Medical Journal Houston February 2013

By Dr. roBert tesh

Last year saw a sudden resurgence of West Nile virus activity in the United States. Texas was hit especially hard, with an unprecedented concentration of cases in the Dallas metropolitan area— nearly 800. Houston had far fewer than that, but still recorded 74 cases — more than 12 times its 2011 total.

For many Texans, the sudden return of West Nile came as a surprise. In retrospect, though, there was nothing surprising about West Nile’s 2012 comeback. The virus may be a newcomer to the Western Hemisphere (it made its first American appearance in a 1999 New York City outbreak ), but it has been known for many years in Africa, the Mediterranean region and Central Asia. And wherever it establishes itself, West Nile behaves like other endemic mosquito-borne viruses that cause encephalitis (St. Louis encephalitis and eastern equine encephalitis, for example): it primarily strikes certain vulnerable populations, and it varies in intensity from year to year.

This pattern is characteristic of viral and bacterial pathogens whose transmission cycles involve wild animals, including rabies, sylvatic plague and hantavirus pulmonary syndrome. West Nile is primarily maintained in a transmission cycle involving Culex mosquitoes and wild birds. While most birds are susceptible to infection, the majority of infections are asymptomatic; in groups such as corvids (jays, crows and magpies), however, mortality can be quite high.

Interestingly, many human infections with West Nile virus are also asymptomatic. Studies by the Centers for Disease Control and Prevention indicate that overall about 80 percent of U.S. residents who became infected with the virus exhibit

no symptoms; about 20 percent of people have a brief illness characterized by fever, headache, muscle aches, nausea and weakness of relatively short duration; and less than 1 percent develop more serious neuroinvasive disease which can be manifested as meningitis, encephalitis or flaccid paralysis. About 10 percent of patients who develop this neuroinvasive form of West Nile virus infection have died.

The people at highest risk for developing neuroinvasive disease are those over 55 years of age and those taking immunosuppressive drugs, such as recipients of organ transplants or cancer patients receiving steroid or immunosuppressive therapy. There is also evidence suggesting that people with hypertension and diabetes are also at higher risk of developing neuroinvasive disease if infected with the virus. In patients recovering from symptomatic West Nile

virus infection, especially people who have had the neuroinvasive form of the disease, symptoms such as persistent headache, confusion, chronic fatigue and various degrees of muscle weakness or paralysis may persist.

The CDC estimates that about 3.5 million Americans have been infected with West Nile virus since its initial appearance in North America. A recent study by a group at Baylor College of Medicine and the Texas Department of State Health Services estimated that approximately 534,000 people in Texas have been infected with West Nile virus since 2002. While infection with the virus probably confers life-long immunity, these data indicate that the majority of U.S. residents and most Texans are still susceptible to infection.

INSIDE▼

The Leading Source for Healthcare Business NewsFebruary 2013 • Volume 9, Issue 11 • $3.50

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INDEX▼

Financial Perspectives.......3

Legal Affairs......................4

THA.................................5

Special News.....................6

Integrative Medicine.........7

Managed Care Corner......8

. . . . . . . . . . . .

Legal Affairs: OCR flexes its muscles in the HIPAA final rule, see page 4

Special Feature: Infectious Disease

Chocolate as a health food

see page 7

Learning to live with West Nile virus

PRSRT STDUS POSTAGE

PAIDHOUSTON TX

PERMIT NO 13187

Uh system Board of regents approves creation of health

science Centersee page 6

Please see INFECTIOUS DISEASE page 9

Dr. robert tesh with samples from the World reference Center for emerging Viruses and Arboviruses, which holds more than 640 characterized viruses and serves as a resource for virologists all over the world.

Medical Journal - HoustonPage 2 February 2013. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Medical Journal - Houston Page 3February 2013. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

By reeD tINsLey, CPA, CVA, CFP, ChBC

The American Taxpayer Relief Act of 2012 (the Act) was signed into law on 1/2/13. Because the so-called payroll tax holiday was not

extended, all workers will pay higher Social Security taxes this year. Thankfully, the Act cancels most other federal income tax increases that would have affected just about every individual. However, starting in 2013, higher-income individuals will pay more federal income taxes. This article summarizes the most important fiscal cliff legislation tax changes for individuals.

