HHS Awards Planning Grants to States to Establish Insurance Exchanges

The Department of Health & Human Services (“HHS”) Secretary Kathleen Sebelius recently announced the distribution of $220 million to states for the creation of private health-insurance exchanges.  Alabama, Arizona, Delaware, Hawaii, Idaho, Iowa, Maine, Michigan, Nebraska, New Mexico, Rhode Island, Tennessee and Vermont were the state recipients in this latest funding effort, and Rhode Island is the first state to receive a Level Two grant geared towards states in more advanced planning stages.  State health insurance exchanges are expected to start operating in 2014.  Currently only 13 states have enacted legislation to establish insurance exchanges; though 49 states have received planning grants so far.

Read HHS’ full press release here


CMS Issues Final Rule on ACA’s New Medical Loss Ratio

The Centers for Medicaid & Medicare Services (“CMS”) recently released a final rule establishing the new medical loss ratio requirements under the Affordable Care Act (“ACA”).   Under the ACA, individual and small group market insurers are required to spend at least 80 percent of premium dollars on medical care and quality improvement, and large group market insurers must spend at least 85 percent of premium dollars on the same services.  The final rule describes the technical process for calculating medical loss ratio and also provides details on insurers’ annual medical loss ratio reporting requirements, as well as the ACA’s requirement that insurers grant rebates to consumers in the event the insurer fails to meet the required medical loss ratio. 

Read the full text of the rule here, or HHS’ fact sheet on the ACA’s changes to medical loss ratios here


HHS Finds Pennsylvania Insurance Rate Increase of 12% is Excessive

The Department of Health and Human Services (HHS) recently cited as “excessive” a 12% insurance rate increase proposed by Everest Insurance under a Pennsylvania insurance plan.   HHS’ finding that the rate increase was excessive was the first such move under the Affordable Care Act, which gives HHS the authority to review insurance rate increases over 10% and cite them as excessive.  Although the Affordable Care Act does not give HHS the authority to sanction insurers attempting to push through excessive rate increases, the hope is that publicizing the excessive rate increases will increase transparency and accountability.   

Read HHS’ full news release here

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Don’t Just Pay the RAC

Medicare Recovery Audit Contractors (RACs) mine data using automated systems to detect and recover improper Medicare payments.  RAC audits pick up billing and coding errors and deny claims based on those errors.  In many instances, the service was provided and was billable.  In some cases, the coding error makes no difference in reimbursement, sometimes reimbursement should be higher, sometimes lower, but still reimbursable, under some code. In some cases, the RAC’s automated systems deny claims that were properly billed, because of software coding flaws.  RAC auditors don’t correct billing errors, they just take the money back.

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CMS Announces Coverage of Preventive Services to Reduce Cardiovascular Disease

Recently the Centers for Medicare and Medicaid Services (“CMS”) announced new coverage under the Medicare program for preventive services for the reduction of cardiovascular disease.  CMS’ decision details that Medicare will now cover one-to-one cardiovascular disease risk reduction visits that may include three components: (1) encouraging aspirin use; (2) high blood pressure screening for adults 18 years or older, and (3) intensive behavioral counseling to encourage healthy diets. 

The new coverage is part of a joint initiative between CMS and the Centers for Disease Control, the Million Hearts Initiative.  Read more about the initiative here, and access CMS’ entire coverage decision here

United States Supreme Court to Hear Affordable Care Act Cases

In a highly anticipated decision, on November 14, 2011 the United States Supreme Court granted certiorari in three cases on the constitutionality of the Affordable Care Act (“ACA”): National Federation of Independent Business v. Kathleen Sebelius, Secretary of HHS, et al.; Florida, et al. v. Department of Health and Human Services; and Department of Health & Human Services et al. v. Florida, et al.  The Court’s review will address four fundamental questions: (1) whether the ACA’s individual mandate is constitutional, (2) whether the individual mandate may be severed from the ACA if it is unconstitutional, (3) whether the claim brought by the opponents to the mandate is barred by another federal statute, and (4) whether the ACA’s expansion to Medicaid coverage was valid.  The Court has granted a total of four and a half hours of oral argument for the three issues, which is highly unusual.  This decision will be monumental for the future of the ACA, and will be closely followed by Duane Morris attorneys. 

View the United States Supreme Court’s order here


DC Circuit Court of Appeals Upholds Individual Mandate

On November 8, 2011, in the latest scrimmage regarding the Affordable Care Act’s (ACA’s) individual mandate, the D.C. Circuit Court of Appeals upheld the mandate’s constitutionality.  The Court found that Congress could create “national solutions to national problems, no matter how local–or seemingly passive–their individual origins,” and that the individual mandate was therefore constitutional because it was within Congress’ authority. 

On November 10, 2011, the United States Supreme Court will hold a private conference to decide whether to hear the challenges to the ACA.     

Read the entire decision here


Final ACO Rule – Some Highlights For Physicians

Two weeks ago, the Centers for Medicare and Medicaid Services (“CMS”) issued the final rule (“Final Rule”) for accountable care organizations (“ACO’s”).  CMS released the Final Rule after receiving more than 1,300 comments to the proposed regulations (“Proposed Rule”) published more than seven (7) months ago.  As compared with the Proposed Rule, the Final Rule contains a number of revisions designed to encourage more physicians to become involved with ACO’s, including the following:

·       Physicians are not required to be meaningful users of electronic medical records (“EMR”) as a condition of participating in an ACO, although EMR is now a quality measure and is weighted higher than others.  Essentially, CMS elected not to add an extra requirement to ACO participation, preferring instead to permit participating physicians to discover and decide for themselves how best to manage patient data and other information in order to provide coordinated care for their patients.

