Heman A. Marshall, III Christine F. Underwood Woods Rogers PLC 540.983.7600 woodsrogers

The Affordable Care Act of 2010

How Does it Affect Network Provider Members and How Can Your

Network Help?

Heman A. Marshall, IIIChristine F. Underwood

Woods Rogers PLC540.983.7600

www.woodsrogers.com

September 25, 2012

Health Care Reform Law

• Patient Protection and Affordable Care Act of 2010 (the “Act” or “ACA”; Pub. L. 111-148) signed March 23, 2010

• Health Care and Education Reconciliation Act of 2010 (Pub. L. 111-152) signed March 30, 2010

Initially, A Rocky Road

Initial Legal Challenges

• 6th Circuit declared the Act unconstitutional

• 11th Circuit declared the Act unconstitutional

• 4th Circuit dismissed the case for lack of standing

The Act and The Supreme CourtJune 28, 2012

U.S. Supreme Court Declared the Act (mostly) Constitutional

Issues Before the Court• Can the Court hear the case?• Is the “Individual Mandate” constitutional?• Is the “Medicaid Mandate” constitutional?• If either or both are unconstitutional, must

the entire Act fall?

The Decision

• 5-4 Opinion• 2 Majority Opinions – The Chief Justice

and Remainder of the Majority• Upheld the Individual Mandate as a “Tax”

not as an exercise of the Commerce Clause

• Upheld “most” of the Medicaid Mandate • Struck withdrawal of all funds if a State

refuses to participate in expanded coverage

Effect of the Decision

• We are where we were in 2010!

• Except states can decline to expand Medicaid and continue to receive existing levels of support

In short, the Act is alive and well!

Four Major Focuses of the Act

• Provisions applicable to Health Care Providers– Hospitals– Physicians/Physician practices– Drug and Device Makers

• Provisions applicable to health insurance plans (private and government)

Four Major Focuses of the Act

• Provisions applicable to all employers regarding the workplace and employer sponsored plans/benefits

• Provisions applicable to CMS funding for innovation and reform

This Presentation

Addresses

Provisions Applicable to Health Care Providers

Generally

The Major Direct Effects on Providers:• Self-Referral Notice Requirements• So Called “Increased Accountability”

Requirements– Overpayments– Changes to the Federal False Claims Act– Amendments to the Anti-Kickback Act– Expanded Civil Monetary Penalties

Generally

• Modified Timely Filing Requirements for Medicare Claims

• Stark II Self-Disclosure Protocol• Physician/Hospital Ownership Restrictions• So Called “Transparency” Requirements• Compliance Mandate• Medicaid Payment Changes• Specific Requirements for Tax Exempt

Hospitals• Value-Based Purchasing for Hospitals• Readmission Penalties for Hospitals

Major Indirect Effects

Major Indirect Effects

• Creation of ACO concept

• EHR Incentive Program

• Other Alternative Reimbursement Models

Self-Referrals

Self-Referrals

• Referring physician is required to inform patients, in writing, at the time of a referral that patients may obtain specified services (e.g., MRI, CT, PET) from a provider other than the referring physician or another provider in the same group practice

Self-Referrals

• Notice must list other suppliers who furnish such services in the area where the patient resides

• Effective Date: January 1, 2011

Self-Referrals

• June 13, 2010 - CMS published a proposed rule See 75 Fed. Reg. 40140-2

• Required written notice to include no fewer than 10 other suppliers within a 25-mile radius unless fewer than 10 suppliers within such radius 

• List must include the name, address, phone number, and distance from the referring physician’s office location 

• The physician must obtain the patient’s signature on the disclosure notice and retain a copy of the signed disclosure in the patient’s medical record

Self-Referrals

• The Final Rule was effective January 1, 2011 See 75 Fed. Reg. 73443-73447

• Under the Final Rule, CMS:– Reduced the number of suppliers that must be

listed from 10 to 5– Removed the requirement that the distance

from the physician’s office be listed– Removed the patient signature and retention

requirement

Self-Referrals State Laws

Also check your state laws – Many have similar Provisions

Example:• Virginia Law

– Requires that practitioners, prior to a referral to a facility, must provide the patient with a notice in bold print that discloses any known material, financial interest of or ownership interest by the practitioner in such facility, and states that the services may be available from other suppliers in the community

• Va. Code § 54.1-2964

“Transparency”

Transparency

• The Act requires manufacturers that provide a payment or other item of value to a physician (or to an entity or individual at the request of a covered recipient) to disclose annually the value, nature, purpose and recipient of the payment

• Generally applies to device, drug, medical supply and biologic companies, and requires reporting payments or transfers of value of $10 or more ($100 aggregate in the calendar year)

• Effective Date: March 31, 2013

Medicare Payment Changes

Medicare Payment Changes

• The Act provides a 10% bonus on select primary care services for physicians in family medicine, internal medicine, geriatrics and pediatrics whose Medicare charges for office, nursing facility and home visits comprise at least 60% of their total Medicare charges and to general surgeons performing major surgery in health professional shortage areas. – Effective January 1, 2011 – December 31,

2015

Medicaid Payment Changes

• Medicaid payment rates to primary care physicians will be raised to no less than 100% of the Medicare payment rates for 2013 and 2014.

