Surgical Practices Must Now Be Licensed as Ambulatory Surgical Centers in New Jersey

by Glenn P. Prives

Surgical practices in New Jersey will now be required to become licensed by the New Jersey Department of Health (“DOH”) as ambulatory surgical centers, with existing ones required to do so by January 16, 2019.  Previously, surgical practices had to be registered with the DOH, and oversight was jointly shared by the DOH and the New Jersey Board of Medical Examiners.  Now, oversight will be the sole province of the DOH.

Surgical practices that are certified by the Centers for Medicare and Medicaid Services (“CMS”) will be exempt from the physical plant and functional requirements set forth in the New Jersey licensing regulations for ambulatory surgical centers.  Existing surgical practices not certified as such, but which are accredited by an accrediting body recognized by CMS, will also be exempt.  Those surgical practices that do not fall in one of the foregoing categories will have to comply with the requirements.

Surgical practices will also be exempt from the New Jersey ambulatory care facility assessments unless they expand to include any additional room dedicated for use as an operating room.

Surgical practices may now also combine with each other or with ambulatory surgical centers to form a larger licensed ambulatory surgical center consisting of an aggregate number of operating rooms up to the total number of operating rooms that both facilities contained prior to the combination.

These changes mean more for surgical practices than the mere language of the law would suggest.  As licensed facilities, anyone, not just New Jersey licensed physicians, can now be an owner of a one room facility.  This will make it easier for outside investment directly in one room centers.  Those who are not New Jersey licensed physicians and who are currently managing one room facilities can now seek to become direct owners of those facilities, which was previously prohibited.  Additionally, any New Jersey licensed physician will now be able to perform a procedure at a one room center, not just owners of the center.

Outside investment and mergers and acquisitions in the New Jersey ambulatory surgical center market have been active for years, with recent increased movement due to the influx of private equity dollars into health care.  The level of activity will now increase even more.

Fulfilling Your Purpose: Recent Developments Impacting on Non-Profit Hospital’s Liability Cap and Tax-Exempt Status

by Daniel Esposito

Recently there has been an increase in the number of challenges to non-profit hospitals related to their limitation of liability pursuant to the Charitable Immunity Act (“CIA”) and to their tax-exempt status for purposes of local property taxation.  A Federal District Court in New Jersey has recently denied one of these challenges by affirming the protection of the liability cap afforded by the CIA applicable to a hospital in a medical malpractice action. In Sexton v. Rizzetta, D.O. et al, Civ. No. 15-3181, plaintiff alleged malpractice during an admission in 2013 to defendant Cape Regional Medical Center (CPRM). The hospital moved to cap damages at $250,000 pursuant to N.J.S.A. 2A:53A-8. Plaintiff opposed arguing that the statute was unconstitutional and not applicable arguing the hospital must show that it was “actually a non-profit” and not one “solely in name” and based an argument on an unpublished opinion dealing with a claim of charitable immunity in a nursing home context. [(Klein v. Bristol Glen, Inc., 2010 WL 3075582 (App. Div. 2010)] The Federal Court granted the application and rejected plaintiff’s arguments. Judge Kugler quickly dispatched the constitutional argument, relying upon caselaw that has settled the constitutionality of the CIA years ago. Citing to Johnson v. Mountainside Hospital, 239 N.J. Super. 312 (App. Div. 1990).

In rejecting the substantive argument the court applied the N.J. Supreme Court case of Kuchera v. Jersey Shore Medical Center, 221 N.J. 299 (2015).  In Kuchera, the N.J. Supreme Court held that the defendant hospital was entitled to limited immunity under 2A:53A-8 (rather than the absolute immunity of 2A:53A-7). The Court noted that whether a nonprofit organization is entitled to the limitation on damages afforded to those institutions organized exclusively for hospital purposes “turns on the purpose of the institution, not the use to which the facility is put on any given day”. Id. at 242.  In doing so the Court focused on the purposes set forth in the organizing documents of the entity:

By the plain language of N.J.S.A. 2A:53-7 and 8, a hospital is subject to limited liability under section 8 if it is formed as a non-profit corporation, society, or association, is organized exclusively for hospital purposes, was promoting those objectives and purposes at the time plaintiff was injured, and the plaintiff was a beneficiary of the activities of the hospital. Id. at 249.

