Posts Categorized: Perspectives

Litigating Tanning Salons in Massachusetts: A Policy Proposal

By: Robert A. Ciccia[1]


In February of 2012 Rep. Henry Waxman (D-CA), a ranking member of the United States House of Representatives Committee on Energy and Commerce, released a report concerning false and misleading information provided by tanning salons across the nation.[2] The report detailed the risks associated with indoor tanning, as well as the strategies employed by the tanning industry to improve tanning rates. However, the report fell short of recommending any policy to curb the use of indoor tanning. This article analyzes tanning in Massachusetts, and recommends litigation as a policy initiative to counter false and misleading information disseminated by tanning salons.

To address the issue, the first section briefly describes the health risks and public health impacts associated with indoor tanning. This is followed by an examination of the veracity of several local tanning salons’ health claims. Next, the article details current federal and state laws applicable to the tanning industry including the tanning industry’s history of false and misleading advertisements, along with the Federal Trade Commission’s (“FTC”) past decisions. In addition, Massachusetts’s Consumer Protection Act is introduced as a potential theory of liability. The last section of the article focuses on possible consumer protection actions and addresses potential issues that may arise.

The Problem

Indoor tanning is a serious health issue. The World Health Organization recently classified tanning beds as “carcinogenic to humans,” the organization’s highest risk category.[3] Tanning is linked to several types of skin cancer: basal cell carcinoma, squamous cell carcinoma, and melanoma.[4] Despite these known risks, it is estimated that 30 million Americans use indoor tanning services every year; many of these users are young women between the ages of 18-29.[5] As a result of increased tanning rates, skin cancer is now the most common cancer in the United States.[6] Moreover, while the incidence of many other cancers is falling, the incidence of melanoma is rising faster than the seven most common cancers.[7]

Complicating this issue further are social beliefs that a tan is a sign of health, beauty, and success.[8] Additionally, individuals who tan do not perceive tanning risks and are pressured to tan by friends or family members who engage in the same behavior.[9] Although several public education campaigns were launched to curb tanning rates, several studies indicate that educational efforts alone are insufficient to decrease such rates.[10] Several states have passed legislation limiting the tanning services available to minors, but many tanning facilities fail to comply with these regulations because there is little state enforcement.[11] Thus, this article recommends litigation to raise awareness of this public health issue, reprimand tanning salons for deceptive business practices, and spur societal change. However, before delving into a solution, it is critical to understand the marketing techniques tanning salons employ in Massachusetts.

The Strategic Marketing of Tanning Salons in Boston

Tanning salons often employ misleading advertisements to promote indoor tanning. Despite the well-publicized association between indoor tanning and skin cancer, many tanning salons advertise that their services are safe and healthy. Several tanning salons across Boston perpetuate these false claims.

For example, Tanorama, a tanning salon located on Newbury Street, an upscale shopping district of Boston, stated on their website that indoor tanning is “safer than the sun.”[12] In the predominately white working class neighborhood of South Boston, Sobella Salon stated on their website that “[t]anning beds help the body produce more vitamin D that helps keep your bones, teeth and joints very healthy . . . some studies conducted show that a person’s mood significantly improves when they use a tanning bed.”[13] Last year, the Tan Man Sun Spa, which is also located in South Boston, posted on its Facebook page that “new studies show that the large amount of Vitamin D your sessions produce actually burns fat cells, promotes weight loss & increases muscle strength.”[14] Many salons commonly cite the benefits of Vitamin D production, despite the fact that physicians recommend oral supplements rather than increased exposure to UV radiation.[15] Advertisements often state that tanning can even be used as treatment for seasonal depression. The Tan Man Sun Spa published an update on its Facebook webpage that claimed indoor tanning produces “serotonin” and “endorphins” which help combat seasonal depression.[16] However, these health claims are without a verifiable scientific basis. Only the FDA can classify and approve devices for health purposes, presently UV tanning lamps are limited to the use of tanning the skin.[17]

There are also health claims that are less explicit. Campus Tan, which has several franchises near college and university populations, takes such a route. On its webpage, Campus Tan advocates that users avoid use of SPF lotion during indoor tanning because their booths allow for controlled exposure.[18] However, many health professionals state that protective sun lotion should be used prior to receiving large amounts of UV exposure –indoor tanning would fall under such a category.[19] Campus Tan also stated that it used “Browning Lamps” instead of what it referred to as “Burning Lamps,” and while it is believed that such a statement is meant to convey a competitive advantage over other salons, there is an implicit claim that its lamps are healthier because they do not cause burns.[20] Physicians also agree that any manner of indoor tanning, unless prescribed for medical necessity, is not healthy.[21]

The Smart Tan franchise has three locations across the Boston area, and the franchise is one of the more visible salons in Boston. Its business slogan is “Faster, Safer, and Less Costly,” which conveys that it is less dangerous than its competitors. Smart Tan is most notable for a TV advertisement that aired on both MTV and E! Entertainment; channels which tend to cater to a young female demographic. The TV advertisement claimed that several medical studies advocated for increased sun exposure, and by extension, more indoor tanning.[22] On its website, Smart Tan also lists several “proven benefits” to indoor tanning and links to other pro-tanning websites.[23]

Many, if not all of these advertisements, use images of slim young women to help perpetuate the notion that tanning is desirable, healthy, and beautiful.[24] Images of women in bathing suits along with bright radiant colors used in the websites’ design are commonly used in these kinds of advertisements.[25] These images, along with the false and misleading messages they convey, are harmful to the public’s overall perception of tanning. The totality of these advertisements compounds the harmful effects of tanning by promoting its use through ecological and social factors.

There are several key regulations and legal remedies available to protect consumer rights against false and misleading advertisements, including the Federal Trade Commission Act (“FTC Act”).  In Massachusetts, the state’s consumer protection act also can be employed when businesses engage in unfair or deceptive practices.

The Role of the Federal Trade Commission

The FTC Act established the Federal Trade Commission in 1914. Since then, the FTC has been responsible for protecting “both business and the public from anticompetitive behavior and unfair and deceptive acts and practices.”[26] Typically if a business is charged with “unfair and deceptive” practices, the FTC will investigate to determine if a violation of the commission’s rules occurred. However, only the FTC can bring a claim under the FTC Act.

Over the past two decades, the FTC has taken action several times to curb the deceptive claims and practices of the tanning industry. In August 1997, the FTC settled charges with California SunCare. The charges arose from the company’s assertion that, “moderate exposure to the ultraviolet radiation of the sun and in indoor tanning salons is not harmful.”[27] The FTC ordered California SunCare and its CEO to cease from making such health claims, and required the company “to have scientific substantiation for any claims about the health benefits of UV exposure.”[28] Despite the settlement by the FTC, tanning salons continued to disseminate false and misleading material.

In 2008, the Indoor Tanning Association, a prominent lobbying group that represents tanning facilities and suppliers, launched a nationwide campaign to depict indoor tanning as safe and healthy.[29] In January 2010, the Indoor Tanning Association settled with the FTC on charges of “making false health and safety claims” concerning tanning. The terms of the settlement required the Indoor Tanning Association to cease any further marketing campaigns premised on unsubstantiated medical claims.[30] In addition, the FTC required any future advertisements making health claims to contain disclosures on the risks of developing skin cancer. The FTC also published a consumer factsheet to warn consumer of potential risks.

Although these settlements were lauded as progress against the tanning industry, the FTC’s continued regulation of the tanning industry is relatively weak. In fact, many tanning salons continue to tout other benefits of UV rays on their website. Nonetheless, the FTC settlements are important litigation resources for consumer protection claims.

Massachusetts Consumer Protection Act

In 1967, the Massachusetts Consumer Protection Act (“Chapter 93A”) was enacted to declare unfair and deceptive acts of business unlawful.[31] The law is one of the broadest and most powerful consumer protection statutes in the country.[32] It created new consumer rights and procedures to enforce these rights.[33] The law encompasses any acts “in the conduct of any trade or business,” and includes: advertisements, offerings of sale, the sale, and distribution of services. The purpose of the law was to ensure that businesses properly disclosed information, and did not profit from unfair practices. Chapter 93A is often described as a “Little FTC Act” because it tracks the language of the FTC Act, however Chapter 93A permits consumers and businesses to pursue private remedies against violators —unlike the FTC Act, which only permits the FTC to bring claims.[34]

False advertisements are treated as deceptive acts under Chapter 93A.[35] The requirements for a deceptive act are not as stringent as other common law principles because courts have interpreted Chapter 93A to extend far beyond the scope of the common law principles of fraud and deceit.[36] For example, there is no requirement to prove the defendant’s intent under deception; proof that the plaintiff relied on the deceptive act is sufficient for a claim.[37] Additionally, Section 2 of Chapter 93A permits state courts to use the interpretations of the federal courts and the FTC to determine if a business practice is deceptive. This is beneficial for consumer advocates because recent case law in Massachusetts has confirmed that a violation of the FTC Act is a violation of Chapter 93A.[38]

Another benefit to consumer claims under Chapter 93A is that the law is receptive to class action lawsuits. Traditionally Rule 23 of the Massachusetts Rules of Civil Procedure (“Rule 23”) governs class action certification in Massachusetts. For class action consumer protection claims, however, Section 9(2) of Chapter 93A governs over the provisions of Rule 23.  As the case law in Massachusetts points out, Rule 23 has more rules and prerequisites than Chapter 93A, thus consumer protection claims are more likely to be certified in Massachusetts than a traditional class action claim in the state.[39]

Consumer Protection Case Law

While no tanning related consumer protection claim has taken place in Massachusetts, in 2008 the Third Circuit decided Nafar v. Hollywood Tanning Systems, Inc.[40] The case was heard on appeal after a district court judge certified a nationwide class of tanning customers. The lawsuit was primarily based on violation of the New Jersey Consumer Fraud Act, which is similar to Chapter 93A.[41] In Nafar, the plaintiffs alleged that Hollywood Tanning deceived and failed to warn consumers that exposure to UV rays would increase their risk of cancer.[42] After reviewing the district court’s decision, the Third Circuit vacated the class certification. The Third Circuit held that the district court erred because of several procedural issues: (1) the district court failed to conduct an adequate choice-of-law analysis; (2) failed to consider causation; and (3) did not determine if res judicata was applicable. However, there are several issues that would distinguish the Third Circuit’s ruling in Nafar to a potential case brought in Massachusetts.

First, Nafar is inapplicable in Massachusetts because the Third Circuit’s ruling is only persuasive in the region governed by the court. Massachusetts has its own case law concerning class action consumer fraud lawsuits. A more analogous case is Aspinall v. Philip Morris Companies, Inc., heard by the Supreme Judicial Court of Massachusetts in 2004.[43] The case focused on the “certification of a class of purchasers of “light” cigarettes.”[44] In their complaint the plaintiffs alleged, “that the marketing of Marlboro Lights as “light” cigarettes that deliver “lowered tar and nicotine” was deceptive under [Chapter 93A], entitling them to monetary damages.”[45] The primary issue in the case was whether the defendants caused actual harm to the plaintiffs. This was a complicated dilemma for the Court because each cigarette delivered different levels of nicotine and tar, depending on each smoker’s habits. This is a similar dilemma tanning plaintiffs would face because UV ray levels may differ across individuals. Nonetheless, the Court certified the class and determined that the purchase of a falsely advertised product constituted an “injury” under Chapter 93A.[46] Detractors warned that Aspinall would open the gates to consumer class action litigation due to the broad definition of injury, but the case did not have such a drastic effect in Massachusetts.[47] Instead the case is commonly cited in many consumer rights claims.

The Texas Attorney General’s Office brought lawsuits against Darque Tan in 2008[48] and Euro Tan in 2010[49] for violations of several state laws. In both cases the state sought an injunction against the vendors for their health based tanning advertisements.[50] The justification for the attorney general’s claim was the tanning salons’ dissemination of false and misleading advertisements to consumers. In the Euro Tan complaint, the state referenced the use of a website and colorful brochures to promote misleading health benefits of tanning. These health claims included the benefits of Vitamin D for those with autism, autoimmune illnesses, other cancers, and chronic pain.[51] Other health claims stated that tanning beds would lower blood pressure, decrease pre-menstrual syndrome symptoms, increase muscle strength and improve the immune system.[52] The suit was premised on violations of the Texas Health and Safety Code, which prohibits tanning salons from claiming health benefits, and the Texas Deceptive Trade Practices Act, which prohibits deceptive advertising —similar to Chapter 93A. Presently, the Euro Tan case is pending in court. However, after several years of litigation, the Darque Tan case was recently settled in March of 2013. In addition to paying monetary damages, the court entered an injunction to prevent Darque Tan from claiming any health benefits in future advertising campaigns.[53] Thus proving the potential efficacy, at least in a case brought by the state’s attorney general, of a consumer protection claim based on false and misleading tanning advertisements. However, there is no guarantee that the Massachusetts Attorney General Office will ever take up such a case.

The Case for Tanning Litigation in Massachusetts

In order to facilitate change in Massachusetts, litigation is recommended as a policy initiative. The purpose of such action is to limit consumer fraud based on the false and misleading health claims tanning salons continue to assert. Such action should be premised under the Massachusetts Consumer Protection Act, and ideally brought in state court. While individual plaintiffs can bring such a lawsuit, a class action lawsuit is recommended due to the influential nature of such cases. Although federal removal may arise under federal class action rules,[54] a state claim is possible if the class is confined to residents the state of Massachusetts. This would avoid the procedural issues such as class certification, diversity, amount in controversy, and choice of law, that arose in Nafar.

The next issue is to establish deceptive advertising. In this case, the advertisements at issue are those proclaiming the benefits of Vitamin D, the safety of indoor tanning, and dispelling associations with skin cancer. Although there is no definition of deceptive acts in Chapter 93A, prior FTC cases are used to define the term.[55] A class could rely upon the California SunCare or International Tanning Association FTC settlements to prove that such advertisements were deceptive because the health claims made by many Boston tanning salons are similar, if not identical, to those made by California SunCare and the International Tanning Association. Such deceptive advertisements would likely be violations of Chapter 93A. The fact that the FDA has not approved the use of tanning devices for any other purposes also may be used to prove deceptive advertisements.

Tanning salons may claim waivers and warning as a defense for these consumer protection claims. These waivers are now common at many tanning salons, and often attempt to eliminate consumer protection claims. However, tanning waivers or warnings are likely to be ineffective in Massachusetts for two reasons. In Feeney v. Dell, Inc., the Massachusetts Supreme Court invalidated a waiver located in the arbitration clause of a consumer contract.[56] The waiver attempted to eliminate a consumer’s right to bring a class action consumer protection claim. In its ruling, the court stated that such a waiver “is not enforceable because it is contrary to the fundamental public policy of the Commonwealth favoring consumer class actions” under Chapter 93A.[57] The Feeney ruling would not enforce consumer protection waivers in Massachusetts. Tanning salons may also claim they provided warnings to customers, on the health risks. However, even if a salon provides healthy warnings, a Massachusetts statute dictates that “[t]he liability of a tanning facility operator or the manufacturer of a tanning device shall not be affected by the giving of the warnings.”[58] The statute, in effect, eliminates health warnings as a defense. Thus, neither waivers nor warnings would serve as a proper defense for tanning salons in Massachusetts.

The last requirement of such a lawsuit is damages. This requires that the plaintiff show “that he or she has been ‘injured’ in the sense that there has been an invasion of a consumer’s legally protected interests.”[59] This requirement can be satisfied principally in two ways: (1) if the consumer developed cancer, or any other illness associated with tanning; or, (2) if a consumer paid for tanning services and sought to recover the price (e.g., misled due to false or fraudulent advertising).

One major difficulty in proving damages is causation. This is especially burdensome in damages for cancer because there are a variety of variables that may increase risk. For example, if the plaintiff were both an outdoor sunbather and indoor tanning salon user, the causation link would weaken between a particular tanning salon and the cancer claim.

Stronger arguments could be made for the price paid for tanning services if a consumer would not have sought such services “but for” the misleading advertisements. Even if the price of tanning services is the only remedy recovered, a plaintiff can recover reasonable attorney’s fees and treble damages if the violation was knowing and willful under Chapter 93A. While treble damages are difficult to prove, given the knowing and willful standard, recovery is feasible due to the tanning industry’s disregard of prior FTC rulings. If treble damages and attorney’s fee can be recovered, this would likely result in a substantial impact on tanning providers.


It is well documented that the incidence of skin cancer is rising in the United States, despite the fact that many other cancer rates are in decline. This is partly due to the misleading and false advertising tanning salons employ to improve their business earnings. These advertisements often trumpet false health benefits and the safety of their services, while attempting to dispel the proven association between indoor tanning and skin cancer. The FTC has ruled twice that such assertions are false, and has reprimanded the tanning industry for its deceptive acts. Nonetheless, such deceptive practices continue and are especially prevalent in Massachusetts.

In order to combat the misleading rhetoric, litigation is suggested as a possible public policy initiative. A similar campaign was undertaken against cigarette companies, and although the process was long and difficult, it ultimately helped to sway public opinion and public policy against tobacco use. Massachusetts is an ideal location for such action to take place. The state’s consumer protection act, Chapter 93A, is one of the broadest consumer protection statutes in the country. It also provides lenient procedures for class certification, the ideal lawsuit to effectuate change, and the state has relevant case law supporting large consumer protection lawsuits. Massachusetts’ law would also invalidate any waiver or warning that salons attempt to use as a defense. Most importantly, Chapter 93A contains damage provisions that would cause tremendous injury to the tanning industry if a suit were successful.

Massachusetts provides a unique venue for tanning litigation to occur, and if successful, it can effectuate tremendous change for consumers and greater public health for the state. Although a statewide ban on indoor tanning is the ideal solution, there is little evidence such an effort could easily be achieved. Litigation is a slow, expensive, and difficult process, but it remains a powerful tool that public health advocates should consider to ultimately address the tanning issue.


Exhibit 1: Sobella Salon Advertisement

 Tanning Litigation Exhibit 1 

Exhibit 2: The Tan Man Spa Facebook Update

Tanning Litigation Exhibit 2

Exhibit 3: The Tan Man Facebook Update

Tanning Litigation Exhibit 3


Robert A. Ciccia, Esq. is a graduate of Northeastern University School of Law (J.D.) and Tufts University School of Medicine (M.P.H). He is interested in public health litigation and healthcare delivery. While in law school Robert was a staff member of the Northeastern University Law Journal and interned at Millennium Pharmaceuticals, Public Health Advocacy Institute, the U.S. District Court in Boston with the Honorable George O’Toole, and the Miami-Dade State Attorney’s Office. 


[1] The author would like to thank Mark Gottlieb of the Public Health Advocacy Institute, and Marcia Boumil of the Tufts University School of Medicine for their input and continued support throughout the drafting of this article.

[2] False and Misleading Health Information Provided to Teens by the Indoor Tanning Industry: Investigative Report. 112th Cong. (2012) (U.S. House Energy and Commerce Committee).

[3] Fitiha El Ghissassi et al., on behalf of the WHO International Agency for Research on Cancer, Monograph Working Group, A Review of Human Carcinogens–Part D: Radiation, 10 The Lancet Oncology 751 (Aug. 2009), available at

[4]  Margaret R. Karagas et al., Use of Tanning Devices and Risk of Basal Cell and Squamous Cell Skin Cancers, 94 J. Nat’l Cancer Inst. 224 (2002).

[5] Kwon HT, Mayer JA, Walker KK, Yu H, Lewis EC, Belch GE. Promotion of frequent tanning sessions by indoor tanning facilities. 46 J Am Acad Dermatol 700 (2003).

[6] Rogers, HW, Weinstock, MA, Harris, AR, et al. Incidence estimate of nonmelanoma skin cancer in the United States, 146 (3)Arch Dermatol 283, 287 (2010).

[7] Ries LAG, Melbert D, Krapcho M, Stinchcomb DG, Howlader N, Horner MJ, et al. (eds). SEER cancer statistics review, 1945-2005. Bethesda, MD: National Cancer Institute.

[8] See Heckman, C. J., Manne, S. L., Kloss, J. D., Bass, S. B., Collins, B., & Lessin, S. R. Beliefs and intentions for skin protection and UV exposure in young adults. 35(6) American Journal of Health Behavior 699, 711 (2011).

[9] See Id.

[10] Mawn V.B., Fleischer Jr. A.B., A survey of attitudes, beliefs, and behavior regarding tanning bed use, sunbathing, and sunscreen use, 29 (6) Journal of the American Academy of Dermatology 959 (1993).

[11] Forster J.L., Lazovich D., Hickle A., Sorensen G., Demierre M., Compliance with restrictions on sale of indoor tanning sessions to youth in Minnesota and Massachusetts, 55 (6) Journal of the American Academy of Dermatology, 962 (2006).

[13] Exhibit 1: Sobella Salon Advertisement.

[14] Exhibit 2: The Tan Man Spa Facebook Update..

[15] See False and Misleading Health Information Provided to Teens by the Indoor Tanning Industry: Investigative Report. 112th Cong. (2012) (U.S. House Energy and Commerce Committee).

[16] Exhibit 3: The Tan Man Spa Facebook Update.

[17] 21 C.F.R. § 878.4635 (“An ultraviolet lamp for tanning is a device that is a lamp (including a fixture) intended to provide ultraviolet radiation to tan the skin.”).

[18] last accessed 3/18/14.

[19] Joel J. Hillhouse, Arthur W. Stair and Christine M. Adler, Predictors of sunbathing and sunscreen use in college undergraduates, 19(6) Journal of Behavioral Medicine 543-561 (2012).

[20] last accessed 3/18/14.

[21] Gary Mendese and Barbara A. Gilchrest, Selected Indoor Tanning Myths and Controversies, Shedding Light on Indoor Tanning 121-133 (2012).

[22] last accessed 3/18/14.

[25] Id.

[26] 1 Fed. Trade Comm’n. § 1:1 (2011).

[27] FTC Announcements of 1997, Federal Trade Commission.

[28] Id.

[29]Indoor Tanning Association Settles FTC Charges That It Deceived Consumers About Skin Cancer Risks From Tanning, Federal Trade Commission.

[30] Id.

[31] August Horvath, John Villafranco, Stephen Calkins, Consumer Protection Law Developments 468 (2009).

[32] See Matthew S. Furman, How Chapter 93a Consumers Lost Their Day in Court: One Legislative Option to Level the Playing Field, 15 Suffolk J. Trial & App. Advoc. 107 (2010).

[33] August Horvath, John Villafranco, Stephen Calkins, Consumer Protection Law Developments 468 (2009).

[34] Justin J. Hakala, Follow-On State Actions Based on the FTC’s Enforcement of Section 5, 1, FN 3 (2008). available at:

[35] 52 Mass. Prac., Law of Chapter 93A § 4.6

[36] See August Horvath, John Villafranco, Stephen Calkins, Consumer Protection Law Developments 468, 469 FN 1019 (2009).

[37] Id.

[38] August Horvath, John Villafranco, Stephen Calkins, Consumer Protection Law Developments 289 (2011).

[39] 52 Mass. Prac., Law of Chapter 93A § 5.10.

[40] Nafar v. Hollywood Tanning Sys., Inc., 339 F. App’x 216 (3d Cir. 2009).

[41] Sean Wajert, Third Circuit Vacates Class Certification In Consumer Fraud Tanning Case, Mass Tort Defense. available at:

[42] Nafar v. Hollywood Tanning Sys., Inc., 339 F. App’x 216, 224 (3d Cir. 2009).

[43] Aspinall v. Philip Morris Cos., 442 Mass. 381, 385 (2004).

[44] Donald J. Savery, Brandon L. Bigelow, Aspinall One Year Later: Making Sense of “Similar Injury” in Claims Under Chapter 93a, Section 9, Boston B.J., November/December 2005, at 10.

[45] State High Court Ruling Departs from Tort Principles in Consumer Protection Case, 2005 WL 310059 (4th Cir. Feb. 10, 2005).

[46] Donald J. Savery, Brandon L. Bigelow, Aspinall One Year Later: Making Sense of “Similar Injury” in Claims Under Chapter 93a, Section 9, Boston B.J., November/December 2005, at 10.

