Category Archives: Healthcare Regulatory Matters

INSURANCE COMPANIES SEEK TO DEFEAT THE SURGERY CENTERS

Posted on May 5, 2016 by | Comments Off on INSURANCE COMPANIES SEEK TO DEFEAT THE SURGERY CENTERS

Various news organizations (for example, Law360) reported on Aetna’s jury verdict against Northern California surgery centers for over-billing the insurer for out-of-network procedures. The jury determined that the surgery center should pay $37.4 million in damages.  The complaint by Aetna included allegations that surgery centers waived patient co-pays and other fees, sales of shares to physicians (who received substantial ROI) in addition to the physician’s own fee for service and other “fraud.”

Other lawsuits with similar allegations are pending. United Healthcare Services has a complaint against several Bay Area ASC’s claiming the ASCs’ bills are artificially inflated, that the providers utilizes different charges for different patients (out-of-network charges being the highest), that the ASCs failed to disclose waiver of co-pays, and inappropriate incentives to physicians for referring patients to the ASC.

The insurers in these cases are attempting to utilize the courts to stop out-of-network billings, especially for ASCs.   The conduct they are complaining about is a common issue of our medical landscape.  Surgery centers are typically physician owned and tend not to have insurance with the typical plans that exist.  Physicians will often promote the ASC as providing superior service, especially compared with alternative medical centers and hospitals.  In order to encourage the patient to have procedures at a facility which does not accept their insurance, the physician and the ASCs will often assure the patient that they will seek reimbursement from the out-of-network insurance provider and that any service received will be at no cost to the patient.  Freed from in-network contracts, these facilities seek their “reasonable fees” from the insurer.

The current litigation will certainly lead to appeals and opinions by courts that will alter the legal landscape. The facts in the Aetna case appear to include evidence of communications between physicians encouraging referrals to the surgery centers, which would appear inflammatory to the jury.

 

However existing law does not appear to support the insurers claims.  For instance, the Accountable Care Act actually requires discounting co-payments for out-of-network emergencies. (“Any cost-sharing requirement expressed as a copayment or coinsurance rate imposed with respect to a participant, beneficiary, or enrollee for out-of-network emergency services cannot exceed the cost-sharing requirement imposed with respect to a patient, beneficiary or enrollee if the services were provided in network.” 45 C.F.R. 147.138.)  The California Attorney General that waiver of copayments for out-of-network insurance companies was appropriate.  (Dentists routine waiver of co-pay appropriate. 64 Ops. Cal. Atty. Gen. 782 (1981).) Discounts to encourage patient referrals is not impermissible. (People v. Duz-Mor Diagnostic Laboratory, Inc. (1998) 68 Cal. App. 4th 654.)  Likewise, it is legal for physicians to refer to surgery centers where they have a financial interest. (California Business Code section 650(d).)

Providers who routinely bill to out-of-network providers should monitor these cases closely. The Courts will be making ground-making decisions in this area in coming months.

By Matt Kinley, Esq, LL.M.  Mr. Kinley represents health care clients in Southern California.

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Posted in Accountable Care Act, Healthcare Regulatory Matters, Medical Insurance, Physician

Federal Court Rules CGL Policies Cover Data Breach

Posted on April 14, 2016 by | Comments Off on Federal Court Rules CGL Policies Cover Data Breach

Insurance companies issuing commercial general liability (CGL) policies are undoubtedly taking note of a recent noteworthy, though unpublished, federal appeals court decision. In April 2016, a federal appeals court in Virginia upheld a lower court’s ruling that a CGL policy may cover a data breach. The decision centered on the interpretation of policy language that the court said should be construed broadly. The ruling will likely cause insurers to scrutinize coverage language more closely and revise future policy definitions.  For insureds, the decision should prompt a second look at policy language to determine whether a data breach arguably falls within the scope of coverage. The case, Travelers Indemnity Company of America v. Portal Healthcare Solutions, L.L.C. (https://www.scribd.com/doc/308033367/Travelers-v-Portal-Healthcare-Fourth-Circuit-Court-of-Appeals) (hereinafter referred to as “Portal Healthcare“), is at odds with other recent state court decisions.

