icemiller.com icemiller.com

Deepali Doddi (312) 726-7134

Deepali.doddi@icemiller.com

Sherry Fabina-Abney (317) 236-2446

Sherry.Fabina-Abney@icemiller.com

Tara Schulstad Sciscoe (317) 236-5888

Tara.Sciscoe@icemiller.com

Kevin C. Woodhouse (317) 236-2154

kevin.woodhouse@icemiller.com

Health Law Developments for 2018

March 21, 2018

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Introduction

Health Care Privacy and Cyber Security Update

Employee Benefits Legislative Update

Prescribing and Dispensing of Opioids

HIP 2.0 Waiver Extension

AGENDA

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Health Care Privacy and Cybersecurity

Update

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Deepali Doddi (312) 726-7134

Deepali.doddi@icemiller.com

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Presence Health (Jan. 2017; $475k settlement)

Children’s Medical Center of Dallas (Feb. 2017; $3.2

million civil money penalty)

Memorial Healthcare System (Feb. 2017; $5.5 million

settlement)

St. Luke’s-Roosevelt Hospital Center (May 2017;

$387k)

21st Century Oncology (Dec. 2017; $2.3 million)

OCR HIPAA Enforcement : 2017 Highlights

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Fresenius Medical Care North America (Feb. 2018;

$3.5 million)

Filefax, Inc. (Feb. 2018; $100k)

And more to come…

OCR HIPAA Enforcement: 2018

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Emblem Health (New York AG; March 2018; $575k

settlement)

University of Rochester Medical Center (New York

AG; Dec. 2015; $15k settlement)

Dr. Beck (Indiana AG; Jan. 2015; $12k settlement)

Women & Infants Hospital of Rhode Island

(Massachusetts AG; July 2014; $150k settlement)

State Attorney General Enforcement

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Phase 2 desk audits have been completed

Phase 2 on-site audits not currently scheduled

OCR will publish report on best practices gleaned

from Phase 2 desk audits

Remember: HITECH Act established a permanent

audit program

OCR’s Phase 2 Audit Program

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Trending Issue: Ransomware

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Trending Issue: “Curious” Workforce Members

• UCLA Health System ($865,500 settlement with OCR)

• Snooping employees improperly accessed electronic records of high-profile celebrities

• Walgreen Co. v. Hinchy, 21 N.E.3d 99 (Ind. Ct. App. 2014)

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Trending Issue: Mobile Device Security

• Cancer Care Group (Sept. 2018; $750k settlement with OCR)

• Theft of unencrypted backup media containing ePHI of 55,000 individuals from employee’s car

“Organizations must complete a comprehensive risk analysis and establish

strong policies and procedures to protect patients’ health information,” said

former OCR Director Jocelyn Samuels. “Further, proper encryption of

mobile devices and electronic media reduces the likelihood of a breach of

protected health information.”

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Trending Issue: Paper PHI

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Trending Issue: Internet of Health Things (IoHT)

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Employee Benefits

Legislative Update

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Tara Schulstad Sciscoe

(317) 236-5888

Tara.Sciscoe@icemiller.com

icemiller.com

Tax Cuts and Jobs Act of 2017

Bipartisan Budget Act of 2018

Court decisions

Overview

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Tax Cut and Jobs Act adds a new Code Section

4960 which imposes a 21% excise tax on:

Remuneration in excess of $1 million dollars paid for a

taxable year by a tax-exempt organization with respect

to the employment of a covered employee; and

Excess parachute payments paid by a tax-exempt

organization to a covered employee for the taxable

year.

Excise tax is paid by the employer.

Effective January 1, 2018.

New Excise Tax on Covered Employees

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A tax-exempt organization includes:

An organization described in Code Section 501(c).

An organization whose income is excluded from

taxation under Code Section 115.

A covered employee is:

Five highest compensated employees of the

organization for the tax year.

Any employee who has ever been a covered

employee for a tax year beginning on or after January

1, 2017.

New Excise Tax on Covered Employees (cont’d)

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Remuneration generally includes all taxable wages.

Includes Code Section 457(f) and QEBA distributions.

Includes remuneration paid by a related person or

governmental entity (controlled group).

Does not include amounts paid to a licensed medical

professional for the performance of medical services.

New Excise Tax on Covered Employees (cont’d)

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An excess parachute payment is the amount by

which a parachute payment exceeds the base

amount allocable to such payment.

A parachute payment is any payment in the nature of

compensation to a covered employee that is

contingent on separation from employment, and

exceeds three times the average annual

compensation for the most recent five taxable years.

Does not include amounts paid to a licensed medical

professional for the performance of medical services.

