Is Your Surgery Center Ready for California’s Surprise Medical Billing Law?

A new California law (AB 72) limits the amount that out-of-network surgeons and other health care professionals may bill patients for covered non-emergency services provided at a contracted facility, such as an ambulatory surgery center.  California’s “surprise medical bill” law went into effect on July 1, 2017.  It is intended to prevent a consumer from receiving an unexpected medical bill from a non-contracted provider as follows:

  • A patient who is enrolled (“Enrollee”);
  • In a health care service plan or health insurance policy (“Plan”);
  • Receives health care services covered by the Plan;
  • From an individual health professional (“Professional”);
  • Who does not have a contract with the Plan; and
  • Services are performed at (or as a result of) a contracted health facility (“Facility”).[1]

In such circumstances, the Enrollee may be billed no more than the same cost-sharing amount that the Enrollee would pay a contracted Professional for the same service (“in-network cost sharing amount”).   At the time of payment, the Plan must inform the Enrollee and the non-contracted Professional of the in-network cost-sharing amount owed by the Enrollee. Continue Reading

Medical Board of California Circulates Opioid Prescriber Guidance

Recently, the Medical Board of California circulated an open letter, known as a Prescriber Guidance Letter to all practitioners in California who prescribe opiates.  The letter was authored by a statewide workgroup on Prescription Opioid Misuse and Overdose Prevention.  The workgroup includes the Medical Board of California, the Board of Pharmacy, the California Department of Public Health, the DEA, DMV, California Department of Justice, California Health and Human Services, California Society of Addition Medicine, and California Healthcare Foundation, among others.

The Prescriber Guidance Letter was accompanied by a number of resources for providers facing these situations, including Strategies for High Risk Patients, Medication-Assisted Treatment Certification Programs, Local Addiction Recovery Services Locator, CURES information, Opioid Prescriber Resource Sheet, and Opioid Prescribing Guidelines.

The letter prominently displays the subtitle “Don’t Fire Your Patients Who May be Over-using Opioids.”  This request stands in contrast to most provider risk-avoidance guidance, which would suggest that terminating the patient from the practice is the best way to insulate the provider from regulatory scrutiny.  The Medical Board of California Expert Reviewer Guidelines regarding the treatment of pain focus on excessive prescribing concerns; gone are the days of concern for the undertreatment of pain.  Many pain contracts, for example, authorize the provider to terminate the patient from the practice for any breach of the agreement, including the patient’s overuse of medications, early filling of prescriptions, and the patient getting medications from other providers.  The rapidly evolving and constantly changing regulatory guidelines make it hard for prescribers to stay compliant. In addition, retrospective case reviews can be skewed when viewed through the lens of subsequently-released guidelines.

The Prescriber Guidance Letter acknowledges “providing safe and effective pain management can be challenging.”  The authors further recognize the difficulty in weaning patients off of opiate medications. “One of the most difficult situations for prescribers may be how to respond to patients with difficulty decreasing opioid intake or with other possible addiction symptoms.”  This recognition of the difficulty in getting patients off opiate medications and the important role physicians will need to play to reach a resolution to this issue serves as a counterpoint to the communications from other agencies, such as the federal Centers for Disease Control, which suggests the opioid epidemic is a “doctor-driven” problem and recommends no more than 3 days of opioid treatment.

Prescribers are surrounded by guidelines from various regulatory bodies, such as the Medical Board of California and the CDC, as well as academic bodies, such as The American Society of Addiction Medicine, regarding the safe and recommended approaches to treating patients with pain. These often-conflicting guidelines can lead to confusion as to the appropriate standard of care.


  • California is actively seeking to address the opioid epidemic.
  • Some patients have chronic pain and their opiate medications cannot simply be stopped cold-turkey.
  • Physicians must be an integral part of the solution, rather than abandoning their patients at the first sign of non-compliance.

Press Release Mistake Leads to $2.4 Million HIPAA Penalty for Health System

On May 10, 2017, the U.S. Health and Human Services Department Office for Civil Rights (“OCR”) announced an agreement whereby Memorial Hermann Health System (“MHHS”) will pay a $2.4 million penalty for releasing a patient’s name in a press release.  According to the resolution agreement, in September 2015, a patient at an MHHS clinic presented an allegedly fraudulent identification card to office staff.  The staff notified law enforcement and the patient was arrested.  Although notification to law enforcement did not violate the HIPAA rules, it wa a violation to include the patient’s name in the title of a press release regarding the incident and to disclose the patient’s protected health information (“PHI”) during meetings with an advocacy group, state representatives, and a state senator, in response to the events.

There are a number of lessons to be learned from this settlement:

  • Confirm that senior management, as well as workforce members and subcontractors, understand the HIPAA rules.
  • Thoroughly train press and communications personnel to be alert for information that is protected by HIPAA and must not be disclosed.
  • Review and regularly update HIPAA policies and procedures.
  • Obtain patient consent before disclosing patient names on a website or in a press release.
  • Do not discuss patient PHI with the media or public officials without patient consent.
  • Be sure to document, in a timely manner, any sanctions imposed upon workforce members who fail to comply with the entity’s privacy policies and procedures or violate the HIPAA rules.

