HHS Proposes $9 Billion Lump Sum Payment for Hospitals to Remedy Unlawful 340B Payment Reductions

Posted by Gregory M. Fliszar on July 10, 2023
CMS, HHS / No Comments

On Friday, July 7, 2023, the Centers for Medicare & Medicaid Services (CMS) published their long-awaited proposed remedy to the unlawful 340B drug payment reductions.

Background: In 2018, CMS significantly reduced the Average Sales Price (ASP) plus six-percent (6%) formula for calculating 340B drug payments to ASP minus 22.5%. After conflicting decisions from the District of Columbia’s federal District and Appeals Courts, on June 15, 2022, a unanimous U.S. Supreme Court concluded that the ASP minus 22.5% formula was “unlawful” and violated a clear statutory mandate to reimburse 340B drugs at ASP plus 6%. American Hospital Assn. v. Becerra, 142 S. Ct. 1896, 1906 (2022). However, the U.S. Supreme Court did not address remedies and remanded the case to the U.S. District Court for the District of Columbia. On September 28, 2022, the District Court vacated the payment reduction and ruled that CMS had to stop paying the unlawful rate. However, it did not address the damages from January 1, 2018 – September 27, 2022.[1]  On January 10, 2023, the District Court further remanded the case to CMS to provide a remedy for the underpayments dating back to January 1, 2018.[2]  

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Google Partners with Ascension To Store and Analyze Millions of Patient Health Records

Posted by Gregory M. Fliszar on November 19, 2019
Uncategorized / No Comments

Google has confirmed that it is working with Ascension, one of the nation’s largest health systems in a project that will involve the health data of millions of Americans.  Google and Ascension have partnered in a project to store and analyze patient data with the intended goal of using Google’s artificial intelligence tools to enhance patient care and medical decision making.  As a result of this partnership, it has been estimated that over 100 Google employees may have access to sensitive patient data such as name, birth date, diagnoses and treatments.  Such access by Google to millions of patient’s health data has resulted in some concern over how the data will be protected, including a recently announced inquiry into the relationship by the U.S. Department of Health and Human Services’ Office of Civil Rights (“OCR”).  OCR has stated that it “would like to learn more information about this mass collection of individuals’ medical records with respect to the implication for patient privacy under HIPAA.”  Ascension has said that the project with Google has complied with the law and followed the healthcare organization’s “strict requirements for data handling.” 

We will continue to follow this important story.  Several other tech companies continue to try to gain a bigger share of America’s health care market, which will all have to be balanced with patient data privacy and security concerns.

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Anthem Agrees to Record $16 Million Settlement for Alleged HIPAA Violations

Posted by Gregory M. Fliszar on October 16, 2018
HIPAA / No Comments

In the wake of the largest U.S. health care data breach in history, Anthem, Inc., has agreed to pay $16 million to the Office for Civil Rights, which is a record settlement for alleged HIPAA violations. According to the Department of Health and Human Services (“HHS”), the previous high was a $5.55 million settlement paid in 2016. In addition to the monetary payment, Anthem has also agreed to take “substantial” corrective action to help prevent a similar breach from occurring in the future.

The settlement arose out of a 2014 breach involving the electronic protected health information (“ePHI”) of nearly 79 million people. On January 29, 2015, Anthem discovered that hackers had gained accessed to its IT system through a persistent threat attack. Further investigation revealed that hackers had sent spear phishing emails to one of Anthem’s subsidiaries and at least one employee took the bait. Through that seemingly simple act, the hackers were then able to infiltrate Anthem’s system and compromise its stored ePHI, consisting of names, social security numbers, medical identification numbers, addresses, dates of birth, email addresses, and employment information. Continue reading…

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Hospitals Will Need Psychiatrists and Mental Health Professionals to Satisfy EMTALA

Posted by Gregory M. Fliszar on November 07, 2017
Hospital, Mental Health, Uncategorized / No Comments

Hospitals that have emergency departments should call upon their “available resources” to screen and stabilize patients with mental health emergencies as required by the Emergency Medical Treatment and Labor Act (“EMTALA”) according to recent statements by an analyst for CMS and an attorney with the Office of Inspector General (“OIG”) for the Department of Health and Human Services.

