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Welcome
Welcome to our sixth issue of The Health Record - our healthcare law insights e-newsletter. In this edition, we take a look at the impact of AI when it comes to diverse health data, the FDA and AI medical devices, Virginia's healthcare staffing shortage, palliative care and telehealth, addiction services and telehealth, another health insurance data breach, and the FTC and noncompetes. In this month's Featured Attorney Q&A, Alex Macia of our Charleston office discusses the complex world of government relations and lobbying when in comes to healthcare issues.
Former WV Commerce Secretary James Bailey Joins Spilman
Spilman is excited to welcome James Bailey, former WV Commerce Secretary, to the firm. James brings extensive public sector experience and will focus on government relations, government contracts, public finance, and general corporate law. His addition bolsters the firm’s already strong capabilities in navigating the complex intersection of business and government. Click here to learn more about James and his practice.
ABA Annual Labor and Employment Conference - New York, NY, November 13-16
We are also looking forward to hearing from our Spilman colleagues as they present at the ABA Annual Labor and Employment Conference in New York City November 13-16. This conference is the Section’s signature event of the year, which will offer cutting-edge and in-depth programs covering developments across the full range of labor and employment law topics along with numerous networking opportunities. Spilman is pleased to be a sponsor of the Section and this exciting program! Click here to learn more.
We hope you enjoy this issue of The Health Record. 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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“The researchers will develop new methods for integrating structured data and free-text notes from various health professionals—including nurses, physical and occupational therapists, and speech and language pathologists—into electronic health records.”
Why this is important: The integration of AI into all aspects of human existence has begun in earnest, and the use of AI in electronic medical records is no different. This article dives into the current research and implementation of AI with nursing, physical and occupational therapists, and speech and language pathologists' electronic records, and how those records can then be data mined to better help with patient care, particularly with fall risks. AI is coming whether we like it or not, so the better we understand its usefulness and potential pitfalls the better we can care for our patients. --- Matthew W. Georgitis
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“Since 2016, the average number of medical AI device authorizations by the FDA per year has increased from two to 69, indicating tremendous growth in commercialization of AI medical technologies.”
Why this is important: AI and healthcare appear to be a great match. However, as with every new technology, the utilization of AI in the healthcare industry comes with its own concerns. Primarily, industry observers are apprehensive about the use of AI in healthcare because of patient privacy concerns, the possibility of bias, and concerns regarding device accuracy. These concerns regarding device accuracy are exacerbated by the fact that the development of AI is outpacing the government’s ability to effectively regulate it. Since 2016, the number of AI devices authorized by the FDA has grown from two per year to 69 per year. The result is that even with FDA approval, AI medical devices have not been sufficiently reviewed for clinical effectiveness using actual patient data. AI medical devices are evaluated using three different methods. Retrospective validation involves feeding the AI model image data from the past. Prospective validation is based on real-time data from patients, and is seen as more effective than retrospective validation. Finally, the best evaluation method is considered randomized controlled trials that utilize random assignment controls for confounding variables that would differentiate the experimental and control groups. To ensure an accurate evaluation of the effectiveness of AI devices, researchers recommend that the “FDA and device manufacturers should clearly distinguish between different types of clinical validation studies in its recommendations to manufacturers.” Researchers hope that the FDA will adopt their evaluation recommendations in order to improve AI medical device safety and effectiveness. --- Alexander L. Turner
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“Virginia has 133 cities and counties, and more than a hundred of them are currently muddling through with a shortage of health professionals.”
Why this is important: Workforce shortages strain healthcare systems in a number of ways. The most obvious is that there are simply not enough people to fill open positions, which restricts the services healthcare systems are able to provide and overburdens the existing workforce that has barely recovered from burnout during the height of the pandemic. There are also significant financial strains. Health systems are increasingly having to turn to locum tenens physicians and traveling nurses, which, although temporarily fill positions and allow for revenue from services, can be extremely expensive compared to the cost of an employee on payroll. Although wages nationwide have risen in recent years, that alone does not seem to be a sufficient stimulus to materially increase workforce numbers. Resolving this multifaceted problem will require creative and diverse solutions to stabilize the workforce in the healthcare industry. --- Joel P. Jones, Jr.
