Health Law Advisor

The Centers for Medicare and Medicaid Services (CMS) is issuing, what will amount to be, very significant Risk Adjustment Data Validation (RADV) Audit notices for PY2018 to Medicare Advantage Organizations (MAOs).

These notices follow the issuance of CMS’s final rule (88 Fed. Reg. 6643 (Feb. 1, 2023), amending 42 C.F.R. 422.310(e). Pursuant to the rule, CMS has the authority to extrapolate audit findings for PY2018 and beyond. CMS has noted that the extrapolation methodology it adopts for RADV audits will be focused on MAO contracts that, through statistical modeling ...

As much of the Southeastern U.S. continues to recover from the aftermath of Hurricanes Helene and Milton, health care providers should be aware of, and consider the extent upon which they rely upon, the flexibilities that the Centers for Medicare & Medicaid Services (CMS) extended to assist with the Public Health Emergencies (PHEs) in the affected states. As a result of Hurricanes Helene and Milton, CMS extended additional resources to Medicare providers and certain health care facilities in Florida, Georgia, North Carolina, South Carolina, and Tennessee.

As background, during a PHE, the Secretary of the U.S. Department of Health and Human Services (HHS) may temporarily waive certain HIPAA Privacy Rule requirements for hospitals.

During the recent PHE, HHS issued HIPAA-related waivers lasting up to seventy-two (72) hours to hospitals located in the declared emergency that had activated their disaster protocol, including waivers for: the distribution of HIPAA privacy notices; patient rights to request privacy restrictions and confidential communications; communications with family or friends involved in care; and, opting out of facility directories. Health Information Privacy PHE responses can be found here.

New from the Diagnosing Health Care Podcast: One year ago, on October 30, 2023, President Joe Biden signed an executive order laying the groundwork both for how federal agencies should responsibly incorporate artificial intelligence (AI) within their workflows and how each agency should regulate the use of AI in the industries it oversees.

What has happened in the past year, and how might things change in the next?

On this episode, Epstein Becker Green attorneys Lynn Shapiro Snyder, Eleanor Chung, and Rachel Snyder Good reflect on what is new in health care AI as a result of the 2023 executive order and discuss what industry stakeholders should be doing to comply and prepare for future federal regulation of AI in health care.

In our ongoing series of blog posts, we have examined key negotiating points for tenants in triple net health care leases. We also have offered suggestions for certain lease provisions designed to protect tenants from overreaching and unfair expenses, overly burdensome obligations, and ambiguous terms with respect to the rights and responsibilities of the parties. These suggestions are intended to result in efficient lease negotiations and favorable lease terms from a tenant’s perspective. In our previous blog posts, we considered the importance of negotiating initial terms and renewal terms, operating expense provisions, assignment and subletting terms, maintenance and repair obligations, holdover provisions and surrender terms, and tenant improvement allowances. This latest blog post focuses on negotiating lease terms governing exclusivity, expansion and relocation.  A tenant should carefully negotiate these terms in order to protect its interest in the leased premises during the term.

Exclusivity provisions protect a tenant’s interest in leased premises by restricting landlords from leasing space in the same building or shopping center as tenant’s space for a similar permitted use. These provisions are not only important for retail tenants but should be negotiated for by healthcare tenants as well. For example, a tenant that operates a dermatology practice in a shopping center may want to restrict landlord form leasing space to other tenants who provide many of the same services. It is also important to define what tenant’s recourse is if landlord breaches the exclusivity or if another tenant operates outside of its permitted use in violation of the exclusivity provision. This may include a reduction in rent for a certain period of time while landlord attempts to resolve the violation, and eventually a termination right if landlord is unable to cause the rogue tenant to cease the violation.

Expansion provisions allow tenants the flexibility to expand into additional space that may become available for lease by landlord during the lease term, usually contiguous space or other space in the same building. Tenants should push for a right of first offer if such space should become available, even if the tenant is uncertain of what its future needs may be during the term.  Negotiated rent and coterminous terms should be included in the lease.

In September 2024, a group of Washington, D.C., legislators introduced the Certificate of Need (CON) Improvement Act of 2024, B25-0948. If passed, the measure will reform the requirements and process for health establishments in the District to obtain CONs from D.C.’s State Health Planning and Development Agency (SHPDA).

