Health Care Lawyer Blog

You know the drill – you call your health care insurer to see if a certain procedure or drug is covered by your plan. After the friendly representative assures you it is, you go ahead and order the drug or procedure. However, a few weeks later you receive a hefty invoice for the allegedly “covered” procedure, leaving you in a nasty game of “He said, she said” and endless calls to your insurance company.

Relief from such scenarios may be on the way. Last week, the Departments of Health and Human Services (HHS), Labor, and the Treasury issued new regulations designed to help consumers appeal coverage decisions made by health plans and insurance companies, and to help boost the availability of resources to do so. The appeals regulations, which were issued pursuant to the Patient Protection and Affordable Care Act (PPACA), includes $30 million in Consumer Assistance Program grant funding to help states establish consumer assistance offices or strengthen existing ones. Consumers who live in the State of Michigan, for example, can appeal denied claims through the Office of Financial and Insurance Regulation.

While many insurance plans already include a mechanism by which consumers can appeal coverage denials, under PPACA such provisions are now mandatory. Additionally, for the first time patients will have the right to appeal coverage decisions to an outside, independent decisions-maker. Specifically, consumers in states who lack such outside determination laws will not have access to a Federal external review program.

For more information on the appeals regulations, check out the HHS Fact Sheet or contact Mercedes Varasteh Dordeski.

Under the Fair Labor Standards Act (FLSA), outside sales employees are generally exempt from overtime pay. However, employers bear the burden of proving that employees fall within FLSA exemptions that are construed narrowly against employers. A recent case out of the 2nd Circuit, In re Novartis Wage and Hour Litigation, 2nd Cir., No. 09-0437 (July 2010), considered whether outside pharmaceutical representatives fell within that exemption.

Novartis Pharmaceuticals Corp. researches, manufactures, markets and sells pharmaceuticals. However, under federal regulations, it cannot sell its drugs directly to patients. Novartis instead sells its products to wholesalers, who sells them to pharmacies. Physicians write prescriptions that permit patients to purchase the drugs from pharmacies.

Where an employee promotes a pharmaceutical product to a physician, but cannot lawfully transfer any quantity of the drug in exchange for anything of value, cannot lawfully take an order for its purchase and cannot lawfully obtain from the physician a binding commitment to prescribe it, the employee does not make a sale under the Fair Labor Standards Act (FLSA), according to the 2nd U.S. Circuit Court of Appeals, and therefore cannot be deemed exempt as an outside salesperson.

In making its decision, the District Court reasoned that patients were unable to obtain Novartis’ drugs without a prescription; therefore, physicians were the appropriate targets of the reps’ sales efforts and so they “made sales in the sense that sales are made in the pharmaceutical industry.”

While acknowledging that the physician is “an essential step in the path that leads to the ultimate sale of a Novartis product,” the 2nd Circuit viewed what occurred between physicians and reps as less than a “sale,” thereby disqualifying reps as outside salespeople within the meaning of the FLSA.

For additional information about overtime pay and general employment inquiries, contact FHWN attorney Melinda Balian.

Dozens of unscrupulous health care providers across the county were rounded up today in what federal officials are referring to as the country’s largest Medicare fraud crackdown. Individuals from five states, including several Metro Detroit residents, were involved in the estimated $251 million fraud scheme. Those arrested in the Metro Detroit cases are alleged to be responsible for $35 million in Medicare fraud, while others were arrested in Miami, Houston, New York City, and Baton Rouge.

Despite the timing of the bust, based on news reports it does not appear that the fraudulent schemes are connected. Some charges involve home health care companies billing Medicare for equipment or treatment that patients did not need, or never even received. In Brooklyn, New York, eight individuals were charged with operating a $72 million scam where a clinic owner paid patients in exchange for using their Medicare numbers and submitting bogus claims for physical therapy. Other claims involved HIV infusion fraud. The metro Detroit cases involved several home health companies accused of billing for unnecessary services, and paying kickbacks in order to recruit patients.