[47] Id.

[48] Attorney General Abbott Resolves Health Claims, Marketing Issues with Tanning Salon Operators, Attorney General of Texas,

[49] Plaintiff’s Original Petition and Application for Permanent Injunction, State of Texas v Ryan,

[50] Id.

[51] Attorney General Abbott Charges Euro Tan of San Antonio With Violating Health and Safety Laws. Attorney General of Texas,

[52] Id.

[53] Id.

[54] Congress passed the Class Action Fairness Act of 2005, in an attempt to curtail the role of state courts in large class action cases by expanding federal court jurisdiction over certain types of class action cases. 28 U.S.C. §§1332(d), 1453, and 1711–1715. In essence, the law eases federal class requirements with regards to numerosity, diversity, and amount in controversy. William Rubenstein, Understanding the Class Action Fairness Act of 2005, UCLA Program on Class Actions. 2005 at 5. These changes thereby allow class action defendants to remove a case from state to federal court, a venue where judges may be less likely to certify nationwide classes than state court judges. Id. at 15.

[55] 52 Mass. Prac., Law of Chapter 93A § 4.5.

[56] Feeney v. Dell Inc., 454 Mass. 192 (2009).

[57] Feeney v. Dell Inc., 454 Mass. 192, 193 (2009).

[58] Mass. Gen. Laws Ann. ch. 111, § 212 (West).

[59] 52 Mass. Prac., Law of Chapter 93A § 4.18.


BIDMC and the Boston Marathon Bombings

By Jamie Katz, Sr. VP and General Counsel, BIDMC

The first bomb went off at 2:49 pm on April 15, 2013, the second about twelve seconds later. The BIDMC Emergency Department received notice of the bombings within two minutes and the first patient arrived eleven minutes later. Within a short time, more than fifty BIDMC clinicians and staff came back to the hospital voluntarily to help out in a variety of departments. The first BIDMC patient went into surgery within forty seven minutes of the initial blast. Of the twenty four patients that BIDMC treated that day, fourteen went through the Operating Room by the end of the evening. Ultimately sixteen patients citywide received amputations, some of them double.

BIDMC began implementing its Emergency Operations plan within minutes after getting word of the blasts. Emergency Department staff erected a decontamination tent for the first patient who arrived in case any hazards were detected and all of the victims coming into the hospital received Geiger counter scans—staff knew nothing about the nature and scope of the bombings, about the attackers, or whether additional attacks might occur.

Within fifteen minutes of getting word of the bombings, staff set up a command center to allow BIDMC personnel to communicate clearly and quickly with hospital staff, as well as with federal, state, and city agencies. The command center gave us a better understanding of what was happening outside the hospital walls while also making sure we could keep track of what was going on inside.

At the outset, our clinical leaders had a series of tasks. They had to figure out how to manage the ED patients who were already there when the bombing victims started to arrive. Each one of our physicians, trainees, nurses, and other staff had to receive appropriate instructions on their deployment in the most effective manner. Clinicians had to ensure that there were sufficient Operating Room capacity and staff to support the Emergency Department, ORs, critical care units and clinical support services. Most importantly, the clinicians had to evaluate, identify, and transport the most seriously injured victims to ORs or Intensive Care Units as quickly as possible.

The vast majority of the 264 victims transported to hospitals that day went to the six Boston-area Level I Trauma centers. While three victims died at the scene of the bombing, remarkably, none of those who survived transport to hospitals did. In the end, while far too many were hurt far too badly, the situation could have resulted in much worse damage. Boston area hospitals, EMS, Public Health and law enforcement had practiced disaster drills so many people who responded were prepared for an emergency. Also, the bombs went off as shifts were changing in hospitals, meaning many people were still around to help. And ironically, the wars in Iraq and Afghanistan have yielded something positive back home—we know much better how to handle damage from bomb blasts.

Once the bombing victims became patients at BIDMC and other Boston area hospitals, all of the hospitals faced extraordinary circumstances and events. Many of the injuries, particularly the amputations, were complex and involved multiple system interventions within the patients. These were, after all, not planned and expected surgeries, but surgeries conducted on jagged open wounds, full of shrapnel, dirt and debris, and severely hemorrhaging, damaged limbs.

BIDMC caregivers also quickly recognized the deeper wounds that did not show on the surface. On the first night after the bombings, one of the surgeons in charge was rounding on the patients and stopped to talk with a young woman. He asked her how she was doing. “Okay here,” she said, pointing to her body. “Not so good here,” she said, pointing to her head. At first, he thought she was referring to a head wound. He quickly recognized, though, that she was referring to her own psychological state.

From that point on, our clinical leadership put a Mass Casualty service in place. Surgeons from different specialties joined with chaplains, social workers, physical therapists, occupational therapists, and psychiatric clinicians to see patients. These teams visited each patient daily to evaluate his or her condition and determine the next steps. This service follows them through their outpatient care.

Our clinicians worked hard to tend to the entire patient holistically and provide all of the dimensions of the care that our patients needed. For some patients, that meant shielding them from the large number of well-wishers that came to the hospital. A day or two after the bombings, Gov. Patrick came through the hospital in a welcome show of support for the victims and our caregivers. At the door to one of our patient’s room, the Governor appropriately asked one of our nurses if the patient in the room would be willing to talk with him. The nurse went in and talked to the patient, then came out and told the Governor that the patient would be happy to see him. As Gov. Patrick moved past, his entourage began to follow. The nurse put up her arms and said, “She said she’s willing to see the Governor.” The entourage stayed outside.

Even as our clinicians dealt with a surge in patients, our communications staff dealt with a flood of press inquiries and demands. We received well over a thousand inquiries from local newspapers to an Australian radio station, some seeking information and others seeking access to clinicians or victims. Our communications staff struggled to maintain control of the press—where individual reporters knew, or identified, BIDMC physicians, they contacted them directly, sometimes accomplishing an end-run around our communications staff. Once our Emergency Department chief appeared live on a 7 a.m. CBS news show, the requests for interviews escalated. This flood of press requests came in through phone calls, pagers, e-mail, text requests, and social media. Our communications department developed a triage system to handle the influx, but even that system did little to unburden our staff.

The press demands evolved and mutated daily. Some families had absolutely no interest in publicity and, over time, kept a tight cocoon around their loved ones in the hospital. Other individuals and families wanted different kinds of publicity, for different reasons. Those individuals and families worked with our communications staff in some instances, while others, worked with reporters they selected. They were, of course, perfectly within their rights to work with members of the press, but it made the work of our staff more complicated as they tried to sift through which patients wanted what, and how to keep appropriate information private.Reporters, of course, did not always follow the guidelines established for them. Some reporters got in and went from door to door or office to office, seeking people to talk to. One national network called to request access for a reporter to speak to victims in the hospital. Our communications people explained that no reporters were allowed to meet with victims yet. A short time after that, one of the network’s reporters was escorted out of the building after having gotten close to entering a victim’s room.

Meanwhile, well meaning movie stars, television celebrities, motivational speakers, politicians, and other dignitaries requested visits to the victims in the hospital. In almost all cases, those requests were turned down at the request of patients.

Beyond the traditional press, social media proved a significant benefit for BIDMC. We were able to use our website and Facebook pages to let patients know that the hospital was open amidst the difficulties following the bombings. We were able to tell people how to find out about appointments on Facebook, or to give warnings of parking problems or other issues on our website.

In the first few days after the bombings, BIDMC shared a common experience with other Boston hospitals as we all struggled to provide appropriate care to patients and families and to manage the press. On Thursday, April 18, however, BIDMC began a journey down a different path.

On that Thursday night, the first suspect, Tamarlan Tsarnaev, was transported to BIDMC where he was declared dead shortly after arriving. On Friday night, the second suspect, Dzohkar Tsarnaev, was brought to BIDMC following his capture. His arrival changed the landscape dramatically.

Immediately upon the Tsarnaev’s arrival, security concerns became paramount. Would anyone take action against the hospital while he was there, or try to get him out? For BIDMC, the questions were more complicated because we have two campuses. Tsarnaev was on the West Campus. If we moved most of our security to the West Campus, did we endanger the East? Meanwhile, we had the families of victims still in the hospital—we did not expect they would all be comfortable with the alleged bomber being treated at the hospital. Very quickly, BIDMC security personnel worked with the FBI, ATF, State Police, Boston Police, Watertown, and Transit Police to provide security at multiple sites. Happily, within a couple of days of Tsarnaev’s arrival, we determined we could loosen security at most sites, except for the building where he was treated.

The arrival of Tsarnaev also meant that some of the impacts we had seen earlier in the week became even more pronounced. The press demands went back up. And the full impact of social media quickly became obvious.
The press worked hard to get information not just about the victims from that point on, but about Tsarnaev. Our security personnel regularly cleared press photographers from the roofs of several parking garages, where photographers with telephoto lenses sought to get pictures of Tsarnaev while he lay in the hospital. And one newspaper offered a BIDMC employee $5,000 for a picture of Tsarnaev in the hospital.

Pictures, indeed, posed the first major test for me. By Saturday, April 20, when I went into the hospital, pictures of the two suspects in or around the hospital had started showing up on the Internet. Because the release of the photos represented potential breaches of privacy as well as violations of hospital policy, we had to try to track down the origin of the photos in the face of our enormous clinical and administrative demands.

The first photo that came to our attention was of the first suspect, Tamarlan Tsarnaev, after he had died in the hospital. It sped around the web and supposedly was put on the front page of a small newspaper. No major newspaper would run it, because it was never corroborated. The photo was taken in a room within the hospital—but one that, as soon as Tamarlan Tsarnaev was brought in, went under the full control of federal authorities. Federal agents and Boston Police were in the room and no hospital personnel were allowed in the room without express authorization. Given the characteristics of the photo and the picture it conveyed, it quickly became clear to both federal authorities and BIDMC leadership that the photo was taken on a cell phone by someone in law enforcement.
A second cell phone photo circulated on the web, but we quickly determined that it showed the second suspect, the younger Tsarnaev, in an ambulance. The photo may have exhibited bad taste and bad judgment, but the photo did not come from within BIDMC so we did not pursue the photographer.

The last photograph became the most problematic. It depicted the younger Tsarnaev within the hospital, after his surgeries on his first night in the hospital. Again, the photo’s resolution suggested it was a cell phone photo. In this case, both law enforcement and hospital personnel were present where the photo was taken, on and off for a period. The area was controlled by the federal agents but numerous BIDMC clinicians had come through the unit in the course of providing care to Tsarnaev. As a result, I interviewed those hospital personnel who had been involved when it appeared the photo was taken. Federal agents also conducted some inquiries. In the end, the federal authorities believed that the photo was taken by a hospital employee, and we believe it was taken by a member of law enforcement—in the end, we will never know whose phone it came from.

Just as the press and photos became more problematic, the impact of social media became far more profound. Once Tsarnaev was in the hospital, BIDMC staff could not release any information about him, including his medical condition, without consulting with federal officials. As we started receiving endless press and public inquiries about his status, we conferred with federal officials, and the FBI subsequently sent out tweets on the FBI/DOJ Twitter account that announced Tsarnaev’s medical condition.

Meanwhile, Facebook became a forum for some of our clinicians to vent. Upon Tsarnaev’s arrival in the ED at BIDMC, some of those treating him or in close proximity to him became quite unhappy about his presence. A number of clinicians made derogatory statements about the patient and BIDMC’s role in treating him, with some of their co-workers indicating “Likes” of those posts and other BIDMC readers becoming very unhappy, arguing that BIDMC caregivers had an obligation to treat all patients to the best of their ability. Certain managers brought Facebook posts to my attention, feeling strongly that the posts were disruptive to their unit and inappropriate for BIDMC employees. We did review a number of Facebook pages, but only for inappropriately revealed private information about Tsarnaev or other patients. While I and another lawyer reviewed some tasteless and offensive posts, as long as they consisted solely of opinions and did not inappropriately reveal private information, we took no action against the writers.

The most dramatic social media event occurred a few days after Tsarnaev came into the hospital. I received a call late one night—the BIDMC website had been flooded by messages about Tsarnaev. The messages, though, were most unexpected.

“God is with you Djokhar, we pray for you . . . We stand for Justice”

“Praying for Dzhokahar, like for my brother. Pliiz take care of him! Czhokhar, we all r with you. . . “

“If we write to him will you deliver the letters?”


“dzhokar is innocent . . please take good care of him. He is a great man dzhokar we love you . . .”

“Sending all my love to Dzhokhar and his family.”

The sudden influx of supporting e-mails made it clear that there was a concerted effort to overwhelm our website with these messages. We had messages about the victims falling next to messages about freeing Tsarnaev. For the next few days, we had to regularly spend time and effort cleaning the site of similar messages. Ultimately a court, not BIDMC, will determine Tsarnaev’s guilt or innocence. As distasteful as some of the messages were, they certainly might fit somewhere in cyberspace—just not in an attack aimed at taking down our website or making it wholly offensive to many of our Facebook users, including employees and patients.

We are now six months past the bombings. We have tried to absorb some of the lessons from the experience. Preparation, training, and drilling to prepare for a disaster are critical. Making sure our leaders and teams communicate, and work smoothly together are also important—which also requires that people know, very quickly, what their roles are and will be. The importance of clear communications both internally and with outside agencies cannot be overstated. And neither can the risk from camera phones.

There is another cautionary note to add. The “Boston Strong” mantra certainly has a strong foundation based on how the first responders, healthcare providers, law enforcement community all reacted to the bombings, coupled with the enormous amount of public support the victims received. That phrase, however, while it fits what happened in the post-bombing period, should not mask some on-going difficulties.

In particular, we should not fool ourselves into believing that all is well for many of those most affected by the bombings. Some of our caregivers are still struggling. They lived through what was comparable to a war zone. Some of them still feel guilt, feeling they should have done more. Some of them are still haunted by the extent of the injuries and damage they saw. And some of them struggle with the care they provided for Dzohkar Tsarnaev, feeling they did the right thing professionally but fearing that many of their friends and neighbors would judge them harshly for doing what they did. And many of the victims, particularly those with amputations, still have long, difficult recovery periods ahead of them. Their worlds changed in an instant and they now face life with pain, difficulties, and sometimes financial burdens that they never imagined. Their medical care, while dramatically better than in times past, is still fragmented and some of them will bounce from doctor’s office to hospital to physical therapist to mental health provider, with no single entity providing care coordination. So while we can all use Boston Strong as a symbol of pride, the slogan should not become a burden or a standard that caregivers or victims feel they have to live up to.

Finally, I will leave you with one lasting image from last spring. On the Saturday just after Tsarnaev became a patient at BIDMC, I went to the hospital and walked to the building where he was being treated for a meeting. As I approached the building, I saw a group of eight or so people to my right who were entering an adjacent building. Something about the group seemed out of the ordinary, so I took a second, longer look. The group of men all wore red tee shirts that read Semper Fi Fund. Each one had lost a limb—some arms, some legs. They were all veterans of Iraq and Afghanistan, on their way to visit some of the victims in our hospital to support them and give them tangible evidence that a good life could follow even after an amputation.

With that image still fresh in my mind, I went through multiple gauntlets of security, up to the SICU where Tsarnaev was being treated. When I entered that area, a number of physicians and nurses huddled around him, talking and adjusting things on and around him. The clinicians treated him while they were surrounded by federal agents and police officers.

I was struck by the simultaneous presence, in our hospital, of men who fought and suffered grievous injuries from hostile soldiers and IEDs overseas in order to protect Americans from terrorist activities, as well as a suspected terrorist who was ultimately charged with inflicting similar damage on the victims in our hospital. And despite the enormity of the charges against Tsarnaev, and the carnage he may have participated in, our doctors and nurses did what they did best and what they were supposed to do—they treated him to the best of their ability, giving the same kind of care they would have given to anyone.

Boston, and too many people, lived through a wrenching, difficult, tragic event, but what our caregivers did during that time—for victims and the second suspect alike—spoke to our deep, enduring commitment to care for our patients first, whoever they are, wherever they come from. The emotions inspired by the Marathon bombings were undoubtedly powerful and complicated for many individuals. What BIDMC accomplished is not so complicated—we took care of people, very disparate people, with exemplary care under very difficult circumstances.


Jamie W. Katz is the General Counsel and a Senior Vice President for Beth Israel Deaconess Medical Center in Boston, Massachusetts.  He had previously served as the Interim Chief Compliance Officer and Deputy General Counsel at BIDMC.  Before joining BIDMC, Mr. Katz was the General Counsel for the Commonwealth Health Insurance Connector Authority between 2006 (the inception of the Connector Authority) and October, 2010.  In that role, Mr. Katz was the chief legal adviser to the Connector Authority, the first state entity dedicated to implementing healthcare reform.  Prior to joining the Connector, Mr. Katz served as the Chief of the Public Charities Division of the Attorney General’s Office.  Mr. Katz also served as an Assistant Attorney General in the Attorney General’s Administrative Law Division and as an enforcement attorney for the U.S. Environmental Protection Agency.  He also was an associate at Hale & Dorr and a founding partner of a small Boston law firm.  Mr. Katz has extensive healthcare, insurance, trial, and appellate experience, and he has acted as a mediator and arbitrator in numerous matters.  Mr. Katz has presented at numerous national and local conferences and seminars.  He graduated from Harvard College and the University of Virginia Law School.  He has written professional articles in the areas of healthcare, charities, environmental law, and disabilities law.  Mr. Katz is also the author of numerous non-fiction pieces published in newspapers and magazines as well as two novels published by major publishers, Dead Low Tide (finalist for a Shamus Best First Mystery award) and A Summer for Dying.

The Bay State Boondoggle During a Time of Reform

By Amy Kaufman

On June 13, 2013, Senators Tom Coburn (R-OK) and Claire McCaskill (D-MO) sent letters to more than fifty senators urging them to support legislation to repeal Section 3141 of the Affordable Care Act (ACA). Under Section 3141, budget neutrality adjustments made to the Medicare hospital wage index based on the “rural floor” must be applied on a national, instead of a state-specific, basis. Established under the Balanced Budget Act of 1997 (BBA), the rural floor requires that the wage index for a hospital in an urban area of a State not be less than the wage index determined for that State’s rural area. The Hospital Payment Fairness Act of 2013, which Senators Coburn and McCaskill introduced in January, would restore the application of the “rural floor” adjustment to one that is state-specific.  State hospital associations have also called for the repeal of Section 3141. Most recently, twenty state hospital associations, along with the Rural Hospital Association, wrote a letter to President Barack Obama claiming that this provision creates an unacceptable windfall for Massachusetts hospitals at the expense of hospitals in other states and requested a reversal in policy.

The debate about the rural floor is not new. Rather, the discussion spawns from a long history of legislative action that has attempted to reform the broader hospital wage index adjustment under the Medicare inpatient prospective payment system (IPPS). The Secretary of the Department of Health and Human Services (HHS), the Medicare Payment Advisory Commission (MedPAC), and the Institute of Medicine (IOM), among others, have weighed in on the issue and, while many agree that change is necessary, few can confidently advocate for a specific plan for reform. This article examines how the debate about the rural floor, particularly about the application of budget neutrality, has progressed and has shifted over time, and predicts how Congress might address the issue, if at all, in the near future.

A.      History of the Rural Floor

The purpose of the hospital wage index under the IPPS is to adjust the IPPS standardized payment to reflect variations in wage levels in different labor market areas. This system is intended to help “hospitals which are disadvantaged by their current geographic classification because they compete with hospitals that are located in the geographic area to which they seek to be reclassified.”[i] Geographic classification was created under section 1886(d)(1) of the Social Security Act (the Act) (42 U.S.C. 1395ww(d)).

Section 4410(a) of the BBA provides that, for discharges on or after October 1, 1997, the area wage index applicable to any hospital that is located in an urban area of a State may not be less than the area wage index applicable to hospitals located in rural areas in that State.[ii] This provision is referred to as the “rural floor.” Section 4410(b) of the BBA established a budget neutrality requirement by providing that the Secretary shall “adjust the area wage index referred to in subsection (a) for hospitals not described in such subsection in a manner which assures that the aggregate payments under section 1886(d) of the Social Security Act in a fiscal year for the operating costs of inpatient hospital services are not greater or less than those which would have been made in the year if this section did not apply.”[iii] The Secretary initially applied this budget neutrality requirement on a nationwide basis. As a result, rural hospitals and other urban hospitals that do not benefit from their state’s rural floor received reduced wage index adjustments.

In the FY 2009 IPPS Proposed Rule, the Centers for Medicare and Medicaid Services (CMS) proposed (and later finalized its proposal) to apply the budget neutrality requirement on a state-by-state basis and, as such, redistribute wage index adjustments within the borders of each state.[iv] CMS noted that the rural floor benefits a minority of states and negatively impacts a majority of states—primarily rural ones– when budget neutrality is applied on a national scale.[v]  Moreover, CMS reasoned that since one purpose of the wage index is to help hospitals in the same geographic area to compete, it seemed appropriate to make budget neutrality state specific. Under this new policy, hospitals in states without a rural floor wage index would no longer be negatively affected by the budget neutrality adjustment.[vi] At the same time, hospitals in states with a rural floor would in essence be responsible for funding the rural floor adjustment within the borders of their own state.

CMS anticipated that states with the majority of their hospitals in urban settings would be disadvantaged by this this new policy and that states with few urban hospitals would benefit.[vii] In states such as Connecticut and California, for example, CMS expected adjustments to go from 2.1 and .7 under the national adjustment status quo to -2.2 and -.8, respectively. In Wisconsin, currently one of the biggest proponents of returning to the state-specific system, CMS expected the adjustment to remain steady at -.1.[viii] Surprisingly, CMS expected the adjustment for Massachusetts, the state that is now being accused of reaping benefits from the application of a national adjustment, to increase from -.2 to .3.[ix] But, as explained below, that was before Nantucket Cottage Hospital converted from  a critical access hospital (CAH) to an IPPS facility, which dramatically changed the circumstances in the Commonwealth.

The ACA restored the budget neutrality adjustment to a uniform, national adjustment, beginning in FY 2011. During the Senate Finance Committee’s mark-up of the Affordable Care Act in December 2009, Senators Robert Menendez (D-NJ) and John Kerry (D-MA) proposed to amend CMS’s new application of state-specific budget neutrality and return to the previous , national policy.[x] According to a letter sent by the Massachusetts delegation to President Obama on January 31, 2012, the American Hospital Association urged House Speaker Nancy Pelosi and Majority Leader Harry Reid to keep in place the Kerry-Menendez amendment.[xi] Moreover, none of the more than 1,000 amendments offered during the markup period sought to stop the Kerry-Menendez amendment from being passed.[xii] As such, the amendment passed both the House and the Senate and was signed into law as Section 3141 of ACA on March 23, 2010.

B.       Lobbying for Change

The application of the national rural floor budget neutrality adjustment has been the topic of heated debate since CMS issued its first set of regulations implementing Section 3141 in July 2011. Much of the controversy has centered on the fact that Massachusetts hospitals have benefited greatly from returning to the pre-2009 policy, collectively earning between a $275 million and $367 million annual bonus as a result of the national adjustment.[xiii] While hospitals in Alaska, California, Colorado, Connecticut, New Hampshire, and New Jersey have also benefited from the new policy, Massachusetts has been by far the largest beneficiary of the policy (California, the second largest recipient, received half as much as Bay State).[xiv]  

Given that CMS had expected Massachusetts to benefit from the earlier shift from the national application of budget neutrality to the state-specific application in 2008, it is perhaps surprising that the state would be the biggest winner of all when the policy was reversed only a few years later.   A seemingly minor change in circumstances, however, caused this major shift to occur.

Nantucket Cottage Hospital, a fifteen-bed hospital located in Nantucket, Massachusetts that serves approximately 150 Medicare patients each year, was previously classified as a critical access hospital (CAH) (a provider that is paid based on reasonable costs, rather than on the IPPS system). In October 2011, the hospital obtained IPPS status (becoming the only rural hospital In Massachusetts with IPPS status) and, as such, “triggered” the rural floor exception for urban hospitals in the state of Massachusetts.[xv] Because wages at Nantucket Cottage Hospital are high (due to its remote location and high cost of living), the inclusion of Nantucket in the IPPS resulted in a boost in wages for urban hospitals in the Commonwealth. Due to the national adjustment in place under the ACA, hospitals across the nation, rather than only Massachusetts hospitals, footed this bill.