Payroll taxes For 2011 and 2012, the Social Security tax withholding rate on wages (the employee’s portion of the tax) was temporarily reduced by 2%, from the normal 6.2% to 4.2%. For self-employed individuals, the Social Security tax component of the self-employment tax was also reduced by 2%,

from the normal 12.4% to 10.4%. Last year, the Social Security tax hit wages and self-employment income up to $110,100. Thus, this so-called payroll tax holiday could have saved one person up to $2,202 or a working couple up to $4,404. Somewhat surprisingly, the Act does not extend the payroll tax holiday through 2013.

For 2013, the Social Security tax can hit up to $113,700 of salary or self-employment income. Thus, loss of the 2% payroll tax holiday could cost one person up to $2,274 or a working couple up to $4,548.

Lower rates made permanent for most individuals For 2013 and beyond, the Act permanently installs the Bush era federal income tax rates of 10%, 15%, 25%, 28%, 33%, and 35% on ordinary income. The Act also permanently installs the treatment of qualified dividends as investment income for purposes of the investment interest expense limitation if the taxpayer elects to have those dividends taxed at ordinary rates instead of at preferential rates (the same

rule applies to long-term capital gains).

Alternative minimum tax patch made permanent It had become an annual ritual for Congress to “patch” the AMT rules to prevent millions more households from getting socked with this add-on tax. The patch primarily consisted of providing bigger AMT exemptions and allowing nonrefundable personal tax credits to offset the AMT. Amazingly, the Act makes the patch permanent by retroactively increasing the AMT exemptions for 2012 to $50,600 for unmarried individuals, $78,750 for joint filers, and $39,375 for married filing separately; indexing these amounts for inflation beginning in 2013; and permanently allowing nonrefundable personal tax credits to offset the AMT.

Tax Increases for higher-income individuals While most individuals will continue to benefit from the favorable Bush era federal income tax rules for 2013 and beyond, higher-income folks are not so lucky. Here’s the scoop for them.

Rates on ordinary income starting in 2013The Act permanently raises the top federal income tax rate for higher-income taxpayers to 39.6% (up from 35%). For 2013, this change only affects singles with taxable income above $400,000, married joint-filing couples with taxable income above $450,000, heads of households with taxable income above $425,000, and married individuals who file separate returns with taxable income above $225,000. After 2013, these taxable income amounts will be adjusted for inflation.

Higher-income taxpayers may also get hit by the new 0.9% Medicare tax on wages and self-employment income and the new 3.8% Medicare contribution tax on net investment income. If so, they can face combined tax rates in excess of the advertised rates.

Rates on long-term gains and dividends starting in 2013The Act permanently raises the top rate

FINANCIAL PersPeCtIVes

. . . . . . . . . . . . . . .

Please see FINANCIAL PERSPECTIVES page 10

Key tax changes for individualsin the fiscal cliff legislations

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By MAry M. BeArDeN AND ALLIsoN sheLtoN,BroWN & FortUNAto, P.C.

On January 25, 2013, the Department of Health and Human Services (HHS) Office for Civil Rights (OCR) published the long awaited Omnibus Health Insurance Portability and Accountability Act (HIPAA) Final Rule (Final Rule). In the HHS press release

announcing the Final Rule on January 17, 2013, the OCR Director, Leon Rodriguez, was quoted as saying: “This final omnibus rule marks the most sweeping changes to the HIPAA Privacy and Security Rules since they were first implemented.” Rodriguez explained that “[t]hese changes not only greatly enhance a patient’s privacy rights and protections, but also strengthen the ability of my office to vigorously enforce the HIPAA privacy and security protections, regardless of whether the information is being held by a health plan, a health care provider, or one of their business associates.” This article highlights some of the changes affecting patients’ privacy rights and business associates as well as changes that increase a covered entity’s risk of liability and alter the standards for breach notification.

In accordance with the Final Rule, upon request, individuals may restrict a covered entity (CE) from disclosing the individual’s protected health information (PHI) to a health plan if (1) the disclosure is for payment purposes or health care operations and is not required by law, and (2) the individual or a payor, other than the health plan, covers the full cost of the items or services to which the restricted PHI relates. In the preamble to the Final Rule, OCR addresses the impact of PHI restrictions on medical records, follow-up care, downstream providers, contractual agreements with health maintenance organizations (HMOs), and mandatory claim submission laws for federal health care programs.

