1. March 2012
In This Issue:
Proposed Rules for Reporting & Returning Overpayments
NJ Court Upholds Cullen Act Immunity
Proposed PIP Amendments Would Make Dramatic Changes
Bill Prohibits Discharge of Drugs into Sewer/Septic Systems
Brach Eichler in the News
HIPAA Corner
FEDERAL UPDATE under the Medicare program. The law requires a person who has
received an overpayment to report and return the overpayment
by the later of (i) 60 days after the overpayment was identified; or
Interim Fix to Medicare’s Sustainable Growth Rate
(ii) the date any corresponding cost report is due. The knowing
Formula Averts Reduction to Physician Payments and improper failure to return an overpayment imposes liability
On February 22, 2012, President Obama signed into law the under the federal False Claims Act (FCA), exposing the provider
Middle Class Tax Relief and Job Creation Act of 2012. The law or supplier to treble damages and penalties.
temporarily averts a 27.4% reduction in Medicare’s physician Under the proposed rule:
payments based on the Sustainable Growth Rate (SGR) formula.
• person would be considered to have “identified” an
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Congress left for another day a permanent fix to the SGR formula.
overpayment if the person has actual knowledge of the
Under the law, Medicare physician payments are extended at their existence of the overpayment or acts in reckless disregard
current rates, but only through December 31, 2012. Among other or deliberate ignorance of the overpayment
things, the law also:
• here a provider receives information about a potential
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• xtends the baseline for that portion of the Medicare physician
E overpayment, such as from an anonymous tip through a
payment formula that takes into account the geographic area compliance hotline, the provider would have a duty to investigate
where the physician’s practice is located the information; if, after reasonable inquiry, the provider or
• educes Disproportionate Share Hospital (DSH) payments
R supplier identifies an overpayment, it would then have 60 days
under the Medicaid program from that time to report and return the overpayment
• educes by 2% payments for clinical laboratory services
R CMS also proposes a 10-year look-back period (i.e., the obligation
• ermits independent laboratories that service eligible hospitals
P to report and return an overpayment applies if the overpayment
to bill directly is discovered within 10 years of the date the overpayment
was received), which is in alignment with the FCA statute of
Without a permanent fix, Congress will again be required to
limitations. To facilitate this look-back period, CMS proposes to
address the SGR formula at the end of the year in a lame duck
amend its regulations that generally limit the claims reopening
session and amid mounting pressure to reduce spending under
period to 4 years to allow for a 10-year reopening period for
various federal programs such as Medicare and Medicaid.
claims resulting in a reported overpayment. Medicare Self-
For additional information, contact: Referral Disclosure Protocol disclosures would also be subject
John D. Fanburg | 973.403.3107 | jfanburg@bracheichler.com to the 10-year look-back period.
Debra C. Lienhardt | 973.364.5203 | dlienhardt@bracheichler.com Comments are due by April 16, 2012 and may be submitted by
hand, regular or express mail, or electronically at http://www.
regulations.gov.
CMS Publishes Proposed Rule on Reporting For additional information, contact:
and Returning Medicare Overpayments Lani M. Dornfeld | 973.403.3136 | ldornfeld@bracheichler.com
John D. Fanburg | 973.403.3107 | jfanburg@bracheichler.com
The Centers for Medicare Medicaid Services (CMS) recently
published a proposed rule implementing sections of the health
reform law regarding reporting and returning overpayments
continued on page 2

2. BRACH EICHLER
Joint Regulations Released Outlining Standards such as parties and showers, was unlawful and not justified by
any special circumstances as required by prior NLRB and U.S.
for Summary Benefits and Coverage
Supreme Court decisions.
The Department of Health and Human Services, the Department
of Labor and the Treasury Department recently released joint final For additional information, contact:
regulations implementing the health care reform requirement that Anthony M. Rainone | 973.364.8372 | arainone@bracheichler.com
group health plans and health insurers provide participants with Matthew M. Collins | 973.403.3151 | mcollins@bracheichler.com
an accurate summary of benefits and coverage (SBC). The SBC is
a uniform document that helps consumers better understand the
coverage they have and allow them to easily compare different
coverage options. STATE UPDATE
Insurance companies must comply with the SBC requirement
The Cullen Act’s Civil Immunity Protection
beginning September 23, 2012, and the requirement applies
to both grandfathered and non-grandfathered plans. The
Successfully Tested in Court
final regulations, template and uniform glossary are available The Superior Court of New Jersey, Appellate Division, recently
through the Department of Health and Human Services at: ruled in favor of a health care entity that was sued by a former
http://cciio.cms.gov/programs/consumer/summaryandglossary/ employee after the entity provided negative reference letters.
index.html. Senisch v. Carlino, No. A-6218-09T3, 2011 N.J. Super. LEXIS 211
(N.J. App. Div. Dec. 1, 2011).
