© 2010 Smith Moore Leatherwood LLP. ALL RIGHTS RESERVED. Health Reform Highlights An Overview of the Patient Protection and Affordable Care Act and What

© 2010 Smith Moore Leatherwood LLP. ALL RIGHTS RESERVED.

Health Reform HighlightsAn Overview of the Patient Protection and

Affordable Care Act and What it Means for Providers

Presented by:Maureen Demarest Murray

Smith Moore Leatherwood LLPGreensboro, NC

[email protected]

Jennifer Pritzker Sender Smith Moore Leatherwood LLP

Atlanta, [email protected]

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Introduction

• Sunday, March 21, 2010 – House passed the Senate health care reform bill, H.R. 3590 “Patient Protection and Affordable Care Act” (PPACA)

• House passed the reconciliation bill, H.R. 4872 “Health Care and Education Reconciliation Act” on Sunday, March 21, 2010

• The President signed PPACA into law on March 23, 2010 with the stroke of a pen (actually 22 pens)

• The President signed H.R. 4872 into law on March 30, 2010 (at NoVA Community College)


Introduction

• According to the Congressional Budget Office (CBO), the cost of health reform is $938 billion over the next decade

• Through increases in taxes and Medicare payment cuts, it is projected the deficit will be reduced by $143 billion

• Reform affects 32 million uninsured Americans, and all aspects of the health system (especially providers)


Introduction

Regulatory Guidance needs to be issued regarding:

– Affordable health insurance coverage options

– Definitions of essential health benefits

– Dependents staying on parents’ insurance


Introduction

What is health care reform supposed to accomplish?

– Access to affordable health coverage

– Improving the quality and delivery of care

– Curbing growth of health care costs


Main Themes

Three Main Themes of PPACA Coverage Expansion

– Title I Affordable Health Care – Private Coverage Expansion

– Title II Public Programs – Medicaid, SCHIP, DSH, Prescription Coverage


Main Themes

Quality Improvement/Cost Efficiency

– Title III Improving the Quality and Efficiency of Health Care

– Title IV Prevention of Chronic Disease and Improving Public Health

– Title V Health Care Workforce

– Title VI Transparency and Program Integrity

– Title VII Improving Access to Innovative Medical Therapies


Main Themes

Raising Revenue

– Title VIII Community Living Assistance Services and Supports

– Title IX Revenues Provisions – Excise Tax on High-Cost Insurance Plans

– Title X Changes/Additions to the Preceding 9 Titles


Main Themes

New Reform Entities

• Center of Innovation

• Independent Payment Advisory Board

• Patient Centered Outcomes Research Institute

• Coordinated Health Care Office


Main Themes

To be discussed in later webinars:

– Insurance Reforms

– Health Insurance Exchange

– Individual & Employer Responsibility

– Tax Provisions

Smith Moore Leatherwood LLP


Effect on Providers(What does this mean for providers?)

Hospitals

– Market basket update reductions between 2010 – 2019

– Increased payments to hospitals in counties in the lowest quartile of per capita Medicare spending, effective 2011

– Reduced payments to hospitals with high readmission rates, effective fiscal year 2013

– Reduced payments to hospitals for hospital acquired conditions, effective fiscal year 2015




Imaging– Utilization rate assumption from 50% - 75%, effective 2011

– Reduction for imaging procedures on contiguous body parts

– Physicians must disclose ownership interests in imaging equipment and provide a list of local suppliers (effective now)

LTCH– Market basket update reduced



Accountable Care Organizations

– Allows groups of providers who meet certain statutory criteria to be recognized as ACO's and be eligible to share in the cost-savings achieved by the Medicare program

• Promotes accountability and coordination of Parts A & B• Joint decision making (group practices, networks of

practices, partnerships, jvs)• Brookings-Dartmouth, Carilion Clinic, Community Care of NC

(formation stage)• To be discussed in later Webinar




Medical Home – Grants to fund medical home models

– Geisinger Health System – team-based, provider & payor

– Medicaid enrollees with chronic health conditions could designate a provider as a medical home

– Bundled payments – Effective 2013, HHS required to develop a national voluntary bundled payment pilot program to provide incentives for providers to coordinate care

Primary Care – 10% bonus payments for certain primary care services and general surgeons providing care in HPSA's, effective 2011-2016



Quality & Transparency

– Nursing Homes

• Public disclosure of ownership• Implementation of compliance and staff training• Enhanced CMP's

– Physician Payments

• Effective 2013 – public reporting of payments made by drug and device manufacturers to physicians

– Quality Measures/Reporting

– Value-Based Purchasing



Fraud and Abuse

Title VI – not a lot of press, but most immediate changes for providers

– Limitations on Physician Ownership in Hospitals

• PPACA prohibits physician ownership in hospitals unless both the physician-ownerships in place, and the hospital has a Medicare provider agreement prior to December 31, 2010

• Such grandfathered hospitals may continue to participate in Medicare under tighter restrictions addressing conflict of interest, bona fide investments, patient safety, and expansion limitations

