Texas Injunction on Modifications to “Exempt” Status May Affect WA Healthcare Employers

The Department of Labor’s (the “DOL”) new rule related to the salary-level test for exempt employees was challenged yesterday in a broad ruling from the Eastern District of Texas.  Yesterday, a federal judge in the Eastern District of Texas issued a nationwide preliminary injunction against the DOL rule which increased the salary-level test for exempt employees from $23,660 per year to $47,476 per year.  The injunction blocks the new rule from going into effect on December 1, 2016.

On its face, the ruling says it is nationwide.  However, the federal courts in Washington may decide not to follow the Texas court’s ruling because Washington was not a party to the decision.  It is unlikely that the courts in Washington will rule on this issue prior to the December 1, 2016 effective date of the new rule, which leaves Washington healthcare employers in a state of uncertainty unless the DOL issues a statement indicating whether or not it intends to enforce the rule in states that were not a party to the Texas lawsuit.

What are the possible consequences if a Washington employer does not raise exempt employee’s salaries on December 1?

If the Washington courts decide that the Texas decision does not apply to them, then any Washington employers who failed to raise the salary of their exempt employees to $47,476 per year on December 1, 2016 would be liable for wrongful withholding of wages and would owe back wages to the affected employees, plus interest at 12% and any attorney’s fees they may have incurred to collect the money.  The employees or the DOL could also make a claim for double damages, but employers may be able to avoid double damages by arguing that they, in good-faith, relied upon the Texas injunction.

What are the possible consequences if a Washington employer does raise exempt employee’s salaries on December 1?

The Texas injunction does not prohibit employers from raising salaries on December 1.  The only consequence is that if the new salary rule is thrown out, the employer will have paid the employee more than the law required.

What do you recommend?

At this point, we recommend waiting until we are closer to December 1 to finalize any decisions about employee raises to meet the salary test to see if the DOL will issue any guidance as to whether it intends to enforce the rule in states that were not a party to the Texas lawsuit.  If no guidance is issued by the DOL, we suggest weighing the cost of the salary increases and effect on morale of not giving an employee an increase against the risk that employers will be ordered to pay more than back wages to employees if the DOL rule is found to be applicable to Washington employers.  If you have employees in other states, we recommend that you contact us or your employment attorney regarding whether that state was names a party in the Texas lawsuit.

 For further information or if you have any questions regarding the new developments in implementation of the DOL over time rules  please contact Karen Sutherland, Patrick Pearce or Erin McCool.

 

Certificate of Need New Rule Invalidated by Supreme Court

The Washington Supreme Court unanimously agreed with the Washington State Hospital Association that the new expanded Certificate of Need rule defining the “sale, purchase or lease” of a hospital exceeded the Department of Health’s authority.  WSHA successfully argued that the new definition, promulgated by the Department of Health’s Certificate of Need Program, which expanded its jurisdiction to include “any transaction in which the control, either directly or indirectly, of part or all of any existing hospital changes to a different person, including, but not limited to, by contract, affiliation, corporate membership restructuring, or any other transaction,” was overly expansive.

The Supreme Court agreed that pursuant to the wording of the new rule, Certificate of Need approval would be required for any change in control of a hospital, including those changes that commonly occur, for example a change in the composition of the board of directors of a hospital.  The Supreme Court held that the new rule interprets “sale, purchase, or lease” in RCW 70.38.105(4)(b) too broadly and “departs too far from the plain meaning of those terms.”

For more information regarding the Certificate of Need rules please contact Elana Zana.

Finally! Washington Has A Telemedicine Bill. But What’s In It?

After many years of effort, the Washington State Legislature has sent a telemedicine bill to the Governor for signature.

It is an exciting achievement, but now that the bill has passed, we need to answer an important question: “What is actually in the bill?”

Payment for Professional Telemedicine Services

The primary purpose of the bill is to require health insurance companies, Medicaid managed care plans, and health plans offered to Washington State employees to reimburse health care providers who provide professional services via telemedicine technology.

