Buying in to medical practices entails special planning

Erica K. Halley

Erica K. Halley represents individuals and businesses in a broad range of transactional matters.

In this article, Oklahoma City Attorney Erica K. Halley answers questions about the basics of investing in a medical practice.

What does it mean to buy in to a medical practice?

Small health care practices are typically owned by one or more of the health care providers at the practice. Such practices are usually organized as professional corporations (PCs) or professional limited liability companies (PLLCs). Although PCs and often PLLCs are considered corporations for legal and tax purposes, where the owners are technically “shareholders,” owners of a medical practice are colloquially referred to as “partners.” For a junior provider in a small practice, the pathway to partnership and the partnership itself can take on many different forms, but the key concerns are generally the same in every case.

Health care providers interested in purchasing ownership in a practice should invest with a comprehensive understanding of the valuation of the business, the compensation structure among partners and the exit strategies available to each of the partners. Retaining advisers who can alleviate this burden, such as an accountant and an attorney having experience in medical practice transactions, will ensure the tax implications are favorable and the exposure to risk is minimized.

How are medical practices valued and how do partners buy in?

Ordinarily, valuations consider the values of the hard assets, the accounts receivables and other intangibles, and the goodwill of the practice. Unlike other types of companies, it is common in health care practices for all partners to share ownership equally. This means a new partner to an existing two-partner practice will own a full 33.33% of the practice either immediately or shortly after the buy-in.

How the new partner pays for his or her share of the business varies. Sometimes, buy-ins are structured over time. For example, if a buy-in were to take place over the course of three years, the new partner would pay one-third of the total purchase price every year, and he or she would slowly purchase their interest in the practice, not becoming an equal partner with full voting power until the third payment in the third year. Alternatively, a practice may grant the new partner his or her full ownership (with full voting power) at the outset, and treat the buy-in like a loan being paid off over time. In either event, the payoff of the purchase price is frequently in the form of income-shifting or plain reductions in salary and/or bonuses.

How are partners paid?

Compensation structures in medical practices also differ across the board. Many times, a partner’s compensation is determined, at least in part, by the partner’s “productivity” in the practice according to how much revenue each provider generates, how many patients each provider sees, how many hours each provider works, or a combination of any of the foregoing. Other variables used in determining partner compensation include the management duties of the partners, seniority, special training and allocations of expenses. Such formulas among the partners ought to be negotiated and agreed upon prior to a buy-in.

How do partners get out of practices?

Before partners buy in, they need to understand how to get out — and how the other partners can get out at their expense. Shareholder agreements in professional corporations and operating agreements in professional limited liability companies usually set forth the procedures for a partner leaving the practice in the event of employment termination, retirement and death, as well as the calculations for valuing the exiting-partner’s ownership. In most cases, the other partners will be ultimately responsible for buying that partner (or his/her estate) out of the business. In addition, practices often bind their partners to noncompetition covenants, which restrict them from competing with the practice after they leave the practice.

 

Erica K. Halley is an attorney with Phillips Murrah.

Summary of Oklahoma Opioid Decision

Oklahoma Opioid Decision by Phillips Murrah healthcare attorney Mary Holloway

Mary Holloway Richard is recognized as one of pioneers in healthcare law in Oklahoma. She has represented institutional and non-institutional providers of health services, as well as The following patients and their families.

The following summary of the Oklahoma opioid decision is also published at Lexology.com.

The decision in the non-jury trial, Oklahoma ex rel. Mike Hunter, Attorney General of Oklahoma v. Purdue Pharma L.P. et al was filed on August 26, 2019.  The trial, which lasted for thirty-three days, focused on the State’s sole claim against the defendants for public nuisance under state statute, during which forty-two witnesses were called by the parties and 874 exhibits were submitted into evidence, along with 225 additional court exhibits.

In the first such decision in the United States among a plethora of cases filed across the nation, the Court held that the State had met its burden of proof that the defendant, Johnson & Johnson, was the cause-in-fact of the extensively described injuries, and that the harm suffered was the kind recognized by the state law. Purdue and Teva Pharmaceuticals settled prior to trial. The court found no intervening causes to defeat a finding of direct and proximate cause.

Testimony ran the gamut of describing the development of opioids in the 1950’s and research and development that occurred from the 1990s until recent years, and it focused on what the Court considered intentionally misleading marketing information and activities. It is noteworthy that the Court included in its findings that there was no opioid epidemic in Oklahoma through the mid-1990s, according to the state Commissioner of Mental Health.

The Court found that “Defendants, acting in concert with others, embarked on a major campaign in which they used branded and unbranded marketing to disseminate the messages that pain was being undertreated and ‘there was a low risk of abuse and a low danger’…designed to reach Oklahoma doctors through multiple means and at multiple times over the course of the doctor’s professional education and career” in the state.  The defendants were found to have deceptively marketed the concepts of “undertreatment” and “pseudoaddiction” in the effort to avoid the “addiction ditch,” to increase the volume of prescriptions and increase use by state physicians.

An Abatement Plan was relied upon to represent the cost of addiction treatment included in the: assessment and treatment at all levels for addicted individuals; supplementary treatment; public medication and disposal programs; screening; Brief Intervention and Referral to Treatment (SBIRT) for all primary care practices and emergency departments; universal screening; pain management program for state Medicaid members; education; naloxone treatment and education; law enforcement and provider licensure agency investigation activities; and perinatal preventive services.

The total yearly costs for remediation as described to the Court for 2019 is $572,102,028.  While State witnesses testified that the abatement Plan will require twenty years, the Court found that “…the State did not present sufficient evidence of the amount of time and costs necessary, beyond year one, to abate the Opioid Crisis.” Oklahoma ex rel. v. Purdue Pharma L.P. et al at 41.

In a news release, counsel for Johnson & Johnson stated that it is confident that it has strong grounds for an appeal. This decision is expected to influence the settlement talks taking place in Ohio currently related to thousands of pending lawsuits against twenty-two opioid manufacturers and distributors, including Purdue.

Deadline Monday for pharmacies’ annual inventory of controlled dangerous substances

In this article, Oklahoma City Attorney Martin J. Lopez III discusses requirements pharmacies must abide by when submitting controlled substance inventories and the consequences they may face if they neglect to do so.

attorney Martin J Lopez III

Martin J. Lopez III is a litigation attorney who represents individuals and both privately-held and public companies in a wide range of civil litigation matters.

There seems to be increasing regulation of pharmacies in recent years, and this has been heightened by the responses to the opioid crisis. What are the various inventory requirements of the Oklahoma State Board of Pharmacy (OSBP)?

According to state regulation, and because of the dangerous propensities of these controlled medications, OSBP requires pharmacies to perform inventories much like any retailer, although there are some distinctions based upon the nature of the pharmacy’s product. The regulation, Oklahoma Administrative Code 535:15-3-10, sets forth four distinct circumstances where inventories must be performed: The first is an annual inventory of controlled dangerous substances (“CDS”). Most relevant for all pharmacies at this particular time, the OSBP requires an inventory of all CDS be performed between May 1 and July 1 of each year; this annual inventory must be included with the pharmacy’s annual license renewal application. This annual license renewal application must be in writing, must contain the names of the pharmacy’s owners and shall provide any other information deemed relevant by the board — including the CDS inventory. Inventory is required for a Change of Ownership or a change of the Pharmacist-in-Charge (PIC) and must be sent to the board within 10 days. The OSBP requires the inventory include the new manager’s name and registration number and recommends that it include the outgoing manager’s name, registration number, and current place of employment. The OSBP further recommends that both the incoming and outgoing managers sign the inventory. Inventory also may be triggered by circumstances such as theft. In the case of suspected loss, theft, or other event, the OSBP may require an inventory be performed and sent to the board within ten days of the completion of the inventory. Inventory is also required when a pharmacy closes and must be sent to the board within 10 days of the pharmacy’s closing.

What is a controlled dangerous substance for the purposes of the annual inventory to be performed between May 1 and July 1?

Generally, a CDS is a drug, substance or immediate precursor (a substance that serves as a chemical intermediary to manufacture a controlled dangerous substance) in Schedules I through V of the Oklahoma Uniform Controlled Dangerous Substance Act, found at Title 63, Sections 2-203 through 2-212 of the Oklahoma Statutes; these Schedules range from those with high potential for abuse and no accepted medical use (includes many “street” drugs like heroin) to those with low potential for abuse and which are accepted for medical use (such as pseudoephedrine—such as brands commonly known as Sudafed PE and Allegra D.

What happens if a pharmacy misses or fails to complete an inventory or doesn’t perform or submit the inventory on time? For example, what happens if a pharmacy doesn’t perform inventories of its controlled dangerous substances between May 1 and July 1?

If a pharmacy fails to comply with the annual CDS inventory, both the PIC and the pharmacy itself are deemed to have violated the administrative code. A violation of the administrative code amounts to a violation of the Oklahoma Pharmacy Act, over which the OSBP may take a number of actions, including a reprimand, probation, suspension, permanent revocation of a pharmacy’s license, or other disciplinary action in its discretion; the OSPB also can levy fines up to $3,000.

Martin J. Lopez III is an attorney with Phillips Murrah law firm.

Medical practice support can be costly to suppliers, others

In this article, Oklahoma City Healthcare Attorney Mary Holloway Richard discusses the “Anti-Kickback Statute” and potential, federal violations of the statute as it relates to providers in the healthcare industry.

Mary Holloway

Mary Richard is recognized as one of pioneers in health care law in Oklahoma. She has represented institutional and non-institutional providers of health services, as well as patients and their families.

What is the authority for the federal government to oversee providers’ relationships with durable medical equipment (DME) and device suppliers and drug companies, such as educational programs that would seem to benefit the patient? How active is that oversight?

The Anti-Kickback Statute (AKS) prohibits remuneration to induce referrals or use of products reimbursement by Medicare, Medicaid or other federal healthcare programs. The federal government, through its investigators and prosecutors, pursue civil remedies including fines for remuneration considered as kickbacks. Remuneration may be cash of in-kind contributions. Under the AKS both civil and criminal charges may result from an investigation by the federal government. Federal policy is designed to prevent relationships that purportedly “lead to excessive or unnecessary treatment,” drive up health care costs and inhibit free market competition. The kickback prohibition applies to all sources of referrals, even patients. For example, where the Medicare and Medicaid programs require patients to pay copays for services, you generally are required to collect that money from your patients. Routinely waiving these copays could implicate the AKS and you may not advertise that you will forgive copayments. However, providers are free to waive a copayment if the provider makes an individual determination that the patient cannot afford to pay or if reasonable collection efforts fail. In addition, providing free or discounted services to uninsured people is not prohibited. The beneficiary inducement statute (42 U.S.C. § 1320a-7a (a) (5)) also imposes civil monetary penalties on physicians who offer remuneration to Medicare and Medicaid beneficiaries to influence them to use their services.

Is the federal government even active in investigating and prosecuting under the AKS?

