Market Stabilization: To Be or Not to Be?

health insurance iStock_000028383644_FullThe Centers for Medicare and Medicaid Services (CMS) published a Final Rule intended to stabilize the individual and small group insurance markets on April 18, 2017. Reflecting the urgent need to address the uncertainty afflicting the markets, CMS advanced the rule from proposed to final form in just two short months despite receiving more than 4,000 comments. Not surprisingly, the Final Rule does not differ substantially from its proposed version. The critical questions are whether the Final Rule can produce stability in the markets and prompt issuers to offer products on the Exchanges established under the Affordable Care Act (ACA) and whether a significant relaxation in the rules concerning network adequacy and the inclusion of essential community providers (ECPs) ensure that the right mix of hospitals, physicians and other providers are available to those purchasing insurance products on the Exchanges.

The Final Rule amends standards relating to special enrollment periods, the timing of open enrollment beginning in 2018, guaranteed availability, network adequacy, inclusion of the ECPs and actuarial value requirements. As noted in the preamble, the purpose of the Final Rule is to address the stability and competitiveness of the Exchanges as well as the individual and small group markets that have been “threatened by issuer exits and increasing rates in many geographic areas” of the country. Thus, the intention is to encourage issuers to join the market, assure a stable risk pool, incentivize individuals to maintain continuous coverage and deter adverse selection. Unless otherwise stated, the Final Rule is effective on June 19, 2017. Continue Reading

Electronic Signature Pads: I Didn’t See Those Terms

digital signature on sign padAlthough we healthcare lawyers generally view ourselves as a pretty healthy lot, there are times when we are patients too. In a recent experience I was asked by a provider’s employee to sign several registration and privacy documents using an electronic signature pad that captured only my signature. The signature pad provided none of the documents’ terms and conditions and I was not provided a copy of the materials, either before or after signing. Assume for purposes of this article that I was familiar with the documents and their terms and did not agree to any unknown terms – but I wondered whether such terms would be enforceable.

Enforcement of Consumer Agreements – General Overview

Courts have historically enforced the terms of consumer agreements where the consumer had actual notice of an agreement or was required to affirmatively acknowledge the agreement before proceeding with use of the product or service. However, courts have been less willing to enforce agreements where there is no evidence that the consumer had actual knowledge or that a reasonably prudent user would have been on notice to inquire about the terms of the agreement. Consumer arguments that they should not be bound to the terms of an agreement because it was signed on a signature pad rather than a written document have been rejected. See Blocker v. Wells Fargo Bank, No. CV 08-1196-PK (D. Ore. March 30, 2011).

In a case challenging Best Buy’s practices, where the electronic signature pad contained verbiage describing the transaction’s terms above the consumer’s signature, the court stated that:

Parties … have a duty to read what they sign. … (“In general, individuals are charged with knowledge of the contents of documents they sign – that is, they have ‘constructive knowledge’ of those contents.’ … (As a result of [the duty to read the contract,] a person who signs a written contract is bound by its terms regardless of his or her failure to read and understand its terms.”)). Plaintiffs cannot argue that they did not read the electronic signature pads when they signed their names; they are bound by what they signed. Continue Reading

Bundled Payments Out in the Cold? Another Delay for Mandatory Bundled Payment Models

budget doccotrThis most recent delay raises questions concerning how the Trump administration intends to implement value-based payment in the Medicare program.

The Centers for Medicare and Medicaid Services (CMS) has delayed again the implementation date of its final rule mandating hospital participation in two new cardiac episode-based payment models (EPMs) and an expansion of the Comprehensive Care for Joint Replacement (CCJR) program that began in April 2016 (EPM rule). This most recent delay, published in an interim final rule on March 21, 2017, comes on the heels of a February rule in which CMS addressed the impact of the Trump administration’s regulatory freeze and postponed the effective date of many EPM rule provisions until March 2017.

