Health law newsletter
April 2010
Federal Healthcare Bill
The Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act (collectively the "Healthcare Bill"), passed by Congress and signed into law by President Obama on March 30, 2010, is arguably the most significant piece of healthcare legislation since Medicare and Medicaid were establish in 1965. The Healthcare Bill comprises over two-thousand pages of new laws and modifications to existing laws. Provisions in the Healthcare Bill address issues that range from medical insurance for the uninsured to coverage for preventive care to fraud and abuse enforcement, and a host of topics in between.
Much of the Healthcare Bill has both direct and indirect impact on healthcare providers. Elements of the Healthcare Bill will benefit providers by increasing reimbursement for certain services, while other services will experience reductions in benefits. As formerly uninsured individuals begin to obtain health insurance coverage, there will be an associated increase in demand for healthcare services.
A great deal of congressional and public debate has focused on how the government intends to pay for the Healthcare Bill. One aspect that is evident from the provisions of the bill is the intention to reduce waste. The Healthcare Bill is replete with a variety of increased enforcement provisions to combat fraud and abuse by providers.
This issue of our newsletter is entirely dedicated to the Healthcare Bill. To assist our clients and colleagues in determining how the Healthcare Bill impacts them and their respective practices, we have reviewed the legislation and culled out the elements that we believe are most relevant, and have the most immediate impact. We have categorized elements of the Healthcare Bill into: (1) Coverage Issues; (2) Fraud and Abuse; (3) Laws Governing Health Insurance Providers; and (4) Miscellaneous.
Each of the selected sections is summarized below. The Healthcare Bill is being phased in over the next several years; however, some provisions have already become effective, such as Section 6002 titled "Transparency Reports and Reporting of Physician Ownership or Investment Interests" which modifies elements of the Stark self-referral rules.
We have prepared this summary to assist our clients and colleagues in assessing the impact of the Healthcare Bill on their businesses. We are available to answer questions related to the Healthcare Bill, and to advise and assist you in complying with provisions applicable to you, your business, and your patients.
Specific Provisions in the Health Care Bill
Coverage Issues
Sec. 2713. Coverage of Preventive Health Services.
Requires all plans to cover preventive services and immunizations recommended by the U.S. Preventive Services Task Force and the CDC, certain child preventive services recommended by the Health Resources and Services Administration (HRSA), and women's preventive care and screening recommended by HRSA, without any cost-sharing.
Sec. 2714. Extension of Dependent Coverage.
Requires all plans offering dependent coverage to allow unmarried individuals until age 26 to remain on their parents' health insurance.
Sec. 2719. Appeals process.
Health insurers will be required to implement an effective process for appeals of coverage determinations and claims.
Sec. 1104. Administrative Simplification.
Accelerates HHS adoption of uniform standards and operating rules for the electronic transactions that occur between providers and health plans that are governed under the Health Insurance Portability and Accountability Act (such as benefit eligibility verification, prior authorization and electronic funds transfer payments). Establishes a process to regularly update the standards and operating rules for electronic transactions and requires health plans to certify compliance or face financial penalties collected by the Treasury Secretary. The goal of this section is to make the health system more efficient by reducing the clerical burden on providers, patients, and health plans.
Sec. 1501. Requirement to Maintain Minimum Essential Coverage.
Contains findings of Congress related to the individual responsibility requirement.
Sec. 5000A. Requirement to Maintain Minimum Essential Coverage.
Requires individuals to maintain minimum essential coverage beginning in 2014. Failure to maintain coverage will result in a penalty of $95 in 2014, $350 in 2015, $750 in 2016 and indexed thereafter. For those under the age of 18, the applicable penalty will be one-half of the amounts listed above. Exceptions to the individual responsibility requirement to maintain minimum essential coverage are made for religious objectors, individuals not lawfully present, and incarcerated individuals. Exemptions from the penalty will be made for those who cannot afford coverage, taxpayers with income under 100 percent of poverty, members of Indian tribes, those who have received a hardship waiver and those who were not covered for a period of less than three months during the year.
Sec. 1512. Employer Requirement to Inform Employees of Coverage Options.
