Health Highlights

Integrating Physical and Behavioral Health: Strategies for Overcoming Legal Barriers to Health Information Exchange

By William Bernstein, Partner, Chair, Healthcare Division, Manatt | Robert Belfort, Partner, Healthcare Industry, Manatt | Susan Ingargiola, Director, Manatt Health

Editor’s Note: Medicaid programs across the country are exploring approaches for effectively integrating the delivery of physical and behavioral health services. Coordinating care between these two historically balkanized sectors requires robust data exchange among physical and behavioral health providers. Many providers, however, are reluctant to share data for fear of violating health information privacy laws. In a new issue brief for State Health and Value Strategies, a program funded by the Robert Wood Johnson Foundation, Manatt Health discusses the strategies states are using to address the barriers that impede the data sharing critical to physical and behavioral health integration. Below is a summary of key points. To download the full brief, click here.

A growing number of Medicaid officials believe that coordinating care across the physical and behavioral health sectors is critical to improving outcomes and decreasing costs. States interested in more and better data exchange to support physical and behavioral healthcare integration, however, must first understand the legal barriers to sharing that information. They then must address the misperceptions that providers, health plans and other stakeholders have about those barriers, overcoming the common concern that freely sharing data means violating health information privacy laws.

Identifying the Real Legal Obstacles to Data Sharing?

There is no single obstacle to data sharing between physical and behavioral healthcare providers. Federal and state health information privacy laws create a complex network of requirements governing the use and disclosure of health information.

The Health Insurance Portability and Accountability Act (HIPAA) is the legal foundation for health information privacy in the United States. The HIPAA privacy rule restricts the use and disclosure of “protected health information” maintained by covered entities, which include most physical and behavioral healthcare providers. Due in part to broad exceptions covering disclosures by providers for treatment and care management activities, HIPAA is generally not a legal impediment to data exchange between physical and behavioral healthcare providers.

There are other laws, however, that can—and often do—stand in the way of effective data sharing and care coordination between the physical and behavioral healthcare sectors. For example, the federal alcohol and drug abuse treatment confidentiality rules, commonly referred to as the “Part 2 regulations,” create potential legal obstacles to data sharing that providers and states must carefully navigate. In addition, some states have created limitations on sharing behavioral health information, both across providers and between providers and insurers.

Debunking Misperceptions that Impede Data Sharing

Given the range of state and federal laws governing health information privacy, the nature of the real or perceived legal barriers to data sharing between physical and behavioral health providers will vary among situations and states. A state’s strategy for reducing barriers must be tailored to its particular obstacles. Certainly, one of the most common barriers to data exchange is provider confusion over the complex web of state and federal privacy laws. In the absence of a single, comprehensive health information privacy legal framework that governs all data exchange activities, providers are left to figure out for themselves how the patchwork of laws applies to their activities. Some of the most common provider misconceptions about health privacy laws include:

  • Misconception: HIPAA requires patient authorization for disclosures for treatment purposes.
  • Actual Legal Rule: No patient authorization is required.
  • Misconception: HIPAA’s minimum necessary provision forces providers to determine which parts of their medical records they can share with other providers for treatment purposes.
  • Actual Legal Rule: The minimum necessary rule does not apply to disclosures for treatment purposes.
  • Misconception: A provider may not disclose information to another provider for treatment purposes unless the receiving provider has a preexisting relationship with the patient.
  • Actual Legal Rule: No preexisting relationship is required to receive information for treatment purposes. (A prior relationship is required to receive information for quality improvement purposes.)
  • Misconception: HIPAA’s restriction on the disclosure of psychotherapy notes applies to all notes from counseling sessions that are part of the patient’s medical record.
  • Actual Legal Rule: A clinician’s notes qualify as psychotherapy notes under HIPAA only if they are maintained separately from the patient’s medical record.
  • Misconception: The Part 2 regulations restrict the disclosure of all substance abuse treatment information.
  • Actual Legal Rule: The Part 2 regulations apply only to specialized substance abuse providers, not general medical providers who deliver substance abuse services.
  • Misconception: A consent for the release of a Part 2 provider’s records must be a separate document and cannot be combined with any other type of patient consent.
  • Actual Legal Rule: A Part 2 consent can be combined with another patient consent form, if the form contains all of the elements required under Part 2 regulations.

In addition to the misunderstandings about the laws, other common hurdles to data exchange include disagreements over ambiguities in the law, concerns about the reliance on the privacy and security practices of other providers, and obstacles to obtaining patient consent. To support care integration, states should work with providers and managed care plans to debunk the misconceptions about legal privacy rules, as well as to overcome all the barriers that impede data sharing between physical and behavioral health providers.