·       Allows prospective assignment of patients to ACO’s on a quarterly basis, rather than using a retrospective method for selecting patients to participate in an ACO, as had been originally proposed.  In the Final Rule, prospective assignment of patients is permitted in order that physicians shall know in advance which patients are in an ACO, thereby enabling physicians and patients to partner together in order to better address health problems, both in terms of objectives and how to achieve them.  In this regard, it should be noted that, according to the Final Rule, only persons enrolled in the Medicare fee-for-service program may be assigned to an ACO.

·       Eliminates participant risk in the first of the two (2) ACO shared-savings’ models.  The Proposed Rule had required that, after the first two (2) years, an ACO choosing the one-sided model (i.e., shared savings among participants without any sharing of losses) would transition into the two-sided model (i.e., shared savings and losses) during the third year.  However, the Final Rule provides for shared savings among the participants in the one-sided model during the entire initial agreement period with no sharing of losses in the third year.  The two-sided model, where participants share savings and losses for the entire initial agreement period (the first “year” of the initial agreement for ACO’s starting in 2012 will be to 18 to 21 months) continues to include risk- or loss-sharing for participants, but also offers them larger potential rewards than they would have received under the Proposed Rule.

·       Reduces from 65 to 33 the number of quality measures ACO-participating physicians must report.  The Proposed Rule required providers to report on 65 quality measures in five (5) categories so as to enable CMS to assess the quality of care furnished by ACO’s.  In response to the comments it received – the majority of which favored utilizing fewer quality measures in order to reduce reporting burdens and attain more focused and meaningful improvements to the Medicare program – CMS reduced to 33 in four (4) categories the required number of quality measures subject to reporting.  These categories are as follows:  (i) patient/caregiver experience; (ii) care coordination/patient safety; (iii) preventive health; and (iv) at-risk population that includes subcategories of reporting requirements regarding the following disease states:  diabetes, hypertension, ischemic vascular disease, and coronary artery disease.

·       Ensures that all ACO’s shall receive a share of any first-dollar savings generated to Medicare once a minimum amount of savings is achieved, known as the Minimum Savings Rate (“MSR”).  The MSR is on a sliding scale, ranging from 3.9% for ACO’s with 5,000-5,999 beneficiaries to 2% for ACO’s with 60,000 or more beneficiaries.

Finally, it should be noted that the Department of Justice and the Federal Trade Commission have issued a joint “Final Statement of Antitrust Enforcement Policy Regarding Accountable Care Organizations Participating in the Medicare Shared Savings Program.”  This Final Statement addresses the application and enforcement of antitrust laws for ACO’s and supplements the Final Rule.  While the Justice Department and FTC promise to monitor the impact of ACO’s in order to protect competitive markets, they shall not require a regulatory antitrust review of ACO’s as had been originally mandated.  


2012 Physician Fee Schedule Final Rule Released by CMS

On November 1, 2011, the Centers for Medicare and Medicaid Services (“CMS”) released the 2012 Physician Fee Schedule Final Rule with comment period (“Final Rule”).  Effective January 1, 2012, the Final Rule addresses several key components of physician reimbursement through Medicare including, to name a few, the new practice expense relative value units, changes to the adjustment of geographic practice cost indices, updates to the electronic health records incentive program, expanding the list of eligible services for telehealth services coverage, and reducing physician payments at physician wholly owned or hospital operated practices for hospital admissions occurring within 3 days of a physician service.

Importantly, the Final Rule also indicates that CMS anticipates a 27.4% cut in physician reimbursement payment rates for 2012, though in the past the CMS anticipated reductions have been ameliorated through legislation. 

Read the entire final rule here.  

2012 Hospital Outpatient Prospective Payment System Final Rule Released by CMS

On November 1, 2011, the Centers for Medicare and Medicaid Services (“CMS”) released the 2012 Hospital Outpatient Prospective Payment System Final Rule with comment period (“Final Rule”).  The Final Rule, effective January 1, 2012, addresses the 2012 hospital outpatient prospective payment system including payment policies, the process for physician-owned hospitals seeking an exemption on the prohibition on expansion, and changes to patient notification requirements. 

The Final Rule establishes two new processes.  First, the Final Rules establishes an independent technical review process for assignment of supervision levels to hospital outpatient therapeutic services.  The independent technical review process will be spearheaded by the existing ambulatory payment classification groups (APC Panel), which has been expanded to include critical access and small rural hospitals.  It will be designed to assign supervision levels other than direct supervision to hospital outpatient therapeutic services.   Second, the Final Rule establishes the process for physician owned hospitals seeking an exemption to the prohibition on expansion, which was created through the Affordable Care Act.  The final exemption process establishes that eligibility for an exemption will be based on the most recent year of data available, as well as the applicant’s satisfaction of additional requirements including, for example inpatient admissions and bed capacity.

Finally, the Final Rule modifies the notification requirements that are currently required if a doctor of medicine or osteopathy is not on site 24 hours a day/7 days a week, by reducing the categories of outpatients who must receive this notification to outpatients receiving observation services, surgery, or services involving anesthesia.  Likewise, hospitals must conspicuously post the patient notice if they have dedicated emergency departments at which a doctor of medicine or osteopathy is not present 24 hours a day/7 days a week.

Read the entire final rule here


Duane Morris Health Law

Reporting legal developments in the healthcare industry and the latest on the implementation of
the Healthcare Reform Act impacting providers, employers and physicians.

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The opinions expressed on this blog are those of the author and are not to be construed as legal advice.