Sunday, August 22, 2004

Department of Labor FairPay Rules Go Into Effect on August 23, 2004

Tomorrow the U.S. Department of Labor's new FairPay Rules go into effect regarding the Fair Labor Standards Act. Employers should seek to learn more about the regulations and the impact on their employees and business. For more information go to the FairPay Web site created by the Wage and Hour Division of the U.S. Department of Labor.

According to the website the new regulations strengthen overtime protections for workers. Under the new FairPay rules, workers earning less than $23,660 per year — or $455 per week — are guaranteed overtime protection. This will strengthen overtime rights for 6.7 million American workers, including 1.3 million low-wage workers who were denied overtime under the old rules.

The regulations contain new guidance on the "white collar" overtime exemptions under the regulation. Here is a FairPay Fact Sheet on the exemptions for exective, administrative, professional, computer and outside sales employees under the Fair Labor Standards Act.

Saturday, August 21, 2004

Justice Department Opens Broad Investigation of Hospital Purchasing Activities

According to various news reports the Department of Justice (DOJ) has opened a national investigation of the medical-supply industry to assess whether hospitals and other providers are fraudulently overcharging Medicare and other federal and state health care programs for various goods.

A New York Times article reports that, federal subpoenas have been sent out by the DOJ to a substantial number of medical-supply companies relating to the way that suppliers market products to hospitals, nursing homes, clinics, etc. that serve Medicare and Medicaid patients. The article also indicates that the investigation is likely to expand and will include the investigation of specific hospitals and other health care providers.

First Criminal Conviction under the HIPAA Privacy Rule

A press release issued by the United States Attorney's Office for the
Western District of Washington announced the first criminal convication in the U.S. under the health information privacy provisions of the Health Insurance Portability & Accountablity Act of 1996 (HIPAA).

In US v. Gibson, W.D. Wash. No.CR04-0374RFM, Mr. Gibson admitted that he obtained a cancer patient's name, date of birth and social security number while Gibson was employed at the Seatle Cancer Care Alliance, and that he disclosed that information to get credit cards in the patient's name. He racked up more than $9,000 in debt in the patient's name. The terms of the plea agreement include that Gibson should be sentenced to a term of 16 months in federal prison or nome confinement.

The press release stated: "Too many Americans have experienced identity theft and the nightmare of dealing with bills they never incurred. To be a vulnerable cancer patient, fighting for your life, and having to cope with identity theft is just unconscionable," stated United States Attorney John McKay. "This case should serve as a reminder that misuse of patient information may result in criminal prosecution."

Wednesday, August 18, 2004

OCR Issues Two New Fact Sheets on the HIPAA Privacy Rule

Today the Office for Civil Rights (OCR) in the US Department of Health and Human Services issued two new Fact Sheets discussing the impact of the HIPAA Privacy Rule on health care consumers.

According to the OCR the Fact Sheets are designed to provide an easy-to-understand overview of what the Privacy Rule means to consumers. The Fact Sheets can be accessed from the "What's New" column on the OCR website.

The OCR states that, "[t]he first Fact Sheet, entitled, "Privacy and Your Health Information" is a general overview of the Rule, explaining that the Privacy Rule gives individuals rights over their health information, sets rules and limits on how information can be used and disclosed, and requires covered entities to take steps to protect health information. The second Fact Sheet, entitled, "Your Health Information Privacy Rights," focuses on each of the privacy rights individuals have under the Privacy Rule."

Health care providers who are required to comply with HIPAA should read these Fact Sheets to better understand OCR's perspective on what the HIPAA Privacy Rule requires.

$1.5M Stark and Anti-Kickback Settlement Reached with Pennsylvania Ophthalmologist and Two Hospitals

On August 6, 2004, the U.S. Attorney's Office issued a press release that the U.S. Attorney's Office for the Eastern District of Pennsylvania reached a $1.5 million settlement with an ophthalmologist and the former operators of two hospitals in Pennsylvania based on allegations of improper financial arrangements and referral inducements in violation of the Stark and Anti-Kickback laws.

This matter involved a qui tam action alleging that the hospitals proived free space, equipment, personnel, supplies, excessive medical director fees and other services to the physician who operated a number of eye care centers. The physician was hit for $200K and the hospitals had to pay $1M and $250K respectively.

The settlement highlights the importance of physicians and hospitals understanding and complying with the Stark and Anti-kickback laws, especially in light of the recent clarification of the Stark laws under the Stark II Phase II regulations.

Monday, August 16, 2004

Mississippi Hospital Is First to Settle Unisured Patient Class Action

An electronic article in the August 23, 2004 American Medical News reported that a Mississippi hospital, North Mississippi Health Services, which has 650 beds and more than $1 billion in annual billings, is the first facility to settle a nationwide class action targeting non-profit hospitals and the methods they use for charging the unisured for health related services.