In response to the Massachusetts windfall, state hospital associations, primarily from states with more rural areas, have lobbied for change. For example, on January 18, 2012, a group of state hospital associations from around the country asked the Obama administration to examine the rural floor provision, alleging that this provision would allow Massachusetts hospitals to earn an additional $275 million or more per year in Medicare reimbursements. According to that letter, the change is “unfairly favoring one state’s hospitals and Medicare beneficiaries to the detriment of others.”[xvi] The letter also stated that:

If left uncorrected, hospitals in 49 states will experience reduced funding of more than $3.5 billion over the next ten years as a direct result of this manipulation of Medicare’s hospital wage index.  Hospitals nationwide are already struggling with reduced government payments and the potential for cuts through the federal deficient reduction discussions and health care reform. Scarce Medicare funding should reward value and efficiency in health care, not be diverted based on an artful manipulation of obscure payment formulas.[xvii]

On June 25, 2012, the Wisconsin Hospital Association sent a letter to Acting Administrator of CMS Marilynn Tavenner opposing the “continued application of a nationwide rural floor budget neutrality adjustment….”[xviii] The association asserted that hospitals in many states lose significant money to offset the Medicare payments in Massachusetts and requested that CMS implement wage index provisions in an equitable manner in FY 2013. The association highlighted that the Agency itself had expressed concerns about this issue in the CY 2012 Outpatient Prospective Payment System (OPPS) final rule (CMS-1525-FC), when it stated that “[i]n recent years, we have become concerned that hospitals converting their status significantly inflate wage indices across a State….Our concern is that the manipulation of the rural floor is of sufficient magnitude that it requires all hospitals wage indices to be reduced.” [xix]

On January 16, 2013, twenty state hospital associations, along with the National Rural Hospital Association, wrote a letter to President Obama, requesting that he include language in his FY 2014 budget to address Section 3141.[xx] Former administrator of CMS Donald Berwick is quoted therein as stating that “the entire way the payment…has become so complex and so susceptible to gaming and manipulation…what Massachusetts gets comes from everybody else.” [xxi] This letter brought the debate about the rural floor back to the national stage.

A select group of congressmen also became involved in this discussion. First and foremost, former senator John Kerry has continuously defended the national application of the budget neutrality adjustment and the fact that Massachusetts is one of the beneficiaries. In a letter dated January 31, 2012, Senator Kerry and the rest of the Massachusetts delegation urged President Obama to ignore requests from state hospital associations to revert back to the state-specific adjustment.[xxii] They explained that:

rural floor budget neutrality has historically been applied at the national level, just like all other Medicare budget neutrality provisions. Near the end of the Bush Administration in 2008, [CMS] for the first time, in unprecedented rule-making, reversed long standing policy and changed rural floor budget neutrality to apply on a within-state basis. It meant that though all other budget neutral provisions in the Medicare program would continue to be on a national basis, the rural floor would be singled out for a different approach. The rule conflicted with statutory intent, destabilized the wage index, and produced inequity among providers. It was, in effect, a manipulation of long standing Medicare reimbursement policy.[xxiii]

The delegation also adamantly asserted that there was no manipulation by the Commonwealth or its hospitals, and pointed out that nine of twenty-seven state associations that had signed onto a letter urging President Obama to support the state-specific adjustment had in fact lobbied against changing to the state-specific adjustment at an earlier time.[xxiv]

Senator Coburn is also very much involved in this discussion. During a U.S. Senate Finance Committee Hearing on the President’s Budget for FY 2013, on February 15, 2012, he asked Secretary Kathleen Sebelius why she permitted the “nice little trick that enhances [reimbursement for] Massachusetts to the tune of $3.5 billion over the next ten years at the expense of 49 other states….” [xxv] He later explained that he was most concerned about HHS’s decision to grant IPPS status to Nantucket Cottage Hospital since that move ultimately triggered the significant shift in reimbursement dollars around the country.

Earlier this year, Senator Coburn and Senator McCaskill introduced the Hospital Payment Fairness Act of 2013 (S.183), which would sunset section 3141 of the ACA. In a statement about the bill, Senator Coburn said that “[t]his policy is effectively a payment earmark inserted in a law without the American people’s knowledge or consent. No state should have a special exemption while others bear the costs for a provision designed to advance a special interest.”[xxvi] The bill has been referred to the Senate Finance Committee for consideration and, as of the date of this publication, the bill had sixteen Republican and nine Democratic co-sponsors. Although the senators are adamantly seeking additional support, it appears unlikely that the bill will move beyond the committee anytime soon.   

C.      The Bigger Picture: Wage Index Reform

The debate about the rural floor adjustment is only a narrow piece of the ongoing discussion about more comprehensive wage index reform. Congress began a review of the Medicare wage index system through Section 106(b)(1) of the Medicare Improvements and Extension Act, Division B of the Tax Relief and Health Care Act of 2006.[xxvii] This act required MedPAC to submit to Congress a report describing the wage index system applied in the IPPS and any alternatives methods for computing the wage index. MedPAC set forth its recommendations for reforming the wage index in its June 2007 report titled “Report to Congress: Promoting Greater Efficiency in Medicare.” The Report recommended the creation of a new hospital compensation index that:

  • uses wage data from all employers and industry-specific occupational weights;
  • is adjusted for geographic differences in the ratio of benefits to wages;
  • is adjusted at the county level and smooth large differences between counties; and
  • is implemented so that the large changes in wage index values are phased in over a transition period.[xxviii]

In addition, the Institute of Medicine (IOM) issued a report in 2011 that called for a new system based on the Bureau of Labor Statistics data “with a method for smoothing differences in wage indexes across adjacent payment areas. This new system “is intended to replace the system of geographic reclassifications that is currently in place.”[xxix]

The Secretary of HHS released its own “Report to Congress: Plan to Reform the Medicare Wage Index,” as required by section 3137(b) of the ACA, on April 11, 2012.[xxx] Section 3137(b) requires the Secretary’s report to include a plan to reform the Medicare wage index applied under section 1886(6) of the Social Security Act relating to the IPPS. Congress directed the Secretary to consider the goals that MedPAC described in its 2007 Report to Congress and to consult with relevant affected parties when it developed its plan.

The Secretary’s report analyzes recent efforts to reform the wage index system and describes the concept of a Community Based Wage Index (CBWI), which “takes into account hospital hiring patterns in calculating the wage index by using commuting data to establish a labor market area and wage index for each hospital (as opposed to labor market areas).” The CBWI would focus more on individual hospitals and is intended to create a system that is more accurate and less distorted.[xxxi]  The report also notes the pros and cons of transitioning to this type of system.

D.       Conclusion

At this time, it is not clear whether Congress will resolve the debate about the wage index this year. It only appears unlikely that the Hospital Payment Fairness Act will be the vehicle of choice.  Perhaps the introduction of a bill in the House of Representatives could be the next best move for proponents of the repeal of Section 3141. Until a resolution is reached, however, regardless of who makes the next move in the debate, this issue will continue to have a significant impact on hospital reimbursement nationwide.


Amy E. Kaufman represents clients in the health care industry on a wide range of fraud and abuse, regulatory, and reimbursement matters. She has in-depth experience advising clients on compliance with federal and state fraud and abuse laws, including the Stark law and Anti-kickback Statute, licensing matters, and pharmacy regulations.

Ms. Kaufman also counsels private equity clients on acquisitions of health care providers and suppliers. For instance, she assists clients by identifying strategic ways to structure acquisitions, conducting due diligence, drafting regulatory sections of purchase agreements, and keeping federal and state agencies informed of acquisitions as required by law. 


[i]  Medicare Program; Proposed Changes to the Hospital Inpatient Prospective Payment Systems and FY 2009 Rates; 73 Fed. Reg. 23528, 23618 (April 30, 2008).

[ii]  Balanced Budget Act of 1997, Pub. L. No. 105-33, §4410(a), 111 Stat. 251 (1997).

[iii] Id. at §4410(b).

[iv] 73 Fed. Reg. 23620.

[v] Id.

[vi] Id.

[vii] Id.

[viii] Id. at 23621.

[ix] Id. at 23621.

[x] See Letter from Mass. Delegation to President Barack Obama (Jan. 31, 2012) (on file with author), available at

[xi] Id.

[xii] See id.

[xiii] See Overly, Jeff, “Sens. Aim to Curb Medicare ‘Earmarks’ for Mass. Hospitals,” Law360 (Jan. 31, 2013), available at

[xiv] Cheung-Larivee, Karen, “Mass. to Win $275M through Medicare Loophole, States Outraged,” Fierce Healthcare (Aug. 4, 2011), available at

[xv] Letter from MedPAC to Donald M. Berwick, M.D., Jan. 17, 2011 (on file with author), available at

[xvi] Letter from State Hospital Assn’s to President Barack Obama, Jan. 18, 2012 (on file with author), available at

[xvii]  Id.

[xviii] Letter from Wis. Hospital Assn., Inc. to Acting CMS Administrator Marilyn Tavenner  (June 25, 2012) (on file with author), available at

[xix] Id.

[xx] Letter from State Hospital Assn’s to President Barack Obama (Jan. 16, 2013) (on file with author).

[xxi] Id.

[xxii] Letter from Mass. Delegation to the President, Jan. 31, 2012 (on file with author), available at

[xxiii] Id.

[xxiv] Id.

[xxv] The President’s Budget for 2013: Hearing Before the Committee on Finance, United State Senate, 112th Cong. (2012),


[xxvii] Tax Relief and Health Care Act of 2006, Pub. L. 109-432, §106(b)(1) Div. B, 122 Stat. 2922 (2006).

[xxviii] Letter from MedPAC to Donald M. Berwick, M.D., Jan. 17, 2011 (on file with author), available at

[xxix] Institute of Medicine, 2011. Geographic Adjustment in Medicare Payment: Phase I: Improving Accuracy. The National Academy Press, Washington, DC.

[xxx]   Secretary of Health and Human Services, Report to Congress: Plan to Reform the Medicare Wage Index (Apr. 11, 2012).

[xxxi]   Id. 

“Should I Tell Someone?” Permissible Disclosures by Massachusetts Health Providers and the Need for Greater Statutory Clarification

By William M. Mandell

In the wake of the recent Newtown shootings and the Boston Marathon bombings, a lingering question for health providers has been whether they ever have a duty, or the option, to disclose information derived from patient encounters if that information could help prevent an attack or a violent crime, help apprehend a suspect, or solve a criminal investigation.

Health care lawyers are frequently confronted with questions from hospitals, physicians and other providers about how to navigate and apply the conflicting legal and ethical duties to maintain and protect patient privacy rights but also to protect third parties and the general public from harm. Can medical groups proactively report to the police that a patient is mentally unstable and may have access to guns? May hospitals release information about victims of an attack to the police without consent?

This article summarizes current federal and Massachusetts law on the circumstances in which Massachusetts health care providers are authorized to share patient information with law enforcement and public safety personnel and agencies, notwithstanding patient privacy laws. This article also identifies some shortcomings under current Massachusetts law, and proposes a legislative solution to the confusion between HIPAA and a lack of clarity under existing applicable Massachusetts law.

A. Federal HIPAA Privacy Rule

The Health Insurance Portability and Accountability Act of 1996 (“HIPAA”) Privacy Rule  established by the Office of Civil Rights (“OCR”) of the United States Department of Health and Human Services (“HHS”) does identify a variety of permissible urgent situations in which a health care provider may disclose patient health information.

Notwithstanding this fact, since the effective date of the HIPAA Privacy Rule in 2003, providers have had a greater reluctance to talk or report facts to law enforcement, either because of a failure to properly understand or apply HIPAA or a fear of liability.

Criminal and civil penalties can be imposed on both individuals and organizations under HIPAA for impermissible disclosures, but there are no such statutory penalties for failing to make disclosures to law enforcement or government agencies that HIPAA authorizes. Additionally, many states, including Massachusetts, have very strong and broadly established patient privacy rights over additionally protected areas of sensitive information but less clearly delineated exceptions for disclosures without patient consent for public safety and law enforcement reasons.Although it establishes a minimum level of privacy rights under federal law, the HIPAA Privacy Rule does not pre-empt any state laws that grant greater protections over patient health information. Thus, health lawyers must help provider clients harmonize the application of a HIPAA provision with a state law that may be more protective of patient health information.For example, HIPAA permits a hospital to release a patient record including HIV test results or psychiatric treatment communications upon a subpoena alone and without written patient authorization or a court order, if the discovering party can show it has meet certain procedural requirements ensuring that proper notice has been given to the patient’s counsel and no objections or motions for protective orders have been filed. However, Massachusetts statutes covering HIV test results or psychiatric treatment communications  – more protective of patient rights and thus not pre-empted by HIPAA – require the presentation of either a written patient consent or a court order before that portion of a patient record may be disclosed.

OCR, in the Privacy Rule, attempted to strike the right balance between patient privacy and the need to protect public safety, and in doing so permits the use and disclosure of protected health information, without an individual’s authorization or permission, for twelve national priority purposes. OCR has noted that these disclosures are permitted, although not required, by the Privacy Rule in recognition of the important uses made of health information outside of the health care context. For each public interest purpose, OCR included specific conditions or limitations in the Privacy Rule to strike the right balance between the individual privacy interest and the public interest need for such information.

Among these 12 national priority purposes, the HIPAA Privacy Rule permits non-patient consented disclosures in the following circumstances:

  • To assist law enforcement in certain extreme situations
  • To avert serious threats to health or public safety
  • To protect national security
  • To protect the public health

          1. Assist Law Enforcement

HIPAA permits providers to disclose patient health information without permission from the patient for a law enforcement purpose to a law enforcement official in the following situations:

Providers can disclose health information to comply with federal or state reporting laws, including laws that require the reporting of certain types of wounds or other physical injuries.

In response to a law enforcement official’s request for information for the purpose of identifying or locating a suspect, fugitive, material witness, missing person, a provider may disclose the following:

(1) Name and address;

(2) Date and place of birth;

(3) Social security number;

(4) ABO blood type and rh factor;

(5) Type of injury;

(6) Date and time of treatment;

(7) Date and time of death, if applicable; and

(8) A description of distinguishing physical characteristics, including height, weight, gender, race, hair and eye color, presence or absence of facial hair (beard or moustache), scars, and tattoos.

However, DNA or DNA analysis, dental records, or typing, samples or analysis of body fluids or tissue can only be released upon issuance of a court order, warrant, or written administrative request.

In response to a law enforcement official’s request for patient information about an individual who is or is suspected to be a victim of a crime if the individual is incapacitated, or there  are other emergency circumstance, as long as:

(A) The law enforcement official represents that such information is needed to determine whether a violation of law by a person, other than the victim, has occurred, and such information is not intended to be used against the victim;

(B) The law enforcement official represents that immediate law enforcement activity that depends upon the disclosure would be materially and adversely affected by waiting until the individual is able to agree to the disclosure; and

(C) The disclosure is in the best interests of the individual as determined by the provider, in the exercise of professional judgment.

          2. To Avert Serious Threats to Health or Public Safety

The HIPAA Privacy Rule also permits providers, acting consistent with applicable law and standards of ethical conduct, to disclose patient health information without consent where the provider in good faith believes the use or disclosure:

Is necessary to prevent or lessen a serious and imminent threat to the health or safety of a person or the public; and is to a recipient reasonably able to prevent or lessen the threat, including the target of the threat; or

Is necessary for law enforcement authorities to identify or apprehend an individual:

(A) Because of a statement by an individual admitting participation in a violent crime that the provider reasonably believes may have caused serious physical harm to the victim; or

(B) Where it appears from all the circumstances that the individual has escaped from a correctional institution or from lawful custody.

The information provided must not be more than what meets the minimum necessary standard. For purposes of identifying or apprehending an individual, the information authorized to be disclosed is limited to the same eight basic identifying items that can be disclosed in response to a law enforcement official’s request for information for the purpose of identifying or locating a suspect, fugitive, material witness, missing person.

HIPAA presumes that the disclosing provider in these instances has acted in good faith with regard to the belief of the necessity for such public safety disclosures.

          3. National Security and Intelligence Activities

Providers may also disclose protected health information to authorized federal officials under the HIPAA Privacy Rule for the conduct of lawful intelligence, counter-intelligence, and other national security activities authorized by the National Security Act and implementing authority.  Those activities can include efforts to create counter-terrorism intelligence databases, including health records.  Thus, the reporting of possible or suspected terrorists or terrorist activity by a provider is not necessarily prohibited under HIPAA and a provider meeting the minimally necessary standard could share its suspicions with federal and state law enforcement agencies without violating the HIPAA. The bigger question is whether such a disclosure would run afoul of more protective state laws protecting patient privacy, and whether a provider could be subject to a lawsuit for invasion of privacy or patient rights under Massachusetts law.

          4. Public Health Protection

The HIPAA Privacy Rule also allows unauthorized disclosures of protected health information to public health authorities to carry out their mission to protect the public’s health and safety.

The Privacy Rule permits – but does not require – providers to disclose protected health information, without authorization, to public health authorities who are legally authorized to receive such reports for a variety of widely accepted public health functions such as: the reporting of a disease or injury; reporting vital events, such as births or deaths; and conducting public health surveillance, investigations, or interventions. Also, covered entities may, at the direction of a public health authority, disclose protected health information to a foreign government agency that is acting in collaboration with a public health authority.  Covered entities who are also a public health authority may use, as well as disclose, protected health information for these public health purposes.

Generally, covered entities are required reasonably to limit the protected health information disclosed for public health purposes to the minimum amount necessary to accomplish the public health purpose. However, covered entities are not required to make a minimum necessary determination for public health disclosures that are made pursuant to an individual’s authorization, or for disclosures that are required by other law.  Since most public health disclosures are made by providers under specific mandatory reporting laws established by both federal and state agencies the minimum necessary rule under HIPAA is often not applicable when a provider is fulfilling a mandatory reporting obligation. Furthermore, the HIPAA Privacy Rule also allows covered entities to reasonably rely on a minimum necessary determination made by the public health authority when it initiates a request for protected health information.

Permissible public health disclosures under HIPAA also cover mandatory or suggested disclosures to authorized third parties who have a need to know, such as to the police in the case of known or suspected abuse or neglect of children or the elderly, or victims of domestic violence or rape. Similarly, if state law allows providers to warn third parties of exposure to a communicable disease HIPAA also allows the same disclosure as necessary to carry out public health interventions or investigations to prevent or control the spread of the disease.

B. New OCR Guidance

Following the Newtown tragedy, the HHS Office of Civil Rights published a letter to the nation’s healthcare providers in January, 2013 to make them aware of their ability under HIPAA to disclose information and their ethical “duty to warn” when they believe a patient poses a serious and imminent threat.

The OCR letter clarifies that the HIPAA Privacy Rule permits disclosure when a health care provider believes in good faith that a warning is necessary to prevent or lessen a serious and imminent threat to the health or safety of the patient or others.  If the disclosure is made consistent with applicable law and standards of ethical conduct, the provider may alert those persons whom the provider believes are reasonably able to prevent or lessen the threat. The provider is presumed to have such a good faith belief when the provider warns and discloses upon obtaining actual knowledge of facts from interaction with the patient or in reliance on a credible representation by a person with apparent knowledge or authority, such as a friend or family member of the patient.

The OCR letter further states that a health care provider may disclose patient information, including information from mental health records, to law enforcement, family members of the patient, or any other persons who may reasonably be able to prevent or lessen the risk of harm.

Thus, if a mental health professional has a patient who has made a credible threat to inflict serious and imminent bodily harm on one or more persons, HIPAA permits the mental health professional to alert the police, a parent or other family member or others who may be able to intervene to avert harm from the threat.

Such disclosures are not only permitted by HIPAA, but are also advisable under state tort laws following the duty to warn standard  first recognized by the 1974 California Supreme Court in Tarasoff v. the Regents of the University of California. Tarasoff established a common law duty upon health care providers to warn potential victims and the authorities, notwithstanding patient privacy rights, when an individual makes a credible threat of violence.  The Tarasoff rule can be best summarized in its most often quoted passage: “The protective privilege ends where the public peril begins . . . .”

C. Massachusetts Law on Patient Privacy and Disclosure

In sharp contrast, the scope of permitted disclosures to warn third parties or avert possible imminent harm to possible victims is more limited under Massachusetts law. Furthermore, Massachusetts law articulates very stringent privacy and confidentiality protection and duties to maintain patient confidentiality, with only a handful of stated exceptions related to public safety. Unlike other state’s patient privacy laws, Massachusetts does not have a single comprehensive statutory act governing all facets of health care information confidentiality and permitted disclosure.  Instead, the law of patient privacy and confidentiality in Massachusetts is comprised of a patchwork of different sources: constitutional, statutory, common law, and a variety of state agency regulations.

Generally, the right of privacy in Massachusetts is either implicitly or explicitly recognized and protected under the state constitution, Opinion of Justices, 375 Mass. 795, 806-9 (1978), by common law, Commonwealth v. Wiseman, 356 Mass. 251 (1969), and by statute.  Massachusetts Gen. Laws c. 214, § 1B provides for a general right to privacy (“[a] person shall have a right against unreasonable, substantial or serious interference with his privacy”) and authorizes a civil tort action to recover damages for any interference with that privacy right.

Specific to health information, Mass. Gen. Laws c. 111, §§  70 and 70E (the “Massachusetts Patient’s Bill of Rights”), and Mass. Gen. Laws c. 112 § 12CC , and a variety of other statutes and licensing board regulations, establish the right of patients of  Massachusetts hospitals, licensed facility, physicians and other practitioners to the confidentiality of all records and communications.

In addition, the Massachusetts Supreme Judicial Court has ruled that physicians have an affirmative duty to maintain the confidentiality of patients’ medical information, and a breach of patient confidentiality can result in tort liability for the physician as well as the discovering party.  Alberts v. Devine, 395 Mass. 508 (1985).

The Massachusetts Legislature has also implicitly recognized the general legal and ethical obligation not to release medical information without patient consent by enacting several statutes establishing qualified evidentiary privileges protecting certain medical information and by authorizing and immunizing particular non-consensual disclosures.  These statutes (and the cases interpreting them) comprise the body of medical information confidentiality laws in Massachusetts.

Generally, absent written patient consent or an appropriate court order or subpoena, Massachusetts health providers are not explicitly permitted to divulge medical information to the police or other law enforcement agencies.

 Under the Massachusetts statutory version of the Tarasoff  rule, Mass. Gen. Laws c. 123, § 36B, licensed mental health professionals have a professional duty to take reasonable precautions to warn or protect a potential victim or victims of a patient (and are granted immunity against invasion of privacy claims) in the following circumstances:

The patient has communicated to the licensed mental health professional an explicit threat to kill or inflict serious bodily injury upon a reasonably identified victim or victims and the patient has an apparent intent and ability to carry out the threat or,

The patient has a history of physical violence which is known to the practitioner and the practitioner has a reasonable basis to believe that there is a clear and present danger that the patient will attempt to kill or inflict serious bodily injury against a reasonably identifiable victim or victims.

In such instances, licensed mental health professionals are authorized to disclose confidential patient communications by taking one or more of the following reasonable precautions:

Communicate the threat to the reasonably identified victim or victims;

Notify the appropriate law enforcement agency in the vicinity where the patient or potential victim resides;

Arrange for voluntary hospitalization, or initiates proceedings for involuntary commitment.

In situations where Massachusetts providers, other than a mental health practitioner, believe that failure to disclose patient information will result in serious danger to the patient or others, they have tended to make the disclosure. Even without explicit statutory authority these disclosures are usually made by hospitals, physicians and other non-psychotherapist providers from a risk management and general common law standpoint to disclose limited information to prevent serious and imminent danger. The Massachusetts Supreme Judicial Court has recognized a “serious danger exception” to a physician’s common law duty to maintain patient confidentiality.