In looking to the “purposes” of the entity, the Court discussed the role of the hospital in today’s modern society. Id. at 250. The Court noted that the modern hospital is now a place where members of the community not only seek emergency services but preventative services, therapy, educational programs and counseling. Id. at 251.The Court also noted that the modern hospital “also provides medical care to those who can pay for the care and those who cannot. In fact, every acute care hospital in this State is required to provide care to anyone who seeks care without regard to ability to pay”. Id. at 254.  The provision of charity care is therefore a “core function of a hospital”. Id.  Applying these principals, the Court concluded that the Defendants are governed by the “specific expressions of legislative intent regarding hospitals articulated in N.J.S.A. 2A: 53A-8”. Id.  Additionally the Sexton Court deemed that the hospital’s 501 (c)(3) status was recognized evidence of its non-profit status. (citing Parker v. St. Stephen’s Urban Dev. Corp., 243 N.J. Super. 317, 324 (App. Div. 1990)).

Shortly after the Kuchera decision was rendered, a tax court denied a hospital full tax exempt status related to local property taxes based on an interpretation of the so-called “profit test’. See AHS Hospital Corp. v. Town of Morristown, 28 N.J. Tax 456 (2015).  This test is based on the elements of the Paper Mill Playhouse decision which overlap to some degree with the Kuchera elements: (1) the owner of the property must be organized exclusively for the exempt purpose; (2) its property must be actually and exclusively used for the tax-exempt purpose; and (3) its operation and use of its property must not be conducted for profit”. See Paper Mill Playhouse v. Millburn Township, 95 N.J. 503, 506 (1984). The AHS tax court found that many of the facilities involved were not exempt as a result of not meeting the third element of the test as the Hospital “entangled its activities and operations with those of other for-profit entities, thus allowing its property to be used for profit”. AHS Hospital Corp., supra. Recently, the IRS denied tax-exempt status of a hospital as result of a lease agreement it entered into with a for-profit entity. See Herschman, “Hospital Involved in Joint Venture with For-Profit Entity Loses Tax-Exempt Status” National Law Review (December 6, 2017).

These recent developments highlight the importance for non-profit hospitals to follow the guidance the N.J. Supreme Court issued relating to maintaining non-profit status and continuing to demonstrate the fulfillment of “hospital purposes” as the term is applied in the modern context.  Under the Kuchera analysis the focus is not on whether the hospital is exclusively organized for charitable purposes or exclusively acting as a charity (as plaintiffs have attempted to argue especially as it relates to some of the larger non-profit entities with relatively high overall revenues). The challenges highlight the importance of applicable statutory and regulatory compliance as it relates to both the organization of the not-for profit and the ongoing activities to avoid the entanglement with for-profit entities or purposes. Those facing challenges to tax-exempt status may look to the N.J. Supreme Court’s emphasis on the role of the modern hospital in society in order to highlight the aspects of multitude of the charitable and related societal benefits and programs which the hospitals routinely engage which are not driven by monetary profit motive.

Revised Confidentiality Rules Under HIPAA Part 2 For Substance Use Disorder Patient Records

by John Zen Jackson and John W. Kaveney

On January 3, 2018, the Substance Abuse and Mental Health Services Administration (SAMHSA) within the Department of Health and Human Services published its final rule revising confidentiality rules for substance use disorder treatment programs.   A review of the Part 2 regulations for such programs and their overlap with pertinent provisions of HIPAA was the subject of a recent post on this blog.

The effective date of the revised regulations is February 2, 2018 with the exception of one provision which has a compliance date of within two years of the effective date.  The agency indicated that “[t]hese changes are intended to better align the regulations with advances in the U.S. health care delivery system while retaining important privacy protections for individuals seeking treatment for substance use disorders.”  An important aspect of this effort was aligning the substance use regulations with HIPAA and HITECH while recognizing the Part 2 regulations provide “more stringent federal protections” to safeguard individuals from discrimination and the legal consequences of improper disclosure.

The prior Part 2 regulations included a strict prohibition on redisclosure of information that is disclosed in the first instance with a patient’s consent.   SAMSHA’s new regulation approved the use of an abbreviated notice of prohibition of redisclosure which was intended to help the notice fit within space limitations of free-text fields in electronic health record systems.

The new regulation also permits disclosures with written consent for payment and health care operations activities.  The germane language in this regard is in the preamble to the regulation to indicate that the catalog of such activities is illustrative rather than an exhaustive list.  SAMSHA sought to balance the protection of confidentiality with the legitimate need to disclose information to obtain the benefits of emerging health care models promoting integrated care and patient safety.  It pointed to the existing provision in 42 CFR § 2.13(a) that was intended to ensure that information is not shared more broadly than the purpose(s) for which the patient consents.

SAMSHA also addressed the applicability of the Part 2 regulations to business associates and subcontractors in a fashion similar to the HITECH regulations.  It stated that the agency did not intend at this time to have Part 2 regulations apply to business associates and subcontractors. However, the agency left the door open to further alignment with HIPAA indicating that additional changes were under consideration.

With these latest changes and the promise of more to possibly come in the future, providers subject to these regulations must be sensitive to their applicability and complexity given the significant repercussions that can come from violations of HIPAA Part 2.

