Avoiding traps in EMR/Technology Contracts by Sandra P. Greenblatt

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Avoiding Traps in EMR/Technology Contracts (You mean I’m stuck with this for 5 years!) Presented by Sandra P. Greenblatt, MBA/HA, JD Board Certified Health Law Attorney for Gassman Law Associates, P.A. Webinar September 10 & 12, 2013 Sandra Greenblatt, P.A. Lubell Rosen, LLC Columbus Center 1 Alhambra Plaza Suite 1410 Coral Gables, Fl 33134 Phone: (305) 442-1172 Direct: (305) 577-9995 Fax: (305) 442- 9047 Email: [email protected] er.com Email2: [email protected] .com www.lubellrosen .com © 2013 Lubell Rosen, LLC

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Avoiding traps in EMR/Technology Contracts by Sandra P. Greenblatt, Lubell Rosen

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  • 1. Avoiding Traps in EMR/Technology Contracts (You mean Im stuck with this for 5 years!) Presented by Sandra P. Greenblatt, MBA/HA, JD Board Certified Health Law Attorney for Gassman Law Associates, P.A. Webinar September 10 & 12, 2013 Sandra Greenblatt, P.A. Lubell Rosen, LLC Columbus Center 1 Alhambra Plaza Suite 1410 Coral Gables, Fl 33134 Phone: (305) 442-1172 Direct: (305) 577-9995 Fax: (305) 442-9047 Email: [email protected] m Email2: [email protected] www.lubellrosen.com 2013 Lubell Rosen, LLC

2. OVERVIEW OF PRESENTATION Intersection of Technology & Healthcare Federal Incentives Spurred Growth Federal Government EMR Subsidies Stark Exception & Anti-Kickback EMR Safe Harbor Regulation Benefits & Risks of EMR Role of Attorney Software License Agreements Can and should be negotiated! Equally relevant to other technology & other clients Key provisions & tips 2013 Lubell Rosen, LLC 3. TECHNOLOGY & HEALTH CARE Technology spending continues to account for a major and growing portion of many health care providers budgets, whether the provider is a hospital, physician group practice, solo physician, or other kind of provider or health care business. Practice Management/Billing Systems Electronic Medical Records (EMR) Laboratory or nursing information systems Programs that operate the newest MRI and CT scanners Technology Consulting Contracts 2013 Lubell Rosen, LLC 4. GROWTH IN EMR As of 2009, healthcare providers in the U.S. spent $2.18 billion on EMRs.* By 2015, this number is expected to rise to $6.05 billion, with the country seeing an estimated compound annual growth rate of 18.1 percent in the EMR market between 2010 and 2015.* * U.S. Electronic Medical Records Market, 2010-2015 (Market Share, Winning Strategies and Adoption Trends). The report includes research on the market drivers, restraints and opportunities for EMR and EHR providers throughout the country. 2013 Lubell Rosen, LLC 5. FEDERAL INCENTIVES Federal Government subsidies for EMR* spurred growth Enacted in ARRA of 2009 Medicare incentives up to $44,000 Medicaid incentives up to almost $64,000 No up front money; paid over 5 years Penalties starting in 2015 if no meaningful use of EMR Reduction in Medicare reimbursement rate (1% to 5%) Subject to audit and recoupment! Stark Law Exceptions & Anti-Kickback Safe Harbor Regulations for eRx and EMR Eased ability of hospitals, group practices and MedicareAdvantage Plans to provide technology items, services & training to physicians using paper records Only up to 85% of cost of certified software, training, and upgrades; no hardware Not based on volume or value of referrals Complex requirements for both parties Sunset 12/31/13; CMS proposed extension to 2016 *Note: We refer to EMR, the popular term; such systems are alternatively referred to as electronic health records, or EHR. 2013 Lubell Rosen, LLC 6. BENEFITS OF EMR Goals/Benefits of EMR: Improvements to patient safety Enhanced productivity for clinicians Better access to clinical data Gains in privacy and security Reductions in paper handling Decreased costs of health care system in long run, i.e., reducing redundant or ineffective tests and procedures 2013 Lubell Rosen, LLC 7. RISKS OF EMR High Cost in Dollars, Time and Effort Lack of Physician Cooperation Loss of Productivity Security Breaches/HIPAA Violations Technology fails to perform as promised Need to update technology Long term contracts; how to terminate? Vendor Bankruptcy/business failure Vendor Resells Contract to Financing Company 2013 Lubell Rosen, LLC 8. ROLE OF THE ATTORNEY Technology Relationships are Governed by Contracts: Software License Agreement Hardware Purchase or Lease Agreements Maintenance and Support Agreements Financing Agreements These contracts ARE negotiable, in whole or in part! As presented, all are vendor favorable Look like non-negotiable form contracts Technology will always have problems: when, not if Many clients dont even read them! Even if terms are not all negotiable, clients will know what they can expect If not negotiated, can