February 22, 2010Client Alert

HITECH Reminder

The American Recovery and Reinvestment Act (“ARRA”), signed into law last year, contained the Health Information Technology for Economic and Clinical Health Act ("HITECH"), which, in part, amended HIPAA. Although many of the specific features of HITECH have separate effective dates, the default effective date for HITECH was February 17, 2010.

HITECH only affects entities that were previously regulated by HIPAA. That is, HITECH does not expand the types of entities which must comply with HIPAA.

Prior to HITECH, a business associate only had to comply with HIPAA by virtue of the business associate agreement between the business associate and the covered entity. As a result of HITECH, business associates have a direct, affirmative obligation to comply with HIPAA. In addition, HITECH requires business associates to enact security measures to ensure the protection of health information. Further, business associates now must undertake a review of their business relationships to determine whether they are serving as a business associate for a covered entity and, if so, execute a written business associate agreement with the covered entity. Before HITECH, the obligation of identifying business associate relationships was solely that of the covered entity.

HITECH additionally affects both covered entities and business associates by requiring certain types of notice in the event of a breach of protected health information. The definition of "breach" is complex and must be reviewed on a case-by-case basis. Penalties for failing to provide proper notice, which differ depending upon the particular circumstances of the breach, begin on February 22, 2010.

Electronic Health Records

ARRA also included significant incentives for health care providers to adopt and utilize qualified, certified electronic health record (“EHR”) systems. A wide variety of health care providers, including hospitals, are eligible for federal dollars. The federal programs incentivize an early transition to an EHR system. For example, a physician practice that transitions to a qualifying EHR system by October 2012 can receive up to $44,000 in payments over five years under the Medicare program; however, the potential incentives decrease for transitions occurring after October 2012. After 2015, non-EHR users will receive lower Medicare reimbursement rates than their EHR-using competitors.

Crucial to any effort to enroll in these incentive programs is understanding: (1) what form of EHR system “qualifies” under the programs; (2) the certification requirements; (3) the timing of implementation; and (4) the necessary provisions to include in an EHR vendor agreement in order to protect your interests.

Medical Malpractice Caps

On February 4, 2010, the Illinois Supreme Court struck down the state’s medical malpractice law that capped non-economic damages for medical malpractice awards against physicians at $500,000 and against hospitals at $1,000,000. Wisconsin caps non-economic damages at $750,000. The Wisconsin Supreme Court struck down a predecessor statute in 2005. The legislature responded by passing the current statute, which includes a higher cap and detailed legislative findings justifying the rationale behind the legislature’s actions.

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