Yes. The Office of the Inspector General, counsel for the Department of Health and Human Services (HHS), estimated in 2018 that for every $1 spent on investigating health care fraud, $4 is recouped. The government has investigated, prosecuted and settled claims with many types of providers and continues to do so. The government does not need to prove patient harm or financial loss to the programs to show that a physician violated the Anti-Kickback Statute. A physician can be guilty of violating the AKS even if the physician actually rendered a medically necessary service. Taking money or gifts from drug or device companies or DME suppliers is not justified by arguing that providers would have prescribed that drug or ordered that wheelchair even without a kickback. An example of unlawful activities comes from the Covidien case. A supplier of vein ablation products in California and Florida, Covidien recently settled its claims with the federal government that it offered or provided free to medical practices, or at discounted rates, practice development assistance, lunch-and-learns, dinners with physicians, and market development support, such as vein screening activities designed to recruit new patients to the practices — all provided free of charge or at discounted rates. This virtually uncompensated support, according to the Department of Justice, was designed to induce the use of certain items or services, leading to excessive and unnecessary treatments and driving up health care costs for everyone.

Are there any clear guidelines for physicians and other providers?

HHS has published guidelines for providers, such as “A Roadmap for New Physicians-Avoiding Medicare and Medicaid Fraud and Abuse,” which I routinely provide to new physicians, advanced-practice nurses and other providers. Failure to follow the guidelines can be costly. For example, the outcome of the Covidien investigation was a civil settlement agreement for violation of the AKS in the amount of $17,477,947, with additional payments in excess of $2 million by the company to the states of California and Florida for claims paid by their Medicaid programs.

How are violations of the AKS usually discovered?

Violations of the AKS are often discovered through “qui tam” actions brought by employees of the practice group or those with knowledge of its practices known as “whistleblowers” or “relators.” To avoid vulnerability to qui tam actions providers are advised to adopt and implement robust compliance policies, including training providers and other personnel regarding behavior that may constitute risk under a federal regulatory analysis. It is also advisable to have operating agreements of the practice’s legal entity and written agreements reviewed by counsel in order to shift legal liability where possible.

 

Published: 4/19/19; by Paula Burkes
Original article: https://newsok.com/article/5629122/medical-practice-support-can-be-costly-to-suppliers-others

Doing business by email can cause legal concerns

In this article, Oklahoma City Attorney A. Michelle Campney discusses email practices that could be considered legally binding.

A. Michelle Campney

As a litigation attorney, A. Michelle Campney represents companies in a wide range of business litigation matters with an emphasis on the construction industry.

What are the general legal concerns regarding conducting business through email?

It is estimated that there will be almost 3 billion email users by the end of this year, with an average of 128 business emails sent and received per person, per day. Often, only passively mentioned in employee handbooks and with little to no training during onboarding, employers and employees adopt varied practices for email use. The sheer volume of emails creates logistical problems for businesses (e.g., server space, data protection), but it can also create legal issues when exchanges can bind companies or reveal confidential, privileged or personal information.

How can emails bind someone until they actually sign an agreement?

Does the party you are working with know that you require hard copy agreement with handwritten signatures? If not, and if the email contains all the material terms and the facts, and circumstances surrounding that show that you were conducting the transaction electronically, then you could have an enforceable agreement under the Oklahoma Uniform Electronic Transactions Act (“UETA”).

But no one actually signed the agreement, so how can it be enforceable?

Not all agreements have to be signed to be enforceable, and specifically under the UETA, a signature only need be “attributable to a person if it was the act of the person.” Furthermore, an electronic signature under the act is “determined from the context and surrounding circumstances at the time of its creation, execution, or adoption … .” While Oklahoma does not have any case law on the issue, a Texas court found a simple “Thank you, Clyde” typed above the signature block was sufficient for a signature. Parks v. Seybold (Tex. App.—Dallas, 2015). Additionally, some courts (including those in Texas) broadly interpret the signature requirement to include an automatically generated signature block.

What are other potential concerns for email?

Let’s say that your company is involved in litigation regarding a contractual dispute. Most attorneys ask that all communications, including email communications, regarding the issue be turned over during the discovery process. While the communication may not ultimately be admissible in court, if there are emails between employees discussing the dispute and the surrounding facts and circumstances, those will generally have to be turned over to the other side. Additionally, if certain individuals are involved then you may have to turn over all emails regarding that person. Thus, if any mentions of any disciplinary action regarding that person or even your own personal feelings about the person are on email those may have to be turned over. While the emails may not ultimately impact your case, they could embarrass your company.

Are there any practices or policies that would help alleviate the concerns surrounding email?

While policies and procedures will be specific to each type of business and its standard practices, at the most basic level, having a robust email use policy will set a good foundation and, if properly drafted, help educate your employees on what to do and not to do. One important thing to remember is that email will only continue to grow as a means of communication. Setting good groundwork for how it is to be used in your company may help prevent issues down the road.

 

Published: 4/11/19; by Paula Burkes
Original article: https://newsok.com/article/5628396/doing-business-by-email-can-cause-legal-concerns

Lopez: A bitter pill – medical malpractice liability for new resident physicians

While becoming a resident physician is undoubtedly an exciting next step in the process, it inherently comes with daunting new realities – a plethora of health care regulatory compliance issues, constantly developing reimbursement requirements, and medical malpractice liability. This short article focuses on minimizing the risk of negligence-based medical malpractice lawsuits.

attorney Martin J Lopez III

Martin J. Lopez III is a litigation attorney who represents individuals and both privately-held and public companies in a wide range of civil litigation matters.

Medical school residency match day. It’s a chaotic, stressful revelation at which fourth-year medical students find out where they will spend the next few years of their lives as residents – newly minted physicians becoming experts in their respective fields.

While no practicing physician is immune from being sued, common-sense measures have proven effective in avoiding malpractice claims. And, although a resident physician’s liability is generally covered by the residency program, there remains ample reason to mitigate liability risk – notably, to avoid the stress, time, and hassle that comes with litigation.

Most obviously, physicians should provide the best medical care to their patients they possibly can. Lawsuits for medical malpractice involve determining whether the physician has met the standard of care owed to the patient; if she provided the best care she could have, she has positioned herself well from the outset.

Essential to providing a high level of care to the patient is communication about that care to the patient. Medical malpractice lawsuits often involve allegations of poor communication that may be rooted in a failure to convey respect, inadequate listening skills, and the use of technical medical jargon rather than patient-friendly language.

In a fast-paced environment with numerous patients to attend to, it’s understandably easy to use verbal medical shortcuts for efficiency’s sake; however, using patient-friendly language creates a stronger connection with patients, makes for well-informed patients, and may also manage patient expectations about treatment, diagnosis, and prognosis.

When a patient is dissatisfied, the physician should carefully listen and try to understand the basis for the concern or frustration and engage in meaningful dialogue about the issue. By making this concerted effort to proactively communicate and resolve issues, physicians affirm their commitments both to the patients and to a quality practice where people are treated with respect.

Another important aspect of mitigating liability risk is thorough detailed documentation in the medical record. Careful documentation is the foundation for quality and coordinated patient care, defending malpractice claims, and even for reimbursement issues by government programs – such as Medicare and Medicaid – and commercial insurers.

Proper documentation should include, but certainly isn’t limited to: details of discussions with patients, the physician’s thought and decision-making processes, results of laboratory tests and other ancillary services, proposed courses of treatment (including the impact of doing nothing), the bases for any physician recommendations, and communication of alternatives to the patient. In so carefully documenting, the physician establishes medical necessity for her services and creates admissible evidence in the event litigation arises out of the treatment.

While it may create extra work for physicians, taking the steps outlined in this article offers the benefits of more meaningful communication with patients, increases patient satisfaction, facilitates coordinated care with other providers on the patient’s behalf, and reduces the risk of medical malpractice lawsuit liability. Establishing these habits early in a medical career will undoubtedly offer great long-term rewards.

Martin J. Lopez III is a litigation attorney with the Oklahoma City law firm of Phillips Murrah.

Data breach still compliance concern for health care providers

cyber breach artworkHIPAA concerns, established in 1996 and evolving ever since, continue to be a very real compliance concern for healthcare providers. As an example, last year HHS collected $28.7 million from providers of healthcare services and payors for responses to HIPAA data breaches that HHS considered inadequate.

According to Modern Healthcare, this is $5.2 million over the prior high for settlement and penalties reported in 2016.  The data for 2018 may be skewed by the $16 million settlement by Anthem for a breach involving approximately 79 million people. That breach occurred in 2015, and the settlement was record-setting for the Office of Civil Rights.

Changes being discussed by HHS include the possibility of sharing a percentage of civil monetary penalties or monetary settlements with affected individuals; revisions to HIPAA rules that facilitate the additional information demanded by coordinated care, outcome-focused care and value-based payments; and reconciliation of behavioral health care’s 42 CFR Part 2 rules with HIPAA.


Mary Holloway Richard portrait

Mary Holloway Richard

If you are concerned about how this issue affects your business or practice, contact Mary Holloway Richard, who represents and counsels clients on issues including healthcare compliance, health services contracting, reimbursement audits and appeals, OIG investigations, and regulatory and corporate matters. 

Mary can be reached at 405.552.2403 or at mhrichard@phillipsmurrah.com.

Click here to view Mary’s Attorney Profile page.

Oklahoma healthcare law leader Mary Holloway Richard offers mentoring advice in AHLA magazine

“Forewarned is forearmed.” I adopted that as one of my guides. Nowhere is that more true than in the lawyer mentor selection process within AHLA.

oklahoma city health care attorney mary richard

Mary Holloway Richard

I want to share some thoughts with you to make your selection more likely to lead to a meaningful mentor relationship to help you along your path in this broad, ever-changing field we have chosen.

I am passionate about many things, including mentoring and AHLA. While I mentor within my state and community, the focus there is often on facilitating connections for young lawyers looking for a job or a career change. Within AHLA, mentors additionally provide a safe place to discuss difficult issues – both legal and human relations – as well as inspiration and support to other lawyers. We have the opportunity to help other health lawyers along their career path, and to learn from those mentees.

Yet, while AHLA members may share similar passions and goals, that is not a strong basis for selection. Rather, there is a bit of magic to being selected. Obviously you need to be as transparent as possible about your goals, areas of interest (“Mentoring Topics”), and your member profile. As much information as you can share is important because you never know what it is that will draw a potential mentor to you. For example, in addition to substantive areas of health law of interest to me, I am interested in supporting young women balancing commitments to family, profession, and community. In reviewing recent mentee applications, I found that I connected with those who provided enough information so that I could connect with them., such as the young mother on the partnership track who still worked to contribute to her community and another who had moved from an in-house position to a private practice (as I did). Some of those who did not provide enough information in their profiles left me without a basis for connecting with them. I even suggested to some that they revise their profiles to tell their story and state their objectives more clearly.

In the spirit of wishing you the most satisfying, helpful, and inspiring mentor-mentee relationship, I will distill my thoughts down to the following messages of motivation:

Your story is interesting so tell enough of it – education, family, job path, current position. Let prospective mentors get to know you a bit.

Share your professional dreams, goals, objectives. Readers won’t know if they can be proper lawyer mentors without this information. Allow a prospective mentor to properly select you as his or her mentee based upon your objectives and common or complementary skill sets. You may also create a connection via disparate experiences and different skill sets, so pique the prospective mentor’s curiosity with sufficient information to determine if you two are a match.

