Failure to Provide Communication Aid Costs Hospital $20K

John Dempsey Hospital agreed to pay $20,000 as compensation to a patient after failing to provide auxiliary communication aids during an emergency department visit. The patient, who is deaf and uses American Sign Language for communication, had to rely on a companion for all treatment communications.  In addition to paying compensation to the patient, the hospital is required to undergo a comprehensive review of its corporate policies and procedures to implement changes to enhance access, address intake and grievance procedures, adjust technology capabilities and institute staff training to ensure compliance with Section 1557.

Despite requesting interpreter services upon arrival at the hospital’s emergency department, the patient was not provided an interpreter or video remote interpreting services and had to rely on a companion to interpret throughout the hospital visit. After receiving a complaint about the incident, the U.S. Department of Health and Human Services (HHS) Office for Civil Rights (OCR), in partnership with the U.S. Attorney’s Office of the District of Connecticut conducted a compliance review of the hospital’s policies and procedures to determine compliance with the nondiscrimination provisions found in Section 1557 of the Patient Protection and Affordable Care Act (ACA). This is the first OCR settlement agreement under Section 1557 which provides for monetary damages specifically to a patient.

In general, Section 1557 expands upon existing federal non-discrimination rules and regulations to prohibit discrimination based on race, color, national origin, sex, age or disability in health programs or activities that receive federal financial assistance. The law applies to most hospitals, skilled nursing facilities, ambulatory surgical centers, home health agencies, hospices, federally qualified health centers, rural health clinics, physician practices, laboratories, pharmacies, outpatient rehabilitation facilities, ESRD dialysis centers, state Medicaid agencies as well as insurers that participate in the ACA’s Health Insurance Marketplace.

HHS issued the final rule implementing Section 1557 in 2016 and as of October 2016, entities subject to the rule must post notices regarding the entity’s nondiscrimination practices and taglines in at least the top 15 non-English languages spoken in the state that alert individuals with limited English proficiency of the availability of language assistance services. See sample notice and tagline documents here.  In addition, entities subject to the rule with 15 or more employees must designate a compliance coordinator and adopt a grievance procedure.  Section 1557 requires health care entities to ensure effective accessible communications with individuals who need interpreters, including individuals with disabilities as well as individuals with limited English proficiency.

The final rule requires health care entities to take appropriate steps to ensure that communications with individuals with disabilities are as effective as communications with others using appropriate auxiliary aids and services, such as alternative formats, sign language interpreters, and remote video interpreters. Health care entities are also required to make all programs and activities provided through electronic and information technology equally accessible. In addition, the final rule requires health care entities to take reasonable steps to provide meaningful access for individuals with limited English proficiency by providing qualified oral interpretation and written translation services. See HHS’s limited English proficiency resources for effective communications for additional guidance.

Where noncompliance of Section 1557 cannot be corrected by informal means, enforcement can include suspension of, termination of, or refusal to grant/continue federal financial assistance, referral to the Department of Justice and any other means authorized by law. Section 1557 authorizes a private right of action to challenge Section 1557 violations and receive compensatory damages. Affected entities are encouraged to develop and implement a language access plan to ensure they are prepared to take reasonable steps to provide meaningful access to each individual.

HHS has created several resources regarding ACA Section 1557 compliance: see general information and FAQs.

For further information or if you have any questions about ACA Section 1557 please contact Anthony Halbeisen.

 

 

MACRA Released

On Friday, CMS released the MACRA final rules, its innovative payment system for Medicare replacing the sustainable growth rate formula and the EHR Incentive Program for Medicare providers.

MACRA creates the framework for providers to participate in the CMS Quality Payment Program through either the Advanced Alternative Payment Models (Advanced APMS) or the Merit-based Incentive Payment System (MIPS). The goal of these models is to reward value and outcomes, specifically supporting CMS’ goal of paying for quality and value. The MIPS program importantly consolidates components of PQRS, the Physician Value-based Payment Modifier (“VM”), and the EHR Incentive Program (aka meaningful use).

