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CMS and OIG Propose to Amend Stark and Anti-Kickback Rules for EHR Donations

Wednesday, May 01, 2013
By Dean P. Nicastro

Last month, the Centers for Medicare & Medicaid Services (CMS) and the Office of Inspector General of the U.S. Department of Health and Human Services (OIG) proposed similar amendments to the Stark exception and to the Anti-Kickback safe harbor for the donation of electronic health records (EHR).  The current rules permit hospitals, group practices and other entities to donate technology-related items and services to physicians, to be used to create, maintain, transmit or receive EHR.  Highlights of the proposed changes:

  • Eliminate the requirement that EHR must include an electronic prescribing component or interface ability
  • Change the procedure for deeming EHR software “interoperable,” so as to follow the current certification process employed by the Office of National Coordinator for Health Information Technology (ONC); and eliminate the 12-month prior timeframe for certification
  • Postpone the EHR sunset from December 31, 2013 to December 31, 2016

The two agencies believe that “sufficient alternative policy drivers” exist to advance electronic prescribing, and that the ONC certification program (which certifies to any edition of EHR certification criteria that is identified in the regulatory definition applicable at time of donation) is consistent with the objective of ensuring that EHR products are certified to the current standard of interoperability when they are donated.  In addition, the sunset extension is thought needed in order to help achieve more widespread adoption of EHR in the healthcare industry (the December 31, 2016 date corresponds with the closing timetable for Medicare/Medicaid EHR incentive programs; the agencies even suggest an extension to December 31, 2021).

The agencies have invited comment on the proposed amendments through June 10, 2013.  Also, they seek comment on whether to limit the class of permitted donors, so as to exclude certain ancillary suppliers, such as lab companies, durable medical equipment suppliers and independent home health agencies, and on other suggestions for preventing “data and referral lock-in” and for encouraging the free exchange of data.

The proposed changes are contained in the April 10, 2013 Federal Register.  Please contact the health law professionals at Pierce & Mandell for additional information on this subject.

New HIPAA Regulations Impact Health Care Providers and Business Associates - Boston, MA

Monday, March 18, 2013
The federal HHS Office of Civil Rights recently adopted final HIPAA regulations covering a broad range of topics, to strengthen privacy and security protections for individual health information.  This blog is Part 1 in a series.   

By Dean P. Nicastro, Esq.

Business Associates.

The new HIPAA regulatory amendments make business associates directly liable for various requirements in the HIPAA Privacy and Security Rules.  In particular, the amendment to the general applicability provision at 45 C.F.R. §160.102(b) states: “Where provided, the standards, requirements, and implementation specifications [of HIPAA privacy and security] apply to a business associate.”  Similar language has been added for both the Security Rule and the Privacy Rule (including particularly with respect to the protected health information (PHI) of a covered entity) at 45 C.F.R. §164.104(b) and 45 C.F.R. §164.500(c).  In effect, this means that business associates must implement administrative, physical and technical safeguards, and implement and document reasonable and appropriate policies and procedures, to protect PHI and electronic PHI under both the Security Rule and the Privacy Rule.

The amendments go on to expand the definition of a “business associate.”  The term now includes Health Information Organizations, E-prescribing Gateways, personal health record providers, and, most significantly, subcontractors of a business associate that create, receive, maintain or transmit PHI on behalf of the latter.  A definition of “subcontractor” has also been inserted: "a person to whom a business associate delegates a function, activity or service.”  HIPAA obligations thus now reach downstream entities that access or handle PHI of the main covered entity.

Additionally, the amendments add business associates to the HIPAA Enforcement Rule, in order to implement the imposition of liability for civil money penalties (CMPs) upon business associates for various HIPAA violations.

The new rules for business associate compliance become effective on March 26, 2013, and must be complied with by September 23, 2013.  Existing business associate agreements that were compliant with pre-existing regulations are deemed compliant with the new rules until the earlier of September 22, 2014 or the date the agreement is renewed or modified on/after September 23, 2013.