If you want someone to provide feedback about a specific area, such as interfacing with the FBI or handling OIG investigations, or if you want your mentor to assist you in connecting within AHLA, be sure to mention those goals.

You must sell yourself truthfully, so don’t despair if it takes some time to connect with just the right mentor.

Finally, once connected to a Mentor, engage with that Mentor. AHLA recommends quarterly contact as a minimum. The responsibilities to create a meaningful relationship belong to both parties, as do the benefits of the relationship. Mentoring is a two-way street, and you will get out of it what you put into it, but it will be much less effective and satisfying – for both the mentor and mentee – if you fail to provide sufficient information upon which to base the relationship.


This Oklahoma healthcare law topic regarding mentoring was featured in the June 2018 issue of Connections, the official publication of the American Health Lawyers Association.

By Mary Holloway Richard

Mary H. Richard heads up the Health Care Practice Group at the law firm of Phillips Murrah, headquartered in Oklahoma City. Mary has a law degree from George Washington University and a master’s degree in public health administration from the Oklahoma Health Sciences Center. She began her career in ambulatory care, health services research, and health management consulting at the Texas Medical Center. She has practiced health law in private practice settings and as in-house counsel for the INTEGRIS Health system. While at INTEGRIS, she provided legal counsel on issues regarding behavioral health services, hospital operations, clinical research activities, and a variety of other topics in a number of facilities throughout the system. She is active in the AHLA and is a part of the AHLA Behavioral Task Force leadership. She served as subcommittee co-chair of the Providers/Clinicians subcommittee, Vice Chair of Publications, Vice Chair of Strategic Planning and Special Projects, and is currently Vice Chair of Membership. She continues to be active in the AHLA mentoring program by mentoring six young professionals and is an active mentor to lawyers in Oklahoma who are interested in health law. Mary is also a proud member if the Choctaw Nation of Oklahoma. Her grandfather was one of the first lawyers in Indian Territory.

NewsOK Q&A: Certificate of need laws can bridle behavioral, other care

oklahoma city health care attorney mary richard

Mary Richard is recognized as one of pioneers in Oklahoma healthcare law. She has represented institutional and non-institutional providers of health services, as well as patients and their families. She also has significant experience in representing providers in regulatory matters.

In this article, Oklahoma City healthcare attorney Mary Holloway Richard discusses Oklahoma’s Certificate of Need laws with the Daily Oklahoman newspaper.

Q: What are Certificate of Need (CON) laws and what is the status of CON in Oklahoma?

A: The history of CON laws is an interesting one. Federal law required CON for facilities that received federal funds to construct facilities. By 1978, unique CON statutes were passed in 36 states. Although the federal mandate was repealed in 1987, many states still have CON laws in place. The CON system was intended by Congress as one mechanism for controlling healthcare costs by controlling development. The idea was that unnecessary beds or services would drive up the costs and miss system efficiencies and economies of scale. Development was broadly defined to include activities ranging from new development, acquisitions, mergers, management agreements, leases, stock purchases and changes in ownership via foreclosure. The Oklahoma legislature repealed CON laws in all areas except for psychiatric and chemical dependency services and long-term care.

Q: What are current requirements for developing long-term care and behavioral health services in Oklahoma under these statutory schemes?

A: For long-term care, the Oklahoma law provides for development of long-term care services in a “ … planned orderly economical manner consistent with and appropriate to services needed by people in various (parts of Oklahoma) ….” Development must match or reflect the need demonstrated in the CON application as evaluated by the state Department of Health. The statutes also enumerate the powers of the Department of Health with regard to long-term care facilities, and services. The law applies to long-term care facilities including nursing homes, specialized facilities such as long-term acute care and skilled nursing facilities and the nursing component of continuity of care and life care communities. For psychiatric and chemical dependency service facilities, the process is outlined in the statutes and includes application requirements, findings by the state Board of Health, providing bases for the board’s decision, the opportunity for appeal of the board’s decision and an explanation of potential penalties for failure to comply.

Q: Some writers and consultants in the healthcare industry contend that these laws no longer serve the purposes for which they were created by legislatures or fail to achieve the ostensible objectives. Is this fair criticism?

A: All segments of the healthcare industry are highly regulated. There is a good argument to be made that business decisions in the healthcare space are guided by reimbursement, the impact of effectiveness and outcome metrics, and classic business principles such as market share and that, while the original ideas supporting the CON effort may have been sound, the system now provides an additional hurdle and expenses in two areas of significant needs in our state — services to the elderly and others requiring long-term care and to those suffering with behavioral health diagnoses. More specifically, Oklahoma’s CON rules apply only to hospitals so that development for treatment facilities not considered “hospitals” by the Oklahoma Department of Health are not covered by the CON procedures and limitations. The result is that addiction treatment facilities providing services, including beds, only require approval of the Oklahoma Department of Mental Health and Substance Abuse Services, which does not have its own CON process and can be developed without hindrance.

Q: Is there interest among Oklahoma lawmakers to repeal the last vestiges of CON law in Oklahoma?

A: Although this issue has come up in the last several years, it has not been successful. No such legislation was proposed in the first regular session of this legislative term, which ended in May. In terms of the status of CON laws in the nation, as of 2016, 14 states had discontinued their certificate of need requirements and 34 continued with some remnant of the CON system.

Published: 10/12/17; by Paula Burkes
Original article: http://newsok.com/qa-with-mary-holloway-richard-certificate-of-need-laws-can-bridle-behavioral-other-care/article/5567643

NewsOK Q&A: FBI warns against doctors, dentists using ‘anonymous mode’ computer servers

From NewsOK / by Paula Burkes
Published: April 12, 2017
Click to see full story – FBI warns against doctors, dentists using ‘anonymous mode’ computer servers

Click to see Mary Holloway Richard’s attorney profile

Mary Richard is recognized as one of pioneers in health care law in Oklahoma. She has represented institutional and non-institutional providers of health services, as well as patients and their families.

Q: What attention has the FBI recently given to protect Protected Health Information (“PHI”) from cyber criminals?

A: Under a “Private Industry Notification” dated March 22, the FBI’s Cyber Division has provided guidance that’s applicable specifically to medical and dental providers and focuses on protection of sensitive, identifiable health information.

Q: What does the notice specifically recommend?

A: The notification recommends these health care providers request that their IT services personnel take steps to further secure the information from cyber threats by checking networks for File Transfer Protocol (“FTP”) servers running in anonymous mode. FTPs routinely are used to transport information between network hosts. This is the case, for example, when a covered entity such as a hospital or group practice transfers information to a business associate, such as a billing company or a third-party payer, for the purpose of submitting claims for services provided.

Q: What does “anonymous mode” mean and what threat does it represent?

A: “Anonymous mode” refers to the situation where an FTP server can be structured to permit users who are anonymous, doesn’t require a password to enter, and accepts common user names such as “anonymous” or “FTP.” The danger is that, in such circumstances, sensitive patient information stored on a server could be accessed with little or no security.

Q: Why does the FBI guidance focus specifically on health care?

A: Research conducted at the University of Michigan in 2015 resulted in a finding that more than one million FTP servers would allow such access. According to the FBI, some computer security researchers seek servers in anonymous mode as part of legitimate research, but others make such connections to facilitate nefarious activities such as launching cyber attacks, hacking, blackmailing, harassing and intimidating business owners. It’s the FBI’s purpose issuing this new guidance to both make health care business aware of the risks represented in their IT systems and to shore up weaknesses that pose cyber security risks. In addition to the precautions urged in the notice, the FBI has previously urged companies to buy and implement ransomware.

Q: Should additional actions be taken by medical and dental health care entities to provide additional protections against cyber crime?

A: The FBI encourages medical and dental health care entities to report suspicious or criminal activity to the local FBI field office (locate via www.fbi.gov/contact-us/field) or the FBI’s 24/7 Cyber Watch, CyWatch 855-292-3937 or CyWatch@ic.fbi.gov. Submitted reports must include available information regarding the date, time, location, type of activity, number of people and type of equipment used for the activity, the name and contact person for the entity submitting the report. Victim complaints can be filed with the internet Crime Complaint Center at www.ic3.gov.

 

Mary Holloway Richard sourced in article investigating hospital merger

Mary Holloway Richard is recognized as one of pioneers in health care law in Oklahoma. She has represented institutional and non-institutional providers of health services, as well as patients and their families.

Mary Holloway Richard, Phillips Murrah Of Counsel Attorney and leader of the Firm’s Health Care Practice, was quoted in a Journal Record article by Sarah Terry-Cobo regarding an attempted merger by OU Medical System and how best to financially achieve that mission.

Read Richard’s comments from the article below:

OKLAHOMA CITY – When it comes to complicated relationships, sometimes it just takes the right partner. After a failed hospital merger was announced Monday, OU Medical System could still find its better half.

But making that match probably won’t be easy, said industry observers. Health care attorney Mary Holloway Richard said a potential partner needs the business expertise as well as the financial backing to purchase a large teaching hospital.

Richard said teaching hospitals have historically had higher costs than non-academic hospitals.

A potential partner has to evaluate the economic feasibility, regardless of whether parties are considering an outright acquisition or a joint venture, she said.

“Will it fit in with your overall business model?” Richard said. “(A teaching hospital) is a complex system, so how you incorporate that complex system into an existing system requires mastery of both the business model and the financial feasibility, as well as recognition of the compliance issues at play.”

Read the full article at the Journal Record.

Therapists need liability protection

By Mary Holloway Richard, Of Counsel for Phillips Murrah. This column was originally published in The Journal Record on January 18, 2017.


Mary Richard is recognized as one of pioneers in health care law in Oklahoma. She has represented institutional and non-institutional providers of health services, as well as patients and their families.

Behavioral health is a unique subset of health care law. I long have been privileged to see firsthand the challenges in working as a therapist while successfully avoiding liability and regulatory land mines, and I am empathetic with patients and families.

I believe it is important to provide protection from liability for therapists and to eschew expansion to predicting dangerousness of patients as the standard of care to which they are held. Therapists must adhere to standards of care that, when breached, result in liability to a patient for harm caused by that breach. Forty years ago the therapist’s burden was expanded to encompass a duty to warn third parties under certain circumstances in Tarasoff v. Regents of Univ. of California.

Recently the Washington Supreme Court decided Volk v. DeMeerleer, expanding liability of mental health professionals to unidentified individuals. As in Tarasoff, reactions among states can range from adopting to rejecting the rule in response. Such decisions are framed in reliance on laws in other states, scholarly articles and treatises, such as the creation of post-Tarasoff California statutory immunity for the therapist’s duty to warn third parties.

The Washington Supreme Court ruled in Volk that a psychiatrist could be liable for homicides even though the victims were not identified as targets of violence. The decision expands the scope of liability beyond the professional’s traditional duty to create a duty to identified third parties and may also result in expanding the rule from mental health professionals to other providers.

It is true that the Volk case concerned the murders of a young mother and her son as well as the suicide of the patient who killed them, and we are all too familiar with the facts of Columbine and Newtown. And society must protect these individuals. We must balance the need to protect our communities from violence with the need to protect our providers from the reprehensible burden of liability for predicting violent propensities.