“As prescribed by Congress, MIPS will focus on: quality – both a set of evidence-based, specialty-specific standards as well as practice-based improvement activities; cost; and use of certified electronic health record (EHR) technology (CEHRT) to support interoperability and advanced quality objectives in a single, cohesive program that avoids redundancies. Many features of MIPS are intended to simplify and integrate further during the second and third years.”

Though the new rule becomes effective on January 1st, 2017, clinicians will be given a transition period in which to prepare for MIPS, with negative payment adjustments not occurring until January 1, 2019. MACRA will sunset payment adjustments under the Medicare EHR Incentive Program, PQRS and VM after CY2018. For those clinicians not ready to start on January 1st, 2017 they have until October 2, 2017 to commence participation. Regardless of when a clinician starts he/she needs to submit performance data by March 31, 2018.

CMS’ Quality Payment Program has the following strategic objectives:

(1) to improve beneficiary outcomes and engage patients through patient-centered Advanced APM and MIPS policies;

(2) to enhance clinician experience through flexible and transparent program design and interactions with easy-to-use program tools;

(3) to increase the availability and adoption of robust Advanced APMs;

(4) to promote program understanding and maximize participation through customized communication, education, outreach and support that meet the needs of the diversity of physician practices and patients, especially the unique needs of small practices;

(5) to improve data and information sharing to provide accurate, timely, and actionable feedback to clinicians and other stakeholders; and

(6) to ensure operational excellence in program implementation and ongoing development.

CMS also launched a new website with graphics to aid in understanding the MACRA regulations. The view the interactive website click here.

CMS has also provided a 24-page executive summary. Click here to view the executive summary.

If you have questions about MACRA please contact Elana Zana.

 

EEOC Announces New Employer Pay Data Reporting Requirements

On Friday, January 29, 2016, the Equal Employment Opportunity Commission (EEOC) announced the agency’s intent to require a new obligation for employers with at least 100 employees to submit data on wages earned and hours worked to the agency in annual reports[1]. The intent of the new requirement is to make it easier for the EEOC to identify possible pay discrimination issues and assist employers in efforts to provide equal pay for employees.

 

The EEOC’s announcement would mean revisions to the Employer Information Report (EEO-1) already submitted by some private employers annually[2]. The report has historically collected information on employee ethnicity, race, and sex by job category[3]. The reporting obligation has previously depended on number of employees and whether the employer works on federal contracts[4]. Since 1966, private employers with at least 100 employees, and employers performing federal contracts and who have at least 50 employees have been required to submit the EEO-1 report annually. Small private employers with less than 50 employees have not been required to submit information regardless of whether they work on federal contracts.

 

Under the anticipated changes, employers including federal contractors with at least 100 employees will be required to report pay data on earnings and hours worked along with the previously required EEO-1 information on ethnicity, race, and sex. Employers that are federal contractors and have between 50-99 employees, and employers who do not perform federal contracts but have 99 or fewer employees will be free of EEO-1 reporting obligations.

 

If the proposed changes go into effect, employers will need to collect and report on employee earnings as measured by W-2 information for a 12 month period as measured between July 1st and September 30. The employer will be able to select the 12 month period within that window. For example, an employer may choose to determine W-2 earnings as paid to employees in the 12 month period as measured back from the second pay period in July. Along with W-2 earnings, employers will also need to report employee hours worked for all employees falling within the same pay range. The anticipation is that reporting hours worked within the same pay range will allow the EEOC to account for periods of time when employees are not working, such as part time employees or employees who only worked for part of the 12 month period.

 

EEO-1 reporting currently identifies ten job categories ranging from Executive/Senior Level Officials and Managers to Service Workers. There are seven potential race and ethnicity groups. The proposed pay data requirement anticipates twelve pay bands. The proposed pay bands start at a low of $19,239 and under and go to a high of $208,000 and over. As an example, an employer may be required to report that it has eight male Asian employees performing as Sales Workers, compensated in the sixth pay band, and who worked a total of 12,000 hours.

