SZD Health Law Scan : Health Care Lawyers & Attorneys : Schottenstein Zox & Dunn Law Firm : Strategic Planning, Managed Care, Insurance : Columbus, Cleveland, Cincinnati, Central Ohio

Provider implementation of health information technology is a priority of the current Obama administration and will continue to be a focal point of national health care reform. A major question for health care reform is who pays? In theory, cost savings and efficiencies are one source. Another may be continued payment pressures by governmental and nongovernmental payers. Perhaps, the two go hand in hand, and the only way providers can survive effectively with looming payment pressure is by implementing robust health information records and business systems. Some providers are only reluctantly "embracing" this change, but go along they must.

The American Recovery and Reinvestment Act of 2009 (ARRA 09) provides funding to increase the adoption of Health Information Technology (HIT) with the goal of creating a national health information infrastructure and network. The funds available in the stimulus bill are to provide approximately $35 billion for this purpose, with a large potion of those funds to be paid to Medicare and Medicaid providers that adopt electronic health records (EHRs) by the deadlines set forth in the statute. With payments set to begin in late 2010 (hospitals) and early 2011 (other providers), the federal government seeks to increase EHR adoption among physicians to more than 90% by 2016. This may be a tall order given that current adoption estimates for physicians are now in the low 20th percentile. Many hospitals are in the process of implementing EHRs, but they too have significant financial and technical challenges ahead of them. Many believe the ARRA 09 funding will fall well short of the need.

In May 2009, the Office of the National Coordinator for Health Information Technology (ONC) released its implementation plan titled The Health Information Technology American Recovery and Reinvestment Act Implementation Plan. The ONC's Implementation Plan met the 90-day deadline under the Health Information Technology for Economic and Clinical Health (HITECH), a section of ARRA 09. In order for a provider to qualify for funding, however, there are a number of requirements each provider must meet. The EHR must be interoperable with a health information exchange and the provider must demonstrate "meaningful use" of EHRs, which term is undefined at this time. Recommendations have been made about how to define these terms, but no definitive regulatory or other guidance has been provided in the Implementation Plan or otherwise.

The Implementation Plan provides that later this year the government will release important definitions and clarifications regarding these terms as well as describe how other aspects of the HIT stimulus package will work. It is interesting to note the Implementation Plan calls for swift action to achieve long-term improvements in health and healthcare through adoption of information technology, while at the same time the Plan acknowledges the need to finalize many of these details. The ONC has held hearings now with more to come in order to determine what "meaningful use" of EHRs really means. This process is supposed to involve significant stakeholder review, input and evaluation. While this may be the best approach, it may be a recipe for further delay in finalizing many of these critical elements of the incentive funding proposal.

As this process continues to unfold, the clock is ticking toward 2011. In addition to money, it takes time to implement large (and even small) scale EHR projects. Even though vendors will tout their products as the "solution," many providers have rightfully expressed concern that implementing the wrong system now in light of these developing standards could be a big mistake. Whether providers will have enough time to meet the 2011 timeline when significant aspects of the funding requirements have yet to be finalized remains to be seen. Providers in the near future may need to ask their legislative representative to consider additional legislation to allow providers more time to implement EHRs prior to the start of the incentive funding cycles.

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On June 15, 2009, the American Medical Association (AMA) approved new guidelines for physicians on responding to breaches of patients' electronic medical records (EMR).

According to the AMA Council on Ethical and Judicial Affairs (CEJA) in its report, CEJA Report 3-A-09, these guidelines are intended to fill an important gap in the AMA's policy, which, until now, did not "address physicians' ethical responsibilities in the event the security of electronic records is breached and patient data are inappropriately accessed." The CEJA identified the need for the guidelines particularly in light of the newly enacted American Recovery and Reinvestment Act of 2009 (ARRA), which amended the Health Insurance Portability and Accountability Act of 1996 (HIPAA) to mandate that patients be notified in the event of certain breaches of their medical records.

