Health Law Blog

On March 27th, Governor Andrew M. Cuomo, Senate Majority Leader Dean Skelos and Assembly Speaker Sheldon Silver announced an agreement on the 2012-2013 New York State Budget (“Health Budget Bill”).  The Health Budget Bill represents a victory for those elderly individuals that rely on Medicaid for financial assistance for home care or institutional care.   While the Health Budget Bill must be approved by the New York Legislature, most expect this to occur by early Friday, easily making the fiscal deadline of Saturday midnight.  We will update this blog as new information becomes available.  

In our earlier blog posts, we noted that New York had changed its law to permit an expansion of the definition of assets against which a Medicaid claim could be made, thereby making previously protected assets vulnerable.  The regulations under consideration would have expanded the definition of assets to include, among other options, IRAs, life estates, trusts and certain exempt transfers.  Under the revised Health Budget Bill, the definition of “estate” has returned to its former narrow definition, meaning that Medicaid can only recover from assets in the Medicaid recipient’s probate estate.  

Another major victory is that the proposal to eliminate “spousal refusal” has been abandoned.  Spousal refusal is a commonly used Medicaid planning tool that allows a Medicaid applicant’s spouse to refuse to provide financial assistance to another spouse, which may enable the ill spouse to be Medicaid-eligible.  While this issue is likely to be revisited in future years, it remains available at this time.

The importance of these changes in the law cannot be overstated. It allows for important planning opportunities for those facing expensive, long-term care.  As many find out too late, careful advance planning can avert difficult and onerous financial situations that can arise in caring for family members.  Please contact us with any questions about these planning options.

 ~Submitted by M Salzman

Medicaid Services (“CMS”) recently released the proposed rule regarding Stage 2 requirements for meaningful use of electronic health records (the “Proposed Rule”).  In order to allow vendors time to develop technology that complies with the proposed requirements, the Proposed Rule delays the implementation of the onset of Stage 2 criteria until 2014. 

Otherwise, the Proposed Rule expands the threshold requirements of existing measures (e.g., the threshold for computerized provider order entry increases from 30% of only medication orders to 60% of medication orders plus laboratory and radiology orders.) and increases the number of core objectives providers must meet.   Under the Proposed Rule, eligible professionals must meet, or qualify for an exclusion to, seventeen core objectives and three of five menu objectives, and hospitals must meet, or qualify for an exclusion to, sixteen core objectives and two of four menu objectives. 

The Proposed Rule also provides guidance on how providers can avoid negative payment adjustments, which begin in 2015, for failing to demonstrate meaningful use of electronic health records.  In order to avoid payment adjustments providers can argue that they qualify for an exception because: (i) there is a lack of availability of internet access or barriers to obtaining IT infrastructure, (ii) they qualify for a time-limited exception for newly practicing providers or new hospitals; (iii) there are unforeseen circumstances such as natural disasters; or (iv) they meet other specified criteria such as lack of face-to-face or telemedicine interaction with patients or lack of control over the availability of EHR technology at their practice locations.

HHS and CMS also propose to expand the definition of what constitutes a Medicaid patient encounter, which is a required eligibility threshold for the Medicaid incentive program, by including encounters for individuals “enrolled” in a Medicaid program, which ensures that patients enrolled in a Medicaid program are counted, even if the Medicaid program did not pay for the service. 

 ~Submitted by Z Cohen

The U.S. Department of Health and Human Services, Office of Civil Rights (“OCR”) announced on March 13, 2012 that it settled with Blue Cross Blue Shield of Tennessee (“BCBS”) for $1.5 million as a result of a breach reported under the HITECH breach notification rule. 

BCBS timely reported a breach to OCR on November 3, 2009 after 57 unencrypted hard drives were stolen from a network data closet on or about October 2, 2009.  These hard drives contained audio and video recordings of customer service calls with included protected health information of over $1 million insurance plan members including their names, insurance member numbers, dates of birth, and social security numbers.  The network closet was secured by biometric and keycard scan security with a magnetic lock and additional door with a keyed lock.  Although BCBS received an alert on October 2, 2009 that the server at the network closet was unresponsive, it wasn’t until Monday, October 5, 2009 that the theft was identified. 

OCR’s determined that BCBS failed to implement appropriate physical safeguards by not having adequate facility access controls, despite the security measures mentioned in place at the network closet. OCR also found BCBS lacked administrative safeguards by not performing the required security evaluation to adequately protect the data stored in the network closet.  As part of the settlement, BCBS agreed to a 15 month corrective action plan which requires BCBS to update their HIPAA security policies, conduct training to employees with access to patient information, and to conduct monitor reviews  to ensure compliance.  For more information see the resolution agreement here. 

This settlement sends a strong message that OCR expects covered entities to have a well designed and implemented HIPAA compliance program.  Please do not hesitate to contact your regular GW contact if you need assistance in updating, evaluating or implementing your HIPAA compliance program. 

~Submitted by T Hubbell

A federal district court in New York determined that a medical clinic was not liable for an employee’s dissemination of a patient’s private health information regarding his treatment for an STD because the nurse was acting outside the scope of her official duties when she revealed confidential information about the patient to her sister-in-law, the patient’s girlfriend. (Doe v. Guthrie Clinic Ltd., 11-CV-6089T, 2012 WL 531026 (W.D.N.Y. Feb. 17, 2012)). The Court concluded that the clinic could not be held vicariously liable for the nurse’s action because it was clear the actions were taken in the nurse’s personal interest and there was no evidence that the nurse took the action on the clinic’s behalf or with its authorization.

More on this case Click Here

~Submitted by S Klein

Remember to electronically file reports of all HIPAA breaches (i.e., unauthorized disclosure of patient information involving unsecured protected health information)  which occurred in 2011.  The report must be submitted  to the U.S. Department of Health and Human Services, Office for Civil Rights by February 29, 2012.   The following link will take you to the report form: Click Here

~Submitted by T Hubbell

The Good News:
Eligibility thresholds are up.  The New York State Department of Health has published increased allowances for 2012 which include the following key provisions.  The new resource allowance that a single person is entitled to keep is $14,250.  The amount of monthly income that a single person is entitled to keep to qualify for home health care is $792.  The amount of resources that the community spouse is permitted keep if the ill spouse is in a nursing home is increased to a maximum amount of $113,640 and the monthly maintenance needs allowance that the community spouse is entitled to keep is increased to $2,841.  In addition, the homestead exemption is increased from $758,000 to $786,000.  Pursuant to this exemption, up to $786,000 in equity value of a Medicaid applicant’s home is not considered an available resource and will not disqualify such applicant from receiving Medicaid.  The equity value is calculated by subtracting legal encumbrances (liens, mortgages, etc.) from the fair market value of the home.

The Bad News:
The Governor’s Budget Bill (i.e., the proposed 2012-2013 New York State Executive Budget Health and Mental Hygiene Article VII Legislation, “Governor’s budget bill”) proposes significant changes to the Medicaid program which may restrict access.  While the proposed changes may not be enacted in current form, they support our belief (as discussed in our December 2011 blog entry) that restrictive changes are afoot, and that putting Medicaid and estate planning in place is prudent.

Spousal refusal.  The Governor’s Budget Bill would severely restrict the “spousal refusal” technique for obtaining Medicaid for an ill spouse.  Spousal refusal is a commonly used Medicaid planning tool when a Medicaid applicant’s spouse signs a written statement refusing to pay for the medical expenses of the applicant.  With a “spousal refusal,” the assets of the spouse may not count as a resource for the Medicaid applicant, thereby allowing the Medicaid applicant to qualify for Medicaid if he or she is otherwise eligible.  While the well spouse may under certain circumstance be held accountable to pay for Medicaid expenditures paid on behalf of the Medicaid recipient, the Medicaid rate for healthcare services is far lower than the private pay rate.

There have been numerous attempts over the years to repeal or eliminate the “spousal refusal” Medicaid planning tool.  The proposed Governor’s budget bill allows for spousal refusal only if the spouse is both absent and refuses to provide support.  The word “absent” is not defined in the budget bill and it is unclear whether the statute will provide a definition.  We also understand that the “spousal refusal” issue is under negotiation and it is unclear at this time whether this provision of the budget bill will remain.

Regulations to be issued. As we discussed in our December 2011 blog entry, there has been an expansion of the definition of assets against which Medicaid can make a claim to recover for healthcare expenditures made on a Medicaid recipient’s behalf.  The regulations for expanded recovery are still under consideration.  There is much speculation that the regulations will consider IRAs and other retirement funds, life estates and Medicaid income only trusts as assets against which Medicaid can make a claim.  However, until the regulations are proposed and finalized, it is anyone’s guess as to what types of assets will be subject to the expanded recovery rules.

Planning Considerations.  While the Medicaid law will continue to change, careful advance planning can assist in many circumstances.

~Submitted by E Koopersmith, D Martin & M Salzman

            New York State has followed the IRS’ lead in granting extensions to charities that electronically file.  Please note that these extensions are available only to organizations that file electronically with the IRS.

             IRS Extension until March 30th for Electronic Filers with Form 990s due in January or February 2012.  The IRS announced that it is granting filing extensions to organizations that file electronically and whose Form 990 is due in January or February 2012. Those organizations have until March 30, 2012 to file their Form 990s.  Information about the extensions is posted at http://www.irs.gov/charities/article/0,,id=251096,00.html.

             New York State Attorney General’s Office grants similar extension.  The Attorney General’s Office will grant the same extension to organizations that file with the Charities Bureau.  An organization that qualifies for the IRS extension will similarly have until March 30, 2012 to file its CHAR500, IRS Form 990 and, if applicable, financial audit or review. To be eligible for the extension, an organization must send an email to the Charities Bureau at charities.extensions@ag.ny.gov stating that (1) it files electronically with the IRS, (2) its annual report is due to be filed in January or February 2012, and (3) it will file the report with the Charities Bureau on or before March 30, 2012.  The organization should put its name and Charities Bureau Registration Number in the subject line of the email.

Click Here for more information

~Submitted by M Salzman

The Federal estate and gift tax exemption for 2012 rose to $5,120,000 after an inflation adjustment. The Federal estate and gift tax rate remains at 35% for 2012.  In 2013, the exemption is scheduled to revert to $1,000,000 and the rate to 55% so consider making substantial gifts in 2012 before this opportunity could be gone.  The annual gift tax exclusion remains at $13,000 per person ($26,000 per couple) for 2012 (make your 2012 gifts now to ensure you don’t miss this opportunity in the year end holiday crush and get the growth on the gifted assets out of your hands).  The amount of business real estate eligible for special estate tax valuation discount also rose to $1,040,000.  If more than 35% of an estate consists of a closely-held business, more estate tax (up to $486,500) now qualifies for installment payment and the IRS charges only 2% interest. 

~Submitted by D Martin

Recently, New Jersey passed a law that allows for, and encourages, the use of a Physician Orders for Life-Sustaining Treatment (“POLST”) form.  The standardized POLST form contains signed, immediately actionable medical orders that address a patient’s wishes regarding life-sustaining care.  The form clearly expresses a patient’s decisions on a range of life-sustaining interventions and the patient’s preferred intensity of treatment for each intervention.  The function of the POLST form, complementing an advance directive, is to convert a patient’s wishes about end-of-life care into direct medical orders and to provide detailed direction to health care professionals. Health care professionals are recommended to introduce the POLST form on a voluntary basis to patients who have advanced chronic progressive illness or a life expectancy of less than five years.

Click Here for the NJ Senate bill (S-2197) and Click Here for a sample NJ POLST form.  A standardized form for NJ is not yet available.

~Submitted by E Sibley