Does a “Do Not Resuscitate” Tattoo Accurately Reflect A Patient’s Wish?

by Brooks Evan Doyne

The word “tattoo” comes from the Tahitian word “tatu” which means “to mark something” and historians believe the practice began roughly between 3370 and 3100 BC. However, in 2017 medical physicians faced an ethical dilemma that few have experienced when an unconscious man arrived in the emergency room with a tattoo that read “Do Not Resuscitate” illustrated on this chest.

Doctors at Jackson Memorial Hospital in Florida had discussed this quandary but had never been faced with it. The 70-year-old man’s blood pressure was dropping and he had a history of chronic obstructive pulmonary disease and diabetes. Medical ethicist Dr. Arthur Caplan, Ph.D., who was not involved in the patient’s case, reported to CBS News “there’s no law that says you have to respect or recognize a tattoo”. In the United States people have the right to ask not to be resuscitated in the event of a medical emergency and can express their wishes known ahead of time in the event they one day find themselves alone or incapacitated.

Naturally, not all inscriptions are to be taken literally. Nonetheless, medical tattoos have been on the rise for the past few years. As reported in USA Today, medical tattoos first appeared in 2014 to alert doctors to conditions such as diabetes. While a tattoo certainly has a penetrating power, legibility and decipherability may be an issue, especially during a medical emergency.

Normally when faced with ethical conundrums, doctors do not want to choose an irreversible path. As such, doctors attempted to wake the unconscious patient, but he was in a delirious state and unable to respond. The patient also arrived at the hospital without ID or family and next of kin could not be reached. The ethical team eventually ruled that the tattoo expressed his wishes and told doctors to follow his orders. The patient’s status deteriorated throughout the night and he eventually died without intervention. Eventually, the patient’s written DNR request was later found at his home.

Dr. Gregory Holt, an assistant professor of medicine at the University of Miami helped write a case study that was published in The New England Journal of Medicine. The case study conveyed that the tattoo “produced more confusion than clarity, given concerns about its legality and likely unfounded beliefs that tattoos might represent permanent reminders of regretted decisions made while the person was intoxicated.” In the event medical tattoos become more popular it will be interesting to see if legislation is passed on how to properly treat a patient who has medical instructive ink.

For patients, while a tattoo might seem like the most convenient way to convey one’s wishes, it is still important to have a formal Do Not Resuscitate order and to consider a living will or advance directive to make your wishes clear and alleviate potential confusion. For providers, this case study highlights the evolving cultural trends and individuals involved in critical and emergency care must be prepared to address such a situation should it arise since many times there is limited time to research and debate whether such a tattoo will be honored.


CMS Releases CY 2018 OPPS and ASC Payment System Final Rules Slashing Reimbursement for the 340B Program

by Paul L. Croce

On November 1, 2017 the Centers for Medicare and Medicaid Services (CMS) issued its final rule updating payment rates and policy changes for the Hospital Outpatient Prospective Payment System and Ambulatory Surgical Center Payment System.

The most controversial aspect of the Rule is the significant reductions to reimbursement for drugs purchased through the 340B program. The final Rule reduces reimbursement for such drugs from the Average Sale Price (ASP) plus 6% to ASP minus 22.5%.  CMS indicated that it selected this reimbursement rate based on an analysis previously performed by the Medicare Payment Advisory Commission (MedPAC).  However, this reduction greatly exceeds that suggested by MedPAC who when commenting on the proposed Rule recommended a reduction of only 10% of the ASP.  Thus, it is unclear exactly what CMS ultimately relied upon to determine the appropriateness of the ASP minus 22.5% rate.

These reductions exclude certain facilities including Rural Sole Community Hospitals, Children’s’ Hospitals and PPS-Exempt Cancer Hospitals. The Rule also does not apply to Critical Access Hospitals and non-excepted provider based sites under Section 603 of the Bipartisan Budget Act.  Each of these facilities will continue to be paid at the prior rate of ASP plus 6%.

CMS anticipates this policy will result in a decrease of $1.6 billion in drug payments which will be redistributed to non-drug items and services throughout the OPPS to maintain budget neutrality. CMS indicates that overall OPPS payments will increase in 2018 by 1.4%.  Nevertheless, 340B facilities will see significant decreases in drug reimbursement in CY 2018.

Unsurprisingly, the reductions in 340B reimbursement have been met with great criticism from the impacted parties. Indeed, within two weeks of the issuance of the final rule several hospital associations and hospitals filed suit seeking to enjoin the implementation of this provision in the CY 2018 OPPS Rule.  The government has moved to dismiss and a hearing on the matter is scheduled for December 21, 2017.