Tax-Exempt Hospitals• Requirements (cont.)

– Set a limitation on charges for emergency or medically necessary care for eligible individuals not more than the amounts billed to the insured and eliminate gross charges;

– Undertake reasonable efforts to determine whether an individual is eligible for assistance before engaging in extraordinary collection actions

Value-Based Purchasing

• The Act establishes a value-based purchasing incentive payment to acute care hospitals paid under the Inpatient Prospective Payment System based on specific performance standards

Value-Based Purchasing• For the first year, incentive payments

will be based on measures related to:– Acute myocardial infarction (AMI);– Heart failure;– Pneumonia;– Surgeries; and– Healthcare-associated infections

• Effective Date: On or after October 1, 2012

Readmissions

Readmissions

• The Act defines a “readmission” as the admission to the same hospital from which the patient was discharged, or to another hospital, within a specified time period (e.g. 30 days) from the date of the patient’s discharge

Readmissions

• The Act reduces Medicare payments based on the percentage of potentially preventable readmissions for certain conditions

• Effective October 1, 2012, conditions subject to this provision are AMI, heart failure and pneumonia and the readmission period is 30 days

• HHS will publish readmission rates on a “Hospital Compare” website

Timely Claims Filing

Timely Filing of Fee-For-Service Claims

• The Act reduced the statutory timely filing deadline for Medicare fee-for-service claims under Medicare Parts A and B to 1 year (previously 3 years), effective for services furnished on or after January 1, 2010

Increased Accountability

New Enforcement Tools

By Way of Background

The

“HEAT”

Initiative

HEAT

• In May 2009, DOJ and HHS announced the creation of the “Health Care Fraud Prevention and Enforcement Action Team” (“HEAT”).

HEAT

• Mission of HEAT– To gather resources across government to

help prevent waste, fraud and abuse in the Medicare and Medicaid programs, and crack down on the fraud perpetrators who are abusing the system and costing us all billions of dollars

– To reduce skyrocketing health care costs and improve the quality of care by ridding the system of perpetrators who are preying on Medicare and Medicaid beneficiaries

HEAT

• Mission of HEAT (cont.)– To highlight best practices by providers

and public sector employees who are dedicated to ending waste, fraud and abuse in Medicare

– To build upon existing partnerships between DOJ and HHS such as Medicare Fraud Strike Forces to reduce fraud and recover taxpayer dollars

Overpayments

Overpayments

ACA Requirements• Identified overpayments must be reported

and returned within 60 days to the applicable contractor, intermediary or carrier along with a written notification of the reason for the overpayment

• Failure to return such payments within 60 days can trigger liability under the Civil False Claims Act, 31 USC § 3729(b)(3)

• Effective Date: March 23, 2010

Overpayments

• CMS published a proposed rule on the reporting and returning of overpayments on February 16, 2012– 77 Fed. Reg. 9179

Overpayments

• Under the Proposed Rule, an overpayment is “identified” if the provider/supplier has actual knowledge of its existence or acts in reckless disregard or deliberate ignorance of the overpayment – (Standard is consistent with False

Claims Act)

Overpayments

• CMS acknowledged that time may be needed to conduct a “reasonable inquiry” of a suspected overpayment

• Still little guidance as to what is “reasonable”

• Failure to act “with all deliberate speed” could result in a determination of knowingly retaining an overpayment

Overpayments

• Overpayments should be reported to Medicare contractors using the existing voluntary refund process (See Chapter 4, Medicare Financial Management Manual)

• Overpayments that may have occurred within a 10-year look-back period should be reported– (Consistent with SOL under False

Claims Act)

Anti-Kickback Amendments

Anti-Kickback Amendments

• The Act amended the Anti-Kickback statute to state that “a person need not have actual knowledge” of the statute to commit a violation

• Previously, regulators had to show specific intent to commit a violation of the AKS

• Violations of AKS now constitute a false or fraudulent claim for purposes of the False Claims Act

• Effective Date: March 23, 2010

Civil Monetary Penalties

Civil Monetary Penalties• The Act expanded the application of CMPs

to:– Failure to report and return an overpayment;– Making a false statement in a provider

enrollment application; – Making a false statement in a claim for

payment; – Failure to timely grant access to HHS for

investigations, audits or evaluations; and– Ordering or prescribing a medical item or

service for an excluded individual

• Effective Date: March 23, 2010

Stark II

Self-Disclosure

Self-Disclosure

• The Act established a self-disclosure protocol for actual or potential violations of the Stark Law, and granted HHS the discretion to reduce amounts due for violations