While speaking at the American College of Emergency Physicians annual meeting in Chicago, the CMS representative noted that EMTALA requires hospitals with emergency departments to provide a medical screening within the capabilities of the hospital by a person who is qualified to do the examination, which, if the hospital offers psychiatric services, would include a psychiatrist.  While the initial screening must be done with medical personnel such as a psychiatrist, the CMS official stated that other mental health professionals may be qualified to assist in those examinations.

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FTC Overturns ALJ’s LabMD Decision and Reasserts its Role as a Data Security Enforcer

Posted by Gregory M. Fliszar on August 25, 2016
Federal Trade Commission, HIPAA, OCR / No Comments

On July 29, 2016, the Federal Trade Commission (“FTC” or “Commission”) reversed an FTC administrative law judge’s (“ALJ”) opinion which had ruled against the FTC, finding that the Commission had failed to show that LabMD’s conduct caused harm to consumers to satisfy requirements under Section 5 of the FTC Act. In reversing the ALJ, the FTC issued a unanimous opinion and final order that concluded, in part, that public exposure of sensitive health information was, in itself, a substantial injury.

The FTC initially filed a complaint against LabMD in 2013 under Section 5 of the FTC Act, alleging that the laboratory company failed to “provide reasonable and appropriate security for personal information on its computer networks,” which the FTC claimed lead to the data of thousands of consumers being leaked. The complaint resulted from two security incidents that occurred several years prior, which the FTC claimed were caused by insufficient data security practices.

In its opinion, the FTC concluded that the ALJ had applied the wrong legal standard for unfairness and went on to find that LabMD’s data security practices constituted an unfair act or practice under Section 5 of the FTC Act. Specifically, the Commission found LabMD’s security practices to be unreasonable – “lacking even basic precautions to protect the sensitive consumer information on its computer system.” The Commission stated that “[a]mong other things, [LabMD] failed to use an intrusion detection system or file integrity monitoring; neglected to monitor traffic coming across its firewalls; provided essentially no data security training to its employees; and never deleted any of the consumer data it had protected.” As a result of these alleged shortcomings in data security, medical and other sensitive information for approximately 9,300 individuals was disclosed without authorization.

Further, and perhaps more importantly, the Commission concluded that “the privacy harm resulting from the unauthorized disclosure of sensitive health or medical information is in and of itself a substantial injury under Section 5(n), and thus that LabMD’s disclosure of the [ ] file itself caused substantial injury.” Thus, contrary to the findings of the ALJ, the Commission essentially held that the mere exposure of sensitive personal and health information into the public domain may be enough to constitute a substantial injury for purposes of Section 5, without any proof that the information was ever misused.

As a result, the FTC ordered LabMD to establish a comprehensive information security program, obtain independent third party assessments of the implementation of the information security program for 20 years, and to notify the individuals who were affected by the unauthorized disclosure of their personal information and inform them about how they can protect themselves from identity theft or related harms.

Takeaway: While LabMD has announced its intention to appeal, the FTC’s decision reinforces its role as an enforcer of data security, even in the health care arena, where OCR has been the traditional enforcer of HIPAA and health care data breaches.   Thus, in addition to OCR, health care entities must continue to monitor FTC enforcement actions to see if there are any additional or conflicting data security standards mandated by both agencies.   Any companies handling PHI should, therefore, continue to ensure that their data security policies and procedures are being implemented and followed in accordance with industry standards. Inadequate security safeguards may contribute to data breaches resulting in government investigations and enforcement actions – not just by OCR, but the FTC as well.

For more information about the FTC’s opinion, contact Gregory M. Fliszar or a member of Cozen O’Connor’s Health Law team.

