Teamwork Makes the Dream Work: New Jersey Innovation Institute Joins Forces With New Jersey Department of Health To Improve Patient Health Data Exchange

The New Jersey Innovation Institute (NJII) is teaming up with the New Jersey Department of Health to develop and improve patient health data exchange through the New Jersey Health Information Network (HIN).

Health information is important for various reasons:

  • Improve Health Care: Improve health care and patient results by reducing medication and medical inaccuracies.
  • Efficiency:  Diminish redundant tests and services and improve efficiency of care by making sure that everyone has the same information.
  • Streamline: Reduce administrative costs.
  • Engage Patients: Increase patient participation in their own care and decrease completing paperwork.

NJII will develop the federal grant-funded HIN to improve interoperability and allow for better-informed decision-making. “There has long been a need to share information and get them out of silos in hospitals, physicians’ offices or long-term care facilities,” NJ HIN Executive Director Jim Cavanagh told ROI New Jersey. “Interoperability is a big issue right now with government in health care reform. It drives the ability to do population health management, as well as reducing health care costs and making it more efficient, too.”

Cavanagh, who already was successful in Michigan, has stated that the NJ HIN will be modeled after Michigan and tailored toward what is necessary for New Jersey. Concerning costs, NJII and the state health department intend to keep the program cost-efficient by leveraging data exchange capabilities and resources already available through existing HIEs in certain regions of New Jersey.

While that goal may sound arcane, New Jersey must figure out where the State’s needs are concerning health care treatment and how best to meet those need in an efficient manner. Unfortunately, the landscape of data exchange efficiency continues to be uneven, with some healthcare organizations communicating more proficiently than others. In speaking with Modern Medicine, Laura Young, interim executive director of the Alaska eHealth Network, stated “Health plans are often sharing claims data that can be 30 days or older and medication history is one of the most important records that needs to be complete and easy to share with providers.”

Time will tell how New Jersey and the country develop networks that help both sides of the medical treatment. In order to improve nationwide HIEs will need to modify their contractual relationships with participating organizations.

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

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.

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

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.

 

Trump Provides Leeway to Employers to Withhold Birth Control Coverage

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.

Corporations Cannot Practice Medicine in New Jersey, Part II – Is It A Sham Operation?

Given the recent Supreme Court opinion in Allstate Insurance Company v. Northfield Medical Center, P.C., an update to our prior post on why “Corporations Cannot Practice Medicine in New Jersey” was timely and appropriate. In that prior blog post, we discussed the regulation guiding this prohibition, N.J.A.C. 13:35-6.16 (the “CPOM Regulation”).  The Supreme Court’s recent decision provides further guidance to providers and reemphasizes the care with which such arrangements must be structured.

Control, Ownership, and Direction of a Medical Practice

Under the CPOM Regulation, a plenary licensed health care professional and a lesser-licensed (allied) health care professional cannot together own a medical practice that results in its control and direction by the lesser-licensed health care professional.  Moreover, an unlicensed individual cannot own a medical practice with a health care professional.  The objective behind these prohibitions pertains to the medical judgment involved in the practice of medicine.  Essentially, cost considerations of a corporate partner should not interfere with a health care professional’s medical judgment and patient interactions.

For similar reasons, a general business corporation cannot employ or otherwise engage (e.g., through an independent contractor relationship) a health care professional.

One way that health care professionals and non-professional owners have structured relationships in an effort to stay within the parameters of the CPOM Regulation is to create two separate entities.  One entity is a management company that is owned by a lesser-licensed or unlicensed individual.  The other entity is a professional corporation with a sole shareholder who is a medical doctor.  A management services contract runs between the two entities.  The key question is: What do the terms of that management services contract and its implementation entail?

Following Allstate, especially, we caution interested stakeholders: Do not try to fit a square peg in a round hole.  In other words, if the purpose of the CPOM Regulation is to prevent control by a lesser-licensed or unlicensed individual over medical judgment, do not inject such control through a structure of interconnected contracts between a management company and a medical practice.

Some fear that, following Allstate, the management company/medical practice structure in and of itself is too risky and may even be illegal, but, if written and implemented properly, a clear delineation of roles may be achieved and would likely be upheld.  Indeed, the regulations permit administrative contracts between management companies and professional practices.  N.J.A.C. 13:35-6.17.