For additional information, contact:
Joseph M. Gorrell | 973.403.3112 | jgorrell@bracheichler.com In essence, this was a test of the civil immunity protection that
Carol Grelecki | 973.403.3140 | cgrelecki@bracheichler.com the Health Care Professional Responsibility and Reporting
Enhancement Act (also known as the “Cullen Act”) provides
to entities that comply with the Act’s requirements. By way of
background, hospitals are statutorily required under the Cullen Act
Hospital Violates NLRA with Policy Barring to provide, in relevant part, “information about a current or former
Nurses from Wearing Union Ribbons in Patient employee’s job performance as it relates to patient care.” In the case
Areas and Limiting Off-Duty Access to Hospital of a former employee, the entity must also disclose the reason for
that employee’s separation. N.J.S.A. 26:2H-12.2c(a)(2).
The National Labor Relations Board (NLRB), in St. John’s
In Senisch, the plaintiff was involuntarily terminated from his work
Health Center, ruled that a policy that prohibited employees
as a physician assistant. During the process of seeking employment,
from wearing union ribbons that read “Saint John’s RNs for Safe
the plaintiff’s former employers were requested to provide reference
Patient Care” in patient care areas constituted an unfair labor
letters. The plaintiff then filed suit against those who provided
practice. In its decision, the NLRB reminded employers that
the references, alleging defamation, tortious interference with
employees have the right to wear union symbols at work absent
economic advantage and violation of the Conscientious Employee
“special circumstances.” With regard to health care facilities, in
Protection Act. In May 2010, the trial court granted the defendant’s
immediate patient care areas, bans on all non-official insignia are
motion for summary judgment. On appeal, the plaintiff argued
presumptively valid, whereas bans in other areas of a hospital are
that the trial court erred by concluding as a matter of law that the
presumptively invalid. The policy justification for the presumptively
defendants acted in good faith and without malice—a requirement
valid ban is that patients—in particular those who are seriously
for obtaining the civil immunity protection under the Cullen Act.
ill—need peace and quiet. However, a hospital that selectively bans
The Appellate Division agreed with the lower court’s finding that
certain union insignia is not protected. With the presumptively
the plaintiff had failed to introduce any evidence to show that the
invalid ban in non-patient care areas, it is up to the hospital to show
references were provided in bad faith or with malice. Without
that the selective ban is necessary to avoid disruption of health
such a showing, and because the health care provider followed the
care operations or disturbing patients. Because the hospital in this
requirements of the law, the Cullen Act’s civil immunity protection
case allowed employees to wear a hospital ribbon that contained an
prevented the plaintiff from succeeding in the lawsuit.
almost identical message, the NLRB found the ban on the union
ribbon was not supported by any special circumstances. For additional information, contact:
Kevin M. Lastorino | 973.403.3129 | klastorino@bracheichler.com
The NLRB also found the hospital’s policy, which barred off-duty
Todd C. Brower | 973.403.3103 | tbrower@bracheichler.com
employees from access to the interior of the hospital’s building
or other work areas except to attend hospital-sponsored events,
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3. BRACH EICHLER
DOBI Proposes Several Substantive Changes to • prohibition on “most favored nations” clauses in managed care
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contracts (i.e., clauses requiring the provider to maintain or reduce
New PIP Regulations Introduced Last August
the rate specified in the agreement based upon a lower rate the
In response to comments received by the New Jersey Department provider has accepted or has agreed to accept from a third party
of Banking and Insurance (DOBI) to the new personal injury for providing the same or a comparable service or supply)
protection (PIP) regulations initially proposed on August 1, 2011, • prohibition on certain types of “unilateral amendments” that
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DOBI has made substantive changes published for public comment. occur when carriers amend the terms of a contract without
Significantly, DOBI has now proposed a separate fee schedule for approval of the provider; any agreement that permits unilateral
services performed in a hospital outpatient surgical facility (HOSF), changes must provide that material terms will only be revised with
thereby distinguishing these services from procedures performed in sufficient advance notice to permit termination in advance of the
ambulatory surgical centers (ASCs). According to DOBI, the newly effective date of the change
proposed Exhibit 7 to the PIP fee schedule regulation reimburses • dditional obligations on insurers to ensure that their provider
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HOSFs at higher amounts than ASCs and more accurately reflects directories remain up-to-date and available to current and
the increased costs associated with surgical procedures performed prospective beneficiaries
in a hospital setting. Accordingly, the HOSF fee schedule is set at Comments must be submitted by April 21, 2012, either by mail
300% of the 2011 geographically wage-adjusted Medicare Hospital or by email to legsregs@dobi.state.nj.us.
