March 2012 Health Law Update


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March 2012 Health Law Update

  1. 1. March 2012 In This Issue: Proposed Rules for Reporting & Returning Overpayments NJ Court Upholds Cullen Act Immunity Proposed PIP Amendments Would Make Dramatic Changes Bill Prohibits Discharge of Drugs into Sewer/Septic Systems Brach Eichler in the News HIPAA CornerFEDERAL UPDATE under the Medicare program. The law requires a person who has received an overpayment to report and return the overpayment by the later of (i) 60 days after the overpayment was identified; orInterim Fix to Medicare’s Sustainable Growth Rate (ii) the date any corresponding cost report is due. The knowingFormula Averts Reduction to Physician Payments and improper failure to return an overpayment imposes liabilityOn February 22, 2012, President Obama signed into law the under the federal False Claims Act (FCA), exposing the providerMiddle Class Tax Relief and Job Creation Act of 2012. The law or supplier to treble damages and penalties.temporarily averts a 27.4% reduction in Medicare’s physician Under the proposed rule:payments based on the Sustainable Growth Rate (SGR) formula. • person would be considered to have “identified” an ACongress left for another day a permanent fix to the SGR formula. overpayment if the person has actual knowledge of theUnder the law, Medicare physician payments are extended at their existence of the overpayment or acts in reckless disregardcurrent rates, but only through December 31, 2012. Among other or deliberate ignorance of the overpaymentthings, the law also: • here a provider receives information about a potential W• xtends the baseline for that portion of the Medicare physician E overpayment, such as from an anonymous tip through a payment formula that takes into account the geographic area compliance hotline, the provider would have a duty to investigate where the physician’s practice is located the information; if, after reasonable inquiry, the provider or• educes Disproportionate Share Hospital (DSH) payments R supplier identifies an overpayment, it would then have 60 days under the Medicaid program from that time to report and return the overpayment• educes by 2% payments for clinical laboratory services R CMS also proposes a 10-year look-back period (i.e., the obligation• ermits independent laboratories that service eligible hospitals P to report and return an overpayment applies if the overpayment to bill directly is discovered within 10 years of the date the overpayment was received), which is in alignment with the FCA statute ofWithout a permanent fix, Congress will again be required to limitations. To facilitate this look-back period, CMS proposes toaddress the SGR formula at the end of the year in a lame duck amend its regulations that generally limit the claims reopeningsession and amid mounting pressure to reduce spending under period to 4 years to allow for a 10-year reopening period forvarious federal programs such as Medicare and Medicaid. claims resulting in a reported overpayment. Medicare Self-For additional information, contact: Referral Disclosure Protocol disclosures would also be subjectJohn D. Fanburg  |  973.403.3107  | to the 10-year look-back period.Debra C. Lienhardt  |  973.364.5203  | Comments are due by April 16, 2012 and may be submitted by hand, regular or express mail, or electronically at http://www. Publishes Proposed Rule on Reporting For additional information, contact:and Returning Medicare Overpayments Lani M. Dornfeld  |  973.403.3136  | John D. Fanburg  |  973.403.3107  |  jfanburg@bracheichler.comThe Centers for Medicare Medicaid Services (CMS) recentlypublished a proposed rule implementing sections of the healthreform law regarding reporting and returning overpayments continued on page 2
  2. 2. BRACH EICHLER Joint Regulations Released Outlining Standards such as parties and showers, was unlawful and not justified by any special circumstances as required by prior NLRB and U.S. for Summary Benefits and Coverage Supreme Court decisions. The Department of Health and Human Services, the Department of Labor and the Treasury Department recently released joint final For additional information, contact: regulations implementing the health care reform requirement that Anthony M. Rainone  |  973.364.8372  | group health plans and health insurers provide participants with Matthew M. Collins  |  973.403.3151  | an accurate summary of benefits and coverage (SBC). The SBC is a uniform document that helps consumers better understand the coverage they have and allow them to easily compare different coverage options. STATE UPDATE Insurance companies must comply with the SBC requirement The Cullen Act’s Civil Immunity Protection beginning September 23, 2012, and the requirement applies to both grandfathered and non-grandfathered plans. The Successfully Tested in Court final regulations, template and uniform glossary are available The Superior Court of New Jersey, Appellate Division, recently through the Department of Health and Human Services at: ruled in favor of a health care entity that was sued by a former employee after the entity provided negative reference letters. index.html. Senisch v. Carlino, No. A-6218-09T3, 2011 N.J. Super. LEXIS 211 (N.J. App. Div. Dec. 1, 2011). For additional information, contact: Joseph M. Gorrell  |  973.403.3112  | In essence, this was a test of the civil immunity protection that Carol Grelecki  |  973.403.3140  | the Health Care Professional Responsibility and Reporting Enhancement Act (also known as the “Cullen Act”) provides to entities that comply with the Act’s requirements. By way of background, hospitals are statutorily required under the Cullen Act Hospital Violates NLRA with Policy Barring to