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Health Law Highlights

Wade’s Health Law Highlights for April 1, 2025

Abortion

  • Senate Bill 31, known as the Life of the Mother Act, aims to clarify medical exceptions to Texas abortion laws that currently permit the procedure only when the mother’s life or major bodily function is at risk. The bill would specify that doctors need not delay treatment if doing so increases risk to the pregnant woman, broadens definitions for ectopic pregnancy and premature water breaks, and protects physician-patient discussions about abortion options from being considered “aiding and abetting.” With bipartisan support including 12 Republican senators and Lt. Gov. Dan Patrick’s backing, the legislation would require the Texas Medical Board to offer educational courses about physicians’ rights under the law. Texas doctors have reported confusion about existing laws, with 29% lacking clear understanding of abortion regulations, leading to delayed care and increased complications for pregnant women.

Artificial Intelligence

  • Healthcare organizations implementing LLMs face eight critical challenges including over-reliance on AI without domain expertise integration, unresolved data quality issues across fragmented systems, and ethical risks in handling sensitive healthcare data. Additional pitfalls include poor workflow integration, inadequate model validation post-deployment, neglect of regulatory requirements, overpromising AI capabilities to stakeholders, and failure to customize models for specific healthcare needs. Healthcare companies must maintain human expertise in the loop, implement robust data governance, ensure regulatory compliance, and set realistic expectations to successfully deploy LLMs that enhance rather than compromise patient care and operational efficiency.

Compliance Programs & Audits

  • Compliance auditing has become mandatory in today’s regulatory environment, with federal and state laws requiring companies to conduct regular reviews of their practices. The Office of Inspector General’s Compliance Program Guidance identifies auditing as a core element that helps organizations detect fraud, assess policy adherence, and mitigate risks before they escalate into enforcement actions. Recent settlements demonstrate the consequences of inadequate compliance monitoring, with companies like Pfizer, Teva, Innovasis, and Endo Health Solutions paying millions or billions in penalties for violations related to kickbacks, improper marketing, and other infractions. Companies should prioritize auditing high-risk areas including speaker programs, healthcare professional arrangements, promotional materials, and patient assistance programs using a risk-based approach.

Contracting

Cybersecurity & Privacy

  • Healthcare cyberattacks have increased dramatically, with annual large breaches nearly tripling from 242 (2010-2014) to 713 (2020-2024), with 81% caused by hacking or IT incidents in 2024 alone. The 2024 Change Healthcare breach affected 190 million individuals, making it the largest healthcare data breach to date. When protected health information is compromised, organizations must notify affected individuals, media outlets, state agencies, and the Office for Civil Rights, potentially facing investigations, enforcement actions, and costly settlements. Healthcare entities must strengthen defenses through annual security risk assessments, multi-factor authentication, and comprehensive incident response plans, with HHS proposing updates to the HIPAA Security Rule to mandate these protective measures.
  • [The Office for Civil Rights has announced a $3 million settlement with Solara Medical Supplies for HIPAA violations](HHS Settles HIPAA Security Breach Stemming from Phishing Cyberattack for $3 Million). A phishing attack compromised eight employee email accounts, exposing protected health information of over 100,000 individuals, followed by a second breach when notification letters were sent to incorrect addresses affecting 1,500 more people. OCR investigation determined Solara failed to conduct proper risk analysis, implement adequate security measures, and notify affected parties in a timely manner. The settlement includes a corrective action plan requiring risk analysis, implementation of a risk management plan, policy development, and staff training on HIPAA compliance.
  • The Seventh Circuit ruled in Hulce v. Zipongo that communications promoting free services do not qualify as “telephone solicitations” under the TCPA. Plaintiff Hulce received approximately 20 calls and texts from Foodsmart about services available at no cost through his healthcare plan, with payment coming from the insurer rather than Hulce. Foodsmart successfully argued that since their communications encouraged use of free services rather than purchase of services, they fell outside the TCPA’s definition of solicitation. The court determined that encouraging use of a service available at no cost to the recipient does not constitute encouraging a purchase, even when a third party pays for the service.

Fraud & Abuse

GLP-1 Weight Loss Drugs

Health and Human Services

  • The Department of Health and Human Services plans to cut 10,000 full-time jobs as part of a larger reduction that will decrease total headcount by 20,000 employees, saving $1.8 billion annually according to HHS. The cuts will affect multiple agencies including 3,500 workers at FDA, 2,400 at CDC, 1,200 at NIH, and 300 at CMS, though HHS claims the reductions will not impact core services like Medicare, Medicaid, or food and drug reviews. The reorganization includes consolidating 28 redundant offices into 15 new divisions, reducing regional offices from 10 to five, and creating new entities like the Administration for a Healthy America, which will combine multiple existing health offices. Democratic lawmakers and health advocates have criticized the cuts, warning they could harm vulnerable populations and disrupt essential services.

Immigration

  • Hospitals and healthcare systems nationwide are experiencing increased random inspections by USCIS targeting H-1B visa holders. Immigration officers from the Fraud Detection and National Security Directorate conduct unannounced site visits to verify compliance with H-1B program requirements, focusing on Public Access Files, work location accuracy, and position/salary verification. Non-compliance can result in fines, program debarment, operational disruption, and reputation damage. Healthcare facilities are advised to conduct system-wide compliance reviews, train staff on inspection protocols, collaborate with immigration counsel, standardize recordkeeping, and stay informed about policy changes to maintain compliance.

Taxation

Telehealth

  • The DEA has further delayed the effective dates of two telemedicine prescribing rules until December 31, 2025. The rules would expand prescribing of buprenorphine for opioid use disorder and controlled substances for VA patients via telemedicine. Originally scheduled to become effective February 18, 2025, then delayed to March 21, 2025, the Department of Justice now seeks additional time to review questions of fact, law, and policy despite some commenters requesting immediate implementation. Meanwhile, practitioners can continue prescribing controlled medications via telemedicine without prior in-person visits under COVID-19 flexibilities through the end of 2025.

Texas Health and Human Services Commission

Transparency

Categories
Health Law Highlights

Wade’s Health Law Highlights for March 25, 2025

Abortion

  • Texas Attorney General Ken Paxton announced the arrest of Maria Margarita Rojas, a 48-year-old midwife who operated multiple clinics in the Houston area. Rojas, known as “Dr. Maria,” was charged with performing illegal abortions and practicing medicine without a license, both serious offenses under Texas law. Her network included three clinics—in Waller, Cypress, and Spring—where unlicensed individuals allegedly posed as medical professionals. The Attorney General’s office has filed for a temporary restraining order to shut down these facilities and may seek civil penalties of at least $100,000 per violation under the Texas Human Life Protection Act of 2021. Texas law specifically holds abortion providers, not patients, criminally responsible for unlawful procedures.
  • A second person has been arrested in connection with illegal abortion services at clinics operated by a midwife near Houston. Jose Manuel Cendan Ley, a 29-year-old medical assistant, faces charges of performing an illegal abortion and practicing without a license, while Rojas was previously arrested for operating three clinics that allegedly performed illegal abortion procedures. Texas Attorney General Ken Paxton announced that Rubildo Labanino Matos was also arrested for practicing medicine without a license in connection to the investigation. Texas law bans abortion at all stages of pregnancy with exceptions only for life-threatening conditions, with those convicted of performing illegal abortions facing up to 20 years in prison. This case represents the first criminal charges filed under Texas’s near-total abortion ban.