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OCR Announces New HIPAA Guidance on Ransomware

Posted by Gregory M. Fliszar on July 13, 2016
HHS, OCR / No Comments

shutterstock_438013921In response to the increasing prevalence of ransomware cyber-attacks by hackers on electronic health information systems in hospitals and medical practices, the Department of Health and Human Services (HHS) Office for Civil Rights (OCR) announced on Monday July 11, 2016 its publication of new HIPAA guidance on ransomware (“Ransomware Guidance”). According to OCR:

Ransomware is a type of malware (or malicious software) that encrypts data with a key known only to the hacker and makes the data inaccessible to authorized users. After the data is encrypted, the hacker demands that authorized users pay a ransom (usually in a cryptocurrency such as Bitcoin to maintain anonymity) in order to obtain a key to decrypt the data.

Notably, the HIPAA Security Rule already requires implementation of security measures to help covered entities and business associates prevent the introduction of malware (e.g., ransomware) into their systems, and to implement policies and procedures to assist in responding to ransomware attacks. The Ransomware Guidance addresses, among other areas, how to implement security measures in order to prevent, mitigate the chances of, or even recover from ransomware attacks. Not surprisingly, conducting a risk analysis (or risk assessment) is at the core of covered entities and business associates implementing security management processes as required by the HIPAA Security Rule. The Ransomware Guidance further notes that maintaining an overall contingency plan, as required by the Security Rule, that includes disaster recovery planning, emergency operations planning and frequent backups of data can also help covered entities and business associates respond to and recover from malware infections, including ransomware attacks.

In addition, the Ransomware Guidance states that ransomware attacks against a covered entity or business associate can be considered a breach under the HIPAA Rules. Specifically, the Ransomware Guidance provides, “[w]hen electronic protected health information (ePHI) is encrypted as the result of a ransomware attack, a breach has occurred because the ePHI encrypted by the ransomware was acquired (i.e. unauthorized individuals have taken possession or control of the information), and thus is a ‘disclosure’ not permitted under the HIPAA Privacy Rule.” Therefore, unless it can be shown that there is a low probability that the PHI involved in the ransomware attack has been compromised based on the factors in the Breach Notification Rule, a breach is presumed to have occurred, which would trigger the applicable breach notification provisions.

Even before OCR’s publication of the Ransomware Guidance, in late June the Secretary of HHS sent a letter (“Letter”) to the attention of chief executive officers at health care entities addressing the threat of ransomware. The Secretary attached interagency guidance to the Letter containing best practices and mitigation strategies integral to combatting ransomware incidents.

Ransomware is immediately disruptive to the day-to-day operation of businesses, as seen by its impact earlier this year on health care systems like MedStar in Washington, D.C. and Hollywood Presbyterian Medical Center in Los Angeles (“HPMC”), resulting for example, in HPMC paying 40 Bitcoins (approximately $17,000) to regain control of its computer system. Although the Ransomware Guidance does not address whether payment or ransom should be paid to regain access to computer systems, the interagency guidance attached to the Letter advises against paying hackers because, among other reasons, paying a ransom doesn’t necessarily guarantee that an entity will regain access to its system. The Ransomware Guidance does recommend that an entity victimized by a ransomware attack contact its local FBI or United States Secret Service field office.

For more information about the Ransomware Guidance contact Gregory M. Fliszar, Ryan Blaney, J. Nicole Martin or a member of Cozen O’Connor’s Health Law team.

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Heads-up! HIPAA Phase Two Audits Begin – Business Associates Included!

Posted by Gregory M. Fliszar on March 22, 2016
HHS, OCR / No Comments

The Department of Health and Human Services (HHS) Office of Civil Rights (OCR) finally announced on March 21 that it is ready to begin Phase Two of its HIPAA audit program, which will include business associates. These audits, mandated by HITECH, will primarily be comprised of desk audits, scheduled for completion by the end of December 2016, followed by onsite audits.

OCR explained it will immediately commence Phase Two by verifying, via email, cover entities’ and business associates’ contact information. The OCR is requesting timely responses, so that it can send pre-audit questionnaires out in order to gather data from covered entities and business associates for the creation of potential audit subject pools. The data will relate to the entities’ size, type and operations. Should covered entities and business associates fail to respond to OCR’s requests, they may still be part of OCR’s potential subject pools because OCR plans to compile publicly available information about covered entities and business associates that do not respond to its requests.