This is critical because, prior to the bill, insurance companies had no obligation to reimburse providers for telemedicine services.

One unfortunate aspect of the new law is that it does not set the specific reimbursement rate for telemedicine services. In other words, nothing requires health plans to pay for telemedicine services at the same rate as an in-person encounter.

Instead, the rate for telemedicine services will be whatever the health plan and provider agree upon in the negotiated provider agreement between the parties.

Additionally, in order to receive the negotiated rate, providers must pay special attention to the detailed reimbursement requirements of the bill:

Health Care Providers

The bill states that only “health care providers” are entitled to reimbursement for telemedicine services. Fortunately, “health care provider” is defined broadly and includes any of the licenses listed in Title 18 of the Revised Code of Washington.

A health plan need only reimburse health care providers that are contracted with the health plan.

“Out of network” reimbursement is not required.

Types of Technology

The bill applies to both real time “telemedicine” technology and “store and forward” services.

“Telemedicine” technology is a real-time, interactive, video and audio conference between a patient and a provider.  Think “Skype.”

“Store and forward” technology is a system by which information is sent to an intermediate location where it is kept and, at a later time, sent to the intended destination.

This type of technology is very common in the teleradiology and teledermatology fields in which specialists provide reads for digital images of patients.

Unlike telemedicine technology, the bill has some critical restrictions on the use of store and forward technology:

  • The bill requires an associated office visit between the patient and referring health care provider if store and forward technology is used. The use of “telemedicine” technology, as defined above, can meet the office visit requirement; and
  • A health plan only has the obligation to provide reimbursement for a service provided via store and forward technology if the service is specified in the negotiated agreement between the health plan and the provider.

The second restriction is a big deal.

Under this restriction, the bill does not require a health plan to pay a provider for services rendered via store and forward technology if such services are not explicitly covered in the provider agreement between the provider and health plan.

Therefore, it is critical that providers using store and forward technology pay close attention to their provider agreements with health plans.

Types of Telemedicine Services

The bill is clear that health plans only have the obligation to provide reimbursement for services that meet all of the following criteria:

  • Reimbursement is only required if the health plan provides coverage of the same service when it is provided in person;
  • The service must be an “essential health benefit” under the Affordable Care Act; and
  • The service is medically necessary.

Health plans have no requirement to provide reimbursement if these three requirements are not met.

Payment For Facility Fees

In discussing the facility fee issue, it is important to understand that there are always two different sites in a telemedicine encounter:

  • The Originating Site: This is the location where the patient is physically located. For reimbursement purposes, originating sites can be hospitals, rural health clinics, federally qualified health centers, health care provider offices, community mental health centers, skilled nursing facilities, or renal dialysis centers (except independent renal dialysis centers).
  • The Distant Site: This is the location where the health care provider is physically located at the time telemedicine services are rendered.

As described above, the bill requires health plans to reimburse providers for the professional services they perform at the distant site during a telemedicine encounter.

But what about the originating site facility where the patient is located? Are health plans required to reimburse these facilities?

The answer is no.

According to the bill, originating site providers are only entitled to facility fees if such fees have been negotiated in the provider’s contract with the health plan.

The bill does not require any health plan reimbursement to the originating site if a health plan refuses to include reimbursement for facility fees in its provider agreement.

This is unfortunate for rural providers who would have benefited from the requirement for health plans to pay facility fees for telemedicine.

Hospital Credentialing and Privileging of Telemedicine Physicians

Aside from reimbursement, another important part of the bill is the changes to the requirements for hospital credentialing and privileging of telemedicine physicians.

In the hospital world, a physician can only provide services at a hospital if the physician is properly credentialed and privileged.  Therefore, a physician that provides telemedicine services an originating site hospital technically must be credentialed and privileged by the hospital.

Prior to the bill, Washington law required hospitals to engage in a detailed credentialing process of requesting information from a physician who was applying for privileges.  The hospital also had to request information from hospitals and facilities that had granted privileges or employed the physician.