The consequences of a HIPAA violation can be severe, so any entity that handles PHI should be diligent in HIPAA compliance.

Mealtime Waiver Decision is Good News for California Healthcare Employers Hungry for Clarity

Female Medical Professional Doctor or Nurse Eating Healthy Lunch
In a rare move, the California Court of Appeal reversed itself and validated a California hospital’s policy of allowing healthcare workers to waive an otherwise mandatory second meal period on shifts longer than 12 hours.  In reversing itself, the California Court of Appeal in Gerard v. Orange Coast Memorial Medical Center (Gerard II) held that its previous decision in Gerard v. Orange Coast Memorial Medical Center (“Gerard I”) [see our prior discussion re Gerard I here], partially invalidating healthcare meal waivers, was incorrect.

California Labor Code section 512(a) requires that two meal periods be provided for any employee working shifts longer than 12 hours.  However, Industrial Welfare Commission (“IWC”) Wage Order No. 5 carves out an exception to this requirement for employees in the healthcare industry.  The Wage Order permits healthcare employees to waive one of their two meal periods on shifts longer than 8 hours even when their shift exceeds twelve hours.

In Gerard I, the Court found that IWC Wage Order No. 5 was partially invalid to the extent it authorized second meal break waivers by healthcare workers on shifts longer than 12 hours.  Thus, Gerard I invalidated these meal period waivers.  In response to the uncertainty created by Gerard I, Governor Brown signed SB 327 as an emergency measure on October 5, 2015, effective immediately.  Although SB 327 confirmed that employees in the healthcare industry who worked shifts longer than eight hours could voluntarily waive their right to one of their two meal periods, even where shifts lasted longer than 12 hours, it only affected meal period waivers entered into on or after October 5, 2015.[1]  Now, as a result of Gerard II, healthcare employers in California will not face retroactive liability if they used such waivers prior to October 5, 2015.

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Stable or Fable: Will the Trump Administration Proposed Rule Save the Exchanges or Hasten Their Demise?

A proposed rule intended to stabilize the individual and small group insurance markets was issued on February 17, 2017, only a week after the Senate confirmed Tom Price as the Secretary of the U.S. Health and Human Services Department (HHS).[1] Although the proposed rule is intended to stabilize these markets, it may make it more difficult for individuals to obtain and maintain health insurance coverage, thereby reducing the number of people who are insured.

This is a turbulent time for American healthcare. Within weeks after the publication of the proposed rule, the American Health Care Act (AHCA) was introduced in the U.S. House of Representatives to repeal and replace key provisions of the Affordable Care Act (ACA) and make significant changes to federal funding for Medicaid.[2] On Friday, March 24, House Speaker Paul Ryan pulled the bill before a vote.[3]  In the aftermath of the bill’s withdrawal, President Trump predicted that if it were left in place, ObamaCare would explode.[4]  As recently as Sunday, April 2, however, the President tweeted that talks of repeal and replace of the ACA were ongoing and would continue until a deal was struck.[5] On Tuesday, April 4, House Speaker Paul Ryan said Republican lawmakers are having productive talks on a new healthcare reform bill.[6]

This on again, off again, action to attack the ACA leaves a great deal of uncertainty for healthcare providers.  That uncertainty is compounded by regulatory action that will affect the ACA in ways less visible to the public.  Apparently, Secretary Price is well aware of HHS’ options to make regulatory changes.  According to the Chicago Tribune, he remarked during the House Appropriations Committee hearing on his agency’s proposed budget that “[f]ourteen hundred and forty-two times the ACA said ‘the secretary shall’ or ‘the secretary may.’”[7]

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BRN Sunset Report Criticizes Enforcement Process, Treatment of Nurse-Midwives

The California Board of Registered Nursing (BRN) received a negative evaluation of its enforcement program in the most recent sunset review. The sunset review included a performance audit by the California State Auditor due to complaints received about the BRN’s enforcement process.

31 out of the 40 investigated consumer complaints between January 1, 2013 and June 30, 2016, were not resolved within the 18-month goal set by Consumer Affairs, potentially placing patients at additional risk.  15 of those 31 delinquent complaints took longer than 36 months to resolve.  Seven of those 15 complaints took longer than 48 months to resolve, six of which included allegations of patient harm resulting from a nurse’s actions. Continue Reading

What’s in Your Local Transportation Policy?


The Anti-Kickback Statute

Those in the business of providing healthcare services to Medicare and Medicaid beneficiaries are all too familiar with the federal Anti-kickback Statute (AKS). Among other dreadful sanctions, it imposes criminal penalties on those individuals or entities that knowingly and willfully offer, pay, solicit, or receive remuneration in order to induce or reward the referral of business reimbursable under federal healthcare programs. A violation of the AKS is a felony punishable by fines of up to $25,000 and imprisonment for up to five years. An offense may also result in the imposition of civil monetary penalties, government program exclusion, and liability under the federal False Claims Act.  The U.S. Department of Health and Human Services (HHS) has the authority, however, to protect certain provider arrangements and payment practices under the AKS.  To that end, HHS has established safe harbors in various areas.  While compliance with a safe harbor is not mandatory, healthcare providers and others may voluntarily seek to comply with safe harbors so that they may have substantial assurance that their business practices do not violate the AKS.

