Caution: Curb Your Enthusiasm for the Reduced HIPAA Annual Limits

By Amy Jeon McCullough on Posted in Healthcare Law, HIPAA, Privacy, and Data Security

Until recently, the annual limit for civil monetary penalties (CMP) that could be levied against covered entities and business associates in violation of the Health Insurance Portability and Accountability Act of 1996, as amended by the Health Information Technology for Economic and Clinical Health Act, and their implementing regulations, as amended from time to time (collectively, HIPAA) was $1,500,000. On April 30, 2019, the U.S. Department of Health and Human Services (HHS) released a notice of enforcement discretion lowering the annual CMP caps for certain types of penalties imposed for violating HIPAA. Given 2018 was HHS’ all-time record year for HIPAA enforcement ($28.7 million in penalties collected), the new annual caps seemingly appear to provide relief to covered entities and business associates. The reduced annual caps certainly lower the financial risks for covered entities and business associates that have taken steps to meet HIPAA’s requirements.

However, covered entities and business associates should not get too excited because the reduction in the annual CMP caps are limited in many ways, including, as follows: Continue Reading

2019 Legislative Session – The Passage of Telehealth (HB 23)

By Steven Grigas and Bruce D. Platt on Posted in Government Affairs, Licensure & Regulatory, Health Insurers & Managed Care Organizations, Healthcare Law, Medicare & Medicaid

In the closing days of this year’s legislative session, the Florida House and Senate came to agreement on statutory language that adopts the parameters for telehealth for Florida. HB 23, sponsored by Representative Clay Yarborough, establishes a statutory basis for telehealth services, provides meaningful definitions of the terms telehealth and telehealth provider, and creates Section 456.47 Florida Statutes which provides the standards of practice under which all telehealth providers must operate. HB 23 further creates Sections 627.42396 and 641.31 relating to certain reimbursement requirements for contracts between health insurers, health maintenance organizations, and telehealth providers.  Notably absent from this bill is earlier language that provided for a tax credit and a requirement of payment parity for out-of-state and in -state services. Continue Reading

Florida Legislature Repeals its “Certificate of Need” Law

By James M. Burns on Posted in Antitrust, Government Affairs, Licensure & Regulatory, Healthcare Law, Hospitals & Health Systems

In a somewhat surprising move, on April 29, 2019 the Florida Legislature passed legislation (HB 21) that repeals the state’s “Certificate of Need” (CON) laws with respect to general hospitals and tertiary services. Such laws, which are in place in many states, typically prohibit a healthcare provider from expanding its services and from entering new markets absent its ability to demonstrate to state regulators that there is an unmet need for such services in the target community. The Legislature’s action comes during the last week of the legislative session, and after numerous unsuccessful efforts to pass such legislation over the last several years. HB 21 now goes to Governor DeSantis for approval, and if signed, general hospitals and providers of tertiary services will be free of this requirement beginning in July (the legislation also provides that specialty hospitals will no longer be subject to the CON law starting in 2021; at least for now, nursing homes and hospices would still be subject to the CON regulations). Continue Reading

District Court Further Extends Review of CVS/Aetna Merger

By James M. Burns on Posted in Antitrust, Government Affairs, Licensure & Regulatory, Healthcare Law, Healthcare M&A, Joint Ventures, Transactions & Health Ventures

The District of Columbia District Court has again deferred its decision regarding whether to approve the merger between CVS Health and Aetna, a $69 billion transaction that was first announced back in December 2017. Notably, while the parties closed the transaction back in November of 2018, after reaching a proposed settlement with the US Department of Justice (DOJ) Antitrust Division that required CVS to divest its Part D Medicare business to WellCare, final approval of the deal has stalled as the Court continues to assess whether the proposed settlement adequately addresses the competitive harms addressed in the DOJ’s complaint that originally sought to derail the merger (as required by the Tunney Act). Pending a decision by the Court, CVS has voluntarily agreed not to integrate Aetna’s operations into CVS.