HIPAA Enforcement Rule.

The HIPAA regulatory amendments also strengthen HIPAA enforcement:

  • Private Complaints - HHS will investigate complaints about non-compliance filed by private persons when preliminary review of facts indicates possible violation due to willful neglect
  • Compliance Reviews - HHS will conduct a compliance review when preliminary review of facts indicates possible violation due to willful neglect
  • resolution of such investigations or compliance reviews can result in the imposition of CMPs or a determination of no violation
  • HHS may, for criminal or civil law enforcement activities, share PHI obtained in an investigation or compliance review with other legally-permitted governmental agencies (including state attorneys general)
  • Covered entities liable for violations by their business associates, and vice versa
  • governed by federal common law of agency
  • Increased tiered CMP penalty structure for violations, that takes into account whether the covered entity or business associate would have known of the violation, whether the violation was due to willful neglect or reasonable cause, and was corrected within 30 days
  • HHS will determine CMP amounts, considering mitigating or aggravating factors
    • nature and extent of violation (number of affected individuals, time period)
  • nature and extent of harm (physical, financial, reputation, patient’s ability to obtain health care)
  • prior compliance/violations
  • financial condition
  • other matters as justice may require

Covered entities and their business associates should be moving forward now that these final rules have been issued to review and update their business associate agreement templates and compliance policies accordingly.

Please contact the health law attorneys at Pierce & Mandell for additional information on this subject.

Health Law Provider Alert: New Notice Requirement for Material Change to Provider Operations or Governance

Friday, March 15, 2013
By: Rebecca Merrill, Esq.

Massachusetts hospitals and medical groups contemplating a proposed acquisition, integration or affiliation must be aware of a new governmental reporting mandate and cost/market based oversight unique to Massachusetts that has just gone into effect.

The Massachusetts Cost Containment Law, passed last year, establishes a new requirement that every Massachusetts provider and provider organization must submit notice at least 60 days in advance of any proposed “material change” to its operations or governance structure to (1) the Massachusetts Attorney General, (2) the Center for Health Information and Analysis (“CHIA”), and (3) the new Health Policy Commission (“HPC”) established under the 2012 Cost Containment Law.   

 “Provider” is defined as “any person, corporation, partnership, governmental unit, state institution or any other entity qualified under the laws of the commonwealth to perform or provide health care services.”   

“Provider organization” includes “any corporation, partnership, business trust, association or organized group of persons, which is in the business of health care delivery or management, whether incorporated or not that represents 1 or more health care providers in contracting with carriers for the payments of heath care services; provided, that ‘provider organization’ shall include, but not be limited to, physician organizations, physician-hospital organizations, independent practice associations, provider networks, accountable care organizations and any other organization that contracts with carriers for payment for health care services.”

The rather limited statutory definition of “Material Change” includes, but is not limited to:

  • Corporate mergers;
  • Acquisitions or affiliations of a provider or provider organization and a carrier;
  • Acquisitions of insolvent provider organizations; and
  • Mergers or acquisitions of provider organizations resulting in provider organization having near majority of market share in a given service or region.

HPC has been charged with adopting regulations for administering these notice and review requirements and for further defining key terms including “material change” and “non-material change.”  While the notice and market impact review regulations are presently being developed by HPC and have not yet been issued, HPC has just released some Interim Guidance.      

In the Interim Guidance HPC has clarified that the following events constitute a Material Change for notification purposes:

  • A Merger or affiliation with a carrier;
  • An Acquisition of or by a carrier;
  • A Merger with or by a hospital or a hospital system;
  • Any other acquisition, merger or affiliation with another provider or provider organization that would result in an increase in annual patient service revenue of the provider or provider organization of $10 million or more;
  • Any clinical affiliation with another provider or provider organization that has an annual patient service revenue of $25 million or more in the preceding fiscal year; and
  • Any formation of a partnership, joint venture, common entity, accountable care organization, or parent corporation created for the purpose of contracting on behalf of one or more provider or provider organizations.