While the reduction in 340B payments is the most significant change in the final Rule, there are several other aspects of the Rule worth commenting on:

  • The Rule increases OPPS payment rates by 1.35% and ASC payment rates by 1.2%.
  • The Rule removes Total Knee Arthroplasty from the Medicare inpatient only list, thereby allowing reimbursement for such procedures performed on an outpatient basis.
  • The Rule also establishes a new modifier, “FY” to be used to identify X-rays taken using computed radiography technology. Claims submitted with this modifier will be subject to phased-in payment reductions of 7% for services provided in CY 2018 through CY 2022 and 10% for services provided in or after CY 2023.
  • The Rule will also allow laboratories to bill Medicare directly for molecular pathology tests and advanced diagnostic laboratory tests in order to reduce concerns that the current date of service policy known as the “14 Day Rule” creates operational burdens for hospitals and laboratories.

Absent the Court issuing a preliminary injunction in the previously mentioned lawsuit, each of these rule changes will become effective January 1, 2018.

Overlapping Regulations for Confidentiality Regarding Substance Abuse Treatment

by John Zen Jackson

Our starting point is that privacy and confidentiality are important in any type of treatment but in connection with substance abuse and addiction treatment, there is a need for some enhanced protections. The United States Court of Appeals for the First Circuit has stated that “[t]he express purpose” of federal initiatives in this area was “to encourage patients to seek treatment for substance abuse without fear that by so doing their privacy will be compromised.” United States v. Cresta, 825 F.2d 538, 551-52 (1st Cir. 1987).  The collateral stigmas for an individual and the family are of such great concern that they can be obstacles to even seeking treatment. Reputations are at risk for having the disease and jobs or work opportunities may be jeopardized. Family members will be embarrassed. Federal regulations involving the HIPAA Privacy Rule and special provisions for substance abuse treatment programs recognize these concerns. While there have been efforts to align these two regulatory systems, it is important to recognize that these regulations intersect, overlap, and sometime supersede each other. In addition, state licensing or regulatory provisions may have stricter requirements or may, as in New Jersey (N.J.A.C. 10:161B-3.6(b)(5)), incorporate the Federal standards.

HIPAA is the first body of regulations concerning medical privacy that comes to mind for most persons. But historically speaking, it is not. The Health Insurance Portability and Accountability Act (HIPAA), 42 USC §1320d, enacted in 1996 directed the Secretary of Health and Human Services and the Attorney General to develop guidelines that “appropriately protect the confidentiality of the information and the privacy of individuals receiving health care services.”  This eventually led to the release of the Privacy Rule in 2002 with an April 13, 2003 effective date and codification at 45 CFR Parts 160 and 164. In contrast, the restrictions on disclosures concerning substance abuse treatment have their origins in the 1970 Comprehensive Alcohol Abuse and Alcoholism Prevention, Treatment and Rehabilitation Act and the 1972 Drug Abuse and Prevention, Treatment and Rehabilitation Act with implementing regulations issued by the then Department of Health, Education and Welfare in 1975 with various revisions and supplements. The pertinent statute is 42 USC §290dd-2 with regulations now codified at 42 CFR Part 2.

As with the HIPAA regulations, there have been some recent amendments to the 42 CFR Part 2 regulations. 82 Fed.Reg. 6052 (Jan. 18, 2017). The most recent update was to go into effect as of February 17, 2017 but was delayed to March 21, 2017 by virtue of the 60-day regulatory freeze issued by the Trump Administration on January 20. The amendments were intended to make the Part 2 regulations more consistent with HIPAA. Differences persist with the potential for resulting confusion.

Here is one starkly clear reality: violation of the substance abuse treatment restrictions is a federal crime with a fine to be imposed pursuant to Title 18 of the United States Code.  42 USC §290dd-2(f). While both sets of regulations cover similar material, there are points of difference. But a reasonably valid heuristic in choosing between HIPAA and Part 2, with a slight refinement, is: Whichever standard is stricter — usually 42 CFR Part 2 — and provides the greater privacy protection should be applied.

Here is the refinement to that problem-solving heuristic. While HIPAA covers the health care industry broadly, the provisions of 42 CFR Part 2 only apply to “federally assisted” drug and alcohol “programs.” These are defined terms in 42 CFR 2.11. Thus, the records of a primary care physician who is not held out as providing alcohol or drug abuse treatment is not covered. The special confidentiality provisions would not apply to a hospital except to an identified unit that has a “primary function” of providing substance abuse diagnosis, treatment or referral. Similarly, the rules would not apply to an emergency room. See generally Center for Legal Advocacy v. Earnest, 320 F.3d 1107 (10th Cir. 2003); United States v. Zamora, 408 F.Supp.2d 295 (S.D. Tex. 2006). The applicability of Part 2 requires not only a “program” as defined in the regulation but also that the program be “federally assisted.” Federal funding is, of course, endemic in health care and the definition in 42 CFR 2.12(b) is consistent with that reality but being “federally assisted” must be confirmed.