AI in Healthcare

  • AI healthcare models trained on limited institutional data face challenges in broader applications. Healthcare institutions currently train AI models using data from their own populations, creating systems that work well locally but fail when deployed in different settings due to variations in practice patterns, genetic factors, and lifestyle differences across regions. The isolation of medical data in institutional silos prevents AI from reaching its potential to standardize and improve healthcare globally. To address this, healthcare organizations must implement cross-institutional data sharing frameworks and ensure AI models are trained on diverse populations. The solution requires collaboration between health systems, regulatory support, and transparent validation processes to create AI models that can be trusted and effective across all healthcare settings.
  • A Harvard Medical School study found that an open-source AI model called Llama 3.1 405B performed equally well as GPT-4, a leading proprietary model, in diagnosing complex medical cases. Researchers compared both models on 92 challenging cases from The New England Journal of Medicine, with results published March 14 in JAMA Health Forum. The NIH-funded research was conducted by Harvard Medical School in collaboration with clinicians from Beth Israel Deaconess Medical Center and Brigham and Women’s Hospital. Open-source models offer advantages by allowing hospitals to keep patient data in-house rather than transmitting it to external servers required by closed-source models.
  • Google is developing multiple AI healthcare initiatives, including TxGemma for drug discovery, Articulate Medical Intelligence Explorer for patient data collection, and a “co-scientist” chatbot for research assistance. The company has partnered with medical centers like Beth Israel Deaconess in Boston and Princess Maxima Center in the Netherlands, where doctors report tasks that once took days now complete in seconds. Meanwhile, Congress continues to extend pandemic-era telehealth rules through short-term solutions rather than permanent legislation, causing concern among healthcare providers about long-term investment in remote care technologies.
  • The FUTURE-AI framework provides international consensus guidelines for developing trustworthy healthcare AI systems through six guiding principles: fairness, universality, traceability, usability, robustness, and explainability. Developed by a consortium of 117 experts from 50 countries over a two-year period, the framework includes 30 detailed recommendations covering the entire AI lifecycle from design to deployment. FUTURE-AI is designed as a dynamic framework that will evolve with technological advancements and stakeholder feedback to ensure AI tools are technically robust, clinically safe, ethically sound, and legally compliant.

Cybersecurity

  • HIPAA regulations require healthcare providers and business associates to protect patient information in electronic communications. When communicating PHI to patients via email or text, covered entities must either encrypt the information or warn patients about security risks and obtain their consent to proceed with unsecured communications. For communications from patients, providers can assume email is acceptable if initiated by the patient, though warning about risks is recommended. Communications with other providers or third parties require stricter security measures, as simply warning about risks is insufficient; these messages must comply with Security Rule standards through encryption or other safeguards.
  • Healthcare data breaches reached record levels in 2024, with a 9.96% increase from 2023. The healthcare sector ranks second to finance in sensitive data volume, with 68% of medical devices expected to be connected by 2025, creating increased security risks through wireless communication and cloud storage. The industry faces future challenges from quantum computing threats, with NIST developing post-quantum cryptography standards while organizations still struggle with basic security measures like multi-factor authentication.
  • A vulnerability in ChatGPT identified last year is being exploited to target healthcare organizations, with 35% of analyzed organizations unprotected due to security misconfigurations. A recent report documented over 10,000 cyberattack attempts in one week, despite the vulnerability being classified as medium severity. The American Hospital Association warns these attacks could lead to data breaches, unauthorized transactions, and regulatory penalties. Healthcare remains the costliest sector for cyberattacks, with the average breach costing nearly $11 million—more than three times the global average.
  • The U.S. Department of Health and Human Services’ Office for Civil Rights has reached a $227,816 settlement with Health Fitness Corporation for HIPAA Security Rule violations. The settlement, which marks the fifth enforcement action in OCR’s Risk Analysis Initiative, resolves an investigation triggered by four breach reports filed between October 2018 and January 2019, where electronic protected health information became discoverable online due to a server misconfiguration. Health Fitness failed to conduct a thorough risk analysis until January 2024, affecting approximately 4,304 individuals whose data was exposed beginning in August 2015 but not discovered until June 2018. Under the agreement, Health Fitness must implement a corrective action plan including annual risk analyses, risk management planning, and policy development, which OCR will monitor for two years.

Dentistry

  • [The Texas Health and Human Services Commission has adopted an amendment to the Texas Government Code](Adopted Rules Title 25) that requires providers to be reimbursed for teledentistry services. This amendment allows dentists to use synchronous audiovisual technologies to conduct oral evaluations of established clients. As a result, oral evaluations are now more accessible, reducing unnecessary travel for clients in the Texas Health Steps Program.

FDA

  • FDA regulations prohibit compounding pharmacies from creating “essentially a copy” of commercially available drugs unless the modification produces a “significant difference” for an individual patient. Adding B12 to name brand weight loss drugs does not automatically exempt them from being considered copies under Sections 503A and 503B of the Federal Food, Drug, and Cosmetic Act. For a compounded drug to be permissible, the prescribing practitioner must document that the modification creates a significant difference for the specific patient. The FDA established these rules to prevent compounders from circumventing regulatory requirements by making minor changes to commercially available medications.

Medicaid

  • Medicaid program integrity involves both federal and state responsibilities, with states handling day-to-day administration while the federal government provides support and oversight. There is no comprehensive measure of fraud in Medicaid, though most fraud is committed by providers rather than beneficiaries, with the Health Care Fraud and Abuse Control program recovering $3.4 billion across Medicaid and Medicare in FY 2023. Improper payments, which had a 5.1% rate in 2024, are not equivalent to fraud, as 79.1% resulted from insufficient documentation or administrative errors rather than payments to ineligible recipients. HHS and CMS develop strategies to address program integrity issues, focusing on prevention and early detection rather than just recovery of misspent funds.

Mergers & Acquisitions

Privacy

Tax Exemption

  • [The Fifth Circuit Court of Appeals affirmed that Memorial Hermann Accountable Care Organization does not qualify for tax-exempt status under Section 501(c)(4)](Accountable Care Organization Denied Tax-Exempt Status | Gordon Feinblatt LLC). The court applied the “substantial non-exempt purpose” test, determining that Memorial primarily benefited healthcare providers and insurance companies rather than promoting social welfare. Memorial had argued for the application of the “primary purpose test” from Treasury Regulations, but the court rejected this approach while noting it would have reached the same conclusion under either standard. Though currently binding only in Louisiana, Mississippi, and Texas, the ruling suggests Accountable Care Organizations elsewhere may face similar tax treatment.
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Article

Can Compounding Pharmacies Continue to Compound Name Brand Weight Loss Drugs by Adding B12?

In the world of pharmaceuticals, compounding pharmacies play a crucial role in customizing medications to meet the unique needs of individual patients. However, the practice of compounding is tightly regulated to ensure patient safety and maintain the integrity of the drug approval process.