Background

D.C.’s CON requirements were originally established in 1980 to ensure that access to health care services is available to all D.C. residents and to contain the costs of such health care services. D.C. regulators have more recently argued that D.C. was experiencing an overabundance of primary care providers, which has led regulators to apply the CON process in an overly broad manner to prevent a doctor on every block.^[1] The CON requirements have been applied in an inconsistent manner such that similarly situated providers may or may not have a CON depending on enforcement by regulators. Stakeholders within the D.C. community have contested the overly broad interpretation and enforcement of the CON law in D.C. and have argued that such interpretations are in fact creating provider shortages, increasing health care costs, and decreasing access to care.

In addition, the time and expense of complying with the CON requirements is enough of a barrier to potentially send independent physician practices across the border into Maryland and Virginia.^[2] Stakeholders have asserted that rather than decrease health care costs and increase access to care, the CON laws have had the opposite effect.

Lastly, the current requirements for institutional and physician providers to apply for a CON for even routine projects or activities is unnecessary and overly burdensome. For example, hospitals must wait months to a year following the CON process to get non-patient improvements like heating, ventilation, and air conditioning (HVAC). Furthermore, under the current interpretation by regulators, a physician group could subject itself to requiring a CON simply by hiring a non-owner physician or maintain a separate room to perform non-surgical procedures.

While we wait for long-anticipated federal regulations from the Occupational Safety and Health Administration (OSHA) addressing the issue of workplace violence in health care, activity continues at the state level.

California and North Carolina are among those currently filling the gaps—with the latter bringing law enforcement officers into hospital emergency departments to address the problem, and the former legislating to keep weapons out (through screening devices).

These laws are the latest developments in the national landscape of initiatives designed to address workplace violence in health care facilities. Though a federal OSHA standard is slated to issue by year-end, it remains to be seen whether that will happen and what effect, if any, the 2024 presidential election might have on those plans.

New from the Diagnosing Health Care Podcast: Workplace violence in health care settings is on the rise, capturing the attention of both state and federal lawmakers.

As awareness grows, so too does legal scrutiny and the push for new regulations and enforcement. In these seemingly critical times, what should health care employers be thinking about and incorporating into their comprehensive strategies to prevent and address workplace violence?

On this episode, Epstein Becker Green attorneys Sharon Peters, Eric Neiman, and Avery Schumacher dissect the legal landscape surrounding health care workplace violence, examining the steps being taken at various levels of government and what they mean for health care providers and institutions. Join us as we explore the legal frameworks, emerging policies, and broader compliance implications for health care employers.

New from the Diagnosing Health Care Podcast: The game has changed—are you positioned to adapt? Over the past 12 months, the federal government has been heavily regulating private investment in health care entities.

Simultaneously, multiple states have enacted or introduced new laws restricting or requiring approval of such investments. The question arises: What do you do if you already have investments in these health care entities?

On this episode, Leslie Norwalk, Strategic Counsel at Epstein Becker Green (EBG), joins EBG attorneys Josh Freemire, Tim Murphy, and Ted Kennedy, Jr., to discuss how health care entities, investors, and board members should be responding to an evolving political and regulatory environment that has increased the scrutiny of private investment in health care entities.

On July 25, 2024, a federal “Health Over Wealth Act” was introduced in the U.S. Senate and House of Representatives. The bill would amend the Public Health Service Act, requiring the Secretary of Health and Human Services (HHS) to enforce certain transparency, accountability, and other requirements with respect to for-profit corporations that own health care systems.

S. 4804 was introduced by Senator Edward D. Markey (D-Mass), chair of the Health, Education, Labor, and Pensions Committee on Primary Health, and Retirement Security, before being referred to the Committee on Finance. H.R. 9156 was introduced by Representative Pramila Jayapal (WA-07), member of the House Judiciary Subcommittee on Health, Employment, Labor, and Pensions.

New from the Diagnosing Health Care Podcast: Knock, knock! If the Drug Enforcement Administration (DEA) is already at your door, it may be too late.

Enforcement is on the rise, and the microscope is fixed on controlled substances. What can industry stakeholders do to prevent penalties and protect themselves from DEA scrutiny?

On this episode, Epstein Becker Green attorneys Melissa Jampol, David Johnston, and Avery Schumacher discuss recent and pending updates to DEA rules and guidance, outline steps stakeholders can take to prepare for an inspection, and share tips on what to do when the DEA arrives.