Outpatient Department fees for Bergen County (northern NJ)
For additional information contact:
and Atlantic County (southern NJ), and also permits certain
Mark E. Manigan | 973.403.3132 | mmanigan@bracheichler.com
outpatient surgical services that would not otherwise be eligible for
Carol Grelecki | 973.403.3140 | cgrelecki@bracheichler.com
reimbursement if performed in an ASC.
In addition, DOBI has also eliminated the previously proposed
option for a Worker’s Compensation Managed Care Organization
Proposed Legislation Would Prohibit Health
that would have permitted carriers to direct patients to networks
for treatment. Further, DOBI has also deleted 117 CPT codes Care Institutions from Discharging Medications
from the Physician’s Fee Schedule for low-frequency but high-cost into Sewer and Septic Systems
procedures performed by neurosurgeons and spine surgeons.
Pending legislation in the New Jersey legislature (S81/A733)
The complete proposal published by DOBI for public comment would prohibit hospitals and other health care institutions, or
may be viewed online at:http://www.state.nj.us/dobi/pipinfo/ any employee, staff person, contractor or other person under
aicrapg.htm#21. Comments are due by April 21, 2012. the direction or supervision of the health care institution, from
For additional information, contact:
discharging, disposing of, flushing, pouring or emptying any
unused prescription medication into a public wastewater collection
Keith J. Roberts | 973.364.5201 | kroberts@bracheichler.com
Mark E. Manigan | 973.403.3132 | mmanigan@bracheichler.com system or a septic system, beginning 210 days after the date of
enactment of the bill into law.
The bill would require:
Department of Banking and Insurance Proposes • he Department of Environmental Protection (DEP) to issue
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Managed Care Regulations recommendations for the proper disposal of unused medications
within 90 days after the date of enactment of the bill into law
On February 21, 2012, the New Jersey Department of Banking
• very health care institution, within 120 days after enactment,
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and Insurance published proposed regulations that seek to
to submit to the New Jersey Department of Health and Senior
reform and improve provider network requirements for managed
Services and the DEP a plan for the proper disposal of unused
care companies. These proposed rules establish standards
prescription medications
for agreements between health care providers and insurance
• he DOHSS, in conjunction with its periodic inspection of a
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companies, health service corporations, hospital service
licensed health care facility, to ensure that the health care facility
corporations, medical service corporations, HMOs and
is in compliance with the plan submitted
organized delivery systems. Some of the key provisions include:
We will continue to monitor the progress of the bill.
• requirement that carriers credential providers within
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90 days of the provider’s submission of an application For additional information, contact:
Kevin M. Lastorino | 973.403.3129 | klastorino@bracheichler.com
Joseph M. Gorrell | 973.403.3112 | jgorrell@bracheichler.com
continued on page 4 3

4. BRACH EICHLER
HIPAA CORNER
Brach Eichler In The News
We previously reported on the federal breach notification
Lani M. Dornfeld, Carol Grelecki and Debra C. Lienhardt rule contained within the Health Information Technology
will host the second annual New Jersey Women in Healthcare for Economic and Clinical Health Act (HITECH Act). The
networking function on March 21 at The Palace at Somerset Department of Health and Human Services’ (HHS) Office
Park. This year’s event will focus on the changing landscape for Civil Rights recently set a March target date for release
of healthcare, including consolidation in the marketplace, of the long-delayed final version of HITECH Act breach
hospital-physician integration and ACOs. The keynote speaker notification rule. (As of the date of this publication, we are
will be Annette Catino, President CEO of QualCare, Inc. For still awaiting posting of the rules.) According to the Office
information, contact Alan Levine at alevine@bracheichler.com for Civil Rights, they are also making efforts to publish rules
or 973-364-8389. on all of the remaining HITECH Act provisions so these
important protections and expansions of individual rights under
Richard B. Robins will be speaking at the Newark Dental
the HIPAA privacy and security rules can be made available
Club on March 22, on legal issues concerning dentistry.
uniformly to consumers across the country.
