|
Welcome
Welcome to our second issue of 2025 of The Health Record -- our healthcare law insights e-newsletter.
In this edition, we look at the effect of the decline of DEI on the healthcare industry, the fate of Medicaid under the new administration, leveraging technology, an issue impacting non-profits in Pennsylvania, HIPAA and reproductive health issues, guidance on I-9 investigations and raids, the latest regarding the Corporate Transparency Act, understanding how ChatGPT and HIPAA can work together, the increasing occurrences of ransomware in healthcare, and the decline in healthcare bankruptcies. Finally, Kevin Carr and Mitch Rhein answer our questions about labor and unionization issues as they pertain to healthcare.
We also would like to share some information about conferences we are sponsoring, attending and will be presenting.
CHARLESTON AREA ALLIANCE ISSUES & EGGS LEGISLATIVE BREAKFAST, CHARLESTON, WV, FEBRUARY 11
With keynote remarks by West Virginia's legislative leaders and a preview of the Chamber's legislative agenda, Issues & Eggs supports the Chamber's efforts to champion economic prosperity and quality of life for the Kanawha Valley. Spilman is pleased to sponsor this event. Click here to learn more.
2025 WVEDC LEGISLATIVE CONFERENCE, CHARLESTON, WV, FEBRUARY 25-26
The 2025 West Virginia Economic Development Council Legislative Conference includes educational sessions covering relevant economic development topics facing economic developers practicing in the State of West Virginia. Spilman’s own James Bailey will be presenting on an omnibus state government legislative outlook. Click here to learn more.
Finally, Jeff Patton, Member in Charge of the Winston-Salem Office, was recently interviewed by FAR -- The Nonprofit Business Leaders' Network -- regarding the state of nonprofits and the latest issues impacting those organizations. You can read that interview here.
We hope you enjoy this issue and will let us know if you have any questions or suggestions.
Brienne T. Marco
Member, Chair of the Corporate Department, and Editor of The Health Record
| |
|
“The American Association of Medical Colleges noted in a blog post that the DEI EO would impact academic medical centers receiving federal funds.”
Why this is important: What a whirlwind it has been since President Trump took office. Trump’s far-reaching and sweeping executive orders on DEI programs/policies will undoubtedly have an impact on the medical field, particularly those institutions/facilities that accept federal funding of any kind. This article explores the new and unknown world of how Trump’s rollback of DEI programs/policies could have a real effect on medical professionals, medical schools, and patient care. Given that we are still in the early stages of implementation of Trump’s executive orders, the full practical effect of these orders is still unknown, but everyone who works within the medical field will need to keep an eye on how the DEI rollback is effectuated, particularly when it comes to federal funding. --- Matthew W. Georgitis
| |
|
“Larger financial burdens could fall on individual states, which could reduce the number of people eligible for Medicaid and lead to additional cuts to services.”
Why this is important: A potential restructuring of Medicaid, which serves 90 million Americans including children, elderly, disabled, and low-income individuals, could fundamentally alter healthcare access for the nation's most vulnerable populations.
In response to a memorandum from the Office of Management and Budget directing federal agencies to freeze all federal grants and aids, U.S. District Judge Loren L. AliKhan temporarily blocked parts of the administration's plans through February, three minutes before the directive was scheduled to take effect, before a complete stay of the freeze’s enforcement was issued by a second federal district judge, Judge John J. McConnell Jr. Despite the White House attempting to narrow the freeze's scope to programs involving immigration, foreign aid, climate and energy, gender identity, DEI initiatives, and elective abortion funding and asserting that Medicaid was not part of the original freeze, Republican leaders have identified it as a key target in their broader $5 trillion federal spending reduction plan, proposing to cut Medicaid funding by $2.3 trillion over the next decade.
Such dramatic reductions would transform the program's existing $600 billion annual budget, of which the federal government currently provides 70 percent while states cover the remainder. Medicaid's reach is extensive, serving as primary health insurance for half of all adults and 80 percent of children living in poverty, while also covering 43 percent of non-elderly adults with disabilities and funding 40 percent of all U.S. births.
Healthcare experts remain deeply concerned about Medicaid's future with Dr. Kanwar Kelley, CEO of Side Health warning that any substantial cuts would have “massive negative implications across the entire healthcare system.” Dr. Kelley asserts that states will soon face difficult choices of choosing between restricting eligibility, reducing services, or withdrawing from the program entirely due to the suggested federal spending cuts. Rural healthcare facilities, nursing homes, and county hospitals appear particularly vulnerable due to serving a higher proportion of Medicaid patients than urban facilities.