end in significant losses with virtually no remedy 2013 Lubell Rosen, LLC 9. SOFTWARE LICENSE AGREEMENTS THE KEY DOCUMENT! Key Provisions: Scope of License: who can use EMR and where? Delivery, Installation, Testing & Acceptance Payment Terms: amount and timing Performance Standards: Get what they promised! Warranties/Disclaimers Limitation of Liabilities Maintenance & Support Data Ownership/HIPAA Compliance Termination Rights Remedies 2013 Lubell Rosen, LLC 10. SCOPE OF LICENSE User-Based License: Based on number or type of users who are allowed access to the software, or the number of computers on which the software may be installed Most appropriate for a client with a relatively small number of users, a server with a relatively large number of computers and can anticipate its needs for the duration of the license Software may only be used by clients employees. If the client uses independent contractors or other agents who need access, you must make sure the contract clearly defines all authorized users. Beware designating specific hardware; what if hardware changes? Site-Based License: Based on reference to a geographic or physical location More costly than user-based license Unlimited users, computers within defined location, e.g., hospital 2013 Lubell Rosen, LLC 11. DELIVERY, INSTALLATION, PAYMENT Beware vendors disclaimers of liability for late delivery, installation, yet want payment in full on delivery If timing is important, build in mutually agreed timeline for all activities and penalties for late performance Withhold substantial portion of contract price until after installation and client testing & acceptance of software Vendors seek to book revenues at earliest stage Clients/Licensees need to ensure performance 2013 Lubell Rosen, LLC 12. PAYMENT & PERFORMANCE The only performance guaranty generally made by the software vendor is that the software will perform in accordance with their Documentation, which is often subject to revision by the vendor during the contract term. See all Documentation in advance; limit unilateral changes Specific requirements of software or customization material to the clients purchase decision should be expressly stated in the software licensing agreement. At minimum, attach and incorporate any sales presentations into the software license agreement. Withhold significant portion of payment pending testing & acceptance of software performance. 2013 Lubell Rosen, LLC 13. TESTING & ACCEPTANCE Spell it Out! Who does it; when, how Software testing that leads to acceptance & payment by the client should start at a time mutually agreed by the parties. Never allow acceptance to be deemed -- give client control. Testing should involve using software on live data, after installation and preliminary diagnostic testing. Vendor must fix glitches arising during testing and client must notify vendor in writing. Failure of the vendor to remedy problems after reasonable opportunities should allow the client to terminate the contract and receive a full refund of any prepaid amounts. 2013 Lubell Rosen, LLC 14. WARRANTIES/DISCLAIMERS EXAMPLE #1: DISCLAIMER OF WARRANTY FOR SOFTWARE EXCEPT FOR THE EXPRESS WARRANTIES SET FORTH IN THIS AGREEMENT, SOFTWARE VENDOR DISCLAIMS ALL EXPRESS AND IMPLIED WARRANTIES FOR THE SOFTWARE, INCLUDING WARRANTIES OF INFRINGEMENT, MERCHANTIBILITY AND FITNESS FOR A PARTICULAR PURPOSE. SOFTWARE VENDOR MAKES NO REPRESENTATION CONCERNING THE QUALITY OF THE SOFTWARE AND DOES NOT PROMISE THAT THE SOFTWARE WILL BE ERROR FREE OR WILL OPERATE WITHOUT INTERRUPTION. 2013 Lubell Rosen, LLC 15. MORE WARRANTY DISCLAIMERS EXAMPLE #2: DISCLAIMER OF WARRANTY FOR SOFTWARE Software Vendor warrants to Client for a period of ninety (90) days from the completion of the Software Diagnostic Test Run of the Standard Licensed Software that the Licensed Software shall perform in a manner substantially consistent with the Documentation. Software Vendors sole obligation or liability under this warranty shall be to use best efforts to correct the Licensed Software, in a reasonable time, to perform in accordance with the Documentation, upon written notice of its failure to so perform from Client. In the event Software Vendor fails to remedy a material defect in the Licensed Software, Clients sole remedy shall be to receive a refund of six months of license fees paid hereunder. Software Vendor does not warrant that the Licensed Software will meet Clients requirements or that its use will be uninterrupted or error-free. EXCEPT AS EXPRESSLY SET FORTH IN THIS PARAGRAPH, SOFTWARE VENDOR MAKES NO WARRANTIES, EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED TO, INFRINGEMENT, IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE. 2013 Lubell Rosen, LLC 16. BETTER WARRANTIES Non-Infringement: Vendor should warrant it either developed or has right to license software Vendor