New Excise Tax on Covered Employees (cont’d)

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Tax Cuts and Jobs Act eliminates the employer

deduction under Code Section 274 for the cost of

entertainment, amusement or recreation, regardless

of its relationship to employer’s business.

Effective January 1, 2018.

Tax Cuts and Jobs Act eliminates the employer

deduction under Code Section 119 for meals

provided to the employee by the employer on

business premises for employer's convenience

Effective January 1, 2026

Still excludible from employees' wages.

Employer Deductions Eliminated

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Code Section 132 excludes from employees’ gross

income the value of a de minimus fringe benefit,

which generally includes value of a nondiscriminatory

eating facility operated by the employer on or near its

business premises.

The employer received a 100% deduction of

expenses associated with providing the eating facility.

Tax Cuts and Jobs Act reduces the employer

deduction to 50% effective January 1, 2017, and

eliminates the employer deduction effective

January 1, 2026.

Employer Deductions Eliminated (cont'd)

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Code Section 132(a) excludes from gross income

qualified transportation fringe benefits, such as

community and parking related expenses.

An employer can also deduct the cost of qualified

transportation fringe benefits.

Tax Cuts and Jobs Act eliminates the employer’s

deduction beginning January 1, 2018, to the extent

that the benefits are excluded from the employee’s

gross income.

Qualified Transportation Expenses

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Under Tax Cuts and Jobs Act, qualified bicycle

community reimbursements are no longer

excludable from an employee’s gross income, but

will be taxed as wages.

These include expenses for the purchase of a bicycle,

bicycle improvements, repair, and storage, if the

bicycle is regularly used for travel between the

employee’s residence and employment.

These payments may be deducted by the employer.

Effective January 1, 2018 through December 31,

2025.

Biking Related Benefits

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Under Tax Cuts and Jobs Act, unrelated business

taxable income (UBTI) is increased by the amount

the employer pays for

qualified transportation fringe benefits or

for a parking facility used in connection with qualified

parking and on premise athletic facilities.

Governmental plans continue to have same

arguments against the application of UBTI that have

historically been utilized.

Unrelated Business Taxable Income

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Code Section 274(j) provides for a limited employer

deduction for the cost of an employee achievement

award, and the value is also excludible from

employee’s gross income.

An employee achievement award is tangible personal

property that an employer gives to an employee at a

meaningful presentation for an achievement related to

length of service or safety.

Clarification: does not include cash, cash

equivalents, gift cards, vacations, meals, lodging,

theatre or sports tickets, stocks, bonds, etc.

Effective January 1, 2018.

Employee Achievement Awards

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IRS announced HSA contribution limits for individual

and family coverage in spring of 2017.

Tax Cuts and Jobs Act changed the method for

determining inflation-related increases.

IRS recalculated limits, and issued Rev. Proc. 2018-

18 in March 2018, revising the maximum family

contribution to an HSA from $6,900 to $6,850.

Individuals may need to change their elections if they

had intended to make the maximum family

contribution, or withdraw $50 prior to April 15, 2019, if

the maximum contribution has already been made.

Health Savings Accounts

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An individual can make contributions to a HSA if,

among other requirements, he/she is covered by a

high deductible health plan (HDHP).

A HDHP cannot pay medical expenses until a

minimum deductible is satisfied for the year, but can

pay certain preventive care benefits.

IRS Notice 2018-12 clarifies that male contraception

and male sterilization are not preventive services

for purposes of a health plan qualifying as a HDHP.

Transition relief through December 31, 2019.

Health Savings Accounts (cont’d)

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Bipartisan Budget Act of 2018

Deletes requirement that elective deferrals must be suspended for 6 months under safe harbor for determining whether a need is “necessary.”

Clarifies that a distribution will not fail to be made for hardship simply because the employee does not take an available loan under the plan.

Expands sources from which hardship distributions can be made to include earnings on elective deferrals, QNECs, and QMACs.

Impacts 401(k) plans and – maybe – 403(b) plans.

Effective January 1, 2019

Changes to Hardship Distributions

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US District Court of Columbia issued a decision on

August 22, 2017, vacating the EEOC's final wellness

regulations under the Americans with Disabilities Act

and the Genetic Information Nondiscrimination

effective January 1, 2019.

Fifth Circuit Court of Appeals issued a decision on

March 15, 2018, vacating the Department of Labor's

final fiduciary regulations.

Court Decisions

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Prescribing and Dispensing of

Opioids: Legal Update

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Indiana Code § 25-1-9.7

Applies to opioid prescriptions only

4 parts: 3 apply to prescribers and 1 applies to

pharmacists

Limits prescription to 7 days for certain patients

unless exception

Requires prescription limits if requested by specific

individuals

Allows pharmacist to partial fill if requested

Requires certain medical record documentation

Became effective July 1, 2017

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“[A] prescriber may issue a prescription for an opioid

only if the following limitations are met:

(1) If the prescription is for an adult who is being

prescribed an opioid for the first time by the

prescriber, the initial prescription may not exceed a

seven (7) day supply.

