Volume 2, Issue 9, 2025
Welcome
Welcome to our ninth issue of 2025 of The Health Record -- our healthcare law insights e-newsletter.
In this edition, we look at the No Surprises Act and its impacts; a bipartisan effort in Congress to help with price transparency through a bill called the Patients Deserve Price Tags Act; the latest regarding West Virginia’s Certificate of Need process; how AI is impacting the health care industry, including health professionals and HIPAA; and a new case in Florida involving the alleged defective design of a health care facility and the facility’s right to collect remediation costs as direct damages.
Study Suggests No Surprises Act Protections are Reducing Patients' Out-of-Pocket Costs
“While data released raised questions about the administrative costs associated with No Surprises Act (NSA) arbitrations, a second study suggests the legislation is working to reduce out-of-pocket costs for members.”
Why this is important: The article suggests that the No Surprises Act (NSA) is providing real-world “dollar and cents” relief for a large percentage of patients who would otherwise be facing unpredictable and often exorbitant costs after a medical emergency. As noted in the article, a recent study published by BMJ Group analyzed data from patients with private insurance and found that patients in states with no existing surprise billing protections saw an average annual reduction in out-of-pocket spending of $567 after the NSA was passed. A survey released by the Blue Cross Blue Shield Association reported that the NSA prevented more than 10 million potential surprise bills in just the first nine months of 2023.
The NSA, however, is not exclusively beneficial to patients. As the article notes, providers have won 85 percent of disputes since the fourth quarter of 2023, and the median payments were three times higher than the established Qualifying Payment Amount.
There are at least two key mechanisms under the NSA that are specifically designed to benefit a healthcare provider who does not receive adequate payment from an insurer of an out-of-network patient. The first of those is the “open negotiation” period. The open negotiation mechanism is a mandatory 30-business-day period during which a healthcare provider and a health insurance plan can resolve a payment dispute for an out-of-network service. The open negotiation process begins after a provider receives an initial payment that it believes is inadequate or notice of payment denial from a health plan. Either the provider or the payer can initiate the negotiation. The provider sends an "open negotiation notice" to the insurer, starting the 30-business-day clock. This must be done within 30 business days of receiving the initial payment or denial. The process provides a structured time for both parties to exchange information and attempt to reach a settlement. The health plan provides the Qualifying Payment Amount, which is the median in-network rate for the service, and other necessary claim information. If the parties come to an agreement during this period, the dispute is settled.
If, on the other hand, the parties cannot agree by the end of the 30 business days, the NSA has a second mechanism – Independent Dispute Resolution (IDR) – which the healthcare provider can invoke in an attempt to obtain a larger payment from the insurer. Although there are strict requirements to initiate the IDR process, it is generally a neutral process where a third-party arbitrator determines the appropriate payment amount by considering factors like prevailing rates and the complexity of the services. This ensures providers are fairly compensated for out-of-network services.
At Spilman, we have seen firsthand how the NSA’s open negotiation period and IDR mechanisms can have a significant impact on a healthcare provider’s bottom line. For instance, one healthcare provider we recently assisted received an additional $135,000 in compensation for out-of-network services provided to a patient. This amount was more than double what the insurance company for the out-of-network patient initially paid the healthcare provider.
In sum, in addition to patient savings, the NSA benefits healthcare providers by providing more predictable and timely resolutions, reduced costs associated with protracted disputes, and the ability to recover fair payment rates for services. --- Todd A. Biddle
Lawmakers Seek More Price Transparency from Hospitals
“The lawmakers introduced the bill, the Patients Deserve Price Tags Act, last month.”
