Reimbursement shifts, new healthcare reform laws, and the cost of implementing an electronic health record (EHR) system have led some physicians to consider closer alignment with group practices or hospitals, although many are looking to maintain clinical and administrative independence.  At a recent Medical Group Management Association (MGMA) meeting, many experts cited the cost of running a physician practice as a key driver of integration, as lowered state and federal reimbursement rates – combined with healthcare reform’s focus on coordinated care models – are encouraging provider systems to join together to achieve savings.  The purchase and implementation of EHR systems is also challenging for physician practices, although MGMA data showed that independent single and multispecialty practices with EHR systems earned $49,916 more in medical revenue per physician than those with paper records.

 A provision of the Small Business Jobs Act, which recently became law, requires that CMS integrate predictive analysis technology into the Medicare payment system. CMS will use predictive analysis to identify and analyze billing patterns and detect fraudulent activity by providers and suppliers. CMS will also use it to capture utilization and outcome data. The goal is to analyze payment data before payment is made, so CMS can deny payment for potentially wasteful, fraudulent, or abusive activities. Credit card companies use similar technology to identify and prevent questionable transactions.

Analysis of this predictive analysis program can be found here.

Beginning in 2014, PPACA requires that certain “essential health benefits” must be covered by health plans. In addition, certain plans may not subject essential health benefits to a lifetime dollar limits after September 23, 2010, and must phase out annual limits for these benefits by 2014 (the maximum annual limit in 2011 is $750,000). However, as mentioned previously on this blog, HHS has not yet determined the full range of benefits that are essential. On close review of the existing guidance, it appears that hearing aids may be essential health benefits.

Current guidance notes that “rehabilitative and habilitative services and devices” are essential health benefits. Hearing aids may fall within the scope of habilitative devices. We all know that hearing aids assist with hearing functions, which seems habilitative. However, the National Institute of Health also seemed to consider a hearing aid a habilitative device when it recently noted that a hearing aid can increase an individual’s awareness of sounds and their sources, helping the person to communicate more fully despite the fact that a hearing aid will not restore normal hearing. While the National Institute of Health’s view of devices is not authoritative with respect to PPACA, it does suggest that at least one agencies of the federal government see a hearing aid as habilitative.

Going forward, plan sponsors should consider lifting annual or lifetime limits on hearing aid expenses.

The IRS recently issued Notice 2010-69, which gives employers interim relief from a new Form W-2 reporting requirement. PPACA required that the cost of employer-sponsored group health coverage be reported on Forms W-2.

The IRS Notice makes this reporting optional for 2011.

As a result, the cost of health plan coverage will first be required to be reported on Forms W-2 for 2012, which are distributed in 2013.

In issuing this guidance, the Treasury Department and IRS recognized that employers needed more time to make the necessary changes to payroll systems and procedures in order to comply with the new requirement. Compliance has been difficult due to the lack of guidance on W-2 reporting issues including how to determine the cost of coverage for self-insured group health plans. The Treasury Department and IRS anticipate issuing guidance before the end of 2010.

IRC § 501(r), which was enacted as part of PPACA, tightens the requirements that hospitals must satisfy to maintain IRC § 501(c)(3) status. IRC § 501(r) also complements steps taken by the IRS in the last couple of years to increase hospital transparency and supplement the”community benefit” standard set out in IRS Rev. Rul. 69-545, including more detailed requirements for reporting charity care and community benefits in the redesigned annual federal information return form (Form 990, particularly Schedule H). Under IRC § 501(r) a hospital organization that wants to retain its IRC § 501(c)(3) status must: (1) at least every three years conduct a community health needs analysis and develop a plan to meet these needs; (2) adopt, implement, and widely publicize written financial assistance and emergency care policies that must cover specified topics; (3) limit charges to persons qualifying for financial assistance to amounts charged to persons with emergency insurance; and (4) not take extraordinary collection actions without first trying to find out whether the individual is eligible for financial assistance under its policy.