One contentious issue is whether compounding pharmacies can continue to compound name brand drugs by simply adding an ingredient like Vitamin B12 to the formulation. This blog post will delve into the regulations and guidelines provided by the FDA under Sections 503A and 503B of the Federal Food, Drug, and Cosmetic Act (FD&C Act) to analyze the validity of this practice.

Understanding FDA Regulations on Compounded Drugs

The FDA has established specific conditions under Sections 503A and 503B of the FD&C Act that must be met for compounded drugs to qualify for exemptions from certain regulatory requirements. These exemptions include current good manufacturing practice (CGMP) requirements, labeling with adequate directions for use, and new drug approval requirements. One critical condition is that the compounded drug must not be “essentially a copy of a commercially available drug product” unless there is a change made for an identified individual patient that produces a significant difference for that patient, as determined by the prescribing practitioner.

What Constitutes “Essentially a Copy”?

The FDA defines “essentially a copy” of a commercially available drug product as a compounded drug that:

  1. Has the same active pharmaceutical ingredient(s) (API) as the commercially available drug product.
  2. The API(s) have the same, similar, or an easily substitutable dosage strength.
  3. The commercially available drug product can be used by the same route of administration as prescribed for the compounded drug.

The Requirement for Significant Difference

For a compounded drug to be exempt from being considered “essentially a copy,” there must be a documented determination by the prescribing practitioner that the change in the formulation produces a significant difference for the patient. This determination must be specific and documented on the prescription. Examples of significant differences include:

  • Removing an allergenic dye for a patient with allergies.
  • Changing the dosage form for a patient who cannot swallow tablets.
  • Adjusting the dosage strength for a patient who requires a different dose.

The Role of Adding B12 to the Formulation

Can adding Vitamin B12 to a name brand drug formulation exempt the compounded drug from being considered “essentially a copy”? The answer is not straightforward. The addition of B12 must produce a significant difference for the patient, as determined by the prescribing practitioner. This significant difference must be documented on the prescription, specifying the change and the benefit it provides to the patient.

FDA’s Position on Minor Changes

The FDA’s guidance explicitly states that minor changes in strength or formulation that do not produce a significant difference for the patient do not exempt the compounded drug from being considered “essentially a copy.” For example, changing the strength from 0.08% to 0.09% is not considered significant unless it is specifically determined to be so for an individual patient.

Minor changes that do not produce a significant difference for the patient do not qualify the compounded drug for exemptions. This is to ensure that compounders do not evade the limits set by the FDA by making relatively small changes to a compounded drug product and then offering it to the general public without regard to whether a prescribing practitioner has determined that the change produces a significant difference.

Conclusion

The position that compounding pharmacies can continue to compound name brand drugs by simply adding B12 to the formulation is not valid unless the addition of B12 produces a significant difference for the patient, as determined and documented by the prescribing practitioner.

The compounded drug must meet all other conditions under Section 503A or 503B of the FD&C Act to qualify for exemptions. Without a documented significant difference, the compounded drug would still be considered “essentially a copy” of the commercially available drug product, and compounding it would not be permissible under FDA regulations.

Adding an ingredient like B12 to a name brand drug does not automatically make it permissible to compound unless it meets the specific criteria set forth by the FDA.

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Health Law Highlights

Wade’s Health Law Highlights for March 18, 2025

🚨Are Your Vendors Protecting Patient Data? 🚨

If you’re a healthcare provider, you likely rely on vendors who handle patient information—your EHR system, billing company, IT support, and more. But how well do you know their security practices?

Before entrusting them with PHI (protected health information), conduct due diligence. Here are some red flags to watch for:

🔴 No mention of HIPAA compliance on their website? That’s a problem.

🔴 Misspelling HIPAA as “HIPPA”? If they can’t spell it, they probably don’t understand it.

🔴 No third-party security certifications? That’s a risk.

🔴 Small vendor with no resources for security audits? That could be a liability.

Don’t assume vendors know what they’re doing—ask tough questions. At the end of the day, your practice is responsible for protecting patient data, and a reckless vendor could expose you to massive penalties.

Have questions? Drop a comment or email me at wade@texashealthlaw.com.

🔒 Privacy is everyone’s responsibility. Take it seriously.

340B

  • Multiple legal developments occurred in 340B program litigation across the United States. Two amicus briefs were filed supporting a state in a contract pharmacy law appeal case, while a court permitted withdrawal of a preliminary injunction motion in an HRSA audit process case. In a Medicare Advantage payment dispute, the court issued a split decision on accessing damages documentation. Six cases challenging HRSA’s rejection of drug manufacturers’ rebate models saw various legal actions, including the granting of intervention motions and the filing of amicus briefs supporting the defendant. Intervenors in one rebate model case filed supplemental authority, prompting responses from both the plaintiff and supporting amici.

Abortion

  • Texas and Louisiana have filed lawsuits against a New York physician for providing telehealth abortion services across state lines. The cases challenge shield laws designed to protect out-of-state clinicians who prescribe abortion medication via telehealth, with New York Governor Hochul refusing to comply with extradition requests. Several states including Vermont, Maine, California, Colorado, Massachusetts, and New York have enacted shield laws to protect clinicians from legal consequences when providing abortion care to out-of-state patients. The outcomes of these cases could impact the broader landscape of telemedicine by setting precedents for how states can enforce healthcare laws beyond their borders.

Biometric Data

  • Texas Representative Capriglione has introduced a bill (HB 3755) aimed at amending the state’s biometric privacy legislation. This bill seeks to include a definition of artificial intelligence and clarifies that the law does not pertain to AI or associated training, processing, or storage, unless conducted for the purpose of uniquely identifying a specific individual.

Data Breaches

Emerging Technologies

  • A research paper published in the Journal of Theoretical and Computational Advances in Scientific Research presents a framework combining blockchain and AI technologies for healthcare data integration. The blockchain component provides a secure platform for sharing medical records between healthcare providers, patients, and researchers. AI algorithms process the integrated data to enable predictive analysis, automated diagnostics, and personalized treatment recommendations. The framework addresses challenges in healthcare data privacy, interoperability, and efficiency through secure data integration and intelligent decision-making.