Massachusetts providers have generally disclosed only that information necessary to prevent serious danger, but there have been many instances where police departments, hospitals and other providers have disputed whether and to what extent such disclosures are allowed without a court order or written patient authorization.

While the right of privacy is not absolute under Massachusetts law and it is the unreasonable interference that is actionable, the specific statutory exceptions for mandatory reporting (e.g. bullet wounds) and permissible public safety disclosure are confusing under the variety of applicable Massachusetts legal sources, and as noted above beyond psychotherapists are not governed explicitly by a state statutory exception for hospitals and physicians to report instances of serious and imminent danger and granting them immunity for doing so.

D. Recent Tragic Events Should Compel Massachusetts to Take Legislative Action

Massachusetts is in need of comprehensive, consolidated legislation on the balance between patient privacy rights and permissible and necessary limited disclosures to protect the public.   Such legislation should contain explicit statutory provisions applicable to all classes of providers, in order to delineate and provide clear guidance on what type of public safety disclosures are permitted, and in what circumstances.

The Massachusetts Legislature could ease the confusion among providers and lessen the risk of future preventable tragedies by having Massachusetts law adopt and follow the permissible HIPAA public safety exceptions described above, and grant immunity under state law for providers who follow these HIPAA permissive disclosures. HIPAA’s limited pre-emption of state law still leaves it to state governments to identify when they want to be more protective of patient rights and limit disclosures that may be otherwise permitted under HIPAA   Providers in Massachusetts would be better served by such a state statute law, as it would diminish the current uncertainty and case-by-case effort hospitals, medical practices and other providers must regularly engage in when they balance their legal and ethical duties to patients against the safety of the general public.


Bill Mandell is a founding member and co-managing partner of Pierce & Mandell, P.C.. He represents health care providers in regulatory and transactional matters, including practice start-ups, buy-ins and buy-outs, hospital-physician relationships, risk management, professional contracts and regulatory compliance. He also represents non-profit organizations, corporate executives, start-ups, and small and family businesses.  He serves frequently as a neutral hearing officer and advisor to medical staff hearing panels for medical staff disciplinary action and peer review appeals.

The Massachusetts Healthcare Information Exchange – An Inside Look at the Policy and Technology


In December of 2011, John Halamka’s wife visited a suburban community hospital for a diagnostic mammogram.   The study was highly suggestive of a tumor and she wanted to follow-up with a treatment team of oncologists, surgeons, and radiation oncologists at a downtown academic medical center.   She was told that there is an information superhighway in Massachusetts – the Mass Pike.   For 25 cents a page she could get a copy of her medical records on paper and then drive them into Boston.

In September of 2012, John’s mother broke her hip and because the hospital had no access to her outpatient records, she was placed on 22 different medications based on pill bottles John’s father collected.   She takes only 2 medications, which are clearly documented in her primary care physician’s electronic health records.

Both of these scenarios illustrate that we do not have a healthcare system in the United States.  Rather, we have a disconnected set of information silos – hospitals, clinics, labs, and pharmacies – that lead to redundant, unnecessary and error prone care.

But there is hope.

On October 16, 2012 at 11:35am Governor Deval Patrick officially “flipped the switch” on the Massachusetts state Healthcare Information Exchange, called the HIWay, enabling electronic records to be sent from provider to provider  throughout the Commonwealth with patient consent.

This event, held in the Ether Dome of the Massachusetts General Hospital, was the culmination of years of hard work by many stakeholders and experts in the Commonwealth.   Here is their story.

Historical Efforts:

In 1995, Massachusetts stakeholders convened through the Massachusetts Health Data Consortium (MHDC) to found the Chief Information Officer (CIO) Forum. The CIOs from payers, providers, and employer groups, agreed to meet on a monthly basis to discuss the use of IT to streamline health care commerce, reduce costs, and enhance care delivery processes. Early work included common privacy/security guidelines, common data sets for describing clinical encounters, and early discussions of how organizations could collectively address HIPAA compliance issues as a region rather than a series of disjoined efforts.

In 1997, at an MHDC-sponsored security conference, several CIOs of the payers and providers of Massachusetts gathered at dinner to discuss the creation of a network for the exchange of claims, referrals, and benefits/eligibility transactions in Massachusetts. The group named the effort the New England Healthcare Electronic Data Interchange Network or NEHEN.

Three provider organizations (Partners Healthcare, CareGroup, and Lifespan) and two payer organizations (Tufts Health Plan and Harvard Pilgrim Health Care) worked together to formally create NEHEN LLC as an independent organization. Computer Sciences Corporation (CSC) was hired to manage a region-wide administrative data exchange effort, and by October 1998, with prior patient consent, eligibility data began flowing among these early NEHEN members. Boston Medical Center joined in December 1999. University of Massachusetts Memorial and Boston Children’s Hospital joined in February 2000. As of 2012, more than 100 million administrative health care transactions in Massachusetts flow over the collaborative NEHEN network annually.

This early work on transaction exchange built trust among the CIOs and established a business model that all could understand — cost avoidance. Before NEHEN, administrative transactions such as claims cost $5.00 each in labor to submit via paper, fax, phone and e-mail. After NEHEN, these transactions could be exchanged electronically for pennies apiece. The payers and providers in the Commonwealth recognized that IT collaboration reduced costs for everyone.

Over the past 5 years, NEHEN added e-prescribing and clinical data exchange functionality, enabling data to flow among more than 60 institutions in the commonwealth.

Over the same time period, advances in technology and incentives from the American Recovery and Reinvestment Act funded Meaningful Use stimulus program encouraged practices of all sizes to install electronic health records.    NEHEN was optimized for larger organizations with significant IT resources and was generally perceived as too expensive for small practices and providers in the rural parts of the Commonwealth.    Additionally, State government was not involved with NEHEN as officials feared conflicts of interest while serving as a board member of a private multi-stakeholder organization.  NEHEN needed to evolve into a state-wide, low cost, government engaged model.

Creating the Massachusetts HIWay:

In September of 2011, the Secretary of Health and Human Services Dr. JudyAnn Bigby created the HIE-HIT Advisory Committee as a mechanism to channel advice and recommendations to the HIT Council, the healthcare information technology governance body established by Chapter 305 of the Acts of 2008. Comprising 24 public and private sector experts from a broad range of perspectives, and 92 individuals in its working groups, the Advisory Committee has provided substantive advice to the HIT Council in a wide variety of areas, including architecture, phasing, technical specifications, consumer priorities and concerns, provider adoption, financing of the statewide HIE, and legal/policy considerations.

The 5 working groups were as follows:

•     Consumer & Public Engagement Work Group – To raise awareness of the HIT-HIE program among consumers, to engage consumers in the program, and to ensure that consumer input is considered for all critical recommendations and Advisory Committee decisions.

•     Provider Engagement & Adoption Work Group – To raise awareness of the HIT-HIE program among providers, to encourage adoption of HIT-HIE among providers, and to ensure that provider input is considered for all critical recommendations and Advisory Committee decisions.

•     Technology & Implementation Work Group – To plan and develop technical and operational requirements and approaches for statewide HIE activity conducted through publicly-funded or -supported programs. To develop strategies, standards, and requirements for an enhanced statewide HIE architecture that leverages existing networks, shared services, and standardized regional services to enable broad adoption and use of statewide HIE services

•     Finance & Sustainability Work Group – To recommend financing and business models for implementing and sustaining statewide HIE infrastructure and services.

•     Legal & Policy Work Group – To plan and develop a governance model and legal and policy framework for statewide HIE activity conducted through publicly-funded or -supported programs.

Many people put in many hours in September 2011 to engage stakeholders, create a unified statewide HIE plan, suggest a funding model, define requirements, and broadly communicate the strategy.

In October of 2011, three of us that had worked with these early efforts – Manu Tandon (the CIO of the Executive Office of Health and Human Services), Micky Tripathi (the CEO of the Massachusetts eHeath Collaborative), and John Halamka (CIO of Beth Israel Deaconess Medical Center) visited CMS to discuss a powerful idea.   We proposed a single state operated infrastructure connecting all payers, providers, and patients using national standards at low cost.    In Massachusetts, where 100% of the hospitals serve Medicaid patients and   80% of the ambulatory providers serve Medicaid patients, development of this infrastructure could be a game-changer.   Medicaid 90/10 matching funds could be applied for the first time to the construction of a statewide health information exchange.   The state would contribute $5 million and Medicaid would match it with $45 million to create an infrastructure that all stakeholders could use.  The private sector would pay its fair share and every stakeholder would pay a subscription fee that related to the value they derived from healthcare information exchange and their ability to pay.

CMS was impressed by the core elements of the proposed strategy that included:

•     Three-phase HIE plan beginning with creating the statewide Information Highway as a foundation for richer applications and services from 2012-2014.

•     Alignment with national interoperability standards and emerging Meaningful Use (MU) stage 2 requirements[1]

•     Maximization of Medicaid SMHP/Medicaid Management Information System (MMIS) 90/10 Federal Finance Participation (FFP) funding

In January of 2012, CMS approved the funding and work began on the Requests for Proposal to support an open, transparent, competitive bidding process for vendors to provide the products and services needed by the HIE.

The Plan:

The three phase plan was based on stakeholder requirements, the maturity of available technology, and the likelihood that the needed policies would be supported by payers and providers.

The first phase leverages existing workflow and processes used to release medical records today.  In a paper-based healthcare world, patients request/consent that their information be disclosed to another party and then the information is sent (we use the term “pushed” to another organization).   Information would continue to be “pushed” from one organization to another, but we would replace all these paper flows with secure, fully electronic ones. Such a workflow supports coordination of care between primary care givers and specialists; hospitals and primary givers; providers and payers.

The second phase uses this new “push” technology to send data from provider offices and hospitals to registries and data warehouses for quality measurement and population health analytics.

The third phase envisions a solution for the “unconscious in the Emergency Department” problem.  You arrive in the Emergency Department with only a wallet and no ability to communicate.  Using only your name, gender, and date of birth, information from clinician offices and hospitals where you have previously consented to disclose your data make that information available to the emergency physician.

The Technology:

These three phases require an array of technology components and policies.   For the first phase, we implemented 5 components.

  1. A transmission gateway – just like email, a server is needed to send and receive pushed data between organizations.  As part of the Federal stimulus program for electronic health records, a set of standards for exchange of data, called Direct, is required.   We needed to create appropriate hardware and software to support the state’s efforts to enable secure transmission between EHRs.
  2. A provider directory – just as email has an address book, we needed an address book of every provider organization in the Commonwealth and its members.
  3. Certificate management – to send data securely between organizations, there needs to be appropriate encryption over the wire.   Digital certificates enable us to prove the provenance of the sender and ensure only the rightful recipient organization can unencrypt the message.
  4. Skilled nursing facility/long term care interfaces – we received a grant to accelerate adoption of data sharing in post-acute facilities that often do not have an EHR.
  5. Webmail – for those organizations without EHRs, we needed a method of sending and receiving secure messages.  A secure webmail portal meets those requirements.

All of these were competitively bid and procured from a single vendor (Orion) and then, implemented over the Summer of 2012.

In 2014, we will complete a statewide consent repository.  Each institution will record opt-in consent for disclosure of that institution’s data and that consent will be forwarded to a statewide registry, which will store patients’ consent preferences.  At any time a patient may opt-out of disclosing data from an institution.  To support stored consent function, we will need a secure, statewide citizen index.  We will also need this index to support patient-matching of medical records across organizations.  For other phases in the future, we will need other additional components.

The Policies:

Before we could send patient identified data between organizations over this infrastructure, we needed policies to delineate roles/responsibilities, support business associate agreements, and ensure patient consent is obtained and patient privacy preferences are respected.

We assigned roles and responsibilities as follows:

  • Executive Office of Health and Human Services (EOHHS) – provides the infrastructure, the overall project governance, and manages the participation agreements/business associate agreements.   A new HIT Council, as enumerated in the Healthcare Cost Containment Bill (Chapter 224 of the Acts of 2012), will serve as the ongoing governance body.   Advisory workgroups will continue to engage community and other stakeholders to provide input to the HIT Council.
  • Massachusetts eHealth Institute (MeHI) provides the connections from EHRs to the state HIE via its “last mile” program, which offers grants to vendors to develop interfaces, incentives to providers to implement connectivity to the HIE, and community-based collaborative working groups to encourage adoption that fits the needs of the local healthcare community..
  • Massachusetts eHealth Collaborative – provide Last Mile Management Office support to MeHI and facilitation support to other stakeholders and agencies.  Part of that facilitation included running the 5 HIT Council Work Groups that suggested initial policies and procedures.

EOHHS created a single participation agreement that included business associate language.   Each stakeholder that wants to use the state HIE must first sign this common participation agreement.   The Participation Agreement defines key aspects of roles and responsibilities of EOHHS and participants, especially those relating to maintaining patient privacy and technical data security, including audits and investigations of suspected incidents or breaches.

Highlights of this Phase 1 (pushing of information only) Participation Agreement include:

  • Permitted Users and Uses:  Initial participation is open to Massachusetts-licensed providers and entities, Massachusetts-licensed health plans, Commonwealth agencies, and certain employees and agents of the foregoing who are authorized as users. Use of the Massachusetts HIWay is limited to exchanges of information that are allowed by law and that are related to treatment, payment, or healthcare operations as defined by HIPAA. EOHHS may, if it determines, in its sole discretion that such actions are in the public interest:
    • allow additional participants and/or authorized users;
    • allow additional uses;
    • deny or suspend participation, or use, for any organization or individual
  • Delegated Authority:  Each Participant must execute a Delegated Administration Agreement before being granted access to the Massachusetts HIWay.  Each Participant must identify at least one individual to serve as an Access Administrator, as provided in the Delegated Administration Agreement.  Each Participant’s Access Administrator is responsible for administration of the Participant’s Authorized Users and must sign the Access Administrator Agreement.
  • Patient Privacy and Consent:  Each Participant is responsible for obtaining any and all necessary patient consents and authorizations relating to the use and exchange of patient information, including without limitation consent to release HIV test results, genetic test information, substance abuse information, and as otherwise required by law.  In addition, the Participant and/or the Authorized User is responsible for obtaining patient permission to share patient information over the Massachusetts HIWay.  It is the responsibility of the Participant to maintain these consents and permissions as required by law and their policies. The method by which the Participant maintains the consents will be determined by the Participant but proof of consent may be subject to audit by EOHHS.

As noted above, standard practice is that health records are only disclosed from one organization to another when the patient has signed his or her written consent to such a release.  We adopted the same approval to disclose (oral, written) that is in place in healthcare workflows today.   All that changes is that phone, fax, email, and paper is replaced by secure electronic transmission.

The end result of obtaining common participation agreements among all the providers in the Commonwealth over a single secure infrastructure governed by the underlying principle of achieving patient consent to disclose before transmission creates a fabric of trust that protects patient privacy.

Acquiring Customers:

With policies in place and technologies under construction, we could begin acquiring customers.  In the Summer of 2012 the Advisory Committee supported efforts to recruit and prepare early adopters to go live with the statewide HIE on its launch date or “Golden Spike” event. A large number of early adopter organizations have come forward to participate including Atrius Healthcare, Baystate Healthcare, Beth Israel Deaconess Medical Center, Boston Children’s Hospital, Greg Harris MD, Holyoke Medical Center, Network Health Plan, Partners, Tufts Medical Center, and Vanguard Health Systems representing a significant portion the Commonwealth’s active providers.

The “Golden Spike Group” began meeting in August to review, react to, and help refine the statewide HIE participation agreements, pricing, and technical interfacing requirements.

The Go Live:

In front of the press and leaders of Massachusetts, I accessed my wife’s actual hospital records, with her consent, and sent them electronically to her actual doctor’s office, a payer, a private primary care provider affiliated with another hospital, and the Massachusetts eHealth Collaborative (a quality measurement and analytics service provider).  We broke down silos, demonstrating that care coordination, population health, and quality analytics based on healthcare information exchange is now possible in Massachusetts.  The electronic records involved included an institution’s home-grown electronic medical record, eClincialWorks, a custom payer system, and self built analytic applications.

Other transactions followed.

With patient consent, Tufts New England Medical Center sent patient-identified summaries to and received summaries from Vanguard Health Systems New England illustrating a primary care physician-to-specialist closed loop workflow.  EHRs included Siemens Soarian and Meditech.

Also with patient consent, Boston Children’s sent pediatric patient-identified summaries to Atrius Healthcare, a multi-specialty group, illustrating tertiary hospital-to-primary care giver coordination.

All were successful and were documented in real time on the Twitter stream.

The Governor distributed golden spikes made from actual railroad spikes salvaged from rail near Promontory Point, Utah, the site of the original transcontinental railroad connection.


Just as the original Golden Spike in 1869 issued in a new era of connectedness, so does the Massachusetts healthcare information exchange change business as usual in Massachusetts. Over the next year, we will be building new “bridges,” ensuring that every payer, provider, and payer can send transition of care summaries with patient consent.

This achievement, although conceived in Fall of 2011 and completed in the Fall of 2012, builds upon over 15 years of trust building, early experiences with healthcare information exchange, and an array of public/private investments along the way.

Simple policies – a common participation agreement and consent to disclose complemented by simple technologies – gateways that support secure transmission, a provider directory, and a digital certificate infrastructure, funded by both Medicaid funds and private sector contributions, make the Massachusetts a first-in- the-country model for the rest of the U.S.   We look forward to breaking down healthcare information silos over the coming months.  Never again will issues such as those which affected John’s wife and mother be caused by the lack of healthcare information superhighway in Massachusetts.


John D. Halamka MD, CIO Beth Israel Deaconess Medical Center

Manu Tandon, CIO EOHHS

Micky Tripathi, CEO, Massachusetts eHealth Collaborative

Laurance Stuntz, Director, Massachusetts eHealth Institute

[1] Medicare and Medicaid Programs; Electronic Health Record Incentive Program—Stage 2, 77 Fed. Reg. 53,968 (September 4, 2012).

HIPAA Enforcement Trends: Growing Civil Enforcement

By Cassandra H. Arriaza and Sarah W. Walsh

The stakes are higher than ever before for HIPAA compliance.  Enforcement of the Health Insurance Portability and Accountability Act (“HIPAA”) is spread throughout numerous government bodies at the state and federal levels, leaving covered entities vulnerable to a wide scope of investigatory and enforcement actions.  Each of these enforcement authorities brings a different approach and different focus to their HIPAA efforts:

  • The Office for Civil Rights in the Department of Health and Human Services (“OCR”) can impose civil monetary penalties for HIPAA violations;
  • State attorneys general can initiate civil proceedings for injunctive relief on behalf of a state’s citizens; and
  • The Department of Justice (“DOJ”) can investigate and treat certain HIPAA violations as criminal offenses.

The differing remedies and corresponding approaches taken by these government bodies complicate the enforcement landscape, particularly with the recent addition of state enforcement.  With increasing enforcement by state attorneys general and increasing penalties levied by OCR, HIPAA compliance has become the focus of investigations – no longer merely a backdrop to enforcement investigations.

State Attorneys General Join HIPAA Enforcement Landscape Through Civil Enforcement

State attorneys general have most recently entered the enforcement landscape, having only been given authority to pursue civil actions starting in 2009.  Although it is still early to determine how state attorneys general will pursue enforcement, training on HIPAA enforcement offered by OCR for state attorneys general offers some insight.  This training program, which was held in four different locations in 2011, was attended by representatives from 45 States and territories and the District of Columbia.  Many of the modules focused on background information about HIPAA and the relationship between OCR and state attorneys general.  For example, the training explained that pending federal actions take priority over state actions and OCR has a right to be heard in all matters that a state may file regarding HIPAA enforcement.[1]

Most interesting was OCR’s suggestions to state attorneys general about how they may uncover potential HIPAA violations.  Some of these methods are similar to those approaches that OCR itself takes—monitoring news outlets, breach reports filed by covered entities, receiving direct complaints, referrals from other agencies.[2]  However, OCR also suggested that states may learn of potential violations from whistleblowers or as a part of—or by revisiting—other types of investigations, such as health care fraud, labor and employment cases, or any case that involves health care access and licensure.[3]  Thus, in addition to investigating HIPAA problems that are likely already known to the covered entity—perhaps through breach reports or a patient complaint—state attorneys general may also use the threat of HIPAA civil penalties as additional leverage in broader—or even ongoing but unrelated—investigations of covered entities.

New England Takes the Lead in HIPAA Civil Enforcement Actions

Massachusetts followed Connecticut and Vermont as the third state to pursue HIPAA enforcement actions.[4]   The Massachusetts investigation followed a data breach that was reported to the Massachusetts Attorney General in July 2010.  After receiving a breach report from South Shore Hospital, the Massachusetts Attorney General’s office launched an investigation into the hospital’s practices in handling protected health information.  It was determined that the hospital had shipped three boxes containing 473 unencrypted back-up computer tapes to a third-party to be erased and resold, never having informed the third-party that Protected Health Information (“PHI”) was on the disks.  Only one of the three boxes arrived at its destination.  In May 2012, South Shore Hospital ultimately agreed to pay $750,000 to settle the data breach allegations.  In addition, the hospital agreed to take a variety of steps to ensure compliance with HIPAA and agreed to undergo a review and audit of certain security measures.[5]

More recently, on January 7, 2013, the Massachusetts Attorney General reached a settlement with Goldthwait Associates and four pathology groups.  Goldthwait Associates, a medical billing practice, improperly disposed of PHI from those four pathology groups, affecting more than 67,000 residents.  This first came to the public’s attention in July 2010 when a Boston Globe photographer, who was disposing of his own trash at the Georgetown Transfer Station, observed a large pile of papers, which he determined were medical records.  The Massachusetts Attorney General alleged that the four pathology groups violated HIPAA by failing to have appropriate safeguards in place to protect the PHI and by failing to take reasonable steps to select and retain a service provider that would maintain appropriate security measures to protect PHI.  As part of the settlement, all five entities collectively agreed to pay $140,000 in civil penalties, attorney fees, and “a data protection fund to support efforts to improve the security and privacy of sensitive health and financial information in Massachusetts.”[6]

With Massachusetts at the forefront of state-based HIPAA enforcement, covered entities can expect that Massachusetts will continue to look for and bring additional HIPAA  enforcement actions.  Indeed, recent activity from the Massachusetts Attorney General underscores the intent to continue to pursue HIPAA violations.  The Massachusetts Attorney General’s Office and the Massachusetts Medical Society held a “first-of-its-kind data privacy training” in October 2012 and January 2013.  Additionally, the most recent HIPAA settlement from the Massachusetts Attorney General’s Office also include a contribution to a data protection fund.[7]  All of this points to increased HIPAA enforcement on the horizon in Massachusetts.

Monetary Fines Serve As New Enforcement Tool but Improved Compliance Remains the Focus for OCR

OCR also has been stepping up enforcement after it obtained authority to impose civil monetary penalties (“CMPs”) in 2009, but OCR’s focus remains largely on educating covered entities in proper procedures to prevent HIPAA violations, reserving monetary fines for the most serious of violations.  Indeed, in 2011, OCR implemented a new audit system that ran through December 2012 to proactively review compliance with HIPAA.[8]  Although OCR describes these audits as a “compliance improvement tool” that will be used to determine what types of assistance OCR should develop, OCR has noted that in certain cases, it may elect to open a compliance review as a result of an audit.[9]  The future of the audit program will be shaped by evaluation and reports from the first year of audits.