 

The factual prompt for the suit was a class-action lawsuit brought by a patients of a hospital whose confidential medical records were publicly posted online by the hospital’s electronic record-keeping service, Portal Healthcare Solutions (“Portal”). Portal tendered the matter under the two separate but substantially identical CGL policies issued by Travelers.  In a declaratory relief action, Travelers argued data breach was not covered under the policies, but the District Court for the Eastern District of Virginia in Alexandria ruled that Travelers had a defense obligation under its Personal and Advertising Injury coverage section of the policies. The policies language obligated coverage because of an advertising or website injury arising from the “electronic publication of material that…gives unreasonable publicity to a person’s private life” or “the electronic publication of material that discloses information about a person’s private life.”

 

Travelers argued that the action of posting the medical records online was not a “publication” within the meaning of the policy because it could not be proven that the records were actually viewed by a third-party. The lower court and appellate court rejected this narrow and “pars[ing]” definition of publication.  The appellate court also held that the class-action complaint by the patients, “at least potentially or arguably alleges a publication of private medical information” and that the conduct if proven, would have given unreasonable publicity to and disclosed information about the patients’ private lives.  The court determined that any doubt in the meaning of the word “publication” should be interpreted in a manner that grants coverage rather than withholds it.

 

The lower court’s opinion distinguished a Connecticut case which ruled that a CGL policy did not cover the loss of computer tapes that contained personal information. See Recall Total Info. Mgmt. Inc. v. Fed. Ins. Co., 83 A.3d 664 (Ct. App. Conn. 2013).  In that case, computer tapes fell out of the back of a van, were taken by an unknown person, and never recovered. Id. at 667.  This fact pattern was distinguished because it involved a single thief and no allegation that the stolen information had been placed on the internet.  In the Portal Healthcare case, the court stressed that the facts alleged “potentially or arguably” constituted “publication.”

 

While insurers offer policies specifically addressing cyber liability and data breach, these policies can often be cost-prohibitive and/or scarce. Business owners should consult with their legal counsel to look closely at the terms of the business’ CGL policies to determine whether they may potentially or arguably cover data breaches. The exorbitant cost of defending a data breach lawsuit, especially a class-action suit, may justify a declaratory relief action against a CGL carrier to determine the claims trigger a defense obligation. All companies should evaluate their cyber risks and exposures to make an informed decision about whether cyber liability insurance coverage is worth it.  Despite the holding in Portal Healthcare, securing coverage for data breach incidents under a CGL policy is still an uphill battle.

 

By Matt Kinley,Esq., LLM, CHC

562.715.5557

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Posted in Healthcare Regulatory Matters, HIPAA

Los Angeles Medical Association: Navigating the Hornet’s Nest of Reimbursement

Posted on March 8, 2016 by | Comments Off on Los Angeles Medical Association: Navigating the Hornet’s Nest of Reimbursement

Matt Kinley Speaks to Los Angeles County Medical Association on March 23, 2016.  Contact Mr. Kinley at mkinley@tldlaw.com if your interested in attending.

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Posted in Accountable Care Act, Anti-kickback, Current Affairs, Healthcare Regulatory Matters, Medical Insurance, Medicare, Physician, Physician Assistant, physician compensation, telehealth, Uncategorized

HHS TO CREATE NEW CYBERSECURITY REGULATIONS FOR HEALTH CARE

Posted on February 5, 2016 by | Comments Off on HHS TO CREATE NEW CYBERSECURITY REGULATIONS FOR HEALTH CARE

CONGRESS DIRECTS ACTION IN HEALTHCARE CYBERSECURITY

In December of 2015 Congress passed a 2000-page spending bill which was enacted into law. Included in the text was the Cybersecurity Information Sharing Act of 2015 (CISA). While that legislation received most of the headlines, the spending bill also implemented some major developments in the field of privacy for the healthcare industry. Section 405 of Title IV directs the Department of Health and Human Services (HHS) to develop best practices for organizations in the healthcare industry.

The legislation mandates HHS to report to Congress regarding the preparedness of the health care industry in responding to cybersecurity threats. This includes identifying the HHS official responsible for coordinating threat efforts and including plans on how HHS divisions communicate with one another regarding threats. Congress also mandated a one-year task force to plan a threat reporting system in real time, and to prepare a cybersecurity preparedness information for dissemination in the healthcare industry. Most notably, HHS has been directed to collaborate with other governmental entities and experts to establish a best practices standards specific to healthcare cybersecurity. The intent is to create an industry standard and cost-effective method to reduce cybersecurity risks for healthcare organizations.

