SGR Update
August 29, 2013
Posted by Frank Ciesla
It is expected that when Congress returns after Labor Day that it will continue to address the issue of the Sustainable Growth Rate (SGR). The good news of the proposed legislation is that it will eliminate the lookback covering an extensive period of time, since Congress deferred, on an annual basis, the implementation of the SGR. Had the SGR been implemented, there was projected an approximately 30% reduction in the payments to providers that were made by the Medicare program.
While legislation has not been enacted, it appears clear that should the SGR be eliminated, there will be some other mechanism imposed to control the growth of expenses of the Medicare program.
This is important because the Congressional Budget Office (CBO) as well as the trustees for the Medicare program, use the current law in various ways. The CBO uses it when it projects the costs or the cost savings of a program, and the trustees use it when they project the solvency of the Medicare Trust Fund. Both of these agencies in the past have used the SGR as if it were to be implemented on January 1st of the following year, since the deferrals by Congress had been limited to an annual deferral. That requirement resulted in calculations that assumed that there would be an approximately 30% reduction in payments to physicians under the Medicare program.
In light of that, Congress will have to substitute some statutory mechanism for controlling the increased expenses so that the CBO can continue to score the health care legislation in a “favorable” light, and the trustees of the Medicare fund can continue to project its solvency over a longer period than if such a requirement were not in the legislation.
The concern that providers must have is that in any proposed legislation that is based on outcomes, it is essential that there be a clear definition of outcomes that would be tied to the conduct of the provider and not the conduct of the beneficiary. The provider cannot be responsible for the beneficiary’s failure to follow medical advice such as taking prescribed medicine in a timely manner or any other medical advice, which may alter the beneficiary’s conduct. Such a “test” should not be incorporated into the quality standards, shifting the risk from the Medicare program to the provider, since the provider has no control over the beneficiary’s conduct.
Recent Appellate Division Decision Represents Importance of Employee Background Checks
August 26, 2013
Posted by Beth Christian
The New Jersey Appellate Division issued a decision in Township Pharmacy v. Division of Medical Assistance and Health Services which Medicaid reaffirms the absolute obligation on the part of providers to comply with the Medicaid requirements (which are also applicable to Medicare) to perform background checks for all individuals working for a provider who are involved, even peripherally, in providing services that will be paid for by a governmental program. In this case, the Department of Human Services denied a pharmacy’s application to participate as a provider of services in the Medicaid program. The applicant (Township Pharmacy) had purchased an existing pharmacy and submitted an application to participate in the Medicaid program to the Department of Human Services. Question 37 of the Medicaid provider application asked if any officers, directors, shareholders, members, owners, employees or partners had ever been indicted, arrested, charged, convicted, pled guilty or no contest to any federal or state crime. The pharmacy checked the box marked “No”. A pharmacy technician who worked at the pharmacy had entered a guilty plea to an Oxycodone possession charge and was sentenced to three years’ probation. The New Jersey Board of Pharmacy allowed her to keep her pharmacy technician license notwithstanding the entry of the guilty plea. The pharmacist who purchased the pharmacy allegedly verified that the pharmacy technician was licensed but never performed a criminal background check. Notwithstanding the fact that the Board of Pharmacy had not taken action against the pharmacy technician’s license, the Department of Human Services denied the provider application based on the pharmacy’s incorrect response to Question 37 regarding criminal history. The pharmacy conceded that no employee criminal background checks had been performed. The Appellate Division upheld the denial of the Medicaid provider application. While the Court noted that it was “sympathetic to the Plaintiff’s predicament”, it concluded that “the integrity of the Medicaid provider program demands scrupulous compliance with the disclosure requirements in N.J.A.C. 10:49-11.1(d)(22).” The decision serves as a reminder of the importance of performing criminal background checks and verifying that employees are not excluded from participation in Medicare or Medicaid. Providers who fail to do so, do so at their peril. In many other situations, when the information becomes available to the Medicaid or Medicare programs, they will recoup the payments that had been made for the services rendered, in which the individual was involved. The involvement can be very peripheral. It can be the individual who is sending out the bills who is not permitted to participate in providing the services.
