HHS Imposes a $4.3 Million Civil Money Penalty for Privacy Rule Violations

The Department of Health & Human Services (HHS) Office of Civil Rights (OCR) has issued a notice of final determination concluding that Cignet Health of Prince George's County, Maryland (Cignet) violated the Privacy Rule of the Health Insurance Portability and Accountability Act of 1996 (HIPAA). HHS has imposed a civil monetary penalty of $4.3 million for the violations. OCR determined that in October 2010, Cignet violated the rights of 41 patients by denying them access to their medical records when requested. The HIPAA Privacy Rule requires covered entities to provide patients with their medical records no later than 60 days after a patient request. Additionally, OCR found that Cignet failed to cooperate in HHS's investigation and refused to produce records in response to an agency subpoena. According to OCR, Cignet was fined $1.3 million for denying 41 patients access to their medical records between September 2008 and October 2009. The insurer was fined another $3 million for failing to cooperate with the OCR investigation. The agency indicates that this is the first time federal officials have imposed a civil penalty for violations of the HIPAA privacy rule since it went into effect in 2003.

HHS-DOJ Strike Force Arrests Over 100 For Medicare Fraud

The joint Department of Justice/Department of Health & Human Services Medicare Fraud Strike Force charged 111 defendants in nine cities, including doctors, nurses, health care company owners and executives, and others, for their alleged participation in Medicare fraud schemes involving more than $225 million in false billing. Charges included conspiracy to defraud the Medicare program, criminal false claims, violations of the anti-kickback statutes, money laundering and aggravated identity theft. Services provided included home health care, physical and occupational therapy, nerve conduction tests, and the purchase of durable medical equipment.

The Strike Force is a multi-agency team of federal, state, and local investigators designed to combat Medicare fraud through the use of Medicare data analysis techniques and an increased focus on community policing. Since the task force was started in March 2007, 990 people have been charged in false billing schemes totaling more than $2.3 billion; nearly 750 of them have been convicted. In addition, the federal, state and local task force last year recovered $4 billion in fines and other restitution payments on behalf of taxpayers that had been lost to corruption. The Strike Force also announced the expansion of its operations to two additional cities – Dallas and Chicago.

HIT Incentive Payment Program Underway

The Centers for Medicare & Medicaid Services announced that more than 21,000 providers registered for the Medicare and Medicaid EHR Incentive Programs in January and four states reported initial Medicaid incentive payments totaling approximately $20 million. The CMS also announced that as of mid-February, more than 45,000 providers requested information or registration help from the 62 Regional Extension Centers which provide hands-on support for providers who want to adopt and become meaningful users of electronic health information technology.

Eleven states have launched Medicaid EHR incentive programs, and incentives have been issued by four states.

  • Oklahoma and Kentucky issued incentive payments totaling $2,842,500. Kentucky made an initial payment of $2.86 million to a teaching hospital, University of Kentucky Healthcare. This payment comprised one third of the hospital's overall expected amount for participating in the incentive program. On the same day, Kentucky disbursed an incentive payment of $1.3 million to Central Baptist Hospital. Also on January 5, 2011, Oklahoma issued incentive payments to two physicians at the Gastorf Family Clinic of Durant, Okla., totaling $42,500 ($21,250 each), for having adopted certified EHRs.
  • On January 12, 2011, Louisiana announced a payment of $63,750 to Winn Community Health Center, the first federally qualified health center (FQHC) in the nation to receive an incentive payment. The incentive payment consisted of $21,250 for each of three eligible professionals at the clinic.

The Medicare and Medicaid EHR Incentive Programs were established by the Health Information Technology for Economic and Clinical Health Act (HITECH), part of the American Recovery and Reinvestment Act of 2009. Under HITECH, Medicare and Medicaid incentive payments will be available to eligible professionals, eligible hospitals, and critical access hospitals when they adopt certified EHR technology and successfully demonstrate "meaningful use" of the technology in ways that improve quality, safety, and effectiveness of patient-centered care.