Reducing Barriers

The extent to which providers engage in electronic data sharing—and the mechanisms they use to do it—will affect the feasibility and success of data exchange strategies. To reduce barriers effectively, state leaders must understand the nature of data exchange initiatives and develop strategies for both electronic and non-electronic communication that are appropriate for current data sharing methods and practices. States seeking to promote innovative care delivery models that rely on increased information exchange between physical and behavioral healthcare providers can use the following six strategies to eliminate barriers:

  • Clarify state law through agency guidance.
  • Enact state legislation or regulations to streamline privacy standards governing exchange.
  • Create standardized consent forms.
  • Provide information exchange implementation advice.
  • Enact immunity laws to protect providers engaging in information exchange.
  • Promote technological solutions to data segmentation that allow healthcare providers to share some data but not others.


States should use several different tools and approaches to eliminate barriers to data sharing while working within the patchwork of federal and state privacy laws. In addition, to improve integration between physical and behavioral healthcare, it is imperative that states foster a dialogue on actual vs. perceived barriers to data sharing and actively address misconceptions. Finally, states must understand data sharing initiatives within their states and develop relevant strategies for all communication, whether electronic or nonelectronic.

The most critical step for states to take is to get started. The sooner states create strategies to facilitate data sharing in support of care integration, the more productive electronic data exchange can occur—and the earlier patient care will improve.

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Establishing Performance Standards for Hospital-Based Presumptive Eligibility: Considerations for State Medicaid Agencies

By Jocelyn Guyer, Director, Manatt Health

Editor’s Note: In a new issue brief for the State Health Reform Assistance Network, a program of the Robert Wood Johnson Foundation, Manatt Health examines the “presumptive eligibility” (PE) option for hospitals, allowing them to use preliminary information to enroll people temporarily in Medicaid and facilitate their enrollment into ongoing coverage. The brief is summarized below. Click here to download the full paper.

The Affordable Care Act (ACA) allows hospitals to use preliminary information to enroll people who appear eligible for Medicaid coverage on a temporary basis. While this “presumptive eligibility” (PE) option is not a new concept in Medicaid, the ACA for the first time gives hospitals—rather than states—the authority to decide whether to participate.

While states are obligated to allow hospitals that participate in Medicaid to conduct PE determinations, they have the authority to oversee the quality of those determinations. States may require hospitals to participate in training and to meet ongoing performance standards. If a hospital fails to meet a state’s performance standards, it must be allowed to take corrective action. If a hospital continues to fall short, however, the state may revoke its authority to conduct PE determinations.

Background on Presumptive Eligibility

Beginning on January 1, 2014, the ACA allowed hospitals participating in Medicaid to enroll Medicaid-eligible individuals temporarily into coverage based on preliminary information. This temporary coverage or PE period lasts until the last day of the month the person applies or, if earlier, the date on which he or she receives a determination of Medicaid eligibility. For example, if a person is found eligible for temporary coverage in January and never files a full Medicaid application, it will end on the last day of February.

People found presumptively eligible are covered for all Medicaid services—not just those provided by the hospital—during the PE period. Among other things, this allows people who are discharged from the hospital to fill prescriptions, attend follow-up visits and receive any other needed services covered by Medicaid. If PE enrollees are later found to be ineligible for Medicaid or fail to complete an application by the PE deadline, they lose coverage. Neither they nor their providers, however, are required to reimburse Medicaid for the cost of services provided during the PE period.

When hospitals conduct a PE assessment, they rely on information the individual provides to conduct a simplified assessment of whether the applicant meets the state’s income requirements. After a hospital performs the PE determination, it must provide the applicant with a full Medicaid application and, depending on the state, may be expected to help the person complete it, submit it and provide required documentation. Unlike the simplified PE application, the full application gathers all of the data needed to determine ongoing Medicaid eligibility.

Suggested Performance Standards

To take advantage of the PE option, hospitals must be enrolled in the state’s Medicaid program, inform the state of their intention to conduct PE determinations, participate in training, follow the state’s policies and procedures and meet the state’s performance standards. In general, the Department of Health and Human Services (HHS) gives states broad flexibility in developing standards. HHS has provided, however, two examples of performance standards that states may want to adopt. Both encourage hospitals to connect people to Medicaid on an ongoing basis, not just for a short PE period.

1. Percent of PE enrollees who file a regular application. HHS suggests that states evaluate hospitals based on the percent of people enrolled in Medicaid on a PE basis who ultimately submit a full Medicaid application. This measure allows states to assess the extent to which hospitals are encouraging PE enrollees to submit applications for ongoing medical coverage.

2. Percent of PE enrollees who enroll in Medicaid on an ongoing basis. HHS recommends monitoring the percent of people who enrolled in Medicaid on a PE basis who eventually file a regular Medicaid application and are found eligible for the program.

HHS has not established any appropriate target goals for these suggested standards. It will be important for states to create realistic targets, tailored to their specific circumstances.

