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Senate Bill 1264 Texas Balance Billing

2019 Update on Balance Billing and Texas Healthcare Law

This article updates the prior article, “Balance billing and Texas healthcare law.”

“Balance billing” occurs when doctors, hospitals, or other health care providers who are not contracted with a patient’s health maintenance organization (HMO) or preferred provider benefit plan (PPO) bill the patient for the difference between the amount the health plan pays and the amount the provider believes to be the adequate cost of a service.

For example, a patient may visit the emergency room at a hospital that is contracted with her health plan, but the emergency room doctor who treats her is not contracted with that health plan. The emergency room doctor and the hospital each bill $1,000 for their services, and the health plan pays them each $400. The hospital, which is contracted with the patient’s health plan, may bill the patient only for the copayments, deductibles, and coinsurance amounts under her plan. However, the emergency room doctor, who is not contracted with the patient’s health plan, may bill her for the $600 that her health plan didn’t pay, as well as any copayments, deductibles, and coinsurance that she owes.

Some providers and health plans display cost information on their websites. Texas law also gives patients the right to request, in advance, estimates of charges from providers and facilities and estimated payments from health plans. However, the law allows doctors, other providers, and health plans up to 10 days to provide patients the estimates. As a result, patients cannot obtain advance notice of possible balance billing costs in emergent situations.

Senate Bill 1264

To combat this issue, the Texas Legislature recently passed Senate Bill 1264 (“SB 1264”), which makes balance billing illegal for emergency services but is limited to Texas regulated health plans. SB 1264 contains an exemption if the provider provides written disclosure to the patient informing them:

  1. that their health plan does not cover the provider,
  2. the projected cost the patient could be responsible for, and
  3. under what circumstances the patient will be responsible for those amounts.

Before SB 1264, Texas law did not give consumers many rights with regard to disputing a balance billing they were surprised to receive. SB 1264 significantly improves the dispute resolution process for consumers by removing the patient from the process altogether.

Instead, the onus is on the health plan to initiate mediation or arbitration because the excess charges cannot be passed down to the patient. 

Mediation is conducted for health plans and facility providers, i.e., hospitals, but is only applicable if the patient cannot be billed, and the charges are for emergency services, diagnostic imaging, or laboratory services. Arbitration will be for health plans and providers that are not facilities, i.e., individual physicians. While arbitration is binding, the arbitrator may only determine reasonable cost of the medical services rendered.

While the remedies of SB 1264 are still being implemented, including the mediation and arbitration processes, it is a great first step in protecting Texas consumers from inequitable balance billing practices.


Scott Chase | Health Law

Attorney Scott Chase is a health law and corporate attorney at Farrow-Gillespie Heath Witter LLP.  Mr. Chase has been named to the lists of Best Lawyers in America (U.S. News & World Report), Texas Super Lawyers (a Thomson Reuters service), and Best Lawyers in Dallas (D Magazine) in every year for more than a decade.

Mr. Chase thanks intern Stephen Chance for his contributions to the article. Stephen Chance is a 2019 summer intern with Farrow-Gillespie Heath Witter and a law student at SMU Dedman School of Law.

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The Revised AdvaMed Code of Ethics on Commercial Interactions with U.S. Health Care Professionals

Advanced Medical Technology Association (AdvaMed) is a trade association for companies producing medical devices, diagnostic products, and health information systems. Relationships between AdvaMed member companies and Health Care Professionals (HCPs) are vital to the development of medical technologies, their safe and effective use, and medical research and education. However, these relationships can also create risk under state and federal laws. To avoid such risks, AdvaMed created the AdvaMed Code of Ethics on Interactions with U.S. Health Care Professionals (AdvaMed Code) in 1993. Recently, AdvaMed has announced revisions to its code to clarify and refine its discussion of interactions between HCPs and AdvaMed member companies. Revisions become effective January 1, 2020.

AdvaMed Code: New Sections

Jointly Conducted Education and Marketing Programs: Companies who partner with HCPs to conduct joint education and marketing programs, which must be designed to highlight medical technology and an HCP’s ability to diagnose or treat medical conditions, should comply with the following guidelines:

  • A legitimate need must exist for the company to engage in the activity for its own educational or marketing benefit;
  • Companies should establish controls to ensure that the decisions to engage in such arrangements are not an unlawful inducement;
  • Jointly conducted education and marketing programs should be balanced and should promote all parties;
  • All parties should make equitable contributions towards the activity and costs of the program; and
  • The arrangement should be documented in a written agreement.