New Medical Device Innovation Initiative Announced

The FDA has issued a report entitled "Medical Device Innovation Initiative" and is seeking public written comments (due by April 11, 2011). The report proposes potential actions for FDA's Center for Devices and Radiological Health (CDRH) to facilitate the development, assessment, and regulatory review of innovative medical devices. These actions include: (1) establishing a voluntary, third-party certification program for U.S. medical device test centers designed to promote rapid improvements to new technologies during a product's development and clinical testing stages; (2) creating a publicly-available core curriculum for medical device development and testing to train the next generation of innovators; and (3) using more device experience and data collected outside the United States.

While the FDA is seeking comments on the Initiative generally, it is, in particular, looking for stakeholder views on the following:

  • What should be the eligibility criteria for the Innovation Pathway?
  • How should CDRH determine what types of technology should be allowed into the Innovation Pathway and at what point should they no longer be accepted as innovative products?
  • What are the appropriate timeframes for review of submissions under the Innovation Pathway?
  • What should be the criteria for clinical test center certification?
  • What are examples of candidates for inter-agency or public–private partnerships to foster medical device innovation?
  • What other actions should CDRH take to facilitate the development, assessment, and regulatory review of innovative medical devices while assuring their safety and effectiveness?

The Joint Commission Primary Care Model

The Joint Commission is developing a Primary Care Home designation that ambulatory health care providers will soon have the option of obtaining along with their ambulatory care accreditation. It is unknown how primary care homes, or "medical homes," may play a role in Accountable Care Organizations (ACO), as the eagerly awaited ACO regulations have not yet been released. The trend towards the patient-centered medical home model, however, has continued to gain ground as a model of its own. The Joint Commission is the fourth accreditation body to develop medical home standards, following the National Committee for Quality Assurance, the Utilization Review Accreditation Commission, and the Accreditation Association for Ambulatory Health Care.

The Joint Commission posted proposed standards and elements of performance (EPs) for the designation on its website, as well as a Primary Care Home Model that outlines the types of providers that may be eligible for the designation. The proposed EPs emphasize the development and coordination of interdisciplinary teams, and the communication, education and involvement of the patient in the patient's care.

The Joint Commission is currently seeking comments on the proposed standards for its new Primary Care Home (PCH) designation. Comments may be submitted through The Joint Commission's online survey and/or form, or via mail and must be received by March 14, 2011. Any questions should be directed to Joyce Marshall – Division of Healthcare Quality Evaluation – at (630) 792-5934 or jmarshall jointcommission.org

CMS Rescinds Physician Signature Requirements for Clinical Laboratory Requisitions

Under intense industry and Congressional pressure, the Centers for Medicare and Medicaid Services (CMS) has withdrawn a provision included in the 2011 Medicare Physician Fee Schedule Final Rule that would have required physician signatures on all laboratory requisition forms reimbursable by Medicare. Laboratory requisition forms are documents provided to a clinical diagnostic laboratory identifying the tests to be performed.

A coalition of several national laboratory associations, including the National Independent Laboratory Association and the Clinical Lab Coalition, joined by other groups such as the American Hospital Association and the American Medical Association, led an effort to rescind the rule and persuade CMS that the requirement would create numerous patient care concerns and logistical operational challenges.

In a letter to CMS Acting Administrator Dr. Donald M. Berwick and subsequent in-person meetings with CMS officials, the organizations argued that the new policy could cause significant harm to patients and cause laboratories that serve a large number of Medicare beneficiaries to possibly shut their doors. An independent cost analysis of the new requirement showed the impact on small physician and laboratory businesses would be in the hundreds of millions of dollars. The nursing home industry voiced its concern that about the costs associated with the new provision especially in emergency situations.

Members of Congress — 89 House members (40 Democrats, 49 Republicans) and 34 Senators (19 Democrats, 15 Republicans) — were concerned enough about the unintended consequences of the new signature requirements to send letters to CMS asking the agency to address the cost and quality of care issues raised by the health care community.

As a result of the health care community's concerns, CMS has rescinded the physician signature requirement for clinical laboratory requisition forms. A revised rule has yet to be published.

Source: Health Law Regulatory Update