May 2012 Health Law Update

FEDERAL UPDATEFederal Court Reverses $44 Million Jury Verdict and Provides Guidance on Stark Law Violations

On March 30, 2012, the U.S. Court of Appeals for the Fourth Circuit reversed a jury verdict requiring Toumey Healthcare System in South Carolina to pay $44.9 million for violating the Stark Law, the federal physician anti-referral law. The verdict stemmed from Toumey Hospital seeking to provide contractual incentives to specialists who would otherwise perform procedures outside of the hospital. Although the reversal was due to procedural grounds, the court provided guidance on the key principles to assess in order to determine whether a contractual relationship between a referring physician and a health care facility violates the Stark Law:

• Whether the contractual relationship generates a “referral” within the meaning of the Stark Law

• Whether the compensation takes into account or varies with the “volume or value” of referrals or other business between the parties

These questions are consistent with the essential purpose of the Stark Law - to minimize overutilization of services by physicians who stand to profit from referring patients to health care facilities or entities in which they have a financial interest.

For additional information, contact:

Lani M. Dornfeld | 973.403.3136 | [email protected] Todd C. Brower | 973.403.3103 | [email protected]

CMS Final Rule Requires NPI Number on Claims and Enrollment Applications

The Centers for Medicare & Medicaid Services (CMS) recently finalized several provisions of the Affordable Care Act implemented in the May 5, 2010 interim final rule with comment period. The final rule:

• Requires all providers of medical or other items or services and suppliers that qualify for a National Provider Identifier (NPI) to include their NPI on all Medicare enrollment applications and on all Medicare and Medicaid claims for payment

• Requires physicians and other professionals who are permitted to order and certify covered items and services for Medicare beneficiaries to be enrolled in Medicare

• Mandates document retention and provision requirements on providers and suppliers that order and certify items and services for Medicare beneficiaries.


Debra C. Lienhardt | 973.364.5203 | [email protected] Keith J. Roberts | 973.364.5201 | [email protected]

CMS Posts Stage 2 Meaningful Use Quality Measures

The Centers for Medicare & Medicaid Services (CMS) has posted two sets of clinical quality measures that were included in the proposed rules for Stage 2 of the CMS Electronic Health Record (EHR) Meaningful Use program. One set applies to eligible professionals and one set applies to hospitals.

Under the American Recovery and Reinvestment Act/Health Information Technology for Economic and Clinical Health Act, health care providers can qualify for Medicare or Medicaid incentive payments if they demonstrate meaningful use of certified EHR systems. On March 7, 2012, CMS issued its proposed rule for Stage 2 of its EHR Meaningful Use incentive program, including the quality measure charts mentioned above.

CMS’s Stage 2 measures were developed with several goals in mind: (1) measures that can be technically implemented within the capacity of the CMS infrastructure; (2) measures that improve quality of care; (3) measures that address known gaps in quality of care; and (4) measures that address areas of care for different types of professionals.

In This Issue:

CMS Final Rule Requires NPI Numbers

Stage 2 Meaningful Use Quality Measures

Moratorium on Adults Day Health Services Extended

Board of Optometrists Rules

Brach Eichler in the News

HIPAA Corner

May 2012

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Under the Stage 2 proposed rules, eligible professionals would need to meet 12 clinical quality measures from the list of 125 measures. Hospitals would need to meet 24 clinical quality measures out of the list of 49 measures. Note, however, that CMS may delete certain measures after the comment period. According to CMS, eligible professionals can submit their measures through the Physician Quality Reporting System and hospitals can submit their data through the Hospital Inpatient Quality Reporting System.

The proposed Stage 2 clinical quality measures for eligible professionals include Measure 52 – Use of Imaging Studies for Low Back Pain, Measure 59 – Diabetes: Hemoglobin A1c Poor Control, Measure 271 – Perioperative Care: Discontinuation of Prophylactic Antibiotics (Non-Cardiac Procedures), and Measure 419 – Documentation of Current Medications in the Medical Record.

Among the proposed Stage 2 clinical quality measures for hospitals are Measure 132 – Aspirin at Arrival, Measure 148 – Blood Cultures Performed in the Emergency Department Prior to Initial Antibiotic Received in Hospital, Measure 301 – Surgery Patients with Appropriate Hair Removal, and Measure 639 – Statin Prescribed at Discharge.


John D. Fanburg | 973.403.3107 | [email protected] E. Manigan | 973.403.3132 | [email protected]

ICD-10 Compliance Date: HHS Proposes One-Year Delay

On April 17, 2012, the Department of Health and Human Services (HHS) published a proposed rule that would delay (from October 1, 2013 to October 1, 2014) the compliance date for the International Classification of Diseases, 10th Edition diagnosis and procedure codes (ICD-10). The ICD-10 compliance date change is part of a proposed rule that would, among other things:

• Adopt a standard for a unique health plan identifier

• Adopt a data element that would serve as an “other entity” identifier

• Add a National Provider Identifier requirement.