In our ongoing series of blog posts, we examined key negotiating points for tenants in triple net health care leases. We also offered suggestions for certain lease provisions that will protect tenants from overreaching and unfair expenses, overly burdensome obligations, and ambiguous terms with respect to the rights and responsibilities of the parties. These suggestions, when implemented, are intended to result in efficient lease negotiations and favorable lease terms from a tenant’s perspective. In our previous blog posts, we considered the importance of negotiating initial terms and renewal terms, operating expense provisions, assignment and subletting terms, maintenance and repair obligations, and holdover provisions. This latest blog post focuses on negotiating surrender terms. Tenants should understand and negotiate their obligations for removal of alterations, equipment and other personal property, and the condition in which leased premises must be surrendered at the expiration or earlier termination of the lease term. Failure to do so could result in delays in a tenant’s ability to vacate the leases premises as well as unforeseen significant costs.

Most commercial leases provide that alterations and improvements made by or on behalf of a tenant become the property of landlord and must be surrendered with the leased premises upon expiration or earlier termination of the lease unless landlord requires removal. We suggest tenants request language in the lease requiring landlord to advise at the time it consents to such alterations and improvements whether or not the same must be removed, rather than landlord having the right pursuant to the terms of the lease to demand removal at the time of expiration or earlier termination. Having such a term in place eliminates the element of surprise and provides tenant with certainty as to which alterations and improvements tenant is required to remove. Tenants may also want to limit the removal requirement so that any alterations or improvements that cannot be removed without significant damage are to remain in the leased premises upon expiration of the lease term.

In June 2024, the U.S. Food and Drug Administration ("FDA") clarified, with respect to the Drug Supply Chain Security Act (“DSCSA”)[1], that it will not extend the one-year stabilization period for the enhanced drug distribution requirements beyond November 27, 2024.[2] At the same time, the FDA also issued exemptions, through November 27, 2026, for small pharmacies from certain DSCSA requirements, and is allowing all other trading partners to request waivers or exemptions from the enhanced drug distribution security requirements.[3]

DSCSA Background

The DSCSA provides for the tracking and tracing of drug products from drug manufacturers through the supply chain down to dispensers, requirements for investigating and dispositioning suspect and illegitimate drug products and federal licensing requirements for wholesalers and third-party logistics providers. The driving force behind the DSCSA is to prevent counterfeit drugs from entering the supply chain and to prevent such drugs from harming patients if they do enter the supply chain. Under the law, manufacturers, repackagers, wholesale distributors, third-party logistics providers, and dispensers (“Trading Partners”) each have affirmative obligations governing how they must transfer ownership of prescription drug products and the specific product data or tracking data that must be maintained and shared between buyers and sellers of such products. Further, Trading Partners must have processes in place for drug product verification, as well as an affirmative obligation to identify, investigate and manage suspect or illegitimate products, such as counterfeit or intentionally adulterated products.

On June 11, 2024, U.S. Senators Ed Markey and Elizabeth Warren from Massachusetts, introduced proposed legislation titled The Corporate Crimes Against Health Care Act (“CCAHCA”), aimed at addressing a perceived “looting” of health care systems by for profit private equity investors. According to Sen. Warren, the bill was introduced to “root out corporate greed and private equity abuse in the health care system,” “prevent exploitative private equity practices,” and to specifically ensure that actions such as “looting” do not happen again by addressing trigger events and targeting real estate investment trusts.

The CCAHCA proposes to impose significant criminal penalties, compensation clawbacks, and civil penalties against executives of private equity firms and health care entities that are found to have contributed to the death or injury of a patient through a triggering event. Additionally, the bill imposes certain requirements that impact real estate investments funds (REITs) and would require annual reporting requirements for change of control transactions.

New from the Diagnosing Health Care Podcast: Laboratories in the United States are facing a major regulatory landscape shift.

The U.S. Food and Drug Administration (FDA) has finalized a new rule ending its historical blanket enforcement discretion over laboratory developed tests (LDTs). What does this mean for labs going forward?

On this episode, Epstein Becker Green attorneys James Boiani, Rob Wanerman, and Megan Robertson lay out the new landscape, analyze existing and potential challenges, and identify key developments to watch for as this new regulatory era unfolds.

Key Takeaways

• Federal courts are no longer required to defer to federal agencies’ reasonable regulatory interpretation of ambiguous federal statutes under the 1984 Chevron
• In this new Loper landscape, increased engagement at all points of the federal legislative and federal regulatory process is more important than ever, especially for those in the heavily regulated health care industry.