The basic HIPAA rule of thumb is that except in connection with disclosures to the individual whose health information is at issue or to HHS or its Office of Civil Rights enforcement arm, a covered entity should not make any use or disclosure without a patient’s authorization unless permitted by the Privacy Rule. However, in addition to the broad approval for use or disclosure for treatment, payment or operations (TPO) without patient authorization, there are quite a few permissive disclosures without patient authorization set forth in 45 CFR 164.512 including such circumstances as public health activities and oversight, judicial and administrative proceedings, law enforcement purposes, and reporting crimes. The Part 2 regulations on the other hand are much stricter and more limited than what is allowed under HIPAA. Disclosures without a patient’s consent are allowed in the following circumstances:

  • Communications among program personnel
  • Communications between a program and a Qualified Service Organization
  • Crimes on program premises or against program personnel but without an exception for the duty to warn others unless the threatened violence is against program personnel.
  • Reports of suspected child abuse and neglect limited to making the initial report with any disclosure for subsequent investigation not permitted in the absence of a court order or signed authorization.
  • Medical emergencies involving an immediate threat to the health of the patient requiring immediate medical intervention.
  • Scientific research
  • Audits and evaluation activities
  • Court order, which must comply with special requirements set forth in the regulations.

Moreover, in the absence of consent or the special court order, the regulations in 42 CFR  2.13(c) prohibit a substance abuse treatment facility from even acknowledging that a particular individual is a patient.

Another instance of a stricter standard in Part 2 can be found in connection with a consented-to disclosure. 42 CFR 2.31 requires written voluntary consent. A verbal consent is inadequate. The consent document must contain ten elements specified in the regulation. Furthermore, under the provisions of the HIPAA Privacy Rule found at 45 CFR 164.508(c)(2) information that is disclosed pursuant to an authorization has the potential for being re-disclosed and no longer subject to HIPAA privacy protection. In contrast, an authorized disclosure under Part 2 must be accompanied by an explicit statement that further disclosure of information that identifies a patient as having or being treated for a substance use disorder is prohibited. 42 CFR 2.32(a).

HIPAA covers “protected health information” (PHI) and “individually identifiable health information” (IIHI). The Part 2 regulations speak in terms of “records” which term is defined in 42 CFR 2.11 as “any information” whether recorded or not, created by, received, or acquired by a Part 2 program relating to a patient whether involving diagnosis, treatment, referral for treatment, billing, emails, voice mails, and texts. For the purpose of the regulations “records” include both paper and electronic records.

Both HIPAA and Part 2 address disclosures in connection with judicial proceedings and various law enforcement activities. Although there are few judicial decisions concerning 42 CFR Part 2, there is a lucid and helpful discussion by the Connecticut Superior Court in Briggs v. Winter, 2014 Conn. Super. LEXIS 1292, 2014 WL 2922643, of these “two discrete but complementary federal statutory schemes” in the civil context. The HIPAA approaches of “satisfactory assurances” concerning civil subpoenas and the effectiveness of grand jury subpoenas without a court order are inadequate for substance abuse records. The statutory standard found in 42 USC §290dd-2 requires a showing of “good cause.” The Part 2 regulations more specifically set forth separate requirements for what constitutes “good cause” as to the court orders to be issued in connection with disclosures for noncriminal purposes such as civil law suits and those for criminal investigations and prosecutions of patients as well as for investigations or prosecutions of Part 2 programs or employees including the use of undercover agents. Under 42 CFR 2.64, the criteria for entry of an order authorizing disclosure for a noncriminal matter require a finding of “good cause” with determinations (1) that other ways of obtaining the information are not available or would not be effective and (2) that the public interest and need for the disclosure outweigh the potential injury to the patient, the physician-patient relationship and the treatment services. In connection with disclosures for criminal matters, the criteria in 42 CFR 2.65 are more extensive and “all” must be met. The threshold is that the crime involved is extremely serious, such as one which causes or directly threatens loss of life or serious bodily injury including homicide, rape, kidnapping, armed robbery, assault with a deadly weapon, and child abuse and neglect. Next, there must be a reasonable likelihood that the records will disclose information of substantial value in the investigation or prosecution along with a demonstration that other ways of obtaining the information are not available or would not be effective. As part of the evaluation, the court must determine that the potential injury to the patient, to the physician-patient relationship and to the ability of the Part 2 program to provide services to other patients is outweighed by the public interest and the need for the disclosure. Lastly, if the applicant is a law enforcement agency or official, the person holding the records has been afforded the opportunity to be represented by independent counsel; and any person holding the records which is an entity within federal, state, or local government has in fact been represented by counsel independent of the applicant.