Carol Grelecki | 973.403.3140 | [email protected] M. Gorrell | 973.403.3112 | [email protected]

OIG Modifies Advisory Opinion 08-17 Approving Expansion of Proposed Arrangement’s Benefits to Financially Needy Cystic Fibrosis Patients to Include Legal Counseling

The United States Department of Health & Human Services Office of Inspector General (OIG) recently issued a modification of a prior OIG advisory opinion in which the OIG approved an arrangement proposed by a foundation for providing financial assistance to underprivileged individuals who (1) had been diagnosed with cystic fibrosis and pulmonary complications; (2) had insurance coverage but could not afford costs associated with prescription drugs; and (3) provided an explanation of benefits from the individual’s insurer denying coverage (Notice of Modification of OIG Advisory Opinion No. 08-17, issued April 4, 2012).

The OIG had already modified its approval of the arrangement once before (OIG Notice of Modification, issued October 27, 2010), to approve the foundation’s amendment of the arrangement through (1) expanding coverage to include patients who did not experience pulmonary complications; (2) expanding financial eligibility to cover more patients; and (3) replacing its requirement of providing an explanation of benefits with a requirement that the patient provide a written certification and proof of drug costs.

Under the arrangement as modified the first time, the foundation was permitted to give patients general contact information regarding publicly funded coverage options or other patient assistance programs, such as charitable assistance programs. This most recent modification from the OIG permitted the expansion of services offered by the foundation to include counseling from a law firm regarding a patient’s eligibility for federal and state-funded benefits programs and assistance from the law firm in applying for benefits.


Carol Grelecki | 973.403.3140 | [email protected] M. Lastorino | 973.403.3129 | [email protected]

New OSHA “National Emphasis Program” Places Emphasis on Nursing and Residential Care Facilities

OSHA has announced that it is implementing a new National Emphasis Program (NEP) for all nursing and residential care facilities to protect workers from safety and health hazards common to the medical industry. The NEP focuses outreach efforts and inspections on specific hazards in specific industries for a three-year period. The specific targets of this new NEP are nursing and residential care facilities with days-away-from-work rates of 10 or higher per 100 full-time workers. OSHA claims that these facilities experience 2.3 times higher rates of workplace injuries and illness than all other major industries, primarily overexertion, slips, trips and falls.


Anthony M. Rainone | 973.364.8372 | [email protected]

Matthew M. Collins | 973.403.3151 | [email protected]

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STATE UPDATE

Moratorium on Adult Day Health Services Extended

A moratorium in place for new or expanded Adult Day Health Services (ADHS) will continue until November 1, 2012. The Commissioner of the New Jersey Department of Health and Senior Services (DHSS) has determined that there continues to be adequate access to ADHS facilities and the DHSS will not accept licensure applications during the remainder of the moratorium. This extension is intended to give the DHSS time to solicit feedback from managed care organizations (MCOs) regarding capacity and eligibility assessments of participants. The DHSS has indicated that the impact has not yet been realized of the transition of ADHS participants to MCOs and, therefore, more time is needed.

Presently, there are 12,701 ADHS slots in 134 facilities, with applications pending for more than 4,800 additional slots. The vast majority of these pending additional slots are in applications for over 30 new facilities. The DHSS will continue to process applications for ADHS facilities submitted to the DHSS prior to November 3, 2008.


Mark E. Manigan | 973.403.3132 | [email protected] Kevin M. Lastorino | 973.403.3129 | [email protected]

Revised Rules Adopted by New Jersey State Board of Optometrists

On April 16, 2012, the New Jersey State Board of Optometrists adopted revised rules. Many of the changes were simply for the purpose of clarification, including:

• A change to the definition of “closely allied health care professional” so as to include “ophthalmic dispensers” within the definition; this change merely reconciles the regulatory definition with the definition already existing in The Professional Service Corporation Act

• A restriction prohibiting an optometrist from prescribing a controlled dangerous substance on the same New Jersey Prescription Blank as a non-controlled dangerous substance

• A provision allowing an optometrist to transmit a prescription to a pharmacist telephonically or electronically

• A rejection of the initial proposal which would have changed the procedures delegable to an optometrist’s ancillary personnel; the final rule rejected any changes to the present regulations.


Debra C. Lienhardt | 973.364.5203 | [email protected] Todd C. Brower | 973.403.3103 | [email protected]

Lawsuit Filed over Delays in Commencement of New Jersey’s Medical Marijuana Program

The NORML Legal Committee, on behalf of a disabled New Jersey man and his physician, recently filed a lawsuit against the New Jersey Department of Health and Senior Services (DHSS), DHSS Commissioner Mary O’Dowd, and John O’Brien Jr., a retired state trooper who heads the medical marijuana program, for their failure to implement the Compassionate Use Medical Marijuana Act, signed on Jan. 18, 2010. The lawsuit alleges that the defendants have not completed parts of the medical marijuana program as mandated by law, including a physician registry, criminal background checks for the operators of the dispensaries, and patient and caregiver registries.

New Jersey’s program was required to commence by July 1, 2010 and then, after an extension, by October 1, 2010. The DHSS failed to meet both deadlines and has yet to implement the program.