Additional ACA Risks to Provider Cash Flow
August 23, 2013
Posted by Frank Ciesla
For those patients who have obtained their policies through the health care insurance exchanges, where they qualify for federal premium tax credits, under 45 C.F.R. §156.270(d), the insurers are required to keep the policies in effect for a three month grace period should the beneficiary fail to make the premium payments. The insurers, however, are only required to pay the claims arising during that first month. They are permitted to “pend” claims during the second and third month. If the premium is not paid for that three month period, the insurers then ultimately can deny payment of those “pended” claims to the providers.
This is not a philosophical issue. This is not a liberal or conservative issue. This is simply shifting the risk of loss to the providers, which will adversely affect the provider’s cash flow.
The provider will be providing services with the assumption that the patient is covered by insurance. Should the provision of those services occur during the second or third month, and the individual does not pay the premium to continue the policy, the insurer will be authorized to deny payment. It will be up to the provider to obtain payment directly from the patient or more likely not to be paid for those services. This issue is being vigorously contested by organizations representing the providers.
If this position is not resolved before January 1, providers should expect during 2014 to run into situations where claims are denied because certain patients will not keep their insurance coverage current.
Affordable Care Act Update
July 11, 2013
Posted by Frank Ciesla
With all of the delays to the Affordable Care Act, it is not clear as to the impact on those portions of the Affordable Care Act which are now in effect and those portions that will go into effect on January 1, 2014.
As of this point in time, the administration has determined either to delay or not enforce the following portions of the Affordable Care Act: the Class Act; the small employer option; the Employer Mandate; the verification of eligibility for subsidies; the tobacco insurance premium.
We still have not seen the impact of the nonexpansion by certain states of Medicaid, not applicable in New Jersey, as well as the implementation of the exchanges whether by the states (not New Jersey), or the federal government, the situation in the State of New Jersey.
How will these delays impact the providers’ ability to be paid? How will the insurance companies react? Will they raise premiums to employers and beneficiaries? Will they reduce reimbursements to the providers?
Providers should examine each delay as to its ultimate impact on the providers ability to provide services to their patients.
Health Care Obligations of Employers Under the Affordable Care Act
June 11, 2013
Posted by Ari G. Burd
For most employers, the most important part of the Patient Protection and Affordable Care Act (commonly referred to as the “ACA” or “Obamacare”) will be the section known as the employer shared responsibility provision. Many media outlets continue to incorrectly suggest that this provision requires employers to provide health insurance to all of their employees. This is not actually the case. Instead, this provision subjects employers to taxes or penalties if they fail to offer “adequate” and “affordable” health insurance to their employees. Another fact commonly misunderstood is that for now, the only employers who need to be concerned about this issue are those who employ 50 or more “full time” employees (the ACA uses a very specific formula to determine who is considered full time) or those who employ under 25 employees and are looking to take advantage of the small business tax credit.
The employer shared responsibility provision goes into effect on Jan 1, 2014. In most cases, in order to determine who is a full time employee, the employer reviews each employee’s full time status by “looking back” at a past employment period of between three (3) and twelve (12) months. As a result, it is critically important that employers start thinking about their obligations under the ACA right now so they can be prepared for January 1, 2014.
Determining who is considered a full time employee under the ACA can be complex. Under the ACA, a full time employee is someone who works 30 or more hours per week, on average. Also taken into consideration are full time equivalent employees (“FTE”). The number FTE employees are determined by adding up the total number of hours worked in a given month by part time employees and dividing than number by 120. So for example, 10 part time employees working 60 hours per month would be counted as 5 FTE employees (10×60 = 600; 600/120=5). Special rules also apply for seasonal employees, temporary employees, etc.