provide, in relevant part, “information about a current or former Nurses from Wearing Union Ribbons in Patient employee’s job performance as it relates to patient care.” In the case Areas and Limiting Off-Duty Access to Hospital of a former employee, the entity must also disclose the reason for that employee’s separation. N.J.S.A. 26:2H-12.2c(a)(2). The National Labor Relations Board (NLRB), in St. John’s In Senisch, the plaintiff was involuntarily terminated from his work Health Center, ruled that a policy that prohibited employees as a physician assistant. During the process of seeking employment, from wearing union ribbons that read “Saint John’s RNs for Safe the plaintiff’s former employers were requested to provide reference Patient Care” in patient care areas constituted an unfair labor letters. The plaintiff then filed suit against those who provided practice. In its decision, the NLRB reminded employers that the references, alleging defamation, tortious interference with employees have the right to wear union symbols at work absent economic advantage and violation of the Conscientious Employee “special circumstances.” With regard to health care facilities, in Protection Act. In May 2010, the trial court granted the defendant’s immediate patient care areas, bans on all non-official insignia are motion for summary judgment. On appeal, the plaintiff argued presumptively valid, whereas bans in other areas of a hospital are that the trial court erred by concluding as a matter of law that the presumptively invalid. The policy justification for the presumptively defendants acted in good faith and without malice—a requirement valid ban is that patients—in particular those who are seriously for obtaining the civil immunity protection under the Cullen Act. ill—need peace and quiet. However, a hospital that selectively bans The Appellate Division agreed with the lower court’s finding that certain union insignia is not protected. With the presumptively the plaintiff had failed to introduce any evidence to show that the invalid ban in non-patient care areas, it is up to the hospital to show references were provided in bad faith or with malice. Without that the selective ban is necessary to avoid disruption of health such a showing, and because the health care provider followed the care operations or disturbing patients. Because the hospital in this requirements of the law, the Cullen Act’s civil immunity protection case allowed employees to wear a hospital ribbon that contained an prevented the plaintiff from succeeding in the lawsuit. almost identical message, the NLRB found the ban on the union ribbon was not supported by any special circumstances. For additional information, contact: Kevin M. Lastorino  |  973.403.3129  | The NLRB also found the hospital’s policy, which barred off-duty Todd C. Brower  |  973.403.3103  | employees from access to the interior of the hospital’s building or other work areas except to attend hospital-sponsored events,2
  3. 3. BRACH EICHLERDOBI Proposes Several Substantive Changes to • prohibition on “most favored nations” clauses in managed care A contracts (i.e., clauses requiring the provider to maintain or reduceNew PIP Regulations Introduced Last August the rate specified in the agreement based upon a lower rate theIn response to comments received by the New Jersey Department provider has accepted or has agreed to accept from a third partyof Banking and Insurance (DOBI) to the new personal injury for providing the same or a comparable service or supply)protection (PIP) regulations initially proposed on August 1, 2011, • prohibition on certain types of “unilateral amendments” that ADOBI has made substantive changes published for public comment. occur when carriers amend the terms of a contract withoutSignificantly, DOBI has now proposed a separate fee schedule for approval of the provider; any agreement that permits unilateralservices performed in a hospital outpatient surgical facility (HOSF), changes must provide that material terms will only be revised withthereby distinguishing these services from procedures performed in sufficient advance notice to permit termination in advance of theambulatory surgical centers (ASCs). According to DOBI, the newly effective date of the changeproposed Exhibit 7 to the PIP fee schedule regulation reimburses • dditional obligations on insurers to ensure that their provider AHOSFs at higher amounts than ASCs and more accurately reflects directories remain up-to-date and available to current andthe increased costs associated with surgical procedures performed prospective beneficiariesin a hospital setting. Accordingly, the HOSF fee schedule is set at Comments must be submitted by April 21, 2012, either by mail300% of the 2011 geographically wage-adjusted Medicare Hospital or by email to Department fees for Bergen County (northern NJ) For additional information contact:and Atlantic County (southern NJ), and also permits certain Mark E. Manigan  |  973.403.3132  |  mmanigan@bracheichler.comoutpatient surgical services that would not otherwise be eligible for Carol Grelecki  |  973.403.3140  |  cgrelecki@bracheichler.comreimbursement if performed in an ASC.In addition, DOBI has also eliminated the previously proposedoption for a Worker’s Compensation Managed Care Organization Proposed Legislation Would Prohibit Healththat would have permitted carriers to direct patients to networksfor treatment. Further, DOBI has also deleted 117 CPT codes Care Institutions from Discharging Medicationsfrom the Physician’s Fee Schedule for low-frequency but high-cost into Sewer and Septic Systemsprocedures performed by neurosurgeons and spine surgeons. Pending legislation in the New Jersey legislature (S81/A733)The complete proposal published by DOBI for