The Washington Supreme Court stated that whether the patient’s violent actions were foreseeable should have been resolved by a jury and created instability concerning professional liability. It remains to be seen if this holding reflects a national trend of expanding the scope of liability for mental health and other health care professionals.

Mary Richard is a health care attorney with Phillips Murrah and a member of the Behavioral Health Task Force of the American Health Lawyers Association.

NewsOK Q&A: Advance directives provide care guidance for end of life

From NewsOK / by Paula Burkes
Published: April 28, 2016
Click to see full story – Advance directives provide care guidance for end of life

Click to see Mary Holloway Richard’s attorney profile

Mary Richard is recognized as one of pioneers in health care law in Oklahoma. She has represented institutional and non-institutional providers of health services, as well as patients and their families. She also has significant experience in representing providers in regulatory matters.

Mary Richard is recognized as one of pioneers in health care law in Oklahoma. She has represented institutional and non-institutional providers of health services, as well as patients and their families. She also has significant experience in representing providers in regulatory matters.

Q: What should we know about decision-making in the future to care for ourselves?

A: The mechanism for providing guidance to your health care professionals and to your family at the end of your life is a legal document known as an “advance directive.” The process of completing your advance directive is an important one because it makes you think about yourself in various end-of-life situations. You are telling your providers, in advance, what you will allow them to do, to the extent possible.

Q: Is there a specific form for an advance directive in Oklahoma?

A: Advance Directive forms are available at the Oklahoma Bar Association at www.okbar.org/Portals/14/PDF/Brochures/advance-directive-form.pdf. The advance directive statute requires that you must be 18 or older, of sound mind, and have two witnesses 18 or older and who aren’t beneficiaries of your will. The advance directive needn’t be notarized. It’s effective when your health state is such that your physician and another physician conclude that you no longer are able to make your own health care decisions.

Q: What kinds of provisions can I make for myself with an advance directive?

A: Advance directives provide treatment and care directions for three different conditions. You can provide directions to your providers when your condition is determined to be terminal. A terminal condition is one which, in your physician’s opinion, will result in your death within six months. You also can provide directions about your care when you’re persistently unconscious, which means that your condition is irreversible and you aren’t aware of your environment or of yourself. You also can provide your wishes for your care when you’re in an end-stage condition or an irreversible condition, and medical care would be ineffective. An advance directive also gives you the option of directing future artificially-administered food and water if you’re unable to take those by mouth in the three conditions described. You also can provide for organ donation in the advance directive.

Q: What else should I know about advance directives?

A: These decisions aren’t easy and it’s helpful if you involve your family in your decision-making so that they understand your wishes. Second, keep copies of your advance directives in a number of places and let your family members and loved ones know where they are so that guidance will be readily accessible when needed. Finally, under Oklahoma law, an advance directive for mental health also is available.

Q: Is there a specific form for the advance directive for mental health?

A: The Oklahoma Advance Directive for Mental Health form is found in our Oklahoma statutes, Title 43A Section 11-106. This advance directive allows you to provide for an alternate decision-maker for your mental health treatment. For the seriously mentally ill, this is important in terms of facilitating care when needed, at moments of crises. The advance directive on mental health becomes effective if the attending physician or psychologist determines that the ability to receive and evaluate information and to communicate decisions is impaired so that one lacks the capacity to refuse or consent to mental health treatment. “Capacity” is a determination made by the health care provider.

Health care industry leaders need to understand history of regulations

Mary Richard is recognized as one of pioneers in health care law in Oklahoma. She has represented institutional and non-institutional providers of health services, as well as patients and their families. She also has significant experience in representing providers in regulatory matters.

Mary Richard is recognized as one of pioneers in health care law in Oklahoma. She has represented institutional and non-institutional providers of health services, as well as patients and their families. She also has significant experience in representing providers in regulatory matters.

By Mary Holloway Richard, JD, MPH

On March 10th, the industry magazine, Modern Healthcare, posted news hot off the presses that a physician, Dr. Benjamin Chu of Kaiser, has been selected to be the CEO of Memorial Hermann Hospital in Houston.

As I read this, I couldn’t help but remember my first job out of graduate school—the lowest level administrator at Hermann Hospital in Houston at the Texas Medical Center.  I was responsible for ambulatory care at a time when layoffs in the emergency department and the outpatient clinics were required.  It was quite literally a baptism by fire.

I had come to that position from graduate school where I studied about the needs of the health care system—continuity, quality, cost effectiveness.  This likely sounds familiar to you if you are involved in health care in any capacity.  During my final semesters in graduate school, I interned at the Old University Hospital in what developed into the session in which the legislature refused to, once again, bail the hospital out in meeting its payroll. That unfortunately also sounds familiar.

In the classes I teach at OCU law school, I remind my students, who are largely enthralled with the idea of a health care law practice, of the importance of understanding the language and limitations of the pervasive regulations, but also their history.  It is important to have the context within which to place the regulations, statutes and case law that impact our providers.

Similarly, I advise clients to look forward, to be proactive in their compliance efforts.  It will be interesting to observe physician leadership in the Memorial system.

You can read more articles by Mary Holloway Richard here.

NewsOK Q&A: New health measures will require baseline screenings

From NewsOK / by Paula Burkes
Published: February 18, 2016
Click to see full story – New health measures will require baseline screenings, more data

Click to see Mary Holloway Richard’s attorney profile

Mary Richard is recognized as one of pioneers in health care law in Oklahoma. She has represented institutional and non-institutional providers of health services, as well as patients and their families. She also has significant experience in representing providers in regulatory matters.

Mary Richard is recognized as one of pioneers in health care law in Oklahoma. She has represented institutional and non-institutional providers of health services, as well as patients and their families. She also has significant experience in representing providers in regulatory matters.

Q: The Centers for Medicare and Medicaid Services (CMS) released core quality measures for physicians on Feb. 15. What does this mean for physicians and for patients?

A: Physicians currently are required to report multiple quality measures to a variety of entities, and this has been confusing for providers and difficult to report effectively. The quality measures, spearheaded for some time now by federal health care reimbursement programs and by commercial insurers, are being used to standardize care and to establish baseline performance for providers they reimburse for services provided to their beneficiaries. These measures are seen as a cost containment initiative and a way to facilitate provision of baseline quality services. It’s also envisioned as an opportunity to empower consumers to become informed decision-makers.

Q: How were these quality measures established?

A: CMS and America’s Health Insurance Plans came together, along with consumer groups, national physician organizations and employers, to form the Core Quality Measure Collaborative. The seven sets of core measures include: accountable care organizations, patient-centered medical homes and primary care; cardiology; gastroenterology; HIV and hepatitis C; medical oncology; obstetrics and gynecology; and orthopedics. CMS currently is using measures from each of these core sets. An example of a core measure for primary care (family practice) is control of high blood pressure by first obtaining a core set of data about the patient. Another primary care example for comprehensive diabetic care is performance of an eye exam.

Q: Does CMS intend to establish core measures for other medical practice “sets”?

A: The CMS news release of the Collaboration’s Core Quality Measures appears to be a single step in a process that will result in future proposed rules in additional clinical areas. Presumably CMS has stated that it will continue to engage in a multi-stakeholder collaboration including additional notice and public comment rulemaking. CMS isn’t newly committed to applying outcome metrics to payments for physicians and other providers. In fact, it’s not unusual for hospitals and other institutional providers to include baseline quality and performance metrics as a prerequisite to salary or bonus compensation in physician employment and other agreements.

Q: Are these additional regulations a win for Medicare, commercial insurers, physicians, patients?

A: The announcement of these regulations is thought to signal successful progress by Medicare and commercial insurers toward value-based purchasing. This is an effort to make the federal and private health care dollars go farther. Part of the federal health care agenda is based upon recouping financial savings by enabling a healthier population. For physicians, although this may initially seem like another layer of regulations tied to reimbursement, the standardized core measures are likely to simplify patient data the information that must be maintained and provided. For patients, although quality improvement is entirely positive, the logical extension of the efforts of the collaboration is to standardize care that will covered by these federal and commercial insurance programs. It’s possible that it will improve services provided to some patients while limiting that available to others.

FDA announces multi-step response plan to mitigate abuse of pain killers

By attorney Mary Holloway Richard

Mary Richard Oklahoma health care law

Mary Richard is a pioneer in Oklahoma health care law. She represents providers, patients and their families in a wide variety of transactional and regulatory matters.

In response to criticism that it has been too lenient in approving addictive narcotics and reticent to take action to mitigate abuse and overuse of these painkillers, the FDA announced on Friday a multi-step responsive plan of action:

  • It plans to convene an outside advisory committee to seek advice prior to approving new opioids that don’t have abuse-deterring properties.
  • It plans to convene a separate pediatric advisory committee to examine all proposed labeling changes related to children.
  • The FDA also intends to strengthen follow-up studies to provide more insight regarding safety, effectiveness of opioid’s long-term use and to step up physician training in order to mitigate over-prescribing practices.
  • Pharmaceutical companies will be encouraged to develop more painkillers that are less subject to abuse—difficult to break, crush and dissolve—and, therefore, more difficult to ingest quickly in large quantities by snorting or injecting.
  • Finally, the agency will engage in efforts to increase access to naloxone and other treatments to counteract the effects of heroin and opioid overdoses.

Some pundits suggest that this response by the FDA is designed to ease tense relations with senators and to prepare the way for confirmation of President Obama’s appointee for agency director. In the face of industry- and society-wide recognition of the “opioid epidemic,” even action potentially based upon self-serving agency motivation, if effective, will save lives and scarce resources.

NewsOK Q&A: E-players enter health market

From NewsOK / by Paula Burkes
Published: August 19, 2015
Click to see full story – E-players enter health market

Click to see Mary Holloway Richard’s attorney profile

Consumers can search for doctors and clinical experts on a new product of Google called “Helpouts.” The trial is limited to symptoms related to common conditions or diagnoses and a wide range of pediatric concerns.

Mary Richard is recognized as one of pioneers in health care law in Oklahoma. She has represented institutional and non-institutional providers of health services, as well as patients and their families. She also has significant experience in representing providers in regulatory matters.

Mary Richard is recognized as one of pioneers in health care law in Oklahoma. She has represented institutional and non-institutional providers of health services, as well as patients and their families. She also has significant experience in representing providers in regulatory matters.

Q: Is Google becoming a provider of health services?

A: One new Google product, “Helpouts,” allows consumers to search for clinical experts and then to video chat with those doctors. This project is in its final stages, and Google is working with some existing medical groups who are verifying the credentials of the doctors who are participating in the trial. The trial is limited to symptoms related to common conditions or diagnoses and a wide range of pediatric concerns. One pediatrician, for example, is available for free consultations with the goal of eliminating gaps created by isolated visits in favor of applied multidisciplinary expertise. Not all of the offerings are related to health care and not all of them are free.

Q: What’s the impetus for this expansion by Google and presumably other technology companies?

A: A consulting company, PWC, has referred to this trend as a move toward “… building a new health economy centered around the consumer.” Stated another way, there are patient needs to be met and patient populations to be built by providers. This is likely to bring new players into local, state and regional health care communities who may position themselves to receive revenue from shrinking health care dollars. For example, Walmart is experimenting with health conglomerate Kaiser Permanente to access physicians via Skype in two of its California locations. Providers who’ve petitioned the Department of Health and Human Services to allow Affordable Care Organizations to be reimbursed for “connect care” argue that it will improve quality and reduce costs. Providers participating in the Medicare Shared Savings Program can’t currently bill for services provided using advanced technology.