Additional Performance Measures for States to Consider

In addition to the measures HHS recommends, state officials and other experts have identified additional metrics states may want to consider. Some seek to ensure that hospital-based PE is used to increase ongoing enrollment and use of other services, while others aim to reduce administrative complexity.

Measures meant to strengthen ongoing coverage include:

  • Assessing the percent of PE applicants identified through outpatient clinics to ensure the hospital’s focus extends beyond inpatient care
  • Evaluating the extent to which PE applicants continue to use coverage after enrollment to capture whether hospitals are effectively educating people on how to use their Medicaid coverage

Measures intended to reduce administrate complexity include:

  • Verifying individuals are not enrolled in Medicaid prior to submitting a PE application to prevent PE from generating duplicate enrollments
  • Establishing performance measures that assess whether hospitals are taking the necessary steps to prevent people from presumptively enrolling too frequently
  • Determining whether hospitals are conducting PE determinations in accordance with Medicaid eligibility rules to ensure accuracy

Considerations for Establishing Appropriate Targets

Along with selecting performance standards, states must determine appropriate targets for their measures. Unfortunately, little data exists to help states identify the right targets. In light of the lack of existing benchmarks, states may want to consider the following strategies when establishing targets:

  • Base targets on data gathered during initial implementation. States may want to gather data from hospitals on their experiences with PE for a period of time in 2014 to identify firm targets.
  • Increase benchmarks over time. States may want to increase benchmarks over time, as they learn how to implement the hospital-based PE option.
  • Use an outlier approach. Identify those hospitals whose outcomes are one or two standard deviations or more away from the mean or median of the state as a whole.


Both states and hospitals have a strong interest in facilitating the enrollment of eligible individuals into coverage and ensuring PE is working as intended. HHS allows states to establish and apply performance standards, but there is little data to guide them in informing goals and expectations. Therefore, states may want to rely initially on more modest performance measures and raise them over time to assess hospitals’ effectiveness in connecting people to ongoing coverage.

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St. Luke’s Verdict Marks the First Antitrust Finding for a Hospital’s Acquisition of an MD Group

On January 24, a federal judge ruled against Idaho’s largest hospital system in an antitrust lawsuit that is likely to result in increased FTC scrutiny of vertical transactions. The case marked the first time that a hospital’s acquisition of a physician group has been found to be an antitrust violation.

U.S. District Judge B. Lynn Winmill in Boise said that St. Luke’s Health System broke antitrust laws when it bought Saltzer Medical Group, Idaho’s largest independent physicians’ practice, slightly more than a year ago. The court found that the acquisition gave St. Luke’s control of 80% of the primary care physicians in the Nampa, Idaho market.

During a four-week trial last fall, two competing businesses—Saint Alphonsus Health System and the Treasure Valley Hospital surgical center—cited records showing referrals from independent doctors plummeted after St. Luke’s bought their practices. They argued that the deal would cost them business and force them to cut jobs, if it were allowed to continue. Federal and state consumer protection agencies also sued St. Luke’s, pointing to a spike in prices after St. Luke’s took over a large share of hospitals and clinics in the Magic Valley, two hours east of Boise.

St. Luke’s and Saltzer defended their deal as necessary to reward providers for quality work, stabilize insurance rates and allow more poor patients in the area to access medical care. They accused their opponents of cherry picking records and trying to prevent a well-intentioned merger. They argued that competitors don’t suffer a loss in business after St. Luke’s buys independent practices.

Judge Acknowledges Good Intent but Finds Too Much Risk of Higher Costs

In his finding, the judge agreed that the acquisition “was intended by St. Luke’s and Saltzer primarily to improve patient outcomes.” He also said that St. Luke’s “is to be applauded for its efforts to improve the delivery of healthcare in the Treasure Valley.”

Nevertheless, the court concluded that the acquisition violated Section 7 of the Clayton Act, as it would likely lead to higher reimbursement from health plans and higher costs to consumers, due to St. Luke’s increased bargaining power. While the judge acknowledged St. Luke’s and Saltzer’s positive motivation to improve healthcare, he went on to say that “there are other ways to achieve the same effect that do not run afoul of antitrust laws and do not run such a risk of increased costs.”

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HHS Final Rule Amending CLIA and HIPAA Allows Patients to Receive Test Results

By Michelle McGovern, Associate, Healthcare Industry, Manatt

On February 6, the U.S. Department of Health and Human Services (HHS) published a final rule amending the Clinical Laboratory Improvement Amendments of 1988 (CLIA) regulations and the Health Insurance Portability and Accountability Act of 1996 (HIPAA) regulations to permit CLIA-certified laboratories to provide copies of completed test reports to patients (or their representatives) upon request. This change was effectuated by including a provision in the CLIA regulations authorizing the release of test results directly to patients,1 and by removing the HIPAA exceptions to an individual’s right of access to information maintained by CLIA-exempt laboratories.2


The final rule represents a significant departure from past policy, as HHS has generally deferred to state law on whether laboratories can release test results directly to patients, rather than through their treating providers. The CLIA regulations provide that state law determines the parties who may receive test results directly from laboratories;3 and a majority of states generally prohibit the release of such results directly to patients.4 The aim of this prohibition is to ensure that patients receive appropriate clinical interpretation of their results.