 

 

The full notice of the proposed revision to the EEO-1 is available online[5], and comments may be submitted until the comment period ends on April 1, 2016. The new requirements are anticipated going into effect in 2017, with pay data to be included in the EEO-1 reporting by the September 30, 2017 filing deadline. If the changes are put into effect this year as expected, the EEOC will post a notice on its official web site and will provide an additional written notice to existing EEO-1 recipients of the changes and need to submit pay data information with the 2017 EEO-1 information collection cycle. At present, the EEOC anticipates that because of the changes, EEO-1 information will not need to be reported until the 2017 cycle.

 

Going forward, there are several considerations for employers subject to reporting.

 

  1. Establish a regular measurement date for W-2 wages paid: Consistency in determining the 12 month period measurement date will likely be the most effective and convenient way for employers to gather the pay data needed for reporting. The window for assessment is relatively limited and must be measured using a date falling between July 1 and September 30 of the particular reporting year. It is likely that administratively the task of compiling the data across all employee pay bands will be most efficiently done using one consistent trigger date.

 

  1. Anticipate the need to organize and properly report the data: The EEOC anticipates that most if not all employers subject to the reporting requirement will already have the anticipated pay data information available, and that employers may face a short term and possible costs to integrate all the data for reporting. In anticipation of the first reporting period in 2017, it will likely be best to develop and put systems in place early to internally track and compile the necessary data.

 

  1. Use the requirement as a risk management tool: The data sought by the EEOC can also be utilized internally by employers to identify whether disparities exist, and if so, the reasons for any disparities. If disparities or unusual results are found, employers may wish to consult with counsel familiar with employment issues to determine whether legitimate business reasons exist to justify the results or to determine best options to address and fix a potential problem.

 

_____________________________________________________________________________________

 

Patrick Pearce is a member of Ogden Murphy Wallace, P.L.L.C., and practices in the firm’s Employment and Labor Law group. He can be reached at pspearce@omwlaw.com. The above article is a broad outline of a complex topic and should not be relied upon for purposes of legal advice.

 

 

[1] http://www.eeoc.gov/eeoc/newsroom/release/1-29-16.cfm

[2] A sample copy of the EEO-1 may be found at http://www.eeoc.gov/employers/eeo1survey/upload/eeo1-2.pdf.

[3] The reporting obligation resulted from regulations issued pursuant to Section 709(c) of Title VII of the Civil Rights Act of 1964, which required employers to make and keep records relevant to the determination of possible unlawful employment practices, preserve such records, and produce reports to the agency.

[4] http://www.eeoc.gov/employers/eeo1survey/2016_eeo-1_proposed_changes_facts.cfm

[5] https://www.federalregister.gov/articles/2016/02/01/2016-01544/agency-information-collection-activities-revision-of-the-employer-information-report-eeo-1-and

WHOA ME! TUOMEY!

For the second time in the past three years, Tuomey Healthcare System found its fate in the hands of the 4th Circuit Court of Appeals as a Qui Tam Defendant under the False Claims Act (“FCA”). Only this time it did not fare quite as well in what amounts to a crushing defeat. Back in 2012, pending retrial on allegations that Tuomey violated the FCA, the 4th Circuit Court of Appeals vacated a $45 million judgment stemming from violations of the Stark Law, see prior article here.  Now, on July 2, 2015, the 4th Circuit affirmed the district court’s decision on retrial that Tuomey submitted 21,730 False Claims based on Stark Law violations and was thereby liable for $237,454,195 in damages and penalties. The 4th Circuit rejected Tuomey’s arguments that no reasonable jury could have concluded that Tuomey violated Stark or intended to submit False Claims and that it was entitled to a new trial based upon various assignments of error related to jury instructions and damages issues related to measurement and constitutional matters.