As adopted, the guidelines state:

"When there is reason to believe that patients’ confidentiality has been compromised by a breach of the electronic medical record, physicians should:

1. Ensure that patients are promptly informed about the breach and potential for harm, either by disclosing directly (when the physician has administrative responsibility for the EMR), participating in efforts by the practice or health care institution to disclose, or ensuring that the practice or institution takes appropriate action to disclose.
2. Follow ethically appropriate procedures for disclosure, which should at minimum include: 
   1. carrying out the disclosure in a private setting and within a time frame that provides patients ample opportunity to take steps to minimize potential adverse consequences; and
   2. describing what information was breached; how the breach happened; what the consequences may be; what corrective actions have been taken by the physician, practice, or institution; and what steps patients themselves might take to minimize adverse consequences.
3. Support responses to security breaches that place the interests of patients above those of the physician, medical practice, or institution.
4. To the extent possible, provide information to patients to enable them to mitigate potential adverse consequences of inappropriate disclosure of their personal health information, such as credit monitoring services or identity theft hotline."

Now, physicians and other health care providers who intend to establish policies to address responses to breaches of their patients' EMR must not only take into account the above AMA guidelines and the recent amendments to HIPAA but they also must remember to consult the applicable laws of their own state.

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On June 16, 2009, the Centers for Medicare & Medicaid Services (CMS) released a fact sheet on the Medicare and Medicaid Health Information Technology: Title IV of the American Recovery and Reinvestment Act (ARRA). The fact sheet details the Medicare and Medicaid incentive payments for meaningful users of electronic health information (EHR). In addition to the summary of ARRA, the fact sheet contains a section on Frequently Asked Questions about the incentive payments.

According to this fact sheet, CMS expects to publish a proposed rule to define "meaningful use" of EHR and to establish the criteria for the incentive payments by late 2009.

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On June 16, 2009, the Health Information Technology (HIT) Policy Committee held a meeting to begin defining the "meaningful use" of electronic health records (EHR). Under the American Recovery and Reinvestment Act (ARRA), only "meaningful EHR users" will be eligible to receive Medicare and Medicaid incentive payments for adopting EHRs. The ARRA broadly defines a meaningful EHR user as one who demonstrates (1) the meaningful use of certified EHR; (2) the electronic exchange of health information to improve quality of health care; and (3) the submission on clinical quality and other measures using certified EHR technology.

The HIT Policy Committee developed a "Meaningful Use Matrix" that establishes proposed objectives that hospitals and physicians would have to meet to receive the incentive payments. The committee believes that this matrix "represents a set of objectives and care processes that . . . should inform the ultimate definition of meaningful use."

The Office of the National Coordinator for Health Information Technology (ONC) is now seeking public comments on the HIT Policy Committee's recommendations through Friday, June 26, 2009. The Centers for Medicare & Medicaid Services expects to publish a proposed rule to define "meaningful use" of EHR and to establish the criteria for the incentive payments by late 2009.

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The loudest objection we hear to a government funded public option is that it would compete unfairly with the private plans and eventually cause many employers to drop coverage for their employees. But despite extreme views on either side of this issue, some health policy experts believe that the health insurance marketplace could be structured so that both public and private health plans compete on a level playing field. See "A Modest Proposal for a Competing Public Health Plan" by Len M. Nichols and John M. Bertko of the New American Foundation (2008).

At a minimum, it would require that all rules apply equally, i.e., benefit package requirements, insurance regulations and pricing for risk adjustment. There is some precedent for this in other areas of the economy (e.g., federal flood insurance and private homeowners insurance; high risk state insurance pools). A level playing field would also require both providers and payers to seriously address the issue of cost containment, once and for all. By using the most modern health information technology, clinically proven "best practices" and other protocols, as well as incentives for patients to achieve and maintain good health care, it is not unreasonable to argue that the United States could re-allocate what it currently spends on health care to cover virtually all Americans without the need for burdensome taxes or rationing. Like any issue of this importance, there will always be winners and losers no matter how the health reform debate concludes. Those who oppose the co-existence of public and private plans in principle would do better to direct their criticism toward any proposal that fails to address the underlying causes of our health care dilemma.

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President Obama recently ordered federal agencies to perform a comprehensive review of all regulations released in the past ten years to determine if federal "preemption" was improperly implemented in any of these regulations. 

President Obama's order represents yet another major departure from the policies/philosophy of the Bush Administration.  The Bush Administration encouraged federal agencies to add preemption language to their respective regulations.  This position was grounded in the policy that plaintiffs were being given too many opportunities to circumvent federal laws and bring state law tort claims against corporations. 