According to United States Attorney Barbara McQuade and Detroit FBI chief Andrew Arena, economically depressed areas like metro Detroit are “hot spots” for Medicare fraud. Areas such as Miami, which houses a significant elderly population, are also common areas for fraud schemes to unfold.

Individuals who believe their employer may be improperly billing Medicare and Medicaid, or who have questions about potential health fraud cases, should contact an experienced health care attorney.

Today's post was authored by FHWN attorney Maro E. Bush.

The Centers for Medicare and Medicaid Services (CMS) and Health and Human Services Office of the National Coordinator for Health Information Technology recently issued their much-anticipated final meaningful-use information technology regulations that hospitals and physicians must follow to tap into some $27.3 billion in financial incentives under the HITECH act.

In its final meaningful rule published on Tuesday, the CMS abandoned its original all-or-nothing approach to offering incentives for electronic health record (“EHR”) adoption. Healthcare providers now have various ways of reporting objectives to demonstrate meaningful use of EHRs. Additionally, some objectives that are deemed too difficult to achieve by the original 2011 deadline will be delayed a year.

One of the major changes in the final rule requires providers to meet a “core” group of objectives, including electronic prescribing, maintaining an active medication list and providing patients with an electronic copy of their health information upon request. In its proposed meaningful use rule published in January, CMS had required providers to meet 25 measures and hospitals to meet 23 measures in order to demonstrate they were meaningfully using EHR. However, critics of the rule argued that meeting the objectives would impose a heavy burden on providers. Under the final rule, physicians must meet 15 of the core requirements, and hospitals must meet 14. Providers must also choose and meet an additional 10 measures from a “menu set” of procedures, but may defer up to five of them until the next implementation stage.

CMS anticipates that the new approach will allow providers and hospitals to implement the basic elements of meaningful EHR use while qualifying for incentive payments. Through meaningful EHR use, CMS aims to improve the quality, safety and efficiency of healthcare services; reduce healthcare disparities; engage patients and their families; improve the coordination of care; improve population and public health; and ensure the privacy and security of personal medical information.

Physicians and other health care providers who want to learn more about implementing EHR systems and qualifying for incentive payments should contact Maro E. Bush or Mercedes Varasteh Dordeski.

The Department of Health and Human Services ("HHS") has issued proposed rules intended to strengthen the privacy and security of personally identifiable health information as required by the Health Information Technology and Economic Clinical Health Act ("HITECH"). This proposed rule strengthens the privacy and security of health information, and is an integral piece of the administration's efforts to broaden the use of health information technology in health care today.

As previously discussed on the Health Care Lawyer Blog, HITECH requires business associates of HIPAA-covered entities to fully comply with the HIPAA privacy rule. Business associates must also now comply with certain portions of the HIPAA Security Rule and report breaches of unsecured PHI to HHS. As described in the notice of proposed rulemaking, HHS intends to require business associates to enter into written agreements requiring subcontractors who create or receive personally identifiable health information to safeguard the privacy and security of such information. Importantly, the requirements applicable to business associates with respect to subcontractors mirror the requirements imposed on covered entities with respect to business associates.

As an example, if a home health care agency (covered entity) hires an attorney to perform a reimbursement audit, the attorney would be a business associate. If the attorney retains a copy center to help with photocopying voluminous patient files, the copy center would be a subcontractor of the business associate. Therefore, the attorney must enter into a written agreement with the copy center requiring the copy center safeguard the privacy and security of the information, in the same way that the attorney must protect the information.

In addition, the proposed regulations also set forth the conditions under which the sale of protected health information without patient authorization is prohibited and limitations on the use and disclosure of protected health information for marketing and fundraising.

HHS has also launched a website at www.hhs.gov/healthprivacy/index.html that will keep consumers informed about what HHS is doing to protect the privacy of their health information.