In regards to medical records, CEs should develop a method to flag portions of medical records that are subject to a restriction; this will protect against inadvertent disclosure. The restricted portion of the record need not be segregated, however. In the event a patient receives follow-up care and authorizes submission of a claim to a

health plan that was subject to a previous restriction, the CE may then disclose the previously restricted PHI when necessary to demonstrate the medical necessity of the follow-up care. Furthermore, OCR clarifies that CEs are not required to notify downstream providers of the restriction. Such notice is the responsibility of the patient.

Many CEs are under contracts with HMOs that require the CE to submit claims to the HMO. OCR explained that such contractual provisions do not preempt the patient’s request; the CE must comply with the patient’s restriction. Likewise, many governmental health care programs have mandatory claim submission rules. In the event a patient restricts disclosure to such governmental programs, OCR directs CEs to use the mechanisms that exempt the CE from the claim submission mandates. For example, a CE should obtain a Medicare beneficiary’s express refusal to authorize a claim to Medicare if the beneficiary desires to restrict disclosure of PHI.

In addition to empowering the patient to restrict PHI, the Final Rule protects patients from the use of PHI for marketing purposes. Prior to the Final Rule, CEs had to obtain an individual’s express written authorization to use the individual’s PHI for marketing purposes. This requirement remains; however, the Final Rule broadens the definition of marketing. As a result of the Final Rule, marketing is defined to include any communications to individuals about health care items or services when the CE receives direct or indirect financial remuneration from a third party for the communication. Thus, CEs must obtain a patient’s express written authorization prior to using or disclosing the patient’s PHI for such communications, even if the communication relates to the patient’s treatment. The Final Rule retains some of the existing exceptions to the definition of marketing, including that a CE may receive reasonable reimbursement for communications, like refill reminders, for the patient’s currently prescribed drugs.

In its press release announcing the Final Rule, HHS indicated that business associates (BAs) have been involved in some of the largest breaches reported to HHS. Thus, the Final Rule strengthens the government’s ability to enforce BAs’ compliance with the Security Rule and

LeGAL AFFAIrs

. . . . . . . . . . . . . . .

OCR flexes its muscles in the HIPAA final rule

Please see LEGAL AFFAIRS page 11


special to Medical Journal – houston By DAN stULtz, M.D., FACP, FAChe, President/Ceo, texas hospital Association

Medicaid expansion financed with payment cuts, revisions

Hospitals in Texas stand to lose as much as $13 billion in Medicare reimbursements over the next 10 years and, without a way to balance those reductions, many hospitals will have to cut services and expenses.

The provisions of the Patient Protection and Affordable Care Act were financed by $500 billion in cuts to hospitals, home health care providers, nursing homes and Medicare Advantage plans when the bill was passed. Hospitals agreed to cuts in Medicaid and Medicare reimbursements in exchange for policies that created greater access to health insurance coverage in the private market and in Medicaid. On top of the cuts to pay for PPACA, another $19.4 billion in cuts to hospitals are being discussed in

Washington. These cuts are in addition to $8 billion in Medicaid cuts to hospitals that were enacted by the Texas Legislature in Austin in 2011.

These cuts will aggregate at your local hospital and reduce services and access to care, hitting our local economies with decreased spending and increased unemployment. Ultimately, the ripple effect will be felt by everyone in Texas, especially those in smaller communities.

Under the terms of PPACA, funds are available at the federal level to expand health care coverage to patients who are uninsured and underinsured. Taking advantage of those dollars would help hospitals reduce the amount of unreimbursed care they currently provide. In 2011, Texas hospitals provided $5.4 billion in bad debt and charity care costs and had $9 billion in unreimbursed Medicare costs. Medicaid expansion provides a unique

opportunity because the federal government will fully fund the cost of expanded health care coverage for the first three years. Thereafter, the state would be required to provide matching dollars, but the state’s required share never increases above 10

percent.

While the legislative session has prompted some leaders to discuss politically risky alternatives that will take many years to implement -- if at all -- the high stakes

currently threatening Texas make bypassing Medicaid expansion a costly error in how hospitals are treated and are able to treat patients.

Patients and families at HealthSouth Rehabilitation Hospitals hear a lot about a higher level of care. What does this mean to

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Texas hospitals face Medicare cuts as high as $13 billion

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The University of Houston System Board of Regents recently took a bold step to address changing health care needs by unanimously approving the creation of a Health Science Center at UH. With University of Houston (UH) programs in the health sciences as one of the primary drivers in its move to Tier One status, the board agreed that the university must further develop these resources to achieve the next level of success. UH offers a wealth of health science programs, including undergraduate and graduate academic programs to prepare students for health-related careers; research programs addressing health-related scientific, engineering and policy issues; and clinical programs directly involved in patient care.