The Modern Medicaid Alliance highlights broader implications, noting that funding cuts could force states to reduce other essential services including education and infrastructure. Healthcare providers emphasize that reduced funding would disproportionately affect those in healthcare deserts and individuals facing transportation or childcare barriers. Despite Medicaid’s exempt status from the freeze, with a legal battle over the federal funding freeze likely heading toward the Supreme Court, any decision will likely signal a potential impact on Medicaid’s future. --- Hikmat N. Al-Chami
| |
|
“Technology to help medical professionals and their patients has advanced substantially in recent years, especially in the aftermath of the COVID-19 pandemic, officials said.”
Why this is important: Technological advancements in healthcare, such as electronic medical records, telemedicine and robots are improving the quality of patient care, expanding access to care, and shortening hospital stays and recovery times. Health systems in West Virginia are using these technologies to improve their patient experiences and expand their reach, ensuring that West Virginians receive the best quality of care, no matter where in the state they live. --- Brienne T. Marco
| |
|
“Two dozen states have enacted legislation to control the fallout when for-profit medicine goes bad.”
Why this is important: A recent surge in for-profit healthcare bankruptcies has highlighted the need for oversight of transactions involving medical practices, hospitals, nursing homes and other healthcare providers owned by private investors in Pennsylvania.
Two dozen states have enacted legislation to address fallout when for-profit medicine fails, but Pennsylvania has not. A string of bankruptcies of investor-owned healthcare in the state includes three hospitals in Delaware and Mercer counties; Sharon Regional Medical Center; Crozer Health System; Prospect Medical Holdings Inc.; and a chain of nursing homes, all of which were owned by private investors.
Quality of care is also an issue with healthcare motivated by profit. A 10-year study by Harvard Medical School found that medical complications for Medicare patients rose 25 percent at hospitals after they were purchased by private equity. These failures highlight the need for additional transactional oversight of for-profit healthcare deals.
Twenty-four states have enacted laws related to healthcare systems, such as requiring merger review and approval. At least a half dozen bills have been introduced into the Pennsylvania legislature to improve hospital transaction transparency, but Pennsylvania has not enacted any such laws at this time. Pennsylvania is the only state without an antitrust statute, which also limits the state’s power to monitor healthcare deals. --- Anthony L. Huber
| |
|
“The lawsuit names 14 other states as plaintiffs – Alabama, Arkansas, Georgia, Idaho, Indiana, Iowa, Louisiana, Montana, Nebraska, North Dakota, Ohio, South Carolina, South Dakota, and West Virginia.”
Why this is important: On April 23, 2024, the Department of Health and Human Services (HHS) Office for Civil Rights issued the HIPAA Reproductive Health Care Privacy Final Rule (Rule). The Rule implemented changes to improve privacy protections related to women’s reproductive health by prohibiting the disclosure of protected health information (PHI). The rule applies to requests for PHI for health oversight activities, judicial and administrative proceedings, law enforcement purposes, and disclosures to coroners and medical examiners. The Rule took effect on June 25, 2024, and mandatory compliance began on December 23, 2024.
Thirteen states have joined Tennessee in its suit against HHS challenging the Rule. Texas has also brought its own suit against HHS with similar challenges to the Rule. The states allege that the Rule prohibits them from collecting information necessary to prevent Medicaid abuse, child and elder abuse, and insurance fraud. The states go on to allege that the Rule was implemented for political purposes and that it creates unlawful impediments to the states’ oversight actions to protect state citizens. The concern is that if the Rule is overturned by the courts, it may result in prosecutors in a woman’s home state, where the ability to obtain an abortion is limited, obtaining her PHI related to an abortion she received in a more lenient state. The fear is that these investigations will result in prosecution in the woman’s home state of the woman and doctor who performed the procedure out of state. Many states have passed physician shield laws to protect against these types of prosecutions, but even those laws are being challenged. With the change of administrations, we will have to see whether HHS will defend against these lawsuits, or if there will be an Executive Order preventing the enforcement of the Rule. --- Alexander L. Turner
| |
|
“Business owners in segments such as restaurants, construction, and meatpacking should be prepared for an increase in I-9 audits and immigration raids after President Donald Trump signed a slate of immigration-related executive orders.”
Why this is important: The first weeks of the Trump administration have confirmed that employers can expect increased enforcement of immigration compliance. Immigration & Customs Enforcement (ICE), Department of Homeland Security (DHS), and Homeland Security Investigations (HSI) will conduct more I-9 audits and other worksite enforcement actions (i.e., “raids”). All employers should develop proactive plans to mitigate the risks of these enforcement actions, including civil money penalties, seizure of employer resources, and criminal charges.