Communicating Information for the Safe and Effective Use of Medical Technology: Communicating information about unapproved or uncleared (off-label) uses for approved or cleared products should be in accordance with the code’s established principles. These principles recognize the industry’s responsibility to communicate medical and scientific information to achieve positive patient outcomes and to support public health. The code’s off-label communication guidelines reflect recent judicial opinions affirming First Amendment protections for truthful and non-misleading off-label speech. Industry appropriate communications can include:

  • Proper dissemination of peer-reviewed scientific and medical journal articles, reference texts, and clinical practice guidelines;
  • Presentations at education and medical meetings; and
  • Discussions with consultants and HCPs to obtain advice or feedback.

Companies should evaluate and implement these guidelines in light of existing FDA laws and the HHS/OIG instruction on off-label communications.

Company Representatives Providing Technical Support in the Clinical Setting: Company representatives may play an important role in the clinical setting by providing technical support on the safe and effective use of medical technology. For company representatives providing technical support, representatives should . . .

  • Be present in the clinical setting only at the request of and with supervision by an HCP;
  • Be transparent that they are acting on behalf of the company in a technical support capacity;
  • Not interfere with an HCP’s independent clinical decision-making;
  • Comply with applicable hospital or facility policies and requirements; and
  • Not eliminate an expense that the HCP should otherwise incur while providing patient care.

AdvaMed Code: Consolidations and Clarifications

Cornerstone Values:  Innovation, education, integrity, respect, responsibility, and transparency form the basis of the updated AdvaMed Code. It directs medical technology companies to review all interactions with HCPs in light of these values and to avoid interactions designed to circumvent the code.

Scope and Applicability: The updated AdvaMed Code applies to all interactions regardless whether an interaction occurs outside the United States (such as at a conference or other event). The updated code clarifies that for companies with multiple lines of business, the code applies only to the company’s interactions linked to medical technology, including all interactions related to combination products that include a medical technological component (i.e., combination of biologic devices and drug products).

Consulting: Although the content regarding consulting remains mostly unchanged, the updated AdvaMed Code adds clarifying language defining what constitutes a “legitimate need” for the consultation. According to the code, a legitimate need arises when a company requires the services of an HCP to achieve a proper business objective. However, engaging an HCP for the purpose of generating business directly from such HCP (or health care provider affiliated with the HCP) is not a proper business objective.  

The AdvaMed Code also explains how a company can establish “fair market value.” A third party may assist in developing an approach to assess fair market value, but in all instances, a company should incorporate objective and verifiable criteria. Companies are encouraged to document their methods to evaluate whether compensation reflects the fair market value of the services provided.

Consolidations: The AdvaMed Code consolidates the following sections:

  • Industry conducted training, education, and other business meetings into a comprehensive section that provides parameters for all industry-conducted programs;
  • Third-party education, charitable, and research programs into a comprehensive section regarding grants, donations, and commercial sponsorships; and
  • Meals, travel, lodging and venue sections into a comprehensive section that encourages companies to avoid selecting a setting because of its entertainment or recreational facilities, as well as encouraging companies to develop meal policies and review benchmarking information.

Next Steps

The updated AdvaMed Code notes that it does not replace any state laws, regulations, or codes that contain stricter requirements. Certain states, including California, Connecticut, and Nevada, have made the code’s provisions mandatory. Alleged violations of the federal Anti-Kickback Statute may provide a basis for whistleblowers or the government to file cases alleging that AdvaMed Code noncompliance is evidence of improper conduct. To reduce compliance risks, medical technology companies and HCPs should consider whether the updates to the AdvaMed Code warrant changes to their policies, procedures and practices, and contracts regarding interactions with one another. The delayed effective date of the new Code is intended to provide time to conduct this review.

Legal Assistance

Medical companies and Health Care Providers are well-advised to seek legal counsel to conduct a review of the paperwork governing their interactions. The health law attorneys at Farrow-Gillespie Heath Witter LLP can assist in that review.