A Question of Fact

Allstate sued an attorney and a chiropractor involved in promoting a multi-disciplinary structure that resulted in payment by Allstate for patient services rendered.  The structure included three key types of contracts: (1) space rental leases, (2) equipment leases, and (3) management contracts.  The purpose of these contracts was to prevent a nominal doctor-owner of a medical practice from seizing control of the practice from the real investor, the chiropractor.  The contracts permitted the chiropractor-owned management company to extract profits from and maintain control over the affiliated medical practice through various means.

Although the majority of stock in the medical practice was owned by the doctor, the doctor did not participate in day-to-day patient care (other doctors would be employed by the medical practice to provide the care).  Profits made by the medical practice would be turned over to the management company in exchange for the provision of management services, leased space, and leased equipment.  The doctor-owner of the medical practice would be asked to sign an undated (1) resignation letter and (2) affidavit of non issued or lost certificate bearing an unexecuted notary attestation for the doctor’s signature and date; this would permit the chiropractor to remove the doctor from his or her position and have it appear that the controlling interest in stock certificates previously held by the doctor were being transferred by the departing physician to another physician.  Finally, the leases between the management company and the medical practice included a “break fee” of $100,000 to penalize the medical practice’s doctor-owner for breaking the lease.

Following a bench trial, the trial court found the defendants violated the Insurance Fraud Prevention Act (IFPA), N.J.S.A. 17:33A-1 to -30, by knowingly assisting a New Jersey chiropractor in the creation of an unlawful multi-disciplinary practice, which submitted medical insurance claims to Allstate.  The trial court found that the practice structure, which the defendants promoted and assisted to create, was designed to circumvent regulatory requirements with respect to the control, ownership, and direction of a medical practice.

The Appellate Division reversed the trial court’s ruling, finding a lack of evidence of intent.  The Supreme Court, however, disagreed with the Appellate Division, finding that a fact finder could reasonably conclude the structure was “little more than a sham intended to evade well-established prohibitions and restrictions governing ownership and control of a medical practice by a non-doctor.”  The Court stated that considering the broad anti-fraud liability imposed by the IFPA, defendants should have anticipated being held responsible for “promoting and assisting in the formation of an ineligible medical practice” which was created to obtain reimbursement for the care provided at the practice.  Indeed, the Court reasoned that the defendants knew what the laws were and their purposes but nonetheless, in order to protect the investment, developed a structure to circumvent the law and cover up the circumvention.

Accordingly, the Supreme Court upheld the trial court’s finding of intent to circumvent the CPOM Regulation and remanded the case to the Appellate Division for further evaluation.

Factors to Consider in Future Arrangements

Below are some factors to consider when structuring future arrangements between plenary licensed and lesser or unlicensed individuals.  The factors are meant to place with the licensee complete discretion of his or her judgment in rendering health care services.  The list is not meant to be exhaustive nor applicable to every scenario.  Attorney advice should always be sought when assessing these factors and developing these types of arrangements.

  1. The physician owner of the medical practice should contribute startup capital to the entity.
  2. Any voting rights / shares in a medical practice should be divided with a majority of rights / shares to the physician.  (This factor would apply only if ownership in the medical practice was split between a physician and a lesser-licensed health care professional.  Direct ownership in a medical practice by an unlicensed individual is prohibited.)
  3. The physician owner of the medical practice should not be paid a salary (versus a profit distribution) while the management company sweeps the practice’s accounts of all remaining profits.
  4. A management company should not make above-market loans to the medical practice.
  5. The physician owner of a medical practice should have the right to terminate the management contract with a management company.
  6. The management contract should contain no provision (nor require the execution of documents) which would allow for the termination and replacement of the physician/medical director should there be a conflict of interests, e.g., medical judgment v. cost considerations.
  7. A medical practice should not contract with a management company that also leases space and equipment to the medical practice.
  8. The physician owner of the medical practice should either participate or oversee the day-to-day treatment of practice patients.  Supervision within the medical practice should not run to the management company.
  9. The medical practice should pay fair market value for services performed by the management services company.
  10. Monies earned for the provision of patient services should be kept within the medical practice to pay salaries, bills, etc.