The first round of desk audits will focus on covered entities, and the second round will focus on business associates. The third round will be onsite audits, with a greater focus on the HIPAA requirements. OCR explains that some covered entities and business associates who are subject to desk audits may also be subject to onsite audits. According to OCR, all covered entities and business associates are eligible to be audited. The audits will focus on identifying compliance with specific privacy and security requirements under HIPAA/HITECH, and OCR will notify auditees by letter, regarding the subject(s) of their specific audits. On the HHS website, OCR provides a sample letter for review. Subsequent to the audits, OCR will review and analyze information from audit final reports.

Importantly, if an audit report uncovers significant noncompliance with HIPAA, it could prompt an investigation by OCR. The areas of interest for OCR in Phase Two will become clearer as the Phase Two audit program gets underway, but for now, we know OCR will focus on assessing covered entities’ and business associates’ HIPAA compliance, identifying best practices and discovering risks and vulnerabilities.

More information about the Phase Two audits is available here, and you can also contact Greg Fliszar, Ryan Blaney, J. Nicole Martin or another member of Cozen O’Connor’s Health Law team.

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OCR Announces Two Significant HIPAA Breach Settlements

Posted by Gregory M. Fliszar on March 21, 2016
HHS, OCR / No Comments

shutterstock_62667685On consecutive days, the Office of Civil Rights (“OCR”) of the Department of Health and Human Services (“HHS”) recently announced two large HIPAA breach settlements. On March 16, 2016, OCR announced that it entered into a Resolution Agreement with North Memorial Health Care of Minnesota for $1.55 million plus a two-year corrective action plan. On March 17, 2016 OCR followed by announcing that Feinstein Institute for Medical research, a New York biomedical research institute, agreed to pay to OCR $3.9 million and enter into a three-year corrective action plan to settle potential HIPAA violations. Both cases resulted from the all too familiar scenario of breaches resulting from stolen, unencrypted laptops.

In the Minnesota hospital breach, the unencrypted laptop containing the PHI of over 9,000 individuals was stolen from the locked car of an employee of a business associate of the hospital. According to the OCR’s investigation, the hospital failed to have a business associate agreement in place with that particular business associate. OCR also alleged that the hospital had not previously performed a risk analysis to identify and address potential risks and vulnerabilities to the ePHI it maintained, accessed or transmitted.

In the New York research corporation breach, OCR alleged that the institution did not have policies and procedures in place, including a policy on encryption and one that addressed use and access of electronic devices (e.g., the removal of the devices from the institution’s facility), nor did it have in place a security management process that sufficiently addressed potential security risks and vulnerabilities to ePHI, namely, its confidentiality, vulnerability or integrity. Notably, the stolen, unencrypted laptop contained the PHI of approximately 13,000 individuals.

As above, both OCR settlements also include multiple year corrective action plans requiring the hospital and research facility to conduct risk analyses/assessments, train their employees, and have HIPAA compliant policies and procedures in place. The Resolution Agreement for the Minnesota hospital breach is available here, and the Resolution Agreement for the New York research institute breach is available here.

Takeaways: The OCR’s 2016 breach enforcement is off to a very strong start with two high dollar settlements. Lessons learned from both breaches include the significance of encrypting electronic devices, conducting and updating on a regular basis security risk assessments and analyses, having adequate safeguards in place to protect PHI, having business associate agreements with all business associates, and having and implementing HIPAA policies and procedures to protect the security and privacy of PHI, including for example, policies related to encryption, authorized access to ePHI/PHI, and removal of electronic devices from facilities.

 

For more information, contact Greg Fliszar, J. Nicole Martin, or a member of Cozen O’Connor’s Health Law team.

 

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Gun Control and HIPAA

Posted by Gregory M. Fliszar on January 06, 2016
HHS, OCR / No Comments

shutterstock_320073545In the wake of recent gun violence and in a concerted effort to protect public safety, the Department of Health and Human Services (HHS) released a final rule published in the Federal Register January 6, 2016, that modifies the HIPAA Privacy Rule to expressly permit certain HIPAA covered entities to disclose to the National Instant Criminal Background Check System (NICS) the identities of persons who are subject to a Federal “mental health prohibitor” that would prevent such individuals from possessing a firearm (“Final Rule”). The covered entities are those that have “lawful authority to make the adjudications or commitment decisions that make individuals subject to the Federal mental health prohibitor, or that serve as repositories of NICS reporting purposes.”