Requires that an employer provide notice to their employees informing them of the existence of an Exchange. Also, if the employer plan's share of the total allowed costs of benefits provided under the plan is less than 60 percent of such costs, that the employee may be eligible for a premium assistance tax credit and cost sharing reduction. Finally, if the employee purchases a qualified health plan through the Exchange, the employee will lose the employer contribution (if any) to any health benefits plan offered by the employer and that all or a portion of such contribution may be excludable from income for Federal income tax purposes.
Sec. 1513. Shared Responsibility for Employers.
Requires an employer with more than 50 full-time employees that does not offer coverage and has at least one full-time employee receiving the premium assistance tax credit to make a payment of $750 per full-time employee. An employer with more than 50 full-time employees that requires a waiting period before an employee can enroll in health care coverage will pay $400 for any full-time employee in a 30-60 13 day waiting period and $600 for any full-time employee in a 60-90 day waiting period. An employer with more than 50 employees that does offer coverage but has at least one full-time employee receiving the premium assistance tax credit will pay the lesser of $3,000 for each of those employees receiving a tax credit or $750 for each of their full-time employees total. The Secretary of Labor shall conduct a study to determine whether employees' wages are reduced by reason of the application of the assessable payments.
Sec. 3107. Extension of Physician Fee Schedule Mental Health Add-On.
Increases the payment rate for psychiatric services by 5 percent for two years, through the end of 2010.
Sec. 3108. Permitting Physician Assistants to Order Post-Hospital Extended Care Services.
Authorizes physician assistants to order skilled nursing care services in the Medicare program beginning in 2011.
Sec. 3109. Exemption of Certain Pharmacies from Accreditation Requirements.
Allows 25 pharmacies with less than 5 percent of revenues from Medicare DMEPOS billings to be exempt from accreditation requirements until the Secretary of HHS develops pharmacy-specific standards.
Sec. 3110. Part B Special Enrollment Period for Disabled TRICARE Beneficiaries.
Creates a twelve-month special enrollment period for military retirees, their spouses (including widows/widowers) and dependent children, who are otherwise eligible for TRICARE and entitled to Medicare Part A based on disability or ESRD, but who have declined Part B.
Sec. 3111. Payment for Bone Density Tests.
Restores payment for dual-energy x-ray absorptiometry (DXA) services furnished during 2010 and 2011 to 70 percent of the Medicare rate paid in 2006.
Sec. 3114. Improved Access for Certified Nurse-Midwife Services.
Increases the payment rate for certified nurse midwives for covered services from 65 percent of the rate that would be paid were a physician performing a service to the full rate.
Sec. 3301. Medicare Coverage Gap Discount Program.
Requires drug manufacturers to provide a 50 percent discount to Part D beneficiaries for brand-name drugs and biologics purchased during the coverage gap beginning July 1, 2010.
Sec. 4103. Medicare Coverage of Annual Wellness Visit Providing a Personalized Prevention Plan.
Provides coverage under Medicare, with no co-payment or deductible, for an annual wellness visit and personalized prevention plan services. Such services would include a comprehensive health risk assessment. The personalized prevention plan would take into account the findings of the health risk assessment and include elements such as: a five- to ten-year screening schedule; a list of identified risk factors and conditions and a strategy to address them; health advice and referral to education and preventive counseling or community-based interventions to address modifiable risk factors such as physical activity, smoking, and nutrition.
Sec. 5501. Expanding Access to Primary Care Services and General Surgery Services.
Beginning in 2011, provides primary care practitioners, as well as general surgeons practicing in health professional shortage areas, with a 10 percent Medicare payment bonus for five years. Half of the cost of the bonuses would be offset through an across-the-board reduction in all other services.
Fraud and Abuse
Sec. 6001. Limitation on Medicare Exception to the Prohibition on Certain Physician Referrals for Hospitals.
Prohibits physician-owned hospitals that do not have a provider agreement prior to February 1, 2010, to participate in Medicare. Such hospitals that have a provider agreement prior to February 1, 2010, could continue to participate in Medicare under certain requirements addressing conflict of interest, bona fide investments, and patient safety issues, and expansion limitations.
Sec. 6002. Transparency Reports and Reporting of Physician Ownership or Investment Interests.