Interestingly, North Mississippi Health Services was not even among the facilities sued in the class action. According to the CEO of the hospital the hospital system agreed to the settlement to avoid the distraction and cost of a potential suit.

The article summarizes the terms of the settlement as follows, "uninsured patients who were being charged higher rates than those with private insurance or Medicare will now pay rates based on the hospital's Medicare charges. The lower an uninsured person's income, the less he or she would be charged."

The settlement has been filed in the U.S. District Court for the Northern District of Mississippi. According to the article, "North Mississippi Health Care Services will give free care to patients making up to 200% of the federal poverty level. It also agreed to discounted prices, which range from 50% of the Medicare rate for people earning between 201% and 250% of the federal poverty level to 85% of the Medicare rate for those making between 301% and 350% of the poverty level. In addition, the hospital agreed that it would not try to collect more than 10% of someone's income in a given year to recoup medical bills."

Nonprofit hospitals were the first to face these class action styled lawsuits in June 2004. However, now for-profit hospitals are being targeted. Earlier this month lawyers in Florida and Nevada filed actions against for-profit hospitals, including Health Management Associates, Universal Health Services and HCA, Inc. Archie Lamb, the Alabama lawyer who helped physicians bring lawsuits against managed care companies for their billing practices, is among the lawyers suing the for-profit facilities.

According to the article, "[t]he lawsuit in Florida alleges that Health Management Associates, a Naples-based hospital chain, billed uninsured patients for amounts far greater than what Medicare and insurance companies would have been charged for the same services. The lawsuit alleges that these higher charges violate Florida's Deceptive and Unfair Trade Practices Act." The article goes on to states that the lawsuits in Nevada Lamb against Universal Health Services and HCA Inc. alleges that the hospital systems violated state anti-racketeering laws.

Having been involved in large class actions filed against hospitals I can certainly understand the position taken and empathize with the CEO of the Mississippi hospital who stated that his hospital wanted to avoid the distraction and cost of a potential suit. The fact that the hospital is willing to settle a potential class action claim before any formal action is filed against the hospital speaks volumes about the power of a "threat" of class action has on business and industry. The mere fact of being drawn into a class action lawsuit, whether or not the action is frivilous or has merit, can be a daunting and distracting undertaking for any business or health care provider.

For more information about the non-profit hospital class action litigation you can visit the website set up by the law firms involved in the case. This website includes a summary of the litigation, documents filed in the action, press releases about the case, law firms and lawyers involved in the case, etc.

Sunday, August 15, 2004

WEDI Issues New HIPAA Security White Paper

On August 3, 2004 WEDI (Workgroup for Electronic Data Interchange) issued a new HIPAA Security Rule risk analysis white paper and a corresponding power point presentation.

The white paper issued addresses the final Security Rule requirement that all HIPAA "covered entities" perform a security "risk analysis." The white paper discusses solutions various covered entities can consider adopting to meet the requirement to complete a risk analysis. In order to begin the Risk Analysis process, one must first review the final Security Rule in general and its guidance regarding HIPAA security implementation.

Tuesday, August 03, 2004

Competition vs. Regulation: Would the Health Care System in West Virginia Benefit from More Competition or Stronger Regulation?

A Charleston Gazette article recently discussed a new report issued by the Department of Justice and Federal Trade Commission addressing and arguing against the need for state regulatory process such as as the certificate of need process in West Virginia. The report argues that state regulatory processes do not control health care costs, provide greater access to health care and instead discourage competition. Officials in West Virginia disagree with this conclusion because it fails to recognize the limited health care resources available in rural states like West Virginia. The positions taken on this issue revolve around the age old question of competition vs. regulation and which is better at serving the needs of the public.

Below is a copy of the Gazette article:

If a hospital in West Virginia wants to add more beds, build a new wing or start offering open-heart surgery, administrators must first get the OK from state regulators. A new report from two federal agencies recommends West Virginia and other states think about scrapping that system.
The report, jointly issued last month by the U.S. Department of Justice and the Federal
Trade Commission, argues that the regulations don't control health-care costs and discourage competition. The state's chief health-care regulator and some local hospital officials disagree. They say the report ignores the limited health-care resources and rural nature of West Virginia, as well as the state's existing rate-review process for hospitals.
"I just think that would be a formula for disaster," said David Ramsey, president and chief executive officer at Charleston Area Medical Center, about the prospect of letting hospitals expand as they wish.
Hospitals often use profits from services that make money - such as outpatient imaging and surgery - to pay for those that don't. Without the state's regulations, some hospital administrators worry specialty facilities will crop up to offer these money-making services,
leaving hospitals no way to recoup their losses.
The report's authors conclude regulations like West Virginia's stifle competition by allowing providers to block others from entering markets. The state's rules allow providers to oppose proposals by competitors. But Sonia Chambers, chairwoman of the state's Health Care Authority, said access to health care is a bigger concern than competition in many
rural parts of the state. "There aren't very many places in West Virginia where you can have
competition in health care," Chambers said.
Steven Summer, president of the West Virginia Hospital Association, said the report does not take into account the high percentage of state residents covered by government insurance programs, such as Medicare and the Public Employees Insurance Agency. These programs pay hospitals less than private insurers.
Steve Dexter, president of Thomas Memorial Hospital, worries that without regulation, specialty hospitals would cherry-pick the few privately insured - and profitable - patients. Hospitals like Thomas would be left to care for the uninsured and those covered by government
insurance programs, Dexter said.
Administrators at the South Charleston hospital waited 15 years through several different applications before state regulators allowed the South Charleston hospital to open a cardiac catheterization lab. But Dexter said he isn't ready to get rid of the state's current review process.
"The state is trying to put a rational system in place," Dexter said. West Virginia's rules, which have existed in some form since 1977, require health-care providers make their case to regulators before making large capital improvements, such as buying new equipment or
expanding services.
Providers must show the services are needed, consistent with the state's
health standards and financially feasible. Chambers said lawmakers and governors have periodically reviewed how the state approves new health-care services and they have yet to change how the authority decides what projects to approve or reject. "I think that every governor and Legislature has determined the [certificate of need] process is working," Chambers said. The release of the 360-page report comes one month after the U.S.
Department of Justice alerted three West Virginia hospitals they were being investigated for possible antitrust violations.
Bluefield Regional Medical Center, Princeton Community Hospital and CAMC learned in June federal officials were investigating the hospitals' partnership to offer open-heart surgery in Bluefield. The state Health Care Authority, which has encouraged hospitals to work
together to offer services, gave its blessing to the hospitals' proposal
in August 2003.
Thirty-five other states and the District of Columbia have some type of
regulatory review when health-care providers wish to expand.

Monday, August 02, 2004

DHHS Announces New Health Information Technology Initiative

Department of Health and Human Services (DHHS) Secretary Tommy G. Thompson July 21 released a press release detailing a report "Decade of Health Information Technology: Delivering Consumer-centric and Information-Rich Health Care," which outlines a ten-year plan for implementing the adoption of electronic health records for all Americans. The report cites four major goals in the initiative: (1) bringing information tools to clinical practice; (2) building a healthcare information infrastructure; (3) using health information technology to encourage people to be involved in their healthcare decisions; and (4) expanding public health monitoring, quality of care measurement, and bringing research advances more quickly into medical practice. The new initiative is designed to transform the delivery of healthcare by building a health information infrastructure that will include electronic health records (EHRs) for all Americans and a nationwide network to link health records.

DHHS also issued a fact sheet about the report.

FTC/DOJ Issue Joint Report On Competition In Healthcare Industry

On July 23, 2004 the Federal Trade Commission (FTC) and the Department of Justice (DOJ)
released a joint report examining competition in the healthcare sector and recommending ways to improve performance of the marketplace. The 361-page report, "Improving Health Care: A Dose of Competition," stems from twenty-seven days of hearings on healthcare and competition
held from February through October 2003, an FTC-sponsored workshop in September 2002, and independent research. The report focuses on a number of key areas, including the importance of reliable information on prices and quality, eliminating barriers to competition, and relying on competition when possible.

Communities in Illinois Take Unique Local Approach to Tort Reform

Two small communities in Illinois have taken tort reform to the local level by passing local ordinances which place caps on noneconomic damages that can be awarded in medical malpractice cases. The ordinance also requires that such lawsuits be filed in the county where the alleged malpractice took place.

Carbondale (population 25,000) and Marion (population 16,624) have both passed ordinances and nearby Herrin (population 11,406) passed a resolution supporting Carbondale's action. Another community, Mount Vernon (population 16,486) was considering a local ordinance.

Carbondale and Marion passed their ordinances under Illinois' "home-rule" authority. Under home rule, cities have a broad right to pass laws dealing with issues of particular concern in their communities. Cities with more than 25,000 residents are entitled to home rule automatically. Residents in smaller cities can adopt these powers through a referendum. Carbondale's and Marion's tort reform ordinances cap noneconomic damages at three times the economic damages. Trial lawyers believe that the ordinances are unconstitutional and unfair to injured patients.

You can read more about this story here.