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Welcome
Welcome to our inaugural issue of The Health Record - our healthcare law insights e-newsletter!
Spilman's healthcare practice has a long and storied history. At least 35 of the firm’s attorneys practice in the field of healthcare law on a full or part time basis, and the recent addition of our Huntington, West Virginia presence has expanded that knowledge base and experience. We have substantial experience in corporate transactions in the healthcare space, including mergers, acquisitions, dispositions, corporate reorganizations and formation of health systems. We have defended hospitals and individuals in civil and criminal litigation matters, including employment litigation, medical malpractice actions, and government investigations. We have advised, assisted and litigated issues concerning the revocation of physician Medicare privileges by the Centers for Medicare & Medicaid Services. As the federal Medicare and Medicaid fraud and abuse laws and regulations have developed over the past several years, we have counseled clients on structuring transactions and relationships to comply with this complex regulatory framework, including the Stark Law, the Anti-Kickback Law, and the False Claims Act. And as the relationships between hospitals and physicians have evolved and changed, we have helped them meet the challenges and opportunities afforded by these changes. Some of the other areas covered by the health care practice include antitrust, bankruptcy, health care contracts, corporate law (including corporate governance), employment law, EMTALA, Health Care Quality Improvement Act, academic medical centers, teaching hospitals, HIPAA compliance, integrated delivery systems, telemedicine, internal investigations, licensure and credentialing, regulatory matters, certificate of need proceedings, joint ventures, labor law, managed care, medical staff issues, nonprofit hospitals and other nonprofit health care businesses, and reimbursement issues.
As such, we wanted to pull together our insights and pass them along to you. Our goal is to create a publication that is different. While we will be providing long-form articles on important healthcare-related topics, our goal is to bring you trending news in the industry and WHY that topic should be of interest. We are proactive lawyers. We want to get you ahead of issues and prepare accordingly to help mitigate risks. We hope this e-newsletter helps do just that.
In addition to providing you our insights, we will be passing along information about events, presentations, webinars, CLEs, etc. On June 21, we are hosting our 2024 SuperVision Labor & Employment Symposium. This complimentary symposium is tailored for business owners, HR professionals, and anyone who manages employees. Dive into a day of invaluable insights on topics such as remote work; workplace investigations; AI, emerging technologies, and privacy; union avoidance; workplace violence; and more. Click here to learn more and register.
If you know of someone that may enjoy this publication and is not on our publication list, feel free to send us an email with their email address and THE HEALTH RECORD in the subject line.
Thank you for reading!
Brienne T. Marco
Member, Chair of the Corporate Department and Co-Editor of The Health Record
and
Joel P. Jones, Jr.
Counsel and Co-Editor of The Health Record
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“Two bills recently introduced in the House aim to permanently extend rural telehealth access and expand the list of practitioners able to provide virtual care.”
Why this is important: Research shows that telehealth has helped to make healthcare more accessible for seniors, families with children, and people living in rural America. During the COVID-19 public health emergency, CMS used emergency waivers to enable flexibilities so providers could quickly respond to people in need of care. Some of those waivers relating to telehealth services are set to expire on December 31, 2024. Lawmakers in the U.S. House of Representatives introduced bills in early May that would permanently extend two telehealth waivers. One bill would allow federally qualified health centers (FQHCs) and rural health clinics (RHCs) to provide, and receive reimbursement through Medicare for, telehealth services. The second bill would permanently expand the list of healthcare practitioners eligible to provide telehealth services, to include physical therapists, occupational therapists, speech-language pathologists, and audiologists. If these waivers expire, seniors, families with children, and people living in rural America may have reduced access to needed services. --- Brienne T. Marco
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“Combined with other recent developments, including California’s minimum wage laws, various state minimum nurse staffing ratio requirements, and increased federal and state scrutiny of hospital M&As, the rule could maintain pressure on the sector.”
Why this is important: The Federal Trade Commission (FTC) recently announced a rule banning noncompete provisions in employment agreements. The rule would go into effect 120 days after its publication in the Federal Register on April 30, 2024, however, legal challenges are likely to delay the effective date.