• After date of enactment, a physician-owned ASC cannot be converted to a hospital



Fraud and Abuse

• Hospitals must have procedures in place for owners to disclose physician ownership to patients and the public

• Physician-owned hospitals must submit an annual report to the Secretary of DHHS containing all owner/investors and the nature/extent of the ownership/investments

• Limited expansion may be applied for once every two years (maximum increase of 100%)



New Disclosure Requirements for In-Office Ancillary Services• Effective as of the date PPACA was signed into

law, referring physicians (or their practices) must inform patients in writing that the patients may obtain imaging services (MRI, CT, and PET), or certain other designated health services from other supplier

– The referring physician or practice must provide patients with a list of other suppliers of the service in the area

• Unclear until additional rules are promulgated exactly what physician practices are required to disclose to patients regarding other suppliers



Stark Self-Referral Disclosure Protocol

– Within six months of PPACA’s enactment date (March 23, 2010), the Department of Health and Human Services (“HHS”) must develop and implement a self-referral disclosure protocol (“SDRP”) to enable health care providers and suppliers to disclose actual or potential Stark Law violations



Stark Self-Referral Disclosure Protocol

– HHS will have the ability to negotiate a settlement for Stark Law violations for amounts less than the amounts outlined in the Stark Law



Revisions to the Anti-Kickback Statute’s Intent Statute

– PPACA amends Section 1128B of the Social Security Act (with respects to violation of this section (the AKS), a person need not have actual knowledge of this section or specific intent to commit a violation of this section.”

• Government still must prove that the defendant knew the conduct was unlawful

• Rejects the standard in the Hanlester (9th Circuit) – “knowingly and willfully” – government had to prove that defendant:

1. Knew the AKS prohibited the conduct; and

2. Engaged in the prohibited conduct “with intent to disobey the AKS.”



Overpayment Reporting

– PPACA requires any provider, supplier, Medicaid managed care organization, and Medicare Advantage organization that has received an overpayment to report and return the overpayment to the government



Overpayment Reporting

– Reporting and repayment should be made no later than 60 days after the date on which the overpayment was identified or the date that any cost report is due

– Overpayments retained beyond the deadline is an “obligation” under the False Claims Act



Enhanced Penalties

– New CMP provisions for health care fraud

• For failure to report and return an overpayment

• For false statements in provider enrollment applications

• For false statements in claims for payment

• For delaying inspection

• Broadens CMP's for services ordered during periods of exclusion



False Claims Act

– AKS violations constitute false or fraudulent acts under the False Claims Act (Lightens the burden on prosecutors and qui tam relators)

• Do not need to prove connection between the kickback and submission of a false claim

– Narrower definition of public disclosure and a broader exception for whistleblowers claiming to be the “original source” of the allegations



Program Integrity

– Broad authority to obtain information

– Expanded subpoena authority

– Suspension of payment



Charitable Hospitals

– PPACA requires charitable hospitals to:

1.Conduct a community health needs assessment at least once every 3 years, and to adopt an implementation strategy

2.Establish and publicize financial assistance and emergency care policies:

• Eligibility, basis for calculating charges• Methods for applying for financial assistance• Measures to publicize the policy• Actions hospital may take in the event of non-payment




3. No extraordinary collection actions without reasonable efforts to determine if patient is eligible for financial assistance. Non-insured patients may not be charged more for emergency or medically necessary care than amounts generally billed to those with insurance.

4. Required reporting with the IRS and DHHS regarding compliance with the new requirements

• Community health needs assessment and related tax years – March 2012




• The changes apply on a facility-by-facility basis.

• If an organization operates multiple hospital facilities, it must comply with each new requirement with respect to each hospital facility.




• Most of the changes apply to any tax year beginning after March 23, 1010

• For organizations on a calendar tax year, most of the changes will apply beginning January 1, 2011.

• For organizations operating on a fiscal year other than the calendar year, the changes will apply starting with the tax year beginning in 2010 (unless the organization’s fiscal year begins in January, February or March, in which case the changes will first apply to the organization’s tax year beginning in 2011.

• The exception is for the community health needs assessment requirement, which will be similarly “phased in” after a period of two years from the date of the enactment.