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“A study found that early palliative care via telehealth for advanced lung cancer patients received quality-of-life scores similar to in-person care, which could expand care access.”
Why this is important: This new study is the result of a collaboration of researchers from multiple institutions, including Mayo Clinic, Massachusetts General Hospital, Northwestern Medicine, and the University of California, San Francisco, conducting a randomized comparative effectiveness trial at 22 U.S. cancer centers between June 2018 and May 2023. The study compared 1,250 patients with advanced lung cancer against 548 caregivers who offered either video or virtual-based telehealth services versus traditional in-person care visitors. According to the results, patient-reported quality-of-life scores were equivalent between groups, with telehealth patients reporting a score of 99.7 compared to 97.7 for in-person visits. Dr. Melanie Smith, co-author and assistant professor at Northwestern Medicine, emphasizes that these findings are "very reassuring," and noted that telehealth may offer a more convenient and cost-effective option without compromising benefits to patients or caregivers. However, she also noted that further research would need to be conducted to determine the long-term benefits as the study failed to go beyond a 24-week comparison. --- Hikmat N. Al-Chami
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“Flexibility allowed during pandemic is set to expire at year-end.”
Why this is important: Senator Mark Warner (D-Va.) and Representative Doris Matsui (D-Calif.) are spearheading new legislation that could extend current telehealth prescribing rules through 2026, according to lobbyists familiar with the effort. The bill aims to counter the Drug Enforcement Administration's potential rollback of pandemic-era flexibilities that allowed healthcare providers to prescribe controlled substances through virtual visits. While the DEA contemplates stricter regulations, telehealth advocates warn that allowing these rules to expire could disrupt patient access to critical medications that go beyond just prescribing stimulants for ADHD or weight loss medications such as Ozempic. Patients prescribed medication via telehealth seek assistance and medication for anything ranging from asthma to PTSD management. Allowing the pandemic-era prescription rights statute to expire could have significant consequences for those who live in areas with limited healthcare providers and/or those who experience mobility issues preventing them from seeking in-person care. The proposed legislation represents a direct challenge to the DEA's regulatory direction, highlighting the tension between maintaining expanded healthcare access and controlling prescription drug distribution. --- Hikmat N. Al-Chami
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“The hacker has created Telegram bots to access data of 31,216,953 customers updated till July 2024 and 5,758,425 claims of the company available till early August.”
Why this is important: Corporate espionage by an insider is every company’s nightmare. It is even worse if the insider is purposefully sharing customers’ personal identifying information (PII) and protected health information (PHI) with bad actors. That was the case with Star Health, an insurance company in India. In this instance, it is alleged that Star Health’s own chief information security officer (CISO) colluded with bad actors to compromise the data of 31 million insureds’ PII and PHI. The breach exposed insureds’ names, PAN numbers, mobile numbers, email addresses, policy details, birthdates, and confidential medical records. The breach was only discovered after third-parties alerted Star Health to the possible breach.
If this had happened in the U.S., this breach would have constituted a major HIPAA violation. The breach would have triggered the reporting requirements outlined in the Breach Notification Rule (45 CFR §§ 164.400-414). Specifically, impacted individuals would have to be contacted without reasonable delay, and in no case later than 60 days following the discovery of the breach. The breach notification would be required to include, to the extent possible, a brief description of the breach; a description of the types of information that were involved in the breach; the steps affected individuals should take to protect themselves from potential harm; a brief description of what the covered entity is doing to investigate the breach, mitigate the harm, and prevent further breaches; as well as contact information for the covered entity, or business associate, as applicable. Because this breach would have impacted more than 500 residents of a state or jurisdiction, the covered entity or business associate would also be required to notify prominent media outlets serving the state or jurisdiction. Additionally, if this breach had taken place in the U.S., the covered entity or business associate would also have to contact the Office of Civil Rights within the Federal Department of Health and Human Services without unreasonable delay, and in no case later than 60 days following a breach.