Inclusion of Section 405 of the Cybersecurity Act of 2015 reinforces the federal government’s well-established priority of protecting personal health information. Protection is necessary because of the high value of personal health information on the black market. According to the The Insurance Journal, a complete health record containing a patient’s entire health profile can fetch as much as $500. The value is based on the ability of lawbreakers to fraudulently bill insurers for medical services. Compared to industries like the credit card payment industry—which has implemented its own cybersecurity standards—the healthcare industry is woefully behind in its efforts to protect valuable private information.

Healthcare facilities, both public and private, should stay ahead of HHS and develop their own internal policies, security measures, and best practices to protect confidential information of their patients. While guidance form HHS in the future will help establish industry standard best practices, healthcare providers should evaluate their cybersecurity needs and work with experts—attorneys, technologists, and governmental agencies—to stay ahead of the curve. Undoubtedly the attention given to healthcare cybersecurity in the next years will increase the scrutiny on healthcare providers who fail to meet industry standards.

By Matt Kinley,Esq., LLM, CHC

562.715.5557

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Posted in Current Affairs, Healthcare Regulatory Matters, HIPAA, Physician, Tredway, Lumsdaine & Doyle, LLP

OSHA GUNNING FOR MEDICAL PRACTICES

Posted on October 16, 2015 by | Comments Off on OSHA GUNNING FOR MEDICAL PRACTICES

NEW GUIDE LINES BRING NEW RESPONSIBILITIES

The Occupational Safety and Health Act of 1970 requires employers to provide their employees with working conditions that are free from known dangers.  There are thousands of pages interpreting the meaning of that simple statement, including primarily what is a “known danger.”

For medical facilities, OSHA has attempted to provide guidelines for protecting healthcare workers from violence in the work place.  In OSHA: Guidelines for Preventing Workplace Violence for Healthcare Workers (2015) OSHA explores its expectations for organizations in complying with the obligation to provide a safe workplace and to prevent violence.  Many of the obligations are structural, that is, they provide for a system to protect against violence:  polices, training, work place evaluation, and documentation of an organizations efforts to complete these tasks.  Like HIPAA and Compliance, the solution to medical office problems are a new policy, a committee and training.

Along with this new resource comes a new obligation.  In an OSHA Instruction, OSHA reviews the inherent dangers in the healthcare setting and the higher rates of violence and injury in the healthcare setting.  It instructs it’s investigators to pay more attention to the healthcare setting utilizing its 2015 guidelines.

If you are a healthcare company, it makes sense to pay attention to these OSHA materials.  Even if you are not investigated by OSHA itself, it does set up a standard for behavior and a potential negligence suit should your facility suffer violence.

By Matt Kinley,Esq., LLM, CHC

562.715.5557

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Posted in Employers and Healthcare, Healthcare Regulatory Matters, HIPAA

Fraud Alert Issued by OIG Puts Medical Directorships Under Suspicion

Posted on August 26, 2015 by | Comments Off on Fraud Alert Issued by OIG Puts Medical Directorships Under Suspicion

Make Sure Your Medical Directorship is Legal

HHS’s Office of Inspector General’s Fraud Alert issued in June of this year  puts an often-used tool for compensating physicians in the regulatory cross hairs. “Medical directorships,” or the payment of a physician for overseeing clinics or other medical services, will violate the Federal and state Anti-Kickback statutes if “even one purpose of the arrangement is to compensate a physician for his or her past or future referrals.”

Compensation arrangements between hospitals, physician groups and other medical providers that contemplate management or directorships by a physician should be carefully evaluated by competent counsel. OIG has said that it will be reviewing such arrangements with particular interest. If a violation is found, the result could include criminal, civil and regulatory fines, and exclusion from federal health care payment systems.

Some of the elements of an appropriate directorship or management position for a physician might include a written contract for at least a year with a salary that constitutes a fair market value for services actually provided. Such an agreement should be backed up by salary surveys or other documentation that the compensation is based on similar positions within the community.