Self-Disclosure

• HHS may consider the following factors:– Nature and extent of the improper or illegal

practice;– Timeliness of self-disclosure;– Cooperation in providing additional information

related to the disclosure; and– Such other factors as HHS deems appropriate– Self-Disclosure Protocol was published on

September 23, 2010

Self-Disclosure

• March 2012 – CMS submitted a report to Congress on implementation of SDP

• Report noted that:– CMS had received 150 disclosures from

148 providers– Of the 150, 125 from hospitals, 11 from

clinical labs, 8 from physician groups, 2 CMHC, 2 DME, 1 ambulance company, and 1 health care foundation

Self-Disclosure

– Six disclosures had been resolved through settlement, collecting $783,060 (settlements ranged from $60 to $579,000)

– Most common disclosed violations include failure to comply with Stark exceptions for personal service arrangements, nonmonetary compensation, rental of office space, and physician recruitment arrangements

Compliance Plans

Compliance

• The Act requires all health care providers to implement formal health care compliance programs as a condition of enrollment in Medicare, Medicaid and CHIP

• Effective Date: To Be Determined

Compliance

• Compliance plans are to be based on “core elements” to be established by the OIG

• To date, the OIG has yet to formally publish the “core elements”, but has advised that it may use the 7 elements described in the Federal Sentencing Guidelines

Compliance

• Using the Sentencing Guidelines as a model, the OIG has developed 7 fundamentals of an effective compliance program:– Implementing written policies,

procedures and standards of conduct;– Designating a compliance officer and

committee;– Conducting effective training and

education;

Compliance

• Fundamentals cont.– Developing effective lines of

communication;– Conducting internal monitoring and

auditing;– Enforcing standards through well-

publicized disciplinary guidelines; and– Responding promptly to detected

offenses and undertaking corrective action

Some of the Results to Date

• During Fiscal Year 2011, health care fraud enforcement actions by DOJ and HHS recovered nearly $4.1 billion in cases involving fraud on federal health care programs

• Apex Medical Group, TN – May, 2012 - $4.36 million settlement related to upcoding

The Effect of “Increased Accountability”

• 2009 – 2011: convictions up 27% from 583 to 743

• 2009 – 2011: criminal prosecutions up 78%

• Targeted areas: DME, HHC, therapy

• American Theraputic Corporation – March 2012 - $87 million verdict– Owner sentenced to 35 years in prison

The Effect of “Increased Accountability”

• Dr. Jacques Roy - $375 million in loss – Discovered through data mining

Provisions Affecting CMS

and Providers

New Initiatives

CMS Innovation Center

CMS Innovation Center• Established by the Act, the CMS

Innovation Center is a “new engine for revitalizing and sustaining Medicare, Medicaid, and the Children's Health Insurance Program (CHIP) and ultimately for improving the health care system for all Americans.” – ww.innovations.cms.gov

CMS Innovation Center

• Since opening its doors, the Innovation Center has introduced 16 initiatives involving over 50,000 providers

CMS Innovation Center

See Handout – Chart of Current Programs

Accountable Care Organizations

Accountable Care Organizations (“ACOs”)

• A creature of the Act’s “Medicare Shared Savings Program” (“MSSP”) (Section 3022 of the Act)

Basic Structural Formats for ACOs:

• ACO Professionals in Group Practice Arrangements

• Networks of Individual Practices of ACO Professionals

• Partnership or Joint Venture Arrangements between Hospitals and ACO Professionals

• Hospitals employing ACO Professionals• Rural Health Centers• FQHCs

ACOs• Three Models

– Standard: a program that helps a Medicare fee-for-service program providers become an ACO

– Advanced Payment Initiative: a supplementary incentive program for selected participants in the Shared Savings Program

– Pioneer Model: a program designed for early adopters of coordinated care. No longer accepting applications

ACOs

• Recent Developments– As of July 9, 2012, there are 154 ACOs

participating in MSSP– CMS has stated that 2.4 million

beneficiaries are receiving care from providers participating in ACOs

EHR Incentive Program

(i.e., “Meaningful Use”)

EHR INCENTIVE PROGRAM

• The Medicare and Medicaid EHR Incentive Programs provide incentive payments to eligible professionals (EPs), eligible hospitals and critical access hospitals as they adopt, implement, upgrade or demonstrate meaningful use of certified EHR technology

• EPs can receive up to $44,000 through the Medicare EHR Incentive and up to $63,750 through the Medicaid EHR Incentive (must choose Medicare or Medicaid)