It is well known that an organization’s employees are the greatest risk to the organization’s data because they have the most access. Most of the time, data breaches caused by employees are not malicious. That is why we recommend extensive training so that your employees can easily recognize threats to the organization’s data, develop a culture that values data security so that your employees feel safe reporting potential threats, and limit access to data to only those who need to know the information to do their job duties. While these steps likely would not have prevented the breach that Star Health experienced because its head data privacy officer purposefully provided access to the bad actor in exchange for a bribe, a culture that values data privacy and reporting threats may have minimized the harm by empowering a lower level employee to recognize a possible problem to report it to other high-level executives. --- Alexander L. Turner
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The FTC’s Rule Banning Noncompete Agreements is Dead. Long Live Noncompete Agreements? | |
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By Mitchell J. Rhein
Earlier this year, the Federal Trade Commission (FTC) announced a Final Rule outlawing nearly all noncompete agreements between employers and employees. That Final Rule, however, was overturned at the end of August 2024. After granting a limited injunction in July 2024, a Texas court invalidated the FTC’s Final Rule days before it was set to take effect on September 4, 2024.
The court ruled that the FTC has no authority to issue broad rules like the Final Rule banning noncompete agreements or invalidating millions of contracts retroactively. Instead, the court said the FTC could only deem noncompete agreements unfair methods of competition through case-by-case adjudication. The court also concluded the Final Rule was unenforceable because the FTC lacked sufficient evidence to support a categorical ban on non-compete agreements and failed to consider less restrictive alternatives.
So, what’s next?
Click here to read the entire article.
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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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Alexander Macia has practiced law for over 33 years, the last 19 of them with Spilman. Alex is the Co-Chair of the firm’s Government Relations Practice Group and, over his career, lobbied at the West Virginia state house for certain entities in the healthcare and healthcare delivery industries such as the West Virginia State Medical Association, the American Heart Association, Maximus, Delta Dental, the American Lung Association, and the West Virginia Chapter of the American College of Cardiology. In addition to his government relations practice, Alex has defended physicians, hospitals, and other healthcare practitioners in state and federal courts, as well as before their respective licensing boards.
What is the first thing you do when you get the assignment to enact legislation?
The language of any proposed bill must be fully vetted with attorneys in the respective professional healthcare organization, be it the American Medical Association, or the relevant specialty organizations, because there are many pitfalls to legislating medical practice and those organizations are positioned well to understand and guard against the potential adverse consequences of ill-defined terms or other loose language. The next step is to understand and set the expectations of the client. On average, about 2,300 bills are introduced in every annual 60-day regular session. Of that number, about 290 are enacted. This yields an annual average of 12.5 percent. With such a marginal success rate, it is imperative to be able to effectively communicate the need for the bill, line up allies who support the bill, and apply persistent pressure to ensure that it is not lost in the blizzard of bills that blanket the legislature every session.
What are the biggest obstacles to lobbying for a healthcare organization?
The genius of our state constitution is that it created a citizen legislature where teachers, public employees, coal miners, lawyers, pest control technicians, and taxi cab drivers can all serve as representatives. The flip side of that coin, however, is that there aren’t many members with medical training (there are now a total of three physicians out of 134 members). Moreover, the legal staff on the committees typically don’t have such a background. I have discovered that the best way to communicate to the members and their staff is to find a practitioner in the relevant field to be the advocate to the Legislature for the bill. A practitioner can testify that the bill is important and should enacted because it is “beneficial to my patients.” I can never say those words, so when I speak about the need for legislation, I don’t have the credibility of the medical professional with an active practice. Additionally, that person should be able to reduce the need for legislation to one easy to remember anecdote which neatly encapsulates the need for the legislation and its desired effect. A few years ago, we were advocating for a bill that recognized certain pharmaceuticals known as biologicals and biosimilars, both of which are routinely used in rheumatology. The physician who testified to the bill told the story of a particular patient who suffered needlessly for years because she could not afford the exorbitant costs of biologicals and how that case nagged at the physician because there did not appear to be any relief for her patient. The bill she advocated permitted pharmacists to dispense interchangeable biosimilars to patients in much the same way that generics are now routinely dispensed for name brand pharmaceuticals. The story of the patient suffering for rheumatism became the quick anecdote which could be recounted to legislators running between meetings or even bites of lunch.
If you have questions about any potential legislation, please contact Alex and his team for guidance.
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