Fraud & Abuse

  • A Plano pharmacist was sentenced to 17.5 years in prison and ordered to pay $115 million in restitution for orchestrating a $145 million healthcare fraud scheme. Between 2014 and 2017, Dehshid Nourian and his co-conspirators paid bribes to doctors who prescribed unnecessary compound creams to federal workers, which were mixed by teenagers for $15 but billed to the Department of Labor for up to $16,000 per prescription. The pharmacies collected $90 million through this scheme while attempting to evade $24 million in taxes through money laundering operations. A federal jury convicted Nourian on multiple counts of healthcare fraud, money laundering, and tax evasion, leading to the forfeiture of $405 million in assets including brokerage accounts, real estate, and vehicles. The case represents the largest healthcare fraud forfeiture in Department of Justice history.
  • An El Paso physician has agreed to pay $468,626 to resolve allegations under the Federal False Claims Act. The United States alleged that Dr. John Patterson received kickbacks from Nursemind Home Care Inc. to falsely certify ineligible patients for hospice services, resulting in fraudulent claims to federal healthcare programs. Patterson received cooperation credit for assisting with the investigation and agreeing to testify in related criminal cases. The investigation led to the criminal prosecution of Nursemind Home Care owner Zenia Chavez, who pleaded guilty to conspiracy charges.
  • Texas has secured a $40 million settlement from Molina Healthcare through the state’s Healthcare Program Enforcement Division. The case involved Molina Healthcare, a Fortune 500 company that manages care for Medicaid STAR+PLUS program members who are disabled, blind, or over 65 years old. The settlement stems from allegations that Molina failed to conduct timely assessments of Medicaid beneficiaries and hid this non-compliance from Texas authorities. A whistleblower initiated the case under the Texas Health Care Program Fraud Prevention Act’s qui tam provisions.
  • Healthcare fraud enforcement will remain a priority despite potential regulatory rollbacks under a second Trump administration, according to a new report. The COVID-19 Fraud Enforcement Task Force has pursued over 3,500 criminal cases and secured $1.4 billion in seizures, with nursing homes facing scrutiny over false claims and misuse of relief funds. Recent court decisions, including Zafirov which ruled whistleblower-led False Claims cases unconstitutional, and Loper Bright which eliminated deference to regulatory agencies, may provide new defenses for healthcare providers. The Supreme Court’s Jarkesy decision, requiring jury trials for civil penalties, could impact 20 pending cases before the HHS Departmental Appeals Board.

Office of Inspector General

  • The U.S. Department of Health and Human Services Office of Inspector General has released updated compliance guidance for nursing facilities, marking its first revision since 2008. The guidance focuses on preventing fraud and abuse through proper billing practices, documentation requirements, and monitoring of financial arrangements between facilities and referral sources. Nursing facilities must implement robust compliance programs that include regular audits, staff training, and oversight from responsible individuals including investors. The OIG specifically highlights concerns about joint ventures, pharmacy arrangements, hospice relationships, and “tunneling” practices that could violate anti-kickback laws.
  • A federal audit found that Texas failed to fully comply with federal waiver and state health, safety, and administrative requirements at all 20 adult day activity and health service facilities examined. The Office of Inspector General (OIG) reported 253 instances of provider noncompliance, including deficiencies in facility maintenance, staff qualifications, and regulatory adherence. Of the 20 audited providers, 19 failed to meet one or more health and safety requirements, while 19 also violated administrative regulations. The report recommended corrective actions, improved oversight, and enhanced facility staffing and training. Texas agreed with the recommendations and outlined steps to address the issues.

Patents

  • A Federal Circuit addressed the patentability of “obvious” pharmaceutical dosing methods, In the case of  ImmunoGen, Inc. v. Stewart, the parties agreed that a method of using the recited immunoconjugate (also known as IMGN853) to treat FOLR1-expressing ovarian cancer or cancer of the peritoneum was known in the art at the time of filing. Therefore, whether the claims were patentable from an obviousness perspective turned on whether the recited dosing limitation of “6 mg per kg of AIDW of the patient” would have been obvious to a person of ordinary skill in the art (POSITA) at the time of filing. The Court determined that the dosing method would have been obvious to try since it overlapped with known dosing schemes, and therefore, was not patentable. The ruling sets a high bar for proving non-obviousness of dosing regimens for known drugs, even when dealing with unpredictable effects.

Weight Loss Drugs

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Health Law Highlights

Wade’s Health Law Highlights for March 11, 2025

False Claims Act

FDA

  • A U.S. District Court has allowed Novo Nordisk to intervene in a case between the FDA and compounding pharmacies. Compounders sued the FDA for removing weight loss drugs from its shortage list, which had previously allowed them to produce copycat versions of Novo’s semaglutide products. The compounders claim the agency’s decisions were arbitrary and that shortages persist. Novo Nordisk cited safety concerns and investment protection in its motion to intervene, which was unopposed by both the FDA and the compounders. Eli Lilly has also filed a motion to intervene in the ongoing legal proceedings.

Medicare

  • CMS has revised its Medicare overpayment rule, replacing the “reasonable diligence” standard with a “knowingly” standard that only requires action when providers are aware of overpayments. The update extends the investigation timeline, giving healthcare organizations 180 days to conduct investigations before the 60-day repayment clock begins. Organizations must keep documentation of compliance efforts and implement processes for identifying, reporting, and returning overpayments. Healthcare providers who fail to address identified overpayments risk penalties under the False Claims Act, which can include treble damages and civil penalties. The new framework tries to streamline compliance while maintaining accountability through structured investigation protocols and documentation requirements.
  • Medicare reimbursement rates for radiologists have declined by 24.9% from 2005 to 2021 after inflation adjustments, while the average starting salary for radiologists reached $472,000 in 2023, representing a 17.7% increase since 2020. The workforce faces significant pressures with 56.4% of diagnostic radiologists being 55 or older, while new trainees are only increasing by 2.5% annually. The implementation of the No Surprises Act has complicated reimbursements for out-of-network services, and healthcare cybersecurity costs have reached $10.93 million per data breach in 2023. These challenges are pushing independent radiology groups to seek financial subsidies from hospital partners to maintain operations.

Nonprofits

  • Nonprofit healthcare organizations are increasingly pursuing mergers to address economic challenges and improve care delivery. These mergers can take the form of either member substitutions, where one organization becomes a controlling member while both entities remain separate, or true mergers that combine organizations into a single legal entity. The consolidations try to achieve cost efficiencies, increase bargaining power with insurance companies, and improve access to capital for technology investments and facility improvements. Mergers also enable organizations to expand their geographic reach, enhance quality of care, and invest in innovations like telemedicine and data analytics. The process requires careful consideration of mission alignment, organizational culture, and governance structures to ensure the merged entity can effectively serve its community while maintaining financial stability.

Physician-Patient

  • Healthcare providers who wish to terminate a patient relationship must follow specific protocols to avoid patient abandonment claims. The process requires providers to notify patients in writing of the termination, explain the reasons professionally, and give patients reasonable time (typically 30 days) to find new care. During the transition period, providers must continue necessary care and facilitate the transfer of medical records to the new provider. While providers can terminate patient relationships for valid reasons like non-compliance or non-payment, they must follow applicable laws regarding discrimination and emergency care, with exceptions only for situations posing immediate safety risks.

Ransomware

Security

Stark Law

  • The Centers for Medicare & Medicaid Services settled 314 Stark Law self-disclosures in 2024, collecting $24.7 million in settlements. The number of settlements in 2024 exceeded the combined total of the previous two record years and represented over one-third of all settlements in the program’s 14-year history. The average settlement amount was $78,781.39, consistent with trends from recent years, while 51 submissions were withdrawn during 2024. CMS has increased its processing speed for settlements, with some cases now resolved within the same calendar year as submission, marking a significant improvement from previous processing times. The smallest settlement in 2024 was $4, while the largest settlement on record remains $1,196,188 from 2018.