The Final Rule, which will appear at 42 C.F.R § 164.512(k)(7), adopted what HHS had initially proposed in April 2013 in its proposed rule. The purpose of the Final Rule is to afford the NICS with the ability to identify individuals subject to this prohibitor for the purpose of disqualifying them from shipping, transporting, possessing or receiving a firearm. Individuals subject to the Federal mental health prohibitor include those who have been involuntarily committed to a mental health institution, found incompetent to stand trial or not guilty by reason of insanity, or have been determined by a court or other lawful authority to be a danger to themselves or others or being unable to manage their own affairs. The disclosures to the NICS will be restricted to limited demographic and other information required by the NICS. Further, the Final Rule specifically prohibits the disclosure of any diagnostic or clinical information and “any mental health information beyond the indication that the individual is subject to the Federal mental health prohibitor.”

Importantly, the Final Rule’s express permission to disclose/report is narrowly tailored. Specifically, it does not extend to covered entities permission to report to the NICS the protected health information of individuals who are subject to the State-only mental health prohibitors. Additionally, the permission is not extended to “most treating providers”, which emphasizes HHS’ intention to protect the privacy of the patient-provider relationship.

A key tension at the heart of the gun control issue for years has been how to adequately protect individual privacy, in particular, mental health information, and maintain public safety. Not surprisingly, the Final Rule’s publication comes at a time of heightened tension between these issues, and President Obama announced yesterday that under his executive actions on guns, the administration will, among other actions, seek to expand mandatory background checks for certain private gun sales.

The Final Rule is effective February 5, 2016, 30 days from its publication in the Federal Register. To learn more about reporting under the Final Rule and the amended HIPAA regulation, please contact Greg Fliszar, J. Nicole Martin or any member of Cozen O’Connor’s Health Care team.

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OCR Announces Another HIPAA Settlement and Warns Not to Forget About Paper Records

Posted by Gregory M. Fliszar on May 04, 2015
HHS, HIPAA, OCR / No Comments

On April 27, 2015, the U.S. Department of Health and Human Services (“HHS”) Office for Civil Rights (“OCR”) announced that Cornell Prescription Pharmacy (“Cornell Pharmacy”) had entered into a resolution agreement to settle, without an admission of liability or wrongdoing, potential HIPAA violations. As part of the resolution agreement Cornell Pharmacy will pay $125,000 and enter into a two-year corrective action plan (“CAP”) focused on correcting the alleged deficiencies in its HIPAA compliance program.

Cornell Pharmacy is a small, single store pharmacy located in Denver, Colorado that specializes in compound medications and providing services for local hospice agencies. OCR began an investigation into the pharmacy after it received a media report from a Denver news agency that protected health information (“PHI”) belonging to Cornell Pharmacy was apparently disposed of and found in an unlocked, publicly accessible dumpster. The documents were not shredded and contained the PHI of approximately 1,610 of Cornell Pharmacy’s patients.   After conducting its investigation, OCR concluded that Cornell Pharmacy failed to implement any written policies and procedures as required by HIPAA’s Privacy Rule, and further failed to provide training on the Privacy Rule to its workforce members.

This settlement is instructive as OCR again highlights the importance of having updated and comprehensive HIPAA policies and procedures in place, including policies on the proper disposal of PHI, and on training all staff on those policies and procedures.   Further, in this year of massive cyber-attacks and other breaches of electronic data, this HIPAA settlement serves to remind covered entities and business associates not to forget about protecting their paper records as well.   As stated by OCR in its press release, “Even in our increasingly electronic world, it is critical that policies and procedures be in place for secure disposal of patient information, whether that information is in electronic form or on paper.” As discovered by Cornell Pharmacy, a breach or other improper disclosure of paper PHI can also result in significant consequences.

For further information please contact the author, Gregory M. Fliszar (Philadelphia, PA), or other members of Cozen O’Connor’s healthcare team.

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