In conclusion, when structuring a multi-disciplinary practice, do not try to fit a square peg into a round hole.  Control and direction over a medical practice and patient care must stay with the licensee at all times.

Hospitals Challenged by the Required Care to Undocumented Immigrants

Medical institutions are facing a dilemma in providing care to undocumented immigrants. While being required to administer emergency care upon a patient’s arrival, once stabilized, providers are finding it difficult to place these individuals in long term care and other sub-acute care facilities. This is the result of their immigration status, which prevents many of the potential financial compensation that might otherwise be available via Medicare, Medicaid or private payor. Without any insurance, these sub-acute care facilities refuse to take the patients leaving the acute care facilities with patients that are unable to be discharged and have no source of funding for their care.

Undocumented immigrants typically have no insurance so they rely on emergency rooms. Federal and state laws require healthcare providers to provide care regardless of legal status and/or ability to pay. The New Jersey “Take all Comers” Statute (N.J.S.A. 26:2H-18.64) dictates that no hospital shall deny any admission or appropriate service to a patient on the basis of that patient’s ability to pay or source of payment. However, this does not require a hospital to perform non-emergency or elective services. Hospitals across the country find themselves in a mystified state and ask themselves “What can we do?”. In order to best accommodate the needs of undocumented individuals and protect the hospital it is vital to make sure ER physicians are appropriately triaging patients and only admitting those that need to be admitted. Additionally, social workers and staff must be diligent in determining elective medical requests.

Many health care providers are left with the difficult decision of whether to attempt to try and return the undocumented immigrant to their native land via coordination of a transfer to an appropriate sub-acute facility there. This is referred to as repatriation. This process is not regulated by the federal government and limited case law exists on the subject. Moreover, no New Jersey State agency has a policy in place on the practice. Hospitals willing to pursue this course of action must be mindful that many patients do not wish to voluntarily go. Thus, hospitals in those situations should consider seeking a court order to permit an involuntary transport. As in many areas of the law, litigation is a constant threat and predicting the outcome is difficult given the lack of precedent in this area of the law. As such, hospitals should proceed with caution and following consultation with counsel whenever met with resistance from an undocumented patient. Ultimately, coordination with families and social workers is critical in exploring all options for both the patient and the hospital before resorting to litigation. However, when faced with a patient that refused to cooperate and the threat of limitless uncompensated medical bills, repatriation may be a hospital’s only remaining option.

 

Value-Based Reimbursement for Care through a Clinical Integration Network

The current environment in health care reimbursement is causing providers to reassess the way in which they are reimbursed for services. For many years now, reimbursement has been moving away from fee-for-service and toward value-based reimbursement, and most notably alongside the implementation of the Affordable Care Act. Implementing models for such reimbursement, however, has had a certain lag time.  Among other reasons, change is time-consuming, expensive, and uncomfortable. However, over time, factors such as competition have encouraged providers to dip their toe in the value-based reimbursement for care model.  This article discusses a particular type of model that reimburses for value-based care, that is, the clinically integrated network.

Most commonly, a clinically integrated model brings together hospitals and physicians in a newly formed entity known as a clinically integrated network.  A CIN may take on a few different forms. One form may involve a hospital (or its captive professional corporation if we are in a corporate practice of medicine state) as the sole member of the CIN, with participating physician agreements running to the CIN.  The physicians would have a strong presence on the governing board of the CIN. Physician empowerment is a key component of the CIN as the physicians are the front line to the provision of and reporting on care.  Structuring the CIN this way alleviates the regulatory issues (e.g., the Stark Law) that physician ownership in the CIN would present.  Another form of CIN may involve physician ownership (in addition to physicians provider agreements) running to the CIN.  The hospital (or its captive PC) would also have equity in the CIN.  Board membership in this scenario would likely be based on percentage of ownership in the CIN. The physician equity model would require fitting the arrangement into a Stark exception, which may be challenging.

Once formed, a major value proposition of a CIN is to leverage the network with governmental and commercial payers in contracting for payment arrangements, particularly given the CIN is now in a position to receive payment based on performance for quality and efficiency metrics.

In setting quality metrics, a CIN may borrow from the Medicare Accountable Care Organization Shared Savings Program model.  (Both the CIN and the ACO strive for quality care and reward participants for the resulting shared savings.)  Those metrics fall into one of the following four domains: (1) Patient / Caregiver Experience, (2) Care Coordination / Patient Safety, (3) Preventive Health, and (4) At-Risk Population.

