The document provides a summary of recent healthcare regulatory and legal developments. It discusses: 1) A federal court case that reversed a $44 million jury verdict for Stark Law violations and provided guidance on assessing such violations. 2) A CMS final rule that requires the use of NPI numbers on Medicare claims and enrollment applications. 3) CMS' posting of proposed Stage 2 meaningful use clinical quality measures for eligible professionals and hospitals.

1. May 2012
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
FEDERAL UPDATE • equires all providers of medical or other items or services and
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suppliers that qualify for a National Provider Identifier (NPI) to
include their NPI on all Medicare enrollment applications and on
Federal Court Reverses $44 Million Jury Verdict
all Medicare and Medicaid claims for payment
and Provides Guidance on Stark Law Violations
• equires physicians and other professionals who are permitted
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On March 30, 2012, the U.S. Court of Appeals for the Fourth to order and certify covered items and services for Medicare
Circuit reversed a jury verdict requiring Toumey Healthcare beneficiaries to be enrolled in Medicare
System in South Carolina to pay $44.9 million for violating the Stark
• andates document retention and provision requirements on
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Law, the federal physician anti-referral law. The verdict stemmed
providers and suppliers that order and certify items and services
from Toumey Hospital seeking to provide contractual incentives to
for Medicare beneficiaries.
specialists who would otherwise perform procedures outside of the
hospital. Although the reversal was due to procedural grounds, the For additional information, contact:
court provided guidance on the key principles to assess in order to Debra C. Lienhardt | 973.364.5203 | dlienhardt@bracheichler.com
determine whether a contractual relationship between a referring Keith J. Roberts | 973.364.5201 | kroberts@bracheichler.com
physician and a health care facility violates the Stark Law:
• hether the contractual relationship generates a “referral”
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within the meaning of the Stark Law CMS Posts Stage 2 Meaningful Use
• hether the compensation takes into account or varies
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Quality Measures
with the “volume or value” of referrals or other business The Centers for Medicare Medicaid Services (CMS) has posted
between the parties two sets of clinical quality measures that were included in the
These questions are consistent with the essential purpose proposed rules for Stage 2 of the CMS Electronic Health Record
of the Stark Law - to minimize overutilization of services (EHR) Meaningful Use program. One set applies to eligible
by physicians who stand to profit from referring patients to health professionals and one set applies to hospitals.
care facilities or entities in which they have a financial interest. Under the American Recovery and Reinvestment Act/Health
For additional information, contact: Information Technology for Economic and Clinical Health Act,
health care providers can qualify for Medicare or Medicaid incentive
Lani M. Dornfeld | 973.403.3136 | ldornfeld@bracheichler.com
Todd C. Brower | 973.403.3103 | tbrower@bracheichler.com
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 Final Rule Requires NPI Number
CMS’s Stage 2 measures were developed with several goals in
on Claims and Enrollment Applications
mind: (1) measures that can be technically implemented within
The Centers for Medicare Medicaid Services (CMS) the capacity of the CMS infrastructure; (2) measures that improve
recently finalized several provisions of the Affordable quality of care; (3) measures that address known gaps in quality
Care Act implemented in the May 5, 2010 interim final of care; and (4) measures that address areas of care for different
rule with comment period. The final rule: types of professionals.
continued on page 2

2. BRACH EICHLER
Under the Stage 2 proposed rules, eligible professionals would OIG Modifies Advisory Opinion 08-17 Approving
need to meet 12 clinical quality measures from the list of 125
Expansion of Proposed Arrangement’s Benefits
measures. Hospitals would need to meet 24 clinical quality
to Financially Needy Cystic Fibrosis Patients
measures out of the list of 49 measures. Note, however, that
CMS may delete certain measures after the comment period. to Include Legal Counseling
According to CMS, eligible professionals can submit their The United States Department of Health Human Services Office
measures through the Physician Quality Reporting System of Inspector General (OIG) recently issued a modification of a prior
and hospitals can submit their data through the Hospital OIG advisory opinion in which the OIG approved an arrangement
Inpatient Quality Reporting System. proposed by a foundation for providing financial assistance to
underprivileged individuals who (1) had been diagnosed with cystic
The proposed Stage 2 clinical quality measures for eligible
fibrosis and pulmonary complications; (2) had insurance coverage
professionals include Measure 52 – Use of Imaging Studies for
but could not afford costs associated with prescription drugs; and
Low Back Pain, Measure 59 – Diabetes: Hemoglobin A1c Poor (3) provided an explanation of benefits from the individual’s insurer
Control, Measure 271 – Perioperative Care: Discontinuation denying coverage (Notice of Modification of OIG Advisory Opinion
of Prophylactic Antibiotics (Non-Cardiac Procedures), and No. 08-17, issued April 4, 2012).
