The Health Care and Education Reconciliation Act of 2010 (Public Law 111-152) and the Patient Protection and Affordable Care Act (Public Law 111-148) together introduce the most far reaching changes in our national health care system since the creation of Medicare in 1965. (
Click here to access HCERA and
click here to access PPACA.) These two new laws have made health care reform a reality and their implementation will affect organizations in the health care industry in countless ways through insurance reforms, changes in Medicare and Medicaid provider payments (and related projects), quality and transparency initiatives, and delivery system reforms (mainly to promote primary care and coordinated care). Some changes in law will take effect over the next three to six months, however many changes will be implemented over a four-year period, with some elements deferred even longer. Nevertheless, even longer term changes should be reviewed now for potential impacts on the policies, programs and operations of health care providers and organizations.
The Verrill Dana Health Care Group is gearing up to help our clients meet the challenges and find the opportunities presented by health care reform. This Client Alert will highlight some of the major components of health care reform affecting hospitals, medical groups, long-term care facilities and other institutional health care providers.
Medicare Payments to Hospitals. Beginning in 2010, Medicare payment updates will incorporate productivity adjustments for prospective payment system hospitals, resulting in a payment reduction over ten years of approximately $112.6 billion. In addition, Medicare payments will be increased for hospitals in counties in the lowest quartile of per capita Medicare spending (beginning generally in 2011) and will be decreased for hospitals with high readmission rates (beginning generally in 2013) and hospitals with a high rate of hospital acquired conditions (beginning generally in 2015). Finally, Medicare DSH payments will be reduced as the number of uninsured patients is reduced (beginning generally in 2014).
Medicare Payments to Physicians. CMS is directed to increase incentive payments under its Physician Quality Reporting Initiative program (beginning generally in 2011), and the PQRI program itself is to be extended at least through 2014. Significantly, beginning in 2015, a penalty will be imposed on physicians who do not participate in the program. The new law provides for the payment of a 10% bonus to primary care physicians and general surgeons for select services provided in health professional shortage areas (beginning generally in 2011).
New Requirements for Tax-Exempt Hospitals. Beginning generally in 2013, tax-exempt hospitals will be required to develop programs designed to assure the aggressive pursuit of their charitable missions. In particular, hospitals must: (1) conduct a community health needs assessment; (2) implement a financial assistance policy for low income patients; (3) limit charges billed to qualifying patients to no more than the amounts generally billed to insured patients; and (4) observe certain limits on debt collection practices. Hospitals that fail to comply will be subject to a monetary penalty.
Accountable Care Organizations and Medical Home Models. Groups of eligible providers who meet certain statutory criteria may be recognized as “accountable care organizations” (ACOs) that are eligible to share in the cost savings expected to be realized by the Medicare program. To qualify as an ACO, a group of providers must have established a mechanism for joint decision making, and may include group medical practices, provider networks, physician-hospital joint ventures, and others. Although HHS has until January 1, 2011 to establish the Medicare Shared Savings Program, hospitals, practitioners and other organizations should assess the merits of ACO status and begin to position themselves now to achieve that status. (Note that special “demonstration projects” will be established through the Medicaid program to promote the provision of care by pediatric medical providers and study the use of bundled payments for hospital and physician services.) Finally, HHS will award grants to providers for the development of “medical home” models of care.
Bundled Payments. In addition to establishing incentives for the creation of ACOs, HHS will develop a Medicare bundled payment pilot program offering incentives to providers who coordinate care (beginning generally in 2013). This program will be complemented by a four year demonstration project (from 2012 to 2016) to study the use of bundled payments for hospital and physician services in eight states through the Medicaid program.
Medicare Fraud and Abuse. As a condition of enrollment in Medicare, Medicaid and/or CHIP, all providers and suppliers who do not already have compliance programs must implement such programs – including core elements to be developed by HHS. Medicare and Medicaid overpayments must be reported and returned within 60 days of the identification of the overpayment or the date a corresponding cost report is due, whichever is later. Providers are required to report the reason for the overpayment in writing. A provider’s failure to report an overpayment is considered an obligation for the purpose of the False Claims Act, which may result in liability against a provider for retaining an obligation. Increased civil monetary penalties and other forms of sanction will be available to CMS in enforcing fraud and abuse prohibitions, and the Health Care Fraud and Abuse Control Fund will receive increased funding for screening and enforcement activity.
Stark Law Amendments. Physicians or group practices that provide in-office MRI, CAT scan or PET scan services (and potentially other radiology services) must now inform patients, in writing, that such services may be obtained elsewhere. This written disclosure must be made at the time of the referral is made, and must be accompanied by a written list of suppliers who furnish these services in the area in which the patient resides. This new requirement takes effect immediately.
Quality Initiatives. HHS will receive addition resources to augment its current quality reporting program, to aide in the development of new quality measures and to establish national priorities for quality improvement programs. Existing quality reporting programs will be expanded to include a broader range of service providers and the value-based purchasing program for in-patient hospitals will be expanded.
New Disclosure Requirements for Manufacturers and Nursing Homes. Beginning generally in 2013, drug companies and device manufacturers will have to disclose payments to physicians. Nursing homes will have to provide public disclosure of ownership information, develop compliance programs and implement staff training programs.
Prevention and Wellness Initiatives. The new law provides for the establishment of a Prevention and Public Health Fund and a Community Health Center Fund. These funds are intended to help finance disease prevention and public health programs, community-based programs that promote healthy lifestyles (particularly in medically underserved areas), patient education and outreach efforts, and develop demonstration programs that may test innovative approaches to reducing chronic diseases. A special 10-state pilot project will test the impact of providing wellness programs to at-risk communities (including nutrition counseling, physical activity plans and smoking cessation programs).
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If you have questions about the recently enacted health care reform law, please call any member of Verrill Dana’s Health Care Group:
Eric D. Altholz
207-253-4908
ealtholz@verrilldana.com
Elizabeth Brody Gluck
207-253-2618
ebrodygluck@verrilldana.com
Kathleen Gleason Healy
207-253-4710
khealy@verrilldana.com
William H. Stiles
207-253-4966
wstiles@verrilldana.com
Brett D. Witham
207-253-4716
bwitham@verrilldana.com
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This newsletter is intended for general information purposes and as a service to clients and friends of Verrill Dana, LLP. This publication, which may be considered advertising under the ethical rules of certain jurisdictions, should not be construed as legal advice or a legal opinion, cannot be relied upon by any person as legal advice, and does not create an attorney-client relationship. Treasury Regulations require us to notify you that any tax advice in this communication (including any attachment) is not intended or written to be used, and cannot be used, for the purpose of avoiding tax penalties, and may not be referred to in any marketing or promotional materials.
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