The FTC claims that nonprofits are not categorically beyond the FTC’s jurisdiction, and notes that employees of a physician group who work at a nonprofit hospital are subject to FTC jurisdiction. The newly announced noncompete prohibition may put further emphasis on the strained labor environment currently experienced by nonprofit hospitals, in addition to issues such as increasing regular and minimum wages, maintenance of minimum service levels, nurse staffing ratios, and governmental scrutiny of health care M&A deals.
Increased staff turnover, especially at the physician level, may precipitate unpredictable and volatile labor markets. However, the new rule may also provide an improvement in physician labor supply and increase in quality of the physician recruiting pool. The American Medical Association estimates between 35 percent and 45 percent of physicians are currently bound by noncompete provisions. While hospital payrolls have risen for 27 consecutive months ending March 2024, the expected availability of a physician hiring pool that is freed from the constraints of noncompete provisions may provide a needed supply boost that may temper rampant wage growth and inflation. --- Anthony L. Huber
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“The healthcare industry has proven to be the perfect playground for the introduction of GenAI, or generative artificial intelligence, and has the potential to significantly improve patient CX journeys via contact centers and hospitals.”
Why this is important: Developments in GenAI, or generative artificial intelligence, are profoundly impacting our everyday lives, and unlocking new opportunities for growth and innovation at lightning speed. By viewing this rapidly evolving technology through the lens of customer service, we can begin to appreciate the positive impact that artificial intelligence is making on patient outcomes in the healthcare industry. The “CX journey,” or, “customer experience,” contemplates every interaction between a business and customers, from start to finish. In the context of healthcare, this includes everything from the first phone call to schedule an appointment, to the time spent in a waiting room, to the quality of care received. Advancements in the following areas have been highlighted:
- Boosting efficiency in the contact center. Issues such as test results, or scheduling an appointment, can be fielded by GenAI, reducing lengthy call times and patient stress.
- Enhancing data personalization. GenAI can tailor specific patient recommendations, identify earlier interventions and preventive measures, and significantly reduce business costs.
- Expanding telehealth processes. By diagnosing common ailments and providing treatment recommendations for home, GenAI can reduce the risk of unnecessary patient exposure.
- Reducing administrative burden and improving workflows in hospitals. Providers can use GenAI to create clinical notes in real-time with hands-free devices, allowing increased focus on patient care.
Key takeaway: These developments are making a real impact on patient outcomes, and, a strong command of emerging GenAI technology will certainly become a necessary component of litigation arising from patient care. --- Ralph "Joe" J. Hagy
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“The Richmond-based 4th U.S. Circuit Court of Appeals ruled 8-6 in the case involving coverage of gender-affirming care by North Carolina’s state employee health plan and the coverage of gender-affirming surgery by West Virginia Medicaid.”
Why this is important: In the ever-growing discord involving medical care for transgender individuals, the Court of Appeals for the 4th Circuit ruled that the healthcare plans for both Medicaid and the state employee plan must provide coverage for gender-affirming care in West Virginia and North Carolina, respectively. This ruling does not implicate the standard of care for these procedures, but does open the door for more financial assistance in seeking these types of procedures. It is anticipated that the United States Supreme Court will weigh in on the issue, so hold the phone, the final chapter is yet to be written. --- Matthew W. Georgitis
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“Twenty percent of a typical healthcare organization’s sensitive data holdings are affected in a ransomware encryption event, compared with an average of just 6% in other industries.”
Why this is important: The U.S. Department of Health and Human Services’ (HHS) Office for Civil Rights has tracked a 256 percent increase in large data breaches involving hacking and a 264 percent jump in ransomware attacks over the past five years. In January 2024, HHS released voluntary cybersecurity goals for healthcare and public health organizations that are broken down into essential and enhanced safeguards, aimed to help organizations prevent cyberattacks, improve their response if an incident occurs, and minimize remaining risk after security measures are applied. At least a portion of HHS’ voluntary goals could become mandatory in the future, with significant penalties for noncompliance, according to the Biden administration’s proposed HHS budget for fiscal year 2025. The ubiquity of cyberattacks means that cybersecurity has become a cost of doing business in healthcare and it is imperative that healthcare organizations are equipped to prevent and properly respond to cyberattacks. --- Joseph C. Unger
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“As a result, from 2021 to 2023, self-disclosures rose from 27 to 176 – a 552% increase.”