Since the November settlement was reached, the DOJ has received over 170 comments on the proposed settlement, many of which expressed concerns about whether it adequately addressed all of the potential competitive harms associated with the merger. Continue Reading

Tread Carefully – DC Federal Judge Weakens Association Health Plan Regulation

By Erin M. O'Neal and Christopher John Shin on Posted in Healthcare Law

A recent ruling by the United States District Court for the District of Columbia calls into question the recently expanded regulations allowing small employers to band together to establish Association Health Plans. This development should be monitored closely by employers and employer organizations currently sponsoring, or considering sponsoring, these plans.

Background

A group of unrelated employers wishing to establish an Association Health Plan (AHP) must satisfy a bona fide association test, as defined by regulations issued by the U.S. Department of Labor (DOL) interpreting the definition of employer under ERISA. Through advisory opinions issued to groups of employers wishing to establish an AHP, the DOL explained that satisfying the bona fide association test requires, among other things, that a commonality of interest be established among the employers. On June 21, 2018, the DOL published final regulations relaxing the long-standing factors required to establish a commonality of interest under the bona fide association test (the Final Rule). Additionally, the Final Rule expanded the scope of prior AHP guidance to allow working owners (i.e., self-employed individuals) to participate in an AHP. In doing so, the DOL made it easier for groups of small employers and sole proprietors to band together to form an AHP in order to avoid some of the more onerous requirements that apply to the small and individual group markets, including community rating. Continue Reading

Possible Changes to Stark Law in 2019

By Marcy Hahn-Saperstein on Posted in Healthcare Law, Medicare & Medicaid, Physicians

Last summer The Centers for Medicare and Medicaid Services (CMS) solicited input on potential amendments to the federal Physician Self-Referral Law (the Stark Law). CMS intends the amendments to eliminate obstacles to its stated goal of enhancing coordinated care and transitioning from volume-based to value-based payment systems.  By the end of last summer, almost 400 stakeholders had provided feedback, including various physician and hospital associations.  Many stakeholders advocated for new “value-based” exceptions to the Stark Law that would  permit physicians to be compensated based on the “value or volume” of referred DHS but in the context of alternative payment models that would provide appropriate incentives that involve shared risks or shared savings.  Many stakeholders urged CMS to revise the definition of commercial reasonableness to permit arrangements that are simply “useful” in the purchaser’s business and based on terms that are “typical” of such arrangements in order to allow for greater clinical integration.  Some stakeholders advocated for the modification of the definition of fair market value so that physicians can be rewarded for value-based care without violating the “volume and value” provision of the Stark Law.  Finally, stakeholders also urged CMS to clarify the “volume or value standard” itself with a variety of suggestions.  Continue Reading

Proposed Florida House Legislation Advances, Requiring Reporting to the State Proposed Hospital and Group Practice Acquisitions

By James M. Burns on Posted in Antitrust, Government Affairs, Licensure & Regulatory, Healthcare Law

A bill recently introduced in the Florida legislature (HB 1243) requires Florida hospitals and group physician practices contemplating mergers or acquisitions to provide advance notice of such transactions to the Florida Attorney General’s Office. The bill has been reported favorably out of the Florida Health Market Reform Subcommittee.  Currently, while the Florida Attorney General’s Office is authorized to, and frequently does, investigate such transactions for potential antitrust concerns, no obligation exists under Florida law for the merging parties to provide advance notice of such transactions to the State.

HB 1243 requires that whenever a Florida hospital or group physician practice of at least 4 physicians intends to engage in a merger or acquisition, information must be provided to the State that includes, among other things, a description of the proposed transaction, the primary service area served by the parties, and a description of how that service area would be impacted by the transaction. The legislation states this proposed submission by parties to the transaction is intended to assist the State in assessing whether further investigation as to the potential competitive implications of the proposed transaction is warranted.