Requires drug, device, biological and medical supply manufacturers to report transfers of value made to a physician, physician medical practice, a physician group practice, and/or a teaching hospital. Duplicative State or local laws would be preempted by Federal law, however, Federal preemption would not occur for State or local laws that are beyond the scope of this section.
***Sec. 6003. Disclosure Requirements for In-Office Ancillary Services Exception to the Prohibition on Physician Self-Referral for Certain Imaging Services.
Adds an additional requirement to the Medicare in-office ancillary exception that requires the referring physician to inform the patient in writing that the individual may obtain the specified service from a person other than the referring physician, a physician who is a member of the same group practice as the referring physician, or an individual who is directly supervised by the physician or by another physician in the group practice.
PLEASE BE ADVISED THAT THE ABOVE REQUIREMENT WENT INTO EFFECT ON JANUARY 1, 2010.
Sec. 6401. Provider Screening and Other Enrollment Requirements Under Medicare,
Medicaid and CHIP.
Provider Screening. Requires that the Secretary, in consultation with the HHS Office of Inspector General (HHS OIG), establish procedures for screening providers and suppliers participating in Medicare, Medicaid, and CHIP. The Secretary would be required to determine the level of screening according to the risk of fraud, waste, and abuse with respect to each category of provider or supplier. At a minimum, all providers and suppliers would be subject to licensure checks. The Secretary would have the authority to impose additional screening measures based on risk, including fingerprinting, criminal background checks, multi-State data base inquiries, and random or unannounced site visits. An application fee of $200 for individual practitioners and $500 for institutional providers and suppliers would be imposed to cover the costs of screening each time they re-verify their enrollment (every five years).
Disclosure Requirements. Providers and suppliers enrolling or re-enrolling in Medicare, Medicaid, or CHIP would be subject to new disclosure requirements. Applicants would be required to disclose current or previous affiliations with any provider or supplier that has uncollected debt, has had their payments suspended, has been excluded from participating in a Federal health care program, or has had their billing privileges revoked. The Secretary would be authorized to deny enrollment in these programs if these affiliations pose an undue risk to a program.
Compliance Programs. By a date determined by the Secretary, certain providers and suppliers would be required to establish a compliance program. The requirements for the compliance program would be developed by the Secretary and the HHS OIG.
Sec. 6402. Enhanced Medicare and Medicaid Program Integrity Provisions.
Civil Monetary Penalties. Expands the use of Civil Monetary Penalties (CMPs) to excluded individuals who order or prescribe an item or service, make false statements on applications or contracts to participate in a Federal health care program, or who know of an overpayment and do not return the overpayment. Each violation would be subject to CMPs of up to $50,000.
*** Sec. 6404. Maximum Period for Submission of Medicare Claims Reduced to Not More Than 12 Months.
Beginning January 1, 2010, the maximum period for submission of Medicare claims would be reduced to not more than 12 months.
Sec. 6406. Requirement for Physicians to Provide Documentation on Referrals to Programs at High Risk of Waste and Abuse.
Beginning January 1, 2010, the Secretary would have the authority to disenroll, for no more than one year, a Medicare enrolled physician or supplier that fails to maintain and provide access to written orders or requests for payment for DME, certification for home health services, or referrals for other items and services. The provision 50 would also extend the HHS OIG's permissive exclusion authority to include individuals or entities that order, refer, or certify the need for health care services that fail to provide adequate documentation to verify payment.
Sec. 6408. Enhanced Penalties.
Subjects persons who fail to grant HHS OIG timely access to documents, for the purpose of audits, investigations, evaluations, or other statutory functions, to CMPs of $15,000 for each day of failure. Also, persons who knowingly make, use, or cause to be made or used any false statement to a Federal health care program would be subject to a CMP of $50,000 for each violation. The violations that could be subject to the imposition of sanctions and CMPs by the Secretary would include Medicare Advantage (MA) or Part D plans that: (1) enroll individuals in a MA or Part D plan without their consent, (2) transfer an individual from one plan to another for the purpose of earning a commission, (3) fail to comply with marketing requirements and CMS guidance, or (4) employ or contract with an individual or entity that commits a violation. Penalties for MA and Part D plans that misrepresent or falsify information would be increased to up to three times the amount claimed by a plan or plan sponsor based on the misrepresentation or falsified information.