public comment would prohibit hospitals and other health care institutions, ormay be viewed online at: any employee, staff person, contractor or other person underaicrapg.htm#21. Comments are due by April 21, 2012. the direction or supervision of the health care institution, fromFor additional information, contact: discharging, disposing of, flushing, pouring or emptying any unused prescription medication into a public wastewater collectionKeith J. Roberts  |  973.364.5201  |  kroberts@bracheichler.comMark E. Manigan  |  973.403.3132  | system or a septic system, beginning 210 days after the date of enactment of the bill into law. The bill would require:Department of Banking and Insurance Proposes • he Department of Environmental Protection (DEP) to issue TManaged Care Regulations recommendations for the proper disposal of unused medications within 90 days after the date of enactment of the bill into lawOn February 21, 2012, the New Jersey Department of Banking • very health care institution, within 120 days after enactment, Eand Insurance published proposed regulations that seek to to submit to the New Jersey Department of Health and Seniorreform and improve provider network requirements for managed Services and the DEP a plan for the proper disposal of unusedcare companies. These proposed rules establish standards prescription medicationsfor agreements between health care providers and insurance • he DOHSS, in conjunction with its periodic inspection of a Tcompanies, health service corporations, hospital service licensed health care facility, to ensure that the health care facilitycorporations, medical service corporations, HMOs and is in compliance with the plan submittedorganized delivery systems. Some of the key provisions include: We will continue to monitor the progress of the bill.• requirement that carriers credential providers within A 90 days of the provider’s submission of an application For additional information, contact: Kevin M. Lastorino  |  973.403.3129  | Joseph M. Gorrell  |  973.403.3112  | continued on page 4 3
  4. 4. BRACH EICHLER HIPAA CORNER Brach Eichler In The News We previously reported on the federal breach notification Lani M. Dornfeld, Carol Grelecki and Debra C. Lienhardt rule contained within the Health Information Technology will host the second annual New Jersey Women in Healthcare for Economic and Clinical Health Act (HITECH Act). The networking function on March 21 at The Palace at Somerset Department of Health and Human Services’ (HHS) Office Park. This year’s event will focus on the changing landscape for Civil Rights recently set a March target date for release of healthcare, including consolidation in the marketplace, of the long-delayed final version of HITECH Act breach hospital-physician integration and ACOs. The keynote speaker notification rule. (As of the date of this publication, we are will be Annette Catino, President CEO of QualCare, Inc. For still awaiting posting of the rules.) According to the Office information, contact Alan Levine at for Civil Rights, they are also making efforts to publish rules or 973-364-8389. on all of the remaining HITECH Act provisions so these important protections and expansions of individual rights under Richard B. Robins will be speaking at the Newark Dental the HIPAA privacy and security rules can be made available Club on March 22, on legal issues concerning dentistry. uniformly to consumers across the country. On April 30, Brach Eichler will sponsor “What You Don’t By way of background, the HITECH Act’s breach notification Know about the Board of Medical Examiners Can Hurt You: rule requires that covered entities (including most, if not all, Regulations You Need to Know to Protect Your License,” at health care providers) inform their patients when there has Brach Eichler’s offices at 101 Eisenhower Parkway, Roseland. been a breach of their protected health information. The term Speakers will include Brach Eichler’s Joseph M. Gorrell and “breach” is broadly defined as the unauthorized acquisition, Dr. Gregory Rokosz, Senior Vice President for Medical and access, use or disclosure of protected health information in Academic Affairs, Saint Barnabas Medical Center and former a manner not permitted by the HIPAA privacy rule which President, New Jersey State Board of Medical Examiners. For compromises the security or privacy of such information. more information, contact Alan Levine at alevine@bracheichler. Detailed instructions and the time-frames within which breaches com or 973-364-8389. must be reported to the Secretary of HHS can be found at: Todd C. Brower will be lecturing to OB-GYN residents at Saint Barnabas Medical Center on issues related to the business breachnotificationrule/brinstruction.html. of medicine on April 13, May 4 and June 1. For additional information, contact: Todd C. Brower  |  973.403.3103  | Lani M. Dornfeld  |  973.403.3136  | 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. Health Care Practice Group | 101 Eisenhower Parkway, Roseland, NJ 07068 | 973.228.5700 Members Todd C. Brower | 973.403.3103 | Carol Grelecki | 973.403.3140 | Lani M. Dornfeld | 973.403.3136 | Kevin M. Lastorino | 973.403.3129 | John D. Fanburg, Chair | 973.403.3107 | Debra C. Lienhardt | 973.364.5203 | Joseph M. Gorrell | 973.403.3112 | Mark E. Manigan | 973.403.3132 | Keith J. Roberts | 973.364.5201 | Counsel Richard B. Robins | 973.403.3147 | Associates Lindsay P. Cambron | 973.364.5232 | Leonard Lipsky | 973.364.5218 | Jenny Carroll | 973.364.5223 | Conor F. Murphy | 973.364.5214 | Jordan T. Cohen | 973.403.3144 | Isai Senthil | 973.403.3150 | Chad Ehrenkranz | 973.364.5234 | Edward J. Yun | 973.364.5229 | Rita M. Jennings | 973.364.5204 | 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 Thank you.4