In connection with any contemplated disclosure, there are several questions to be posed which include at least the following. Can or should patient authorization be obtained? Is there an exception for disclosure without patient authorization? Is the recipient to whom the disclosure is to be made pursuant to an exception authorized under the regulations to receive the information?

American society has long placed significant value on a private sphere protected from intrusion. In addition, bioethical principles of nonmalefience — the doing of no harm — and respect for persons call for safeguarding personal privacy and placing importance on individual autonomy. In follow-up at another time or in another place, musings on whether or not privacy and confidentiality really exist in this era might be appropriate.

CMS Issues The 2018 MACRA Quality Payment Program Final Rule

by Glenn P. Prives

The Centers for Medicare and Medicaid Services (“CMS”) recently published the 2018 Medicare Access and CHIP Reauthorization Act of 2015 (“MACRA”) Quality Payment Program (“QPP”) final rule.  CMS maintained that it is listening to feedback and concerns from providers and that what it has heard is reflected in many of the provisions of the rule.

Among the many changes in the final rule are the following:

  • For 2018, CMS will exempt providers and groups with less than $90,000 in Medicare Part B allowed charges or that care for less than 200 Medicare Part B patients. These providers would be exempt from participating in the QPP altogether.
  • Small practices (those with fifteen or fewer practitioners) can earn five additional points to their Merit-Based Incentive Payment System final score if they submit data on at least one performance category. Further, CMS will award providers up to five bonus points if their patient population is deemed particularly complex, as measured by a combination of Hierarchical Conditions Category risk scores and the number of dually eligible patients treated.
  • Providers are allowed to continue using 2014 Edition Certified Electronic Health Record Technology (“CEHRT”), rather than upgrading to 2015 Edition technology, to report the Advancing Care Information (“ACI”) transition measures.  Providers that exclusively use 2015 CEHRT to report the ACI objectives and measures (the Stage 3 equivalent measure set) could be eligible for a ten percent bonus score.
  • The reporting period for quality performance, which was ninety days during 2017, which was the transition year, is now the full calendar year.
  • Solo practitioners and small practices can form a virtual group without specialty or location limitations to participate in MIPS.  While it was previously known that virtual groups would be an option, more detail on how those groups can be formed and can apply for treatment as virtual groups is now available.
  • CMS will implement a MIPS measurement option that allows hospital-based clinicians to use their hospital’s value-based purchasing results for the MIPS cost and quality categories.  However, this option will not be available until calendar year 2019.
  • Providers will be assessed on cost measures for 2018.  This was originally a 2019 requirement under the proposed rule.  The cost category will be weighted at ten percent of the MIPS final score in 2018 and will increase to thirty percent in 2019.

The 2018 final rule is emblematic of CMS’ continued approach to tinker with MACRA’s obligations and burdens on providers of all sizes.  From the beginning, it has been clear that MACRA would be a work in progress that would evolve, especially in the early years.  Thus, it is important that providers continue to pay attention to additional MACRA-related rules to ensure that they are current on the latest requirements, especially those that may be beneficial.

Trump Provides Leeway to Employers to Withhold Birth Control Coverage

by Brooks Evan Doyne

On October 6, 2017 President Donald Trump signed an executive order calculated to provide employers more opportunities in denying coverage concerning contraceptives. Under the Affordable Care Act (“ACA”), most health plans are required to cover all methods of birth control approved by the Food and Drug Administration without charging women for them. Although religious employers and some private employers with strong religious objections are exempt, very few met the requirements and had to provide the contraception.

President Trump’s executive order officially opens the door for many companies or nonprofit organizations with religious or moral objection to contraception to stop offering it. The move has been long anticipated given the fact that President Trump issued an executive order on “religious liberty” in May 2017. Over 55 million US women have birth control coverage with zero out-of-pocket costs, according to the National Women’s Law Center. Moreover, according to the center, Obamacare saved women an estimated $1.4 billion on birth control pills alone in 2013. To further efforts against the executive order experts have relied on the fact that many women use contraception methods for more than pregnancy prevention. On the other side, Health and Human Services officials claim the new rule would have no impact on “99.9% of women” in the United States. The agency calculated that at most, 120,000 women would be affected: mainly those who work at the roughly 200 entities that have been involved in 50 or so lawsuits over birth control coverage.

Notwithstanding what the early headlines may have inferred, the executive order does not eliminate the ACA’s contraceptive coverage guarantee. This issue is the unknown factor of how many individuals will lose coverage because an employer will claim a religious or moral exemption. A 2015 study from the Henry J. Kaiser Family Foundation estimated that 3% of all nonprofits and 10% of the largest nonprofits have been using the accommodation. There are more than 1.4 million nonprofits in the United States and thousands consist of hospitals, long-term care facilities, schools, and charities—are affiliated with the Catholic church, the hierarchy of which objects to contraception.