Why this is important: Recent and dramatic increases in enforcement of the Stark anti-referral law in both frequency and severity, exacerbated by the shift to a corporate and private equity ownership model in an increasing volume of healthcare practice and system acquisitions, are having the effect of disrupting the orderly provision of competent care and exercise of independent medical judgment by healthcare providers.
Stark is the common name for the Physician Self-referral Law (42. U.S.C. §1395), which prohibits doctors from referring patients receiving Medicare or Medicaid benefits to entities with an existing financial relationship to the referring physician. A financial relationship includes an ownership interest as well as any compensation arrangement, and accordingly, physicians encounter numerous risks of violating Stark in their practice. Furthermore, Stark is a strict liability statute, and does not require intent to violate the law. Penalties include fines and exclusion from federal healthcare programs, such as a refund of all Medicare receipts at issue (multiplied by up to three under a False Claims Act case), and fines of $15,000 for each service in violation, with a fine for deliberate violation of $100,000. The False Claims Act allows whistleblowers to come forward with information regarding Stark violations, and even allows them to file qui tam lawsuits on behalf of the government if they have knowledge of false claims. The qui tam reward is between 15-30 percent of the amount recovered, providing an additional incentive for whistleblowers to report Stark violations.
Stark was updated in 2020 with the stated purpose of relieving administrative burdens on reporting physicians and system participants. The Centers for Medicare & Medicaid Services again revised the Stark protocol in 2023 to streamline self-disclosures under the Self-Referral Disclosure Protocol (SRDP), issued under authority of §6409(a) of the Affordable Care Act.
Physicians are noting that strict compliance with Stark in today’s corporate and PE-owned practice environments may introduce conflicting incentives, as systems are reducing salary, increasing incentive and production-based compensation, and interfering in prior authorizations. As the ownership and, potentially, management of healthcare practices becomes increasingly concentrated in for-profit corporations and private equity portfolios, the pressures to increase revenues and profits on physicians increases Stark risks greatly. --- Anthony L. Huber
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“The request is close to the administration’s original plan for $12.7 billion for 2024, something that was waylaid by a contentious bipartisan budget debate that has left the government operating on a temporary resolution and faced with an imminent shutdown as a broad assortment of bills are negotiated.”
Why this is important: The Biden administration recognizes the need to strengthen our cybersecurity infrastructure and preparedness. To assist with hardening the U.S. economy and infrastructure against cyberattacks and the malicious use of AI, the White House included $13 billion for cybersecurity in its 2025 fiscal plan. If approved, this would be approximately a 10 percent increase in the federal government’s current cybersecurity budget. A large part of the budget increase would go to the Cybersecurity and Infrastructure Security Agency (CISA), increasing its budget by $103 million to total of $3 billion budget. This increase in funding will assist CISA with improving the Joint Collaborative Environment, which centralizes data on known cybersecurity threats. This will also provide additional funding to allow CISA to assist state and local governments to bolster their cybersecurity preparedness. With worries about cyberattacks on critical infrastructure, the proposed increase in cybersecurity funding includes funding for the Cyber Incident Reporting for Critical Infrastructure Act, which established a unified reporting standard for critical infrastructure sectors. The DOJ will also get additional funding for addressing cybersecurity threats, and HHS will get additional funding for new cybersecurity initiatives for hospitals. The increase in the proposed cybersecurity budget also includes more money for AI research. However, with funding for 2024 still held-up in Congress, it is unknown whether this proposed increase in cybersecurity funding for 2025 will become a reality. --- Alexander L. Turner
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“The FTC underscored the Health Breach Notification Rule's applicability to health apps and emerging technologies outside the scope of HIPAA.”
