Health Care Lawyer Blog

I seem to be caught in an alarming pattern in which every time I leave the country, I return to fiscal and/or political turmoil. In September of 2008, for example, I departed to St. Lucia for a week and arrived back into the eye of the Wall Street collapse; Lehman Brothers had filed for bankruptcy, Fannie Mae and Freddie Mac had been placed in conservatorship, and general chaos reigned.

On Monday, I returned from a week in lovely Cabo San Lucas, Mexico in the wake of one of the most significant – and controversial – pieces of health care legislation in U.S. history. With the historic Patient Protection and Affordable Care Act (“PPACA”) now law and passage of the Reconciliation Bill looming (as of the time of this post, the bill had passed both the House and Senate and is awaiting President Obama’s signature), sweeping changes are scheduled to unfold during the next several years.

Some of the key provisions are as follows:

- Immediately, the Act will give small businesses a tax credit to help them pay for health insurance. Seniors will get a $250 rebate on prescription drug expenses. The federal government will begin providing significant funding to community health centers, eventually doubling the number of patients treated at these centers. The federal government will also provide funding to train additional primary care physicians, nurses and public health professionals to meet the increased demand for health care services.

- Within the next ninety days, individuals with pre-existing conditions will be able to purchase subsidized health insurance. Retiree health plans covering early retirees (ages 55 to 64) will qualify for a new federal reinsurance program which will reduce the costs of these plans, helping many Michigan businesses.

- In six months, all health plans will be prohibited from denying benefits to children because of pre-existing conditions or canceling coverage or a policy when a patient becomes sick or reaches a lifetime limit. Health plans will be required to permit young adults up to age 26 to remain on their parents' insurance policies. All new health plans will be required to provide free preventive care with no co-pays or deductibles.

- Beginning January 1, 2011, all insurance plans will be required to spend at least 80 percent of their revenues on paying claims. If an insurer spends too much on overhead, the insurer will be required to rebate some of the insurance premiums it collected.

- Many other significant changes will be made when Michigan's health insurance exchange is launched. Michigan residents and small businesses will be able to purchase insurance from the exchange at affordable rates. Michigan has until 2014 to launch this exchange. Once the exchange has been launched, no one can be denied insurance based on a pre-existing condition.

For a list of employer-specific considerations, please visit the linked article by FHWN attorney Michael Hamblin.

During the next weeks, the Health Care Lawyer Blog will continue to provide updates and details on the new PPACA, including new measures to fight "behavioral waste", new whistblower protection provisions, and amendments to the federal False Claims Act.

It's do or die time this weekend - and not just for the NCAA teams.

A vote is expected Sunday on the health care bill, which has snowballed into the latest headline-dominating, talk-show-circuit monopolizing craze. Today, House Democratic leaders dropped a plan, called the "Deem And Pass" (aka "Demon Pass"), to approve the Senate version of the health care bill without taking a direct vote on in. The "Demon Pass" enraged Republicans and drew ire from protestors, who have circled the Capitol this week picketing and chanting angry slogans. The remaining hot-button issue on the bill appears to be (as always) limits on insurance coverage for abortions.

The Health Care Lawyer Blog will be on hiatus next week - however, stay tuned for extensive analysis on any passed legislation starting Monday, March 29.

Congress has again delayed the pending 21 percent reduction in the 2010 Medicare Physician Fee Schedule. A bill that was swiftly passed through the House and Senate late last month grants an additional 30-day extension for implementing the cuts in physician reimbursement rates. The bill, H.R. 4691, also extended for one month the expiration deadline for unemployment benefits and COBRA health care subsidies.

In other postponement news, the FTC has (again) delayed enforcement of the Red Flags Rule from November 1, 2008 to June 1, 2010. The American Medical Association has continued its efforts to convince the FTC that the rule should not apply to physicians and their practices. Since the rule was issued, the AMA has objected to the FTC’s stance that physician practices are “creditors” since they accept insurance and bill patients after services have been provided, or if they allow patients to set up payment plans for services.

The AMA’s efforts are most likely spurred on by an October 2009 decision from the U.S. District Court for the District of Columbia held that the Red Flag Rules did not apply to attorneys. The decision was the result of a lawsuit filed by the American Bar Association which protested the application of the Red Flag Rules to attorneys. Specifically, the court held that the law was too vague to infer that Congress intended to regulate the legal profession as creditors.

A recent case from the federal Court for the Northern District of Ohio has set out that the Health Insurance Portability and Accountability Act's (HIPAA) exception permitting disclosure of medical records in response to a grand jury subpoena does not authorize covered entities to disclose a patient’s protected health information (PHI), when a more-restrictive state statute prohibits such a disclosure.

Specifically, in Turk v. Oiler, Dkt. No. 09-CV-381 (ND Ohio, Feb. 2010), Ohio’s Cleveland Clinic received a subpoena that ordered it to appear as a witness before a grand jury and produce certain documents relating to the medical treatment of a patient. The Clinic produced the documents pursuant to 45 C.F.R. §164.512(f)(1)(ii)(B). The patient thereafter sued, claiming that Ohio’s physician-patient privilege statute does not contain an exception permitting disclosure of PHI in response to a grand jury subpoena. Specifically, the Ohio statute states that a physician cannot testify as to “a communication made to the physician… by a patient in that relation or in the physician’s advise to a patient” except under limited circumstances.

Since in the past, Ohio state courts have specifically declined to create an exception to the privilege statute for grand jury proceedings, the court held that the disclosure was improper. The court also rejected the Clinic’s argument that since the grand jury proceedings are confidential, it did not “publically” disclose the patient’s medical records. Therefore, the Cleveland Clinic may be held liable – either by the Office of Civil Rights or state Attorney General’s office – for providing the patient’s mental health and substance abuse records to the grand jury.

The Turk case makes clear than when responding to a grand jury subpoena or any other request for patient PHI, it is important to first check state laws and make sure such disclosures are permitted – even if the HIPAA statutes permit the disclosure. In Michigan, for example, the physician-patient privilege statute states that “Except as otherwise provided by law [i.e., by HIPAA], person duly authorized to practice medicine or surgery shall not disclose any information that the person has acquired in attending a patient in a professional character…” (see M.C.L. §600.2157). Therefore, a disclosure of PHI to a grand jury would be permitted in Michigan.

Covered entities should use special care when contemplating disclosure of mental health records, since mental health/psychiatric notes are often afforded special privileges.