Enrolling nearly 11,000 students in 97 health-related degree programs, UH conferred more than 1,800 degrees in these fields in 2011. This represents 23 percent of the health degrees awarded in the region, which is more than any other single institution in Texas.

The university’s research awards in the health sciences totaled $40.5 million – accounting for 38 percent of total UH research – in fiscal year 2012. Additionally, last year’s royalty income from two UH drugs – one to treat epilepsy, the other to treat cancer – was $12 million, ranking UH 17th nationally among public universities for royalty income.

Another strong point taken into consideration by the board was UH’s clinical programs of optometry, pharmacy, clinical psychology, speech language pathology, and social work, which collectively treat more than 30,000 patients annually, generating more than $3 million in revenue.

“The creation of a Health Science Center at UH, which would include patient care, workforce training, research and community outreach, is critical to the economic and social well-being of the region and state,” said UH System Chancellor and UH President Renu Khator. “With numerous academic, research and clinical programs in the health sciences, our university plays a vital role in meeting these needs. Formal creation of this Health Science Center brings a new level of synergy and focus that will broaden the impact of our research and education programs, and provide a clear point of access for the community.”

A major impetus for UH to create this Health Science Center is to address regional and state health care needs. Health care is the largest, fastest-growing industry in Texas, employing 1.3 million workers in more than 200 careers, and the number of

health care jobs in the state is expected to grow 44 percent during the course of the next five years. Organizing UH’s programs and resources through this proposed Health Science Center would enhance the university’s ability to help meet this demand.

What’s more, the training of professionals and delivery of services in health care is moving away from traditional medical school and doctor-patient models, largely due to unsustainable costs and increased patient demand. UH leaders agree a broader spectrum of professionals and expertise is needed to solve the myriad challenges of efficient, effective delivery of these services. With a diverse array of programs, UH is well positioned to be at the forefront of developing fresh, innovative models for educating health care professionals and providing patient care.

With opportunities for innovation more likely to grow out of collaborative programs and external funding becoming increasingly directed at interdisciplinary programs, another benefit of a formal Health Science Center at UH would be an increased ability to identify and support opportunities for collaboration both inside and outside the university. Ultimately, this would elevate UH’s visibility and reputation as a leader in the health sciences, enhancing awareness in the community, the Texas Medical Center and beyond.

Results would include increasing program enrollment and reputation, research partnerships and number of patients served. This enhanced visibility, standing and innovation in the health sciences would enable UH to recruit and retain high-quality faculty and students, as well as increase research productivity, all of which support the university’s Tier One goals.

As funding for higher education becomes increasingly scarce, universities must develop alternative means of securing resources. A Health Science Center would put UH in a position to increase tuition dollars through expanded enrollment in professional training programs, federal dollars through pioneering research programs and third-party payments for clinical services. Implementation of the Affordable Care Act, in particular, will provide an influx of new resources into the health care arena, and UH must be positioned to get the most out of this new law.

The university’s next steps are to seek approval of the Health Science Center from the Texas Legislature during its current session. If legislative approval is secured, the university will plan for an official launch of the center in fiscal-year 2014. t

UH System Board of Regents approves creation of

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February Heart Month Events•Red Wine, Dark Chocolate Reception Wednesday, February 20 from 6:30 to 9:00 p.m. The Houston Museum of Natural Science Hosted by Memorial Hermann Texas Medical Center with Central Market To register, please call 713.222.CARE. Registration is required to attend.

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By VICtor s. sIerPINA, MD, ABFP, ABIhM, Distinguished teaching Professor, Family and Integrative Medicine, UtMB health

When we talk to patients, especially those who are obese or diabetic, recommending chocolate may be the last thing on our minds. Most confections and desserts with chocolate are high in fat, sugar, and calories. Yet, did you know of the many health benefits of chocolate, particularly

dark chocolate?

Chocolate with at least 70% cocoa content has an antioxidant rating of around 10,000 compared to blueberries, which rank closer to 3000. As such, it has been found to helpful in reducing cardiovascular risk. Despite the high content of saturated fats in chocolate, the oleic acid is a healthy fat akin to olive oil and the predominant stearic acid is converted to healthy mono-unsaturated or polyunsaturated fats. It does not raise cholesterol because of these factors. It also provides a mild anticoagulant effect and lowered blood pressure in several studies.