Author Scott Chase is a health law and corporate attorney at Farrow-Gillespie Heath Witter LLP.  Mr. Chase has been named to the lists of Best Lawyers in America (U.S. News & World Report), Texas Super Lawyers (a Thomson Reuters service), and Best Lawyers in Dallas (D Magazine) in every year for more than a decade.

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The Physician Payments Sunshine Act

The Physician Payments Sunshine Act (“PPSA”) requires medical product manufacturers of drugs, devices, biologics, and medical supplies covered by Medicare, Medicaid, or the Children’s Health Insurance Program to annually disclose to the Centers for Medicare and Medicaid Services (“CMS”) any payments or transfers of value made to physicians or teaching hospitals. The PPSA is designed to increase transparency around the financial relationships between physicians and manufacturers by requiring manufacturers to report to CMS in three broad categories of payments or transfers of value:

(A) payments for meals, travel reimbursement, and consulting fees

(B) ownership and investment interests in manufacturers held by physicians and their immediate family members

(C) research payments, including any payment made for participation in preclinical research, clinical trials, or other product development activities

While these categories cover a wide range of relationships, certain transactions and transfers are exempt from disclosure.  Manufacturers are not required to report on any payments under $10 (unless those individual payments total more than $100 annually), on educational materials intended solely for patients, or on product samples. After undergoing a verification process, any data reported under the three categories listed above, will be published annually in a publicly searchable database.

These reports inform patients of any incentive their physician may have for recommending a certain medical device or drug and allows them to make an informed decision on whether to follow the physician’s recommendation or not.

In addition, the PPSA imposes penalties for failure to comply with these reporting requirements. For each payment that a manufacturer or GPO fails to report, a penalty of $1,000 to $10,000 may be applied. The maximum annual penalty for failure to report is $150,000. However, the penalties are more severe in cases where the manufacturer or GPO knowingly fails to report, in which case the penalties range from $10,000-$100,000 per payment, up to a maximum penalty of $1 million. Individual physicians are not required to report, but physicians are encouraged to monitor the manufacturers’ reports for inaccuracies.

The PPSA is not the only federal statute that governs financial relationships between physicians and medical product manufacturers but it is unique in that it creates a report of such relationships.

In order to determine if a payment made by a manufacturer to a physician needs to be reported in compliance with the PPSA, please consult a healthcare attorney.


Tahlia Clement Headshot

Author Scott Chase is a health law and corporate attorney at Farrow-Gillespie Heath Witter LLP.  Scott has been named to the lists of Best Lawyers in America, Texas Super Lawyers, and Best Lawyers in Dallas in every year for more than a decade.

Tahlia Clement is a clerk at FGHW. Ms. Clement is a 2019 candidate for a Juris Doctor at SMU Dedman School of Law, where she is the Editor-in-Chief for SMU’s Science and Technology Law Review. She holds a B.A. in journalism and mass communications from Arizona State University.

Blurry Physician

The 5 Most Important Decisions in a Physician Employment Agreement

Over the years, physician employment agreements have become very standardized. However, there are several provisions in such agreements that the to-be-employed physician must review carefully with his/her attorney.  The following is a brief summary of what I consider to be the 5 most important provisions for a physician to understand and negotiate with the employer.

1. Compensation

First and foremost, the compensation needs to be clearly written and understood.  Many compensation models are based on “Work Relative Value Units (WRVUs),” which are calculated by independent third parties and can be a trap for the unwary.  For example, the calculation of WRVUs can change from year to year and the employment contract usually provides for the current WRVU value to be the compensation model.  What happens if the WRVU value decreases substantially in a given year?  Answer:  The physician’s pay could decrease substantially as well.  Careful negotiation of the compensation provision could ameliorate that occurrence.

Additionally, compensation usually includes employee benefits, e.g., vacation, health insurance, and those can sometimes be negotiated as well.  Attention should also be paid to the reimbursement of expenses such as CME, credentialing fees and professional society fees.

2. Non-Compete

Texas has a statute specifically addressing physician non-competes, i.e., restrictions on where and when a physician can practice his/her specialty after termination of the employment agreement.  However, the statute does not mandate the time period, extent of the restricted area, or the exact type of physician actions that would constitute a violation of the non-compete.  Furthermore,
certain termination circumstances could be negotiated that would render the non-compete unenforceable or inapplicable.  Thus, the non-compete should be negotiated in that it provides ample opportunities to advocate for favorable terms on the physician’s behalf.