I. What Did the Supreme Court Do? What Changed with the Loper decision?

In a 6-3 decision authored by Chief Justice John Roberts, the Supreme Court overruled the longstanding Chevron doctrine—under which federal courts would defer to federal agencies’ interpretation of their own statutes if the underlying statute was ambiguous and the interpretation was reasonable. The Court determined that this Chevron deference was inconsistent with the Administrative Procedure Act’s (APA) tasking to federal courts the duty to interpret federal statutes. Although the Court overruled the original decision in Chevron, the Court went out of its way to state that it “does not call into question prior cases that relied on the Chevron framework. The holdings of those cases that specific agency actions are lawful—including the Clean Air Act holding of Chevron itself—are still subject to statutory stare decisis despite the Court’s change in interpretive methodology.”

As stated in an amicus brief authored by prominent advocates, and as discussed at oral arguments, health care, as one of the most regulated industries, will be significantly impacted by the end of Chevron deference.

Federal regulatory agencies may have to alter their use of existing statutes to address new concerns under the post-Chevron landscape. Federal agencies also may have to go back to Congress to address new, emerging regulatory concerns not yet considered by statute.

New from the Diagnosing Health Care Podcast: In a recent landmark decision, the U.S. Supreme Court overruled the Chevron doctrine in the case of Loper Bright Enterprises v. Raimondo.

This ruling has significant implications for employers and other entities in the health care and life sciences industries, as it changes the way courts are likely to interpret and apply regulations issued by federal agencies.

On this episode, Epstein Becker Green attorneys George Breen, Stuart Gerson, Rob Wanerman, and Paul DeCamp analyze the fallout of this monumental decision, discuss what it means for entities seeking to challenge ambiguous statutes and regulations, and assess how to proceed from here.

In this episode of the Diagnosing Health Care Podcast: Will the reclassification of marijuana from a Schedule I to a Schedule III drug disrupt the cannabis marketplace? What consequences must industry stakeholders consider if the Drug Enforcement Administration's proposal becomes a reality?

On this episode, special guests Anthony Minniti, a New Jersey-licensed pharmacist, and Stacey Udell, an accountant with expertise in representing cannabis operators across the United States, join Epstein Becker Green attorney Lisa Gora to discuss the regulatory domino effect and tax implications related to this major potential change to the cannabis industry.

In our ongoing series of blog posts, we have examined key negotiating points for tenants in triple net health care leases. We also have offered suggestions for certain lease provisions that will protect tenants from overreaching and unfair expenses, overly burdensome obligations, and ambiguous terms with respect to the rights and responsibilities of the parties. These suggestions are intended to result in efficient lease negotiations and favorable lease terms from a tenant’s perspective. In our previous posts, we considered the importance of negotiating initial terms and renewal terms, operating expense provisions, assignment and subletting terms, and maintenance and repair obligations. This latest post focuses on negotiating holdover provisions. Holdover provisions should be carefully negotiated in order to limit a tenant’s liability for expenses arising from unforeseen circumstances.

What happens if a tenant does not vacate on lease expiration without having negotiated a renewal or a new lease? Circumstances may arise which interfere with a tenant’s ability to vacate premises in a timely manner, such as delays in new space being ready for occupancy or delayed or terminated negotiations with respect to a lease for intended new space.

Distressed businesses are often compared to melting ice cubes or an aircraft in rapid descent. The goal for a distressed business is to get to a transaction before the ice cube melts or the aircraft and ground meet at an unsurvivable speed. New state laws modeled after the federal Hart-Scott-Rodino (HSR) Act now require, or will soon require, parties to provide notice of certain health care transactions to state regulators creating additional hurdles for distressed healthcare businesses.

In April, we shared with you our thoughts on what to consider before opening in or investing in a medical spa, thinking about corporate structure, scope of practice, licenses and registrations, referral restrictions, HIPAA and data privacy, and more. This month, we’re focusing on how states are beginning to regulate in this area, so owners and operators can hit the ground running in terms of compliance—or relax and breathe deep, knowing they are ahead of the plan. 

In March 2024, the state of Rhode Island introduced S 2870, the Medical Spas Safety Act, providing (within the definition of “cosmetic medical procedure”) that:

• The performance of cosmetic medical services is the practice of medicine and surgery; and
• A cosmetic medical service shall be performed by a qualified licensed or certified non-physician only if the services have been delegated by a medical director, supervising physician, supervising physician’s assistant (PA) or supervising advanced practice registered nurse (APRN) who is responsible for onsite supervision of services performed.

On May 25, 2024, Louisiana Governor Jeff Landry signed a bill, SB 276, into law that will classify medications commonly used in pregnancy and to treat stomach ulcers (mifepristone and misoprostol) as controlled substances. The provision classifying mifepristone and misoprostol as controlled substances was added in an amendment to SB 276 to make “coerced” abortions unlawful in the state. The new law is scheduled to take effect on October 1, 2024.