The new audit process is just one of the ways in which OCR obtains information that can lead to an investigation.  Other, more typical, sources of information that could result in the start of an OCR investigation include complaints from the public, breach reports filed by covered entities, and privacy and security incidents reported by the media or government agencies.[10]

Two out of three cases investigated by OCR since 2003 have identified a violation and required the covered entity to make changes in privacy and security policies and practices.[11]  A majority of those cases have been resolved without CMPs, relying instead on voluntary agreements by the covered entity to take steps required by OCR, which might include revising or developing policies and procedures, training or retraining staff, or sanctioning members of the entity’s workforce.[12]  If needed, OCR may even provide “technical assistance” to help the covered entity make the required changes.  For example, OCR resolved a complaint of a physician not providing a patient with a medical record by explaining to the physician that nonpayment for services does not permit a covered entity to withhold access to medical records.  After OCR gave that explanation—its “technical assistance”—the physician provided the patient with a copy of the medical record, and this voluntary compliance resolved OCR’s investigation.[13]

Increasingly, OCR does not resolve the violation through education and voluntary compliance alone but instead obtains a resolution agreement.  Under a resolution agreement, a covered entity enters into a contract with OCR to settle potential violations and implement a corrective action plan.  These agreements often include a monetary settlement as well as a period of monitoring or reporting to OCR.[14]  From 2008 through mid-January 2013, OCR has entered into eleven resolution agreements, with five of those occurring in 2012 alone.[15]

These increasingly frequent resolution agreements can involve significant monetary settlements.  In September 2012, Massachusetts Eye and Ear Infirmary and Massachusetts Eye and Ear Associates (collectively, “MEEI”) paid $1.5 million as part of a resolution agreement.  Following a breach report filed by MEEI in 2010 related to the theft of an unencrypted laptop containing PHI, OCR conducted an investigation and concluded that MEEI failed to take certain security steps, particularly relating to the use of portable devices to store confidential protected health information.  In addition to paying $1.5 million, MEEI also agreed to a corrective action plan that includes reviewing, revising, and maintaining policies related to the HIPAA Security Rule.  MEEI also agreed to have an independent monitor conduct assessments of its compliance with the corrective action plan; the monitor will issue semi-annual reports to OCR for three years.[16]  As can be seen with MEEI’s resolution agreement, these agreements not only can be costly but also can have long-term consequences as entities take on additional reporting requirements for a period of time after entering into the resolution agreement.

MEEI’s case follows the February 2011 resolution agreement OCR entered into with Massachusetts General Hospital (“MGH”).  The resolution agreement come about as a result of a March 2009 incident where an MGH employee inadvertently left documents containing the PHI of 192 patients on the subway while commuting to work.  OCR learned of the breach when an affected patient reported it.  OCR’s investigation concluded that MGH failed to take reasonable and appropriate safeguards to protect PHI taken from MGH’s premises.  In addition to paying one million dollars as part of the resolution agreement, MGH also agreed to a corrective action plan that required, among other things, the Director of Internal Audit Services of Partners HealthCare Systems to serve as an internal monitor to conduct assessments of MGH’s compliance with the corrective action plan and send semi-annual reports to OCR.[17]

Although Massachusetts-based companies so far have been able to resolve violations through resolution agreements, OCR does have another tool available to address HIPAA violations.  When a covered entity refuses to take action to resolve the matter in a manner satisfactory to OCR, OCR will seek CMPs but must first obtain authorization from the U.S. Attorney General.[18]  OCR’s first and only CMP to date issued to Cignet Health of Prince George’s County, Maryland (“Cignet”) in 2011.  OCR’s investigation into Cignet began when Cignet denied 41 patients access to their requested medical records over a one-year period and each of those patients filed a complaint with OCR.  Cignet refused to cooperate with OCR’s investigation, requiring OCR to obtain a subpoena to acquire the medical records.  Remarkably, Cignet failed to respond to the subpoena, and OCR obtained a default judgment against Cignet to enforce that subpoena.  OCR determined that Cignet’s failure to cooperate with the investigation was due to Cignet’s willful neglect to comply with HIPAA.  As a result, OCR imposed a $4.3 million CMP for Cignet’s violations.[19]  Because CMP penalties increase with the knowledge of the entity—with the lowest penalties for violations where the entity lacked knowledge and the highest penalties for violations caused by willful neglect that were not corrected[20]—CMP penalties can be expected to continue to be quite high.  Not surprisingly, OCR has found that the specter of these CMP fines “have reinvigorated covered entities’ attention to compliance.”[21]

DOJ’s HIPAA Investigations Tend to Be a Smaller Piece of a Larger Investigation

Another road for enforcement is through DOJ prosecution for criminal violations.  Although OCR forwards to the FBI all HIPAA complaints or disclosures that involve potential criminal violations, the number of cases OCR refers to DOJ for possible criminal prosecution has been steadily declining since OCR’s enforcement tools were enhanced in 2009.  Although over 500 cases have been referred to DOJ since 2003, the number of cases referred has declined in recent years with fewer than 20 referrals a year in 2010 and 2011.  It is difficult to say with certainty how many cases related to HIPAA violations are prosecuted by DOJ.  This is because the criminal statutes that can be used to prosecute medical privacy cases are varied and cases charging only a violation of HIPAA constitute only a small portion of DOJ’s cases.  Although DOJ may not decide to prosecute all cases related to medical privacy, DOJ has noted that it tends to prosecute cases that fall under any one of three fact patterns: records stolen to commit massive fraud, records stolen for purpose of embarrassment, and records stolen for financial fraud.[22]  However, these cases are more likely to be brought under different statutes—such as unlawful computer access, conspiracy, or anti-kickback—rather than HIPAA, underscoring the difficulty of identifying the extent to which HIPAA plays into DOJ prosecutions.

Increased Civil Enforcement Calls for Heightened Attention to HIPAA Compliance

There is a continued pattern of DOJ focusing on cases that involve fraud or improper use of protected health information while OCR targets the prevention of disclosure of protected health information by seeking voluntary compliance and improved procedures.

It is less clear where state attorneys general will fit into this framework, but it seems likely that they will develop into significant players in this enforcement field.  With increasing interest and activity on the part of state attorneys general and OCR, the potential for HIPAA violations to have costly and long-lasting consequences is increasing.  Covered entities must be prepared to not only ensure full compliance with HIPAA through well-crafted and comprehensive written policies but also to vigilantly implement those policies, provide employees with robust training, and prepare an action plan to respond to any policy violations.

Cassandra H. Arriaza and Sarah W. Walsh are associates at LibbyHoopes, P.C. Their clients include organizations and private individuals in many fields, including health care, and their practices focus on white collar criminal defense, internal corporate investigations, and complex civil and administrative litigation.

[1] United States Department of Health & Human Services, HIPAA Enforcement Training for State Attorneys General, Module 6: Investigating and Prosecuting Potential HIPAA Violations, available at

[2] Compare Testimony of Leon Rodriguez, Direct of OCR, before the Senate Committee on the Judiciary, Subcommittee on Privacy, Technology and the Law, Nov. 9, 2011, available at with United States Department of Health & Human Services, HIPAA Enforcement Training for State Attorneys General, Module 1: State Attorneys General Enforcement of Federal Health Privacy Law, available at

[3] Module 1, supra note 2.

[4] Lisa Pierce Reisz, “State Attorneys General Wade Further Into HIPAA Pool,” HealtHITech Law, Aug. 7, 2012, available at

[5] Press Release, Massachusetts Office of the Attorney General, “South Shore Hospital to Pay $750,000 to Settle Data Breach Allegations,” May 24, 2012, available at

[6] Press Release, Massachusetts Office of the Attorney General, “Former Owners of Medical Billing Practice, Pathology Groups Agree to Pay $140,000 to Settle Claims that Patients’ Health Information was Disposed of at Georgetown Dump,” January 7, 2013, available at

[7] Id.

[8] OCR, “HIPAA Privacy & Security Audit Program,” available at (last visited Jan. 10, 2013).

[9] Kurt T. Temple, Esq., Deputy Regional Manager Region V, OCR, “An Update from OCR on HIPAA Enforcement,” HIPAA COW 2012 Spring Conference, Apr. 20, 2012, available at

[10] Testimony of Leon Rodriguez, supra note 2.

[11] Temple, supra note 9.

[12] Id.

[13] U.S. Department of Health and Human Services Office of Civil Rights, Annual Report to Congress on HIPAA Privacy Rule and Security Rule Compliance for Calendar Years 2009 and 2010, at 14, available at

[14] Testimony of Leon Rodriguez, supra note 2.

[15] The last resolution agreement of 2012 was completed on December 31 but not widely publicized until January 2, 2013.  See Case Examples and Resolution Agreements, OCR, available at (last visited Jan. 15, 2013).

[16] Press Release, Department of Health and Human Services, “Massachusetts provider settles HIPAA case for $1.5 million,” Sept. 17, 2012, available at

[17] Press Release, Department of Health and Human Services, “Massachusetts General Hospital settles potential HIPAA violations,” Feb. 24, 2011, available at

[18] Annual Report to Congress, supra note 13; Testimony of Leon Rodriguez, supra note 2.

[19] Press Release, Department of Health and Human Services, “HHS imposes a $4.3 million civil penalty for violations of the HIPAA Privacy Rule,” Feb. 22, 2011, available at See also Case Examples and Resolution Agreements, supra note 15 (listing all CMPs and resolution agreements).

[20] Temple, supra note 9.

[21] Testimony of Leon Rodriguez, supra note 2.

[22] Testimony of Loretta E. Lynch, U.S. Attorney, E.D.N.Y., before the Senate Committee on the Judiciary, Subcommittee on Privacy, Technology, and the Law, Nov. 9, 2011, available at

From Practice to Theory: Medical-Legal Partnership Enters its Third Decade

From Practice to Theory:
Medical-Legal Partnership Enters its Third Decade[i]

By Samantha Morton

Over the last two decades, there has been an increasing recognition that the healthcare system and the legal community share a large swath of low-income, medically vulnerable clients (patients), and that the two professions can better serve those constituents if they collaborate with more intention and structure.[ii]

The medical-legal partnership (MLP) model was founded in 1993 at Boston Medical Center,[iii] and the depth and breadth of MLP integration into healthcare delivery and related medical education and training systems has accelerated rapidly over the last 20 years. Today, the model has taken root in over 250 health care sites across the United States; indeed, 38 medical schools[iv] and 46 residency programs[v] participate in these programs. A first-ever MLP textbook was published in August 2011.[vi] MLP programs have expanded internationally as well: in November 2012, an Inaugural Symposium on Advocacy-Health Alliances was hosted in Melbourne, Australia.[vii]
MLP had important origins in earlier innovations in legal services delivery to vulnerable, low-income people, particularly in the domains of advocacy for (a) persons with disabilities[viii] and (b) domestic violence survivors. These service delivery paradigms were consonant with evolving theories of ethical and optimal allocation of scarce legal services resources for the poor, particularly theories and models cultivated at Harvard Law School as early as the 1970s.[ix]

The MLP model was “born” at a hospital, and founded at a time when the healthcare system was growing – by necessity if not inclination – more attune to patients’ non-biological determinants of health. However, as the model has matured, it increasingly harmonizes with a range of important legal frameworks. These frameworks connect to a diversity of theoretical underpinnings, many of which are relevant to health law practice, especially where that practice involves the interests of low-income, medically vulnerable patients and the providers, staff, and institutions that serve them. Against the backdrop of the monumental 2012 milestones in federal and Massachusetts health reform, and at a time of profound reflection within the access to justice community regarding prioritization of even scarcer resources, this article seeks to update MLP’s theoretical landscape, and to identify specific paradigms through which MLP (and similar) interventions can be understood, leveraged, and critiqued.

The Original Framework: Advancing an Individual Patient’s Health and Well-Being Through Referrals to Legal Adjuncts

Simply put, some social determinants of health have legal solutions. The originating MLP model focuses on integrating legal advocates into healthcare teams so that those teams can leverage their legal colleagues’ advocacy skills and expertise on behalf of patients with health-harming legal needs.[x] These needs range from those with obvious connections to health and healthcare access (correction of housing conditions that exacerbate asthma, legal advocacy for domestic violence survivors needing protection from their abusers, appeals of unlawful health insurance denials on behalf of persons in need of treatment, and so forth) to those with more attenuated but no less important connections to health and well-being (special education advocacy, disability benefits access, estate planning and guardianship preparations for persons with terminal illness and their families, vindicating non-discrimination rights, and many more). The MLP legal partners often have been characterized as an adjunct to social work infrastructure (itself, of course, historically considered an adjunct to the clinical team) in helping patient-families to meet their basic needs.

Historically, the professional adjunct framework has positioned MLP projects primarily to “catch” individual patients’ emergency legal needs that are filtered through existing healthcare “triage” systems – which tend to focus on acute needs. This default MLP operating model aligned with the long-standing orientation of legal services agencies to allocate the majority of their scarce resources to those people at the greatest legal (and immediate human) risk.[xi]

This professional adjunct MLP framework may be revised in the coming years, substantially, by the Patient-Centered Medical Home (PCMH) model, which embodies five key attributes and functions: (1) comprehensive care; (2) patient-centered care; (3) coordinated care; (4) accessible services; and (5) quality and safety.[xii] At least in theory, this model urges healthcare delivery systems (and the teams that comprise them) to be built around the patient’s reality, whatever that may be, and to that extent the model may productively disrupt long-standing organizational charts and service flow models. If fully realized, a patient treated in a PCMH will benefit from a “hub” (such as a primary care physician) with many integrated, coordinated “spokes” (a nurse; and, as needed, a mental health provider, a social worker, a substance use counselor, a housing advocate, and so forth).

As described below, sharing a “room” in the patient-centered medical home with legal advocates – a level of systematic integration thus far without precedent – might also allow for more proactive, population-level benefits for vulnerable patients and the healthcare teams that treat them. Massachusetts already has been a leader in this regard. The Massachusetts payment reform legislation signed in August 2012 invites the State’s Office of Medicaid, when developing new cost containment methodologies that will impact healthcare delivery to a range of patient populations in the Commonwealth, to account for the costs of

care coordination and community based services provided by allied health professionals, including but not limited to community health workers, legal advocates, medical interpreters, clinical prevention specialists, human services workers, social workers, and licensed alcohol and drug counselors (emphasis added).[xiii]

This provision –- developed and advanced by the Disparities Action Network ( –

is a milestone acknowledgment of the broad diversity of professionals required to keep people healthy.

A Corollary Framework: Advancing Population Health and Well-Being Through Structured Integration of Legal Advocates

In medicine, prevention is the province of public health[xiv] and, to some degree, primary care. Primary care is understood generally to be comprehensive first contact and continuing care for patients, with a focus on primary prevention but also diagnosis, referral, and occasional management of conditions. Public health systems are charged with preventing disease and promoting good health within groups of people, and those systems deploy unique strategies (such as policy development, research, door-to-door outreach campaigns, and population health surveillance) to achieve these goals.

In the last five years, MLP services increasingly have been described as a new kind of public health tool,[xv] with accompanying integration into a range of public health systems. In September 2011, the New York State Legislature amended its public health law to define and endorse “Health-Related Legal Services Programs.”[xvi] The U.S. Health Resources and Services Administration (HRSA, part of Health and Human Services) is supporting the model in a variety of ways, including hosting a current MLP demonstration project involving Healthy Start programs in three communities.[xvii] Healthy Start programs are committed to reducing infant mortality and other health disparities affecting communities of color.

When thinking about the role of legal collaborations in the context of combating health disparities, it is necessary to parse the concept of health equity, which often is imprecisely conflated with the phrase “health disparities.” This Boston Public Health Commission Center for Health Equity and Social Justice explanation is useful:

Health disparities, or health inequalities, are differences in the presence of disease, health outcomes, or access to health care between population groups. Health inequities, on the other hand, are differences in health that are not only unnecessary and avoidable, but, in addition, are considered unfair and unjust. Health inequities are rooted in social injustices that make some population groups more vulnerable to poor health than other groups.

Consider the following example. Male babies are generally born at a heavier birth weight than female babies. This is a health disparity. While there may be a difference in the birth weight between male babies and female babies, the difference is unavoidable and rooted in genetics. On the other hand, babies born to Black women are more likely to die in their first year of life than babies born to White women. Some of this difference is due to poverty – a higher percentage of Black mothers are poor and face hardships associated with poverty that can affect their health. But we find differences in the health and Black and White mothers and babies even if we compare Blacks and White[s] with the same income. Many scientists believe that it is racism experienced by Black women that explains this extra difference. Racism creates stress, and too much stress creates a risk for mothers and babies. This is a health inequity because the difference between the groups is unfair, avoidable and rooted in social injustice.[xviii]

This definition of health inequity – emphasizing “unnecessary,” “avoidable”, “unfair,” and “unjust” conditions – reveals that in many respects (and as further discussed below), health equity work is the public health iteration of the civil rights work historically led by, and almost exclusively associated with, the legal community.

MLP as a Civil Rights Strategy

In many respects, health equity work is civil rights work. Its focus on changing conditions (such as structural racism) that have the effect of harming large groups of people – regardless of whether responsible decision-makers intended these harms – is fundamentally analogous to disparate impact theory, a legal concept that has driven decades of important national civil rights litigation on behalf of a range of populations. The work of public health departments in both (a) educating people about health risks and (b) monitoring the prevalence of health problems is directly analogous to the civil rights outreach and enforcement efforts of bodies like the Fair Housing Center of Greater Boston and the Massachusetts Attorney General’s office.

To the extent that MLP projects serve to identify patterns and practices that put vulnerable patient populations at health risk (or greater health risk), they can play an important role in supplying both (a) documentation of the harms to a group of patients’ health and well-being, and (b) linkages to medical experts who can attest to the current and potential future health risks to that population.[xix]

This has important implications for a range of civil rights-informed legal strategies that are gaining more currency nationally, and increasing relevance and impact regionally. Spearheaded by the Kirwan Institute for the Study of Race and Ethnicity at The Ohio State University, opportunity mapping is deployed to “illustrate where opportunity rich communities exist (and assess who has access to those communities) and to understand what needs to be remedied in opportunity poor communities” based on systematic analysis of key metrics across zip codes and neighborhoods.[xx] With funding from the Massachusetts Legal Assistance Corporation, in 2009, the Massachusetts Law Reform Institute’s Race Equity Unit supported publication of a groundbreaking report on opportunity disparities in Massachusetts.[xxi]

MLP as a Community Lawyering Strategy

The community lawyering model, with deep roots in criminal justice[xxii] and environmental justice practice, has evolved significantly over the last two decades. Key elements of this model include: (1) structured collaboration with community members (around priority-setting and strategy, etc.), (2) a focus on “empowering communities, promoting economic and social justice, and fostering systemic change,” and (3) interdisciplinary thinking and collaboration.[xxiii] One example of a thoughtful community lawyering practice in Massachusetts is the Environmental Justice Legal Services project at Alternatives for Community & Environment.[xxiv]

Increasingly, MLP projects are understood to be effective mechanisms for meaningfully infusing legal advocacy work with community perspectives and client priorities.[xxv] A range of MLP sites are integrated into formal community lawyering practices, including but not limited to the Community Lawyering Project of the Volunteer Legal Services Program of the Bar Association of San Francisco, and the Community Lawyering Clinic at the University of New Mexico School of Law.

MLP as Preventive Law

Notions of preventive law are embedded in a familiar paradigm: the customary practice of corporations and organizations to engage legal counsel on how to both conduct business successfully and, simultaneously, avoid legal problems. Typically this is accomplished through integration of in-house general counsels, or external lawyer advisors on a range of subject matters. However, a deeper theoretical basis for preventive law is developing, with significant support over the last two decades from the National Center for Preventive Law at California Western School of Law.

Preventive law theory underscores law as, fundamentally, a problem-solving tool.[xxvi] It also argues that legal problem-solving is most effective when approached as problem prevention.[xxvii] Honoring the early theoretical contributions of Louis M. Brown, preventive law theory advocates, among other things, that clients’ engage in periodic legal check-ups.[xxviii] This concept historically has been viewed as a luxury in the access to justice domain, primarily because of perpetual and deepening resource constraints that necessarily drive a more reactive referral and assistance paradigm. Preventive law theory invites consideration of whether MLP presents an opportunity for patients to have access to a “primary care legal advocate” dedicated to primary prevention of health-harming legal problems.[xxix]

Challenges to Fully Realized MLP Integration in the Next Decade

Not all interests align.

Historically, the MLP model has leveraged the substantial intersection of institutional interests and individual client (patient) interests. This predictably has eased joint, interdisciplinary priority-setting processes for MLP projects. After all, eliminating an asthmatic patient’s housing conditions problem through legal strategies dovetails with a healthcare team’s interest in reducing preventable emergency department or inpatient readmissions for that patient. This concrete alignment also has meant that MLP projects do not tackle legal issues on behalf of patients that might be adverse to the interests of their partner institutions (classic medical debt advocacy, medical malpractice, and so forth).

It remains to be seen whether MLP projects focused on health-harming legal issues that do not hew closely to the incentives embedded in healthcare finance systems will flourish, at least in the short- and mid-term.

Interdisciplinary, public health-informed work challenges deeply-held professional culture and identity attributes.

Particularly in the legal services domain, engaging in interdisciplinary work focused on prevention demands a substantial reorientation, implicating both expansion of professional values and priorities and adaption of front-line resource allocation/workloads.

First, effective partnering between the healthcare sector and the access to justice community requires that the access to justice community in particular (1) understand its (healthcare) allies and the systems that drive them, and (2) embrace its professional responsibility to conduct zealous advocacy for clients as well as develop strong professional cultural competence when communicating with allies from other professions – professions that increasingly are inviting, and funding, legal services agencies.

Second, public health and healthcare ventures are extraordinarily and data-driven, and the access to justice community must accelerate its current efforts to support data collection, aggregation, and analysis relating to the varied impacts of its work on patients and on society. Many such efforts are underway nationally, regionally, and locally.

Third, the access to justice community and the healthcare community share a common history of seeking to divide team-based labor through reliance on the notion of “practicing to the top of one’s license.” In the access to justice domain, this has reinforced a culture of lawyer as litigator and combatant (perhaps analogous to a “legal surgeon”), and a corresponding de-valuing of legal screening, referral, and delivery of legal information and advice short of full litigation (typically performed by legal hotline and related infrastructures, perhaps analogous to “legal primary care”). It bears noting that social work has experienced similar dynamics in the healthcare environment, e.g. those engaging in clinical therapy are positioned differently than those focused on addressing patients’ material hardships and other basic needs barriers to health and well-being.

While there may be reasonable differences of opinion regarding the efficacy of various strategies in a significantly resource-constrained environment, there is no doubt that a true public health-infused model of legal services delivery would allocate more resources upstream than downstream. Perhaps the common ground within the access to justice community will be found in upstream systemic, policy, or impact, work. Achieving this kind of common ground certainly would require funders of legal services delivery for low-income people to adapt their priorities accordingly, and to substantially move away from the case-counting model.

There are other sectors, aside from healthcare, with which the legal community could systematically partner in ways that could be productive for vulnerable members of society.

The “footprint” of healthcare in American society is so expansive, and the intersection of that sector with low-income, medically vulnerable consumers so deep, that medical-legal partnership was a natural nexus for a sustained experiment in interdisciplinary access to justice. But healthcare certainly is one among several, if not many, sectors that present such opportunities, albeit if at a smaller scale.

Will the MLP movement lead new experiments in these other domains, such as education-legal partnerships? Or will the next decade be focused on replication and deepening of MLP infrastructures in many more communities and healthcare delivery systems across the country? Or are these false distinctions, since all roads (schools, prisons, etc.) lead back to the bedrock concept of social determinants of health and well-being?

It would appear that given the expanding theoretical landscape on top of which the MLP model “sits,” there is ample opportunity for these and many other consequential questions to be answered thoughtfully in the next decade.


Samantha J. Morton is Executive Director of Medical-Legal Partnership | Boston. She is co-chair of the Boston Bar Association Delivery of Legal Services Section, and also serves on the Health Law Section’s Steering Committee. Ms. Morton is a graduate of the BBA’s Public Interest Leadership Program, and has taught Health Law at New England Law | Boston. Further biographical details can be found at: Staff & Consultants.

[i] The author thanks JoHanna Flacks, Medical-Legal Partnership | Boston’s Legal Director, for her critical conceptual input on this article.

[ii] Setting the Stage: Need for MLP, Nat’l Center for Med. Legal Partnership, (last visited Jan. 16, 2013); Transforming Delivery Models for Healthcare and Law, Nat’l Center for Med. Legal Partnership (last visited Jan. 16, 2013); The Movement, Nat’l Center for Med. Legal Partnership, (last visited Jan. 16, 2013); Awards and Recognition, Nat’l Center for Med. Legal Partnership, (last visited Jan. 16, 2013); Academic Articles, Nat’l Center for Med. Legal Partnership, (last visited Jan. 16, 2013).