3. Outside Activities

Most physician employment agreements require the employed physician to work full-time and often provide that any outside fees earned, e.g., expert witness fees, belong to the practice.  However, many physicians have pre-existing consulting arrangements, charitable activities or other professional endeavors that should be excepted from the restrictions on outside activities and ownership of fees.  Again, this is a provision that can and should be negotiated.

4. Working Facilities and Staff

An employed physician needs adequate facilities, equipment, supplies and staff to fulfill his/her responsibilities.  Yet, most employment agreements do not contain a provision that requires the employer to provide those items.

The adequacy of staff could also affect compensation.  Consider a scenario in which the employed physician is on a bonus system that relies on collections of his bills by the practice.  The contract should contain a provision that the employer will have adequate billing and collection services.

5. Liability Insurance

The employment agreement will generally contain a provision for the employee/doctor to purchase “tail” insurance in case the agreement is terminated.  Tail coverage can be a substantial cost and, thus, the contract should be written to ensure the employee is not responsible for that coverage in all circumstances, e.g., in case of termination for cause by the physician. This provision is also one that can and should be negotiated.

Physician employment contracts are one of the most important financial undertakings in a doctor’s life.  While tedious, provisions should be reviewed, understood, and negotiated to the fullest.  The entire contract should be carefully reviewed but the above items should receive the most attention.


Scott Chase | Health Law

Scott Chase has practiced health law, corporate law, and intellectual property law for over 35 years.  Mr. Chase is Board Certified in Health Law by the Texas Board of Legal Specialization.

Scott’s primary practice focus is business transactions for physicians and healthcare facilities, as well as healthcare regulatory issues such as the Affordable Care Act, HIPAA and peer review.  Mr. Chase handles general corporate matters and trademark/copyright issues for physicians and also for a variety of non-healthcare clients.

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$2.5M settlement shows that not understanding HIPAA requirements creates financial risk

The U.S. Department of Health and Human Services, Office for Civil Rights (OCR), recently announced a Health Insurance Portability and Accountability Act (HIPAA) settlement based on the impermissible disclosure of unsecured electronic protected health information (ePHI).  In 2012, CardioNet, a company that remotely monitors patients at risk for cardiac arrhythmias, reported to the HHS Office for Civil Rights (OCR) that a workforce member’s laptop was stolen from a parked vehicle outside of the employee’s home.  The laptop contained the ePHI of 1,391 individuals.  The settlement was not reached until 2017, indicating the length of time that some HIPAA investigations can take, with its attendant costs.

CardioNet has agreed to settle potential noncompliance with the HIPAA Privacy and Security Rules by paying $2.5 million and implementing a corrective action plan.  This settlement is the first involving a wireless health services provider, based, in part, on CardioNet’s failure to comply with basic HIPAA rules that are applicable to all “covered entities” and “business associates”. Thus, the compliance steps outlined below for mobile devices are applicable to any device used to store PHI or ePHI.

OCR’s investigation into the impermissible disclosure revealed that CardioNet had insufficient risk analysis and risk management processes in place at the time of the theft.  Additionally, CardioNet’s policies and procedures implementing the standards of the HIPAA Security Rule were in draft form and had not been implemented.  Further, the organization was unable to produce any final policies or procedures regarding the implementation of safeguards for ePHI, including those for mobile devices.

HHS and OCR have published a very helpful 5-step guideline for establishing compliance with HIPAA.  While the following actions relate specifically to mobile devices, these five steps are applicable to all PHI.

Decide

Decide whether mobile devices will be used to access, receive, transmit, or store patients’ health information or used as part of your organization’s internal networks or systems (e.g., your EHR system).

Understand the risks to your organization before you decide to allow the use of mobile devices. Risks (threats and vulnerabilities) can vary based on the mobile device and its use. Some risks may be:

  1. A lost or stolen mobile device
  2. Inadvertent downloading of viruses or other malware
  3. Unintentional disclosure to unauthorized users when sharing mobile devices with friends, family and/or coworkers
  4. Use of an unsecured Wi-Fi network.

Assess

Assess how mobile devices affect the risks (threats and vulnerabilities) to the PHI your organization holds.