Patient / Caregiver Experience measures may include timely care, appointments and information; doctor/patient communication; patient rating of doctor; access to specialists; health promotion and education; shared decision making; and health/functional status.

Care Coordination / Patient Safety measures may include readmissions; admissions for certain conditions (e.g., asthma, heart failure); percentage of primary care physicians who qualify for EHR incentive payments; medication reconciliation; and falls and screening for fall risk.

Preventive Health measures may include influenza immunization; pneumococcal vaccination; adult weight screening and follow up; tobacco use assessment and cessation intervention; depression screening; colorectal cancer screening; mammography screening; and blood pressure screening.

Finally, At-Risk Population measures would address chronic conditions such as diabetes and hypertension.

Physician participants in the CIN, guided in their care of patients by these measures, would then also report on the data they have gathered for each measure, the idea being that savings to payers stemming from positive results would be shared with the CIN and trickle down to the physician participants.

The CIN is just one model that encourages value-based care to obtain value-based reimbursement.  Other models for the provision of medical care that consider value-based measures include integrated physician associations, physician-hospital organizations, and patient-centered medical homes.  Whether or not a new health care law is passed (or the ACA is amended) in the near future, it appears that value-based reimbursement for care is here to stay.

The State of Health Insurance After President Obama

In President Obama’s weekly address on December 10, 2016, the President encouraged Americans who do not currently have healthcare, to enroll in a health insurance plan under the Affordable Care Act (ACA). In the address, the President likely also wanted to remind everyone listening that the threat of Republicans in Congress repealing this law was now a real possibility. President Obama stated “that if Congress repeals Obamacare as they’ve proposed, nearly 30 million Americans would lose their coverage. Four in five of them would come from working families. More than nine million Americans who would receive tax credits to keep insurance affordable would no longer receive that help.” Now that President-elect Trump will take office in a matter of days, what is the fate of healthcare in America?

“The first order of business is to keep our promise to repeal Obamacare and replace it with the kind of healthcare reform that will lower the cost of health insurance without growing the size of government,” Vice President Elect Pence told a news conference recently. Pence also said that Trump would work with congressional leaders for a “smooth transition to a market-based healthcare reform system” through legislative and executive action. House Speaker Paul Ryan said that lawmakers would take action that did not “pull the rug out from anybody” and that the party had “plenty of ideas.” Democrats and many health-care experts are warning that a swift repeal could lead insurers to stop selling policies to individuals on federally mandated exchanges. More than 12 million Americans are covered under those policies.

The current Health and Human Services Secretary, Sylvia Mathews Burwell, briefed Senate Democrats on December 8, 2016, on the expected unraveling of Obamacare’s insurance exchanges. As previously discussed on the MDM&C blog, Trump’s selection of Representative Tom Price to the position of Secretary of Health and Human Services seems to be Trump’s first step towards repealing the ACA. Price has been a regular voice in opposition to the ACA. Price’s philosophy on fixing Obamacare is rooted in “clear[ing] out the bureaucratic impediments” to health-care providers so that the marketplace can figure out the best way to get people health insurance.

Some commentators have stated that a possible less drastic route Congress may go is to replace the ACA rather than an all-out repeal. Congress could pass a plan that doesn’t call for repeal for several years. Between now and then, there would need to be some kind of transition to whatever replaces Obamacare that did not just dump people off coverage with no alternative. However, others still believe that the Republican Congress will swiftly replace ACA’s ban on health status underwriting and pre-existing condition exclusions, as well as its individual mandate, with a continuous coverage guarantee and high-risk pools. This could mean that if individuals were initially uninsured or if they had to drop coverage because of financial hardship, they may face a penalty when they seek coverage significantly greater than the repealed individual mandate penalty. Many argue that these Republican plans would fall far short of the assistance lower-income Americans need, who are currently being helped by ACA.

However, in his recent 60 Minutes interview, President-Elect Trump assured the public that he agrees with certain parts of ACA. Trump plans to keep the ACA policy that allows young adults to stay on their parents’ insurance plans until age 26, as well as the provision that insurers must cover people with pre-existing conditions.