Measure 419 – Documentation of Current Medications in
The OIG had already modified its approval of the arrangement once
the Medical Record. before (OIG Notice of Modification, issued October 27, 2010), to
Among the proposed Stage 2 clinical quality measures approve the foundation’s amendment of the arrangement through
for hospitals are Measure 132 – Aspirin at Arrival, Measure (1) expanding coverage to include patients who did not experience
148 – Blood Cultures Performed in the Emergency Department pulmonary complications; (2) expanding financial eligibility to cover
Prior to Initial Antibiotic Received in Hospital, Measure 301 – more patients; and (3) replacing its requirement of providing an
explanation of benefits with a requirement that the patient provide
Surgery Patients with Appropriate Hair Removal, and Measure
a written certification and proof of drug costs.
639 – Statin Prescribed at Discharge.
Under the arrangement as modified the first time, the foundation
For additional information, contact: was permitted to give patients general contact information regarding
John D. Fanburg | 973.403.3107 | jfanburg@bracheichler.com publicly funded coverage options or other patient assistance programs,
Mark E. Manigan | 973.403.3132 | mmanigan@bracheichler.com 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
ICD-10 Compliance Date: HHS Proposes
assistance from the law firm in applying for benefits.
One-Year Delay
For additional information, contact:
On April 17, 2012, the Department of Health and Human
Carol Grelecki | 973.403.3140 | cgrelecki@bracheichler.com
Services (HHS) published a proposed rule that would delay Kevin M. Lastorino | 973.403.3129 | klastorino@bracheichler.com
(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
New OSHA “National Emphasis Program”
compliance date change is part of a proposed rule that would,
among other things:
Places Emphasis on Nursing and Residential
Care Facilities
• dopt a standard for a unique health plan identifier
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• dopt a data element that would serve as an
A OSHA has announced that it is implementing a new National
Emphasis Program (NEP) for all nursing and residential care facilities
“other entity” identifier
to protect workers from safety and health hazards common to the
• Add a National Provider Identifier requirement. medical industry. The NEP focuses outreach efforts and inspections
on specific hazards in specific industries for a three-year period. The
For additional information, contact:
specific targets of this new NEP are nursing and residential care
Carol Grelecki | 973.403.3140 | cgrelecki@bracheichler.com facilities with days-away-from-work rates of 10 or higher per 100
Joseph M. Gorrell | 973.403.3112 | jgorrell@bracheichler.com 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.
For additional information, contact:
Anthony M. Rainone | 973.364.8372 | arainone@bracheichler.com
Matthew M. Collins | 973.403.3151 | mcollins@bracheichler.com
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3. BRACH EICHLER
Lawsuit Filed over Delays in Commencement
STATE UPDATE of New Jersey’s Medical Marijuana Program
The NORML Legal Committee, on behalf of a disabled New
Moratorium on Adult Day Health Services Extended Jersey man and his physician, recently filed a lawsuit against the
New Jersey Department of Health and Senior Services (DHSS),
A moratorium in place for new or expanded Adult Day Health
DHSS Commissioner Mary O’Dowd, and John O’Brien Jr., a
Services (ADHS) will continue until November 1, 2012. The
retired state trooper who heads the medical marijuana program,
Commissioner of the New Jersey Department of Health and Senior
for their failure to implement the Compassionate Use Medical
Services (DHSS) has determined that there continues to be adequate
Marijuana Act, signed on Jan. 18, 2010. The lawsuit alleges that
access to ADHS facilities and the DHSS will not accept licensure
the defendants have not completed parts of the medical marijuana
applications during the remainder of the moratorium. This extension
program as mandated by law, including a physician registry,
is intended to give the DHSS time to solicit feedback from managed
criminal background checks for the operators of the dispensaries,
care organizations (MCOs) regarding capacity and eligibility
and patient and caregiver registries.
assessments of participants. The DHSS has indicated that the
impact has not yet been realized of the transition of ADHS New Jersey’s program was required to commence by July 1, 2010
participants to MCOs and, therefore, more time is needed. and then, after an extension, by October 1, 2010. The DHSS failed
to meet both deadlines and has yet to implement the program.
Presently, there are 12,701 ADHS slots in 134 facilities, with
For additional information contact:
applications pending for more than 4,800 additional slots.
The vast majority of these pending additional slots are in Joseph M. Gorrell | 973.403.3112 | jgorrell@bracheichler.com
Keith J. Roberts | 973.364.5201 | kroberts@bracheichler.com
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.
Department of Banking and Insurance Proposes
For additional information, contact:
Mark E. Manigan | 973.403.3132 | mmanigan@bracheichler.com
New Rules Governing Medical Laboratories’
Kevin M. Lastorino | 973.403.3129 | klastorino@bracheichler.com Reporting of Personal Health Information
In mid-April, the New Jersey Department of Banking and Insurance’s
Office for the Development, Implementation and Deployment
Revised Rules Adopted by New Jersey State of Electronic Health Information Technology (Office for e-HIT)
Board of Optometrists proposed new standards for the collection and reporting of personal
health information by medical laboratories.