Why this is important: The Federal Trade Commission (FTC) implemented the Health Breach Notification Rule (HBNR) more than 10 years ago. The HBNR requires vendors of personal health records, personal health record-related entities, and other third-party service providers that are not subject to HIPAA to notify the FTC and impacted individuals in the event of a breach of individuals’ protected health information (PHI). While these rules were drafted before the advent of the proliferation of the use of health apps, the FTC issued a policy statement in September 2021 clarifying that health apps and connected device companies are subject to the HBNR. The FTC has now clarified a variety of questions regarding the application of the HBNR to health apps and other tech. These changes include:
- PHR-related entities now include “entities that offer products and services through the online services, including mobile applications, of vendors of personal health records.”
- Additionally, the FTC stated that “only entities that access or send unsecured PHR identifiable health information to a personal health record — rather than entities that access or send any information to a personal health record — qualify as PHR-related entities.”
- The FTC also confirmed that “breach of security” means an unauthorized acquisition of identifiable health information as the result of a data security breach.
- Covered entities are now authorized to utilize email to provide breach notifications, but they will also have to include more information in those notifications, including the name or identity of any third parties that acquired unsecured PHRs as a result of the breach.
- The FTC must now expand the time to provide it notice of the breach. If the breach impacts 500 or more individuals, a covered entity now has the same time to notify the FTC as it does individuals, 60 days.
These changes to the HBNR will go into effect 60 days after they are published in the Federal Register. --- Alexander L. Turner
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Feature Attorney Question & Answer | |
We are excited to introduce you to our large healthcare law team. To help you get to know our team a little better, we are highlighting an attorney in each issue by asking them a healthcare-related question. We hope their response will be insightful for you. | |
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Medical malpractice is a major part of any healthcare practice’s legal issues and considerations. What are the top tier items that should be considered when dealing with potential medical malpractice issues?
Robert M. Sellards, Member in Charge of Huntington, WV Office
“In the intricate and high-stakes arena of medical malpractice litigation, the selection of appropriate legal counsel is not merely a prudent decision—it is an imperative one. The attorney’s role transcends the boundaries of mere legal representation; they become a safeguard against the potential repercussions that could tarnish a healthcare professional’s reputation, financial stability, and career longevity.
Medical malpractice cases hinge on the ability to understand and interpret medical procedures, standards of care, and the potential deviations from these standards. An attorney with expertise in medical malpractice can navigate these complexities, ensuring that the defense is built on a solid understanding of both the medical and legal aspects of the case.
Moreover, medical malpractice attorneys are well-versed in the rules and regulations governing medical practices and healthcare laws. They can effectively communicate with medical professionals, understand medical reports, and challenge expert witnesses. Their ability to dissect medical jargon and translate it into understandable language can make a significant difference in the courtroom. There are five primary qualities that a qualified medical malpractice attorney should possess:
- Medical Knowledge: A good medical malpractice attorney should have a strong understanding of medical concepts and terminology. This knowledge is crucial in understanding the nuances of the case, cross-examining medical experts, and presenting a compelling defense.
- Experience: Experience in handling medical malpractice cases is vital. An experienced attorney will be familiar with the strategies and tactics that work best in these cases, and they will have a network of expert witnesses to call upon.
- Communication Skills: The attorney must be able to explain complex medical procedures and concepts in simple, understandable terms. They should be able to communicate effectively with the client, the court, and the opposing counsel.
- Analytical Skills: The ability to analyze medical records, expert reports, and other complex information is essential. The attorney should be able to use this analysis to develop a strong defense strategy.
- Empathy: While this may not seem like a critical skill for an attorney, empathy is crucial in medical malpractice cases. The attorney should understand the emotional toll that such a case can take on a client and provide support and understanding throughout the process.
Ultimately, the importance of hiring the right counsel in a medical malpractice case cannot be overstated. The attorney’s knowledge, experience, and skills can significantly impact the outcome of the case. Therefore, it is crucial to choose an attorney who possesses the right qualities and can effectively defend the client’s interests."
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