Chocolate has long been thought to help women with premenstrual symptoms but this is controversial. If it helps, it is likely due to the magnesium and iron content plus the natural rush of sugar and carbs from the typical chocolate preparation.

Chocolate also contains copper, potassium, and vitamins.

Chocolate is definitely a mood elevator with effects on endorphins plus the stimulant caffeine effect of theobromine. This compound helps prevent cavities by protecting tooth enamel. Likewise, chocolate has not been associated convincingly with worsening acne as urban teen legend has long held.

High cocoa content chocolate is low in glycemic load and helps control insulin metabolism. Emerging research is finding

benefits of compounds in chocolate for cancer prevention, for immune support, and for memory improvement.

So with all these health benefits, what’s the beef with chocolate?

The story of chocolate is an interesting one. It is derived from cacoa (pronounced Ka-Kow) or cocoa beans. These trees grow in the Mesoamerican tropics, the Caribbean, and Africa. . The pods are big, roughly the size of a small cantaloupe. They contain seeds that are white, thick, and gooey when harvested. These need to be dried and roasted to become the dark brown beans we associate with chocolate.

The ancient Mayans and Aztecs reserved cacoa for the nobles, the wealthy, and priests.

INteGrAtIVe MeDICINe

. . . . . . . . . . . . . . .

Chocolate as a health food…Happy Valentine’s Day

Please see INTEGRATIVE MEDICINE page 10


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By Dr. DAVID NILAseNA, Chief Medical officer, the Centers for Medicare & Medicaid services, southwest region If you are a Medicare eligible professional (EP), an eligible hospital or a critical access hospital (CAH), congressionally mandated payment adjustments will be applied if you do not demonstrate meaningful use of certified electronic health record (EHR) technology. An overview of payment adjustmentsPayment adjustments for providers eligible for the Medicare EHR incentive program are based on an EP’s prior reporting periods. The length of the reporting period depends upon the first year of participation. Payment adjustments for Medicare EPs begin on Jan. 1, 2015. The payment adjustment is 1 percent per year, cumulative for every year an EP is not a meaningful user. The maximum cumulative payment adjustment is 5 percent. Payment adjustments for Medicare subsection (d) eligible hospitals begin on Oct. 1, 2014. The payment adjustment is applicable to the percentage increase to the Inpatient Prospective Payment System (IPPS) rate. Hospitals that do not demonstrate meaningful use will receive a lower payment than the IPPS standard amount. The payment adjustment is cumulative for each year a Medicare subsection (d) eligible hospital does not demonstrate meaningful use. Payment adjustments for CAHs will begin with the fiscal year 2015 cost reporting period. The payment adjustment for CAHs

applies to their Medicare reimbursement for inpatient services during the cost reporting period in which they did not demonstrate meaningful use. If a CAH has not demonstrated meaningful use, its reimbursement would be reduced from 101 percent of its reasonable costs to 100.66 percent. All Medicare EPs, eligible hospitals and CAHs must continue to demonstrate meaningful use every year to avoid payment adjustments in subsequent years. Categories for hardship exceptions

Under certain c i r c u m s t a n c e s , hardship exceptions will be granted to EPs, eligible hospitals and CAHs. Through an application process, providers must demonstrate to CMS that those c i r c u m s t a n c e s pose a significant barrier to achieving meaningful use. The categories for EPs to use to apply for hardship exemptions include i n f r a s t r u c t u r e , newly practicing EPs and unforeseen circumstances. EPs can also apply for exceptions based on their specialty or if they practice in multiple locations. The categories for eligible hospitals and CAHs to use

to apply for hardship exemptions include infrastructure, new CAHs and unforeseen circumstances. View the CMS tipsheet on payment adjustments to read about the circumstances on the stage 2 website:h t t p : / / w w w. c m s . g o v / R e g u l a t i o n s -a n d - G u i d a n c e / L e g i s l a t i o n /EHRIncentivePrograms/Stage_2.html Information on how to apply for a hardship exception will be posted on the CMS EHR incentive programs website: www.cms.gov/EHRIncentivePrograms. t

Medicare EHR incentive program: Learn about payment adjustments

and hardship exceptions

MANAGeDCAre

CorNer

. . . . . . . . . . . . . . .