 

NewsOK Q&A: Sunshine Act applies to dentists, podiatrists, optometrists and chiropractors

From NewsOK / by Paula Burkes
Published: August 11, 2015
Click to see full story – Law also applies to dentists, podiatrists, optometrists and chiropractors

Click to see Mary Holloway Richard’s attorney profile

Physicians should review federal Open Payments database

Mary Richard is recognized as one of pioneers in health care law in Oklahoma. She has represented institutional and non-institutional providers of health services, as well as patients and their families. She also has significant experience in representing providers in regulatory matters.

Mary Richard is recognized as one of pioneers in health care law in Oklahoma. She has represented institutional and non-institutional providers of health services, as well as patients and their families. She also has significant experience in representing providers in regulatory matters.

Q: The Physicians Payments Sunshine Act (“Sunshine Act”) was passed with the intent of limiting the affect of prescribing and treatment practices by payments to providers by manufacturers or groups involved with product selection known as group purchaser organizations. Does this mean that payments to physicians are actually listed on this website?

A: Yes, but the law doesn’t just apply to physicians. It also applies to dentists, podiatrists, optometrists and chiropractors. It doesn’t apply to medical or osteopathic residents, physician assistant or nurse practitioners. This information is reported annually by manufacturers and purchasing groups and is available to anyone on the Centers for Medicare and Medicaid Services (“CMS”) website https://openpaymentsdata.cms.gov/. The database is part of the Open Payments program created as a result of the Sunshine Act.

Q: What options does a provider have if he or she believes that information about a reported payment is inaccurate or misleading to the public?

A: There is a process by which physicians and other providers can seek to correct information they believe to be false. A dispute resolution process begins with a 45-day period during which a provider reviews and works with manufacturers or purchasing organizations to correct the information. During the following fifteen days, the reporting entity (manufacturer or group purchasing organization) can submit corrections to the Open Payments database. This combined 60-day period is the only time that corrections can be submitted by manufacturers and purchasing organizations. CMS will not mediate such disputes but encourages the parties to work together to resolve their dispute. You can see from this description that it is the physician’s or other provider’s responsibility to monitor this information on the website.  Providers can locate relevant data by their names.

Q: What kinds of payments are included in the CMS Open Payments database?

A: First, it applies to payments by manufacturers. That means manufacturers of prescription drugs, biologic agents and medical devices and supplies. Second, it also applies, as I have mentioned, to groups formed to help providers such as hospitals, home health agencies and nursing homes save money and time by purchasing in volume and obtaining manufacturers’ discounts. These are the group purchasing organizations. Third, it applies to payments such as consulting fees, honoraria, food, travel, entertainment, education, research support, charitable contributions, investment interests, grant, and any direct compensation. That’s not even a complete list.

Q: What is the impact of this database?

A: Many physicians, dentists, podiatrist, optometrists and chiropractors regularly disclose to their patients their participation as lecturers, researchers and consultants to such manufacturers and purchasing organizations. Where that is the case, there is likely to be minimal impact from such information appearing on the CMS website. There a great deal of criticism of the Open Payments program, however. For example, a listing of a specific payment or group of payments may be taken out of context and appear unexplained and create in inaccurate impression and a negative response that is not merited. It seems clear that there will be continued refinement of both the regulations and the manner in which the data is presented to the public in the future.

NewsOK Q&A: Americans with Disabilities Act cites only dogs as service animals

From NewsOK / by Paula Burkes
Published: July 24, 2015
Click to see full story – Americans with Disabilities Act cites only dogs as service animals

Click to see Mary Holloway Richard’s attorney profile

Federal law has a narrow definition of what animals can be considered service animals under the Americans with Disabilities Act.

Mary Richard is recognized as one of pioneers in health care law in Oklahoma. She has represented institutional and non-institutional providers of health services, as well as patients and their families. She also has significant experience in representing providers in regulatory matters.

Mary Richard is recognized as one of pioneers in health care law in Oklahoma. She has represented institutional and non-institutional providers of health services, as well as patients and their families. She also has significant experience in representing providers in regulatory matters.

Q: Sunday is the 25th anniversary of the signing of the federal Americans with Disabilities Act (ADA). What animals are currently considered to be service animals?

A: The definition of “service animal” comes from the ADA and includes animals individually trained to perform tasks for individuals with disabilities. As of 2011, Titles II (state and local government services) and III (public accommodations and commercial facilities) of the ADA recognize only dogs as service animals, although there’s a separate provision about mini-horses. In addition to service dogs, there are sensory or social signal dogs, psychiatric service dogs and seizure response dogs.

Q: Is there a difference between a “service animal” and a “therapy animal?” 

A: Service dogs are trained to perform tasks or to do work for people with disabilities such as guiding the blind, alerting the deaf, pulling a wheelchair, reminding a person with a mental health diagnosis to take medications, or protecting a person who is having a seizure. The work must be directly related to the person’s disability. Therapy animals provide supports and comfort to people in many different types of situations.  There seems to be an impression among some members of the public that the service designation includes untrained animals providing comfort to owners of varying degrees of independence. It is generally true that a mental health provider may provide a letter indicating that a “regular” pet provides emotional support as needed by the owner who has a mental health condition or disability, and special training is not required. An  important distinction is that these are working animals and not pets. In my representation of hospitals over the years, I’ve been asked to advise concerning requests for visitation by a broad array of animals including burros, boutique cattle, and cats to serve specifically as therapy or emotional support animals. Some of the relevant case law from other jurisdictions involves monkeys and one involves a sugar glider, an Australian
opossum-like creature.

Q: Do these rules apply just to hospitals or do they also apply to other types of facilities and providers of health services?

A: The guidelines for service animals also apply to surgery centers, dental clinics, assisted living and long-term care facilities, and urgent care and outpatient clinics. The federal requirement is to allow service animals to accompany persons with disabilities in all areas of a facility or office where the public is normally allowed to go. It’s my experience that hospitals are better prepared than these other sites listed and physician offices to respond to these requests. Hospitals generally have policies and procedures that mirror state and federal laws and industry best practices.

Q: Are there limits to these ADA requirements?

A: When service dogs raise valid concerns about patient safety and quality of care, all providers in their distinct care settings will find it necessary to balance patient, staff, employee and public safety interests. Common valid concerns for institutional and non-institutional providers include infection control, allergies, animal control, safety of others, disruption of care or ability to safely provide quality services. An example of such a concern is a situation where a service dog’s presence is desired in a health care setting but there’s no one to provide the necessary care for the service dog. I also have encountered service animals with open wounds or otherwise in need of veterinary care that posed risks to patient care and to personnel that had to be considered. Another issue that has arisen is a service dog trained to be protective in a manner that impedes care by staff, such as a dog trained to place itself between the patient and others.

Illinois Court of Appeals Supports a High Bar for Overcoming State Statute’s Peer Review Immunity for Hospital

Mary Richard is recognized as one of pioneers in health care law in Oklahoma. She has represented institutional and non-institutional providers of health services, as well as patients and their families. She also has significant experience in representing providers in regulatory matters.

Mary Richard is recognized as one of pioneers in health care law in Oklahoma. She has represented institutional and non-institutional providers of health services, as well as patients and their families. She also has significant experience in representing providers in regulatory matters.

By Mary Holloway Richard, JD, MPH

An Illinois appellate court recently upheld a trial court decision granting summary judgment in favor of a hospital in a case where the plaintiff sought to limit a hospital’s statutory peer review immunity.1 Upholding a stringent standard imposed by the trial court, the appeals court ruled that the Illinois peer review statute requires pleading and proof of actual or deliberate intent to harm, or clear indifference to or disregard for, the peer-reviewed physician, along with resulting physical harm to the physician, and that mere harm to reputation is not enough. In this case, OB/GYN Dr. Valfer alleged merely that Evanston Northwest Healthcare (ENH) had failed to follow the proper procedures in dealing with him and that this failure had caused him reputational harm. The appeals court held that this fell short of the showing required to overcome the state law peer review immunity.

Valfer’s medical staff privileges at ENH were renewed in November 2000 for one year and for an additional nine months in September 2001. He re-applied for privileges and was informed that issues had arisen requiring a review of his surgical procedures for the preceding 12 months. In June 2002, Valfer agreed to stop scheduling surgeries at ENH, and his operating privileges were suspended pending resolution of patient safety issues involving unnecessary procedures. Valfer was notified by the service chief that he would not recommend Valfer’s reappointment. In July 2002, the medical executive committee agreed with that recommendation and provided Valfer with written notice of its decision not to reappoint him and also notified him of his hearing rights.

In 2004, an ad hoc hearing was held in which the service chief and another competing physician testified against Valfer. The decision not to appoint was upheld. Valfer appealed the decision to the appellate review committees; the ad hoc committee’s decision was upheld and was affirmed by the Board. Valfer continued to admit patients until the decision not to reappoint became final in March 2005. During the three-year period from Valfer’s final application for reappointment to the effective date of non-reappointment, no changes were made in ENH credentialing software, and he continued to be listed in “good standing” and to admit patients.

In 2007, Valfer sued for civil damages resulting from ENH’s decision not to reappoint him. ENH filed a summary judgment motion seeking to dismiss the breach of contract claim. ENH argued there was no breach as ENH had followed relevant procedures and was immune under both the state statute2 and the federal Health Care Quality Improvement Act (HCQIA).3 The summary judgment motion was granted.

On appeal, Valfer argued that there was, in effect, a reappointment by virtue of his continuing patient admissions and that this raised a question of fact as to ENH’s allegedly improper reliance on reappointment, rather than peer review, procedures. Valfer also characterized HCQIA immunity as limited to peer review and therefore not applicable because of ENH’s alleged reliance upon reappointment, rather than peer review, procedures. He argued that there was no peer immunity because of its willful or wanton denial of his privileges because of peer review by competitors. ENH responded in part that immunity under the Illinois peer review statute applied by virtue of the “willful or wanton” language and in the face of Valfer’s failure to allege physical harm to himself from the decision not to reappoint, and that the four statutory requirements for HCQIA immunity had been met.

In upholding the lower court’s decision the appellate court focused on legislative intent and the clear and unambiguous language of the statute. By giving effect to all statutory language, the court concluded that Illinois statutory immunity exists in the absence of willful or wanton misconduct. The plaintiff’s allegations of breach of contract by ENH for failure to follow the proper bylaws did not satisfy the statutory requirement of willful or wanton misconduct. The court cited precedent for overriding peer review immunity for civil damages where a defendant’s course of action demonstrates actual or deliberate intent to harm others or clear indifference to or disregard for a person and concluded that physical harm must necessarily be alleged and proved in order for a party to be civilly liable for peer review activities.4 According to the court, to require anything less, such as allowing damage to business or reputation to suffice, would make the peer review immunity meaningless and discourage such activities.

While parties often focus on HCQIA as the primary source of peer review immunity, this case illustrates that hospital counsel should not overlook the robust and vital protections that often co-exist under companion state law peer review privileges.