In the preamble to the final rule, HHS said a number of stakeholders asserted that releasing test results to individuals “without the benefit of provider interpretation and without contextual knowledge that may be necessary to properly read and understand results” could cause concerns among test result recipients.5 On the other side of the spectrum, certain laboratories and consumer advocates said that increasing access to test results will result in a better-informed, engaged patient population.6

In part, the decision to expand direct access to test results is tied to the move toward greater adoption of health information technology in the healthcare marketplace. The Health Information Technology (HIT) policy committee, created under the Health Information Technology for Economic and Clinical Health (HITECH) Act, said that “some stakeholders perceive the CLIA regulations as imposing barriers to the exchange of health information,” and that the final rule is part of a larger move toward “revisiting barriers or challenges to individuals’ gaining access to their health information.”7

HHS also rejected commenters’ requests to restrict direct access to “sensitive” tests results (e.g., HIV/AIDS, genetic tests, and tests involving pregnancy or cancer), stating that patients generally have a “broad right of access” to health information under the HIPAA Privacy Rule.8 Further, the preamble to the final rule provided that categorizing testing into “sensitive” and “non-sensitive” categories would be subjective, and would not necessarily result in polices in patients’ best interests.9

Obligations of HIPAA-Covered Laboratories Under the Final Rule

As with other protected health information (PHI) maintained by HIPAA-covered entities, test results maintained by HIPAA-covered laboratories must be provided to patients within 30 days of a request to review such information (unless an exception applies).10 Further, as a result of the final rule, the notices of privacy practices (NPPs) for affected CLIA-certified laboratories who are also HIPAA-covered entities must be revised to reflect the “material change” relating to the release of test results.11

Therefore, by the compliance date of the final rule (October 6, 2014), affected laboratories must revise their NPPs to (i) inform individuals of their right to request test results directly; (ii) include a brief description of how to exercise this right; and (iii) remove any existing contradictory statements.12 Further, HIPAA-covered laboratories must make their revised NPPs available as required by the HIPAA Privacy Rule.13 HHS noted, however, that ordering providers are not required to revise their NPPs to inform individuals of their rights to request results directly from laboratories.14

Clarifications and Effective Date

HHS clarified that laboratories releasing test results pursuant to the new rules are not required to interpret such results.15 Patients merely have the right to “inspect and receive” copies of their test results from laboratories. The copies may refer patients with questions about how to interpret the results back to their physicians.16

The final rule will become effective on April 7, 2014, and affected entities must comply with the applicable requirements by October 6, 2014. HHS stated that the final rule will impact laboratories in 39 states and territories, where state law does not currently permit laboratories to provide test reports directly to individuals.17

1. 42 C.F.R. CFR § 493.1291(l).
2. See 42 C.F.R. CFR § 164.524(a)(1).
3. 42 C.F.R. § 493.2.
4. See 79 Fed. Reg. 7311 (February 6, 2014).
5. 79 Fed. Reg. 7292 (February 6, 2014).
6. 79 Fed. Reg. 7293 (February 6, 2014).
7. 79 Fed. Reg. 7290 (February 6, 2014).
8. 79 Fed. Reg. 7296 (February 6, 2014).
9. 79 Fed. Reg. 7296 (February 6, 2014).
10. See 45 C.F.R. § 164.524(b)(2).
11. See 45 C.F.R. § 164.520(b)(3).
12. See 45 C.F.R. § 164.520(b)(1)(iv)(C).
13. See 45 C.F.R. § 164.520(c).
14. 79 Fed. Reg. 7304 (February 6, 2014).
15. 79 Fed. Reg. 7293 (February 6, 2014).
16. 79 Fed. Reg. 7293 (February 6, 2014).
17. 79 Fed. Reg. 7311 (February 6, 2014).

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Deborah Bachrach, Partner, Healthcare Industry, Manatt

Patricia Boozang, Managing Director, Manatt Health

Melinda Dutton, Partner, Healthcare Industry, Manatt

Jocelyn Guyer, Director, Manatt Health

Anne Karl, Associate, Healthcare Industry, Manatt

Michael Kolber, Associate, Healthcare Industry, Manatt

Alice Lam, Senior Manager, Manatt Health

Kinda Serafi, Counsel, Healthcare Industry, Manatt

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