The notice would be required to be submitted at least 90 days prior to consummation of the proposed transaction. This deadline is somewhat different than that under the federal Hart-Scott-Rodino Act (HSR Act), which also imposes a reporting obligation on merging parties (in healthcare and all other industries) in transactions above a certain dollar threshold (recently increased to $90 million). Under the HSR Act, merging parties can provide notice to the FTC/DOJ Antitrust Division of reportable deals at any time, but are required to await approval from federal regulators prior to consummating the transaction. Many such deals are approved within an initial 30 day “waiting period,” particularly where the federal regulators conclude that the deal does not raise competitive concerns. In other cases, the review can take up to several months, or longer, depending upon the circumstances.  Continue Reading

US Supreme Court to Hear FCA Statute of Limitations Case

By Jeremy Burnette on Posted in Fraud & Abuse & False Claims Act, Healthcare Law, Healthcare Litigation

The Eleventh Circuit Court of Appeals, in its ruling in Cochise Consultancy Inc. v. U.S. ex rel. Hunt, created a 3-way circuit split regarding the determination of the applicable statute of limitations period in a False Claims Act (FCA) case. On March 19, the United States Supreme Court will hear oral argument on the matter, hopefully ending the division among the circuit courts of appeal.

Pursuant to 31 U.S.C. § 3731(b)(1)-(2), two potential statutes of limitations apply to FCA cases.  A qui tam plaintiff can bring an FCA case on behalf of the Government either (1) six years after the date of the alleged FCA violation or (2) three years after the date when the responsible Government official learned or should have known of the relevant facts supporting the claim, but not more than ten years after the alleged FCA violation.

The Fourth, Fifth, and Tenth Circuit Courts have held that a whistleblower plaintiff can only use the three-year, knowledge-based statute of limitations if the Government intervenes in the FCA case, reasoning that Congress intended this limitations period to apply only to the Government because the statute’s language specifically identified the knowledge of a responsible Government official as determinative of when the statute runs. Continue Reading

Antitrust Exemption Allows Health System to Avoid All Claims for Damages in Antitrust Class Action

By James M. Burns on Posted in Antitrust, Government Affairs, Licensure & Regulatory, Healthcare Law, Hospitals & Health Systems

Atrium Health (formerly known as Carolinas Healthcare System) scored a big victory in its defense of an antitrust class action on March 4, when the Court ruled that the plaintiffs in Benitez v. The Charlotte-Mecklenburg Hospital Authority, d/b/a Carolinas Health System, could not seek damages in the action. In granting the defendant’s motion for judgment on the pleadings on the issue, the Court held that Atrium was a governmental entity subject to the provisions of the Local Government Antitrust Act of 1984 (the LGAA), which grants local governments statutory immunity from antitrust claims for damages.

Notably, the plaintiffs’ antitrust claims in Benitez largely tracked allegations that had been made by the DOJ Antitrust Division when they brought an antitrust action against Atrium in 2016 (United States v. The Charlotte-Mecklenburg Hospital Authority). Specifically, the plaintiffs claimed that Atrium’s contracts with insurers contained “anti-steering” provisions that limited the ability of insurers to send their insureds to hospitals other than Atrium, driving up prices for inpatient services and thus inflating the amount of co-insurance that insureds were required to pay for services at Atrium. However, while the DOJ action (which was recently settled) sought only injunctive relief that would terminate the allegedly anticompetitive contract provisions, the Benitez plaintiffs sought damages for the alleged harm that contended they suffered as a result of the provisions. Continue Reading

Multiple States Considering Possible Modification to Their “Certificate of Need” Laws

By James M. Burns on Posted in Antitrust, Government Affairs, Licensure & Regulatory, Healthcare Law, Hospitals & Health Systems

In December, the U.S. Department of Health and Human Services issued a report – “Reforming America’s Healthcare System Through Choice and Competition” – expressly calling upon the states to repeal their “Certificate of Need” (CON) laws. In the report, HHS indicated that the existence of such laws – which typically prevent healthcare providers from expanding their services/entering new markets absence their ability to demonstrate to state regulators that there is an unmet need for such services in the community – has been a significant cause of escalating healthcare costs.

Perhaps in response to this prodding, legislation has recently been introduced in several states that would modify their respective CON laws. In Georgia (HB 198), South Carolina (HB 3823), Virginia (HB1680) and Alaska (HB 17), for example, legislation has been proposed that would either reduce the scope of such laws or repeal them altogether. In contrast, in Indiana, legislation (S. 573) has been introduced that would create a new CON law, something that has not occurred in any state in quite some time. Additionally, while not yet introduced, Florida is also expected to consider changes to its CON laws this legislative session as well. Continue Reading

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