SB 276 represents the first attempt by a state to categorically restrict certain types of medication because they can be used for abortion. Many states have laws restricting the prescription and dispensing of drugs determined to be “abortion-inducing drugs,” but such drugs are only restricted if they are intended to be used to produce an abortion.[1] The laws restricting “abortion-inducing drugs” left open the ability of medical professionals to prescribe these drugs without restriction for non-abortion purposes, such as managing the effects of miscarriage or, in the case of misoprostol, preventing stomach ulcers. Now, due to these drugs’ association with abortion, they will be subject to new restrictions in the state and may impact the treatment of conditions unrelated to abortion.

In this episode of the Diagnosing Health Care Podcast: Gender-affirming care has become the latest flashpoint in state legislatures and state and federal courts across the nation.

States are divided, with some passing laws that seek to restrict access to gender-affirming care and others aiming to protect access.

What is gender-affirming care? What risks does it pose to providers and patients? On this episode, Epstein Becker Green attorneys Jenny Nelson Carney, Lisa Pierce Reisz, and Erin Sutton dissect gender-affirming care: what it is, what it isn't, and what is at stake for everyone involved.

A major update in cannabis law was announced by the Drug Enforcement Administration (DEA) and Attorney General (AG) this past Tuesday, April 30, 2024 regarding their intent to ease restrictions on cannabis. The DEA plans to recommend that cannabis be rescheduled as a Schedule III substance under the Controlled Substances Act (CSA). This announcement follows mounting federal support over the course of the last few years to reschedule cannabis, which has been listed as a Schedule I substance since 1970.

Although it is possible to change the schedule status of a substance per the CSA via ...

Negative online reviews are a concern for many businesses—but they present a unique challenge for healthcare providers, who are restricted by federal and state privacy laws in how to respond. Is the answer to have patients sign a form agreeing in advance of treatment not to make or post negative comments? According to a recent decision by a federal judge in Washington State, the approach tried by one plastic and cosmetic surgery practice runs afoul of a little-known federal law called the Consumer Review Fairness Act (“CRFA”). The case presents a cautionary tale for doctors and ...

Aesthetic services and the medical spa industry have continued to grow over the past few years as clients continue to demand the availability of such cosmetic services. In response, many providers and investors in the health care industry are seeing opportunities to open or invest in a medical spa.

Before opening or investing in a medical spa there are several key elements to be considered:

Corporate Structure

One of the first elements to consider when opening a medical spa is the corporate structure and ownership of the medical spa. Many jurisdictions have “Corporate Practice of ...

In our ongoing series of blog posts, we examine key negotiating points for tenants in triple net health care leases. We also offer suggestions for certain lease provisions that will protect tenants from overreaching and unfair expenses, overly burdensome obligations, and ambiguous terms with respect to the rights and responsibilities of the parties. These suggestions are intended to result in efficient lease negotiations and favorable lease terms from a tenant’s perspective. In our first two blog posts, we considered the importance of negotiating initial terms and renewal ...

We recently wrote about proposed Oregon legislation that would have addressed workplace violence in healthcare settings but failed to move forward in the legislature due to concerns about a provision that would have made assault on a hospital worker punishable as a felony.

This was not a concern that troubled the Kentucky legislature, which on March 27, 2024, signed and delivered to the state governor a bill relating to workplace violence against healthcare workers. The Kentucky legislation expands the offense of assault in the third degree perpetrated against a variety of ...

In our ongoing series of blog posts, we will look at several key negotiating points for tenants in triple net health care leases. We will also offer suggestions for certain lease provisions that will protect tenants from overreaching and unfair expenses, overly burdensome obligations, and ambiguous terms with respect to the rights and responsibilities of the parties. These suggestions are intended to result in efficient lease negotiations and favorable lease terms from a tenant’s perspective. This blog post in our series focuses on the negotiation of operating expense ...

In our upcoming series of blog posts, we will look at several key negotiating points for tenants in triple net healthcare leases. We will also offer suggestions for certain lease provisions that will protect tenants from overreaching and unfair expenses, overly burdensome obligations, and ambiguous terms with respect to the rights and responsibilities of the parties. These suggestions are intended to result in efficient lease negotiations and favorable lease terms from a tenant’s perspective. The first blog post in our series focuses on negotiation of initial terms and ...