On April 16, 2012, the New Jersey State Board of Optometrists
By way of background, one of the goals of the Office of e-HIT,
adopted revised rules. Many of the changes were simply for the
which was established by the 2008 New Jersey Health Information
purpose of clarification, including:
Technology Act, is to effectuate health information technology
• change to the definition of “closely allied health care
A which can eliminate the many different and conflicting standards
professional” so as to include “ophthalmic dispensers” within for collecting and reporting personal health information within the
the definition; this change merely reconciles the regulatory health care community. The proposal adds several new definitions and
definition with the definition already existing in The amends the definition of a “clean claim,” in the regulation governing
Professional Service Corporation Act prompt payment of claims, to include claims for reimbursement for
laboratory tests which have been submitted as required by NJAC
• restriction prohibiting an optometrist from prescribing
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11:22-1.4(b) (see below), which sets forth the minimum requirements
a controlled dangerous substance on the same New Jersey
for the submission of a claim for laboratory tests.
Prescription Blank as a non-controlled dangerous substance
The proposal’s new NJAC 11:22-1.4(b) states that all claims
• provision allowing an optometrist to transmit a prescription
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for reimbursement for laboratory tests must include proof
to a pharmacist telephonically or electronically
of electronic submission of the results of the tests to the
• rejection of the initial proposal which would have changed
A carrier and the medical provider who ordered the tests.
the procedures delegable to an optometrist’s ancillary personnel; If the medical provider does not have the capability to receive
the final rule rejected any changes to the present regulations. the information electronically, test results must be delivered
For additional information, contact: to that medical provider in an alternate format. Once a
medical provider has the capacity to receive the information
Debra C. Lienhardt | 973.364.5203 | dlienhardt@bracheichler.com electronically, all test results should be delivered in
Todd C. Brower | 973.403.3103 | tbrower@bracheichler.com
that manner.
continued on page 4 3

4. BRACH EICHLER
Comments to the proposal must be submitted by June 15, 2012, Cardiac Surgery, P.C., agreed to pay HHS a $100,000 settlement
to Robert Melillo, Chief, Legislation and Regulation, Department and take corrective action to implement HIPAA policies and
of Banking and Insurance, 20 West State Street, PO Box 325, procedures. This agreement resulted from HHS’s investigation
Trenton, New Jersey 08625-0325; Fax (609) 292-0896. into the practice’s unintentional Internet leak making public
patient appointments from its internal web-based calendar.
For additional information, contact:
John D. Fanburg | 973.403.3107 | jfanburg@bracheichler.com The internet leak caught the attention of HHS, and a full-blown
Carol Grelecki | 973.403.3140 | cgrelecki@bracheichler.com investigation ensued. During the investigation, HHS learned that
the practice failed to:
• mplement adequate policies and procedures to appropriately
I
Brach Eichler In The News safeguard patient information
• ocument that it trained any employees on its HIPAA
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Brach Eichler was named one of the New York Area’s Top policies and procedures
Ranked Law firms by LexisNexis Martindale-Hubbell.
• Identify a security official and conduct a risk analysis
Mark Manigan and Kevin Lastorino spoke on “The
• btain business associate agreements with Internet-based email
O
Response to ObamaCare: ACOs, Hospital Integration
and calendar services where the provision of the service included
of Medical Practices and the Emergence of ‘Super Groups’”
storage of and access to its electronic protected health information.
at the Atlantic Regional Osteopathic Convention in Atlantic
City on April 18. 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.
HIPAA CORNER For additional information, contact:
Internet Exposure Results in $100,000 Fine Todd C. Brower | 973.403.3103 | tbrower@bracheichler.com
Lani M. Dornfeld | 973.403.3136 | ldornfeld@bracheichler.com
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
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 | tbrower@bracheichler.com Carol Grelecki | 973.403.3140 | cgrelecki@bracheichler.com
Lani M. Dornfeld | 973.403.3136 | ldornfeld@bracheichler.com Kevin M. Lastorino | 973.403.3129 | klastorino@bracheichler.com
John D. Fanburg, Chair | 973.403.3107 | jfanburg@bracheichler.com Debra C. Lienhardt | 973.364.5203 | dlienhardt@bracheichler.com
Joseph M. Gorrell | 973.403.3112 | jgorrell@bracheichler.com Mark E. Manigan | 973.403.3132 | mmanigan@bracheichler.com
Keith J. Roberts | 973.364.5201 | kroberts@bracheichler.com
Counsel
Richard B. Robins | 973.403.3147 | rrobins@bracheichler.com
Associates
Lindsay P. Cambron | 973.364.5232 | lcambron@bracheichler.com Leonard Lipsky | 973.364.5218 | llipsky@bracheichler.com
Jenny Carroll | 973.364.5223 | jcarroll@bracheichler.com Conor F. Murphy | 973.364.5214 | cmurphy@bracheichler.com
Jordan T. Cohen | 973.403.3144 | jcohen@bracheichler.com Isai Senthil | 973.403.3150 | isenthil@bracheichler.com
Chad Ehrenkranz | 973.364.5234 | cehrenkranz@bracheichler.com Edward J. Yun | 973.364.5229 | eyun@bracheichler.com
Rita M. Jennings | 973.364.5204 | rjennings@bracheichler.com
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