1 Valfer v. Evanston Northwest Healthcare, No. 1-14-2284, IL App (1st) 2015.
2 Ill. Hospital Licensing Act 210 ILCS 85/1 et seq (West 2012).
3 42 U.S.C. 11101 (2012).
4 Valfer at par. 29 citing Larsen v. Provena Hospitals, 2015, IL App (4th) 140255.

King v. Burwell: U.S. Supreme Court Decision Upholds ACA Tax Credits

By Mary Holloway Richard, JD, MPH

Mary Richard is recognized as one of pioneers in health care law in Oklahoma. She has represented institutional and non-institutional providers of health services, as well as patients and their families. She also has significant experience in representing providers in regulatory matters.

Mary Richard is recognized as one of pioneers in health care law in Oklahoma. She has represented institutional and non-institutional providers of health services, as well as patients and their families. She also has significant experience in representing providers in regulatory matters.

On Thursday, June 25, 2015, the United States Supreme Court issued its long-awaited opinion in King et al. v. Burwell, Secretary of Health and Human Services, et al. .[i]  The decision came the week before many of the nation’s foremost health care attorneys met in Washington, D.C. to share information, meet with regulators and network in the interests of their clients.  As you might imagine there was significant discussion about the impact of the decision both in the contexts of formal presentations and hallway conversations.

The decision in this case was considered by some attorneys and commentators to hold the key to the future of the Affordable Care Act (ACA).[ii]   In the King case the ACA’s premium tax credits, as applied to federally financed plans, were challenged.  The premium tax credits worked to reduce the premium amounts for nearly 90% of all persons who have purchased health insurance through the state health insurance marketplace, known as a “health insurance exchange,” which provides consumers the opportunity to compare prices and plans.

The Supreme Court’s 6-3 decision held that the premium tax credits at issue would continue to be available in the dozen or so state-sponsored exchanges as well as in the more than thirty states with federally sponsored exchanges operated by the federal government.  The Court applied familiar theories of statutory interpretation to interpret the both the meaning of the statute and the intent of Congress to make premium tax credits available to individuals enrolled in insurance plans through both state- and federally-operated exchanges.  The Court chose not to defer the interpretation to the federal agency responsible for enforcing the tax credit, the Internal Revenue Service.  This is significant because it effectively forecloses the opportunity for any future administration to alter the interpretation to restrict the premium tax credits to the state-operated exchanges.

The challengers to the ACA language argued that, read literally, the specific ACA language at issue limits premium tax credits to state-operated exchanges only.  Justice Scalia’s twenty-one page dissent was described as scathing by many of us who made presentations at AHLA last week.  Justice Scalia wrote that “[w]ords no longer have meaning if an Exchange that is not established by a State is ‘established by the State.’”[iii]  He also wrote in his dissent, “Perhaps sensing the dismal failure of its efforts to show that ’established by the State’ means ‘established by the State or the Federal Government,’ the Court tries to palm off the pertinent statutory phrase as ‘inartful drafting.’ This Court, however, has no free-floating power to ‘rescue Congress from its drafting errors.’”[iv]

Oklahoma is the site of a federal marketplace where, had the decision come down for the challengers, more than 87,000 persons would have been at risk for losing tax credits, and the state was at risk of losing over $18,000.00 in revenue, according to the Kaiser Family Foundation.[v]  The average tax credit per Oklahoma enrollee is $209.00, and, without the tax credit, there would have been an estimated 243% increase in the average premium.

At least while President Obama is still in office, the Court’s decision in King v. Burwell means that the threats to the ACA will mostly disappear.  The national uninsurance rate is likely to continue to fall because the ACA incentives—the ACA requires individuals to buy health insurance or face a penalty on their taxes and helps them afford health insurance through the premium tax credits. Fewer uninsured presumably also means health care providers will have less uncompensated care.

In the nation and in Oklahoma, we will continue, at least during this administration, generally to see a decreasing uninsured population and less uncompensated care for providers.  However, all of this is in the context of complex, increased regulation such as the proposed regulations for both Medicare and Medicaid that were indirectly and directly respectively spawned by the ACA.  The King decision, so long-awaited, appears to have deflated the opponents to the ACA for the time being.  The Court’s decision also means that the next Presidential and congressional elections may be critical to the fate of the ACA as changes now would only be placed in motion by Congress.



[i]
 576 U.S. ____  (2015), No. 14-114, slip op (June 25, 2015).

[ii] The Patient Protection and Affordable Care Act, 42 U.S.C. §18001 et seq. (2010).

[iii] 567 U.S. at ___-___ (principal opinion) (slip op. dissent, at 2.

[iv] Id. at 17.

[v] Kff.org/interactive/king-v-burwell-effects/

EEOC and Proposed Wellness Regulations: What is means to Healthcare Providers

By Mary Holloway Richard, Attorney

shutterstock_healthcareWellness is in the news again.  Large employers have inserted wellness protocols and metrics into the workplace with great enthusiasm.  Advertisements for webinars tout the importance of clinicians and counsel getting on the wellness bandwagon, and articles on the topic appear daily in local and national newspapers.

The wellness debate continues and focuses on these issues:

  1. Financial impact
  2. High risk diseases and conditions subject to detection and prevention such as diabetes, hypertension, obesity and smoking
  3. Impact of economic status on health and ability to access to programs supporting lifestyle change (e.g., no time to attend a course or to exercise.

The Equal Employee Opportunity Commission (“EEOC”) is the federal agency charged with oversight of employer compliance with the Americans with Disability Act (“ADA”) and specifically with guiding employers in properly complying with the ADA in the context of popular wellness programs.  The ADA is, of course, statutory; supporting regulations and interpretive guidelines are issued by the agency.  While the interpretive guidelines do not have the force of law, they are regularly instructive as a window into the agency’s perspective and intent in terms of review and enforcement

Recently, the EEOC proposed a rule change in which it will reverse its own policy on whether or not employer-sponsored wellness programs discriminate against employees.  The EEOC is now saying that such programs do not necessarily discriminate against workers. The agency also indicates that such employers have yet to show the financial benefits of such programs. The EEOC’s proposed rule change would allow for employers to decrease premiums as an incentive for employees to comply with recommended health screenings and to improve their health metrics without violating federal disabilities laws.

Presented in late April, 2015, the EEOC’s  proposed wellness regulations seek to establish how such a program must be structured in order to comply with the ADA’s rule permitting disability-related inquiries and medical exams by a “voluntary health program.”[i]  The proposed regulations require:

  • A cap on an employer-incentive or penalty at 30% of the total cost of employee-only coverage under the plan. [ii] Total cost refers to employer plus employee contributions.
  • Additional requirements for employers offering a wellness program in conjunction with a group health plan, including notice to employees of the medical information to be obtained and by whom and how the information will be used and how safeguards against improper disclosure.
  • New confidentiality provisions to be applied to information obtained in wellness programs by sponsors or wellness vendor.
  • The program itself must be created in such a way as to promote health status, prevent disease and not be overly burdensome on plan participants.

This does not relieve the employers from compliance with HITECH and HIPAA and the Affordable Care Act.  In addition and importantly, employers will be faced with differing requirements by the Internal Revenue Service, the Department of Labor and the Department of Health and Human Service — the agencies responsible for implementing the Affordable Care Act. These inconsistencies may be resolved at the close of the public comment period for these new EEOC proposed regulations. The period for public comment closes on June 19, 2015.


[i] It is likely that most wellness programs will fit into this category.

[ii] The Affordable Care Act’s non-tobacco incentive is held to the same limit for wellness programs including collection of health data.  The additional cap in the proposed regulations is for the same amount for the tobacco incentive for participation-only wellness programs unless the employer does not fall within the purview of the ADA (less than 50 employees.)  The policy ramification is that the EEOC does not distinguish between a tobacco-cessation wellness program where the participants are questioned about their tobacco use from one where a nicotine test is required of them to verify tobacco use or non-use.


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AuthorMary Holloway Richard is recognized as one of pioneers in healthcare law in Oklahoma. She has represented institutional and non-institutional providers of health services, as well as patients and their families. She also has significant experience in representing providers in regulatory matters.

Click to see her  attorney profile.

NewsOK Q&A: Healthcare providers can use Oklahoma’s unclaimed property fund to collect on unpaid bills

From NewsOK / by Paula Burkes
Published: June 3, 2015
Click to see full story – Healthcare providers can use Oklahoma’s unclaimed property fund to collect on unpaid bills

Click to see Gretchen M. Latham’s attorney profile

Gretchen Latham, a litigator at Phillips Murrah law firm, talks about how physicians can recoup payment by making a claim to the state treasurer for unclaimed property.

Gretchen M. Latham’s practice focuses on representing creditors in foreclosure, bankruptcy, collection and replevin cases.

Gretchen M. Latham’s practice focuses on representing creditors in foreclosure, bankruptcy, collection and replevin cases.

Q: I understand it’s becoming increasingly difficult for healthcare providers to collect fees from patients and third-party payers for services rendered. What can they do?

A: Collection of these monies through the judicial system involves the filing of a lawsuit, and often times strict compliance with collection and privacy laws. And the time frame within which any significant collection activity takes place can be months or even years. Luckily, physicians, and nearly everyone, can make a claim with the state’s Unclaimed Property Fund to recoup funds in certain circumstances.

Q: What is unclaimed property?

A: Unclaimed property consists of obligations and liabilities for businesses which have been inactive, or have not been paid for a period of time. The funds may be in the form of a security deposit, an overpayment on an account, collateral pledged as security on a loan, payroll and wage obligations, or stocks and bonds.

Q: How does property attain unclaimed status?

A: When the rightful owner of the property fails to contact the holder of the property for a specified period of time, the property is considered unclaimed. A typical example is when an employee leaves his or her job prior to receiving the last paycheck, and there’s no forwarding address for the employer’s use in mailing final payment. Upon showing proof of ownership and making a valid claim, the state will relinquish the property to its rightful owner.

Q: How does the state come into possession of unclaimed property?

A: Holders of unclaimed property are required by law to make an annual report of the property being held. After the holder makes a diligent effort to contact the rightful owner both within and outside the state’s borders without success, the holder is then required to deliver the unclaimed property to the state treasurer.

Q: Can physicians and other providers rely on this claim process for more than clinic visit charges?

A: In the medical field, making a claim for unclaimed property can help physicians recover funds due them for a variety of reasons. Perhaps the practice has been sold and not all the funds due as part of the transaction have been paid. Although there’s no time limit on claiming the provider’s property, the sooner the claim is made, the sooner he or she will get paid.

PM attorney Mary Richard appointed vice chair of AHLA Behavioral Health Task Force

Mary Holloway Richard, Of Counsel to Phillips Murrah’s Healthcare Practice Group, has been appointed Vice Chair of the American Health Lawyers Association’s Behavioral Health Task Force.

AHLA-logo-bigRichard was formerly a co-chair of the Providers and Clinicians Committee of the Behavioral Health Task Force.

She has represented both institutional and non-institutional providers of health services, as well as patients and their families.  Her career has included work at hospitals, outpatient clinics, behavioral health facilities and rehabilitation facilities and clinics.

Richard will be participating in a panel discussion entitled “Hot Topics in Behavioral Health” at the AHLA Annual Meeting in Washington, D.C. in June, 2015.

