Mid-Atlantic Health Law TOPICS

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New Maryland Legislation - Summer 2005

The 2005 Maryland General Assembly Session turned out to be a very busy, a very reactive and a very creative Session in regard to health care, with several truly novel laws being enacted.
The General Assembly not only reacted to the malpractice crisis, but it also reacted to the tragic case of Sara Hohne, who was discharged from a hospital to an unlicensed facility and committed suicide. Laws were also passed in response to the highly publicized recent clinical laboratory mishaps, and in response to Shady Grove Hospital's inability to establish an off-site emergency room. However, in time the most significant piece of 2005 legislation may prove to be the State's innovative attempt to deliver specialty physician care to the poor.
More specifically, the following is a summary of some of the new measures passed by the Maryland General Assembly.
1. Malpractice Premium Support. HMOs had previously been exempt from Maryland's 2% premium tax. That exemption was repealed during the Special December 2004 Legislative Session, and the funds collected will be earmarked to supplement Medical Assistance payments to doctors and to subsidize premiums doctors must pay for medical malpractice insurance to the extent that such premiums increase by more than 5% per year.
2. Non-economic Damages. The medical malpractice reform bill, passed during the 2004 Special Legislative Session, also imposes a 4-year $650,000 freeze on awards for non-economic damages arising out of suits filed on or after January 1, 2005. Beginning January 1, 2009, awards for non-economic damages will increase by $15,000 per year. In a wrongful death action brought in the next 4 years, where there are two or more claimants, beneficiaries or defendants involved in the same medical injury, the total amount awarded for non-economic damages for all actions may not exceed $812,500.
3. Small Group Market Health Insurance. Effective October 1, 2005, until September 30, 2008, self-employed individuals or sole proprietors generally will no longer be eligible for health care coverage in the small group market. These individuals may purchase health insurance in the individual market or may enroll in MHIP, a state administered health insurance program for those individuals without access to health insurance. However, those self-employed individuals enrolled in the small group market on September 30, 2005, may remain covered if they meet certain conditions. This measure was fueled by a belief that a disproportionate number of high risk self-employed individuals were choosing the small group health insurance product, and, thereby making the product too expensive for others.
4. Freestanding Medical Facilities. A new category of medical facility called a "Freestanding Medical Facility" (FSMF) has been established, effective June 1, 2005. An FSMF is a facility that is physically separate from a hospital, but is administratively part of a hospital, and in which health services are provided 24/7, including emergency services provided to all regardless of ability to pay. However, an FSMF must refrain from using the words "Emergency Department", "Emergency Room" or "Hospital" in its name. Regulations must be in place by July 1, 2008, that establish a process to identify areas that would benefit from an FSMF, and a process to approve specific FSMFs. DHMH must also issue a freestanding medical facility license as a pilot to a facility that meets certain parameters that describe the Shady Grove Adventist Hospital satellite emergency facility located 8 miles from the hospital. Although this pilot is exempt from Certificate of Need regulations, and the HSCRC will not set its rates, the pilot facility is subject to certain other requirements.
5. Medical Laboratories. If a medical laboratory provides erroneous or questionable test results that pose a threat to patient health and safety, effective July 1, 2005, DHMH may order the lab (1) to notify physicians or others who ordered tests of the erroneous or questionable results, and (2) to take any additional measures necessary to reduce or eliminate the threat to patient health and safety, including notifying patients and offering retests. A lab that does not comply with the order is subject to a civil penalty of $1,000 per day of noncompliance, up to a maximum penalty of $50,000, instead of or in addition to any other sanction. Before a civil penalty is imposed, the licensee must be given an opportunity for a hearing.
6. Community Health Care Access and Safety Net Act of 2005. An independent commission within DHMH, called the Community Health Resources Commission, has been established to increase health care access to lower income persons through statewide community health resources (CHR). The Commission, whose existence is guaranteed until June 30, 2010, will: (1) develop an outreach program that will create a specialty care network for those with incomes below 200% of poverty who are referred by CHR; (2) establish a program for hospitals to identify, assist and track patients who access health care through CHR; and (3) study ways to expand school-based health centers to provide primary care services. Also by January 1, 2006, the Health Services Cost Review Commission and the Maryland Health Care Commission must make a recommendation to the General Assembly regarding the establishment of an uncompensated and undercompensated care fund patterned after the Maryland Trauma Physician Services Fund.
7. Hospital Discharge. Effective October 1, 2005, a hospital's transfer or discharge policies must be based on a patient's assessed needs. In addition, a hospital must plan and facilitate a discharge/transfer, give the patient or person responsible for providing continuing care to the patient written discharge instructions in a form a patient can understand and to help ensure that continuity of treatment and services is maintained. If a hospital fails to comply with the discharge requirements, DHMH may impose a civil money penalty not to exceed $10,000 for each failure. A hospital may appeal such penalty under the Administrative Procedure Act.
8. Erroneous Denials. Effective October 1, 2005, if an insurance carrier erroneously denies a health care provider's timely-filed reimbursement claim because of a claim processing error, and the provider notifies the carrier of the error within 1 year of the claim denial, the carrier must reprocess the provider's claim without requiring the provider to resubmit the claim.
9. Hospital Bills. Effective October 1, 2005, the summary financial statement presented to a patient, within 30 days of discharge, must explain that charges for services provided by physicians are not included in the total hospital charges and are billed separately.
10. Social Security Numbers. A person, except a unit of State or local government, is prohibited from (1) publicly posting or displaying an individual's Social Security Number (SSN); (2) printing an individual's SSN on a card required for the individual to access products or services; (3) initiating or requiring the transmission of a SSN over the Internet, unless the connection is secure or the SSN is encrypted; or (4) requiring an individual to use his or her SSN to access an Internet web site unless a password, unique personal ID number, or other authentication device is also required to access the web site. Unless required by State or federal law, the printing or faxing of a SSN on materials mailed or faxed to an individual is prohibited, except under specified circumstances. Persons using SSNs may continue to do so until January 1, 2009, if the use is continuous, and if the person provides an annual disclosure form giving the individual the right to stop such use. The new rules apply to all health insurance policies and contracts issued, delivered or renewed on or after January 1, 2006. Policies or contracts in effect before January 1, 2006, must comply by January 1, 2007.
11. Maryland Health Care Commission Membership. Effective October 1, 2005, the Maryland Health Care Commission (HCC) has been reconfigured. The HCC will be expanded to 15 members from the current 13. Nine members must have no connection to payors or health care providers. The remaining members must include 2 physicians, 2 payors, 1 nursing home administrator and 1 non-physician health care provider. The governor must consider ethnic and gender diversity in appointing HCC commissioners, and must appoint at least 5 members from counties with a population of 300,000 or more and 3 members from counties with a population of 300,000 or less, with 1 member each from the Eastern Shore, Western Maryland and Southern Maryland.


June 22, 2005




Rosen, Barry F.


Health Care