States increasingly pass laws to protect patients from surprise billing, varying widely in scoop. Surprise bills occur when a patient is treated by an out-of-network provider and receives a bill from the provider for the difference between the payment made by the health plan and the patient’s cost-sharing amount. Typical scenarios are when a patient accesses emergency services outside the health plan’s network or receives services at an in-network hospital from an out-of-network physician (e.g., anesthesiologist, radiologist, pathologist). Despite state legislative activity, state protections are limited by the Employee Retirement Income Security Act of 1974 and do not apply to self-funded employee welfare benefit plans. According to the Kaiser Family Foundation, approximately 60 percent of workers get coverage through a self-funded health plan. Because these state-level protections vary widely in scope and do not apply to patients in self-funded health plans, federal legislation may provide an opportunity to more comprehensively address surprise billing. Continue reading “Recent Federal Legislative Activity to Address Surprise Billing”
Governance Board Terms
Recently, I have been asked by clients and boards that I am a member of about term limits for board members. While there are no legal requirements for term limits organizations, many governance experts believe that term limits for board members are best practice. Term limits create space for new members and facilitate diversification efforts; bring new members with fresh perspectives; offer a democratic way to refresh the board; make it easier to transition unproductive or disruptive members off the board; allow board members to step down gracefully; facilitate succession planning with a mix of board veterans and newcomers; and deter stagnation and procrastination.
Term limits have value, but so do former board members. When considering term limits, organizations need to consider: (1) the length of terms; (2) the number of consecutive terms permitted; and (3) options for board members to stay involved, such as advisory boards and committee work. In order to ensure that former board members stay engaged, some organizations form advisory boards to address the negative aspects of term limits. Advisory board membership allows former board members to continue to contribute to the organization. The purpose and function of an advisory board depends on the needs of the organization and should be set forth in an advisory board charter. Typically, advisory board members assist with fundraising and share their experience, knowledge and expertise with the board and provide advice and counsel, when requested to assist the board.
Each organization must determine what is best for the organization based on the organization’s current needs, taking into consideration recommendations for best practices. Because an organization’s needs can change over time, boards should periodically review the organization’s bylaws and term limits to ensure that the bylaws and term limits continue to meet the organization’s needs.
Certificate of Need Laws: Desirable or Destructive
The Federal Trade Commission (FTC) is making headlines in Alaska, supporting a move to repeal that state’s certificate of need (CON) law. CON laws require health care providers to establish that a need exists for the services the provider seeks to provide. If there is no need, the provider is not allowed to establish its business.
The goals of CON laws are to reduce health care costs, reduce redundancy, and to improve access to care. CON laws are designed to ensure that health care is available in poor or rural communities, not just cities and wealthy areas. A 1974 federal law (repealed in 1987) required all states to enact CON laws.
The FTC argues that CON laws hurt competition and do not live up to the goals of protecting consumers from unexpected health care costs. The FTC says that CON laws create barriers to entry into the market which limits consumer choice and may stifle innovation.
With the weight of the FTC behind the repeal movement, is Alaska’s law doomed? Maybe not. The FTC criticized Illinois’ CON law in 2008, and the law is still in force, going strong.
Collecting and maintaining fingerprints or other biometric data can lead to huge liability if not handled correctly
Recently, the Illinois Supreme Court considered the consequences of violating the Biometric Information Privacy Act (“Act”). The Act has been on the books for ten years, and during that time, the use of biometric data, such as finger prints, voice prints, or facial recognition, has grown by leaps and bounds. It is possible to unlock an iPhone merely by looking at it—using facial geometry.
As health care facilities move to biometric methods of identifying staff or clients, they will need to consider the ramifications of doing so. The Act requires entities that collect biometric data to first obtain informed consent, in writing, by the individual or their representative. In addition, the entity must have a policy and procedure for destroying the biometric data in accordance with the Act.
According to the Supreme Court, failure to abide by these procedures causes damage to the person whose biometric data was gathered. As a result, the entity can face liability in the amount of $1,000 to $5,000 per violation, or actual damages, plus attorneys’ fees. Considering the real risk of identity theft in this digital age, actual damages could easily exceed the statutory amounts.
GOVERNANCE AND LEADERSHIP
Last year I did a series of blogs with my good friend, Karen Zupko of Karen Zupko and Associates, on physician contracting issues. I loved blogging with Karen. We used the blogs to educate our hospital and physician clients on common issues with respect to physician contracts. My favorite blog in the physician contracting blog series was the indemnification blog. Anyone who has worked with me on contracts knows that I have concerns about indemnification provisions in contracts. One of my proudest blogging moments was when a client said “now I get it” after I sent the indemnification blog to him. I sent the same blog to opposing counsel and we were able to successfully negotiate the indemnification language.