(2) If the prescription is for a child who is less than

eighteen (18) years of age, the prescription may not

exceed a seven (7) day supply.”

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General Rule

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Opioid prescription is for

(A) Cancer.

(B) Palliative care.

(C) Medication-assisted treatment for a substance

use disorder.

(D) [A condition . . . adopted by rule by the medical

licensing board] . . . .”*

*MLB voted to not add any additional treatment

exceptions (9. 27. 2017)

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Exceptions

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Professional Judgment Exception

“ If, in the professional judgment of a prescriber, a

patient requires more than the prescription

limitations specified in subsection (a).”

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Exceptions

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Statute addresses initial opioid prescriptions by prescribing provider

Seems to be targeting acute pain opioid prescriptions

If palliative or professional judgment exception used, need additional documentation

In on-call or coverage situations, if an initial opioid prescription, there is the 7-day or less limitation or professional judgment exception

Although not explicit non-compliance may expose prescribers to the risk of a licensing board action given location in the Chapter

Documentation is evidence of compliance

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What Does This Mean for Prescribing Providers?

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If prescribing provider

(1)determines that a drug other than an opioid is

not appropriate; and

(2)uses palliative care or professional judgment

exemption and issues a prescription that

exceeds the limitations for a child or first

opioid prescription to an adult

then provider must document in the medical

record.

Exception Documentation Required

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Statute requires documentation that:

The indication that a drug other than an opiate was

not appropriate and

The patient is receiving palliative care or that the

prescriber is using the prescriber’s professional

judgment for the exemption.

Ind. Code §25-1-9.7-2(c).

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Required Documentation

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What Does this Mean for Prescribing Providers?

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No additional documentation if opioid script is for

cancer or MAT

Palliative care or professional judgment exception

requires documentation

Indication documentation ought to be patient-specific

This is documentation on top of what provider should

be documenting

Best practice is to discuss/document the risk and

benefits of the opioid provider is recommending for

informed consent purposes

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Prescriber shall, upon the request of the:

(1) patient;

(2) patient’s personal or legal representative; or

(3) patient’s guardian;

“issue the opioid prescription for a lesser amount than the

prescriber initially intended to prescribe, issue the opioid

prescription for the lesser amount, and indicate the

request and who made the request in the patient’s

medical file.”

Ind. Code §25-1-9.7-3.

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Requested Limitations

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Uncertain if statute is trying to enlist those in the medical consent

statute.

Statute does not define “guardian”, “legal representative” “personal

representative.”

A legal guardian and legal representative should have legal

documents--healthcare powers of attorney, health care representative.

Listen to the patients/others listed in the statute and adjust the

prescription accordingly.

Prescribe for the patient’s best interest, not the prescriber’s

convenience.

Competent adult patients have autonomy to direct care so if conflict try

to work out and document.

Unclear why statute refers to “medical file” v. “medical record”.

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What Does this Mean for Prescribing Providers?

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For a partial fill of an opioid prescription, a

pharmacist shall dispense, upon request of the:

(1) patient;

(2) patient’s personal or legal representative; or

(3) patient’s guardian;

the lesser amount requested.

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Pharmacist: Partial Fill

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If an opioid prescription is partially filled under

subsection (a), the pharmacist must:

(1) Comply with the partial refill requirements set forth in

21 U.S.C. 829.

(2) Document that an individual described in subsection

(a) for whom the partial prescription was filled (or the

individual’s personal or legal representative or

guardian) requested the partially filled prescription.

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Documentation and Federal Compliance

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(f) Partial fills of schedule II controlled substances.

(1) A prescription . . . may be partially filled if –

(A) it is not prohibited by State law;

(B) the prescription is written and filled in accordance

with this title, regulations prescribed by the

Attorney General, and State law;

(C) the partial fill is requested by the patient or the

practitioner that wrote the prescription; and

(D) the total quantity dispensed in all partial fillings

does not exceed the total quantity prescribed.

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21 U.S. Code Section 829

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(2) Remaining portions.

(A) In general. Except as provided in subparagraph (B),

remaining portions of a partially filled prescription for a

controlled substance in schedule II –

(i) may be filled; and

(ii) shall be filled not later than 30 days after the date

on which the prescription is written.

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21 U.S. Code Section 829

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(B) Emergency situations. In emergency situations, as

described in 21 U.S.C. 829 (a), the remaining portions of

a partially filled prescription for a controlled substance in

schedule II –

(i) may be filled; and

(ii) shall be filled not later than 72 hours after the

prescription is issued.