The Behavior Health Task Force was established by the nationwide professional organization to provide education for attorneys about the legal issues that arise in the provision of services to behavioral health patients and to alcohol and drug treatment providers and patients.

Regulation focuses on financial ties between physicians and industry

Phillips Murrah healthcare attorney, Mary Holloway Richard published an article about the Sunshine Act in the May/June 2015 issue of the Oklahoma County Medical Society publication, The Bulletin.


CMS seeks to mitigate potential impact on prescribing and treatment practices

Sunshine-Act-MHRThe Physicians Payments Sunshine Act (i) (“Sunshine Act”), despite its name, currently places no direct reporting requirements on physicians. Rather, the Sunshine Act requires that certain manufacturers of prescription drugs, biologic agents, medical devices and medical supplies (“Manufacturers”) and group purchasing organizations (“GPOs”) report to Centers for Medicare and Medicaid Services (“CMS”) payments in specified amounts (ii) and other transfers of value to physicians (iii) and to teaching hospitals (iv). In addition, ownership and investment interests in applicable Manufacturers and GPOs held by physicians (and immediate family members) must be reported annually by applicable Manufacturers and GPOs. Covered payments include cash (or cash equivalent, in-kind items or services), stock (including stock options or ownership interest dividend profit or other return on investment), and other forms of payment to be determined in the future by CMS. While it is not the physician’s duty to report, the reporting requirement directly impacts physicians who receive such payments as their names appear on a list on the CMS website accessible by patients and other consumers (v).

The purpose of the Sunshine Act is to identify potential biases in physician prescribing and treatment practices, to reveal conflicts of interest for clinical researchers and educators, and to identify transactions in which payments involving potential referrals by physicians exceed fair market value. The Sunshine Act creates the Open Payments Program for the actual reporting of the financial payments and transfers of value to physicians. Currently the burden is on the Manufacturers to report payments for consulting fees, contracted services, honoraria, gifts, entertainment, food, travel, education, research, charitable contributions, royalty or license, current or prospective ownership or investment interest, grants, direct compensation for serving as faculty or speaking at a medical education program, and any other nature of payment or transfer of value as defined by the Secretary of the Department of Health and Human Services (“HHS.”) The form of the payment and the nature of the payment must be reported. See Table 1 below. Data has been collected since August, 2013, and is due to CMS by March 31 of each year. The first report was available to the public on September 30, 2014, and the 2014 report is predicted to be available on June 30, 2015 (vi).

The regulations provide for a formal dispute resolution process whereby physicians can seek to correct inaccurate information. In September, 2014, representatives of pharmaceutical and biotechnology companies and organized medicine expressed concerns about the database and its presentation of data to the public in a potentially misleading manner. CMS shut down the Open Payments system for a period of time to address these issues. On October 30, 2014, CMS announced a procedure for Manufacturers and GPOs to report information not previously accepted by the system because of data errors, and CMS extended the reporting time accordingly. CMS has provided guides for Manufacturers to use to correct records and for covered recipients to correct information submitted in compliance with the regulations (vii).

Registration with CMS to receive notifications and information submitted by Manufacturers and GPOs is voluntary. This information is now available on the CMS website, to public and regulators alike, but the website itself continues to present issues of accuracy and ease of on-line accessibility. Physicians and teaching hospital representatives have the opportunity to review and, if appropriate, dispute information reported about them in the Open Payments System (viii).

open payments graph

Source: ttps://www.cms.gov/OpenPayments/About/How-Open-Payments-Works.html

It has been necessary to resolve a number of procedural and substantive issues with the reporting requirements including initial confusion about the information that had to be reported and by whom. Example of substantive issues to be resolved may be helpful is understanding the regulatory climate. Some confusion has surrounded the CMS treatment of payments related to continuing medical education. “Direct payments” have always been included in the Sunshine Act’s reporting requirements. “Indirect payments” refers to payments by a manufacturer to a continuing education organization where the Manufacturer directs that the third party provide the payment or transfer to a covered recipient. In the October, 2014, final regulations, CMS responded to widespread criticism of its treatment of the CME by requiring reporting in 2017 payments (direct and indirect) made to continuing education organizations in 2016 as long as the speaker can be identified (ix). Further, payments to physicians for speaking at CME programs need not be reported if the following conditions are met:

  • The CME program meets accreditation/certification standards of one of the following: (1) the Accreditation Council for Continuing Medical Education; (2) the American Academy of Family Physicians ; (3) the American Dental Association’s Continuing Education Recognition Program; (4) the American Medical Association; (5) the American Osteopathic Association; and
  • The Manufacturer or GPO does not pay the speaker directly; and
  • The Manufacturer or GPO does not select the speaker or provide the third party, such as the CME vendor, with a distinct, identifiable set of individuals to be considered as speakers for the CME program (x).

Other frequent questions concern Manufacturers providing meals and other event support and sponsorships to physicians. In this context the Open Payments program is very specific–e.g., where a Manufacturer’s sales representative brings a meal to a staff meeting or a community education event for a number of persons, the cost of the meal is divided by the number of persons who actually eat the meal and this benefit is reported only if it exceeds $10.00 per person. This does not include meals eaten by support staff. Financial support of buffet meals at large-scale medical conferences is not reportable. The “User Guide” for Open Payments published by CMS is over 350 pages long and provides additional guidance to those reporting and those reviewing reports. It is accessible on-line (xi).

The Open Payments System is expected to significantly impact historic financial support of provider, patient and community education by industry. Importantly, these regulations and reporting requirements echo federal policy designed to avoid improper payments and incentives and market influence. These are the same concerns that spawned the expansion of federal antitrust, Stark and Anti-kickback law within health care.

Ms. Richard is a health care lawyer at Phillips Murrah, P.C. in Oklahoma City and was formerly in house counsel with INTEGRIS Health, Inc.


The Natures of Payment that are of Interest to CMS

Nature of payment Definition Examples
Consulting fee Payments made to physicians for advice and expertise on a particular medical product or treatment, typically provided under a written agreement and in response to a particular business need. These payments often vary depending on the experience of the physician being consulted. Example 1: Company A has developed a drug to treat patients with a particular disease and wants advice from physicians on how to design a large study to test the drug on patients. Dr. J has a large number of patients with this disease and has experience doing research on how well medicines work for this condition. Company A asks Dr. J if he would spend about 10 hours per month to work with other physicians to create a new research study. Dr. J agrees and is paid for his time.Example 2: Company C has designed a new tool for surgeons to use when they are doing heart surgery. The company pays some physicians to give the new tool a “test drive” on a computer-simulated patient at the company headquarters. The physicians are paid an hourly fee for their time testing the tool and giving advice on how to make it work better. They are also paid for flights, hotel rooms and meals.
Compensation for services other than consulting, including serving as faculty or as a speaker at an event other than a continuing education program. Payments made to physicians for speaking, training, and education engagements that are not for continuing education. A physician who frequently prescribes a particular drug is invited by the company that makes that drug to talk about the medicine to other physicians at a local restaurant.  The physician is paid for preparation time as well as the time spent giving the talk.
Honoraria Similar to consulting fees, but generally reserved for a one-time, short duration activity. Also distinguishable in that they are generally provided for services which custom prohibits a price from being set. A medical device manufacturer representative goes to a medical meeting and asks some physicians there for an hour of their time to talk about features they would like to see to improve a particular device. This representative pays each physician a one-time honorarium.

Footnotes:

(i) The Physician Payment Sunshine Act is Section 6002 of the Patient Protection and Affordable Care Act, 42 U.S.C.§18001. The regulations can be found at: http://www.cms.gov/OpenPayments/Downloads/Affordable-Care-Act-Section-6002-Final-Rule.pdf.

(ii) There are specific reporting thresholds for applicable manufacturers and GPOs. The Open Payments reporting thresholds are adjusted based on the consumer price index. This means that for 2015 (January 1 – December 31), if a payment or other transfer of value is less than $10.21 ($10.00 for 2013, $10.18 for 2014), unless the aggregate amount transferred to, requested by, or designated on behalf of a physician or teaching hospital exceeds $102.07 in a calendar year ($100.00 for 2013, $101.75 for 2014), it is excluded from the reporting requirements under Open Payments. http://www.cms.gov/OpenPayments/Program-Participants/Applicable-Manufacturers-and-GPOs/Data-Collection.html.

(iii) This law applies to physicians and other providers, but, for the purposes of this article, we will only reference physicians. The other providers as defined in Section 1861(r) of the Social Security Act to whom this law applies include medical and osteopathic physicians, dentists, podiatrists, optometrists and chiropractors. Providers exempted include medical and osteopathic residents, physician assistants, nurse practitioners and allied health practitioners. However, in some circumstances, payments to these types of providers may be imputed to physicians, thereby triggering the Manufacturers’ obligations to report payments.

(iv) Manufacturers and GPOs may also be referred to in this paper as “covered recipients.”

(v) https://openpaymentsdata.cms.gov/.

(vi) http://www.cms.gov/OpenPayments/About/Resources.html

(vii) The American Medical Association offers a toolkit for physicians to use in reviewing and dispute reports at: http://www.ama-assn.org/ama/pub/advocacy/topics/sunshine-act-and-physician-financial-transparency-reports/sunshine-act-toolkit.page?

(viii) See Flow Chart 1 in content.

(ix) 42 C.F.R. §403.902.

(x) 42 C.F.R. §403.904(g).

(xi) www.cms.gov/Regulations-and-Guidance/Legislation/National-Physician-Payment-Transparenct-Program/Download/Open-Payments-User-Guide-%5BJuly-2014%5D.pdf.

NewsOK Q&A: Laptop losses, misdirected faxes and phishing scams can lead to health information breaches

From NewsOK / by Paula Burkes
Published: May 1, 2015
Click to see full story – Laptop losses, misdirected faxes and phishing scams can lead to health information breaches

Click to see Mary Holloway Richard’s attorney profile

Phillips Murrah’s Mary Holloway Richard provides medical providers tips for minimizing risk and damages related to health information breaches.

Mary Richard is recognized as one of pioneers in health care law in Oklahoma. She has represented institutional and non-institutional providers of health services, as well as patients and their families. She also has significant experience in representing providers in regulatory matters.

Mary Richard is recognized as one of pioneers in health care law in Oklahoma. She has represented institutional and non-institutional providers of health services, as well as patients and their families. She also has significant experience in representing providers in regulatory matters.

Q: What do you recommend to hospitals, physicians and other providers to minimize the risk of a breach of confidential patient information and to lessen the degree of harm in the event of a breach?

A: I recommend creation in advance of a response process to enable a rapid, sensible response. The goals in such a plan (“Incident Response Plan” or “IRP”) are to demonstrate compliance with HIPAA (Health Insurance Portability and Accountability Act) and HITECH (Health Information Technology for Economic and Clinical Health) regulations and to mitigate any harm that may result from the breach.

Q: What specific steps should be taken to prepare for a breach?