This year I am planning a series of blogs on governance and leadership in the context of healthcare mergers and acquisitions. This is blog 1 for 2019. Here is this year’s plan. The series will touch on strategic considerations in mergers and acquisitions, special issues for non-profits, governance dilemmas, deal breakers and exit plans. I’ll talk about lessons learned, bumps in the road, and next time, I’ll tell some funny stories and some not so funny stories, so stay tuned. The prevailing theme for the blog series will be thoughtful civility in mergers and acquisitions. If you have thoughts to share on the topic, email me at pshofstra@duanemorris.com. The Duane Morris blog format does not permit comments to be added to the blogs.
Healthcare M&A Corner – The Materiality Scrape: Buyers Rejoice; Sellers Beware
In counseling clients on M&A deals, it is critical to stress transaction nuances that may otherwise serve as an afterthought to a buyer or seller. While both parties reliably demonstrate laser focus on the big picture (i.e., the deal economics), there remain several purchase agreement provisions that can significantly affect a client’s allocation of risk, including representations and warranties, and indemnification provisions. Continue reading “Healthcare M&A Corner – The Materiality Scrape: Buyers Rejoice; Sellers Beware”
Non-Competition Clauses – Make No Assumptions
The enforceability of non-competition clauses depends on a number of factors. Non-competition clauses are viewed in the context of anti-trust laws as a restraint of trade and disfavored. Consequently, the entity seeking to enforce a non-compete must be able to prove a legitimate business reason for the non-compete. A number of states flat out prohibit non-competition agreements, while other states enforce non-competition agreements on a case by case basis. In some states where non-compete provisions that restrict the physician’s right to practice medicine are considered void and not enforceable as a matter of law, employers may be able to sue the departing physician for monetary damages suffered because of the competition. Continue reading “Non-Competition Clauses – Make No Assumptions”
Will increasing regulatory oversight improve quality of care in the nation’s nursing homes?
Last month I wrote about the hearing to be held by the House Committee on Energy and Commerce Subcommittee on Oversight and Investigations regarding federal efforts to ensure quality of care and resident safety in nursing homes.
The Director of Health Care for the GAO focused his opening remarks on the GAO study of nursing homes that concluded in 2015. The next year, CMS instituted sweeping regulatory changes. So it remains to be seen how CMS’ new requirements of participation will impact the issues found in the GAO report. Ruth Ann Dorrill, Regional Inspector General, HHS OIG noted that the OIG previously made two recommendations to CMS to improve quality of care in nursing homes. First, to provide guidance to nursing homes about detecting and reducing harm to be included in facility Quality Assurance and Performance Improvement programs. Second, to instruct State Agencies to review facility practices for identifying and reducing adverse events, and link related deficiencies specifically to resident safety practices. CMS implemented these recommendations on adverse events in nursing homes as of August 2018.
The focus on deficiencies by the State Agencies is disappointing. Deficiencies result in civil money penalties, further reducing the resources available to care for nursing home residents. Ms. Dorrill testified that nursing home residents often have care needs similar to patients in hospitals. However, nursing homes are not reimbursed at the same rate as hospitals and, yet, are expected to provide similar care. It seems as though the residents are getting lost in the ever increasing cycle of regulation and enforcement. Regulatory oversight sounds good on paper, but does it work?
SUPPORT Act Expands Sunshine Act Disclosure Requirements, Covered Recipients
On October 24, 2018, President Donald Trump signed the Substance Use-Disorder Prevention that Promotes Opioid Recovery and Treatment for Patients and Communities Act (SUPPORT Act), a combination of a number of previously passed House and Senate bills related to addressing the opioid crisis. One of the provisions of this lengthy bipartisan package of bills includes an expansion of the disclosure requirements initially imposed by the Physician Payments Sunshine Act.
Read the full text of this Alert on the Duane Morris LLP website.
Physician Compensation
Today’s blog addresses compensation and benefits; a complicated subject of upmost interest to our clients. The blog touches on major points to consider regarding compensation and benefits. Physicians and physician groups must consult with compensation experts and legal counsel to insure that they understand the best possible, regulatory compliant compensation model for their needs. There are pros and cons and multiple variations of each model. Continue reading “Physician Compensation”