Transparency

  • On February 25, 2025, President Trump signed an executive order focusing on healthcare price transparency. The order instructs the secretaries of Treasury, Labor, and Health and Human Services to implement new requirements within 90 days, mandating disclosure of actual prices rather than estimates. The directive tries to standardize pricing information across hospitals and health plans while updating enforcement policies for transparent reporting. Under current rules, hospitals must publish machine-readable files of standard charges using Centers for Medicare & Medicaid Services templates and provide price estimator tools for shoppable services.
Categories
Health Law Highlights

Wade’s Health Law Highlights for March 4, 2025

Advertising

  • Twenty US states have enacted comprehensive privacy laws that regulate health data usage in digital advertising. The Federal Trade Commission and state regulators have expanded definitions of health data to include browsing histories, location information, and medical purchases, with Washington and Nevada implementing specific consumer health data laws requiring detailed consent. The Dobbs v. Jackson Women’s Health decision has accelerated concerns about health data privacy, particularly regarding reproductive healthcare information. Companies are adapting through various strategies including national opt-in consent standards, data suppression in certain states, increased due diligence, and demographic-based targeting instead of individual health data. Despite potential changes in federal enforcement under new administration, state-level regulation of health data is expected to increase, particularly in Democratic-leaning states.

Artificial Intelligence

  • AI in healthcare currently faces mixed results across different applications. AI-powered ambient scribing tools for clinical documentation show varying effectiveness, with some studies indicating time savings while others suggest increased time spent on records. Clinical decision support tools, particularly for sepsis detection, struggle with accuracy and false positives, though tools like Sayvant offer promise in medical decision-making documentation. AI also shows potential for medical record summarization, though current limitations necessitate a measured approach focused on targeted innovations rather than transformation.
  • OpenAI and Oracle have announced the Stargate AI infrastructure project, a $500 billion initiative backed by Softbank and MGX to develop next-generation AI infrastructure over four years. Project leaders claim it will revolutionize healthcare through capabilities like 48-hour personalized cancer vaccines and improved disease treatments, while studies show AI can match doctor accuracy in diagnoses. However, experts suggest there are implementation challenges including payment systems, clinician training, and integration across healthcare facilities.

Corporate Practice of Medicine

Fraud, Abuse and Waste

Fraud and Misrepresentation

Information Blocking

  • The 2016 21st Century Cures Act established rules against information blocking in healthcare electronic records to promote data sharing and competition. The Department of Health and Human Services and Federal Trade Commission collaborated to implement these rules, requiring fair licensing terms for protected health information. In January 2024, Real Time Medical Systems filed the first lawsuit under these rules against PointClickCare Technologies, alleging that PCC blocked access to health records through unsolvable CAPTCHA walls to hinder competition. The District Court of Maryland granted Real Time a preliminary injunction, and the case is now on appeal to the Fourth Circuit. The case marks the first enforcement action of the Cures Act’s information blocking provisions since its enactment.

Insurance

  • A new American Medical Association survey reveals that prior authorization requirements create barriers to patient care, with physicians reporting increased denials over the past five years and concerns about AI-driven review systems. The survey found that prior authorization led to care delays, with 77% of physicians reporting patients had to attempt ineffective treatments first, and 23% noting hospitalizations due to authorization delays. A Senate report indicated that AI systems deny claims up to 16 times more frequently than human reviewers, prompting the AMA to warn against unregulated AI in medical decision-making. Despite lawmaker scrutiny and legal challenges, experts predict insurers will continue implementing AI review systems, potentially forcing providers to adopt their own AI tools for claims submission.
  • A new American Medical Association survey reveals that 61% of doctors worry about insurers using AI to increase treatment pre-approval denials. The survey found that 93% of physicians report prior authorization delays care, while 82% say patients sometimes abandon treatment due to these delays. Despite 66% of doctors using AI in their practices, 49% want increased regulatory oversight of how insurers employ AI in the approval process. Hospitals report increasing claim denials attributed to AI tools, with 89% of doctors stating that prior authorization battles contribute to burnout. The process impacts patient care, with 29% of doctors reporting serious adverse events due to authorization delays, and 23% noting patients requiring hospitalization as a result.

Security

  • The Department of Health and Human Services has proposed updates to the HIPAA Security Rule on January 6, 2025, with comments open until March 7, 2025. The updates eliminate the distinction between “required” and “addressable” standards, making all security measures mandatory for healthcare entities. The new requirements include encryption, multifactor authentication, regular security audits, vulnerability scans, data backup procedures, and network mapping. The Privacy Rule changes reduce patient record request fulfillment time from 30 to 15 days and allow patients to photograph their health information in designated private areas. Healthcare providers must implement these changes and retrain staff on the new requirements once finalized.
  • The U.S. Department of Health and Human Services proposes updates to the HIPAA Security Rule due to widespread adoption of electronic health records, with 80% of physicians’ offices and 96% of hospitals using them as of 2021. The updates aim to address increased cybersecurity risks in healthcare delivery systems and establish centralized security standards, as current voluntary guidelines have seen inconsistent implementation. HHS chose a prescriptive approach rather than recognizing existing frameworks for safe harbor incentives, despite the 2021 HITECH Act amendments. The proposed changes, which have a public comment deadline of March 7, 2025, would raise security standards and potentially burden smaller providers, though HHS maintains the rules allow for flexibility in implementation.

Taxation

Transgender Care

  • Texas has filed a lawsuit against Dr. Hector Granados and two other doctors for allegedly violating a 2023 law banning gender-affirming care for minors. The state claims Granados prescribed testosterone to a 16-year-old patient after the ban, while he maintains he only prescribed it for hormone deficiencies, not gender transition. Texas is among 27 states that have restricted or banned treatments like puberty blockers and hormone therapy for minors, with some families now seeking care in states like New Mexico where such treatments remain legal. The trial is set for October, and if found guilty, Granados and his co-defendants, Dr. May Lau and Dr. M. Brett Cooper, could lose their medical licenses and face fines. Attorney General Ken Paxton states his office will enforce the ban, while doctors must choose between their ethical duties and maintaining their ability to practice medicine.
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Health Law Highlights

Wade’s Health Law Highlights for February 25, 2025

Artificial Intelligence

  • A recent American Medical Association survey of 1,183 physicians shows AI usage among doctors increased from 38% in 2023 to 66% in 2024. Physicians use AI primarily for visit documentation, discharge summaries, care plans, translation services, and medical research summaries, with 68% reporting AI provides advantages in patient care. While 36% of physicians express excitement about AI, up from 30% in 2023, 47% believe increased oversight is needed to build trust in the technology. The survey reveals physicians want features like feedback channels, data privacy assurances, EHR integration, and proper training to advance AI adoption in healthcare.
  • Healthcare will transform from centralized hospitals to an invisible, integrated system woven into daily life through AI and edge computing. The shift is driven by younger generations demanding personalized care, advancing biometric technology, and the convergence of diagnostic capabilities into smaller devices. By 2051, healthcare will move into homes and repurposed community spaces, with AI-powered preventive care and mental health support becoming standard features of everyday environments. Wearable technology will predict health issues decades in advance, while household items will continuously collect health data and provide real-time monitoring.
  • Organizations are shifting from static AI compliance to continuous governance models as AI systems become more integrated into business operations. The EU AI Act and U.S. regulations require companies to implement real-time monitoring, vendor oversight, and cross-functional governance structures to manage AI risks. Organizations must address challenges including model drift, data provenance, third-party transparency, and AI liability through continuous auditing and risk assessment frameworks. Companies need to balance AI explainability with intellectual property protection while ensuring compliance with privacy regulations like GDPR and CCPA. Those who adopt proactive AI governance frameworks position themselves for competitive advantage in responsible AI innovation.