Although "next step" guidance has yet to be provided to federal agencies, and specific industries have yet to be fingered as prime offenders, the Obama order could have a significant impact on the life sciences industry. 

This order comes on the heels of the Supreme Court's decision in Wyeth v. Levine, where the Supreme Court determined that state law tort claims against pharmaceutical companies were not preempted by FDA approval of those companies' drugs.  The Obama order may have the effect of widening the gateway provided by the Supreme Court to sue pharma companies, and may further have the effect of opening the gateway against medical device companies and other players in the industry. 

This Life Sciences segment of the SZDHealthLawScan has kept a close eye on preemption cases in the industry, and we will provide ample commentary on the effects of President Obama's recent order. 

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On May 20, 2009, President Obama signed into law the Fraud Enforcement and Recovery Act of 2009 (the Act). Although the Act targets economic stimulus fraud in particular, it also expands the scope of the federal False Claims Act (FCA). The amendments to the FCA will expand the scope of FCA liability, provide for new investigative tools, and make it easier for private plaintiffs (known as qui tam relators) to file FCA lawsuits on behalf of the government. In particular, the FCA has been expanded to impose liability for the the knowing and improper retention of "overpayments."

The amendments to the FCA are located in Section 4.

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Merck & Co. claimed victory in California recently, as Judge Victoria Cheney rejected a proposed class action suit against the drug manufacturer for the ill effects of its Vioxx product.  Merck, presently defending lawsuits across the globe for Vioxx, was spared from what could have been billions in liability exposure in California.  

Judge Cheney stated that the patients who consumed Vioxx had too many differences, including medical histories and the length of time each patient took the drug, in order to sue jointly.  Judge Cheney's ruling comes on the heels of another class action denial in Vioxx litigation in New Jersey.  With the fervor over the injuries caused by Vioxx still high, one can only speculate if there will be similar such decisions in the near future. 

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House Energy and Commerce Committee's Health Subcommittee held hearings on May 12, 2009 that could lead to the overturning of the Supreme Court decision in Riegel v. Medtronic, Inc., which established that state law tort claims against medical device manufacturers are expressly preempted by federal law.

The hearings are the first step in the legislative process for H.R. 1346, known as the Medical Device Safety Act of 2009. This bill would amend 21 U.S.C. § 360k by adding a new subsection (c) that, as proposed to the subcommittee, reads, "No Effect on Liability Under State Law- Nothing in this section shall be construed to modify or otherwise affect any action for damages or the liability of any person under the law of any State."

Currently, subject to a few exemptions, Section 360k(a) prohibits states from establishing or continuing "in effect with respect to a device intended for human use any requirement – (1) which is different from, or in addition to, any requirement applicable under this chapter to the device, and (2) which relates to the safety or effectiveness of the device or to any other matter included in a requirement applicable to the device under this chapter."

Based on its interpretation of Section 360k, the Supreme Court in Riegel held that the Food and Drug Administration's (FDA) pre-market approval process for medical devices preempted state law tort claims against medical device manufacturers.

Now, H.R. 1346 seeks to overturn the Riegel decision by incorporating language into Section 360k that parallels the language contained in another preemption statute that the Supreme Court has already acknowledged as preserving states' product liability actions.  According to the Supreme Court in Wyeth v. Levine, Section 379r of Title 21 of the United States Code preempts "certain state requirements concerning over-the-counter medications and cosmetics but expressly preserved product liability actions." Section 379r parallels Section 360k by also prohibiting states from establishing or continuing a requirement that is "different from, in addition to, or that is otherwise not identical with," a requirement established under a number of enumerated federal statutes. However, unlike Section 360k, Section 379r preserves certain state law claims with language that is almost identical to that of H.R. 1346: "Nothing in this section shall be construed to modify or otherwise affect any action or the liability of any person under the product liability law of any State."

Therefore, should H.R. 1346 become law, it would lay the foundation for overturning Riegel v. Medtronic. As a result, medical device manufacturers would once again join pharmaceutical drug manufacturers, which recently lost their own argument for preemption, in facing state law tort claims. See also, "The Supreme Court Decides Wyeth v. Levine" on the Supreme Court's decision that the FDA's pre-market approval of pharmaceutical drugs does not preempt state law tort claims.

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