This cumbersome process could unnecessarily delay the provision of telemedicine services.

Under the bill, the credentialing requirements no longer exist for telemedicine physicians.

The bill states that an originating site hospital may rely on a distant site hospital’s decision to grant or renew privileges for a telemedicine physician if the originating site enters into a written contact with the distant site.

The contract must have the following provisions:

  • The distant site hospital providing the telemedicine services must be a Medicare participating hospital;
  • Any physician providing telemedicine services at the distant site hospital must be fully privileged to provide such services by the distant site hospital;
  • Any physician providing telemedicine services must hold and maintain a valid license to perform such services issued or recognized by the state of Washington; and
  • The originating site hospital must have evidence of an internal review of the distant site physician’s performance of the privileges and sends the distant site hospital performance information for use in the periodic appraisal of the distant site physician.

Conclusion

There is much to like in Washington’s new telemedicine bill.

For the first time, private health plans are required to pay for telemedicine services. Additionally, the process of hospital credentialing and privileging of telemedicine physicians has been streamlined.

But the bill is not perfect.

Without specific requirements on rates, health plans have the ability to reimburse telemedicine services at a much lower rate than in-person services.  Large health systems may have leverage to negotiate for higher reimbursement in provider agreements, but smaller and rural providers may not have this luxury.

Additionally, teleradiology and teledermatology providers must pay close attention to their negotiated provider agreements with health plans.  Under the bill, health plans have no requirement to pay professional services for services rendered via “store and forward” technology if the services are not explicitly covered in the provider agreement.

With that said, no bill is perfect, and the new Washington bill is a good first step into improving the prospects for telemedicine in Washington State.

For more information about telemedicine, please contact Casey Moriarty.

Washington House Bill Seeks to Prohibit Physician Noncompete Agreements

On January 14, 2015, House Bill 1173 (sponsored by Reps. Carlyle, Reykdal and Stanford) was introduced to prohibit noncompete agreements that restrict the right of physicians to practice in a geographic area for a period of time after termination of an employment contract.

By adding new sections to RCW 18.57 (Osteopathic Medicine & Surgery) and RCW 18.71 (Physicians), HB 1173 would make restrictions on the right of a licensed physician to practice medicine in a geographic area for a period of time after the termination of an employment or other professional contract “void and unenforceable.” The bill does allow contractual provisions providing for damages relating to injury suffered due to termination of a contract. However, the injured party would have the challenging burden of establishing the “reasonableness” of such damages with “clear and convincing evidence.”

As reasons for enacting the bill, HB 1173 cites the American Medical Association Code of Medical Ethics which recognizes that “noncompete agreements restrict competition, can disrupt continuity of care, and may limit access to care.” The bill also explains that the physician-patient relationship is critical, especially in primary care and psychiatry, and that this relationship must take precedence over a medical institution’s financial interests. Furthermore, the bill states that “noncompete agreements conflict with the responsibility of medical institutions to train new physicians and to enable those physicians to serve patients in the community.”

Washington law currently permits “reasonable” physician noncompete agreements. A noncompete is reasonable if (1) it is necessary to protect a legitimate business interest; (2) it is no greater than reasonably necessary to secure the employer’s business or goodwill; and (3) the degree of injury to the public in the loss of the service and skill of the physician is so small as to warrant enforcement.

Washington is one of the more enforcement friendly jurisdictions for restrictive covenants such as non-competes. Thus, if passed, HB 1173 would reflect a substantial change to existing law by expressly prohibiting noncompete provisions in physician employment agreements in Washington State. The bill has been referred to the Committee on Health Care & Wellness. If you have questions about HB 1173 or healthcare employment issues, please contact Patrick Pearce or Jefferson Lin.