By Matt Kinley,Esq., LLM, CHC

562.715.5557

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Posted in Anti-kickback, Criminal Prosecution, Current Affairs, Employers and Healthcare, Employment Agreements, Healthcare Regulatory Matters, Uncategorized

PHYSICIAN COMPENSATION UNDER OIG REVIEW

Posted on June 25, 2015 by | Comments Off on PHYSICIAN COMPENSATION UNDER OIG REVIEW

Physician Compensation Arrangements Under Scrutiny

On June 9, 2015, the Office of Inspector General issued a special Fraud Alert warning physicians that compensation arrangements (such as medical directorships) must ensure that the arrangement reflects fair market value. Such arrangements “may violate the anti-kickback statute even if one purpose of the arrangement is to compensation a physician for his or her past or future referrals of Federal health care program business.”

California statures and rules can be even stricter.

In this era of merger and consolidation, medical providers must be careful to create appropriate compensation arrangements. They must carefully document attempts at establishing fair market value, or be subject to regulatory prosecution.

This alert comes after the OIG recently reached settlements with 12 physicians who entered into medical directorships and other arrangements, which the OIG concluded violated the Federal Anti-Kickback Statute. In those cases, the arrangements appeared to be illegal for one or more of the following reasons:

• The payments to the physicians took into account the physicians’ volume or value of referrals.

• The payments did not reflect fair market value for the physicians’ services.

• The physicians did not actually provide the services required under the agreements.

• The entities contracting the physicians paid the salaries of the physicians’ front office staff.
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Certain physician compensation arrangements – and particularly medical director arrangements – are perceived as risk areas for Anti-Kickback Statute violations. Facilities and physicians entering into such arrangements should review existing and new arrangements for compliance in light of this Fraud Alert and should seek the expertise of health care legal counsel.

By Matt Kinley,Esq., LLM, CHC

562.715.5557

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Posted in Anti-kickback, Current Affairs, Healthcare Regulatory Matters, Physician, physician compensation

LAWS AND REGULATIONS SPECIFIC TO IN HOME CARE ORGANIZATIONS IN CALIFORNIA

Posted on June 1, 2015 by | Comments Off on LAWS AND REGULATIONS SPECIFIC TO IN HOME CARE ORGANIZATIONS IN CALIFORNIA

New Emphasis on Patient Safety Will Cause Greater Scrutiny of Home Care Providers

While In Home Care Organizations (“HCOs”) have been relatively free of laws and regulation, such companies are coming under increasing scrutiny in California. There have been concerns about patient safety and security, which has caused the state to enact laws and regulations that impose safety checks and training. There are also concerns about abuse of HCO workers, causing minimums standards for companies employing such workers. While many of these reforms appear to be appropriate, they also make the utilization of in home services more expensive, which will make such services unaffordable for a large segment of the population.

HOME CARE SERVICES CONSUMER PROTECTION ACT

The most significant reform is the Home Care Services Consumer Protection Act of 2013 (AB 1217), signed into law on October 13, 2013. It covers “home care services,” which are formally defined as nonmedical services and assistance provided by a registered home care assistant (“HCA”) to a client who, because of advanced age or physical or mental disability needs assistance in activities of daily living, allowing the client to stay in their residence. Such services include assistance in the following areas:
• Dressing
• bathing
• exercising
• personal hygiene and grooming
• transferring
• ambulating
• positioning
• toileting and incontinence care
• housekeeping
• meal planning and preparation
• laundry
• transportation
• correspondence
• making telephone calls
• shopping for personal care items or groceries
• companionship

WHAT IS INCLUDED IN THE ACT?

This legislation requires agencies to: List aides in an online registry, conduct background checks on workers, obtain finger prints of all aides, provide five hours of training for new hires, and obtain a license from the state certifying their compliance with basic standards.

The commencement date of the law was extended to January 1, 2016. It provides that the California Department of Social Services (CDSS) will regulate HCOs and provide background checks of affiliated Home Care Aides (HCAs) and independent HCAs who wish to be listed on the Home Care Services (HCS) Registry. Currently CDSS is implementing regulations, including the formation of newly formed Home Care Services Bureau (HCSB)  in partnership with the Caregiver Background Check Bureau (CBCB). HCSB will oversee the licensing and oversight of the HCOs and CBCB will oversee the background checks for the HCAs and will maintain the HCS Registry.

