HEALTHCARE REFORM, SINCE ITS ONLY A TAX

The recent Supreme Court decision leaves most of healthcare reform intact with the determination that the act’s penalty is not a penalty, but is a tax. This raises the question of what other tax provisions are parts of the Affordable Care Act.

A higher Medicaid payroll tax is the primary source of financing. Currently wages are subject to a 2.9% Medicare payroll tax with workers and employers each paying half. Self- employed people pay the entire 2.9% but may deduct half on their income tax returns.

Under the Affordable Care Act, earnings over $200,000.00 per person or $250,000.00 per couple will pay an additional payroll tax of 0.9%.

Another change in the Medicare tax is that beginning in 2013 the Medicare tax will be applied to investment incomes. This 3.8% tax will be only imposed on the net investment income for individuals with AGI of $200,000.00 and joint filers with AGI exceeding $250,000.00. This new tax revenue will not go into the Medicare trust fund, but apparently will go to the Government’s general revenues.

Currently, you may deduct certain medical expenses if your deductions total more than 7.5% of AGI. This threshold is increased to 10% of AGI and the effective date depends on your age. If you are under 65 in 2013 the increase threshold is effective immediately. If you or your spouse will be 65 during 2013 the increase threshold does not take effect until 2017.

Additionally, starting in 2013, a new tax equal to 2.3% of the sale price of certain medical devices is imposed. This new excise tax does not apply to eye glasses, contacts and hearing aids.

THE CORPORATIZATION OF MEDICINE

In recent publications discussing the change in medicine generally and particularly with regard to the Affordable Care Act, there seem to be more and more references to the corporatization of healthcare. Many of these reports indicate that physicians feel that increased paperwork, cost increases and the whipsaw effects from arbitratory reimbursement practices are causing doctors to flee to hospitals in increasing numbers. Since the pool of primary care physicians has not

DO YOU OWN YOUR PATIENT DATA?

The idea of ownership of healthcare patient data is a difficult concept. While a patient may have rights to all the data regarding her/him self, certain rights are also created in hospitals, healthcare providers and other generators of patient information.

HIPAA requires a healthcare provider who “creates” HIPAA covered data keep a copy of the created data available. There is no provision in HIPAA for a patient to require a healthcare provider to delete all data or fail to maintain the HIPAA mandated copy. Perhaps the better question is not who owns any particular patient healthcare data, but rather who has rights of access and use of patient information?

Certain cases are obvious, i.e. where patients grant a hospital or a physician the right to access their data, usually by a written agreement. Similarly, agreements (however one-sided) between covered patients and healthcare insurers generally contain provisions which allow the healthcare insurer to have certain rights to receive and utilize individual patient information.

More difficult questions arise when patient data is sought by non-healthcare providers, whether investigative or police agencies, life insurers, RAC auditors or others whose primary function is not the provision of healthcare.

Also, disputes sometimes arise between doctors, healthcare providers and sometimes group practices or hospitals about who ‘owns’ patient information, including a “patient list”. Federal and state courts have held that patient lists are trade secrets and may be protectable under the Uniform Trade Secrets Act or other applicable state law. The USTA also provides for remedies for misappropriation of trade secrets. Patient lists seem to be readily protectable as trade secrets, as they often consist of patient data not readily discoverable by the outside world and have economic value to a physician or medical practice or hospital by containing valuable contact information. Practices and hospitals should make sure that any contracts that they have with others, whether physicians, IT services, consultants or third-party payors, contain provisions where patient lists are acknowledged as trade secrets and are acknowledged to be the property of the physician, medical practice, or hospital, as appropriate.

This newsletter is edited by Paul Wallace, a member of the American Bar Association Healthcare Law Section and the American Health Lawyers Association who has been representing physicians and healthcare practices for over 25 years. Mr. Wallace assists physicians in health practices in contract items, federal legal compliance, creation of practice entities, estate and wealth planning and similar issues. Please feel free to call if you have any questions about this newsletter or any other matter at (812) 402-1600 or pwallace@joneswallace.com.