The most common enforcement action is an I-9 audit. These audits may be random. In such an audit, an ICE, DHS, or HSI agent will serve the employer with a Notice of Inspection requiring the employer to produce all Form I-9s for a specified period, supporting documents for the Form I-9s, and other information about employees (e.g., list of employees and contractors). The agent will review the documents provided by the employer. The agent may provide the employer time to correct any minor errors, and uncorrected technical and substantive violations can result in a civil penalty of $281 to $2,789 for each individual violation.
“Raids” are much more infrequent than I-9 audits. These actions require a warrant for agents to seize information and individuals. Unlike an audit, an employer will have no advance notice. Many agents will appear at the worksite, secure the worksite, and enter the worksite with a warrant. In response, employers must immediately contact its legal counsel. Employers do not have to answer an agent’s questions, but agents may detain unauthorized workers and seize employer property.
To mitigate the risks of enforcement actions and penalties, employers should have an attorney conduct or supervise an internal audit of the employer’s I-9 compliance. Any errors discovered during such an audit should be corrected to avoid or mitigate potential penalties before the employer is audited or raided by immigration agencies. Additionally, employers should ensure responsible employees are properly trained on preparing and maintaining Form I-9s and how to respond to any worksite enforcement actions. --- Mitchell J. Rhein
| |
Corporate Transparency Act Still Blocked Despite Supreme Court Decision | |
|
By Brienne T. Marco and Joseph C. Unger
The saga of confusing Corporate Transparency Act (CTA) litigation continues, but the guidance remains the same: companies are not currently obligated to file Beneficial Ownership Information (BOI) reports with the U.S. Treasury’s Financial Crimes Enforcement Network (FinCEN). The U.S. Supreme Court has granted the government’s motion to stay a nationwide injunction issued by a federal judge in Texas. However, a separate nationwide order issued by a different federal judge in Texas still remains in place.
Click here to read the entire article.
| |
|
“Generative AI has many potential uses in healthcare; however, organizations that are required to comply with the Health Insurance Portability and Accountability Act (HIPAA) are not permitted to use these tools in connection with any ePHI unless the tools have undergone a security review and there is a signed, HIPAA-compliant business associate agreement in place with the provider of the tool.”
Why this is important: The use of AI in the medical industry is growing exponentially. AI is used in both clinical care and in streamlining back office procedures. However, not all AI platforms are created equal, and the use of some AI platforms may result in HIPAA violations. This is because AI learns from the information put into it, and once entered, that information forms the basis of the platform's algorithm moving forward. In order for AI to be used in a healthcare setting, it must be HIPAA compliant. To be HIPAA compliant, the AI platform must have been subject to a security review, and there must be a signed business associate agreement with the AI platform developer. Some AI developers, like the developer of ChatGPT, refuse to sign a business associate agreement. This means that ChatGPT is not HIPAA compliant and cannot be used in connection with any electronic protected health information. However, ChatGPT can be used in connection with de-identified protected health information. The use of non-HIPAA compliant AI in a healthcare setting, even if permissible, risks its inadvertent use with electronic protected health information in violation of HIPAA. If AI is going to be used in a healthcare setting, it is best that a HIPAA compliant AI platform be used for all tasks in order to eliminate the risk of inadvertent disclosure of protected health information. If you have questions regarding the use of AI in your medical practice or facility, need HIPAA compliance training, or a HIPAA-compliant AI policy, please contact a member of Spilman’s Health Care Practice Group. --- Alexander L. Turner
| |
|
“The survey was conducted on 2,547 IT and cybersecurity professionals in the United States, United Kingdom, Germany, France, Australia, and Japan, including 7% of respondents from the healthcare and pharmaceutical sectors.”
Why this is important: Cybersecurity has become a critical component of healthcare delivery, with nearly every component of the system from appointment scheduling to prescription ordering reliant on connected technology. On average, healthcare companies receive and maintain more sensitive information than other industries, and that makes healthcare companies a big target for cyberattacks. The growing number of cyberattacks has resulted in the federal government’s implementation of mandatory and voluntary measures for healthcare companies. Last month, the U.S. Department of Health and Human Services (HHS) proposed the first update to the HIPAA security rule in a decade. The proposed rule aims to improve cybersecurity and better protect the U.S. healthcare system from a growing number of cyberattacks. The proposed rule would, among other things, mandate specific risk analyses and use of multi-factor authentication.
In January 2024, HHS released voluntary cybersecurity goals for healthcare and public health organizations that are broken down into essential and enhanced safeguards, aim 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. Unfortunately, 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
| |
|
“Still, bankruptcy filings remained elevated, with the sector reaching the second-highest amount in the past six years, according to healthcare restructuring advisory firm Gibbins Advisors.”