We are likely to know more in the coming months as Congress and the President-Elect begin to take action.

A Light at the End of the Telemedicine Tunnel Appears (on the New Jersey Side)

Upon recently reviewing the healthcare coverage benefits under a particular health plan, I was almost giddy to note that telemedicine services (both medical and mental health) were covered and reimbursable at the same rate as traditional in-person services. While some carriers have come to appreciate this form of health care service delivery, standards for licensure, practice, reimbursement, and prescription of medication have to date been unregulated and thus unclear in New Jersey.

Nevertheless, New Jersey lawmakers are working hard toward enacting legislation that would provide clarity by regulating the practice of telemedicine. The Senate Health and Human Services Committee and the Senate Appropriations Committee unanimously recommended the passage of Bill No. S291, while testimony was recently taken by the Assembly Health and Senior Services Committee on an identical Bill No. A1464.

What is Telemedicine?

The bill’s definition of “telemedicine” is quite technical and I would refer you to the bill for that technical definition. In sum, telemedicine is the delivery of a health care service using electronic means or technology to remotely bring together a health care practitioner (e.g., a physician, nurse practitioner, psychologist, and psychiatrist) with a patient typically via two-way videoconferencing or store-and-forward technology. (Store-and-forward technology is the transmission of medical data from a patient’s location to a distant site practitioner for later assessment.) This form of communication is meant to replicate the in-person encounter experience; thus, real-time visual and auditory communication is a must. Telemedicine is not a simple phone call, email, instant message, text, or fax.

Standard of Care

Another important issue, particularly if a health care practitioner is located out-of-state, is which state’s standard of care would apply? One view has been to look to the standard of care where the patient is located. The proposed bill confirms, for New Jersey, a health care practitioner is subject to the same standard of care as he/she would be subject to if the patient encounter was physically located within New Jersey. This would apply to recordkeeping rules as well as maintenance of patient confidentiality.

Added Responsibility of Hospitals

Where a health care practitioner wishes to engage in telemedicine with patients in a hospital, the hospital’s governing body must first verify and approve the credentials of, and grant telemedicine practice privileges to, the practitioner based solely upon the recommendations of the medical staff. The medical staff recommendation is based on information provided by the originating site employer (i.e., employer of health care practitioner at location where service rendered).

Licensing

License portability is an added challenge. Most states that permit telemedicine require that a health care practitioner be licensed in the state where the patient is located. This makes sense given the state’s responsibility to protect its residents. Pursuant to the telemedicine bill, the process to obtain a New Jersey license by an out-of-state practitioner wishing to practice here will be easier or harder depending on the laws of the practitioner’s home state. If the following criteria are met, the appropriate licensing board will be required to grant a reciprocal license to an out-of-state health care practitioner: (1) the other state has substantially equivalent requirements for licensure, registration, or certification; (2) the applicant has practiced in the profession within the five-year period preceding application; (3) the respective New Jersey State board receives documentation showing that the applicant’s out-of-state license is in good standing, and that the applicant has no conviction for a disqualifying offense; and (4) an agent in New Jersey is designated for service of process if the non-resident application does not have an office here. Further, the bill proposes clarifying State Board regulations that provide only for discretionary reciprocal license: the discretion is limited to permit a reciprocal license where not all of the criteria above are met; if they are all satisfied, a license must be granted.

Face-to-face Encounter for Online Prescribing

Federal law makes if generally illegal to prescribe a controlled dangerous substance based solely on an online questionnaire completed by a patient. The question with online prescription of medication is always whether a health care practitioner (who is authorized to prescribe medication) must have an in-person encounter with a patient before prescribing medication to that patient via telemedicine. The bill permits a physician to prescribe, dispense or administer medication to a New Jersey patient if (1) the physician first performs a face-to-face examination of the patient (which examination may occur in-person or via telemedicine and must comply with the standard of care) and (2) the physician adheres to particular laws that apply to that medication. 