Why this is important: A bipartisan bill has been introduced that would require hospitals and other medical providers to provide consumers with the actual prices for 300 different services, and eventually all services in 2026, empowering patients with knowledge of the cost of services before making decisions to avail themselves of those services. The legislation would apply to hospitals, ambulatory surgery centers, imaging centers, and laboratories. This move towards greater transparency would require medical providers to give all patients statements explaining benefits while providing detailed bills for each service. This legislation is sponsored by U.S. Sens. Roger Marshall (R-KS) and John Hickenlooper (D-CO). Marshall is a physician, while Hickenlooper is the former governor of Colorado. As a bipartisan measure, this legislation has a real shot at passage. --- Jennifer A. Baker
WV Health Care Authority has Proposed to Amend Their “Exemption from Certificate of Need” Rule
Why this is important: The West Virginia Health Care Authority has proposed to amend the “Exemption from Certificate of Need” rule, 65-CSR-29. This rule establishes the general criteria and procedures for applying for an exemption from the Certificate of Need. At this stage, the amendment only extends the sunset provision, as it is set to expire in August 2026. However, it could be further amended through the legislative process this coming legislative session. This is important for interested stakeholders to monitor, especially considering the administrative and legislative interest in Certificate of Need, plus the newly appointed members and leadership at the Health Care Authority. --- James M. Bailey
Research Suggests Doctors Might Quickly Become Dependent on AI
“The study looking at gastroenterologists in Poland found that they appeared to be about 20% worse at spotting polyps and other abnormalities during colonoscopies on their own, after they'd grown accustomed to using an AI-assisted system.”
Why this is important: AI's increasing use in medicine, particularly in diagnostics, presents both groundbreaking opportunities and significant legal risks. A recent study published in Lancet Gastroenterology and Hepatology highlights one such risk: the potential for over-reliance on technology. Artificial intelligence is being used to help doctors screen patients, but a new study in Poland suggests that doctors may become overly reliant on the technology, reducing their ability to detect possible polyps with the naked eye by 20 percent. The study suggests a "safety-net effect," where doctors may subconsciously rely on the AI's prompts rather than years of training and decades of experience. This raises questions of the use of AI and whether missing a diagnosis due to AI, or a lack thereof, could increase legal exposure.
The increasing integration of AI in medical practice presents a number of potential legal issues for healthcare providers and technology companies. Our law firm can assist in developing risk management strategies, creating clear legal frameworks for AI use, and providing counsel on regulatory compliance to help businesses proactively plan for the future. --- James T. Taylor
Key HIPAA Compliance Considerations for Agentic AI Tools
“Agentic AI tools, like any other AI-powered tools, come with HIPAA compliance considerations to ensure that PHI is protected.”
Why this is important: AI is becoming ubiquitous in all industries, including healthcare. AI’s adoption in the healthcare industry enables better patient results and increased profits. However, when adopting AI in relation to providing healthcare, HIPAA compliance must be a top priority. Many healthcare providers are using agentic AI, which assists with patient interaction, including everything from checking in with patients to analyzing patients with chronic conditions to determine whether further physician review is required. However, recent studies have found that the use of AI as a diagnostic tool has lowered physicians’ ability to make proper diagnoses. By delegating diagnosis to AI, doctors are out of practice when making even routine medical determinations.
With the use of AI, healthcare providers are adding third-party risk to the security of their patients’ protected health information (PHI). The increased risk is attributed to the exponential increase in business associates that may be involved in operating and maintaining the AI systems. This is especially worrisome because a recent survey found that almost half of healthcare providers had a data breach or cyberattack involving a third-party access to their patients’ PHI. However, the utilization of AI does not require healthcare providers to reinvent the wheel when it comes to HIPAA compliance; it just adds additional complexity. To navigate the increase in HIPAA compliance complexity inherent to the utilization of AI, healthcare providers should create a data inventory. This allows the healthcare provider to know how the data the AI is utilizing is consumed, processed, stored, and which vendors along that line touch the data. When contracting with an AI vendor, the healthcare provider should know how its data is being used in relation to the training of the AI, whether the AI system is open or closed, and what happens to that data when the contract ends. --- Alexander L. Turner
7 Ways AI is Transforming Healthcare
“Yet healthcare is ‘below average’ in its adoption of AI compared to other industries, according to the World Economic Forum's white paper, The Future of AI-Enabled Health: Leading the Way.”