IRC § 501(r) is generally effective for tax years beginning after March 23, 2010, and will apply to any “hospital organization” that operates a facility that requires hospital licensing or registration under state law or that the Treasury Secretary determines to be providing “hospital care” as the basis for its tax exemption. Where a hospital organization operates more than one facility, each must satisfy IRC § 501(r) separately. To back up certain IRC § 501(r) requirements, the recent legislation also adds IRC § 4959, which imposes an excise tax for failure to timely conduct a community health needs assessment and implement a strategy to meet such needs, and adds additional reporting requirements under IRC § 6033(b) relating to both IRC § 501(r) and § 4959.  For a few more of the particulars comprising IRC § 501(r) see the following linked summary: Section 501(r) Extends Community Benefit Standard for 501(c)(3) Hospitals.

The Office of the National Coordinator for Health Information Technology is funding the establishment of 60 Regional Extension Centers (RECs) across the country in order to provide outreach, education, and on-site technical assistance for approximately 100,000 primary care physicians implementing electronic health records (EHRs). The RECs will receive $643 million in federal grants over the next two years and an additional $42 million in subsequent years to help physicians achieve the meaningful use of EHRs. Eligible providers for REC support include a doctor of medicine or osteopathy, a nurse practitioner, a nurse midwife, or a physician assistant with prescriptive privileges.

On August 17, President Obama signed into law legislation sending $26.1 billion in aid, including $16.1 billion in additional federal Medicaid assistance, to the states. The new law intends to boost state Medicaid programs and education funding, and is expected to help prevent states from laying off teachers, firefighters, and police officers. The House of Representatives approved the new spending by a vote of 247-161.

On June 22, 2010, the Departments of Labor, Treasury and Health & Human Services issued regulatory guidance under the Patient Protection and Affordable Care Act (the “Act”) regarding prohibitions on preexisting condition exclusions, annual and lifetime limits and rescissions, as well as guidance regarding certain patient protections.

These rules are generally effective for plan years beginning on or after September 23, 2010 (January 1, 2011 for calendar year plans). Grandfathered group health plans must comply with the prohibitions on preexisting condition exclusions, lifetime and annual limits and rescissions, but are exempt from the rules regarding patient protections. Read the rest of this entry »

The Departments of Treasury, Labor and Health & Human Services (the “Departments”) recently issued two more batches of interim final regulations under the Patient Protection and Affordable Care Act, as amended (the “Act”). This new guidance addresses (i) the preventive services coverage mandate, and (ii) the new internal claims and appeals and external review processes. Both sets of interim final regulations are effective for plan years beginning on or after September 23, 2010. Neither requirement applies to grandfathered group health plans.  Below is a summary of these rules. Read the rest of this entry »

CMS has proposed payment policies and revisions to the 2011 physician fee schedule. Buried inside the 600 plus page publication are a number of proposed rules designed to carry out various parts of PPACA. Of note is a proposed rule to implement section 6003 of PPACA. Section 6003 added an additional requirement to the Stark in-office ancillary services exception for providers of MRI, CT, and PET services. In order to qualify for the exception, such providers must, in addition to satisfying existing requirements, give patients a list of other providers from whom they can receive the same services. This new requirement puts MRI, CT, and PET service providers in the undesirable position of having to advertise for their competitors.

 CMS’s proposed rule implements section 6003 with little departure from the statutory language. For example, CMS declined to extend the new requirements to all providers of radiology services, instead limiting application to providers of MRI, CT, and PET services, the same types of providers named in section 6003. The proposed rule requires that the list contain at least 10 other providers that provide the services to which the individual is being referred and that are located within a 25-mile radius of the referring physician’s office at the time of the referral. If there are fewer than 10 other suppliers of the service located within the 25-mile radius at the time of the referral, the list must contain all other suppliers of the service within the 25-mile radius. In addition, the patient must sign a record of receiving the list, and the provider must maintain the list with the patient’s medical record. The proposed rule has double impact on affected providers; it forces them to promote their competitors and adds to their recordkeeping burden.

 Although section 6003 as written appears to have a retroactive effective date of January 1, 2010, CMS is proposing to apply the disclosure requirement only to services provided on or after January 1, 2011. CMS is accepting comments until August 24th.

 You can find a copy of the revisions to the 2011 PFS here: http://edocket.access.gpo.gov/2010/pdf/2010-15900.pdf