The result is stunning, and should give pause to health lawyers, consultants and healthcare executives who find themselves walking the tightrope between sound business judgment and the complicated maze of the Stark Law and other complex healthcare rules. Indeed, in his concurring opinion, Judge Wynn expressed distaste for the outcome:

But I write separately to emphasize the troubling picture this case paints: An impenetrably complex set of laws and regulations that will result in a likely death sentence for a community hospital in an already medically under-served area…..Health care providers are open to extensive liability, their financial security resting uneasily upon a combination of their attorneys’ wits [and] prosecutorial discretion.” [citations omitted]. Despite attempts to establish “bright line” rules,…the Stark law has proved challenging to understand and comply with.

This case is troubling. It seems as if, even for well-intentioned health care providers, the Stark Law has become a booby trap rigged with strict liability and potentially ruinous exposure – especially when coupled with the FCA.

Judge Wynn’s words were not lost on the majority:

Finally, we do not discount the concerns raised by our concurring colleague regarding the result in this case. But having found no cause to upset the jury’s verdict in this case and no constitutional error, it is for Congress to consider whether changes to the Stark Law’s reach are in order.

Short of congressional action, CMS recently announced Stark-related proposals [http://www.cms.gov/Newsroom/MediaReleaseDatabase/Fact-sheets/2015-Fact-sheets-items/2015-07-08.html] that could ease the burden of the law. Tuomey will need to find its relief elsewhere.

Stark Generally.

A physician may not make a referral to an entity for the furnishing of designated healthcare services (“DHS”) if the physician has a financial relationship with the entity, unless an exception applies. DHS include inpatient and outpatient hospital services. A referral does not include any DHS personally performed or provided by the referring physician. There is a referral, however, when the hospital bills a facility fee in connection with personally performed services. A financial relationship may exist through ownership or a compensation arrangement.

Tuomey’s Reaction to Business Challenges.

Tuomey is a nonprofit community hospital in Sumter, South Carolina, a mostly rural, medically underserved area. In the early 2000s, like so many other community hospitals, Tuomey faced the challenge of dropping outpatient volumes due to physicians performing procedures in their own offices or in ambulatory surgery centers. Tuomey’s future looked bleak and tens of millions in lost revenue was predicted. Tuomey developed a strategy to enter into part-time employment agreements with several previously-independent physicians on its medical staff. The arrangements were problematic for several reasons, without considering their current $237 Million price tag:

 

  • Compensation that varied year to year based on collections;
  • A requirement that Physicians perform outpatient procedures at Tuomey facilities;
  • Productivity bonuses of eighty percent of collections and an additional incentive bonus up to 7 percent of the productivity bonus;
  • Physicians were paid more than their collections, despite fair market value opinions from valuation experts;
  • Tuomey provided malpractice coverage, and performed the billing;
  • Ten year terms with 2 year back-end non-competes;
  • Physician who refused the arrangement and raised specific Stark issues (e.g. the Qui Tam Plaintiff in this case, Dr. Drakeford); and
  • Competing expert legal opinions from top health lawyers who were kept in the dark from one another and rejection and lack of diligence regarding negative opinions from counsel

 

Following two trials and two appeals, the 4th Circuit affirmed the $237 Million jury verdict and concluded that the trial court correctly granted a motion for a new trial, and rejected Tuomey’s various claims of error. As discussed below, the Court considered and commented on several important Stark and FCA issues.