A  New Safe Harbor

On January 20, 2017, a new safe harbor became available for local transportation services furnished by healthcare providers to Medicare and Medicaid beneficiaries. [1] The safe harbor protects an offer of free or discounted local transportation services when paid for by an “eligible entity.”  An eligible entity may be a direct provider of healthcare services or one that arranges for the provision of healthcare services to patients, such as a health plan or clinically integrated network.  The definition of an eligible entity excludes organizations that primarily supply healthcare items rather than services, such as a durable medical equipment suppliers or pharmacies. However, entities that primarily provide services, but also provide items, such as a hospital, may provide patients with transportation to the hospital for items or services provided by the hospital (such as for obtaining items at the hospital’s on-site pharmacy).

The safe harbor is available for two types of transportation.  First, the safe harbor protects an offer to provide transportation of an “established patient” to or from an eligible entity for medically necessary items or services. An “established patient” is a person who has contacted the eligible entity to schedule an appointment or had a previous appointment with the eligible entity furnishing the transportation.

Second, the safe harbor protects certain types of shuttle services that are generally available to the public, as well as patients on a non-discriminatory basis.

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MBC Disciplinary Guidelines Relieve Licensees of Onerous Probation Condition


(Updated March 11, 2017) On February 3, 2017, the Medical Board of California (MBC) published the much-anticipated 12th Edition of its Manual of Model Disciplinary Orders and Disciplinary Guidelines (Guidelines).  Drafts of this latest edition had been slugging through the approval process since mid-2015.

The most notable modification is to Standard Condition #33 (Non-practice While On Probation). Under the 11th Edition, the MBC defined “nonpractice” as “any period of time respondent is not practicing medicine in California…for at least 40 hours in a calendar month in direct patient care, clinical activity, or teaching, or other activity as approved by the [MBC]”. This meant that a licensee on probation by the MBC was required to practice at least 40 hours per month in California, or else the licensee would violate the terms and conditions of his or her probation.  The 12th Edition removes the in-state practice requirement, obligating a licensee to practice medicine for at least 40 hours in a calendar month anywhere he or she is licensed to do so, whether in California or elsewhere.

This revision provides much needed relief, both logistically and monetarily, for California licensees who are on probation with the MBC but living and practicing medicine in another state or even in another country.

While not binding standards, the Guidelines are intended for use by those involved in the MBC’s licensing disciplinary process: administrative law judges, defense attorneys, the California Attorney General’s office when representing the MBC, the MBC’s disciplinary panel members who review proposed decisions and stipulations, and MBC licensees.

UPDATE: Based on a conversation with Kimberly Kirchmeyer, MBC Executive Director, there is a difference of opinion as to the interpretation of Condition 33 of the Guidelines. Ms. Kirchmeyer indicated that the revised language, i.e. removing “in California,” was not intended to relieve licensees of the in-state 40-hour practice requirement.  The MBC, she stated, must be able to conduct in-person monitoring of licensees on probation and it is not able to do so if the licensee is practicing outside of California.  To support her stance, Ms. Kirchmeyer relies on the fifth sentence of Condition 33, which was also part of the 12th Edition update:

Practicing medicine in another state of the United States or Federal jurisdiction while on probation with the medical licensing authority of that state or jurisdiction shall not be considered non-practice.

The inverse of that sentence, she believes, means that practicing in another state or Federal jurisdiction while NOT on probation in that state or jurisdiction would be considered a period of non-practice. In essence, a licensee on probation in California must, according to Ms. Kirchmeyer, either be on probation by the other state’s medical board or else the MBC will not credit the physician for that time out-of-state towards the completion of probation (probation will be tolled during the physician’s time out-of-state). 

While the plain language interpretation of both sentences referenced in this article seem to contradict one another, only time will tell how the MBC will enforce this revision.

Opthalmologists’ Group Boycott has the FTC Seeing Red

On January 19, 2017, the Federal Trade Commission announced a settlement which would resolve allegations that competing ophthalmologists violated federal antitrust laws when they refused to negotiate contracts with MCS Advantage, Inc. (MCS), a Medicare Advantage Plan, and Eye Management of Puerto Rico (Eye Management), MCS’s network administrator.

According to the complaint, the charges arise from an arrangement between Eye Management and MCS entered into in April, 2014.  Eye Management agreed to create and manage a network of ophthalmologists to provide services to MCS enrollees and to do so at a cost savings to MCS.   Eye Management planned to replace MCS’s existing contract with each individual ophthalmologist with a new contract between Eye Management and the ophthalmologist at a lower reimbursement rate. In early June 2014, Eye Management sent a proposed contract to every ophthalmologist contracted with MCS at the time. These contracts offered payments at rates that were about 10% lower, on average, than the rates under the existing contracts between MCS and each ophthalmologist. Continue Reading