Washington Certificate of Need – Tertiary Services Review

The Washington State Department of Health issued today an announcement that it is conducting a review of the tertiary services that it requires obtain certificates of need under the current regulations (WAC 246-310-020(1)(d)(i)).  It is seeking comments on whether there should be additions or deletions to the current tertiary services list, which includes:

  1. Specialty burn services;
  2. Intermediate care nursery and/or obstetric services level II;
  3. Neonatal intensive care nursery and/or obstetric services level III;
  4. Transplantation of specific solid organs;
  5. Open heart surgery and/or elective therapeutic cardiac catheterization, including percutaneous coronary interventions generally and elective percutaneous coronary angioplasty (PTCA), specifically;
  6. Inpatient physical rehabilitation services level I; and
  7. Specialized inpatient pediatric services

Those providers seeking to provide the above services must first obtain a certificate of need from the Washington Department of Health before commencing the provision of these services.

The Department of Health is soliciting participation in three phases, the first of which spans from January 1 – February 28, 2015, is an invitation for individuals to propose changes to the current list of tertiary services in order to enable the Department of Health to create a report consolidating the suggestions.

To learn more about the certificate of need tertiary health services review click here.  For assistance in drafting comments to the Department of Health please contact Elana Zana.

Emergency Rulemaking Amends Single-Bed Certification Rules

On September 18, 2014, the Washington Department of Social and Health Services (“DSHS”) amended its rules regarding single bed certifications for psychiatric patients, publicized in this  Rule Making Order.  The new rules were issued in response to the recent Washington State Supreme Court decision regarding psychiatric boarding which declared the use of single bed certifications to detain involuntary mental health patient at non-certified evaluation and treatment facilities unlawful.   The amended rules made two key changes impacting hospitals and other non-certified facilities where single bed certification is sought.

First, the facility that is the site of the proposed single bed certification must confirm that it is willing to provide treatment to the consumer suffering from the mental disorder for whom the single bed certification is sought.  This revision now gives facilities a role in the issuance of single bed certifications.

Second, the amended rules expanded the available criteria to support the single bed certification.  In addition to criteria available under the prior rule, criteria to support the issuance of a single bed certification now includes that the patient can receive appropriate evaluation and treatment in a residential treatment facility, a hospital with a psychiatric unit, a hospital that can provide psychiatric services, or a psychiatric hospital.

While the amended rules expands the opportunity for ITA patients to receive necessary services at non-certification evaluation and treatment facilities, the practical effect of actually providing services to ITA patients remains to be seen.  For example, hospitals and other facilities may be hesitant to confirm their willingness to provide treatment in order for the single bed certification to be issued.  Ambiguity also exists regarding the treatment to be provided under a single bed certification.

The amended rules went into effect September 18, 2014.  It is expected that DSHS will issue new final rules to be effective when the Washington State Supreme Court’s 120-day stay on its decision expires on December 26, 2014.

For more information about Washington’s Involuntary Treatment Act or mental health services, please contact Lee Kuo.

 

 

Washington Earns “F”s on its Telemedicine Report Card

On September 9, 2014, the American Telemedicine Association issued two reports in which it graded all fifty states on telemedicine gaps in coverage and reimbursement and  physician practice standards and licensure.  Not surprisingly, in the area of telemedicine parity Washington received predominantly failing grades.  Washington fared better in the area of Medicaid coverage and conditions of payment but still racked up three failing grades in the ten categories that were graded.  In the report on physician practice standard and licensure, Washington averaged less than a C.

On September 23, 2014 Ogden Murphy Wallace presented the first of two webinar sessions on telemedicine covering CMS, Joint Commission, and Washington rules pertaining to the ability of a site receiving telemedicine services to rely on the credentialing and privileging of the site from which the services are provided.  On October 7, 2014, Ogden Murphy Wallace will present the second session of its telemedicine webinars addressing additional regulatory requirements relevant to telemedicine services in Washington including licensure, informed consent, Washington’s Stark, Anti-Kickback and Anti-Rebating laws, HIPAA compliance and reimbursement.  To register for the October 7 telemedicine webinar click here.

For more information regarding telemedicine laws in Washington please contact Greg Montgomery.