Realistically, West Nile virus and its mosquito vectors cannot be eliminated, so our only options are prevention and control. At present, there are no specific West Nile virus therapeutic agents or vaccines approved for use in humans. A number of candidate vaccines are in development, and clinical trials of some are in progress. But given the time required for safety and efficacy testing and the large financial investment needed for development and production, a licensed West Nile vaccine is probably five to ten years away. Other unresolved questions are who will receive the vaccine, and who will pay for vaccination. Such a vaccine will not be cheap and multiple immunizations may be required. Consequently additional control strategies must be developed.

Probably the most feasible prevention and control strategies are personal protection and vector control. Personal protective measures such as the use of mosquito repellents and protective clothing are effective in reducing the risk of mosquito-bites. Information about protective measures against West Nile virus infection are available from Harris County Public Health and Environmental Services, CDC or TDSHS web sites.

Following the initial appearance of West Nile virus in the U.S., many federal, state and local health agencies invested heavily

in programs of virus surveillance and vector control. But as the number of human cases dropped during the past five to six years, budget concerns and other emerging

health problems forced many public health agencies to cut back funding for West Nile virus research, surveillance and control. The national resurgence of West Nile virus in 2012 has served as a wake-up call. Fortunately for residents of the Houston metropolitan area, Harris County has continued its effective surveillance and vector control program; it’s no accident that

the 2012 increase in West Nile virus activity and human disease in Harris County was less intense than in other regions of the state. But continued surveillance and vector

control cost money, and that requires a commitment by political leaders to provide adequate funding to carry it out.

When increased West Nile virus activity is detected and a cluster of human cases occur, prevention and control largely rest on community-wide applications of insecticides to reduce the number of adult

Culex mosquitoes and on heightened public awareness about taking personal protective measures. Future sporadic outbreaks of increased West Nile virus activity will continue to occur; at present, models for accurately predicting such outbreaks in advance are not available, in part because the virus has not been in the U.S. long enough to provide sufficient data to design valid epidemiologic models. This is another reason why continued research on and surveillance of the virus are essential. Some citizens express concern about the environmental and potential health risks of insecticides and oppose their use. But given the nature of West Nile virus and the experience of the past summer, there seems to be no other effective option, at least until specific therapeutics and vaccines become available. In some respects, West Nile outbreaks are analogous to natural disasters like hurricanes, tornadoes and droughts; they occur sporadically, and we must learn to live with them. And like these other disasters, adequate preparation and a well-planned rapid response can reduce both human illness and the resulting medical expense.

Robert Tesh, MD, is professor in the departments of pathology and microbiology and immunology at the University of Texas Medical Branch at Galveston, as well as director of the World Reference Center for Emerging Viruses and Arboviruses. In 2002 he was the first to report the arrival of West Nile virus in Texas. t

INFECTIOUS DISEASEcontinued from page 1. . . . . . . . . . . . . . .

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These actions at the federal level will cripple hospitals and communities in Texas. Without offsetting the cuts, the burden will fall on all hard-working Texans, their employers, hospitals and the local communities they serve. Walking away from federal funding might be appealing to some, because future federal funding remains uncertain. However, should the federal funding decrease beyond what the law currently requires, Texas has the option to withdraw from the expansion. Consequently, expanding coverage in the meantime is the only responsible thing to do. Hospitals in Texas stand to lose as much as $13 billion in Medicare reimbursements over the next 10 years and, without a way to balance those reductions, many hospitals will have to cut services and expenses.

The provisions of the Patient Protection and Affordable Care Act were financed by $500 billion in cuts to hospitals, home health care providers, nursing homes and Medicare Advantage plans when the bill was passed. Hospitals agreed to cuts in Medicaid and

Medicare reimbursements in exchange for policies that created greater access to health insurance coverage in the private market and in Medicaid. On top of the cuts to pay for PPACA, another $19.4 billion in cuts to hospitals are being discussed in Washington. These cuts are in addition to $8 billion in Medicaid cuts to hospitals that were enacted by the Texas Legislature in Austin in 2011.

These cuts will aggregate at your local hospital and reduce services and access to care, hitting our local economies with decreased spending and increased unemployment. Ultimately, the ripple effect will be felt by everyone in Texas, especially those in smaller communities.

Under the terms of PPACA, funds are available at the federal level to expand health care coverage to patients who are uninsured and underinsured. Taking advantage of those dollars would help hospitals reduce the amount of unreimbursed care they currently provide. In 2011, Texas hospitals provided $5.4 billion in bad debt and charity care costs and had $9 billion in unreimbursed Medicare costs.