On April 30, Brach Eichler will sponsor “What You Don’t
By way of background, the HITECH Act’s breach notification
Know about the Board of Medical Examiners Can Hurt You:
rule requires that covered entities (including most, if not all,
Regulations You Need to Know to Protect Your License,” at
health care providers) inform their patients when there has
Brach Eichler’s offices at 101 Eisenhower Parkway, Roseland.
been a breach of their protected health information. The term
Speakers will include Brach Eichler’s Joseph M. Gorrell and
“breach” is broadly defined as the unauthorized acquisition,
Dr. Gregory Rokosz, Senior Vice President for Medical and
access, use or disclosure of protected health information in
Academic Affairs, Saint Barnabas Medical Center and former
a manner not permitted by the HIPAA privacy rule which
President, New Jersey State Board of Medical Examiners. For
compromises the security or privacy of such information.
more information, contact Alan Levine at alevine@bracheichler.
Detailed instructions and the time-frames within which breaches
com or 973-364-8389.
must be reported to the Secretary of HHS can be found at:
Todd C. Brower will be lecturing to OB-GYN residents at http://www.hhs.gov/ocr/privacy/hipaa/administrative/
Saint Barnabas Medical Center on issues related to the business breachnotificationrule/brinstruction.html.
of medicine on April 13, May 4 and June 1.
For additional information, contact:
Todd C. Brower | 973.403.3103 | tbrower@bracheichler.com
Lani M. Dornfeld | 973.403.3136 | ldornfeld@bracheichler.com
Attorney Advertising: This publication is designed to provide Brach Eichler, L.L.C. clients and contacts with information they
can use to more effectively manage their businesses. The contents of this publication are for informational purposes only.
Neither this publication nor the lawyers who authored it are rendering legal or other professional advice or opinions on
specific facts or matters. Brach Eichler, L.L.C. assumes no liability in connection with the use of this publication.
Health Care Practice Group | 101 Eisenhower Parkway, Roseland, NJ 07068 | 973.228.5700
Members
Todd C. Brower | 973.403.3103 | tbrower@bracheichler.com Carol Grelecki | 973.403.3140 | cgrelecki@bracheichler.com
Lani M. Dornfeld | 973.403.3136 | ldornfeld@bracheichler.com Kevin M. Lastorino | 973.403.3129 | klastorino@bracheichler.com
John D. Fanburg, Chair | 973.403.3107 | jfanburg@bracheichler.com Debra C. Lienhardt | 973.364.5203 | dlienhardt@bracheichler.com
Joseph M. Gorrell | 973.403.3112 | jgorrell@bracheichler.com Mark E. Manigan | 973.403.3132 | mmanigan@bracheichler.com
Keith J. Roberts | 973.364.5201 | kroberts@bracheichler.com
Counsel
Richard B. Robins | 973.403.3147 | rrobins@bracheichler.com
Associates
Lindsay P. Cambron | 973.364.5232 | lcambron@bracheichler.com Leonard Lipsky | 973.364.5218 | llipsky@bracheichler.com
Jenny Carroll | 973.364.5223 | jcarroll@bracheichler.com Conor F. Murphy | 973.364.5214 | cmurphy@bracheichler.com
Jordan T. Cohen | 973.403.3144 | jcohen@bracheichler.com Isai Senthil | 973.403.3150 | isenthil@bracheichler.com
Chad Ehrenkranz | 973.364.5234 | cehrenkranz@bracheichler.com Edward J. Yun | 973.364.5229 | eyun@bracheichler.com
Rita M. Jennings | 973.364.5204 | rjennings@bracheichler.com
You have the option of receiving your Health Law Updates via e-mail if you prefer, or you may continue to receive them in hard copy.
If you would like to receive them electronically, please provide your e-mail address to alevine@bracheichler.com. Thank you.
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