HPC has announced that only those providers and provider organizations with at least $25 million in net patient service revenue in the preceding fiscal year that propose a Material Change to close after March 12, 2013 must file the notice. Acquisition targets with less than $25 million in net patient service revenue could still be party to a reportable proposed transaction if the acquiring provider is in excess of the reporting threshold. Also, all material changes completed on or before March 12, 2013, will not be subject to this notice requirement.

The intent of the new notice requirement and review process is to empower and enable the HPC to conduct cost and market impact reviews with the ultimate goal of improving the quality of care in Massachusetts while simultaneously reducing cost through increased collaboration, transparency and innovation.

In reaction to the rapidly evolving Massachusetts health care market, most hospitals and medical groups in Massachusetts are considering their affiliation and integration options and joining ACOs.  Not all considered ventures and initiatives will trigger the new notice of Material Change under the Interim Guidance, however, providers and their legal counsels must be aware of what types of proposed new relationships and transactions will trigger the required notices and review. These reviews are in addition to already required applicable reviews and approvals by federal and state agencies regarding licensure, DON, closure of facilities, Medicare and Mass Health participation, change in charitable status and anti-trust.  

The requisite Material Change notice must be submitted electronically at least 60 days in advance of the proposed material change. HPC will develop a notice template that will include instructions, definitions, and explanations for all requested information and the form will soon be available online at www.mass.gove/hpc. In the interim, providers and provider groups seeking to submit notice should request the form directly from HPC at HPC-Notice@state.ma.us.  

Stay tuned for developing regulations on Massachusetts Cost Containment Provider Material Change notice and reporting requirements for hospitals, other facilities, medical groups and health plans.  If you have questions about the reporting requirements or need assistance in evaluating affiliation and integration options or joining ACOs, health law attorneys at Pierce & Mandell, P.C., are here to assist you.

Proposed Changes to Prescription Monitoring Program Would Affect Most Physicians

Monday, February 25, 2013
By Dean P. Nicastro

Massachusetts’ new Prescription Monitoring Program (PMP) Law (Chapter 244 of the Acts of 2012) provides that practitioners who prescribe controlled substances (Schedules II-V) will be automatically registered as participants in the state’s PMP when they obtain or renew their Massachusetts controlled substance registration.  This provision took effect January 1, 2013, and the Massachusetts Department of Public Health (DPH), acting under the PMP Law’s mandate, has issued proposed amendments to its existing PMP regulations to implement the automatic participation requirement and associated provisions.

Highlights of these proposed amendments:

  • Effective January 1, 2013, all practitioners (physicians, dentists, podiatrists) who hold a Massachusetts Controlled Substance Registration (MCSR) are automatically granted authority to “utilize” the PMP
  • “utilize” is defined as accessing or reviewing a patient’s prescription history within the PMP
  • Practitioners must accept the Terms and Conditions of use of the PMP to complete a MCSR
  • PMP participants must utilize the PMP prior to seeing a “new patient” – compliance is met by reviewing the most recent 12-month prescription history of the “new patient”
  • “new patient” means an individual person who has not received any professional services from the participant within the previous 12 months
  • Attending physicians in a hospital or other inpatient facility are subject to this utilization requirement, but not other participants who provide care in the hospital/facility
  • Exceptions are carved out for when acute care is required so as not to result in patient harm, and for instances when the PMP is not reasonably possible to be utilized (e.g., technological or electrical failure)
  • PMP primary account holders may routinely request to delegate up to 2 authorized support staff to utilize the PMP on their behalf – the primary account holder is responsible for all delegate use of the PMP

The proposed regulatory amendments will be up for public hearing before the Public Health Council (PHC) on March 22, 2013.  DPH has stated that the goals of the proposed amendments are to: “(1) increase utilization of the PMP in order to provide prescribers and dispensers with additional information that can inform clinical decision making, and (2) better address the morbidity and mortality resulting from prescription drug misuse and abuse by identifying individuals in need of intervention or treatment.”  Because the proposed amendments will require physicians and other prescribing practitioners to check the PMP database when seeing “new patients,” testimony from organized medicine and other interested parties can be expected.  A final version of the regulations could be adopted as early as the PHC’s April 2013 meeting.