MEDICARE EHR INCENTIVE PROGRAM

• Medicare EHR Incentive Program provides incentive payments to EPs, eligible hospitals, and CAHs that demonstrate meaningful use of certified EHR technology

• EPs can receive up to $44,000 over five years under the Medicare EHR Incentive Program. There's an additional incentive for EPs who provide services in a HSPA. To get maximum incentive payment, Medicare EPs must begin participation by 2012

MEDICAID EHR INCENTIVE PROGRAM • Medicaid EHR Incentive Program provides

incentive payments to EPs, eligible hospitals, and CAHs as they adopt, implement, upgrade, or demonstrate meaningful use of certified EHR technology in their first year of participation and demonstrate meaningful use for up to five remaining participation years

• Eligible professionals can receive up to $63,750 over the six years

• Medicaid EHR Incentive Program is voluntarily offered by 43 individual states and territories, and more states will begin offering the program in 2012– Check with your State Medicaid Agency for more

information

ELIGIBLE PROFESSIONALS

EPs under Medicare EHR Incentive Program

EPs under Medicaid EHR Incentive Program

Doctor of Medicine or Osteopathy

Physicians (primarily doctors of medicine and doctors of osteopathy)

Doctor of Dental Surgery or Dental Medicine

Nurse Practitioner

Doctor of Podiatry Certified Nurse-Midwife

Doctor of Optometry Dentist

Chiropractor Physician assistant who furnishes services in a FQHC that is led by a PA

STAGE 1 vs. STAGE 2 CORE OBJECTIVES

• July 13, 2010 CMS issued final regulations defining “meaningful use”

• Regulations only discussed “Stage 1” criteria

• August 23, 2012 CMS issued final regulations for “Stage 2” meaningful use– See attached comparison charts

Stage 2

• Delays deadline for implementation to 2014

• Nearly all of the Stage 1 core and menu objectives that were proposed are being finalized for Stage 2

Stage 2• Some changes:

– The test of “exchange of key clinical information” core objective from Stage 1 is eliminated in favor of a more robust “transitions of care” core objective in Stage 2; and the “Provide patients with an electronic copy of their health information” objective  is also eliminated and replaced with the “electronic/online access” core objective 

Stage 2 cont.

– Final rule adds “outpatient lab reporting” to the menu for hospitals and “recording clinical notes” as a menu objective for EPs and hospitals. There will be 20 measures for EPs (17 core and 3 of 6 menu) and 19 measures for eligible hospitals and CAHs (16 core and 3 of 6 menu)

Stage 2 cont.

– Final rule reduces some thresholds for achieving certain measures and modifies criteria for exclusions to respond to difficulties commenters identified in implementing certain objectives in certain situations, e.g., for some objectives CMS has added exclusions based on broadband availability that allow providers in rural/underserved areas to achieve meaningful use with fewer hurdles

Stage 2

• CMS finalized two new core objectives: – Use secure electronic messaging to

communicate with patients on relevant health information (EPs only)

– Automatically track medications from order to administration using assistive technologies in conjunction with an electronic medication administration record (Hospitals and CAHs)

Alternative Reimbursement Models

Alternative Reimbursement Models

• Bundled Payments

• Comprehensive Primary Care Initiative

• Patient Centered Medical Home

Are Your Members Ready?

Are your members ready?• Transparency

– Are your members prepared to operate in a more transparent health care system?

• Quality– Are your members focused on quality as

a compliance issue?

• Accountability– Are your members prepared for greater

accountability?

Are your members ready?

• Do your members have the right systems to collect, organize, track, retain and report information and data accurately and completely?

• Do your members have security and privacy protections in place for creating, transmitting, and storing data?

• Do your members have systems in place to meet enhanced reporting and disclosure requirements applicable to their industry segment?

Are your members ready?

• Do your members and clinicians understand that quality is a compliance concern and that quality of care is increasingly integral to payment?

• Do your members have systems that will ensure that charting, collection and reporting of quality data and clinical documentation are accurate, complete, and sufficient to justify payment?

Are your members ready?

• Do your members’ compliance departments have the expertise to address quality-related compliance issues?

• Are your members’ boards of directors and management informed about the heightened role of quality of care under health care reform?

Are your members ready?• Do your members have compliance plans in

place? • Do your members know with whom their

organization does business? – Do your members have affiliations with

excluded, suspended, or Medicare debt-owing individuals and entities?

– Are your members prepared to meet new requirements for background and licensure checks?

– Are the persons furnishing services through your members’ organizations qualified to do so?

Are your members ready?

If the answer to any of these Questions is “No”, how can your network assist?- Joint Education- Joint IT Initiatives to Reduce Cost- Development of model polices and procedures- Other Areas

Heman A. Marshall, III [email protected] www.woodsrogers.com