Medicaid expansion provides a unique opportunity because the federal government

will fully fund the cost of expanded health care coverage for the first three years. Thereafter, the state would be required to provide matching dollars, but the state’s required share never increases above 10 percent.

While the legislative session has prompted some leaders to discuss politically risky alternatives that will take many years to implement -- if at all -- the high stakes currently threatening Texas make bypassing Medicaid expansion a costly error in how hospitals are treated and are able to treat patients.

These actions at the federal level will cripple hospitals and communities in Texas. Without offsetting the cuts, the burden will fall on all hard-working Texans, their employers, hospitals and the local communities they serve. Walking away from federal funding might be appealing to some, because future federal funding remains uncertain. However, should the federal funding decrease beyond what the law currently requires, Texas has the option to withdraw from the expansion. Consequently, expanding coverage in the meantime is the only responsible thing to do. t

on long-term capital gains and qualified dividends collected by higher-income individuals to 20% (up from 15%). For 2013, this change only affects singles with taxable income above $400,000, married joint-filing couples with taxable income above $450,000, heads of households with taxable income above $425,000, and married individuals who file separate returns with taxable income above $225,000. After 2013, these taxable income amounts will be adjusted for inflation.

Personal and dependent exemption deduction phase-out is back The phase-out rule for personal and dependent exemption deductions was itself phased out for 2010–2012, but the Act permanently restores it for 2013 and beyond.

Itemized deduction phase-out is back The phase-out rule for certain itemized deductions were also phased out for 2010–2012, but it too has been permanently restored starting in 2013. As a result, higher-income taxpayers can potentially lose up to 80% of their otherwise allowable write-offs for mortgage interest, state and local taxes, charitable contributions, and miscellaneous itemized deductions.

Favorable gift and estate tax rules made permanent for 2013 and beyondThe Act permanently installs a unified federal estate and gift tax exemption of $5 million—adjusted annually for inflation—and a 40% maximum tax rate (up from last year’s flat 35% rate). For 2013, the inflation-adjusted exemption amount is expected to be around $5.25 million. The Act also makes permanent the right to leave your unused federal estate and gift tax exemption to your surviving spouse (the so-called exemption portability deal). Finally, the Act permanently installs a $5 million generation skipping transfer tax exemption—adjusted annually for inflation. (These changes affect various Code Sections; see Section 101 of the Act.). t

FINANCIAL PERSPECTIVEScontinued from page 3. . . . . . . . . . . . . . .

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THAcontinued from page 5. . . . . . . . . . . . . . .

INTEGRATIVE MEDICINEcontinued from page 7. . . . . . . . . . . . . . .

It was used in its pure form as a psychoactive drink meant to bring on spiritual visions and even hallucinations. It was also thought to improve energy and strength and thus was also shared with Aztec soldiers. It was considered so valuable that the beans were used as currency in Mesoamerica as late as the 1850’s. The traditional form was served cold as a frothy broth.

When Cortez, the Spanish conquistador discovered cocoa, he immediately brought it back to Europe, in part for its multiple medicinal qualities. It soon became highly popular. The reputation of the cocoa bean

became so widespread that the Swede, Linnaeus, father of modern botany named it Theobroma cacao, or “Drink of the Gods.”

Because of the complexity of gathering, preparing, and shipping cacao or cocoa beans, it was a highly precious commodity in Europe. As a result, the Swiss, Dutch, French, Italians, and Spanish found they could stretch it by powderizing and mixing it with milk and sugar. Thus, the art of the chocolatier evolved over the centuries. And thus was born the modern day confection of milk chocolate and other delights. These are a long way from the original “bitter liquid” as the Aztecs called it and though tastier, less healthy.

This is why chocolate has evolved into a food with a bad rap. These milk chocolate

preparations are high in fats, dairy, and sugar and calories. By diluting the cocoa content, the health benefits are reduced significantly.

I recommend a few ounces of dark chocolate daily as part of a healthy diet. Always look at the cacoa or cocoa content to see if it is 70% or more as this means you have eliminated much of the unhealthy dairy and sugar additives. Look for free trade cacao that is eco-friendly and a larger percentage of the profits go back to the original native producers.

