New Iowa Act to Affect Health Service Employee Agencies and Healthcare Contracts | Dorsey & Whitney LLP

On March 17, 2022, Iowa Governor Kim Reynolds signed the Home File of Act 2521, “Related to Health Employment Agencies and Providing Sanctions,” which will be contained in Chapter 135Q of the Iowa Code. In general, the law does three things. One is that health care employment agencies must register annually with the State Department of Inspection and Appeals (DIA) and pay a $ 500 tuition fee. Two, it specifies records and other requirements related to agency staff, and prohibits the inclusion of certain conditions in contracts with healthcare entities. Three, it imposes penalties for non-compliance.

Law in a broad way It defines “health care employment agency” as “an agency that contracts with a health care entity in this State to provide temporary agency, direct recruitment, or other contract or employment agency staff.” It is also defined as a “health care entity” that is an “authorized or certified facility, organization, or agency that operates to provide services and assistance to meet the health or personal care needs of consumers.”

Under the new law, health employment agencies must:

  • Register each location of the health employment agency with the DIA annually, and pay a $ 500 tuition fee;
  • Ensure that agency staff meet all health and qualification requirements (i.e., licenses, certifications, training and health requirements, and continuing training rules) in health facility settings, and document that agency staff meet these requirements;
  • Keep records of each agency employee and notify, file or provide the necessary documentation to external parties or regulators, otherwise it would be the responsibility of the health entity if the agency staff worked directly for the health entity;
  • Maintain professional and general liability insurance coverage, minimum coverage per event, $ 1 million coverage, and $ 3 million coverage to insure against loss, damage, or expense incurred as a result of death or injury resulting from health care negligence or failure. employment agency or agency employee; and
  • Submission of quarterly financial reports to the DIA on the amounts charged to healthcare entities.

As discussed earlier, the CMS Provisional Rule requiring workers to be vaccinated against COVID-19 extends to agency employees who are not directly employed by Medicare or Medicaid providers and providers (“Covered Health Employers”). Domestic File 2521 appears to encode this vaccination requirement to ensure that health employment agencies meet all applicable requirements for agency staff health conditions and to document that compliance.

Also under the new law are health employment agencies prohibited Do not place restrictions on the “employment opportunities of an agency employee” by introducing a non-competition clause with an agency employee or health care entity. In addition, contracts between agencies and health care organizations may not be “required to pay paid damages, labor contributions, or other compensation if the agency employee is hired as a permanent employee of the health care entity.” In other words, health employment agencies will not require their employees to sign non-compete agreements as a condition of employment, and health employment agencies will not require health care providers to pay any “search engine fee” to hire an agency directly. worker. These are contracts that violate the new chapter 135Q of the Iowa Code unfulfillable.

After Governor Reynolds signed House File 2521, several questions remained, most notably about its scope of coverage. On May 24, 2022, the Iowa Legislature attempted to address one of these issues in House File 2589 by clarifying that Iowa Code 135Q applies retroactively. Any contract signed on or after January 1, 2019. Although Governor Reynolds is required to sign House File 2589, his signature is expected.

From a legal standpoint, we probably haven’t heard the latest in Chapter 135Q of the Iowa Code and House File 2589. The DIA’s task is to establish administrative rules for compliance with the new law, and these rules can provide more information on the scope of coverage, grace. deadlines for penalties, and other instructions.

For now, Chapter 135Q of the Iowa Code will come into force on July 1, 2022. At any time, any contracts between health employment agencies and health care entities, made on or after January 1, 2019, that contain any of the prohibited provisions described above, are unenforceable. From a practical point of view, this means that healthcare entities would have to renegotiate their contracts with healthcare employment agencies. We recommend that in addition to ensuring compliance with Chapter 135Q of the Iowa Code, health care providers must ensure that renegotiated contracts include the language that requires agencies to comply with the CMS Interim Final Rule requiring vaccination against COVID-19.

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