[iii] History: One Doctor’s Vision, Nat’l Center for Med. Legal Partnership, (last visited Jan. 15, 2013).

[iv] Medical Schools, Nat’l Center for Med. Legal Partnership, (last visited Jan. 15, 2013). See generally Amy T. Campbell, Teaching Law in Medical Schools: First, Reflect, 40 J.L. Med. & Ethics 301 (2012); Jeremy Long et al., Developing Leadership and Advocacy Skills in Medicine Through Service Learning, 17 J. Pub. Health Mgmt. and Prac. 369 (2011).

[v] Residency Programs, Nat’l Center for Med. Legal Partnership, (last visited Jan. 15, 2013).

[vi] See generally Poverty, Health and Law: Readings and Cases for Medical-Legal Partnership (Elizabeth Tobin Tyler et al. eds., 2011) (positioning health in the broader social context of people’s lives and advancing legal advocacy and related interdisciplinary strategies as key responses to complex social problems).

[vii] Advocacy Health Alliances: 2012 Advocacy Health Alliance Symposium, Pub. Interest L. Clearinghouse, (last visited Jan. 15, 2013).

[viii] See Jeanette Zelhof & Sarah Fulton, MFY Legal Services’ Mental Health-Legal Partnership, 44 Clearinghouse Rev. 535, 535 (2011). Of course, the Americans with Disabilities Act was passed by Congress in 1990, and this informed legal services priority-setting greatly.

[ix] See generally Biographies, Bellow-Sacks Access to Civ. Legal Services Project,; Gary Bellow’s Papers, Bellow-Sacks Access to Civ. Legal Services Project,;

[x] Stewart B. Fleishman et al., The Attorney As the Newest Member of the Cancer Treatment Team, 24 J. Clinical Oncology 2123, 2123–26 (2006); Barry Zuckerman et al., Why Pediatricians Need Lawyers to Keep Children Healthy, 114 Pediatrics 224, 224–28 (2004); Paul R. Tremblay et al., Commentary: The Lawyer is In: Why Some Doctors are Prescribing Legal Remedies for Their Patients, and How the Legal Profession Can Support this Effort, 12.2-3 B.U. Pub. Int. L.J. 505-527 (2003).

[xi] The access to justice infrastructure has been compelled to ration its services since its inception, due to profound (and often politicized) resource constraints. This challenge has only deepened over the last few years. See I. Glenn Cohen, Rationing Legal Services, J. Legal Analysis (November 25, 2012) (forthcoming; available at SSRN:

[xii] Patient Centered Medical Home Resource Center: Quality and Safety, U.S. Dep’t of Health and Hum. Servs. (last visited Jan. 15, 2013).

[xiii] Chapter 224 of the Acts of 2012.

[xiv] Public health has critical corollaries in social medicine, population medicine, and preventive medicine. References to public health herein incorporate those practices.

[xvi] See (last visited Jan. 16, 2013).

[xvii] Hearing on Numerous Public Health Bills Before Comm. on Energy and Commerce, Subcomm. on Health, U.S.H.R., 111th Congress (2010) (statement of Marcia K. Brand, Ph.D., Deputy Administrator, Health Resources and Services Administration, U.S. Department of Health and Human Services), available at (last visited Jan. 16, 2013).

[xviii] What is Health Equity?, Boston Pub. Health Comm’n., (last visited Jan.15, 2013).

[xix] One can predict that a human rights-based theoretical basis for MLP interventions is close at hand. In November 2012, the Program on Human Rights and the Global Economy and the Program on Health Policy and Law at Northeastern University School of Law hosted an institute on Human Rights and the Social Determinants of Health, at which an MLP scholar presented. 

[xx] GIS Mapping, Kirwan Inst., (last visited Jan. 15, 2013).

[xxi] Report Finds That 90% of African-Americans and Latinos are in the Lowest “Opportunity” Neighborhoods in Massachusetts, Mass. L. Ref. Inst., (last visited Jan. 15, 2013).

[xxii] Roger L. Conner, Community Oriented Lawyering: An Emerging Approach to Legal Practice, 242 Nat’l Inst. Justice J. 27, 27-33 (2000). 

[xxiii] Karen Tozark et al., Conversations on Community Lawyering: The Newest (Oldest) Wave in Clinical Legal Education, 28 J. L. & Pol. 359, 364 (2008).

[xxiv] See generally EJLS: Environmental Justice Legal Services, Alternatives for Community and Env., (last visited Jan. 15, 2013).

[xxv] See Liz Tobin Tyler, Aligning Public Health, Health Care, Law and Policy: Medical-Legal Partnership as a Multilevel Response to the Social Determinants of Health, 8 J. Health & Biomed. L. 211 (2012).

[xxvi] See Thomas D. Barton, Preventive Law for Three-Dimensional Lawyers, 19 Preventive L. Rptr. 29 (2001).

[xxvii] See id.

[xxviii] David B. Wexler, Beyond Analogy: Preventive Law as Preventive Medicine, National Center for Preventive Law Symposium (2000), available at (last visited Jan. 16, 2013).

[xxix] See Samantha Morton et al. (2009). Advancing the Integrated Practice of Preventive Law and Preventive Medicine. In Thomas D. Barton, Ed., Preventive Law and Problem Solving: Lawyering for the Future. Lake Mary, Florida: Vandeplas Publishing.

The “Dual Eligibles” Demonstration: Massachusetts Becomes First in the Nation to Implement a New Health Care Model for Medicare-Medicaid Beneficiaries

By: Margaretta Homsey Kroeger, Esq.


In August 2012, Massachusetts became the first state to gain federal approval to test a new model for providing integrated health care to individuals who are eligible for both Medicare and Medicaid, known as “dual eligibles.”[i]  The dual eligibles demonstration, detailed in a Memorandum of Understanding reached with the federal Centers for Medicare and Medicaid Services (“CMS”), will significantly alter the way health care is coordinated and funded for up to 115,000 individuals statewide and, if successful, could be replicated nationally.[ii]

Prompted by the passage of the Affordable Care Act, CMS has invited states to develop new service delivery and payment models in order to improve the quality of care for dual eligibles, while also reducing the high cost of care for this population.[iii]  Dual eligibles account for a disproportionately large share of both Medicare and Medicaid spending because of their complex health needs and low incomes, a situation that has been exacerbated by cost-shifting and a lack of coordination between the two programs.[iv]  As a result, CMS has made it a priority to “significantly increase” the number of dual eligibles enrolled in systems that can integrate their care and align the financial incentives of the Medicare and Medicaid programs.[v]

Massachusetts’ new demonstration applies to dual eligibles ages 21 to 64, who receive Medicare because they have a chronic illness or disability and who are also financially eligible for Medicaid assistance.[vi]  The demonstration is intended to reduce the cost of care for these individuals over time by enrolling them in new managed care organizations that will receive prospective blended capitated payments to provide coordinated care.  These organizations will integrate the provision of Medicare and Medicaid services for dual eligibles, including primary, acute, and behavioral health care, along with long-term services and supports.[vii]

Many details still need to be finalized before enrollment begins in July 2013, and questions remain about whether the demonstration will in fact be able to reduce costs without sacrificing the quality of care for this particularly vulnerable population.  In the coming months, policymakers, providers, health plans, and advocates on the state and national level will be monitoring the implementation of the Massachusetts plan closely and evaluating whether it could become a national model.

This article provides a broad overview of the development of the state’s new dual eligibles demonstration.  First, it discusses the national profile of the dual eligible population and the current model for providing health care to dual eligibles.  It then details the provisions of the Affordable Care Act targeted at improving care for dual eligibles and efforts by CMS to promote integrated care demonstration projects.  Third, it describes the dual eligible population in Massachusetts and summarizes the contents of the state’s demonstration plan.  Finally, it discusses various stakeholders’ concerns about the plan and the potential challenges and possible impact that the plan may have.


The Dual Eligible Population: A National Profile

Nationwide, there are approximately nine million people who are dually eligible for both the Medicare and Medicaid programs.[viii]  These individuals are eligible for Medicare either because they are age 65 or older, or, if they are under 65, because they have a permanent disability that qualifies them to receive federal Social Security Disability Insurance benefits or because they have end-stage renal disease.[ix]  Medicare beneficiaries may also qualify for Medicaid assistance if they are low-income or meet certain other requirements.  On average, dual eligibles are much poorer than other Medicare beneficiaries—86 percent of dual eligibles had incomes below 150 percent of the federal poverty level in 2008, compared to 22 percent of other beneficiaries.[x]

Dual eligibles receive primary health insurance coverage through Medicare, which covers inpatient and outpatient care, diagnostic and preventive services, prescription drugs, short-term rehabilitative and skilled nursing care, and some home health services.[xi]  Medicaid supplements this coverage by helping to pay for Medicare premiums and copayments, and may also provide other benefits that are not covered by Medicare, including long-term services such as nursing and home health care and personal care attendant services.[xii]  About 77 percent of beneficiaries, known as “full” dual eligibles, receive complete Medicaid benefits in addition to their Medicare coverage.[xiii]  The remainder receives limited Medicaid assistance that helps to cover Medicare premiums and cost-sharing expenses.[xiv]

The cost of care for dual eligibles is disproportionately expensive because they have more complex medical needs than the general Medicaid and Medicare populations.  Dual eligibles are much more likely to suffer from multiple chronic health conditions, to have cognitive and mental impairments, and to require home and personal care services or nursing home care.[xv]  Additionally, dual eligibles are more likely to utilize expensive services, such as emergency room visits, hospitalizations, post-acute care, and long-term care, than other beneficiaries.[xvi]  As a result, while dual eligibles made up 15 percent of Medicaid and 20 percent of Medicare enrollees, they accounted for 39 percent of Medicaid and 31 percent of Medicare expenditures in 2008.[xvii]

Room for Reform: The Affordable Care Act and Dual Eligibles

As national health care reform gained momentum, policymakers recognized opportunities to control costs and improve the delivery of care for the dual eligible population.  It was clear that the current structure can be inefficient and unnecessarily expensive.  The provision of services to dual eligibles is often not coordinated between the Medicare and Medicaid programs.  Differences in coverage rules, provider networks and plans, and other program regulations have led to problems in navigating the bifurcated system and to inadequate or duplicative care.[xviii]

Further, the financial incentives of the Medicare and Medicaid programs are not aligned, which encourages cost-shifting between the programs.[xix]  In a 2010 report to Congress, the independent Medicare Payment Advisory Commission (“MedPAC”) found that the programs “often work at cross-purposes,” noting that conflicting incentives “encourage providers to avoid costs rather than coordinate care, and poor coordination can raise spending and lower quality.”[xx]  For example, a nursing home receiving Medicaid payments might be incentivized to transfer a dual eligible resident to a hospital, where Medicare would cover costly services, rather than provide the services itself.[xxi]  Similarly, a hospital might be financially incentivized to transfer a patient to a nursing home, without considering the long-term implications for cost containment and quality of care.[xxii]  The Commission also pointed out that under the current system states are “more inclined to invest in programs to lower their long-term care spending,” which comes out of state Medicaid funds, than to create programs that would avoid unnecessary hospitalizations for dual eligibles, because doing so would benefit the Medicare program rather than the state.[xxiii]

In order to address these issues, the 2010 federal Affordable Care Act health reform legislation[xxiv] contains provisions intended to increase coordination and remove the programs’ conflicting financial incentives.  First, § 2602 of the Act created a new Federal Coordinated Health Care Office within CMS, also known as the Medicare-Medicaid Coordination Office.[xxv]  The stated purpose of the office is to “bring together” the officers and employees of both programs to: (1) “more effectively integrate benefits” under the Medicare and Medicaid programs, and (2) “improve coordination” between the federal government and the states concerning dual eligibles.[xxvi]  Specifically, the goals of the office are set out as follows:

“(1) Providing dual eligible individuals full access to the benefits to which such     individuals are entitled under the Medicare and Medicaid programs.

“(2) Simplifying the processes for dual eligible individuals to access the items and             services they are entitled to under the Medicare and Medicaid programs.

“(3) Improving the quality of health care and long-term services for dual eligible    individuals.

“(4) Increasing dual eligible individuals’ understanding of and satisfaction with     coverage under the Medicare and Medicaid programs.

“(5) Eliminating regulatory conflicts between rules under the Medicare and            Medicaid programs.

“(6) Improving care continuity and ensuring safe and effective care transitions for             dual eligible individuals.

“(7) Eliminating cost-shifting between the Medicare and Medicaid program and    among             related health care providers.

“(8) Improving the quality of performance of providers of services and suppliers    under the Medicare and Medicaid programs.”[xxvii]

Further, § 3021 of the Affordable Care Act established the Center for Medicare and Medicaid Innovation (“CMMI”) within CMS, which is intended “to test innovative payment and service delivery models to reduce program expenditures…while preserving or enhancing the quality of care” for Medicare and Medicaid beneficiaries.[xxviii]  The CMMI was granted authority under §1115A of Title XI of the Social Security Act to waive certain requirements of the Medicare and Medicaid programs in order to test 20 possible models set out in the Act.[xxix]  Two of the models specifically reference dual eligibles: (1) “[a]llowing States to test and evaluate fully integrating care for dual eligible individuals in the State, including the management and oversight of all funds under the applicable titles with respect to such individuals;” and (2) “[a]llowing States to test and evaluate systems of all-payer payment reform for the medical care of residents of the State, including dual eligible individuals.”[xxx]

The Act provides for phased testing of these payment and service delivery models through the CMMI.  In the first phase, models will be tested to determine their effect on program expenditures and the quality of care.[xxxi]  In the second phase, the Secretary of Health and Human Services may expand the duration and scope of a model through rulemaking, “including implementation on a nationwide basis.”[xxxii]  In order to expand a particular model, the Secretary must determine that the model is expected either to reduce spending without reducing the quality of care, or to improve the quality of care without increasing spending.[xxxiii]  Further, the Secretary must determine that the expansion “would not deny or limit the coverage or provision of benefits” for the applicable individuals, and the CMS chief actuary must certify that the expansion would reduce, or at least not increase, net program spending.[xxxiv]

The Call for Integrated Care and Financial Alignment Demonstration Proposals

In April 2011, the Federal Coordinated Health Care Office and the CMMI announced that CMS had awarded contracts to 15 states under a new “State Demonstrations to Integrate Care for Dual Eligible Individuals” initiative.[xxxv]  These states, including Massachusetts, were each awarded up to $1 million “to design strategies for implementing person-centered models that fully coordinate” care for dual eligibles, and CMS indicated that it would be working with these states “to implement the plans that hold the most promise.”[xxxvi]

In July 2011, CMS sent a letter to all state Medicaid directors detailing two new “financial alignment models” that it was seeking to test to improve quality and reduce the cost of care for dual eligibles, and inviting all interested states to submit letters of intent to participate.[xxxvii]  CMS observed that a “longstanding barrier” to integrating care for dual eligibles “has been the financial misalignment between Medicare and Medicaid,” noting that because duals receive services from both programs, the states do not have an incentive to invest in initiatives to better coordinate their care.[xxxviii]  To address this structural problem, CMS proposed two options for realigning the programs’ financial incentives, which it believes will lower costs for both the states and the federal government: a capitated model and a managed fee-for-service model.[xxxix]

Under the first option, a proposed “capitated model” would integrate care for dual eligibles by creating three-way contracts between CMS, the state, and health plans that would be selected through a competitive joint procurement process.[xl]  The plans would receive a blended capitated rate for “the full continuum of benefits” provided to dual eligibles by both Medicare and Medicaid, and the rate would be actuarially developed to provide savings to both the state and federal government.[xli]

Under the second option, a “managed fee-for-service model” or “FFS model,” the state would provide coordinated care for dual eligibles.[xlii]  The state would then be eligible for a retrospective performance payment if it achieved a certain level of savings for the Medicare program (after controlling for any increase in federal Medicaid costs) and if it met quality thresholds.  CMS noted that this model could be attractive to states that had already invested in a coordinated FFS model for Medicaid beneficiaries, and to states that wanted to take advantage of new opportunities through the Affordable Care Act to establish Accountable Care Organizations (ACOs) or Medicaid health homes.[xliii]

By the spring of 2012, 26 states had submitted proposals for the financial alignment demonstration to CMS, including Massachusetts and the 14 other states that had been awarded contracts in the initial 2011 integrated care initiative.[xliv]  CMS has been working with state officials to meet demonstration requirements with the eventual goal of entering into a formal Memorandum of Understanding with each state.

The Massachusetts Dual Eligibles Demonstration Plan

Profile of Dual Eligibles in Massachusetts

There are approximately 242,000 dual eligibles in Massachusetts.[xlv]  In 2009, they accounted for 43 percent of the state’s Medicaid spending, compared with a national average of 38 percent.[xlvi]  Within the Massachusetts dual eligible population, approximately 115,000 are between the ages of 21 and 64, and qualify for Medicare due to chronic illness or disability rather than age.[xlvii]

The Massachusetts Medicaid Policy Institute (“MMPI”) in collaboration with the Massachusetts Medicaid Program (MassHealth) found that combined Medicare and Medicaid spending for the 21 to 64 age group was $2.5 billion in 2008, accounting for 16 percent of all Medicare spending and 20 percent of all Medicaid spending in the state.[xlviii]  On average, combined annual spending was $23,700 per capita for this group.[xlix]

The MMPI further found that 60 percent of Massachusetts dual eligibles in the 21 to 64 age group had diagnoses in at least two of three major categories: physical illness or disability, behavioral diagnosis, or developmental disability.[l]  This subset represented more than 80 percent of total spending.[li]  Spending levels were particularly high for dual eligibles in this age group with developmental disabilities, especially when combined with other diagnoses.  For example, annual per capita spending for dual eligibles diagnosed with a developmental disability was $31,800 on average, rising to $71,300 for dual eligibles who also had a behavioral and physical diagnosis in addition to their developmental disability.[lii]

The Massachusetts Demonstration and Memorandum of Understanding

On August 23, 2012, Governor Patrick’s administration announced that Massachusetts had become the first state to sign a Memorandum of Understanding (“MOU”) with CMS to begin implementation of an integrated care and financial alignment demonstration for dual eligibles.[liii]  The Massachusetts plan focuses on the 115,000 “full” dual eligibles in the state between the ages of 21 and 64 and will last for three years.[liv]  The state has decided to test the capitated model proposed by CMS via three-way contracts between the state, CMS, and new managed care entities called Integrated Care Organizations (“ICOs”) that will receive a blended payment to cover all Medicare and Medicaid services.[lv]

The MOU between Massachusetts and CMS describes the demonstration’s key objectives as follows: “[T]o improve the beneficiary experience in accessing care, deliver person-centered care, promote independence in the community, improve quality, eliminate cost shifting between Medicare and Medicaid and achieve cost savings for the Commonwealth and Federal government through improvements in care and coordination.”[lvi]  The MOU also emphasizes the importance of dual eligible beneficiaries’ involvement and ability to self-direct their care under the new demonstration, and it states that the parties expect improvements in the quality of care and in transitions among care settings for dual eligibles.[lvii]

The stated purpose of the MOU is to lay out the “principles under which the initiative will be implemented and operated” and to outline the preparations that will be necessary for the plan’s implementation.  The MOU notes that additional details, including specifics about the responsibilities of the managed care plans, will be contained in the final contracts between the state, CMS, and the ICOs, which at that time were still being selected through the joint procurement process.[lviii]

Benefits and Service Delivery

Generally, ICOs must provide integrated primary care and behavioral health services to each enrollee, coordinated by a designated Care Coordinator or Clinical Care Manager in conjunction with an Independent Living and Long Term Services and Supports (“IL-LTSS”) Coordinator, who will be an independent contractor from a community-based organization.[lix]  Notably, the requirement for the IL-LTSS Coordinator was added to the proposal based on stakeholder comments received by the state as it was developing the demonstration.[lx]  The IL-LTSS Coordinator will be available to act as an independent facilitator between the enrollee, the ICO, and service providers, as well as to provide expertise about community supports and to ensure that the enrollee receives “person-centered” care.[lxi]

The primary care provider, Care Coordinator, IL-LTSS Coordinator, and other providers will together form an Interdisciplinary Care Team that will work with enrollees to develop and implement an Individualized Care Plan.[lxii]  At the outset, the plan will be based on an initial assessment of the enrollee’s medical, behavioral health, and LTSS needs performed by a registered nurse within 90 days of enrollment.  It will also be based on an in-person comprehensive assessment that evaluates the enrollee’s needs in social, functional, medical, behavioral, wellness, and prevention domains.[lxiii]  The comprehensive assessment must describe the enrollee’s strengths and goals, need for specialists, as well as the care management and coordination plans.[lxiv]

The ICOs are required to provide the full continuum of services covered by Medicare and Medicaid to their enrollees as well as a range of supplemental benefits listed in the MOU, including diversionary behavioral health services, community support services, and expanded oral health, personal care attendant, and durable medical equipment services.[lxv]  The MOU explains that medical necessity determinations for services will be based on existing Medicare and MassHealth definitions, except where there is an overlap between the programs; in that situation, the three-way contracts will set out the coverage and rules for particular services.[lxvi]


Under the MOU, Massachusetts will be using a passive enrollment process that will enroll dual eligibles in an ICO managed care plan unless they affirmatively request to opt out of the demonstration.[lxvii]  The state will conduct two passive enrollment periods,[lxviii] prior to which the ICOs will have an opportunity to market their plans and enroll beneficiaries who would like to self-select a plan.[lxix]

For those beneficiaries who do not voluntarily choose a plan, the state hopes to develop an “intelligent assignment” algorithm that will automatically enroll people in particular plans based on factors such as continuing relationships with existing providers and services.[lxx]  These beneficiaries will receive notice at least 60 days prior to being passively enrolled in a plan and will have the opportunity to opt out of enrollment.[lxxi]  Further, once enrolled, dual eligibles may choose to disenroll from their managed care plan on a month-to-month basis.[lxxii]

In order to promote continuity of care, the ICOs must allow enrollees to maintain their current providers and services for up to 90 days after enrollment or until the ICO completes the initial assessment of the enrollee’s needs, whichever comes later.[lxxiii]  Further, under certain circumstances the ICOs will be required to offer single-case, out-of-network agreements to an enrollee’s service providers after the 90-day period if the providers will accept the in-network payment rate.[lxxiv]

Financing, Risk Mitigation, and Program Savings

With respect to financing, the state and CMS will enter into a joint rate-setting process to determine the blended capitated payment rates and contributions will be risk-adjusted.[lxxv]  The MOU provides that the state will arrive at a baseline spending and payment rate for Medicaid based on its historic cost data, and CMS will determine a baseline spending and payment rate for Medicare Parts A and B based on a blend of Medicare Advantage projected payment rates and Medicare fee-for-service standardized county rates, which will be weighted by the proportion of dual eligibles that will be moving from each program to the ICOs.[lxxvi]  The baseline rate for Medicare Part D will be based on the national average monthly bid amount for the calendar year.[lxxvii]

The blended payments to the ICOs will be risk-adjusted.  In addition, the state will be creating “high cost risk pools” to help cover the expense of certain long-term supports and services for high-cost enrollees.[lxxviii]  It will withhold a portion of the ICO Medicaid payments in separate risk pools covering enrollees in different rating categories (those likely to need facility-based care or who have “high” community needs).  Risk pool funds will then be divided and distributed among the ICOs based on their share of total costs for these enrollees above a specified threshold amount, to be determined in the three-way contracts.[lxxix]  Finally, the demonstration will include risk corridors during the first year to prevent overpayment or underpayment to particular ICOs.[lxxx]

The MOU states that the demonstration is expected to generate savings for both programs by applying designated savings percentages to the baseline Medicaid and Medicare Part A and B rates in determining the capitated payment rates.[lxxxi]  In the first year of the demonstration, the savings percentage will be one percent, in the second year, two percent, and in the third year it will increase to four percent.[lxxxii]  The savings percentages will not be applied to the Medicare Part D rate.[lxxxiii]  The MOU notes that the state and CMS “agree that there is reasonable expectation” that savings can be achieved while paying the ICOs “capitated rates that are adequate to support access to and utilization of medical and non-medical benefits according to beneficiary needs.”[lxxxiv]

The MOU also establishes a “quality withhold” policy whereby Medicare and Medicaid will withhold a designated percentage of the capitated rate which it will only pay out to the ICOs if they show that they have met certain quality thresholds.[lxxxv]  The quality withhold will be one percent in the first year of the demonstration, two percent in the second year, and three percent in the third.[lxxxvi]

     Appeals, ADA Compliance, Monitoring, and Evaluation

The MOU provides for a unified grievance and appeals process,[lxxxvii] and for the establishment of at least one consumer advisory committee that will give input to the ICO governing boards.[lxxxviii]  The ICOs must also include consumers with disabilities within their governing structure.  In addition, the state and CMS will be developing both monitoring and quality measures to ensure that ICOs and providers comply with the Americans with Disabilities Act, including providing physical access and flexible scheduling, as well as accommodating enrollees who have hearing or cognitive impairments, or who do not speak English.[lxxxix]

Under the MOU, CMS will pay for an independent evaluator to monitor and evaluate the Massachusetts demonstration.  The evaluator will look at enrollee health outcomes, the quality and utilization of care across settings, enrollees’ satisfaction and experience, administrative and system changes and efficiencies, and overall costs or savings for the Medicare and Medicaid programs.[xc]

Implementation: Future Challenges and Opportunities

As the MOU makes clear, many details of the demonstration project still have to be hammered out in the contracts between the state, CMS, and the new ICOs.  Stakeholders and policymakers nationwide will be watching to see how issues are resolved in the contracts and how implementation progresses, as the Massachusetts model may have a significant impact on the demonstrations being developed in other states.