Data Breach

FDA

Fraud & Abuse

Texas Legislation

  • The Texas Legislature has introduced a bill requiring electronic health records to include dedicated spaces for recording biological sex and sexual development disorders. The legislation defines biological sex based on reproductive system function and mandates that medical algorithms use this recorded biological sex for treatment decisions. Health care providers can only amend the recorded biological sex to correct clerical errors or if a patient is diagnosed with a sexual development disorder. The bill, if passed, will take effect September 1, 2025. The new requirements will apply only to electronic health records created after the law’s effective date.
  • A Texas State Senator filed a bill requiring explicit consent for medical research on corpses in Texas. The legislation responds to an NBC News investigation that revealed UNT Health Science Center used unclaimed bodies for experiments and leased body parts to companies without contacting families. Current Texas law allows medical institutions to use unclaimed bodies after attempting to notify relatives within 72 hours, but the new bill would require prior written consent from the deceased or next of kin. Following the investigation, UNT Health Science Center leaders were fired, the Willed Body Program was suspended, and the university president stepped down, while Tarrant County ended its relationship with the program.

HIPAA

  • The U.S. Department of Health and Human Services has proposed updates to HIPAA Security Rule requirements in a new Notice of Proposed Rulemaking. The updates include mandatory implementation specifications for contingency plans, requiring exact backup copies of electronic protected health information and system restoration within 72 hours of an event. The proposal introduces a new vulnerability management standard requiring automated scanning every six months, ongoing monitoring of known vulnerabilities, annual penetration testing, and timely software patches. Business associates must notify covered entities within 24 hours of activating contingency plans, and regulated entities must maintain written security incident response procedures. The public comment period for these proposed changes ends March 7, 2025.
  • The US Department of Health and Human Services issued a proposed update to the HIPAA Security Rule in June 2024 to strengthen cybersecurity requirements for electronic protected health information. Mobile healthcare apps present unique security challenges, with 79% of healthcare organizations experiencing API-related security incidents in 2023. The proposed rule needs specific requirements for mobile app security, including protection against cloned apps, device manipulation, man-in-the-middle attacks, and API key exposure.

Medicare

  • Medicare Advantage plans required approximately two prior authorizations per enrollee in 2023, while Traditional Medicare required only 0.01 per beneficiary. Prior authorization requirements for Medicare Advantage plans increased to 50 million in 2023, up from 42 million in 2022, despite CMS rules aimed at reducing these requirements. A Senate report revealed that the three largest Medicare Advantage insurers intentionally denied prior authorizations to increase profits, with United Healthcare’s denial rate for skilled nursing facility stays rising 800% between 2019 and 2022. While 3.2 million prior authorization requests were denied in 2023, only 11.7% were appealed, though 81.7% of appeals resulted in overturned denials. The process impacts skilled nursing facilities through delayed admissions, reduced patient volume, and revenue loss.
  • Medicare physician payments have seen only an 11% increase from 2001 to 2021 while practice costs rose 39%. The Centers for Medicare & Medicaid Services implemented a 2.83% reimbursement cut for 2025, prompting concerns about practice viability and patient access. Congress replaced the problematic Sustainable Growth Rate formula with MACRA in 2015, introducing value-based payment models through MIPS and APMs. A bipartisan bill called the Medicare Patient Access and Practice Stabilization Act was introduced in January 2025 to reverse the cuts, with a critical March 14 deadline looming for Congress to act on budget measures that could affect physician payments.
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Health Law Highlights

Wade’s Health Law Highlights for February 18, 2025

AI in Healthcare

  • A new American Medical Association survey reveals that physician acceptance of AI in healthcare has increased, with 35% now showing enthusiasm compared to 30% in 2023. The adoption rate of AI tools among physicians has jumped from 38% to 66% between 2023 and 2024. The survey, conducted from August 2023 to November 2024, found that 57% of physicians view AI’s potential to reduce administrative tasks as a key benefit. Physicians prioritize data privacy (87%), feedback channels (88%), and EHR integration (84%) for AI implementation.
  • Colorado’s new Artificial Intelligence Act will take effect on February 1, 2026, requiring healthcare providers to prevent algorithmic discrimination in AI systems that make consequential decisions about patient care. The law mandates that organizations using high-risk AI systems implement risk management policies, conduct impact assessments, and provide transparency about AI usage to patients. Healthcare providers must notify individuals before AI makes consequential decisions and allow appeals for adverse outcomes, while the Colorado Attorney General holds exclusive enforcement authority. Organizations with fewer than 50 employees who don’t train their own AI models are exempt from many compliance requirements, though the law’s reach extends to any business serving Colorado residents.

Antitrust

  • President Trump’s return to the White House signals a shift in antitrust enforcement approach for private equity firms. The administration has appointed Andrew Ferguson as FTC chair and nominated Gail Slater to lead the DOJ’s antitrust division, replacing Lina Khan and Jonathan Kanter respectively. The Trump administration is expected to be more accepting of negotiated settlements and divestitures involving private equity, moving away from the Biden administration’s stricter stance on merger enforcement and roll-up acquisitions. While antitrust scrutiny will continue, particularly in Big Tech and healthcare sectors, new HSR premerger notification rules taking effect in February 2025 will require closer monitoring of interlocking directorates. PE firms must maintain compliance protocols for board appointments as the new HSR form enhances the ability to detect potential violations of Section 8 of the Clayton Act.
  • States are taking a more active role in healthcare antitrust enforcement through state-level transaction notification regimes known as “Baby HSRs” or “Mini HSRs.” These state regulations impose requirements on healthcare transactions that may fall below federal HSR Act thresholds, with states implementing additional scrutiny for private equity involvement in healthcare deals. States cite concerns that profit motives could reduce quality of care as justification for increased oversight of private equity transactions. The regulations vary by state, with some imposing more stringent requirements than federal rules, and many states continue to implement or expand their healthcare transaction approval processes.