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21 U.S. Code Section 829

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Potentially more work for the pharmacist

A patient many not follow providers treatment plan

and ask pharmacist for less

Guardians, legal representatives and personal

representatives will have a say in the prescription

amount

A pharmacist may question first time prescriptions of

adults over 7 days

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What Does This Mean for Providers?

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Healthy Indiana Plan 2.0 Waiver

Extension

Kevin C. Woodhousei (317) 236-21544

Kevin.Woodhouse@icemiller.com

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*Thank you to Stephen Cornelius of Ice Miller LLP for

assistance in preparing these slides

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On January 11, 2018, CMS issued a State Medicaid Director Letter with new guidance for Section 1115 waiver proposals that would impose work requirements as a condition of eligibility

Indiana requested extension of the Section 1115 demonstration waiver for Indiana’s Healthy Indiana Plan 2.0 (“HIP 2.0”)

CMS granted Indiana’s request on Feb. 1, 2018

The extension request amended several key aspects of Indiana’s HIP 2.0 program, and its approval of a work requirement signaled a reversal of two decades of policy under both Democratic and Republican administrations

HIP 2.0 Waiver Extension - Background

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HIP was originally used to implement Medicaid

expansion in Indiana under then Governor Mike

Pence; began on February 1, 2015

Included a provision under which most adults with

income from 101-138% of the federal poverty level

pay amounts into Personal Wellness and

Responsibility (“POWER”) account

Imposed a 6-month coverage lock-out on those with

income from 101-138% of the federal poverty level

who fail to pay premiums after a 60-day grace period

HIP 2.0 Review – Certain Key Provisions

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Delayed coverage until the 1st premium payment, or

for those from 0-100% of the federal poverty level,

after expiration of the 60-day payment period

Enrolled adults who pay premiums in HIP Plus, an

expanded benefit package with copayments only for

non-emergency use of ER

A plan with a more basic benefit package, HIP Basic,

is available for individuals at or below 100% of the

federal poverty level who do not make monthly

POWER account contributions

HIP 2.0 Review – Certain Key Provisions

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Allows a 50% increase in premiums for smokers in second year of enrollment

Allows disenrollment and a 3-month lockout for expansion adults who fail to complete the eligibility renewal process on a timely basis

Changes premiums to a tiered structure instead of a flat 2% of income – increases as income relative to FPL increases

Expands some coverage of substance abuse disorders for Medicaid beneficiaries, ages 21 to 64, receiving SUD treatment in an Institution for Mental Diseases

Conditions Medicaid eligibility for many adults on meeting a work requirement beginning in 2019

HIP 2.0 Changes and New Provisions

(Approved Feb. 2018)

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Indiana was the 2nd state CMS approved to include a work

requirement as a condition for Medicaid eligibility; Kentucky was the

1st ; as of mid-January, 2018, 7 other states had pending waiver

requests at CMS that would require work as a condition of eligibility

Work Requirement Details

Time on Medicaid Weekly Work Requirement

1-6 months No weekly hour requirement

7-9 months 5 hours / week

10-12 months 10 hours / week

13-18 months 15 hours / week

18+ months 20 hours / week

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Several activities can satisfy the work requirement, including:

Employment

Job searches

Education

Job skills training

Community training public services

Volunteer work

Caregiving for non-dependent relative or other individuals with chronic disabling health conditions

Work requirements are determined in December each year. Individuals not in compliance will be suspended January 1 of the following year

Work Requirement Details (cont.)

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There are several ways an individual can be exempt from a work requirement for a given month, including:

Full or part-time students

Pregnancy

Primary caregiver of dependent child below mandatory education age or dependent with a disability

Medically frail

Documented temporary illness or disability

In active substance use disorder treatment program

Over age of 59

Eligible for good cause exemption, including persons with disabilities and victims of domestic violence

Work Requirement Exemptions

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Excess hours worked in any given week can be

applied to another week in the same month

Work hours may be documented in several ways:

Online

By phone

By mail

In person

The State may also develop a self-attestation

Work Requirement (cont.)

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The work requirement is a significant change to the

Medicaid program in Indiana

However, various activities qualify as work and there

are a number of exemptions as well, so it is unclear

exactly how much impact the new work requirement

will have

All interested parties will have to monitor

developments over the next few years

Work Requirement Practical Effects

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Authority to test graduated copayments up to $25 for

non-emergent use of emergency room; instead, non-

emergent use of ER is subject to a flat $8 copay

Authority to use Medicaid as premium assistance for

those with employer-sponsored insurance

HIP 2.0 Discontinued Provisions

(approved Feb. 2018)

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