To that end, CMS has now pushed back the effective date of the EPM rule to May 20, 2017, and further delayed the applicability date of the EPM regulations and conforming changes to the CCJR provisions from July 1 to October 1, 2017. Hinting that another postponement might be forthcoming, CMS is also seeking public comment on delaying the applicability date until January 1, 2018. Emphasizing the agency’s commitment to “providing some period of time between establishing the final model parameters and beginning the model,” CMS is seeking to ensure that “participants have a clear understanding of the governing rules” prior to the EPM rule’s ultimate effective date.

This most recent delay raises questions concerning how the Trump administration intends to implement value-based payment in the Medicare program. It could also signal the end of mandatory payment models under the current administration now that Dr. Tom Price, a vocal opponent of mandatory bundles, helms the U.S. Department of Health and Human Services. And while the future of bundled payments remains uncertain, we can be sure that this isn’t the last word from CMS on the topic.

Capitol Hill Healthcare Update

CaphillGOP Struggles To Revive Health Bill

House Republicans of all ideological stripes say they are committed to rekindling interest in the American Health Care Act (AHCA), but while the interest is real, so too are the policy and political divisions that thwarted passage of the bill last month.

When House Speaker Paul Ryan and other GOP leaders said intra-party discussions would continue with the hopes of reaching consensus and a possible vote on the AHCA, it wasn’t happy talk. Rank-and-file Republicans say keeping the Affordable Care Act (ACA) in place presents at least as many political problems as the party’s effort to repeal it. For example, failing to repeal the $1 trillion in ACA taxes significantly complicates the GOP’s goal of enacting sweeping tax reform later this year. Continue Reading

You Can’t Fire Me for Drug Diversion If I Am Personally Consuming the Drugs

Definition "discrimination"A nurse employed by a major medical center was suspected of illegally diverting medications. When confronted by her employer with evidence of suspicious transactions recorded by the provider’s medication monitoring systems, the nurse denied diverting medications but could not explain the suspicious transactions (“I’m not an IT person. I’m a nurse.”). Following termination of her employment, the nurse filed suit against her former employer under the Tennessee Disabilities Act (TDA), claiming she had lost her job solely because the employer “perceived her to have the disability of drug addiction.”

The employer argued that “it did not fire her because she was considered a drug addict, but because it thought she was stealing medications.” The Tennessee Court of Appeals in Demastus v. University Health System upheld the trial court’s dismissal of the nurse’s claim on two grounds. First, the court held that the TDA specifically excludes the “current illegal use of or addiction to a controlled substance” as a disability. Second, the court found that the nurse had failed to show that her termination for diversion was a pretext for illegal discrimination. The court noted, however, that an employer is prohibited from terminating an employee for a disability it perceives the employee suffers from, without regard to whether the employee actually suffers from such disability.

As the case shows, to avoid discrimination claims, care is advised when taking action against an employee suspected of diverting medications.

Destination Medicine: Not Just for the Rich and Famous


OIG okays providing modest hotel and meal accommodations for rural and financially needy patients.

The U.S. Department of Health and Human Services Office of Inspector General (OIG) recently issued an advisory opinion interpreting the finalized rules related to the beneficiary inducement civil monetary penalties (CMP) law. In a previous blog post, we discussed the OIG final rule that codified three exceptions to the definition of remuneration under the beneficiary inducement provision of the CMP law. The OIG advisory opinion approved an arrangement under the “promoting access to care” exception to the CMP law by authorizing a hospital system to provide free or reduced-cost lodging and meals to certain hospital patients, including federal healthcare program beneficiaries.

Under the proposed arrangement, the hospital would provide reduced-cost, and sometimes even free, hotel accommodations to eligible patients for one night before, and up to two nights after, treatment at the hospital. The hospital also proposed to provide free or reduced-cost hospital meals for each overnight hotel stay. To qualify for these benefits, patients had to satisfy all of the following criteria:

  • Reside 90 or more miles from the hospital in either a designated medically underserved area of the state or a designated professional health shortage area;
  • Have a household income that does not exceed 500 percent of the federal poverty level and meet the criteria in the hospital’s written financial assistance policy; and
  • Meet one of the follow circumstantial requirements:
    • For lodging and meals prior to treatment: the patient must be required to present at the hospital before 10:00 a.m.
    • For lodging and meals following treatment: The patient must have no need for on-site care but must be required to attend a follow-up appointment or return for surgery within 48 hours.