Significant Aspects of 4th Circuit’s Opinion

 

Testimony of Kevin McAnaney:

 

Following the first Tuomey trial in 2010, the jury found that Tuomey had violated the Stark Law, but not the FCA. The trial court granted a post-trial motion based on what it viewed as its substantial error in excluding the testimony of Tuomey’s Senior Vice President and Chief Operating Officer, Gregg Martin. The 4th Circuit agreed that a new trial was proper, but reached that decision on slightly different grounds – the trial court’s exclusion of Kevin McAnaney’s testimony. Mr. McAnaney, a lawyer in private practice, was retained by Dr. Drakeford and Tuomey to advise of the Stark Law risks. Mr. McAnaney previously wrote a substantial portion of the Stark Law regulations in his role as Chief of the Industry Guidance Branch of DHHS Office of General Counsel to the Inspector General. The Court and the jury, apparently, found the McAnaney testimony to be particularly probative of the knowledge element of the FCA. McAnaney advised that the Tuomey employment agreements raised significant “red flags” under the Stark Law, such as compensating physicians in excess of their collections, thus making the arrangement “an easy case to prosecute.”

 

On McAnaney’s testimony, the 4th Circuit observed and concluded the following:

 

In the first trial, the jury did not hear from McAnaney and found for Tuomey on the FCA claim. When the case was retried, McAnaney was allowed to testify and the jury found for the government. Coincidence? We think not.

Indeed, it is difficult to imagine any more probative and compelling evidence regarding Tuomey’s intent than the testimony of a lawyer hired by Tuomey, who was an undisputed subject matter expert on the intricacies of the Stark Law, and who warned Tuomey in graphic detail of the thin legal ice on which it was treading[.]

Jury Reasonably Found Stark Violations:

 

It is unremarkable in a general sense that the 4th Circuit refused to set aside a jury verdict and find that no reasonable jury could have concluded that Tuomey violated Stark. Tuomey argued, unsuccessfully, that the only question that should have gone to the jury was whether the contracts, on their face, took into account the value or volume of anticipated referrals. The Court concluded that two components of the physicians’ compensation varied with the volume or value of referrals. The physicians were paid a base salary that was adjusted upward or downward in the subsequent year depending on collections from the prior year. The physicians were also paid a productivity bonus that was set at eighty percent of their collections. The Court concluded that it was “plain that a reasonable jury could find that the physicians’ compensation varied with the volume or value of actual referrals.” The Court also recalled its earlier opinion where it noted that the tainted referrals were the “facility component of the physicians’ personally performed services, and the resulting facility fee billed by Tuomey based upon that component.”

False Claims Act

 

The Court rejected Tuomey’s claim that no reasonable jury could have found a violation of the FCA because it acted on the advice of counsel. The court again pointed to the testimony of attorney McAnaney and amplified the District Court’s conclusion that a “reasonable jury could have found that Tuomey possessed the requisite scienter once it determined to disregard McAnaney’s remarks.” Tuomey’s ‘advice of counsel’ defense ultimately failed because it was unable to show that there had been a full disclosure of all pertinent facts to and among legal counsel, and a lack of good faith reliance on just the favorable legal advice. The Court was not persuaded by Tuomey’s claims that it had, following Mr. McAnaney’s negative view, retained top national health lawyers from reputable firms to complete the transaction.

Tuomey Unsuccessfully Challenges Jury Instructions and Damages Award

 

The Court rejected Tuomey’s various claims of error related to jury instructions. Tuomey argued that the trial court failed to limit the jury’s inquiry to whether or not the contracts, on their face, took into account value or volume of anticipated referrals. The Court emphasized that the jury could consider the parties’ intent to determine if an arrangement took into account volume or value of referrals, but intent alone would not be enough to create a violation.

 

Tuomey argued that the jury should have been separately instructed on the knowledge element in the indirect compensation arrangement definition under Stark and in the FCA. The court found that any such error here was harmless since the jury’s conclusion that Tuomey possessed the requisite scienter under the FCA and also possessed knowledge that the Physicians’ aggregate compensation varied with referrals, a necessary element of the definition of an indirect compensation arrangement under Stark. 42 U.S.C. § 411.354 (c)(2)(iii).

 

Tuomey claimed that the trial court erred by failing to instruct the jury that disputed legal questions are not false claims under the FCA. As with all providers who bill Medicare, Tuomey was required to certify its compliance with laws, to include the Stark Law. Because the jury found that Tuomey violated the Stark Law, the certification of compliance was false, and therefore all tainted claims were false. This seems like fertile ground for further appellate challenge.