Some of the penalties found in the Act include:
• $900 fine per day for each day if not licensed by Department of Social Services

• Potential cease and desist order, which shall remain in effect until the individual or entity has obtained a license pursuant to this chapter.

Potential imposition of a civil penalty; or

Potential civil action against the individual or entity.
If CDSS finds that an individual has been convicted of a crime other than a minor traffic violation, the individual cannot work for or be present in any community care facility unless they receive a criminal record exemption from the Community Care Licensing Division, Caregiver Background Check Bureau.

CALIFORNIA’S IHSS PROGRAM

California has established the In Home Supportive Services (IHSS)  program, which is a Medi-Cal program providing payment to providers who are serving aged and/or disabled patients who are without the means to pay for such services Persons wanting to become a IHSS provider must provide a U.S. government issued picture identification and an original Social Security card and the provider must complete the Provider Enrollment Form (SOC 426) and obtain finger prints. The California Department of Justice (DOJ) will obtain a criminal background check on the individual.

DEPARTMENT OF LABOR WAGE AND HOUR RULES

On January 1, 2015, the Domestic Worker Bill of Rights (AB 241), took effect. It regulates the number of consecutive hours for home health care workers and requires overtime pay for long work shifts.
California now is one of 16 states with some type of overtime requirement for home health workers. Personal attendants covered by this law are now entitled to overtime pay at 1.5 times their regular rate of pay for any hours worked in excess of nine (9) hours in a day or in excess of 45 hours in a week.

The new law, due to sunset in 2017, calls for formation of an evaluation committee to review and analyze the effectiveness of the overtime provision over the next three years. The California Department of Industrial Relations is charged with reviewing the law.
One of the areas the committee will monitor is whether the law prompts more underground caregiving, as Janz said is happening.
MINIMUM WAGE

Domestic workers are entitled to the minimum wage, with the exception of babysitters under the age of 18 and the employer’s parent, spouse, or child. The Labor Commissioner enforces the California minimum wage. The Labor Commissioner may enforce local minimum wage laws if the work is performed in a city and/or county that has a higher minimum wage ordinance.

If your employer discriminates or retaliates against you in any manner whatsoever (for example by terminating you or giving you fewer hours), you can file a discrimination/retaliation complaint with the Labor Commissioner’s Office. Alternatively, you can file a lawsuit against your employer in court.

ACTION ITEMS

Institute security check program with all home aides working for your organization, including back ground check and finger printing.

Obtain an exemption or terminate those home aides that fail the background check.

Institute a training program for all home aides working for your organization
Review wage and hour polices and ensure that your organization has all employee manuals with the proper overtime and minimum wage rules.

By Matt Kinley, Esq. 

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Posted in Employers and Healthcare, Healthcare Regulatory Matters, Home Healthcare, Home Nursing

TELEMEDICINE IN CALIFORNIA

Posted on February 26, 2015 by | Comments Off on TELEMEDICINE IN CALIFORNIA

DOES THE LAW STRANGLE ATTEMPTS TO SAVE COSTS THROUGH TELEHEALTH?

Telehealth can take different forms.  It’s one thing to offer consultations and second opinions.  But once this useful tool is utilized for diagnosis and treatment, the rules change.

How can a compnay offer telemedicine, including diagnosis, treatment and prescriptions in California?  Does the physician have to be licensed?  How does a telemedicine company avoid the corporate practice of medicine doctrine?

THE PHYSICIAN MUST BE LICENSED IN CALIFORNIA

California’s Medical Board describes telehealth as: “Telehealth (previously called telemedicine) is seen as a tool in medical practice, not a separate form of medicine. There are no legal prohibitions to using technology in the practice of medicine, as long as the practice is done by a California licensed physician.”

Telehealth is not a telephone conversation, email/instant messaging conversation, or fax; it typically involves the application of videoconferencing or store and forward technology to provide or support health care delivery.” One statute states: Any law allowing telehealth shall not be construed to alter the scope of practice of any health care provider.