Time will tell whether these religious based nonprofits will continue to use the accommodation or whether they will instead actively deny contraceptive coverage to all of those employees, dependents, and students.

How Telemedicine May Change the Landscape of Health Care In New Jersey

by Megan R. George

Technological advances such as EMR, remote patient monitoring, and the use of tablet based patient registration have revolutionized the health care industry. Today, a patient can use an app on their phone to schedule an appointment, obtain their medical records, and locate physicians in the area. It is no surprise that over the past five years, telemedicine has become a popular form of treatment for physicians and patients. New Jersey recently unanimously passed legislation that establishes the requirements for the practice of telemedicine in the state of New Jersey. The passage of this legislation signals the importance of telemedicine to the state of New Jersey and the health care field.

The New Jersey bill defines key terms as follows: “health care provider” as an individual who provides a health care service to a patient, which includes, but is not limited to, a licensed physician, nurse, nurse practitioner, psychologist, psychiatrist, psychoanalyst, clinical social worker, physician assistant, professional counselor, respiratory therapist, speech pathologist, audiologist, optometrist, or any other health care professional acting within the scope of a valid license or certification issued pursuant to Title 45 of the New Jersey Statutes; and “Telemedicine” as the delivery of a health care service using electronic communications, information technology, or other electronic or technological means to bridge the gap between a health care provider who is located at a distant site and a patient who is located at an originating site. The term telemedicine, as explained in the bill, does not include “the use, in isolation, of audio-only telephone conversation, electronic mail, instant messaging, phone text, or facsimile transmission.”

The New Jersey legislation sets standards that those providing telemedicine services must follow. Prior to engaging in telemedicine, a provider-patient relationship must be established. The provider must (i) properly identify the patient using, at a minimum, the patient’s name, date of birth, phone number, and address; (ii) disclose and validate the provider’s identity and credentials, such as the provider’s license, title, and, if applicable, specialty and board certifications; (iii) review the patient’s medical history and any available medical records before initiating the telemedicine consult; and (iv) determine whether or not he/she will be able to meet the same standard of care as if the services were provided in person. When necessary, the provider also must refer the patient to appropriate follow up care, including making appropriate referrals for emergency care, if needed.

The newly passed law allows telemedicine to be covered under New Jersey Medicaid and commercial health insurance plans. As currently written, the law does not go as far as to require that the reimbursement rates for telemedicine be equal to the reimbursement rates that would be paid if the service was provided in-person. The language of the bill reads, “The State Medicaid and NJ FamilyCare programs shall provide coverage and payment for health care services delivered to a benefits recipient through telemedicine or telehealth, on the same basis as, and at a provider reimbursement rate that does not exceed the provider reimbursement rate that is applicable, when the services are delivered through in-person contact and consultation in New Jersey.” The language for commercial plans reads the same regarding parity of payments for telemedicine. As expected, the law sets the in-person reimbursement rate as the maximum reimbursement for telemedicine services. The law allows reimbursement to be paid to either the provider or the facility/organization with whom the provider is associated with, depending on the appropriate billing practices.

The emergence and acceptance of telemedicine as a viable option in the health care setting is extremely beneficial to patients who find themselves within the service area of a community hospital. Many community hospitals do not offer the array of service lines that large facilities offer. In situations where time is of the essence, telemedicine saves lives. One example of telemedicine at work in the community hospital setting is with pediatrics. Prior to telemedicine, when a child was brought into an emergency department without pediatric capabilities, the hospital and the patient’s family was faced with quickly transporting the patient to a facility with pediatric capabilities. Often, had the hospital had the ability to diagnose the patient, the transport would not have had to occur. Telemedicine allows the hospital to connect with a pediatric physician at another facility for a quick and accurate diagnosis. It must be noted that once a diagnosis is made, the patient may still require transportation, but the transportation is now only made in situations where it is medically necessary. For other situations, a physician, via telemedicine, can diagnose and prescribe treatment options that can be carried out in the community hospital or through prescription medicines, eliminating the stress and cost of transportation for the patient and the patient’s family.

Teleneurology, another important use of telemedicine, makes prompt neurological care available to patients in even the most remote locations—an important consideration since, with the treatment of stroke symptoms, every second counts. Teleneurology allows a patient, presenting to a hospital without a neurologist on-site, to have his or her symptoms observed by a physician via tele-conference for diagnosis purposes. The diagnosing physician can observe and converse with the patient and obtain close images of the patient’s eyes to determine if the patient is expecting or has experienced a stroke. Ischemic strokes, which are most commonly treated by giving the patient an injection of tissue plasminogen activator (“tPA”). tPA is used to dissolve the blood clot to improve blood flow to the part of the brain being deprived of blood. tPA, while highly effective, must be administered within three hours of the patient experiencing a stroke. Subtracting the time that it takes for a patient to arrive at a hospital for treatment, the patient may now have less than two hours to be given lifesaving medication. Given this shorter timeframe, it is essential for a hospital to quickly and accurately diagnose stroke symptoms. The use of teleneurology gives the patient the best possible chance of receiving a quick diagnosis and obtaining tPA within the three hour timeframe.