A: The first step is to create an IRP that includes all appropriate parties and to appoint someone in the practice or facility who is knowledgeable about HIPAA and HITECH requirements. The second step is to make certain that the process created is a quick, sensible one. In addition, information technology (IT) components, such as encryption throughout the process, are imperative. The safe harbor provision of the breach notification rule establishes a certain standard of encryption and relieves the provider from breach notification responsibilities if the protected patient information has been properly encrypted. Most breaches result from lost IT assets such as phones, laptops and iPads. Fourth, the IRP must be supported by sufficient employee and staff training. I also recommend that you adequately document that this training took place. Finally, insurance should be in place to provide for risk transfer as needed. Cyberliability is a continually developing area along with a range of products that foresee types of breaches and predict costs that may be incurred.

Q: How do such losses occur?

A: Along with loss of IT assets, misdirected faxes, disposal of nonshredded records, inappropriate disposal or destruction of paper, such as placing material in a dumpster without shredding and mailing patient information to incorrect address. Intentional loss or compromise of data can occur through a combination of IT and social engineering, such as where a person is tricked into clicking on a hyperlink or revealing a password. This occurs with Spear phishing or false emails inserting malware in a system and is very difficult to control. In the case of Cryptolocker, the perpetrator makes a threat and requires payment to restore prevention. This also is called ransomware and can make the system and information completely inaccessible to everyone in your organization, effectively stymieing patient care and business operations.

Affordable Care Act changes affect physicians

Gavel to Gavel, appears in The Journal Record.
Originally published in The Journal Record on Apr. 22, 2015.
View G. Calvin Sharpe’s attorney profile here.


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G. Calvin Sharpe is a trial attorney who represents a diverse list of business clients in matters relating to medical malpractice, medical devices, medical licensure boards,products liability, insurance and commercial litigation.

The Affordable Care Act brought fundamental changes to the American health care system.

One called evidenced-based care significantly affects how physicians are paid. I’ve represented many providers in malpractice actions and before professional licensure boards, but now I must also be as proficient in regulatory law.

The ACA’s value-based care replaces traditional fee for service. In the traditional model, a patient visit is followed by a bill paid by the patient or insurer, and providers are rewarded for a higher-volume practice. One of the stated goals of the ACA is to eliminate care and decision making that could be financially motivated.

The value-based pay-for-performance compensation model that reimburses physicians based upon achievement of measurable objectives or metrics is replacing that traditional model. Evidenced-based guidelines focus on outcomes and will seek to eliminate unnecessary procedures, and compensation will be based upon performance.

Examples would be patient readmission following hospital discharge and so-called never events, defined by the National Quality Form’s list of Serious Reportable Events as events that should never have happened.

Changes in evidenced-based care practice guidelines and how medical malpractice claims are brought generally attempt to measure a provider’s performance against a legal standard. This means the performance is evaluated according to that of a prudent professional in the same or similar circumstances.

Read the entire column here.

Resolution of the “sustainable growth rate” issue

By Mary Holloway Richard.  View her attorney profile here.


medicare

Senate Passes the bill repealing Medicare’s sustainable growth rate (“SGR”) formula just in time to avoid the looming cuts (21%) to physician payments.

(See HERE our ongoing coverage leading up to this.)

Congressional members are purportedly patting themselves on the back as the bill goes to the President who has given assurances that he will sign it.

In the past weeks we have discussed possible amendments, but none of the amendments are included in the final legislation approved by the Senate.  The bill extends the Children’s Health Insurance Program (“CHIP”) for two years.  The bill also provides physician incentives sure to impact both reimbursement and physician contracting include incentives to shift more patients to risk-based payment models.  For physicians who are successful in this effort, as interpreted by CMS, the reimbursement will increase in 2019.

Approximately one-third of the cost of this package is offset by financial cuts to providers and increased costs to wealthier Medicare patients.  The bill also includes additional funding for community health centers and a six-month delay in the enforcement of the payment policy for short inpatient stays known as the “two midnights” rule.

Mary Holloway Richard is recognized as one of the pioneers in health care law in Oklahoma. She has represented institutional and non-institutional providers of health services, as well as patients and their families. She also has significant experience in representing providers in regulatory matters.

(UPDATE) What does all of the talk in the media about the “SGR” mean for physicians?

By Mary Holloway Richard. View her attorney profile here.


Mary Richard is recognized as one of pioneers in health care law in Oklahoma. She has represented institutional and non-institutional providers of health services, as well as patients and their families. She also has significant experience in representing providers in regulatory matters.

Mary Richard is recognized as one of pioneers in health care law in Oklahoma. She has represented institutional and non-institutional providers of health services, as well as patients and their families. She also has significant experience in representing providers in regulatory matters.

(Updated 4/14/15)

What does all of the talk in the media about the “SGR” mean for physicians?

One of the important issues identified in the health care industry “crisis” and reform is the cost of providing services.  Focus has been on shifting payment from charges for visits and procedures to reimbursement according to certain metrics such as outcome and quality.  In addition, a ceiling on physician reimbursement has been much debated.  The Affordable Care Act (“ACA”) included the Medicare sustainable growth rate (“SGR”) formula for doing just that, although the SGR was actually created as part of the 1997 deficit reduction law designed to contain federal spending  by tying physician payments to an economic metric or growth target.

On Tuesday, March 24, 2015, Democrats and Republicans revealed the result of their negotiation and cooperation to offer an alternative to Medicare’s SGR formula.  The proposal calls for repeal of the SGR formula.  House Speaker John Boehner (R-OH) and Minority Leader Nancy Pelosi (D-CA) have arrived at this compromise to strengthen the financial picture for Medicare and to end the continuing threat of payment cuts to physicians.  According to the Association of American Medical Colleges, although medical school applications are up slightly since 2011, the United States faces a physician shortage of between 46,000 and 90,000 by 2015.  www.aamc.org/newsroom/aamcstat/,a=427828.  The economic incentives to the professional are an integral component in stabilizing the health care system in this country.  The House overwhelmingly approved the proposal on Thursday, March 26, 2015.

What does the SGR mean to physicians?  There is still great divergence between the Boehner (repeal Washington’s most famous gimmick) and Pelosi (Medicare payments for doctor services to seniors facilitating continuation of physician-patient relationship) perspectives.

What does the bipartisan proposal mean to physicians?  This will halt the cut that was to be implemented on April 1, 2015.  When the ACA was signed five years ago, that seemed like a long time away but was nonetheless worrisome.  It puts in place a 21.2% reduction in Medicare payments making it virtually impossible for many providers to support the operations of their practices or clinics.

This proposal is very similar to the one proposed in 2014 , and it includes a system of rewarding physicians based upon quality standards rather than output or number of services provided and fosters a focus on coordination of care, prevention and quality and key cost containment strategies.  All of these elements are part of a new accountability that is the cornerstone for allowing payment increases for doctors for the next five years during this period of transition.  In addition, if approved by the Senate, the bipartisan proposal would extend the Children’s Health Insurance Program (“CHIP”) with full funding through September 30, 2017.  It also provides for $7.2 billion funding for community health centers.  The cost of the House package is $200 billion

On Friday, March 27, 2015, the Senate adjourned without approving the Doc fix.  It apparently will take up the issue upon its return in mid-April.  In the meantime, CMS is poised to delay processing provider claims as of April 1, 2015, when the 21.2% cut was to go into effect.  However, CMS is warning that the cut will go into effect if the Senate fails to pass an SGR fix by April 15.  One complication may exist in the form of legislation introduced by a bipartisan Senate team, Senators Cardin (D-MD) and Collins (R-ME), to permanently repeal the caps on how much the program spends on rehabilitation therapy.  This unresolved issue may arise as an amendment to the legislation to be considered after the break and provides a reminder of how single issues or senators can ultimately frustrate the passage of legislation that has support from both parties.  Others in the Senate are critical that spending cuts will offset only a portion of the costs.  Conservatives have characterized this element of the plan as irresponsible.  The AARP is focused on increased costs to Medicare beneficiaries and will continue to lobby for changes to lower these costs.

Democrats may want amendments to extend the CHIP program four years, to remove the Hyde Amendment (abortion-related language), and to repeal the Medicare therapy cap.  Any amendments would, of course, send the legislation back through the House, and this appears to be an unattractive alternative to all concerned because of the remarkable support for this resolution from both parties.  A perhaps more significant complication is presented by the report issued last week by the Office of the Actuary of the Centers for Medicare and Medicaid Services (CMS) indicating that physician payments in which the 0.5% increases in Medicare payments over the next four years would come to a halt in 2020.  In that year a two-tiered system is phased in which is designed to encourage physicians to shift greater numbers of patients into risk-based models.  For physicians continuing to work within the traditional payment system, but who are scoring well on the quality metrics, remuneration will be awarded from a separate appropriation.  After 2024, the alternative payment track would increase annually by 0.75% which will be three times greater than the rates of other physicians. CMS is predicting that 2024 is the time when there will be a shortfall and payments will lag behind inflation.

On the one hand, Congress is fed up with required annual intervention for the past seventeen years to avoid scheduled cuts to physicians.  On the other hand, Congress is forced to rely on estimates to predict costs which places the federal government at risk of future payments not keeping up with the either the chosen formulae or with inflation.

(UPDATE) A look at the controversial Affordable Care Act on its fifth anniversary

By Mary Holloway Richard. View her attorney profile here.


Mary Richard is recognized as one of pioneers in health care law in Oklahoma. She has represented institutional and non-institutional providers of health services, as well as patients and their families. She also has significant experience in representing providers in regulatory matters.

Mary Richard is recognized as one of pioneers in health care law in Oklahoma. She has represented institutional and non-institutional providers of health services, as well as patients and their families. She also has significant experience in representing providers in regulatory matters.

(Updated 4/7/15)
President Obama has taken the occasion of the fifth anniversary of the signing of the Affordable Care Act (“ACA”) to characterize continued activities on the Hill to repeal it as renegade special interest activities. The ACA continues to be a subject of debate both in terms of its accomplishments—how many are newly covered and how much will be saved—and in terms of its public support.

While the Associated Press reported on March 23, 2015, that public support was down 5% since its passage, as one who daily writes and advises health care clients on matters related to the ACA, I can say with certainty that the depth and breadth of increased regulation spawned by the ACA are changing the nature of the system.

Those changes include responsive movement toward integrated health systems, mergers and affiliations; transition from quantity- to quality-based reimbursement; the relaxation of HIPAA standards in some respects and its tightening in others in the context of EHR transformation; and increased direct and indirect costs to employers as a result of new responsibilities.

Nearly fifty changes have been made to the ACA as of March 2, 2015, and this suggests a continuing need for providers, employers and business owners to remain informed and responsive to the moving regulatory compliance target.

On Monday, March 30 the Supreme Court rejected a new challenge to the Affordable Care Act (“ACA”)  that targeted the Independent Payment Advisory Board (“IPAB”), a 15-member government panel which has been characterized as a “death panel” because of its intended role in cutting Medicare costs.   The IPAB was to convene when the target growth rate for Medicare (3.03%) is exceeded.  However, the growth rate is 1.15% according to CMS, and so the administration has not nominated any panel members.  In declining to take up the case, the Supreme Court left undisturbed the 9th US Circuit Court of Appeals in San Francisco dismissal of the lawsuit. The proponents of the ACA are calling this a win.  Coons v. Lew, No. 14-525.   Certiorari was denied by the United States Supreme Court on March 30, 2015.