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Capitol Hill Healthcare Update

hlu photoAHCA Autopsy: What Happened, What’s Next?

House Speaker Paul Ryan’s decision to cancel Friday’s vote on the American Health Care Act triggered post-mortem jockeying among vying GOP factions struggling to come to grips with how the party failed to repeal a law it has singularly campaigned against for the last seven years. Republicans’ inability to muster a majority of their 237 House members to back Ryan’s plan was the result of a combination of factors, including the evolving policy demands of conservative lawmakers as well as the powerlessness of congressional leaders and the White House to persuade the rank and file to stay in line.

Just five months ago, President Trump ran up huge winning margins in most of the congressional districts represented by conservatives, including the 30-member House Freedom Caucus. Those conservatives once feared Trump; they openly fretted about how a single Trump tweet could roil their voters. But during a White House meeting last week, conservatives defied Trump’s call to support the bill and instead proposed a series of ever-changing policy demands. They wanted to jettison the 10 essential health benefits the Affordable Care Act (ACA) requires insurers to include in all plans, which conservatives believe are market-distorting mandates that are causing prices to skyrocket. Trump agreed to drop them. But conservatives had more demands, including allowing insurers to charge different premiums based on age, gender and pre-existing health condition. Continue Reading

Employee Reference Releases: Who’s In and Who’s Out?

Reference check formA recent Indiana defamation case, Manhas v. Franciscan Hammond Clinic, serves as a critical reminder of the importance of scrutinizing physician and employee reference forms and releases. Dr. Sheila Manhas and Franciscan Hammond Clinic (FHC) were parties to a settlement agreement that included a provision whereby Dr. Manhas would direct inquiries from prospective employers to a named person at FHC “who will provide only the following information: dates of employment, last position held, and salary.” Subsequently, Dr. Manhas applied for a temporary position as a neurologist at another hospital, and as part of the application process was required to sign a Release of Information/Consent to Background Check Authorization (authorization form). Unfortunately, the prospective employer failed to send the authorization form to the FHC-designated individual, and the person who responded on behalf of FHC was unaware of the settlement agreement.

The prospective employer hired a temporary physician placement agency to complete the credentialing process. By signing the authorization form, Dr. Manhas authorized the placement agency to:

[P]erform a check of [her] background, references, character, employment, motor vehicle, education and criminal history record bearing on information which may be in any state or local files, including those maintained by both public and private organizations and all public records for the purpose of confirming the information contained in the application and/or obtaining other information which may be material to [her] qualifications for employment.

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Capitol Hill Healthcare Update

hlu photoHouse Sets Thursday Vote on ACA Repeal

House Republicans are scheduled to vote Thursday night on legislation to repeal most of the Affordable Care Act (ACA) even as GOP leaders scramble to secure the final votes needed to pass the bill.

House leaders said publicly this weekend that they are confident the needed 216 lawmakers will vote for the bill, but leadership aides cautioned Monday that the votes aren’t there yet and more changes to the underlying legislation are likely as the internal lobbying continues. Continue Reading

Justice Department Sets Standards for Evaluation of Corporate Compliance Programs

By John J. Carney, Margaret E. Hirce, Bari R. Nadworny and Jacqlyn Rovine

Since the U.S. Department of Justice’s (DOJ) announcement of its new compliance counsel expert in November 2015, many have been waiting patiently for additional insight into the DOJ’s emphasis on corporate compliance programs. In April 2016, the DOJ issued its Federal Corrupt Practices Act Pilot Program, again highlighting its intense focus on effective compliance programs by focusing on remediation as a factor to avoid prosecution. The Pilot Program provided criteria of an effective compliance and ethics program that would be considered during an investigation, setting benchmarks against which a company’s program would be assessed. Recently, the DOJ provided more information in its “Evaluation of Corporate Compliance Programs,” revealing critical insight about how the DOJ’s Fraud Section may evaluate a corporate compliance program during an investigation. Read more >>