should indemnify client in the contract against any Intellectual Property infringement claims arising from the clients use of the software in accordance with the contract. At a minimum, the vendor should agree to refund all funds paid by the client for the software if the vendor is unable promptly to provide non-infringing replacement software acceptable to the client in the event of an infringement claim. Fitness for Particular Purpose: Always disclaimed; limits clients right to recover damages if patient is harmed due to software glitch Warranty Duration: Warranty should last for the useful life of the technology, or as long as there is a Support and Maintenance Agreement in place 2013 Lubell Rosen, LLC 17. LIMITATIONS OF LIABILITY Vendor will disclaim any direct, indirect, consequential, or special damages arising out of the use of the software, regardless of fault. At minimum, make this disclaimer mutual Vendor will disclaim or limit actual damages to a set amount, i.e., refund 6 months of license fees. Software failure may expose the client to liability to third parties, including patients, while the vendor, whose product could be the main cause of the failure, is contractually protected against such liability. Negotiate hard for vendor to pay actual damages. Fallback: Vendor tenders insurance limits for clients actual damages Allocation of Risk: Vendor may seek higher price in exchange for warranties or fewer limits on vendor liability 2013 Lubell Rosen, LLC 18. DATA OWNERSHIP & PROTECTION Clearly state Client Data is sole property of Client Data has commercial value; client should control Access and Confidentiality of Protected Health Information (PHI) FL DOH: Health Professionals must have access to medical records FL Statute 817.5681: If any personal info in computerized data system of FL business, requires notice to affected persons of security breach (not limited to health care) Vendor access to PHI requires HIPAA (and FL Law) Compliance Vendor = Business Associate; Need Business Associate Agreement Vendors, subcontractors, consultants Vendor should warrant that software & services are HIPAA compliant Clearly state Vendors obligation to report breaches to client and assume cost Require vendor in writing, in event of contract termination, to return data to client at vendors cost, in a standard format that will allow client easily to migrate data to new system. 2013 Lubell Rosen, LLC 19. HONEYMOON IS OVER! HIPAA HAS TEETH AS OF SEPT. 23, 2013!! Government audits & sanctions starting in earnest Fines up to $1.5 Million per category of violation & possible Criminal sanctions Omnibus Rule Changed Everything! Need to update HIPAA Compliance 2013 Lubell Rosen, LLC 20. TERMINATION RIGHTS CRITICALLY IMPORTANT PROVISION Long-Term, i.e., 5 year contracts Software Licenses generally non-cancellable by client/licensee except for material breach by vendor Negotiated termination rights may be superseded by Financing Agreement -- obligation to pay even if cease using technology Often overlooked by clients; signed after the fact Post-termination rights & survival clauses Need to cease use and return all software Client must prepare for transition to new system Hidden costs, delay if not planned & negotiated 2013 Lubell Rosen, LLC 21. REMEDIES Vendor offers repair or replace technology remedy How many chances to repair? Client suffers delay, disruption, additional cost, lost productivity Vendor offers refund of few months license payments Insufficient Coordinate with limitations of liability in contract Negotiate payment of actual client damages Limit of vendor liability insurance coverage at minimum Verify vendors coverage Arbitration, Venue, Choice of Law Protection against Vendor Bankruptcy/Cessation of Business Source Code Escrow 2013 Lubell Rosen, LLC 22. CONCLUSION Technology can and does fail When not If Plan and Negotiate Technology Contracts for the Worst and Hope for the Best! 2013 Lubell Rosen, LLC 23. Sandra P. Greenblatt Board Certified Health Lawyer Sandra Greenblatt, P.A. Lubell Rosen, LLC Columbus Center 1 Alhambra Plaza Suite 1410 Coral Gables, FL 33134 Phone: (305) 442-1172 Direct: (305) 577-9995 Fax: (305) 442-9047 Email: [email protected] www.lubellrosen.com/attorneys THANK YOU FOR YOUR ATTENTION! 2013 Lubell Rosen, LLC 2013 Top Rated Lawyer in Health Care Law, Martindale Hubbell & American Lawyer Media Martindale-Hubbell Bar Register of AV Preeminent Lawyers & Preeminent Women Lawyers 2006-2013 named a Florida Super Lawyer, Law & Politics 2001-2013 named to Top Lawyers in S. Florida, S. FL Legal Guide 2010 Top Impact Law Leader, Business Leader Media 2005-2009 & 2011 named to Legal Elite, Florida Trend 2005 named as Heavy Hitter in Health Care, S.FL Business Journal 2003-2005 named Best of the Bar, S. FL Business Journal 1996 selected as Best Health Care Attorney, FL Medical Business