Health Law Pointers - Volume II, No. 7

New York Enacts Legislation Prohibiting Physician
Self-Referrals for Physical Therapy Services

New York Governor George Pataki signed new legislation prohibiting New York physicians from referring patients to physical therapy services in which physicians have a financial or ownership interest. The legislation is similar to the physician self-referral prohibitions already in place with respect to laboratory, pharmacy and x-ray services. The new legislation is scheduled to take effect in December 2002.

Physicians who are currently referring patients to physical therapy services should review whether their current arrangements need to be restructured in light of the new legislation.

Department of Health and Human Services
Releases Patient Health Information Privacy Rules

On December 20, 2000, the United States Department of Health and Human Services issued final regulations governing the privacy of medical records and other patient health information. The regulations cover health plans, health care clearinghouses and those health care providers who conduct certain financial and administrative transactions (such as electronic billing and funds transfers) electronically. Under the new regulations, covered entities must obtain the patient’s consent prior to using or disclosing the patient’s medical records and other health information. Covered entities are also required to inform patients how their medical records and other health information is being used and who has access to their records. The regulations apply to all medical information, whether oral, electronic or in print form, and provide for civil and criminal penalties for improper use and disclosure.

The new regulations go into effect on February 26, 2003. Certain smaller health care providers have until February 26, 2004 to comply with the regulations. The new regulations will clearly increase burdens on health care providers and other covered entities with respect to maintaining patient records. Health care providers and other covered entities should review their standard operating procedures to ensure compliance with the new regulations. To access the final regulations, click onto the Department of Health and Human Services web site at:\admnsimp\.

HCFA Issues Final "Stark II" Regulations

On January 3, 2001, HCFA released the first of a two-part final rule governing the prohibition against physician referral of Medicare patients for health care services in which the physician (or members of their immediate family) has a financial relationship. The new regulations prohibit referrals to most entities in which the physician has an ownership interest. However, the regulations do permit referrals to entities with which the physician has a compensation relationship, but only if the compensation paid to the physician does not exceed the compensation that would be paid to another person providing the same services but who was not in a position to generate business. The regulations also contain guidance with respect to structuring financial relationships that do not violate the self-referral prohibition.

The final regulation is effective January 4, 2002. To access the final regulation, click onto HCFA’s web site at:

New York Enacts Patient Information and Quality Improvement Act

On October 6, 2000, New York Governor George Pataki signed sweeping legislation regarding patient access to information concerning their physicians. The new law authorizes the formation of an on-line database containing physician profiles that may be used by the public in selecting a physician. The database will contain biographical information for each physician and information concerning any state disciplinary proceedings (including medical license restrictions or suspensions), malpractice judgments (if there are more than two within ten years) and/or criminal convictions involving the physician within the past ten years. Pending malpractice actions will not be disclosed on the database.

Physicians should consider periodic review of their physician profile as contained in the database to ensure that it is accurate. To access the new legislation, click here:

Guidelines for Providing Employee Access to Health and Fitness Equipment

In an effort to increase the fitness and general health of employees, some employers acquire physical fitness equipment and place it on their premises for employee use. In order to avoid unwanted liability, employers who want to provide such equipment should take steps to ensure that the equipment is set up and properly maintained and advise each employee how to properly operate the equipment. Employers should also establish rules governing the use of the equipment. Finally, the employer should consider having each employee sign a recreational waiver to protect the employer from liability arising from employee injuries caused by use of the equipment.

Employers should also note that providing physical fitness equipment at the place of employment may result in injury claims that are covered by workers’ compensation laws. Because certain states, including New York, do not permit a prospective waiver of workers’ compensation benefits, employers should be aware that a recreational waiver generally will not insulate the employer from liability for workers’ compensation claims.

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