 

The Court rejected Tuomey’s challenge to the trial court’s failure to give an instruction that Tuomey was entitled to rely on legal advice even if it turned out to be wrong. The Court found that other jury instructions regarding knowledge under the FCA already were sufficient to cover Tuomey’s concern in this regard.

 

Finally, the Court rejected various challenges by Tuomey regarding the whopping $237,454,195 judgment. It argued that the trial court improperly calculated the penalty, that it incorrectly measured damages, and that the award violated the 5th and 8th Constitutional Amendments. The Court rejected all of Tuomey’s arguments, and found that the jury was properly instructed to consider all tainted hospital claims – both inpatient and outpatient, to determine prohibited referrals. The Court further concluded that the Government was allowed to rely on summary evidence of referrals, perhaps due in part to the fact that Tuomey did not offer its own expert as to damages calculations. The court rejected Tuomey’s challenge that the Government was not damaged, and rejected Tuomey’s claims that the award was unconstitutional under the Due Process Clcause of the 5th Amendment and the Excessive Fines Clause of the 8th Amendment.

 

The Court rejected Tuomey’s argument that if it submitted false claims that the only false claims were its annual cost report submissions and not the 21,730 UB-92/04 forms that it submitted. The Court concluded that Tuomey violated the FCA each time it submitted a claim for reimbursement because it was knowingly asking the government to pay an amount that, by law, it could not pay. Again, look for this issue to be prominently featured in a future appellate review of this case.

 

Takeaways from Tuomey

While Tuomey presents staggering results, it does represent a somewhat unusual set of facts. While it provides a strong reminder that hospitals should critically view their arrangements with referring physicians, it does not preclude the development of sound business and legal strategies within a complicated regulatory legal framework. The following are among the valuable lessons learned from Tuomey:

 

  • Courts and juries may look beyond the four corners of an agreement to determine if an arrangement takes account of volume or value;
  • Courts and juries may look beyond supporting items such as self-serving appraisals to find legal violations; Lawyers and their clients are best-advised to validate the assumptions supporting such appraisals;
  • There is a reason that nearly every FCA matter settles and that is due to the shear potential downside, as evidenced by this case;
  • Review arrangements with physicians and consider them and their fair market value support in the context of the history and intent that lead to the arrangements, to determine if they would pass Tuomey-like scrutiny;
  • Take care when bringing in the next lawyer to rule out a prior negative legal opinion or to break the tie between two competing legal opinions – who is the client? Where is the attorney-client privilege? How will all lawyers’ opinions be considered by the lawyers and the client?

 

Adam Snyder is Chair of the Ogden Murphy Wallace Business Department and is a Part-time/Adjunct Faculty member of the University of Washington School of Law. For additional information regarding Tuomey, Stark, or the False Claims Act, please contact Adam Snyder or Greg Montgomery.

 

Proposed “Exempt” Status Risks for Health Care Employers

Health care providers need to be aware of significant anticipated changes to federal laws governing which employees may be treated as exempt from eligibility for overtime. Failing to account for the changes if and when they go into effect will expose health care employers to significant potential liability. Successful claims for improperly paid or unpaid wages carry the potential for both a doubled damage and an award of attorneys fees to a successful claimant. When multiple employees are affected, an employer may be faced with defending a class action.

The proposed regulatory changes are primarily focused on the threshold level of salary an employee must receive in order to potentially be ineligible for overtime. If the proposed changes are implemented, minimum salary for exempt employees would more than double. The changes may become effective as early as 2016.

The changes were posted by the United States Department of Labor’s Wage and Hour Division on July 6, 2015 and set forth proposed modifications to 29 CFR Part 541, the regulations addressing which employees will qualify as “exempt” for purposes of eligibility for overtime pay. The changes will apply to any employer covered by the Fair Labor Standards Act (FLSA), which includes hospitals, businesses providing medical or nursing care for residents, and public agencies. While doctors are not subject to the new regulations, the changes would apply to other health care providers and employees.