Biometric Data

Drugs & Devices

  • A Texas judge ordered Dr. Maggie Carpenter to pay over $100,000 in penalties for prescribing abortion pills via telemedicine to a woman near Dallas. New York Governor Kathy Hochul rejected Louisiana’s request to extradite Carpenter, who faces criminal charges in Louisiana for prescribing abortion pills to a minor. The Texas ruling includes an injunction preventing Carpenter from prescribing abortion medication to Texas residents, while Louisiana’s case marks the first criminal charges against a doctor for prescribing abortion pills across state lines. Both cases will test New York’s shield law, which protects doctors who prescribe abortion medication to states where abortion is restricted.
  • Texas convenience stores are selling synthesized Kratom products containing 7-Hydroxymitragynine, a substance that acts like opioids in the brain. While natural Kratom has been used traditionally in Southeast Asia, companies are now creating concentrated pills that are 97% pure 7-OH, far exceeding the 2% limit set by Texas law. The Texas Kratom Consumer Protection Act outlaws these synthetic versions, but state officials are not enforcing the regulations. The Global Kratom Coalition reports 24 million Americans use Kratom, though the synthesized versions sold in stores can lead to addiction and withdrawal symptoms.
  • The FDA has published final guidance on communications about unapproved uses of approved medical products on January 6, 2025. The guidance defines SIUU communications as firm-initiated exchanges with healthcare providers about scientific information on unapproved uses, requiring specific disclosures and source publications. The document clarifies what constitutes “scientifically sound” studies, removes requirements for plain language, and provides new rules about separating promotional from scientific communications. The guidance also addresses “calls to value,” prohibiting communications that pre-judge product benefits while allowing those that present scientific information for clinical decision-making. The FDA maintains core policies while requiring firms to update their internal procedures to align with the new guidance.
  • The FDA has issued its first guidance on using artificial intelligence models in drug development and regulatory submissions, with a public comment period open through April 7. The guidance introduces a seven-step risk-based framework for assessing AI model credibility, covering nonclinical, clinical, postmarketing, and manufacturing phases while excluding drug discovery and operational efficiencies. FDA recommends implementing life cycle maintenance plans to monitor AI models’ ongoing performance and ensure they remain suitable for their context of use. The guidance emphasizes early engagement with FDA through various programs like the Center for Clinical Trial Innovation and the Complex Innovative Trial Design Meeting Program. President Trump signed an executive order on January 23 to remove barriers to AI leadership, rescinding previous Biden administration restrictions on AI development.

Fraud & Abuse

Pharma

Private Equity

  • A report released by federal agencies analyzing over 2,000 public comments reveals concerns about healthcare industry consolidation and private equity investment. The report identifies issues including higher prices from provider consolidation, quality reductions in PE-backed transactions, and PE firms controlling up to 50% of physician practices in some metropolitan areas. Studies show PE acquisitions correlate with safety issues and reduced quality in healthcare facilities, while physicians report concerns about understaffing and restricted referrals. In response, Massachusetts passed legislation in 2025 granting new powers to review healthcare transactions involving PE firms, though the federal agencies’ continued focus on PE may shift under the Trump administration.
  • Private equity firms were connected to 56% of large corporate bankruptcies across industries in 2024, with healthcare showing a particularly high rate. Of eight major healthcare bankruptcies with liabilities over $500 million, seven involved companies with private equity ownership history. The healthcare sector’s 21% rate of private equity-related bankruptcies exceeded the broader economy’s 11% rate and matched 2023 levels. The Private Equity Stakeholder Project reports these bankruptcies can result in healthcare facility closures and disrupted patient care. Valentina Dabos from PESP emphasizes these trends raise concerns for policymakers, investors, and consumers.
  • Healthcare mergers and acquisitions are expected to increase in 2025 as inflation eases and interest rates decline. Private equity transactions with physician practices typically involve a combination of cash payment and rollover equity through management services organizations, with rollover equity potentially comprising up to 40% of deal value. While orthopedic and spine surgery groups have historically resisted private equity investment due to their profitable ancillary services, this resistance is weakening except among mega-groups. Transaction success requires broad stakeholder support, experienced advisors, regulatory compliance, and careful structuring of tax treatment and indemnification terms. Generational differences often emerge in these deals, as older physicians typically receive larger portions of purchase price while younger doctors face career-long relationships with financial investors.
  • The Senate Budget Committee and HHS released reports in January 2025 examining private equity ownership in healthcare. The reports identified concerns including reduced care quality, facility closures, higher costs, understaffing, and lack of ownership transparency. HHS proposed new oversight measures including expanded transparency requirements, lower merger reporting thresholds, and increased enforcement against hospital consolidation. The reports recommend PE firms maintain compliance through monitoring regulations, documenting quality metrics, and implementing strong compliance programs. The impact of these potential changes under the Trump administration remains uncertain.

Telehealth

  • Healthcare technology trends in 2025 include a shift in telehealth usage to focus on behavioral health and specialist care. Hospitals are expanding AI applications through dedicated centers and AI scribes, while implementing LiDAR sensors and wearable devices for patient monitoring. Remote patient monitoring and hospital-at-home programs continue to grow as medical centers face staffing challenges. Cybersecurity remains critical after ransomware attacks doubled in 2024, affecting over 1,000 U.S. hospitals and prompting healthcare organizations to strengthen their security measures and vendor oversight. AI tools are being developed to detect network breaches and automate tasks like appointment scheduling and medical billing.
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Health Law Highlights

Wade’s Health Law Highlights for February 11, 2025

Ambulatory Surgery Centers

  • United Surgical Partners International, Surgical Care Affiliates, and Amsurg Corporation lead the ambulatory surgery center market with 520, 320, and 250 centers respectively. CMS approved 21 new procedures for ASC coverage in 2025, focusing on dental and regenerative therapy services, while implementing a 2.9% Medicare payment increase. Major consolidation occurred through acquisitions and partnerships, with USPI acquiring 45 new centers including Covenant Physician Partners, though 67% of ASCs remained independent. Several states reformed Certificate of Need laws, with North Carolina and Tennessee planning full repeals for ASCs by 2025 and 2027 respectively, while Georgia introduced exemptions for single-specialty centers. The migration of high-acuity procedures to ASCs continued, with Surgery Partners reporting a 50% increase in total joint cases, while lower-acuity procedures moved to office-based settings.

Cybersecurity & Ransomware

  • The Trump administration has indefinitely suspended all meetings of the Health Information Technology Advisory Committee (HITAC). The committee, established by the 21st Century Cures Act in 2016, consists of 25 members who recommend policies and standards for healthcare data and technologies to the federal government. The Trump administration has also paused other health agency communications and removed certain healthcare data from federal websites.
  • Several healthcare organizations faced ransomware attacks in January 2025, including New York Blood Center Enterprises which affected locations across multiple states, and Frederick Health in Maryland which disrupted IT systems and led to patient diversions. Matagorda County, Texas experienced a network outage due to a cyberattack, while Texas Tech University Health Sciences Center disclosed a ransomware attack affecting 533,874 individuals. Despite these incidents, blockchain analysis firm Chainalysis reported a 35% decrease in ransom payments in 2024 compared to 2023, attributing this decline to increased law enforcement action and more victims refusing to pay.
  • The HHS Office for Civil Rights has proposed new cybersecurity measures for healthcare providers under HIPAA, including mandatory vulnerability scanning every 6 months and expanded annual risk analyses. Healthcare providers must implement cybersecurity protections through staff training, limited access controls, and strong password protocols to prevent data breaches. New regulations require signed attestations for reproductive health information disclosures, with additional privacy protections becoming mandatory by February 16, 2026.