Enjoy your chocolate with your sweetheart this Valentine’s Day. Go with the dark chocolate knowing it is good for both of your hearts, minds, and spirits. t


any obligation related to the Privacy Rule they assume. As expected, the Final Rule provides that BAs and their subcontractors can be directly liable for HIPAA violations. Furthermore, the Final Rule expands the definition of BA to include entities that maintain PHI on behalf of CEs. Storage facilities or companies providing cloud services for electronic PHI are BAs, even if such companies do not access the PHI. Also, entities that transmit PHI on behalf of CEs and require routine access to PHI are BAs. Entities that are mere conduits of PHI, such as the U.S. Postal Service and other couriers, are not BAs, however. All BAs and their subcontractors must comply with the HIPAA Security Rule and any obligation under the Privacy Rule that they contractually assume. Failure to do so may result in severe consequences.

Monetary penalties for HIPAA violations are based on the degree of negligence involved in the violation. The Final Rule increases the maximum amount of the penalty to 1.5 million dollars per violation. Furthermore, as a result of the Final Rule, CEs and BAs can be held liable for the conduct of their agents, including employees and independent contractors. Previously, CEs were exempt from being held liable for a BA’s violation of HIPAA as long as the CE did not know of the BA’s misconduct. This exemption has been removed. Under

the Final Rule, a CE may be held liable for a HIPAA violation caused by a BA if the OCR finds that the BA (1) was an agent of the CE and (2) acted within the scope of agency. Likewise, BAs may be held liable for the conduct of their subcontractors.

Many CEs receive a false sense of security from contractual provisions indicating that a BA is an “independent contractor”

and that the contract does not create an agency relationship. Such contractual provisions are not decisive on whether a BA is in fact the CE’s agent. In the preamble to the Final Rule, OCR clarifies that the totality of the facts and circumstances will determine whether an agency relationship exists. Likewise, an analysis of the facts will determine whether a BA that qualifies as the CE’s agent acted within the BA’s scope of agency. Accordingly, CEs should monitor their BAs; ignorance is no longer a defense. In addition to increasing a CE’s

risk of liability for violations, the Final Rule also imputes a BA’s knowledge concerning a breach of unsecured PHI to the CE when the BA is an agent of the CE.

The Final Rule alters the standard for determining whether the unauthorized use or disclosure of PHI constitutes a reportable breach. Previously, CEs exercised considerable discretion to determine

whether a breach created a significant risk of financial or reputational harm and was, therefore, reportable to the government, the individual, and the media. In the Final Rule, OCR replaces the harm standard with a presumption that all unauthorized uses and disclosures of PHI are reportable breaches. To overcome the presumption, the CE must demonstrate a low probability that the PHI was compromised. Four factors are relevant to the demonstration: (1) the nature and extent of the protected health information involved; (2) the person who

used or received the PHI; (3) whether the protected health information was actually acquired or viewed; and (4) the extent to which the risk to the protected health information has been mitigated. In the preamble to the Final Rule, OCR made it clear that the majority of breaches will be reportable under the new standard.

In addition to the changes discussed in this article, the Final Rule (1) streamlines the authorization process for use of PHI in research; (2) decreases the obstacles in authorizing a CE to share a child’s immunization record with schools; (3) sets limits on how information may be used and disclosed for fundraising purposes; (4) enables individuals to request electronic copies of electronic medical records; (5) authorizes disclosure of a decedent’s PHI to family members involved in the person’s care prior to his or her death; and (6) prohibits the sale of PHI. The Final Rule will be effective March 26, 2013. CEs and BAs are expected to comply with the Final Rule by September 23, 2013. Existing BA agreements must be updated by September 23, 2014.

To ensure compliance with the Final Rule, hospitals should identify the personnel whose jobs will be impacted by the changes and train such personnel on the new requirements. Also, hospitals should review and update policies and procedures. Finally, hospitals should develop a system to monitor and ensure that their BAs are complying with applicable HIPAA requirements.. t

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WE HAVE THE BACKBONE.

We continually push the boundaries of neuroscience.At the Mischer Neuroscience Institute at Memorial Hermann–Texas Medical Center, we have a reputation for innovation. We were selected to participate in the nation’s first multi-center trial to study the use of hypothermia following head injury. We established one of the first dedicated stroke programs in the world. We orchestrate more clinical trials for new multiple sclerosis therapies than anyone in Texas. And we are leaders in performing complex spine surgeries and reconstructions. All of this is enabled by our groundbreaking affiliation with The University of Texas Health Science Center at Houston (UTHealth) Medical School. Together, we make more neuroscience breakthroughs every day. Learn more at neuro.memorialhermann.org.

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Medical Journal Houston February 2013