Pierce & Mandell P.C.’s health care lawyers are uniquely qualified to assist medical professionals in understanding, interpreting and complying with the latest PMP regulations. Contact us.

HIPAA “De-Identification Process” is Clarified by Department of Health and Human Services

Thursday, January 10, 2013
By: Rebecca Merrill

Guidance from the Office for Civil Rights (OCR) of the Department of Health and Human Services (HHS) provides clarity on the available methods of de-identification of protected health information (PHI) as well as the federal government’s scrutiny of such procedures.

The Privacy Rule of the Health Insurance Portability and Accountability Act of 1996 (HIPAA) established two methods of de-identification: (1) Expert Determination Method and (2) Safe Harbor Method. 45 C.F.R. § 164.514(a).  These de-identification methods are applied to PHI to enable the use of health information for non-treatment purposes (e.g., research and policy development), while protecting the individual’s right to privacy by removing identifiers from the PHI prior to utilizing the data for secondary purposes.

Applying the expert determination method, a covered entity may determine that health information is not identifiable if a qualified expert, applying generally acceptable statistical and scientific principles and methods for rendering information not individually identifiable, (i) “determines that the risk is very small that the information could be used, alone or in combination with other reasonably available information, by an anticipated recipient to identify an individual who is a subject of the information; and (ii) documents the methods and results of the analysis that justify such determination.”  45 C.F.R. § 164.514(b).

The HHS guidance sets forth factors that the agency will apply when scrutinizing expert qualifications for the purpose of expert de-identification.  These factors will be helpful to health care providers, health plans and business associates in assessing the qualifications of an expert and understanding the de-identification process and risk assessment.  

The HHS guidance also details three primary principles that should guide expert risk assessment.  The first principle, replicability, involves the prioritization of “health information features into levels of risk according to the chance it will consistently occur in relation to the individual.”  For example, low risk replicability would occur when the “results of a patient’s blood glucose level test will vary”; whereas, high risk replicability would exists when the “[d]emographics of a patient (e.g., birth date) are relatively stable.” Id.  Second, the principle of data source availability examines “which external data sources contain the patients’ identifiers and the replicable features in health information, as well as who is permitted access to the data source.” Id.   In it Guidance, HHS indicates that lab reports with identifying information that are often limited to healthcare environments are low risk, while patient name and demographic information often in public sources (e.g., vital records) are high risk.  Third, the principle of distinguishability requires a determination of “the extent to which the subject’s data can be distinguished in the health information.”  Id.

Finally, the HHS guidance addresses the Safe Harbor Method, pursuant to which a covered entity can de-identify PHI by adhering to a de-identification framework that mandates removal of at least 18 identifiers from the health information and requires that the covered entity.  In addition, the Safe Harbor requires that the covered entity have no actual knowledge of potential for an individual to be identified by the de-identified information alone or in combination with other information. 45 C.F.R. § 164.514(b).  The HHS guidance offers clarification on several of these factors, enabling the covered entity to better navigate the de-identification process.  In addition, the guidance provides examples of what constitutes “actual knowledge.”   Finally, the guidance explains that once data is de-identified in accordance with the Safe Harbor, covered entities are not required to enter into data use agreements when sharing the information with third-parties.  

Pierce & Mandell’s health care lawyers can assist in all phases of HIPAA compliance for medical and dental professionals.  Contact us.


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