Sec. 6411. Expansion of the Recovery Audit Contractor (RAC) Program.
Requires States to establish contracts with one or more Recovery Audit Contractors (RACs). These State RAC contracts would be established to identify underpayments and overpayments and to recoup overpayments made for services provided under State Medicaid plans as well as State plan waivers. The Secretary would also be required to expand the RAC program to Medicare Parts C and D.
Sec. 6501. Termination of provider participation under Medicaid if terminated under Medicare or other State plan.
Requires States to terminate individuals or entities from their Medicaid programs if the individuals or entities were terminated from Medicare or another State's Medicaid program.
Sec. 6502. Medicaid Exclusion from Participation Relating to Certain Ownership, Control and Management Affiliations.
Requires Medicaid agencies to exclude individuals or entities from participating in Medicaid for a specified period of time if the entity or individual owns, controls, or manages an entity that: (1) has failed to repay overpayments during the period as determined by the Secretary; (2) is suspended, excluded, or terminated from participation in any Medicaid program; or (3) is affiliated with an individual or entity that has been suspended, excluded, or terminated from Medicaid participation.
***Sec. 6503. Billing Agents, Clearinghouses, or Other Alternate Payees Required to Register Under Medicaid.
Requires any agents, clearinghouses, or other alternate payees that submit claims on behalf of health care providers to register with the State and the Secretary in a form and manner specified by the Secretary.
Sec. 6504. Requirement to Report Expanded Set of Data Elements Under MMIS to Detect Fraud and Abuse.
Requires States and Medicaid managed care entities to submit data elements from MMIS as determined necessary by the Secretary for program integrity, program oversight, and administration.
Sec. 6507. Mandatory State Use of National Correct Coding Initiative.
Requires States to make their MMIS methodologies compatible with Medicare's national correct coding initiative (NCCI) that promotes correct coding and controls improper coding.
Laws Governing Health Insurance Providers
Sec. 9010. Imposition of Annual Fee on Health Insurance Providers.
Imposes an annual flat fee of $6.7 billion on the health insurance sector beginning in 2010. This non-deductible fee would be allocated across the industry according to market share and would not apply to companies whose net premiums written are $25 million or less and whose fees from administration of employer self-insured plans are $5 million or less. The public option, as well coops and the national plan, will be subject to the insurance provider fee.
Sec. 9014. Limitation on Excessive Remuneration Paid by Certain Health Insurance Providers.
Limits the deductibility of executive compensation under Section 162(m) for insurance providers if at least 25 percent of the insurance provider's gross premium income from health business is derived from health insurance plans that meet the minimum essential coverage requirements in the bill ("covered health insurance provider"). The deduction is limited to $500,000 per taxable year and applies to all officers, employees, directors, and other workers or service providers performing services for or on behalf of a covered health insurance provider.
Miscellaneous
Sec. 9015. Additional Hospital Insurance Tax on High-Income Taxpayers.
Increases the hospital insurance tax rate by 0.5 percentage points on an individual taxpayer earning over $200,000 ($250,000 for married couples filing jointly).
***Sec. 9017. Cosmetic Surgery Tax.
Imposes a five percent excise tax on voluntary cosmetic surgical and medical procedures performed by a licensed medical professional. The tax would be collected by the medical professional at the point of service. The definition of voluntary cosmetic procedures generally would be the same as the definition of cosmetic surgery or similar procedures that are not treated as included in medical care under the current Section 213(d)(9) definition.
Sec. 10408. Grants for Small Businesses to Provide Comprehensive Workplace Wellness Programs.
Authorizes an appropriation of $200 million to give employees of small businesses access to comprehensive workplace wellness programs.
Sec. 10606. Health Care Fraud Enforcement.
Enhances the fraud sentencing guidelines, changes the intent requirement for fraud under the anti-kickback statute, and increases subpoena authority relating to health care fraud.
About Our Law Firm
The attorneys at Frier Levitt represent a broad range of clients in healthcare law, transactional and regulatory matters, pharmacy law, internet law, matrimonial law, real estate and corporate representation tailored to the needs of business and individual clients.
Frier & Levitt, LLC
84 Bloomfield Avenue
Pine Brook, New Jersey 07058
973-618-1660