Last week, I addressed a group of small business leaders regarding the ACA.  In taking questions from the audience, I discovered certain misconceptions among this group concerning the ACA, including the following:

• Misconception: Muslims are exempt from the ACA’s individual mandate requiring nearly all Americans to have health insurance by 2014.

Correction: While certain religious sects are exempt from the individual mandate, only those currently recognized by the Social Security Administration as being exempt from Social Security requirements are eligible for an exemption from the individual mandate.  These sects consist  mainly of the Amish and certain other Mennonite sects.  Because Muslims are not exempt from participating in Social Security, they are not exempt from the individual mandate requirement.  Those seeking a religious exemption from the individual mandate requirement must apply for such an exemption through a health insurance exchange to be established by the individual states or the federal government.

• Misconception: The ACA encourages rationing of care and will interfere with the relationship between physicians and their patients.

Correction: The ACA has created the Patient Centered Outcomes Research Institute (“PCORI”), a private, non-profit entity.  PCORI is designed to benefit physicians and their patients by providing information on which treatments are most effective, and expressly prohibits the rationing of care.  While some believe PCORI is modeled after the United Kingdom’s National Institute for Health and Clinical Excellence (“NICE”), such is not the case.  Unlike NICE, any findings generated by PCORI may not be used to promulgate practice guidelines or make coverage decisions.  Further, the ACA includes patient safeguards so as to ensure that coverage decisions made by the U.S. Department of Health and Human Services (“HHS”) are not based on age, terminal illness, or a patient’s quality of life preference.  Therefore, PCORI will not interfere with the physician-patient relationship.  

• Misconception: The ACA does nothing to address medical professional liability reforms.

Correction: While the ACA does not include any liability reform provisions, such as caps on the non-economic (i.e., pain and suffering) portions of medical malpractice awards, the ACA establishes a competitive grant program for states to develop, evaluate, and implement innovative professional liability reforms.  This program is in addition to the $25 million medical liability reform alternative grant program the Obama administration rolled out in September 2009—one  being implemented by the Agency for Healthcare Research and Quality.

• Misconception: Employers have until December 31, 2014 to impose a $2,500 employee contribution limit on employer-offered healthcare flexible spending accounts (“FSAs”).

Correction: Employers have until the end of 2014 to amend their FSAs to reflect such $2,500 employee contribution limit, but all such FSAs must be operated beginning this year in accordance with this new limit.  Also, if an employee works for two or more separate companies (i.e., ones that are not controlled by the same owner(s)) and participates in more than one FSA, he or she may contribute up to the $2,500 limit to each FSA.  In addition, there is no limit on employer contributions to FSAs; and the $2,500 employee contribution limit does not apply to other employee-funded plans such as a dependent care FSA or a Health Savings Account.  Further, there shall be inflation adjustments that shall serve to increase the $2,500 employee contribution limit in future years.  

• Misconception: Employers are liable for any additional Medicare tax they fail to withhold and that their employees subsequently pay.

Correction: Under the ACA, employers are obligated to withhold an additional Medicare tax of 0.9% (i.e., an increase from 1.45% to 2.35%) on taxpayers with earned income in excess of certain threshold amounts (i.e., $200,000 for an employee who is single; $250,000 if the employee is married and filing jointly; or $125,000 if the employee is married and filing separately).   However, an employer is not liable for any additional Medicare tax it fails to withhold and that the employee later pays.  But employers will be liable for any penalties resulting from their failure to withhold.  In addition, employers are not required to match the extra Medicare tax payment as they are required to do for the basic Medicare tax – they need only pay 1.45% on all earnings – so there is no extra cost to the employer for the additional Medicare tax other than administrative expenses; and an employer must withhold such extra Medicare tax on compensation in excess of the applicable threshold, even if the employee is ultimately not liable for it (e.g., a married employee whose wages, together with his or her spouse, do not exceed the $250,000 threshold for couples that are married and filing jointly).  Further, employers have no duty to inquire about the earned income of an employee’s spouse. 

At the end of last month, we blogged about numerous government agencies, departments, and others, including Medicaid Integrity Contractors, charged with uncovering Medicaid fraud and overpayments.  Now, comes word that one such department, the Medicaid Integrity Group, established by the Centers for Medicare & Medicaid Services to ensure Medicaid funds are spent with minimal waste, is itself guilty of redundancy and waste as per the U.S. Government Accountability Office.

Recently, I read an article discussing the most common complaints of hospital-employed physicians.  Before turning to these complaints and ways to address them, one common thread was an acknowledgment by many of the physicians interviewed for the article that they failed to undertake the necessary due diligence before entering into the hospital employment relationship– either because they rushed into the relationship without having their employment agreements carefully reviewed or because they failed to ask certain questions during their job interviews; and this lack of due diligence was as prevalent among older physicians as ones just coming out of their residency.

The most common general complaint of hospital-employed physicians was the loss of control over their professional lives, especially among those that were formerly in private practice.  However, in terms of specific complaints, the following appeared to be the most common:

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.  

Last week, I served as a panelist/speaker for a nationally-broadcast webinar regarding the formation of physician multispecialty groups.  One of the topics addressed by this webinar—the one that prompted the greatest number of questions from the audience—was the CPOM doctrine. 

Essentially, the CPOM doctrine, which is found in the laws of many states, including New Jersey, prohibits unlicensed and lesser-licensed individuals, business corporations and other entities from employing physicians to practice medicine—all in an effort to ensure that only those entities owned and controlled by licensed professionals shall render healthcare services, subject to certain exceptions.  The CPOM doctrine also prohibits the division or splitting of professional fees between physicians and lay persons/lay entities and/or the payment for referrals. 

Within the past week or so, the FDA has issued draft guidelines concerning mobile medical applications or “apps,” as they are more commonly referred to.  Medical apps are sold for devices such as Apple’s iPad and iPhone, Blackberry phones, and phones using Google’s Android software.