United States: 2015 Year In Review: Health Law

Stark Law Changes Introduced in 2016 Medicare Physician Fee Schedule

In the first major changes to the Physician-Self Referral Law ("Stark") regulations since 2009, CMS issued several clarifications, new exceptions and explanations in the 2016 Medicare Physician Fee Schedule Final Rule. Among the changes were the following:

  • New exception recognized for recruitment assistance and retention payments from hospitals, FQHCs and RHCs to allow physicians to bring in new non-physician practitioners;
  • Clarification that lease exceptions for a written agreement do not require a single contract, but may include multiple writings. To implement this, the term "agreement" was replaced in the regulatory language with "lease arrangement"; and
  • New exception recognized for timeshare lease arrangements between a physician and hospital or unrelated physician organization, with certain exceptions.

The full text of the Final Rule with these and other Stark changes can be found at: https://s3.amazonaws.com/public-inspection.federalregister.gov/2015-27931.pdf.

New DOJ Policy on Individual Accountability for Corporate Wrongdoing

In a memorandum dated September 9, 2015, the Department of Justice set forth a tough new policy to address individual accountability for corporate wrongdoing. This memo, sent to all U.S. Attorneys, outlined a stricter new approach for any companies seeking to receive any consideration for cooperation in a civil or criminal investigation. Specifically, "to be eligible for any credit for cooperation, the company must identify all individuals involved in or responsible for the misconduct at issue, regardless of their position, status or seniority, and provide to the Department all facts relating to that misconduct." This includes companies such as health care entities being investigated under the False Claims Act, 31 U.S.C. § 3729(a)(2). U.S. Attorneys are further instructed that investigations should focus on individuals from the inception of the investigation, and that, absent extraordinary circumstances, no corporate resolution will provide protection from criminal or civil liability for any individuals.

For a copy of the DOJ Memo, please see: http://www.justice.gov/dag/file/769036/download.

Changes in Telemedicine Coverage and Restrictions

  • Congress passed the TELEMedicine for MEDicare Act of 2015 (TELEMED Act) and the Veterans E-Health and Telemedicine Support Act of 2015 and over 200 bills were passed in all but eight states to make telemedicine ubiquitous as a means of addressing access to care.
  • In almost all states (except Rhode Island), Medicaid now reimburses telemedicine services and most states reimburse for live video visits.
  • Efforts by the Texas Medical Board (TMB) to restrict telemedicine services are being successfully challenged in court by TelaDoc, the nation's first and largest telehealth provider. After five separate challenges by the TMB, followed by enactment of a new rule to formally impose requirements deemed unreasonable for most telemedicine consultations, TelaDoc filed suit under federal antitrust law to block the imposition of the rule. An injunction on the application of the new rule has been imposed and TMB's attempts to have the suit dismissed have been unsuccessful. This ruling reflects a growing change in attitude towards state regulatory agencies as highlighted by the recent U.S. Supreme Court decision in North Carolina Board of Dental Examiners v. Federal Trade Commission where the Board (all private practitioners) was found to have violated Sherman Antitrust laws by imposing cease and desist orders on corporate entities alleged to have engaged in the corporate practice of dentistry.

We can expect more changes in 2016 in the following areas:

  1. Private and public payors will continue to expand coverage of telemedicine services as consumer and employer demand increases.
  2. Telemedicine will become an important means of expanding medical education and research on an international basis.
  3. States will continue to support laws and rules that support telemedicine expansion in response to growing local/community needs for access to health services.
  4. Employers with on-site clinics will look increasingly to telehealth services for their employee health and wellness programs.
  5. Telemedicine will become an increasingly important feature of clinically integrated networks and ACOs to better coordinate care and achieve greater savings among.

New Physician Payment Model ("MIPS") from MACRA

On April 16, 2015, Congress enacted into law P.L. 114-10, the "Medicare Access and CHIP Reauthorization Act of 2015" ("MACRA"), which reforms the payment system for Medicare providers. MACRA repeals Medicare's "Sustainable Growth Rate" formula and replaces it with a new compensation system that rewards Medicare providers for value and quality patient care. Medicare providers may participate in the MACRA program by one of two methods: (1) "Merit-Based Incentive Payment System" ("MIPS"); or (2) "Alternative Payment Models" ("APMs"). The MACRA payment models will largely become effective in 2019. In addition, MACRA combines CMS' existing quality reporting programs into one new system by combining parts of the PQRS, the Value-based Payment Modifier, and the EHR incentive program based on the following factors: (a) quality; (b) resource use; (c) clinical practice improvement; and (d) meaningful use of certified EHR technology. MACRA rewards physicians who choose to adopt the new payment and delivery models, while also retaining its fee-for-service model. Participation in the payment models by Medicare providers is voluntary. APMs will also provide alternative methodologies to compensation Medicare providers. Accountable Care Organizations ("ACOs"), Patient Centered Medical Homes, and bundled payment models are some examples of APMs.

Hackable Medical Devices

With the Office of Civil Rights report (https://ocrportal.hhs.gov/ocr/breach/breach_report.jsf), it is clear that data privacy breaches of healthcare providers and payors continue to be a problem. Medical information has become more valuable to hackers than even financial information, with a medical record going for upwards of ten times the value of a credit card number. This is leading hackers to try to find new and creative ways into hospital and physician office networks.