The current minimum salary threshold for most exempt employees was set in 2004 and requires at least $23,660 annually with at least $455 received per week. If effective in 2016, the regulatory changes would increase the minimum threshold to $50,440 annually with at least $970 received per week. The modifications anticipate setting the minimum salary level at the 40th percentile of weekly earnings for all full-time salaried workers. The proposed changes also anticipate incorporating a system for continuing adjustments to the necessary minimum salary in order to keep pace with living costs, either through linking increases to earnings percentile of all full-time salaried workers or through linking to changes in inflation as measured through the Consumer Price Index for all Urban Consumers (CPI-U).

The proposed revisions additionally anticipate modifying the exemption for highly paid employees. Currently, employees making at least $100,000 annually and receiving at least $455 weekly will be considered exempt if the employee customarily and regularly performs at least one of the primary duties or responsibilities of an executive, administrative, or professional employee as identified in the FLSA standard tests for exemption. Under the changes, the minimum salary for highly paid employees would be increased to $122,148 annually which corresponds to the 90th percentile of weekly earnings of all full-time salaried employees.

Employers have a window to voice positions on the proposed regulatory changes. Written comments will be accepted until September 4, 2015 and will need to reference Regulatory Information Number (RIN) 1235-AA11. Comments may be submitted online and additional information for how to submit a comment can be found here.

Health care employers should carefully evaluate the wages paid to all employees currently classed as exempt to identify which employees may be affected. Employers may wish to consult with counsel to most effectively plan for any necessary changes and identify potential pitfalls. Employers may also wish to submit comment prior to the September 4th deadline expressing positions and opinion on the proposed changes.

For questions regarding the anticipated changes, their impact, and potential options, please contact the author, Patrick Pearce.

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.

Religious Accommodation & EEOC v. Abercrombie & Fitch – What You Don’t Know Can Hurt You

Health care providers should be aware that whether and how to provide accommodations for the sincerely held religious beliefs and practices of employees and job applicants is a fast-developing workplace legal issue. On June 1, 2015, the Supreme Court issued its decision in Equal Employment Opportunity Commission v. Abercrombie & Fitch Stores, Inc[1] (“Abercrombie”). For organizations with fifteen or more employees and therefore subject to federal anti-discrimination laws, providers and management involved in interviewing and hiring should note the guidance provided by the opinion.

In Abercrombie, the dispute arose in the context of organization dress code when a practicing Muslim female applied for a position. The assistant manager who interviewed the applicant found her to be qualified but observed that the applicant wore a headscarf. The headscarf was a concern for the assistant manager as the company had an existing “Look Policy” governing employee dress which prohibited wearing any “caps.” The term “caps” was not defined by the policy. The assistant manager sought guidance from the store manager noting that she believed the headscarf was worn by the applicant for religious reasons. The store manager concluded the headscarf violated the company Look Policy and directed that the applicant not be hired.

The EEOC brought suit on behalf of the applicant, arguing the refusal to hire violated federal protections for religious practices. The EEOC won at the trial court level, but was reversed on appeal. After reviewing the case, the Supreme Court rejected the appellate court’s rulings and like the trial court found in favor of the EEOC and Muslim applicant. The company had argued that to make a claim the employer had to have “actual knowledge” of the need for an accommodation. The Court rejected the argument, and instead ruled that the applicant need only show that the need for accommodation was a “motivating factor” in the employer’s decision. Justice Scalia summarized an employer’s obligations to avoid disparate treatment based on religion as follows:

“Thus, the rule for disparate-treatment claims based on a failure to accommodate a religious practice is straightforward: An employer may not make an applicant’s religious practice, confirmed or otherwise, a factor in employment decisions.”