Emerging Technology

  • Healthcare law in 2025 will focus on four key areas of technological advancement and regulation. AI implementation in healthcare requires new legal frameworks to address risks, errors, and biases, while HIPAA and HITECH compliance becomes critical for protecting patient data against cyberattacks. Telehealth expansion drives changes in licensing requirements and reimbursement policies, while the healthcare industry continues its shift from fee-for-service to value-based care models following the ACA’s implementation. These changes necessitate new regulations for data-sharing, antitrust considerations, and risk-sharing arrangements to protect both patients and healthcare professionals.
  • Healthcare providers currently use AI for tasks including disease diagnosis, chart preparation, and treatment planning. The technology presents legal risks in four main areas: HIPAA privacy violations when using public-facing AI platforms, malpractice concerns in the informed consent process, uncertainty about liability when AI recommendations lead to incorrect treatments, and potential billing errors that could trigger false claims allegations. Healthcare providers must maintain human oversight of AI systems and cannot use AI reliance as a defense against malpractice claims, while failure to use available AI technology could also create liability risks. Doctors must disclose AI use to patients during the informed consent process and ensure all AI systems comply with HIPAA requirements.
  • Healthcare systems have transformed to prioritize patient accessibility through technology-enabled solutions. Remote consultations, online prescriptions, and digital platforms now allow patients to receive care without disrupting their routines. Healthcare providers maintain safety through strict regulatory compliance and secure technology for patient data protection. Artificial intelligence and wearable devices enable real-time monitoring and early detection of health risks, while electronic health records improve communication between medical professionals. The integration of these technologies creates a healthcare system that balances convenience with quality care standards.
  • AI is being used in healthcare for tasks including disease diagnosis, chart preparation, pre-authorization, and treatment planning. Healthcare providers must ensure AI systems meet HIPAA requirements and avoid using public-facing AI platforms that could compromise patient privacy. Doctors remain liable for malpractice even when using AI for diagnosis and treatment recommendations, and must disclose AI use to patients during the informed consent process. The technology can create liability for coding and billing errors if incorrect recommendations are followed.

Fraud & Abuse

Gender-Affirming Care

HIPAA

  • The U.S. Department of Health and Human Services announced new HIPAA security rules taking effect March 7, 2025. The updates remove the distinction between “required” and “addressable” standards, making all security measures mandatory with limited exceptions. The changes mandate encryption for all electronic protected health information, require multi-factor authentication, and establish requirements for vulnerability scanning and penetration testing. Healthcare organizations and their business associates must comply with these rules or face penalties up to $50,000 per violation with a maximum of $1.9 million per year, plus potential jail time of 1-10 years. Human error remains the leading cause of healthcare data breaches at 76%, highlighting the need for these enhanced security measures.
  • HIPAA-regulated entities must report 2024 data breaches affecting fewer than 500 individuals to the HHS Office for Civil Rights by March 1, 2025. The HIPAA Breach Notification Rule requires entities to notify affected individuals within 60 days of breach discovery, with breaches affecting 500 or more residents requiring additional media notifications. For smaller breaches affecting fewer than 500 individuals, organizations can submit reports annually through the OCR data breach portal, with each breach reported separately. Business associates must notify covered entities of breaches within 60 days, though covered entities can delegate notification responsibilities back to their business associates while retaining ultimate responsibility for compliance. Failure to meet these deadlines may result in financial penalties for non-compliance.

Physician Fee Schedule

  • The Medicare Physician Fee Schedule for 2025 introduces a conversion factor decrease to $32.3465, representing a 2.83% reduction from 2024. The Medicare Economic Index projects a 4.9% increase in practice costs while payments decline, creating financial pressure on healthcare providers. Care management services see notable increases, with chronic care management codes rising 8-15% and new behavioral health integration codes gaining 12-18%. Geographic Practice Cost Indices show significant adjustments in major metropolitan areas, with San Francisco maintaining the highest PE GPCI at 1.842. The MIPS program maintains its 75-point threshold with potential penalties reaching 9% for underperformers, while high performers can receive bonuses averaging 1.31%.
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Health Law Highlights

Wade’s Health Law Highlights for February 4, 2025

Data Privacy

Dental

  • Dental plans distinguish between non-covered services and disallowed services in their payment policies. Non-covered services are those not included in a patient’s dental plan due to limitations or exclusions, while disallowed services are covered procedures that the plan refuses to pay for due to deficiencies or improper execution. Participating dentists must follow fee schedule limits even for non-covered services and file claims unless patients pay out-of-pocket and request no filing under HIPAA rules. When services are disallowed, dentists cannot bill patients or retain payments, though they may contest these determinations through their participation agreements. HIPAA allows patients to prevent claim filing by paying in full and making a written request.

Fraud & Abuse

  • The U.S. Department of Justice recovered $1.67 billion in healthcare fraud settlements in 2024, with major developments including a new whistleblower program targeting private insurer fraud. The DOJ launched increased scrutiny of private equity and venture capital firms in healthcare, examining their influence on portfolio companies and patient care. The Civil Cyber Fraud Initiative secured $14 million in settlements related to cybersecurity violations, while the FDA strengthened its focus on medical device cybersecurity through new guidance documents and enforcement actions. The government expanded whistleblower incentives with rewards up to 30% of recovered funds for the first $100 million, signaling continued emphasis on fraud detection and prevention.

Healthcare Delivery

HIPAA

  • The U.S. Department of Health and Human Services has proposed new HIPAA Security Rule updates through a Notice of Proposed Rulemaking that will affect group health plans and their sponsors. The updates require plan documents to explicitly connect safeguards to provisions applying to covered entities and business associates, while mandating sponsors report security incidents within 24 hours of contingency plan activation. Plan sponsors must amend existing documents to reflect these changes, though many may already have compliant procedures in place. HHS is seeking input on implementation deadlines and potential transition periods for document amendments, with future updates expected to address encryption, multi-factor authentication, and administrative controls.

Hospice

  • The U.S. hospice care industry faces significant transformation as private equity firms acquire providers, with nearly three-quarters now under for-profit ownership. The number of Americans aged 65 and older will increase 47% to 82 million by 2050, intensifying demand for hospice services. For-profit ownership has led to challenges including staff burnout, reduced care quality, and increased billing issues, while workforce shortages limit access to services. Non-profit organizations are positioned to address these challenges through integration with broader healthcare systems, increased collaboration between providers, and adoption of new technologies like AI and telehealth. The industry must focus on improving quality standards and accessibility while maintaining the core mission of providing comprehensive end-of-life care.

Innovative Technology

Insurance & Reimbursement

Medicaid

  • In Texas, where postpartum Medicaid coverage was extended from 2 months to 12 months in 2023, implementation has faced significant challenges. The program now covers more than 265,000 pregnant and postpartum Texans, but many patients remain unaware of their extended benefits and struggle to access care. Texas healthcare providers report confusion about the new coverage rules, with many doctors learning about the changes through billing departments rather than official communications. The state’s recent removal of people from Medicaid rolls has complicated matters further, with many postpartum women having to fight to reinstate their coverage. Structural issues like provider shortages and limited mental health screening coverage continue to hinder access to care under the expanded program.

Private Equity

  • Private equity firms have invested hundreds of billions of dollars in healthcare over the past 15 years, leading to increased scrutiny from the Department of Justice under the False Claims Act. PE firms typically use leveraged buyouts to purchase companies, leaving portfolio companies with substantial debt burdens that can complicate FCA enforcement and recoveries. The DOJ has two main options for addressing fraud in PE-owned healthcare companies: pursuing fraudulent transfer claims under the Federal Debt Collection Procedures Act and targeting individual liability, particularly former owners who received cash payouts during buyouts.