting purposes. OCR notes that many records related to adjudications of incompetency to stand trial and civil commitments originate in the courts or criminal justice system agencies, which are not covered entities subject to HIPAA, and therefore can be reported by those State agencies without violating the Privacy Rule. OCR also suggests that State agencies that perform both health care services and non-health care services (which would include NICS reporting), may become "hybrid entities" under HIPAA, with the Privacy Rule restrictions applying only to the portion of the entity providing health care services.

OCR poses fifteen questions, not including subparts, for commenters to address to assist the agency in better understanding the current barriers for reporting to NICS. Questions include whether the commenter's state routinely reports the identities of individuals who are subject to the Federal mental health prohibitor to the NICS; if a State does not routinely report such information, what are the reasons for not reporting; and is the HIPAA Privacy Rule perceived as a barrier to reporting. Several questions relate to whether a reporting requirement may adversely affect people seeking needed mental health services and how HHS could mitigate any unintended consequences so that people are not discouraged from seeking mental health services if the Privacy Rule is revised to permit more robust reporting to the NICS. Comments are due to OCR by June 7, 2013 and may be submitted electronically.


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