While networked data centers, laptops, and even phones are obvious targets for hackers to obtain medical records, there is also a new target - medical devices. This is due to the fact that medical equipment is increasingly becoming connected to the internet so that the data it produces can be fed into EMR systems. While this is a good feature for a number of reasons (data entry accuracy, speed, etc.), this type of connectivity has now made the MRI an attack point. If a hacker can gain access to the MRI (or other connected medical device), that device can be used in an attack (such as a "credential elevation" attack) which can give the hacker access to the entire EMR database. This doesn't even take into consideration the patient safety implications of hacking devices like an IV pump.

As far back as 2014, Dave Kennedy, CEO of TrustedSEC LLC, said: "As attackers discover new methods to make money, the healthcare industry is becoming a much riper target because of the ability to sell large batches of personal data for profit. Hospitals have low security, so it's relatively easy for these hackers to get a large amount of personal data for medical fraud."

Consequently, it is important to use the same security protocols in setting up an internet-capable medical device as a new web server. In addition, device manufactures seem to be assuming their devices will be only inside "trusted" environments. A number of security practices which are implemented by device manufacturers in other markets seem to be absent in medical devices (e.g. use of same default password across models, etc).

With the affirmative security obligations imposed by the HIPAA/HITECH Megarule, healthcare providers are in need of including their medical devices in the same security program that all other connected devices are subject to. Otherwise, a security breach is much more likely to occur.

OCR's Security & Privacy Audits

Under HIPAA/HITECH the Office of Civil Rights ("OCR") conducts audits to determine compliance with the privacy and security rules. Previously, the OCR only audited a sample of "Covered Entities". However, OCR has indicated that it is expanding its audit program to include Business Associates. This is particularly important because the 2014 changes to the privacy and security rules bring Business Associates directly under the regulatory framework of HIPAA/HITECH. Business Associates are no longer merely bound by their agreement with a Covered Entity, but rather are directly regulated. Note that this does not mean that the Covered Entities are off the hook. In September 2015, the OIG published a report criticizing OCR sharply for its overly "reactive" approach to HIPAA compliance and lack of oversight of Covered Entities' compliance with the Privacy Rule. Thus, we anticipate that OCR will maintain, and probably increase, its focus on Covered Entities.

Critically, the Phase 2 Audits will target HIPAA Standards that were frequent sources of non-compliance in the Phase 1 Audits, including risk analysis and risk management, content and timeliness of breach notifications, notice of privacy practices, individual access, the Privacy Standards' reasonable safeguards requirement, workforce member training, device and media controls, and transmission security.

OCR projects that later Phase 2 Audits will focus on the Security Standards' encryption and decryption requirements, facility access control, breach reports and complaints, and other areas identified by earlier Phase 2 Audits. Phase 2 Audits of Business Associates will focus on risk analysis, risk management and breach reporting to covered entities.

2015 saw multiple significant settlements with providers over healthcare compliance, including non-institutional providers. Clearly, OCR is focusing on the full range of provider types and is taking the possibility of HIPAA penalties seriously.

CMS Introduces Prior Authorization for DMEPOS

After multiple reports by the Office of the Inspector General showed a longstanding history of improper payments, CMS is adding an additional step for requesting providers. Now, all relevant coverage, coding, and clinical documentation requirements must met before a patient can receive his or her device and before the claim is submitted by the provider for payment. In fact, under the new rule, claims for certain DMEPOS items must have an associated provisional affirmed prior authorization decision as a condition of payment. This rule also adds the review of a contractor's decision regarding prior authorization to the list of actions that are not initial determinations and therefore not appealable.

According to CMS, this new scrutiny will not burden patients; rather, the new prior authorization requires the same information already mandated by Medicare, just earlier in the process. There are no new clinical documentation requirements in order to receive devices.

Although some degree of administrative red-tape can certainly be expected, CMS has created an expedited process in the event that a delay in processing will endanger patient health. To further alleviate the burden on providers and suppliers, CMS is limiting this new rule to only 35 items on the master list of supplies - for now. The ultimate goal is to reduce fraudulent claims, and with an estimated $10 million dollars to be saved in 2016 alone, provider should expert prior authorization to become the new normal.

Congress Enacts New Restrictions on HOPDs

President Obama signed the Bipartisan Budget Act of 2015 (Act) into law on November 2, 2015. Section 603 of the Act implements a so-called "site-neutral" Medicare payment reform for off-campus hospital outpatient departments (HOPDs) by changing the reimbursement methodology for such entities.

Starting on January 1, 2017, apart from dedicated emergency departments, services and items provided at HOPDs that are located more than 250 yards from a hospital's main campus or remote location will be reimbursed under the Physician Fee Schedule (or Ambulatory Surgical Center Payment System) and not under Medicare's Prospective Payment System for Hospital Outpatient Department Services (OPPS).

Although the Act grandfathers such HOPD locations that were billing under the OPPS prior to November 2, 2015, industry associations, such as the American Hospital Association, are expressing concern regarding the Act and, in particular, the fact that its effective date did not provide for any time to prepare for such a change.

We anticipate that the implementing regulations to be promulgated by CMS will provide some clarity on this issue and perhaps future legislation will provide some relief for those caught up in this sudden change.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

In association with
Related Topics
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions