Hospitals & Health Systems

Now that patients with Ebola have landed on U.S. soil, hospitals and other healthcare providers must prepare for the possibility that a patient with Ebola will walk through the doors. In this Oct. 30 webinar, Husch Blackwell presenters will look at some of the pressing legal issues related to treating patients with communicable diseases such as Ebola, and what providers can do now to prepare their clinical, compliance and legal teams.

Husch Blackwell attorneys Ed Barker and Joe Geraci discussed hospital legal issues related to a recent Ebola patient with the Texas Lawyer publication. The two-day period between the recent Dallas, Texas, Ebola patient’s first visit and isolation is the key to potential legal issues for the hospital, according to Barker and Geraci.

The Ebola patient…

The Kentucky Supreme Court issued an opinion Aug. 21, 2014, (Tibbs v. Bunnell, Ky., No. 2012-SC-000603-MR)  in which it held that the incident report developed by the University of Kentucky Hospital (“hospital”), through the hospital’s Patient Safety Evaluation System (“PSES”), following the death of a patient, was not protected as patient safety work product (“PSWP”) under the Patient Safety and Quality Improvement Act of 2005 (the “Act”).

On July 11, 2014, the Internal Revenue Service (“IRS”) released a Technical Advice Memorandum (“TAM”) dated March 7, 2008, which concluded that, contrary to the general rule set forth in Revenue Ruling 85-110 (“Rev. Ruling 85-110”), a tax-exempt hospital’s income from laboratory testing services to patients of private physicians is not subject to the unrelated business income tax.

For construction financing of single- or dual-tenant medical office buildings, credit tenant lease (CTL) offers an intriguing option for developers. A healthcare system or a large healthcare-related company would fit the criteria for consideration.

With CTL financing, the lease rental income is leveraged as the basis for repayment of the loan. In fact, the rental payments are assigned and paid directly to the lender. Because the CTL structure more closely resembles a bond rather than a real estate loan, the interest rate on the note will be determined by the creditworthiness of the tenant(s) rather than the value of the underlying real estate and creditworthiness of, or credit enhancement from, the borrower. The higher the creditworthiness of the tenant(s), the lower the interest rate on the loan.

The U.S. Department of Justice (DOJ) and the New York State Attorney General intervened in a federal False Claims Act (FCA) case on June 27, 2014, accusing Mount Sinai Health System of failing to report and return Medicaid overpayments within 60 days of identifying them. See U.S. ex rel Kane v. Healthfirst, Inc., et al., No. 11-2325 (S.D.N.Y). This case is one of the first examples of litigation involving “the 60-day repayment provision” under the Affordable Care Act (ACA).

The Centers for Medicare & Medicaid Services (CMS) published its final revisions (“Final Rule”) to the Medicare Conditions of Participation (CoPs) on May 12, 2014. Among other things, CMS proposed to revise its current interpretation of the hospital medical staff composition at 42 C.F.R. § 482.22 and modified the prohibition on the use of a unified and integrated medical staff for a multi-hospital health system.

Many pediatric hospitals have an opportunity to be a lead provider of patient care and administrative services to patients in states that are outsourcing Medicaid program administration to managed care companies.  Winn Halverhout presented on this topic for an AHLA webinar titled “Innovative Pediatric Hospital/Provider Partnerships.”

Thirty-seven states currently outsource all or part of their Medicaid administration to managed care companies.  Many states are dividing into regions and awarding Medicaid contracts in each region to only one or a handful of managed care companies, which creates opportunities for pediatric providers that MCCs regard as critical providers within a service region.  Pediatric hospitals are well-positioned to be the lead provider if they can build a critical mass of physicians and other pediatric care providers in the contract region.

The Federation of State Medical Boards recently endorsed a model policy that addresses the proper use of telemedicine services.  Only a few weeks later, a not-for-profit foundation released  a report highlighting the benefits of telemedicine and making recommendations for telehealth services.  It’s no surprise that telehealth and telemedicine have been in the news with increasing frequency given that the demand for telemedicine services are rising sharply.  According to a Law360 article, Deloitte Touche Tohmatsu Ltd. estimates that 75 million digital doctor visits will occur this year in North America.

For many years, healthcare providers – particularly children’s hospitals – took comfort in a belief held widely throughout the healthcare industry that the Stark Law did not apply to Medicaid. That belief has now been challenged by several district court cases involving alleged False Claims Act violations, most recently in U.S. v. All Children’s Health System.