For additional information contact:

Joseph M. Gorrell | 973.403.3112 | [email protected] Keith J. Roberts | 973.364.5201 | [email protected]

Department of Banking and Insurance Proposes New Rules Governing Medical Laboratories’ Reporting of Personal Health Information

In mid-April, the New Jersey Department of Banking and Insurance’s Office for the Development, Implementation and Deployment of Electronic Health Information Technology (Office for e-HIT) proposed new standards for the collection and reporting of personal health information by medical laboratories.

By way of background, one of the goals of the Office of e-HIT, which was established by the 2008 New Jersey Health Information Technology Act, is to effectuate health information technology which can eliminate the many different and conflicting standards for collecting and reporting personal health information within the health care community. The proposal adds several new definitions and amends the definition of a “clean claim,” in the regulation governing prompt payment of claims, to include claims for reimbursement for laboratory tests which have been submitted as required by NJAC 11:22-1.4(b) (see below), which sets forth the minimum requirements for the submission of a claim for laboratory tests.

The proposal’s new NJAC 11:22-1.4(b) states that all claims for reimbursement for laboratory tests must include proof of electronic submission of the results of the tests to the carrier and the medical provider who ordered the tests. If the medical provider does not have the capability to receive the information electronically, test results must be delivered to that medical provider in an alternate format. Once a medical provider has the capacity to receive the information electronically, all test results should be delivered in that manner.

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Members Todd C. Brower | 973.403.3103 | [email protected] Lani M. Dornfeld | 973.403.3136 | [email protected] D. Fanburg, Chair | 973.403.3107 | [email protected] Joseph M. Gorrell | 973.403.3112 | [email protected]

Carol Grelecki | 973.403.3140 | [email protected] M. Lastorino | 973.403.3129 | [email protected] C. Lienhardt | 973.364.5203 | [email protected] E. Manigan | 973.403.3132 | [email protected] J. Roberts | 973.364.5201 | [email protected]

You have the option of receiving your Health Law Updates via e-mail if you prefer, or you may continue to receive them in hard copy.If you would like to receive them electronically, please provide your e-mail address to [email protected]. Thank you.

Health Care Practice Group | 101 Eisenhower Parkway, Roseland, NJ 07068 | 973.228.5700

Counsel Richard B. Robins | 973.403.3147 | [email protected]

Associates Lindsay P. Cambron | 973.364.5232 | [email protected] Jenny Carroll | 973.364.5223 | [email protected] T. Cohen | 973.403.3144 | [email protected] Ehrenkranz | 973.364.5234 | [email protected] M. Jennings | 973.364.5204 | [email protected]

Leonard Lipsky | 973.364.5218 | [email protected] F. Murphy | 973.364.5214 | [email protected] Senthil | 973.403.3150 | [email protected] J. Yun | 973.364.5229 | [email protected]

Attorney Advertising: This publication is designed to provide Brach Eichler, L.L.C. clients and contacts with information they can use to more effectively manage their businesses. The contents of this publication are for informational purposes only. Neither this publication nor the lawyers who authored it are rendering legal or other professional advice or opinions on specific facts or matters. Brach Eichler, L.L.C. assumes no liability in connection with the use of this publication.

Comments to the proposal must be submitted by June 15, 2012, to Robert Melillo, Chief, Legislation and Regulation, Department of Banking and Insurance, 20 West State Street, PO Box 325, Trenton, New Jersey 08625-0325; Fax (609) 292-0896.


John D. Fanburg | 973.403.3107 | [email protected]

Carol Grelecki | 973.403.3140 | [email protected]

Brach Eichler In The News

Brach Eichler was named one of the New York Area’s Top Ranked Law firms by LexisNexis Martindale-Hubbell.

Mark Manigan and Kevin Lastorino spoke on “The Response to ObamaCare: ACOs, Hospital Integration of Medical Practices and the Emergence of ‘Super Groups’” at the Atlantic Regional Osteopathic Convention in Atlantic City on April 18.

HIPAA CORNERInternet Exposure Results in $100,000 Fine for Phoenix Cardiac Surgery, P.C. Although most reported HIPAA fines and settlement agreements with the U.S. Department of Health and Human Services (HHS) seem to affect large practices, hospitals and insurers, the tide is changing. Recently, a five-physician medical practice, Phoenix

Cardiac Surgery, P.C., agreed to pay HHS a $100,000 settlement and take corrective action to implement HIPAA policies and procedures. This agreement resulted from HHS’s investigation into the practice’s unintentional Internet leak making public patient appointments from its internal web-based calendar.

The internet leak caught the attention of HHS, and a full-blown investigation ensued. During the investigation, HHS learned that the practice failed to:

• Implement adequate policies and procedures to appropriately safeguard patient information

• Document that it trained any employees on its HIPAA policies and procedures

• Identify a security official and conduct a risk analysis

• Obtain business associate agreements with Internet-based email and calendar services where the provision of the service included storage of and access to its electronic protected health information.

This settlement alerts smaller physician practices that the government is not targeting larger institutions only. Up-to-date HIPAA policies and procedures and employee training are critical.


Todd C. Brower | 973.403.3103 | [email protected] Lani M. Dornfeld | 973.403.3136 | [email protected]

Documents

May 2012 Health Law Update