THE CORPORATE MEDICINE DOCTRINE

California prohibits the corporate practice of medicine, which among other things, requires that business or management decisions and activities resulting in control over a physician’ practice of medicine, be made by a licensed California physician and not by an unlicensed person or entity. In order to avoid the direct violation of state prohibitions on the corporate practice of medicine.  While there are legal structures that may promote non-physician investment in telehealth, (many companies use the so-called “friendly PC” model).

Enforcement by the medical board regarding the prohibition against the corporate practice of medicine generally is inconsistent.
Although there is no hard and fast rule as to when a given arrangement may be deemed to constitute corporate practice, the focus in any enforcement action likely will be on the level of control a physician exercises over the operation of the medical practice, specifically the professional judgment of licensed health care professionals. Where a high level of control exists, the arrangement may be found to be a sham intended to disguise the de facto practice of medicine by an unlicensed entity.

By Matt Kinley, Esq.

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Posted in Healthcare Regulatory Matters, Medical Licensing, Physician, telehealth, telemedicine

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Reporting Physician Office Controlled Substance or Prescription Abuse

Posted on January 9, 2015 by | 1 comment

Physician offices often are hit with an internal crime:  employees utilize the office, its forms, the doctors DEA Number, or even the computers to write unauthorized prescriptions. The physician’s office has the obligation to make sure that forms, computers, and other tools utilized to write prescriptions are carefully safeguards.  Attorneys and malpractice carriers can be consulted for the best practices.

Health and Safety Code Section 11368 states that anyone who forges or alters a prescription or who obtains any narcotic drug by a forged, fictitious, or altered prescription may be punished by imprisonment in the county jail or state prison for not less than six months or more than one year. Since prescription forgery is considered a criminal offense, it is recommended that a report be made to the local law enforcement.

The California Medical Board provides some specific advice:

Federal law requires physicians to report theft or loss of controlled substances and official Federal Order Forms (Form 222) to a regional office of the Drug Enforcement Administration. The DEA has offices located in Los Angeles, San Diego and San Francisco and the office addresses and phone number are available through their website. In addition, the DEA has their reporting forms available online at the following link: http://www.deadiversion.usdoj.gov/21cfr_reports/theft/index.html.

While neither the Medical Board nor state law requires that a report of stolen or illegal use of the physician’s DEA number be made to the Board, it is our recommendation that physicians provide the Medical Board with a written narrative of the circumstances and the actions taken by the physician so we may have this information on file. When the written narrative is received, this valuable information will be input into the Medical Board’s internal database for reference, as it is not unusual to receive complaints from pharmacists or law enforcement officers regarding concerns about physicians’ prescribing practices. If a physician has already reported that he/she has experienced a problem related to the illegal use of his/her DEA number, the Board has already been provided with background information on the problem. The written narrative should be forwarded to the Medical Board of California, Central Complaint Unit, 2005 Evergreen Street, Suite 1200, Sacramento, CA 95815.

Once the information has been processed, the physician will receive correspondence from the Central Complaint Unit containing their assigned “Conl Number,” which should be maintained for their records. A carbon copy of this correspondence will also be forwarded to the California Board of Pharmacy so they may notify pharmacies in the physician’s surrounding area of the incident. The notified pharmacies will then contact the physician to verify any prescriptions they receive on the physician’s prescription pad or using the physician’s DEA number. For additional questions or concerns regarding this issue, please contact the Central Complaint Unit through the Medical Board’s toll-free number, 1-800-633-2322.

In addition to the above, if the physician is aware of the theft or loss of the tamper-resistant prescription forms, the State Department of Justice, Bureau of Narcotic Enforcement must be notified. To report the theft or loss of the new tamper-resistant prescription forms, Form JUS MUST be completed. Please complete all applicable fields on the form and forward the form to: California Department of Justice, Bureau of Narcotic Enforcement, CURES Program, P.O. Box 160447, Sacramento, California, 95816, FAX: (916) 319-9448. If you have additional questions or concerns regarding lost or stolen tamper-resistant prescriptions forms, please contact the CURES Program at (916) 319-9062.

Matt Kinley, Esq. 

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Posted in Criminal Prosecution, Current Affairs, Healthcare Regulatory Matters, Medical Licensing, Physician