Conduct a risk analysis to identify the risks to your organization. If you are a solo provider, you may conduct this risk analysis yourself. If you work in a larger organization, the organization may conduct the risk analysis.

A risk analysis will help determine the safeguards, policies, and procedures your organization needs. It should include reviewing risks created by all mobile devices used to communicate with your internal networks or systems, regardless whether the devices are personally owned or provided by the organization.

Perform a risk analysis periodically and whenever there is a new mobile device, a lost or stolen device, or suspected compromised health information.

After conducting a risk analysis, document, in writing:

  1. Which mobile devices are being used to communicate with your organization’s internal networks or system (g., the EHR system or Health Information Exchange (HIE)), and
  2. What information is accessed, received, stored, and transmitted by or with the mobile device.

Identify

Identify your organization’s mobile device risk management strategy, including privacy and security safeguards.

The purpose of a mobile device risk management strategy is to develop and implement mobile device safeguards to reduce risks (threats and vulnerabilities) identified in the risk analysis. The risk management strategy should include evaluation and maintenance of the mobile device safeguards you put in place.

Develop, Document, and Implement

Develop, document, and implement the organization’s mobile device policies and procedures to safeguard health information.

Organizations should develop and implement reasonable and appropriate policies and procedures to safeguard health information, including those specific to mobile devices. Here are some topics and questions to consider when developing mobile device policies and procedures:

  1. Has the organization identified all the mobile devices that are being used in the organization? How is the organization keeping track of them?
  2. Should the organization let providers and professionals use their personally owned mobile devices within the organization?
  3. Should providers and professionals be able to connect to the organization’s internal network or system with their personally owned mobile devices, either remotely or on site?
  4. Does the organization restrict how providers and professionals can use mobile devices?
  5. Will the organization institute standard configuration and technical controls on all mobile devices used to access internal networks or systems, such as an EHR?
  6. Are there restrictions on the type of information providers and professionals can store on mobile devices?
  7. Does the organization have written procedures for addressing misuse of mobile devices?
  8. Does the organization have procedures to wipe or disable a mobile device that is lost or stolen or when providers and professionals end their employment or association with the organization?
  9. How is the organization training its workforce (management, doctors, nurses, and staff) on policies and procedures and holding them accountable?

Train

Train and conduct mobile device privacy and security awareness and training for providers and professionals.

Providers and professionals who use mobile devices must have privacy and security awareness and training, on an annual basis, to avoid costly mistakes that can result in loss of patient trust.

Privacy and security awareness and training should include a discussion of the following topics:

  1. How to assess risks (threats and vulnerabilities) when using mobile devices for work;
  2. How to secure mobile devices;
  3. How to protect and secure health information;
  4. How to avoid mistakes when using mobile devices.

Finally, the organization should train its workforce so that they understand the organization’s mobile device policies and procedures and how to follow them.


Jennifer Snow | Farrow-Gillespie & Heath LLP | Dallas, TX

Jennifer Snow practices in the areas of health care law and business litigation. She is the author of numerous articles on health care law. Jennifer represents physicians and physician groups in health law matters, and she represents companies and executives in business litigation.

Ms. Snow has been named to the list of “Rising Stars” by Texas Monthly Magazine and Texas Super Lawyers (a Thomson Reuters service) in every year since 2014.


Scott Chase | Farrow-Gillespie & Heath LLPScott Chase has practiced health law, corporate law, and intellectual property law for over 35 years.  Mr. Chase is Board Certified in Health Law by the Texas Board of Legal Specialization.

Scott’s primary practice focus is business transactions for physicians and healthcare facilities, as well as healthcare regulatory issues such as the Affordable Care Act, HIPAA and peer review.  Mr. Chase handles general corporate matters and trademark/copyright issues for physicians and also for a variety of non-healthcare clients.

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What is the status of ObamaCare, and why should I care?

ObamaCare | Farrow-Gillespie & Heath | Dallas, TXRegardless of your position on the Affordable Care Act, otherwise known as ObamaCare (“ACA”), you should neither panic nor rejoice just yet over the actions and inactions of the United States government regarding this healthcare insurance law.  You have probably read about the various options, i.e., “repeal and replace,” “repeal and delay,” or simply “repeal” the ACA.  What Congress is figuring out is that it is difficult to keep “good” provisions, e.g., the one related to “pre-existing conditions” (which over 70% of Americans like) but to do away with “bad” provisions, e.g., the individual mandate (which 70% of Americans do not like) and still keep an actuarial pool that doesn’t adversely affect insurance premiums in a substantial way.  Conventional wisdom is that, without the individual mandate, premiums would increase, probably at a faster rate than is current under the ACA.

