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

To the MOON and Beyond: Hospitals Must Provide Notice of Observation Status

There may be no noticeable difference between a hospital patient occupying a bed as an inpatient or one in observation status.  Yet, state and federal legislators have been concerned that the difference can have important consequences for the patient.  “Observation care” is considered by Medicare to be an outpatient service.  Patients classified as outpatients in the hospital may fail to achieve a three-day inpatient stay to qualify for subsequent Medicare coverage for skilled nursing facility care.  Patients in observation status may also have higher co-payments and charges for doctors’ fees and hospital services, as well as drugs.

Federal Law.  The Medicare Outpatient Observation Notice (“MOON”) was developed to inform all Medicare beneficiaries when they are receiving observation services and are not an inpatient of the hospital.  The MOON is mandated by the Notice of Observation Treatment and Implication for Care Eligibility Act (NOTICE Act), enacted in 2015. All hospitals and critical access hospitals (CAHs) are required to provide the MOON beginning no later than March 8, 2017.

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OCR Issues $475,000 Fine for Untimely Reporting of HIPAA Breach

On January 9, 2017, the U.S. Department of Health and Human Services, Office of Civil Rights (OCR) announced the first HIPAA enforcement action against a health care provider for failing to make a timely report of a breach of unsecured protected health information (PHI).  Presence Health (Presence) agreed to pay $475,000 and implement a corrective action plan to settle potential violations of the Health Insurance Portability and Accountability Act (HIPAA) Breach Notification Rule.

The HIPAA Breach Notification Rule, 45 CFR §§ 164.400-414, requires HIPAA covered entities and their business associates to provide notification following a breach without unreasonable delay and in no case later than 60 calendar days after discovery of a breach.  A covered entity is:

(1) A health plan,
(2) A health care clearinghouse, or
(3) A health care provider who transmits any health information in electronic form.

Similar breach notification provisions implemented and enforced by the Federal Trade Commission apply to vendors of personal health records and their third party service providers, pursuant to section 13407 of the HITECH Act.  In addition, state breach reporting laws may impose other requirements.  California’s Health and Safety Code section 1280.15(b) requires a clinic, health facility, home health agency, or hospice to report any unlawful or unauthorized access to, or use or disclosure of, a patient’s medical information to the California Department of Public Health no later than 15 business days after detection.

Presence is one of the largest health care networks in Illinois.  It discovered the loss of paper-based operating room schedules, which contained PHI of 836 individuals, from the surgery center of Presence St. Joseph Medical Center in Joliet, Illinois.

OCR Director Jocelyn Samuels explains:

“Covered entities need to have a clear policy and procedures in place to respond to the Breach Notification Rule’s timeliness requirements.  Individuals need prompt notice of a breach of their unsecured PHI so they can take action that could help mitigate any potential harm caused by the breach.”

Three New Laws California Hospitals Need to Know

As the clock struck midnight on New Year’s Eve, a number of new California laws took effect.  Here are three that California hospital executives need to know:

  1. Notice of Observation Status (SB 1076)
    When a patient is being cared for in an inpatient unit of a hospital (or in an observation unit) the hospital must provide the patient with a written notice when the patient is in observation status.  The notice must inform the patient that the observation care is being provided on an outpatient basis and that this may affect the patient’s health care coverage reimbursement.  There are also signage and nursing ratio requirements for the designation and use of observation units in California hospitals.
  2. Critical Access Hospitals (AB 2024)
    If the medical staff of a federally-certified Critical Access Hospital (CAH) agrees, the CAH may now employ physicians and charge for their professional services.  The medical staff must determine by vote that employment of the physician is in the best interest of the communities the CAH serves. The CAH must file a report with the California Office of Statewide Health Planning by July 1 of each year.
  3. Reporting Loss of Encryption Key or Security Credential (AB 2828)
    Encryption only protects data if the thief does not have the encryption key.  This law requires that a privacy breach resulting from the loss of an encrypted device must be reported if an unauthorized person has access to the encryption key or security credential.