The Abercrombie decision almost certainly applies to both employment applicants and existing employees, and has the potential to be expanded and applied to other anti-discrimination protections. In terms of immediate use, several practical points can be taken from Abercrombie.  First, the current Court will give religious beliefs and practices careful scrutiny in assessing treatment of an employee or applicant by an employer. As noted by Justice Scalia, “Title VII does not demand mere neutrality with regards to religious practices…[r]ather, it gives them favored treatment.”  Next, facially neutral policies may not constitute a defense for an employer’s decision. When an accommodation is required relating to an aspect of religious practice, per the Court “…it is no response…” that the subsequent action or inaction by the employer was due to an otherwise neutral policy.  Finally, Abercrombie establishes that an employer does not have to have actual knowledge of the possible need for religious accommodation in order to be under an obligation to provide it. The inclusion of religious beliefs or practices as a factor in the employer’s decision is the critical factor.

Providers and management involved in hiring and employee issues will be well served to carefully assess potential religious accommodation issues to determine whether a concern exists and if so, how best to handle particular employees or employment applicants. Organizations covered by federal employment laws should be aware of potential obligations to make efforts to allow an employee or applicant to observe sincere religious practices or beliefs regardless of what is provided in organization policies.

Patrick Pearce is a member in the Seattle office of Ogden Murphy Wallace where his practice emphasizes counsel and litigation regarding employment and labor issues, and serving as an independent workplace investigator. He can be reached at 206-447-7000 or ppearce@omwlaw.com

 

[1] http://www.supremecourt.gov/opinions/14pdf/14-86_p86b.pdf

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.

CMS Announces Intent to Modify Meaningful Use

CMS announced today its intent to make significant changes to the EHR Incentive Program beginning in 2015.  The proposed changes, though not yet codified in a proposed rule, include a much desired ease of the program requirements in 2015.  They include:

  1. Aligning hospital EHR reporting periods to the calendar year (rather than the fiscal year) to allow hospitals to have more time to incorporate 2014 CEHRT into their workflows;
  2. Shortening the EHR reporting period in 2015 to 90 days to accommodate these changes; and
  3. Adjusting other portions of the program to “match long-term goals, reduce complexity, and lessen providers’ reporting burdens.”

These new rules are expected this spring.  CMS clarified in its announcement that these proposed modifications will not be forthcoming in the Stage 3 proposed rule which is expected to be released in early March.  CMS also indicated that it proposes to limit the scope of the Stage 3 proposed rule to criteria for meaningful use in 2017 and beyond.

To learn more about meaningful use and the EHR Incentive Program contact Elana Zana.

Meaningful Use Exception Includes EHR Vendor Delays

Following its announcement at HIMSS, CMS has published its hardship exception application for 2014 along with its new exception due to vendor delays.  The new exception permits eligible hospitals and eligible professionals to request an exception from the 2015/2016 payment adjustments due to 2014 EHR Vendor Issues.  Specifically, CMS now permits an exception due to the inability of the vendor to obtain 2014 certification or if the hospital or EP was unable to implement meaningful use due to 2014 EHR certification delays.  Along with filling out the EP or Hospital exception forms, those requesting the exception must submit a notification from the EHR vendor.

For EPs and hospitals who are demonstrating meaningful use for the first time, they may apply for this hardship exception to avoid the 2015 payment adjustments.  For those EPs and hospitals who have previously demonstrated meaningful use, they may use this hardship exception to avoid 2016 payment adjustments.

For hospitals, the hardship exception request for 2015 payment adjustments is due April 1, 2014.  For eligible professionals, the hardship exception request for 2015 payment adjustments is due July 1, 2014.  However, for those EPs that have not previously participated in the Medicare EHR Incentive Program they can submit attestation by October 1, 2014 and also avoid the payment adjustments.  CMS has also issued guidance for applying for the EHR Vendor hardship exception for EPs and hospitals.

For more information about the Medicare or Medicaid EHR Incentive Program or applying for these hardship exceptions please contact Elana Zana.