All other countries that have provide universal access to healthcare for its citizens figured out a long time ago that everyone needs to be covered in order to spread the cost of insurance over the total population.  As someone who has studied the ways in which Western countries have instituted universal access to healthcare (e.g., Germany in the 1870’s) and who has lectured extensively on the ACA, I am not surprised at Congress’s inability to come up with a plan that would cover everyone, not require everyone to carry insurance, and keep insurance premiums down.  Add in the fact that any new Congressional plan will affect over 20 million citizens who have already obtained health insurance through the ACA and you can see the possibility of throwing insurance markets into chaos.

Of course, there are lots of other ideas, e.g., more incentives for health savings accounts (“HSA’s”), altering the “minimum essential benefits” list, use of high risk pools, etc., and each of these has a different effect, both on the economics of healthcare and on the hotly-debated issue of universal access to healthcare.

But something is likely to happen in the next 3 months and my recommendations for the immediate future are as follows:

  1. If you have insurance, don’t drop it or let it lapse.
  2. If you lose employer-based insurance, be sure to review your COBRA options.
  3. If you lose your job and COBRA is not attractive, you have the option of utilizing the ACA marketplace because losing your job is “qualifying life event” that allows you to access the marketplace outside of the annual “open enrollment period.”

Please feel free to contact Scott Chase or Jennifer Snow at our firm if you have any questions about the ACA.


Jennifer Snow | Farrow-Gillespie & Heath LLP | Dallas, TX

Jennifer Snow practices in the areas of health care law and business litigation. She is the author of numerous articles on health care law. Jennifer represents physicians and physician groups in health law matters, and she represents companies and executives in business litigation.

Ms. Snow has been named to the list of “Rising Stars” by Texas Monthly Magazine and Texas Super Lawyers (a Thomson Reuters service) in every year since 2014.


Scott Chase | Farrow-Gillespie & Heath LLPScott Chase has practiced health law, corporate law, and intellectual property law for over 35 years.  Mr. Chase is Board Certified in Health Law by the Texas Board of Legal Specialization.

Scott’s primary practice focus is business transactions for physicians and healthcare facilities, as well as healthcare regulatory issues such as the Affordable Care Act, HIPAA and peer review.  Mr. Chase handles general corporate matters and trademark/copyright issues for physicians and also for a variety of non-healthcare clients.

HIPAA Privacy Lock Security

Healthcare providers’ risk of data breach

Health Care Law | Farrow-Gillespie & Heaht LLPBy Scott Chase and Catherine Parsley

Healthcare providers receive, collect, and store vast quantities of sensitive personal health information (“PHI”) from their patients. However, only half of providers responding to a recent survey said that they are prepared to respond to cyber-attacks.  Attacks and other security breaches can have far-reaching effects for providers and their patients.

Electronic Medical Records

Healthcare providers have many vulnerabilities that are unique to their field. Most providers are adopting or have adopted electronic medical records (EMRs), but those programs are often clunky and can be inadequately secured.  The new EMR systems make sharing PHI easy.  Easy sharing is great for internal use but poses an increased risk of external leakage compared to old-fashioned paper records.  Many  providers’ network systems have been pieced together over time, leaving vulnerabilities and  inconsistencies.  At the same time, online attackers are getting increasingly complex and sophisticated.  Another problem created by piece-meal network systems is that many providers either cannot or do not know how to detect in real time if their network system is being compromised.

HIPAA Violation

These factors leave healthcare providers open to higher risk of attacks and data loss. Any data loss can constitute a breach of the Healthcare Insurance Portability and Accountability Act of 1996 (HIPAA).  If a provider loses PHI, or even puts PHI at risk of exposure to unauthorized individuals, the provider can be held to have breached HIPAA, even if no loss or theft actually occurs.  One hospital was recently fined over three million dollars after it did not comply with HIPAA-required protective measures.  It had several violations, including storing PHI on unencrypted devices, allowing such devices to be accessed by individuals who were not HIPAA-authorized, and failing to implement recommended risk management plans.