The state Executive Office of Health and Human Services (“EOHHS”) announced in November 2012 that it had selected six organizations to serve as ICOs for the demonstration: Blue Cross and Blue Shield of Massachusetts HMO Blue Inc.; Boston Medical Center HealthNet Plan; Commonwealth Care Alliance; Fallon Total Care, LLC; Neighborhood Health Plan; and Network Health, LLC.[xci]  These organizations are currently engaged in a joint federal and state readiness review process.  The ICOs will then negotiate the contracts with the state and CMS, which are expected to be finalized in March or April 2013.[xcii]

Dual eligibles and disability and consumer advocates in Massachusetts and across the country have said that they see great promise in the demonstration.  Many view it as a critical opportunity to improve the quality of care for dual eligibles and to increase the level of control that they have over the decisions being made about their care and the long-term services and supports they receive.[xciii]  However, these groups and other organizations have also raised concerns about the overall approach that CMS is taking with the demonstration projects and about the contents of the Massachusetts MOU.

Most broadly, state and national groups have expressed unease about the wide scope and short implementation timeline of the proposed dual eligible demonstrations, the use of passive enrollment, and whether capitated rates will be sufficient for plans to provide adequate care to such medically complex individuals.  For example, in comments submitted to CMS, the Medicare Payment Advisory Commission (“MedPAC”) stated that it believed the scope of the demonstrations was too broad, should be limited to only a few states, and should not apply to all or even to a majority of full dual eligibles in a given state.[xciv]  It noted that given the current size of the proposed demonstrations, plans initially might not have the capacity to care for such large numbers of dual eligibles.  Further, MedPAC pointed out that if demonstrations were not successful it could be very challenging to transition so many people out of the plans.  It also suggested that CMS consider not applying savings reductions to capitated payment rates in the first year of the demonstrations, given how much uncertainty there is about what actual program costs will be and the ability of plans to provide care under reduced rates.[xcv]

The American Medical Association (“AMA”) has suggested that CMS delay the implementation of the dual eligible demonstrations for at least a year to provide more time for stakeholders to review and comment on state proposals and to work with CMS, the states, and health plans to address areas of concern.[xcvi]  The AMA, the Federation of American Hospitals, and other provider associations have also voiced concern about whether providers will continue to be reimbursed at Medicare rates under the new demonstrations, or if plans will try to achieve savings by reducing rates rather than by improving coordination of care.[xcvii]

With respect to Massachusetts in particular, there is concern about the MOU’s lack of specificity and the number of issues that still need to be resolved in the three-way contracts, as well as whether the implementation process will be sufficiently transparent.  Various groups have raised questions about whether the ICOs will have enough time to build the necessary competence and capacity to adequately serve such a high-need population before enrollment begins.[xcviii]  Further, many are worried about the passive enrollment process, specifically that duals may not fully understand the program—especially those with intellectual and developmental disabilities—and that once enrolled they could lose access to providers with whom they have built vital long-standing relationships.[xcix]  There is also unease about the method that the state will be using to assign dual eligibles to particular plans and whether the disability community will be consulted about its design.[c]

To address these and other concerns, the state has announced the creation of an “Implementation Council” that it says will promote transparency and actively monitor implementation of the duals demonstration.[ci]  The Council will include dual eligibles as well as representatives from medical, behavioral health and long-term services and supports providers and from community-based organizations.[cii]  The state has indicated that it also plans to establish an ombudsperson role for the demonstration.[ciii]

Finally, EOHHS recently announced that the state and CMS have decided to delay demonstration enrollment by several months in order to “ensure that there is sufficient time for all critical implementation milestones to be achieved…including robust public awareness and targeted outreach efforts so that individuals have a meaningful opportunity to learn about the Demonstration and select an ICO prior to the auto-assignment process.”[civ]  The MOU originally provided for ICO plan marketing to begin in January 2013, with voluntary self-selected enrollment beginning in April 2013 and passive enrollment periods slated for July and October 2013.  Under the revised implementation timeline, ICOs will now begin outreach to dual eligibles in May 2013 for voluntary enrollment beginning July 1, 2013, followed by the two passive enrollment periods beginning October 1, 2013 and January 1, 2014.[cv]


As the dual eligibles demonstration is implemented in the coming months and years, it remains to be seen whether the state will be able to lower costs by more effectively and efficiently providing care for dual eligible beneficiaries, and how the state’s experience with using a capitated financial model will compare with that of states choosing to implement a managed fee-for-service plan.  What is certain is that the rest of the country will be watching with interest to see whether Massachusetts is successful in its latest attempt to lead the nation in improving the quality of health care while containing its cost.

Margaretta Homsey Kroeger is a Skadden Fellow at Greater Boston Legal Services in the Elder, Health and Disability Unit, where she focuses on advocating for youth with disabilities who are aging out of the foster care system. She provides outreach and direct legal representation to youth who need assistance accessing disability benefits, health care, and related services. Prior to her fellowship, Ms. Kroeger clerked for Justice William P. Robinson III of the Rhode Island Supreme Court. She received her law degree from Boston College Law School, where she was a Public Service Scholar and served as an articles editor of the Boston College Law Review and as vice president of the Public Interest Law Foundation. She received her undergraduate degree from Harvard University with a con

[i] Massachusetts Executive Office of Health and Human Services, Patrick-Murray Administration Announces First in the Nation Comprehensive Health Care Option for Dual Eligible Individuals Approved by Obama Administration (Aug. 23, 2012), available at

[ii] The Kaiser Commission on Medicaid and the Uninsured, Massachusetts’ Demonstration to Integrate Care and Align Financing for Dual Eligible Beneficiaries 3 (Oct. 2012), [hereinafter “Massachusetts’ Demonstration to Integrate Care”].

[iii] Letter from CMS Center for Medicaid, CHIP and Survey & Certification and Medicare-Medicaid Coordination Office to State Medicaid Directors (Jul. 8, 2011), available at [hereinafter “Letter from CMS to State Medicaid Directors”].

[iv] The Kaiser Commission on Medicaid and the Uninsured, Medicaid’s Role for Dual Eligible Beneficiaries 7 (April 2012), [hereinafter “Medicaid’s Role for Dual Eligible Beneficiaries”].

[v] Letter from CMS to State Medicaid Directors, supra n.3.

[vi] Massachusetts’ Demonstration to Integrate Care, supra n.2, at 1-3.

[vii] Id.

[viii] The Kaiser Family Foundation, Medicare’s Role for Dual Eligible Beneficiaries 1 (April 2012), [hereinafter “Medicare’s Role for Dual Eligible Beneficiaries”].

[ix] Id. at 2.

[x] See Medicaid’s Role for Dual Eligible Beneficiaries, supra n.4, at 2.

[xi] See Medicare’s Role for Dual Eligible Beneficiaries, supra n.8, at 2.

[xii] See Medicaid’s Role for Dual Eligible Beneficiaries, supra n.4, at 2.

[xiii] Id. at 4.

[xiv] Id.

[xv] Medicare’s Role for Dual Eligible Beneficiaries, supra n.8, at 3.  For example, in 2008, 55 percent of dual eligibles had three or more chronic conditions, as compared with 44 percent of other Medicare beneficiaries, and 58 percent had a cognitive or mental impairment, as compared with 25 percent of other beneficiaries.  Id.  In addition, 44 percent of dual eligibles required assistance with activities of daily living versus 26 percent of other Medicare recipients, and 13 percent lived in nursing homes or mental health facilities, compared with one percent of non-dual eligibles. Id.

[xvi] Id. at 4.  Among dual eligibles nationwide, 26 percent had at least one hospitalization per year, compared with 18 percent of other Medicare beneficiaries, 17 percent had an emergency room visit compared with 12 percent of other beneficiaries, and nine percent had stayed in a skilled nursing facility versus four percent of other beneficiaries.  Id.  Under the Medicaid program, 69.1 percent of dual eligibles spending was for long-term care services, while 15.8 percent was for Medicare acute care cost-sharing, and  9.2 percent went toward Medicare premiums.  Medicaid’s Role for Dual Eligible Beneficiaries, supra n.4, at 7.

[xvii] Medicaid’s Role for Dual Eligible Beneficiaries, supra n.4, at 7; Medicare’s Role for Dual Eligible Beneficiaries, supra n.8, at 2.  Within the Medicare program, average annual spending on each dual eligible beneficiary was $14,169 in 2008, compared with $7,933 for other Medicare beneficiaries.  Medicare’s Role for Dual Eligible Beneficiaries, supra n.8, at 4.

[xviii] See Community Catalyst, Dual Eligible Demonstration Projects: Top Ten Priorities for Consumer Advocates 1 (March 2012),

[xix] See Letter from CMS to State Medicaid Directors, supra n.3; The Kaiser Family Foundation, Health Reform Opportunities: Improving Policy for Dual Eligibles 4 (Aug. 2009),

[xx] The Medicare Payment Advisory Commission (MedPAC), Report to the Congress: Aligning Incentives in Medicare 129 (June 2010),

[xxi] Id. at 141.

[xxii] Id. at 140-41.

[xxiii] Id. at 141.

[xxiv] The “Affordable Care Act” refers to the Patient Protection and Affordable Care Act (Pub. L. 111-148) enacted on March 23, 2010, as revised by the Health Care and Education Reconciliation Act of 2010 (Pub. L. 111-152).

[xxv] Affordable Care Act § 2602(a).

[xxvi] Id. § 2602(b).

[xxvii] Id. § 2602(c).

[xxviii] Affordable Care Act §3021(a), adding § 1115A to Title XI of the Social Security Act, codified at 42 U.S.C. 1315a(a)(1).

[xxix] 42 U.S.C. 1315a(b).

[xxx] 42 U.S.C. 1315a(b)(2)(B)(x)-(xi).

[xxxi] 42 U.S.C. 1315a(b)(1).

[xxxii] 42 U.S.C. 1315a(c).

[xxxiii] 42 U.S.C. 1315a(c)(1)(A)-(B).

[xxxiv] 42 U.S.C. 1315a(c)(2)-(3).

[xxxv] CMS Office of Public Affairs, 15 States Win Contracts to Develop New Ways to Coordinate Care for People with Medicare and Medicaid (April 14, 2011), available at  The 15 states selected were California, Colorado, Connecticut, Massachusetts, Michigan, Minnesota, New York, North Carolina, Oklahoma, Oregon, South Carolina, Tennessee, Vermont, Washington and Wisconsin.  Id.

[xxxvi] Id.

[xxxvii] Letter from CMS to State Medicaid Directors, supra n.3.

[xxxviii] Id.

[xxxix] Id.

[xl] Id.

[xli] Id.

[xlii] Id.

[xliii] Id.

[xliv] The Kaiser Commission on Medicaid and the Uninsured, Explaining the State Integrated Care and Financial Alignment Demonstrations for Dual Eligible Beneficiaries 2 (Oct. 2012),  The 26 states that submitted proposals were Arizona, California, Colorado, Connecticut, Hawaii, Idaho, Illinois, Iowa, Massachusetts, Michigan, Minnesota, Missouri, New Mexico, New York, North Carolina, Ohio, Oklahoma, Oregon, Rhode Island, South Carolina, Tennessee, Texas, Vermont, Virginia, Washington, and Wisconsin.  Id. at 1-2.  For a current list of states with active financial alignment demonstration proposals, visit

[xlv] Massachusetts’ Demonstration to Integrate Care, supra n.2, at 3.

[xlvi] The Kaiser Family Foundation, Individual State Profiles, Massachusetts: Dual Eligibles, available at  That year, Massachusetts averaged $23,790 in annual Medicaid spending per dual eligible versus the national average of $16,325.  Id.

[xlvii] Massachusetts Medicaid Policy Institute, Dual Eligibles in Massachusetts: A Profile of Health Care Services and Spending for Non-Elderly Adults Enrolled in Both Medicare and Medicaid 4 (Sept. 2011),

[xlviii] Id.  The statistics in the report are based on a data set comprised of 105,000 duals between the ages of 21 and 64 who received fee-for-service coverage, and excludes the approximately 10,000 additional duals in this group who were enrolled in managed care.  Id.

[xlix] Id.  When broken down by type of service, 35 percent of spending went toward long-term support services for these dual eligibles, 22 percent went toward inpatient care, and 13 percent went toward pharmacy costs.  Id. at 21.

[l] Id. at 15.

[li] Id.

[lii] Id. at 19.

[liii] Massachusetts Executive Office of Health and Human Services, Patrick-Murray Administration Announces First in the Nation Comprehensive Health Care Option for Dual Eligible Individuals Approved by Obama Administration (Aug. 23, 2012), available at

[liv] Massachusetts’ Demonstration to Integrate Care, supra n.2, at 3.

[lv] Id. at 1.

[lvi] Memorandum of Understanding (MOU) Between The Centers for Medicare & Medicaid Services (CMS) and the Commonwealth of Massachusetts Regarding a Federal-State Partnership to Test a Capitated Financial Alignment Model for Medicare-Medicaid Enrollees, Demonstration to Integrate Care for Dual Eligible Beneficiaries 3 (Aug. 22, 2012), available at [hereinafter “MOU”].

[lvii] Id.

[lviii] Id. at 2-4.

[lix] Id. at 26, 58.

[lx] See Massachusetts’ Demonstration to Integrate Care, supra n.2, at 5.

[lxi] MOU, supra n.56, at 26, 58.

[lxii] Id. at 26-27, 58-59.

[lxiii] Id. at 59, 82.

[lxiv] Id. at 59.

[lxv] Id. at 10, 68-81.

[lxvi] Id. at 68.

[lxvii] Id. at 9, 56.

[lxviii] Id. at 56.

[lxix] Id. at 56, 87.

[lxx] Id. at 57.

[lxxi] Id. at 56.

[lxxii] Id. at 9.

[lxxiii] Id. at 82.

[lxxiv] Id. at 83.

[lxxv] Id. at 39.

[lxxvi] Id. at 43-44.

[lxxvii] Id. at 45.

[lxxviii] Id. at 52.

[lxxix] Id.

[lxxx] Id. at 52-53.

[lxxxi] Id. at 46.

[lxxxii] Id.

[lxxxiii] Id.

[lxxxiv] Id.

[lxxxv] Id. at 47.  The MOU contains charts that lay out the specific quality withhold measures to be considered, broken down by demonstration year.  Id. at 47-50.

[lxxxvi] Id. at 48-49.

[lxxxvii] Id. at 15.

[lxxxviii] Id. at 13-14.

[lxxxix] Id. at 12-13.

[xc] Id. at 20, 106.

[xciii] Massachusetts Executive Office of Health and Human Services, Patrick-Murray Administration Announces Health Care Cost Containment Measure to Serve 111,000 Dually Eligible Individuals (June 19, 2012), available at

[xciv] See Letter from Medicare Payment Advisory Commission (MedPAC) to Marilyn Tavenner, CMS Acting Administrator (Jul. 11, 2012), available at

[xcv] See id.

[xcvi] See Letter from American Medical Association to Marilyn Tavenner, CMS Acting Administrator (Jul. 19, 2012), available at

[xcvii] See id.; see also The Advisory Board Company, In 26-State Dual-Eligible Demo, Hospitals Push Insurers to Pay Medicare Rates (Sept. 20, 2012),; Letter from Federation of American Hospitals to Marilyn Tavenner, CMS Acting Administrator (April 19, 2012), available at

[xcviii] See, e.g., Letter from Dennis Heaphy and Bill Henning, Co-Chairs of Disability Advocates Advancing our Healthcare Rights (DAAHR), to Massachusetts EOHHS Secretary JudyAnn Bigby, MD, and CMS Medicare-Medicaid Coordination Office Director Melanie Bella (Sept. 18. 2012), available at; Memorandum from DAAHR and the ARC of Massachusetts to the Massachusetts Congressional Delegation, Memorandum on Needed Changes or Clarifications in Massachusetts Medicare/Medicaid Integration Demonstration Project (Oct. 1, 2012), available at

[xcix] See id.

[c] Id.; see also National Committee to Preserve Social Security and Medicare and the National Senior Citizens Law Center, Comments on the Massachusetts Memorandum of Understanding, available at

[ci] See Massachusetts Executive Office of Health and Human Services, MassHealth Demonstration
to Integrate Care for Dual Eligibles, Materials from Nov. 2, 2012 Open Meeting, available at

[cii] Id.

[ciii] Id.

[cv] Id.

Massachusetts and the ACA: Cause and Effect

By: Eric J. Beyer

The Supreme Court’s stunning 5-4 ruling upholding the 2010 Affordable Care Act means that the most comprehensive transformation of the US health care system since the creation of Medicaid and Medicare will remain largely intact. Since the ACA closely mirrored Massachusetts’ own groundbreaking health reform – and the Supreme Court decision would not have overturned our own law –   the logical question to be asked by Massachusetts residents and businesses is: What does the ACA’s preservation mean for us?

The answer: More than one might suspect.

To be sure, the ACA is structured around many of the features already in place in Massachusetts.  Individual health insurance mandate?  Check.  Health insurance exchanges to act as brokers for offering plans to businesses and individuals?  Check.  Financial penalties levied against residents who don’t buy coverage and businesses that don’t subsidize premiums? Check.

Despite the similarities, the federal act paves the way for significant changes in the Bay State, both in how the health insurance market will look in future years and how the flow of federal funds to the state will rise—and, significantly, fall—as many key facets of the ACA are phased in. Patients, employers and health care providers will all feel its effects – for better and worse. Combined with the health care cost controls passed by our state Legislature and signed by Gov. Patrick in July, the next several years could bring significant innovation and increased efficiency in our health care market, or we could see lower-cost hospitals being forced to close, resulting in higher prices for consumers and employers. Much will depend on how the changes set forth in the ACA and the state’s cost control law are actually executed.

I believe that one of the initiatives left intact by the ACA will have a significant positive impact on the health insurance marketplace in Massachusetts. A new insurance model established by the Act called Consumer Operated and Oriented Plans (CO-OPs), is designed to create lower-cost, high-quality health insurance plans governed by their members.  The federal government in August awarded an $88.5 million loan to help create Minuteman Health, Massachusetts’ first and only CO-OP.  Minuteman is sponsored by Tufts Medical Center, along with its 1,500-member New England Quality Care Alliance physicians’ group, and Nashville-based Vanguard Health Systems, which owns MetroWest Medical Center in Framingham and Natick and Saint Vincent Hospital in Worcester. These providers, and 17 others who wrote letters in support of Minuteman’s application, viewed this initiative – created by the ACA – as a terrific opportunity to introduce a plan that would enable doctors and hospitals, consumers and employers, and the insurer, to work more closely together than ever before to improve health and reduce costs. We anticipate that Minuteman will offer individuals and employers a streamlined administrative structure, significantly greater transparency about prices, and much more data sharing between the plan and physicians so that doctors can make better decisions about designing care around patients’ needs. Members will elect the board and ultimately decide how surpluses are reinvested – either to reduce premiums or increase benefits. The plan is expected to be up and running by January 2014.

CO-OPs were designed in the ACA to bring a lower-cost, more consumer-focused option into the health insurance market.  A health insurance model that puts hospitals and doctors at the heart of data collection, sharing and innovation can yield innovative benefits.  How will these plans operate differently? If you’re a patient, imagine getting a single bill regardless of the number of providers you see. If you’re a physician, imagine having ready access to useful data about your patients that wasn’t previously available to you, to help you design their care. If you’re an employer, imagine your health plan’s care coordinators working directly with you, your employees and their own primary care providers, to set up individualized programs addressing your employees’ specific health problems, improving their health and lowering premiums.

The Supreme Court decision on the ACA maintains Congress’s recognition that the healthcare market is not operating at its maximum potential – or at least not to its maximum potential for consumers.  The CO-OP program is among the elements of the ACA that seeks to shift the paradigm, creating change in the market by directly intervening to give the consumer more standing in the market, whether through new insurance options, guaranteed coverage in spite of pre-existing conditions, or greater investment of the premium dollar in their own healthcare instead of administrative overhead.

Minuteman will be sold through the state’s health insurance exchange, the MA Health Connector;  among other channels.  Another facet of the Affordable Care Act upheld by the Supreme Court decision, the creation of health insurance exchanges, is more recognition that the current system is not working for consumers. By creating an exchange in Massachusetts, and through the ACA spurring the development of exchanges throughout the country, we have provided consumers and small business with direct access to shop, compare and purchase insurance products that work for them.  Through the exchanges we have created new competition among insurers, a direct-to-consumer marketplace and transparency around cost and benefit design that hasn’t been seen before- in short, we are changing the old way of doing business.

In addition to the innovative features they will present to members, CO-OPs have the potential to drive improvements throughout the health insurance sector.  By introducing innovative medical services, efficient administrative functions and exceptional accountability measures, we hope Minuteman will not only offer great value to its members, but that the plan will influence other insurers to follow suit.  In the high tech industry, a company that creates a better microchip influences other manufacturers to improve their product.  Why should health care be any different? Had the Supreme Court decision struck down the ACA, Massachusetts may never have had the chance to participate in this innovative new model of health insurance.

While the upholding of the ACA confers many positive benefits on the Commonwealth, other aspects of the bill threaten to significantly harm health care. It is hard to see how any patients will benefit from the $5 billion reduction in Medicare payments hospitals had expected to receive between now and 2019.  The Medicare pull backs, being used to fund the ACA’s other initiatives, will deal an unquestioned blow to providers as more and more baby boomers reach the age where Medicare entitlements kick in.  The Medicare cuts will also present a disproportionately greater impact on lower-cost hospitals with less commercial revenue – the very providers who need support and who are a key part of the answer to our cost control issues.  In addition, the ACA empowers the Centers for Medicare and Medicaid Services (CMS) to levy fines against hospitals that exceed federally-set benchmarks for patient readmission rates. We can all agree that preventing patients from needing another hospitalization less than 30 days after their most recent admission is a worthy goal. But Medicare does not provide adequate funding for the community-based support that many of these patients need in order to stay out of the hospital. While it makes sense to hold providers responsible for factors they can control, I can see little benefit to penalizing hospitals for issues they can’t influence, and which are neglected by Medicare.  In withholding funding to hospitals around these issues, we may be unduly penalizing hospitals who need this funding to build the infrastructure and bridge the gaps in community care that are necessary to significantly reduce readmissions.