Reimbursement

Last, but certainly not least, there is the issue of reimbursement. Even though state regulators currently may permit various providers to engage in telemedicine, the issue of reimbursement remains. The bill would generally prohibit New Jersey Medicaid and New Jersey FamilyCare programs and private health benefit plans from requiring in-person encounters between a health care practitioner and patient, or establishing location restrictions, as a condition of reimbursement under the pertinent program. Further, parity is required for benefits covered and reimbursement rates whether the encounter is in-person or via telemedicine. A drawback to the reimbursement parity, cited by insurance plans, is that it will prevent the use of telemedicine as a cost-savings tool. Of course, the use of telemedicine in the particular situation would have to make sense (and not be contraindicated).

To date, there has been no indication on when the Assembly Health and Senior Services Committee will be voting on Bill No. A1464. If the bill were to pass, it would go before the Governor for review and consideration.

OCR and FTC Detail Overlapping Interests Between HIPAA and the FTC Act

On October 21, 2016, the U.S. Department of Health and Human Services’ Office for Civil Rights (OCR) and the Federal Trade Commission (FTC) issued joint guidance highlighting agencies’ common interest in protecting individuals’ health information.

The health care industry is familiar with the restrictions on use and disclosure of protected health information (PHI) imposed by HIPAA.  In general, other than as required by the HIPAA Privacy Rule or for treatment, payment or health care operations, HIPAA requires a valid, signed authorization from the individual before any further use or disclosure of their PHI can occur.   This authorization must be in “plain language,” not be combined with any other type of authorization, and include specific terms and descriptions of the information sought and the proposed use or disclosure.

The FTC’s interest in the healthcare sector’s information security practices is less well known, however.  Many may be surprised by the FTC’s longstanding position that its broad power to regulate unfair and deceptive practices under Section 5 of the FTC Act includes overlapping jurisdiction with OCR concerning the privacy and security practices of HIPAA-regulated entities.

The FTC Act prohibits a contemplated use or disclosure of health information from being a “deceptive or unfair” act or practice.  Among other things, this means that individuals may not be “mislead” about how their PHI may be being used or disclosed.   The FTC therefore recommends that entities consider all of their consumer-facing messaging to ensure it is free from any deceptive or misleading statements.   Moreover, the FTC explicitly cautions against burying key facts regarding use and disclosure of health information in links to a privacy policy, terms of use, or HIPAA authorizations.  It also warns against manipulating font sizes or colors online in a manner which would make disclosure statements deceptive.  Instead, it recommends that all disclosure statements be “clear and conspicuous” from a consumer’s perspective.

OCR and the FTC have a history of collaboration and joint enforcement in the security area.  In February 2009, OCR entered into a $2.25 million settlement agreement with CVS Pharmacy, Inc. (CVS) and required implementation of a detailed corrective action plan to ensure the proper disposal of PHI.  Simultaneously, in a separate but related agreement, CVS resolved FTC charges that it failed to implement reasonable and appropriate procedures for handling personal information about customers and employees, did not adequately train employees, did not use reasonable measures to assess compliance with its policies and procedures for disposing of personal information, and did not employ a reasonable process for discovering and remedying risks to personal information.

A year later, in July 2010, Rite Aid Corporation entered into a similar resolution agreement, paying $1 million to OCR and implementing a corrective plan of action while simultaneously settling a FTC complaint which alleged it failed to properly dispose of personal information, inadequately trained employees, did not sufficiently assess compliance with its disposal policies, and did not employ a reasonable process for discovering and remedying risks to personal information.

In addition, the FTC has not hesitated to bring enforcement actions on its own against healthcare entities.  Most notably, the FTC has doggedly pursued LabMD, a former clinical laboratory which no longer operates, for failure to protect patients’ sensitive personal information.  This resulted in a July 2016 unanimous opinion from the FTC which found LabMD’s security practices unreasonable, “lacking even basic precautions to protect the sensitive consumer information maintained on its computer system.”  A motion to stay the FTC’s enforcement order has recently been filed in the Eleventh Circuit by LabMD. See, LabMD, Inc. v. FTC, 11th Cir., No. 16-16270, motion to stay filed, Oct. 7, 2016.

It remains to be seen whether this recent joint statement from OCR and FTC foreshadows a more robust collaboration between the two agencies which builds on their efforts in the CVS and Rite Aid cases and expands into the HIPAA Privacy Rule area.  Even if that does not immediately occur, the FTC remains active in pursuing cases on its own, such as LabMD.  Whatever the outcome, businesses in the healthcare sector should remain sensitive to the FTC’s mandates, along with those from OCR.