It is also important to note that the HIPAA, pursuant to its security rule, requires a risk assessment for PHI vulnerability whenever the following occurs

  • In response to environmental and operational changes, such as implementation of new technology or changed office operations
  • Any security breach or security incident that indicates vulnerability.

Fines have been levied on providers that have not performed such assessments, even if no HIPAA breach was found. While healthcare providers are not targeted as frequently as some other types of organizations, such as banking and financial institutions, the wealth of data that healthcare providers own makes them a highly-sought out target. The data can be used for various fraudulent purposes by the attacker, and any loss or possible loss can be a HIPAA violation.  In addition to having appropriate corporate policies in place, providers should also review the various types of insurance coverage available to reduce losses.

Farrow-Gillespie Heath Witter LLP can help healthcare providers deal with security threats. Our attorneys can work with clients to put policies in place before problems arise, or help clients deal with regulatory or operational issues after a breach occurs.  For more information on the available services, contact board-certified health care attorney Scott Chase.

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About the Authors

Scott Chase | Farrow-Gillespie & Heath LLPScott Chase is a Dallas health law attorney, certified by the Board of Texas Legal Specialization.  Mr. Chase has been named for many years to the list of Texas Super Lawyers (a Thomson Reuters service), Best Lawyers in America (U.S. News & World Report), and Best Lawyers in Dallas (D Magazine).

More on health law


Catherine Parsley is currently (March 2017) an intern at Farrow-Gillespie Heath Witter, LLP.  Ms. Parsley is a law student at SMU Dedman School of Law in Dallas, Texas, where she is a staff editor of the SMU Law Review.  Catherine served as a judicial extern for Chief Justice Nathan L. Hecht, of the Supreme Court of Texas.  She holds a B.S. in communications studies, cum laude, from the University of Texas at Austin.

Farrow-Gillespie Heath Witter LLP - Health Care Law

$150,000 Fine for HIPAA Violation

The U.S. Department of Health and Human Services, Office for Civil Rights (HHS-OCR), has recently entered into another HIPAA settlement, emphasizing yet again the government’s focus on the HIPAA Security Rule.  The settlement highlights that health care entities cannot merely adopt HIPAA policies but that they must actually implement and follow those policies in practice on an ongoing basis.  In early December 2014, HHS-OCR confirmed that Anchorage Community Mental Health Services (ACMHS), a nonprofit organization providing behavioral health care services, had agreed to pay a $150,000 fine and adopt a corrective action plan to correct deficiencies in its HIPAA compliance program and to report to HHS-OCR on the state of its compliance for two years.  The settlement was based on a HHS-OCR investigation regarding ACMHS’s breach of unsecured electronic protected health information (ePHI).  The breach was the result of a malware that compromised the security of ACMHS’ information technology (IT) resources and affected 2,743 individuals.

During its investigation, OCR-HHS found that ACMHS had adopted sample HIPAA Security Rule policies and procedures in 2005, but these policies and procedures were not followed and/or updated.  Thus, ACMHS could have avoided the breach (and not be subject to the settlement agreement), if it had followed its own policies and procedures and regularly assessed and updated its IT resources with available patches. The settlement with ACMHS is just one of several recent settlements arising from an HHS-OCR investigation, either because an organization self-reported a breach of ePHI or because HHS-OCR investigated an organization’s HIPAA compliance program after receiving a complaint or as part of its annual audit protocol.  No matter how the investigation begins, HHS-OCR will expect an organization to have fully implemented and updated its HIPAA compliance program and/or policies and procedures.  Compliance with the HIPAA Security Rule requires organizations (among other things) to assess risks to ePHI on a regular basis, including whenever new software, e.g., a patient portal, is implemented.  Organizations cannot simply adopt HIPAA policies and procedures, conduct training and then ignore HIPAA.  All organizations subject to HIPAA, both “covered entities” and “business associates” (regardless of size), must devote ongoing resources to protect personal health information from security threats.

Most of the activities that HHS-OCR found lacking in ACMHS are ones that can be efficiently developed, implemented or sustained with timely planning by health care providers.  Please let me know if you, or any of your clients, would like to discuss any of these activities with me.