It isn’t just the ACA’s Medicare reductions that pose a threat to lower-cost hospitals.  The dominance wielded by some providers and insurers in the Massachusetts market – the primary reason for our escalating health costs – could get worse under some provisions of the ACA. Accountable Care Organizations, or ACOs, will group providers into various networks, ranging from loosely affiliated doctors groups to tightly controlled networks of caregivers. The purpose of forming these affiliations is to provide consumers with better coordinated, more effective and efficient healthcare, by aligning the incentives and responsibilities of providers through a coordinated payment stream.  While patients could benefit significantly from better coordination of their care, this approach is fraught with potential pitfalls when it comes to market power.  Large provider groups with significant clout in our market already obtain unjustifiably high prices for care that is no better and considerably less efficient than many smaller, lower-cost providers. Requiring groups of physicians to align and control the flow of patients within an organization could serve to create even stronger monopolies in the market, as physicians will likely gravitate to the organizations with the highest commercial health insurance rates.  Playing this scenario out over several years, the ACOs with the most patients and highest prices will demand even higher prices. As they attract greater patient volume with even more marketing muscle and the ability to invest in shiny new facilities, the lower cost providers with less clout could be starved out of the market, leaving all of us with a more concentrated, high cost market.  Ensuring this is not the automatic result of a well-intentioned policy will take continuous engagement in reforming the market and challenging the status quo of insurers and providers by addressing the fundamental market drivers. This would create an even playing field for the most qualified providers, not just the ones with the most clout.

The breadth and scope of the ACA touches every aspect of health care, and its possible outcomes are best understood in the context of impacts on various parts of the  system—lower-cost hospitals, large health care networks, providers with large Medicare and Medicaid demographics, and new entries into the insurance market.  It isn’t surprising that the new law is fueling market apprehension reminiscent of half a decade ago when the state adopted the ACA’s progenitor.  Now, as then, significant change is approaching, and its full impact is a diagnosis in waiting.

Eric J. Beyer is President and Chief Executive Officer of Tufts Medical Center and Floating Hospital for Children. Mr. Beyer is a seasoned health care executive who is well-known and respected for his ability to align the goals of hospitals and physicians so that they can provide high quality, cost effective care in a reform environment. 

Mr. Beyer assumed the CEO role from his position as President and Chief Executive Officer of the Tufts Medical Center Physicians Organization, Inc. (Tufts MCPO).  In that role, he was responsible for overseeing all aspects of the 550-physician faculty practice and the 415-bed academic medical center’s entire ambulatory operation. When Mr. Beyer began his tenure at Tufts MC, he was charged with merging its two separate physician groups into one highly-functioning physicians’ organization. He grew that organization nearly 20 percent in almost six years and has made Tufts Medical Center an employer of choice for talented and respected physicians from academic medical centers across the country.

To view Eric Beyer’s full biography, please click here.

What’s Empathy Got to Do with It: Medicaid Expansion and Empathic Space

By James Corbett, M.Div., J.D.

I. Introduction

            Empathy, the ability to understand the thoughts and emotions of another person, is crucial in modern healthcare at a time when patients have become reliant on the specialized skills of strangers. A landmark study recently confirmed what many intuitively suspected: clinical empathy can improve health outcomes.[1] However, while clinical empathy is typically thought of as an individual transaction, the importance of creating empathic space in order to stimulate empathy through structural mechanisms is regularly overlooked. As the legal scholar Lawrence Rosen indicates, “Law creates culture,”[2]and legislation has the capacity to create empathic space. This article is a historical and structural analysis of Medicaid expansion and the likely impact of the Supreme Court’s ruling on the Medicaid provision of the Patient Protection and Affordable Care Act (hereinafter “ACA”) [3] in National Federation of Independent Business v. Sebelius (hereinafter “NFIB”).[4] If, as commonly is held, the test of the morality of a society is the treatment of its most vulnerable residents, then the ruling on the expansion of Medicaid may be the most significant aspect of the Supreme Court’s most recent term.

In 2010, in the midst of the greatest financial downturn since the Great Depression,[5] President Obama signed into law the ACA in an effort to improve the health of the Nation while at the same time reducing unsustainable health care costs.[6] One controversial aspect of the ACA was that the law expanded Medicaid and tied existing federal funding to the expansion of the program. Due to objections by twenty-six states, the Supreme Court ruled on the constitutionality of the Medicaid provision of the ACA in NFIB.[7]

The Supreme Court declared the withholding of a state’s entire Medicaid budget for non-compliance with the ACA to be unconstitutional.[8] However, the Court upheld the ACA’s Medicaid expansion by preserving the existing Medicaid program and interpreted the ACA expansion to be a new program rather than an amendment, which would expand the existing Medicaid program.[9] In the NFIB ruling, seven of the nine Justices voted to limit the power of the Federal Government to impose conditions on federal funding allocated to the states. However, five Justices upheld Medicaid expansion as a new program, distinct from existing Medicaid funding. The holding allows Congress to offer federal funds to states to expand Medicaid, and if states accept the funds, Congress may require states to comply with the terms of the new grant.[10] Nevertheless, declining the Medicaid expansion cannot cause pre-existing federal funds to be withdrawn. Thus, post-NFIB, a state’s practical considerations regarding Medicaid expansion will involve several issues, including how a state views its obligations to its most vulnerable residents, fiscal capacity, and, of course, political factors.

II. History of Medicaid Expansion

Medicaid has been successful in providing coverage to some of the Nation’s most vulnerable populations, and “enrollees have consistently received more regular medical care than the uninsured through that time.”[11] To appreciate the impact of the NFIB decision, it is necessary to understand the history of Medicaid and the goals of its expansion under the ACA.

In 1960, President Eisenhower signed into law the Kerr-Mills Act, which created a new grant program to fund states that provided medical assistance for certain elderly individuals.[12] In 1965, Congress expanded the Kerr-Mills Act, adopting a combination of approaches to improve access to health care for the elderly.[13] The Social Security Amendment Act of 1965 created a hospital insurance program to cover nearly all of the elderly (Medicare Part A) and a voluntary supplementary medical insurance program (Medicare Part B).[14] At the same time, Congress also decided to cover other vulnerable populations including families with children, the blind and the disabled through the creation of Medicaid,[15] an individual entitlement program with open-ended federal matching of funds.[16]

In order to respect state autonomy, Medicaid was originally envisioned as a voluntary program to provide the means for states to offer medical coverage to vulnerable populations. States had the option of opting into or declining to participate in Medicaid.[17] If a state chose to participate, it was required to provide coverage to all individuals who qualified for coverage under the federal government’s guidelines, although each participating state was free to add to the minimum federal requirements.[18] From the inception of the Medicaid program, Congress retained the ability to alter, recall, or replace it with a new law. Since 1965, Medicaid has been expanded on multiple occasions.[19]

The ACA expansion requires coverage for participating states to include adults under age 65 with incomes up to 133% of the federal poverty level.[20] This translates to an income of approximately “$14,800 for individuals and $25,400 for a family of three.”[21] The constitutionality of this mandated coverage, and the threat of the total withdrawal of Medicaid funds for a state choosing not to participate, spurred state protestation.

III. NFIB and Medicaid Expansion

            Twenty-six state plaintiffs claimed that by making the states’ existing Medicaid funding contingent on agreeing to participation in the expanded program, the ACA’s conditions were coercive, and a violation of principles of federalism.[22] Chief Justice Roberts’s controlling opinion posited that Congress could require the states to adhere to the ACA’s conditions in order to qualify for the ACA’s newfunding for Medicaid expansion, but Congress could not require the states to participate in the ACA’s “new program” by threatening the loss of existing Medicaid funds.[23]

Chief Justice Roberts began his Medicaid expansion opinion with the notion that under the Spending Clause, Congress may condition grants of funds in a way that might “encourage a State to regulate in a particular way, [and] influenc[e] a State’s policy choices.”[24] But, Chief Justice Roberts recognized that there are limits; he articulated that “when ‘pressure turns into compulsion,’ the legislation runs contrary to our system of federalism… [and] the Constitution simply does not give Congress the authority to require the States to regulate.”[25] Thus, as a federal grant of funds, Medicaid is subject to Spending Clause constitutional standards and by threatening the withholding of a state’s entire Medicaid budget, Congress forced the states’ hands.

Medicaid funding is a substantial portion of state budgets and on average comprises twenty percent of a state’s budget across the country.[26] As Chief Justice Roberts indicates, “[t]he threatened loss of over 10 percent of a State’s overall budget … is economic dragooning that leaves the States with no real option except to acquiesce to the Medicaid expansion.”[27] Chief Justice Roberts’s opinion expressed his belief that the original Medicaid legislation covered a relatively narrow population, only America’s most vulnerable,[28] whereas the ACA’s attempt to use Medicaid expansion to meet the health needs of the entire non-elderly population with income below 133 percent of the poverty level is a new program and “an element of a comprehensive national plan to provide universal health insurance coverage.”[29]

Thus, as a new program, funds that were previously committed under existing Medicaid grants could not be withdrawn for noncompliance with the new legislation. Despite what he considered to be a fundamental change in Medicaid, Chief Justice Roberts found that “[n]othing in our opinion precludes Congress from offering funds under the Affordable Care Act to expand the availa­bility of health care, and requiring that States accepting such funds comply with the conditions on their use” as an independent program.[30] As a result, the Supreme Court found Medicaid expansion under the ACA to be a voluntary program, which states are free to enter as they choose, and the Secretary of Health and Human Services is free to condition entry and exit of the program within the parameters of the NFIB holding.

Notably, Chief Justice Roberts’ opinion has a broader impact regarding rights retained by the states. Under Chief Justice Roberts’s opinion, the Medicaid condition at issue would impermissibly coerce the states and therefore exceed Congress’s power to spend the federal fisc on behalf of the general welfare.[31] In attempting to differentiate between “pressure” and “compulsion,” the Court distinguished South Dakota v. Dole, a previous case on conditions of federal funding, on the grounds that the only funding at issue in Dole was five percent of a State’s federal highway funds, whereas in NFIB a substantial portion of the states’ budgets would be threatened.[32] The Court upheld the ACA by interpreting it as conditioning the receipt of new funds only on acquiescence to the Medicaid expansion as a new program, removing Congress’s ability to withhold existing Medicaid funding, and thereby preserving state autonomy. Thus, “less than half of one percent” of a state’s budget in Dole would be pressure, whereas a state’s entire Medicaid budget, often “20 percent of the average State’s total budget,” would be coercion, akin to “a gun to the head.”[33]

Essentially, the Court in NFIB affirmed that Congress cannot achieve indirectly through its spending clause power what it has no power to do directly.[34] Congress cannot “commandeer” state legislatures and force them to expand Medicaid, and thus Congress cannot achieve Medicaid expansion by offering the states a financial incentive that they cannot refuse.[35] The Court recognized the nature of political accountability inherent in our federal system, and the danger of allowing Congress to remove the choice from accepting federal programs, which may be unpopular, whereby the state legislators would bear the brunt of political backlash, rather than Congress.[36]

This is consistent with traditional notions of federalism. As Justice Brandeis noted, “It is one of the happy incidents of the federal system that a single courageous State may, if its citizens choose, serve as a laboratory; and try novel social and economic experiments without risk to the rest of the country.”[37] NFIB upholds this concept by allowing Congress to provide the means to create state Medicaid expansion programs, while allowing the several states to create what would best suit individual state needs, but not allowing Congress to penalize states for choosing not to so experiment.

In a dissenting opinion, joined by Justice Sotomayor, Justice Ginsburg suggested that “the expansion [will not] exorbitantly increase state Medicaid spending [and] [t]he Congressional Budget Office projects that States will spend 0.8% more than they would have, absent the ACA” and was thus not unconstitutionally coercive.[38] However, this view fails to fully account for the financial crisis states face. Notably, any additional funding to health care would likely come at the expense of other state programs such as education, housing, employment, or other programs, and detracting from these programs may negatively impact other social determinants of health that can be of equal import to health outcomes. With the decision to expand Medicaid left to the states, the speculation of what states will do has intensified, but perhaps the answer to what this decision portends can best be discerned from the response to the creation of Medicaid, which was equally contentious.

IV. Empathic Space

            The passing of two signature pieces of federal legislations – the Civil Rights Act of 1964[39] and the Social Security Amendment Act of 1965[40] – had a positive impact on health outcomes, but not without controversy. The Civil Rights Act outlawed discrimination in voting and ended racial segregation in schools, the workplace, and public accommodations, which meant that blacks could no longer be barred from hospitals based on race. The Social Security Amendment Act established Medicare and Medicaid, which meant that many of America’s poorest residents garnered health insurance.[41] Notably, the receipt of both Medicaid and Medicare was conditioned on adherence to the Civil Rights Act.

More than 8,000 hospitals were subject to civil rights legislation set forth in Title VI of the Civil Rights Act and within two years of the enactment of the Social Security Amendment Act most hospitals were complying with desegregation laws.[42] Of the 8,000 hospitals approved for participation in Medicaid and Medicare, more than 3,000 had to revise their traditional practices in order to participate.[43] Although the receipt of federal funding for hospitals was an economic boon and led to increased revenue and hospital building booms throughout the country, 250 hospitals, predominantly in the South, refused to comply with Title VI and were barred from receiving Medicare and Medicaid funding.[44] Rejecting the federal funding was based on ideological rationales, as hospitals were initially resistant to desegregation, but by refusing federal dollars so as to not have to integrate their institutions, these hospitals lost revenue and prevented both blacks and whites alike from utilizing federal health insurance funding in their institutions, which negatively impacted health outcomes. Eventually, due to practical financial and medical rationales, these hospitals changed course and accepted the conditioned federal funding.[45]

As a result of the empathic space created by the Civil Rights Act and the Medicaid and Medicare Expansion Act, health outcomes dramatically improved for those who were previously uninsured.[46] For African Americans, the new regulations and capacity to receive better healthcare as a result of health insurance led to the greatest improvement in health disparities in the history of the country.[47] From 1965 to 1980 the overall age-adjusted death rates fell 25.2% for blacks and 21.1% for whites.[48]

The expansion of Medicaid authorized in the ACA has the similar potential to reduce the health disparities that are based on income, as it will allow individuals who previously could not afford health insurance coverage to receive care. Chief Justice Robert’s opinion highlights that allowing states to voluntarily accept federal funds to expand Medicaid when the state is financially ready recognizes that health is not determined by coverage alone, but is multifaceted and impacted by multiple state-funded programs. However, with the large amount of bad debt and charity care that hospitals in states with uninsured individuals encounter, it is likely that states will be under inordinate pressure to accept the Medicaid expansion funding, and like the hospitals who initially refused insurance funding in the 1960’s, it is expected that the states too will eventually accept Medicaid expansion funding.

To be sure, empathy can exist separate from health insurance, but health insurance does help create the empathic space where hospitals and providers who can expect reimbursement can diminish the practical fiscal obstructions that limit the care and empathic space for the uninsured.[49] In fact, if we look at outcomes alone, it is clear that those who have Medicaid have better health outcomes than those without health insurance.[50] The Institute of Medicine estimates that health insurance may reduce adult mortality by 25%.[51] Consequently, the states that refuse to accept the Medicaid funding, if otherwise financially able to expand, would be negatively impacting the health of some of their poorest residents.

V. Conclusion

            Chief Justice Roberts presented each state with a choice. On one hand, to expand Medicaid per Congress’s offering which would improve health and provide the tools to providers to create empathic space for the practice of medicine. On the other, refrain from expansion at a great cost to its most vulnerable citizens. Recent studies confirm that Medicaid insurance improves health outcomes.[52] Despite the clear public health rationale, for Medicaid expansion there remains the possibility that ideological or political factors, may, at least initially, prevent expansion. But sometimes the best political argument can be a financial one.

The federal government will pay 100% of the cost of the newly insured Medicaid beneficiaries through 2016 and 90% after 2020 instead of the 50% to 83% that it currently pays for eligible categories across the country.[53] Furthermore, Medicaid ACO demonstration projects in Oregon and payment reform in Massachusetts may lower the cost curve even further making the financial consequences of not accepting the funding too great for any state to resist.[54] A country that seized the opportunity to improve the health of its most vulnerable residents would be a repudiation of the misguided characterization of DH Lawrence who claimed, “The essential American soul is hard, isolate, stoic, … and has never yet melted.”[55] If a common test of the morality of a society is indeed its treatment of its most vulnerable residents, perhaps the empathic space created by health insurance expansion is more important to the country than we recognize.

James Corbett, M.Div., J.D. is the System Vice President of Community Health & Ethics at Steward Health Care System. James is also a Fellow at Harvard Medical School, Division of Medical Ethics. At Steward, James provides oversight to Community Health, Behavioral Health and Ethics. He received his BA in International Relations from Syracuse University, a Juris Doctor from Saint John’s Law School, and a Master of Divinity from Duke University. James has taught health care law and ethics courses at both the University of Maine Law School of law and New England School of Law. James presents on topics related to health, ethics and empathy internationally.

[1] Mohammadreza Hojat et al., Physicians’ Empathy and Clinical Outcomes for Diabetic Patients: Building the Evidence-Based Medicine, 86 Acad. Med. 359 (2011).

[2] Lawrence Rosen, Law as Culture: An Invitation 14 (2006).

[3] The Patient Protection and Affordable Care Act, Pub. L. 111-148, as amended by the Health Care and Education Reconciliation Act of 2010, P.L. 111-152 (2010).

[4] National Federation of Independent Business v. Sebelius, 132 S.Ct. 2566 (2012).

[5] Phil Oliff, Chris Mai, & Vincent Palacios, States Continue to Feel Recession’s Impact, Center Budget & Pol. Priorities (updated June 27, 2012), index.cfm?fa=view&id=711.

[6] Neil Irwin, It’s Official: The Great Recession Ended Last Summer, Wash. Post, Sept. 20, 2010, _the_great_recessi.html. See also The Patient Protection and Affordable Care Act, Pub. L. 111-148, as amended by the Health Care and Education Reconciliation Act of 2010, P.L. 111-152 (2010).

[7] See NFIB, 132 S.Ct. 2566 (2012).

[8] Id. at 2607.

[9] Id.

[10] Id.

[11] Eliot Fishman, Running in Place: How the Medicaid Model Falls Short, and What to do About it 2:9 (Century Foundation Press 2002).

[12] Judith D. Moore & David G. Smith, Legislating Medicaid: Considering Medicaid and Its Origins, 27 Health Care Financing Rev. 45, 45 (2006). See also Sidney Fine, The Kerr-Mills Act: Medical Care for the Indigent in Michigan, 1960-1965, 53 J. Hist. Med. Allied Sci. 285 (1998).

[13] Moore & Smith, supra note 12, at 46-50.

[14] Ctr. Medicare & Medicaid Serv., Tracing the History of CMS Programs: From President Theodore Roosevelt to President George W. Bush, 4 (last visited Aug. 25, 2012), Downloads/PresidentCMSMilestones.pdf.

[15] Id.

[16] The Social Security Amendments of 1965, Pub.L. 89-97, 79 Stat. 286 (1965). See also Ctr. Medicare & Medicaid Serv., supra note 14, at 46.

[17] Ctr. Medicare & Medicaid Serv., supra note 14.

[18] 42 U.S.C. §§1396a(a)(10)(A); 1396d(a)(1)-(5), (17), and (21).

[19] See Moore & Smith, supra note 12, at 45-48. See also Ctr. Medicare & Medicaid Serv., supra note 14.

[20] The Patient Protection and Affordable Care Act, Pub. L. 111-148, as amended by the Health Care and Education Reconciliation Act of 2010, P.L. 111-152 (2010). The program previously required coverage for adults with incomes up to 100% of the poverty level.

[21] Jordan Rau, Medicaid Expansion Favored in General, Less so Near Home, Survey Finds, Capsules: Kaiser Health News (July 31, 2012), http://capsules.

[22] Brief of State Petitioners on Medicaid at 24–53, Florida v. U.S. Dept. of Health & Human Servs., No. 11–400 (S.Ct. Jan. 10, 2012).

[23] National Federation of Independent Business (NFIB) v. Sebelius, 132 S.Ct. 2566, 2607 (2012).

[24] 2602 (citing New York v. United States, 505 U.S. 144, 166 (1992)).

[25] 2602 (citing New York, 505 U. S., at 178).

[26] Timothy Stoltzfus Jost & Sara Rosenbaum, The Supreme Court and the Future of Medicaid, New Eng. J. Med., July 25, 2012, NEJMp1208219.

[27] NFIB at 2604-05. Medicaid spending accounts for over 20 percent of the average State’s total budget, with federal funds covering 50 to 83 percent of those costs. See id. at 2604 (citing Nat. Assn. of State Budget Officers, Fiscal Year 2010 State Expenditure Report, p. 11,Table 5 (2011), and 42 U.S.C. § 1396d(b)).

[28] NFIB, 132 S.Ct. at 2605-06 (citing 42 U. S. C. §1396a(a)(10)) (“The original program was de­signed to cover medical services for four particular cat­egories of the needy: the disabled, the blind, the elderly, and needy families with dependent children.”).

[29] NFIB, 132 S.Ct. at 2606.

[30] Id. at 2607.

[31] Id. at 2604-06.

[32] Id. at 2604-05.

[33] Id. at 2604.

[34] Id.

[35] Id. at 2602.

[36] Id. at 2602-03.

[37] New State Ice Co. v. Liebmann, 285 U.S. 262, 311 (1932) (Brandeis, J., dissenting).

[38] Id. at 2632.

[39] The Civil Rights Act of 1964, Pub.L. 88-352, 78 Stat. 241 (1964).

[40] The Social Security Amendments of 1965, Pub.L. 89-97, 79 Stat. 286 (1965). See also Moore & Smith, supra note 12, at 45.

[41] The Social Security Amendments of 1965, Pub.L. 89-97, 79 Stat. 286 (1965). See also Ctr. Medicare & Medicaid Serv., supra note 14.

[42] W. Michael Byrd & Linda A. Clayton, An American Health Dilemma: Race, Medicine and Health Care in the United States 1900-2000 and the Problem of Race 313 (2002).

[43] Id. at 313.

[44] See Jill Quadagno, Promoting Civil Rights through the Welfare State: How Medicare Integrated Southern Hospitals, 47 Social Problems 68 (2000). See also Paul Starr, The Social Transformation of American Medicine 358-62 (New York: Basic Books, 1982).

[45] See Quadagno, supra note 44, at 71.

[46] Benjamin D. Sommers, Katherine Baicker & Arnold M. Epstein, Mortality and Access to Care among Adults after State Medicaid Expansions, New Eng. J. Med., July 25, 2012,

[47] See generally Manning Marable, Race, Reform, and Rebellion: The Second Reconstruction and Beyond in Black America, 1945-2006 (Univ. Press of Mississippi 2007).

[48] Id. at 387.

[49] It is important to recognize that for some procedures and services that Medicaid payment is far below the private insurer payment for the same procedure and therefore even if Medicaid coverage is expanded to insure certain populations, in some cases the lower funding can be an impediment to services. See Doug Trapp, Low Medicare, Medicaid Pay Rates Impact Private Costs, Am. Med. News, Jan. 5, 2009, See also Avik Roy, New Study: Expanding Medicaid Reduces Access to Health Care, Forbes, Mar. 10, 2012,

[50] Jonathan Cohn, Are You Better Off With Medicaid Than No Insurance? A Landmark Study Says Yes, Kaiser Health News, Jul. 7, 2011, Columns/2011/July/070711cohn.aspx.

[51] Id. (citing Inst. Of Med., Care Without Coverage: Too Little, Too Late (2002)).

[52] See Sommers, Baicker & Epstein, supra note 45.

[53] Wendy K. Mariner, Leonard H. Glantz & George J. Annas, Reframing Federalism – The Affordable Care Act (and Broccoli) in the Supreme Court, New Eng. J. Med., July 18, 2012,

[54] See Jennifer Lubell, Are ACOs the Answer for Medicaid?, Am. Med. News, July 2, 2012, See also Thomas Lee, Massachusetts Health Care Reform: An Academic Provider’s Perspective, HealthAffairs, Aug. 13, 2012,

[55] D.H. Lawrence, Studies in Classic American Literature 68 (Penguin Classics 1990) (“The essential American soul is hard, isolate, stoic, and a killer. It has never yet melted.”).