Why this is important: With billions of people without access to essential healthcare and with a health worker shortage in the millions, AI could help bridge the gap. However, the healthcare industry is below average in its adoption of AI compared to other industries, according to the World Economic Forum's white paper, The Future of AI-Enabled Health: Leading the Way. The article focuses on the ways in which AI is already making a difference in the medical field. First, AI software is capable of interpreting brain scans with twice the accuracy as medical professionals and can even identify the timescale within which a stroke occurred. Second, AI can identify bone fractures with more accuracy than medical professionals, which could reduce the need for follow-up appointments. Third, AI can provide greater objectivity than paramedics when determining which patients need to be taken to a hospital for additional care. Fourth, AI can detect the presence of more than 1,000 diseases even before a patient is symptomatic, which allows medical providers to treat conditions at an earlier stage in their development. Fifth, clinical chatbots may be able to speed up informed, swift medical decisions by being able to process the medical information faster and more completely. Sixth, AI can give global access to digitized medical texts, enhancing traditional, complementary and integrative medicine. Finally, AI can do much to alleviate some of the administrative burdens of clinicians, such as listening to and creating patient notes, thus freeing up more of their time for patients. While the healthcare industry is below average in its integration of AI technology, the article cautions that AI’s advancement in transforming healthcare can truly only occur if time is spent on creating accurate AI models and through the regulation of AI tools.
Building Design Disputes – New Analysis of Direct v. Consequential Damages in Florida
By Stephanie U. Eaton
Are design professionals involved in your Florida project? If so, then you need to be aware of this newly decided case. The U.S. District Court for the Middle District of Florida, in Orlando, issued an Order on July 11, 2025, confirming that in Florida, remediation costs for defective design work do constitute direct damages, regardless of whether third-party contractors performed the remediation work. See Orlando Health, Inc. v. HKS Architects, Inc., Case No. 6:24-cv-00693-JA-LHP (M.D. Fla., Jul. 11, 2025). This ruling occurred despite the use of the parties’ contract – the AIA B101 (2017) - that contained a waiver of consequential damages. Could this outcome affect your Florida project? To make that determination, we need to discuss what happened in Orlando Health.
Click here to read the entire article.
Featured Attorneys Question & Answer
This is our Featured Attorneys Q&A to introduce you to our large healthcare law team. To help you get to know our team a little better, we are highlighting attorneys in each issue by asking them a healthcare-related question. We hope their responses will be insightful for you.
Stephanie U. Eaton
Member; Co-Chair, Construction Practice Group
Julian E. Neiser
Member; Chair, Litigation Department; Co-Chair, Construction Practice Group; Chair, Alternative Dispute Resolution Practice Group
Q: In your experience working with clients on construction projects, have you observed any issues particular to the construction of medical facilities that you can share with medical facility owners and contractors?
A: Yes. While new construction for medical facilities may not vary greatly from that of similar commercial construction facilities, additions to existing medical facilities can pose special challenges. For example, there are particular and heightened needs to protect patients who are staying overnight and/or long-term from construction-related noise, light, heat and dust pollutants. There are special considerations for when and how long temporary power can be used in certain areas (such as ICU wings). There may be additional health screening for construction workers on-site to help mitigate exposure of patients to unnecessary ailments. If patients must be relocated for a large building addition, construction of temporary ADA-compliant walkways, fencing and paving for emergency parking areas, and erection of temporary emergency-related signage to ensure that patients and EMTs are properly routed to the right area of the hospital may be necessary. On-time completion is crucial, especially for completion of areas affecting relocated patients with critical care needs. Finally, the impacts of construction defects, such as moisture intrusion, can be devastating for patients and hospital staff, as well as sensitive equipment and medical records. Depending on the size of the hospital, construction defects can result in high damage — and hopefully well-insured — claims.