WA Certificate of Need Waiver for Psych Beds

The Washington Certificate of Need (“CN”) Program recently announced a temporary change in the CN requirements for acute care hospitals to change the use of existing licensed beds to psychiatric care beds.  Acute care hospitals choosing to convert some of their acute care beds to psychiatric beds will not have to undergo the CN review process.  This exemption however does not extend to the addition of new beds added to the hospital’s licensed bed count, only the conversion of existing beds.  Hospitals will also be allowed to return the use of the exempt psychiatric beds to general acute care services (i.e. med/surg) without full CN review.

In order to take advantage of this exemption, acute care hospitals will still have to submit a “Hospital Change of Use Exemption Hospitals Licensed Under RCW 70.41 Proposing Psychiatric Beds” application to the CN Program with an application fee of $1,925.  If the project is approved it must commence within two years of the exemption issue date (unless a 6 month extension is otherwise granted).  Hospitals applying for this exemption will still need to meet the physical plan standards and staffing ratios required for providing psychiatric care.

For more information about this exemption or Certificate of Need generally please contact Elana Zana.

Providing Telemedicine Services? Pay Attention To State Licensing Requirements

Advancements in telemedicine offer exciting treatment possibilities for rural communities. Through audio-visual technology, patients in small communities now have the opportunity to access the expertise of specialists at large medical facilities in metropolitan areas.

However, along with all of the promise of telemedicine technologies, there are also some important legal issues that health care providers need to understand.  One of the most important issues is whether physicians who provide treatment advice to a patient through telemedicine must be licensed in the state where the patient is located.  For example, if a patient is located in Washington State, can a physician who is only licensed in Oregon provide telemedicine services to the patient?

The Federation of State Medical Boards (FSMB) has recently addressed the licensure issue in the Model Policy for the Appropriate Use of Telemedicine Technologies.  The Policy  makes it clear that a physician must be licensed by, or under the jurisdiction of, the medical boards of the state where the patient is located.

It is unclear whether state medical boards will follow the Model Policy from FSMB.  For example, Washington State law currently allows physicians licensed in another state to “practice medicine” in Washington so long as they do not open an office or appoint a place of meeting patients or receiving calls within Washington. (RCW 18.71.030). Of course, this provision could change in the future.

In order to avoid the unlawful practice of medicine when providing telemedicine services, physicians and healthcare facilities should take time to understand the licensing regulations in the state where the patient is located.

For more information on the legal issues related to telemedicine, please contact Casey Moriarty.

Skagit County Agrees to Pay $215,000 for HIPAA Violations

On March 6, 2014, the U.S. Department of Health and Human Services, Office for Civil Rights (“OCR”) reached a $215,000 settlement with Skagit County in northwest Washington state for violations of the HIPAA Privacy, Security and Breach Notification Rules, according to terms of the Resolution Agreement.  This represents the first OCR settlement with a county government for HIPAA non-compliance. For two weeks in September 2011, the electronic protected health information (“ePHI”) for 1,581 individuals was exposed after the ePHI had been inadvertently moved to a publicly accessible web server maintained by Skagit County.  The accessible files included protected health information about the testing and treatment of infectious diseases.

The OCR investigation revealed that Skagit County failed to provide notification to individuals as required by the Breach Notification Rule and that the county failed to implement sufficient policies and procedures to prevent, detect, contain, and correct security violations. Further, Skagit County failed to provide necessary and appropriate security awareness and training for its workforce members.  As part of the settlement, the county has agreed to enter into a Corrective Action Plan to address deficiencies in various HIPAA compliance areas, including written policies and procedures, documentation requirements, training, and other measures.

This settlement highlights the importance for all covered entities and business associates, whether in the government or private sector, to implement policies and procedures to safeguard ePHI and, in case of a breach, to respond promptly and effectively. For more information about this OCR settlement or for assistance with HIPAA compliance, please contact Jefferson Lin or David Schoolcraft.