Telemedicine can also be utilized in hospitals to facilitate patient discharge. Often, a patient is ready to be discharged, but continues to wait at the hospital until his or her physician can physically discharge the patient from the hospital. For physicians with robust offsite practices, this step may not be immediate. A patient waiting to be discharged can cause patient flow and capacity issues for the hospital and can cause frustration for the patient and their family, ultimately leading to low patient satisfaction scores for the hospital. Allowing a physician to evaluate the patient via telemedicine would alleviate some of these issues. The physician could have a face to face discussion with the patient, asking the necessary questions prior to discharge, while not having to leave his or her office.

As technology advances and health care becomes more reliant on technology, the uses of telemedicine will continue to grow. Telemedicine will become engrained in the culture of providing top level care to patients, regardless of geographical location. Providers seeking to utilize this technology to implement this new means of delivering medical services must be sensitive to the current laws regulating this area and the fact that this area is continually evolving and developing, especially in New Jersey where the law is brand new.

New Jersey Proposes Enhanced Limitations on Payments From Pharmaceutical Companies to Health Care Providers

by Glenn P. Prives

The New Jersey Division of Consumer Affairs recently proposed enhanced limitations on payments from pharmaceutical companies to health care providers.  Those licensees affected by the proposed rules are the following:  physicians, podiatrists, physician assistants, advanced practice nurses, dentists and optometrists.

With limited exceptions, providers would not be able to accept any of the following from pharmaceutical manufacturers or their agents:

  • gifts
  • payments
  • stock
  • stock options
  • grants
  • scholarships
  • subsidies
  • charitable contributions
  • entertainment or recreational items, such as tickets to theater or sporting events, or leisure or vacation trips
  • meals
  • any item of value that does not advance disease or treatment education, including:
  • pens, note pads, clipboards, mugs or other items with a company or product logo
  • items intended for the personal benefit of the prescriber or staff, such as floral arrangements, sporting equipment, artwork, or items that may have utility in both the professional and non-professional setting, such as electronic devices
  • any payment in cash or cash equivalent, such as a gift certificate
  • any payment or direct subsidy to a non-faculty prescriber to support attendance at, or as remuneration for time spent attending, or for the costs of travel, lodging, or other personal expenses associated with attending any continuing education event or a promotional activity

There are some exceptions to the proposed limitations:

  • items designed for educational purposes for patients
  • a manufacturer subsidized registration fee at a continuing education event if that fee is available to all event participants
  • modest meals provided through the event organizer at a continuing education event, provided the meals facilitate the educational program to maximize prescriber learning and are capped at the fair market value of $15.00 per prescriber
  • modest meals provided to non-faculty prescribers through promotional activities no more than four times in a calendar year from the same manufacturer, each of which is capped at the fair market value of $15.00 per prescriber
  • fair market value compensation for providing bona fide services as a speaker or faculty organizer or academic program consultant for a continuing education event (subject to disclosure to attendees), plus reasonable payment and remuneration for travel, lodging, and other personal expenses associated with such services and continuing education credit if permitted by the licensee’s licensing board
  • fair market value compensation (capped at $10,000 per year from all pharmaceutical manufacturers) for providing bona fide services as a speaker or faculty organizer or academic program consultant for a promotional activity (subject to disclosure to attendees), plus reasonable payment or remuneration for travel, lodging, and other personal expenses associated with such services, but no continuing education credit
  • fair market value compensation for participation on advisory bodies or under consulting arrangements, but subject to the aforementioned $10,000 per year cap (together with payments for services for a promotional activity)

A provider can still receive samples from manufacturers, provided that the licensee does not charge patients for the samples and dispenses samples in accordance with the licensee’s licensing board.

The New Jersey Board of Medical Examiners, Board of Dentistry and Board of Optometry already have regulations that govern the relationships between their respective licensees and pharmaceutical companies, but the proposed regulations will both clarify and strengthen the existing rules.

While restrictions on payments to providers exist in other states, New Jersey’s proposed rules appear to be particularly stringent.  Pharmaceutical companies will need to carefully review their policies on all interactions with providers and, if the rules are passed, revise them accordingly as well as educate and monitor their employees and contractors for compliance.  Providers will also need to carefully track their relationships with pharmaceutical companies.  The regulations, if passed, will burden both parties.