• The Act prohibits hospitals subject to the Act from:

- using gross charges

- limits amounts charged to individuals eligible for financial assistance to not more than the amounts typically billed to individuals who have insurance covering such care



Charitable Hospitals: Consequences• A hospital that fails to comply with the community health needs

assessment requirements will be liable for an excise tax in the amount of $50,000

• An organization with a facility that fails to comply with any of the new substantive requirements, including but not limited to the community health needs assessment requirements, will not be treated as described in Section 501(c)(3) with regard to that facility. For a single-facility organization, presumably this will constitute grounds for revocation of its tax-exempt status. It seems possible that the IRS will also treat the income from such non-complying facility as subject to unrelated business income tax

• The threat of revocation is enhanced by the Act’s requirement that the IRS review at least once every three years the community benefit activities of each hospital to which the Act applies



Long Term Care

The Nursing Home Transparency Act – Ownership Disclosure

Effective immediately, facilities will need to be able to identify and provide information on request regarding:

1. Each person who is a member of the governing body of the facility, including the name, title and period of service of each member

2. Each person who is an officer, director, member, partner, trustee or managing employee of the facility, and

3. Each person or entity who is an additional disclosable party of the facility



Long Term Care

Compliance and Ethics Programs Required and Must Be:

“Effective in preventing and detecting criminal, civil, and administrative violations under the Act and promoting quality of care” by March, 2013



Long Term Care

Compliance and Ethics Programs Required and Must Be:

Regulations to enforce this section must be issued by March, 2012



Long Term Care

The Program must include:

– Compliance standards and procedures

– Designated, high-level personnel with sufficient resources and authority to assure the enforcement of the program

– Appropriate staff training programs



Long Term Care

– Monitoring, auditing, and reporting systems

– Disciplinary mechanisms for violations and failure to detect violations

– An appropriate plan for responding to violations and preventing future similar violations

– Periodic reassessment of the program and its effectiveness



Long Term Care

Reporting of Expenditures

– Effective March, 2012, skilled nursing facilities must separately report expenditures for wages and benefits for direct care staff, breaking out, at a minimum, registered nurses, licensed professional nurses, certified nurse assistants, and other medical and therapy staff

Staffing – Ensuring Staffing Accountability

– By March, 2012, facilities will be required to submit electronically direct care staffing information, including information with respect to agency and contract staff based on payroll and other verifiable and auditable data in uniform format



Long Term Care

National Program for National & State Background Checks

– Secretary to establish a program to identify “effective, efficient, and economical procedures” for long term care providers to conduct nationwide background checks on all employees with direct patient access



Long Term Care

Elder Justice Act

– Contains abuse reporting requirements such as report must be made in two hours

– Specifically, if facility has reasonable suspicion of a crime against a resident by owner, operator, manager, agent, contractor, employee or other resident, reports must be made to HHS Secretary and local law enforcement

– Reporting requirement went into effect on March 23, 2010



Elder Justice Act

– HHS has not set up any type of hotline or number to call with report; for now, recommended reporting to State survey agency as “contractor” for HHS

– If covered individual violates this regulation subject to CMP of $200,000 if failure to report timely did not result in increased harm or $300,000 if failure to report does result in increased harm.



Grants to Long Term Care

• For programs to enhance training recruitment and retention of staff;

• To improve management practices • For certified EHR Technology • As part of a national demonstration project, for

development of best practices regarding culture change and use of information technology to improve resident care that shall be implemented "not later than 1 year after" March 23, 2010.



Grants for Long Term Care

• Requests shall be submitted by the applicant to the Secretary "at such time, in such manner, and containing such information as the Secretary may require."

• Authorized to be appropriated for the grants: $20 million 2011, $17.5 million 2012 and $15 million for each 2013 and 2014.

• NC Coalition for Long Term Care Enhancement is offering grant writing programs this summer



Possible Actions to Take Now

1. Develop potential overpayment processing strategy

2. Review reporting process for incidents of suspected abuse/crimes against residents

3. Compile ownership/investment transparency data

4. Develop meaningful ethics and compliance program



Possible Actions to Take Now

5. Train employees about best practices for responding to government investigations/audits

6. Evaluate whether you may be eligible for grants under Elder Justice Act

7. Review provider/supplier agreement for STARK/AKS compliance



Medicaid

– DSH Payments

• Effective 2014, DSH payments will be reduced to reflect higher levels of insured (total reduction of $14.1 billion from 2014 – 2020)

– Medicaid prescription rebate increased from 15.1% to 23.1%, effective 2010

– Primary Care Services

• Payment rates to primary care physicians must equal at least 100% of the Medicare payment rate in 2013 and 2014 (federal government to fund the cost of this requirement)



Public Health & Workforce

– National workforce strategy

• Report to Congress on existing health care workforce and identify future needs for recruiting, training, and retaining a health care workforce

– Health professional scholarships and loans



340B Program

– The Program requires drug manufacturers participating in Medicaid to enter into a pharmaceutical pricing agreement to provide front end discounts on covered outpatient drugs purchased by covered entities

– Expands participation in the 340B program to children’s hospitals, cancer hospitals, CAH’s and sole community hospitals



ProvidersShould Consider:

– Demonstration projects

– Pay for performance

– Accountability

– Eligibility to be an ACO/medical home

– Clinical integration



Resource

Link to searchable version of the Bill: http://democrats.senate.gov/reform/patient-protection-affordable-care-act-as-passed.pdf



Questions

Documents

© 2010 Smith Moore Leatherwood LLP. ALL RIGHTS RESERVED. Health Reform Highlights An Overview of the Patient Protection and Affordable Care Act and What