Why this is important: Healthcare bankruptcies in the U.S. declined year-over-year in 2024, but it was still the second-highest number of filings in six years. The healthcare sector continues to be bombarded with pressures including increasing labor costs, workforce shortages, and payer pressures, including a 2.83 percent reduction in Medicare’s physician fee schedule for 2025.
The bankruptcy trend in healthcare is highly correlated to size and provider. There were only five hospital operators who filed for bankruptcy in 2024, compared to 12 in 2023. On the other hand, senior care and pharmaceuticals made up nearly half of healthcare bankruptcies. The greatest portion of the decline in bankruptcies has been in the middle market, between $10 million and $100 million of liabilities. There were only 34 middle market filings in 2024, compared to 51 in 2023. --- Anthony L. Huber
| |
Featured Attorney Question & Answer | |
This is our Featured Attorney Q&A to introduce you to our large healthcare law team. To help you get to know our team a little better, we are highlighting attorneys in each issue by asking them a healthcare-related question. We hope their responses will be insightful for you. | |
|
Kevin L. Carr
Member in Charge of Northern Florida Office; Co-Chair, Labor and Employment Practice Group; Co-Chair, Education Practice Group
Northern Florida and Charleston, WV
904.323.1410 and 304.380.3477
kcarr@spilmanlaw.com
| |
|
As two attorneys with extensive experience in union organizing efforts, we know that unions often try to organize healthcare employees. Given the new political climate and the ever-changing healthcare landscape, what are your “best practices” when it comes to maintaining high employee morale and how do you suggest employers address the potential of unionizing efforts?
A: You’re right that unions have recently sought to organize more healthcare employees. While union representation largely declined among most industries last year, the percentage of healthcare practitioners represented by a union increased slightly from 2023 (13.1%) to 2024 (13.7%). For healthcare employers who want to maintain a union-free workforce, the foundation is ensuring high job satisfaction among employees. Ensuring high job satisfaction is the obvious stuff: (1) compensation and benefits (as a whole) meet or exceed the relevant market; (2) employees have avenues to raise concerns and there is a reliable system to resolve those concerns; and (3) employees understand their role in the organization and feel valued for the work they perform. To measure these metrics, employers may regularly conduct employee satisfaction surveys and encourage supervisors to meet with employees to solicit feedback about satisfaction.
Beyond the obvious of keeping your employees satisfied, there are several steps employers should take to address the potential for unionizing efforts:
-
First, employers must invest in training supervisors how to effectively communicate with the employees they supervise. The most likely source of union organizing is ineffective communication between supervisors and employees. If an employee does not get his or her concerns resolved by a supervisor, they will seek a third party such as a union who will listen and work to resolve them. Too often, employers promote employees who are good performers to supervisory positions with no training on how to supervise, which often requires a different skillset than what made the employee a good performer in a non-supervisory position.
- Second, supervisors must know the early signs of union organizing and what to do when they spot those signs. For example, supervisors should immediately report to human resources any signs that employees are soliciting union authorization cards, posting pro-union content, or more subtle signs such as concerted complaints about wages, hours, or working conditions. An employer’s best opportunity to stop union organizing is at the beginning of the process. So, quick responses to early signs are critical.
- Third, supervisors must know the company’s position and how to lawfully speak with or answer questions from employees about unions. This has two parts: (1) the employer must develop its “position” about unions and (2) it must train supervisors on this message and how to lawfully speak with employees about unions. If the employer’s position about unions is it believes employees do not need union representation, then the employer must have a message to explain why union representation is not in the employees’ best interests. Does the employer have compensation and benefits that exceed the market? Does the employer provide employees with tools (e.g., regular performance evaluations) to seek better wages, hours, and working conditions? Before supervisors may discuss unions with employees, they must be trained on what they can and cannot say to avoid coercing or interfering with employees’ protected rights under the National Labor Relations Act.
In short, unions do not unionize employees; employers do. Employers who want to maintain an union-free workforce, must first invest in measuring and improving employee satisfaction. With a strong foundation of high employee satisfaction, an employer may start a union avoidance strategy to mitigate the risk that employees will believe that a union is necessary to improve their wages, hours, or working conditions.
If you have questions about this topic or other healthcare-related issues, please contact us.
| |
|
This is an attorney advertisement. Your receipt and/or use of this material does not constitute or create an attorney-client relationship between you and Spilman Thomas & Battle, PLLC or any attorney associated with the firm. This e-mail publication is distributed with the understanding that the author, publisher and distributor are not rendering legal or other professional advice on specific facts or matters and, accordingly, assume no liability whatsoever in connection with its use.
Responsible Attorney: Michael J. Basile, 800-967-8251
| | | | |