For those employers who have 50 or more full time employees under the ACA, the employer shared responsibility provision leaves the employer with several options:
Option 1– Provide health care coverage that is both “adequate” and “affordable” under the ACA. Determining if coverage meets these requirements requires analysis of the costs of the plan to full time employees and the number of full time employees eligible under the plan. The employer must also determine if providing coverage is more costly than the fines it would be subject to if it chose not to provide coverage.
Option 2 – Do nothing and provide no coverage to the employees, potentially subjecting the employer to a $2000 fine per employee. Rather than simply rejecting this option of out of hand, the employer needs to determine the potential fine it faces and whether or not certain exemptions are applicable that could greatly reduce, if not eliminate the fine entirely.
Option 3 – Provide coverage that is not considered “affordable” under the ACA, subjecting the employer to a $3000 fine for each employee who chooses not to partake in the employer offered health plan and who instead purchases coverage through an insurance exchange and receives a tax credit or subsidy. Before taking this route, an employer must carefully consider whether it believes its employees will seek coverage through an exchange and whether the savings it will gain from not paying its portion of the employee’s health care coverage will offset any potential penalty.
This is merely a summary review of the ACA. Numerous provisions and exceptions contained in the ACA may affect your decision. For consultation and advice regarding the ACA provisions that will best serve your employment situation, please contact Ari G. Burd, Esq.
2013 Annual Report of the Board of Trustees of the Federal Hospital Insurance and Federal Supplemental Medical Insurance Trust Funds
June 4, 2013
Posted by Frank Ciesla
As you are aware from the numerous newspaper articles, they are now projecting that this fund will remain solvent for an additional two years.
However, as we have pointed out consistently in the last couple of years with our blogs , this report is fundamentally flawed as set forth on the last two pages of this 2013 report (pages 273 and 274). In fact, those are the only two pages of the report that you need to read.
The following are excerpts from those last two pages:
In past reports, and again this year, the Board of Trustees has emphasized the strong likelihood that actual Part B expenditures will exceed the projections under current law due to further legislative action to avoid substantial reductions in the Medicare physician fee schedule. While the Part B projections in this report are reasonable in their portrayal of future costs under current law, they are not reasonable as an indication of actual future costs. Current law would require a physician fee reduction of an estimated 24.7 percent on January 1, 2014—an implausible expectation. …
Without unprecedented changes in health care delivery systems and payment mechanisms, the prices paid by Medicare for health services are very likely to fall increasingly short of the costs of providing these services. By the end of the long-range projection period, Medicare prices for hospital, skilled nursing facility, home health, hospice, ambulatory surgical center, diagnostic laboratory, and many other services would be less than half of their level without consideration of the productivity price reductions. Medicare prices would be considerably below the current relative level of Medicaid prices, which have already led to access problems for Medicaid enrollees, and far below the levels paid by private health insurance. Well before that point, Congress would have to intervene to prevent the withdrawal of providers from the Medicare market and the severe problems with beneficiary access to care that would result. Overriding the productivity adjustments, as Congress has done repeatedly in the case of physician payment rates, would lead to substantially higher costs for Medicare in the long range than those projected under current law.
For these reasons, the financial projections shown in this report for Medicare do not represent a reasonable expectation for actual program operations in either the short range (as a result of the unsustainable reductions in physician payment rates) or the long range (because of the strong likelihood that the statutory reductions in price updates for most categories of Medicare provider services will not be viable).
As can be seen, to accomplish the projections that have been bandied about would require a significant reduction in compensation both to physicians as well as to all other health care providers. As the actuarial opinion states clearly this is unlikely.
However, what this does indicate, to all health care providers, is a concern that the government is looking, for viability of these programs, to reductions in what they will pay the providers for the services that these programs have promised to the elderly population in this country. As set forth, again in the actuarial opinion, at the end of the report, this philosophy and approach can only result in lack of access for that population.
Court Upholds Stark Restriction on Under Arrangements Joint Ventures
May 29, 2013
Posted by Beth Christian
Last week, the U.S. District Court for the District of Columbia issued a decision upholding the validity of regulatory provisions contained in the 2008 amendments to the federal Stark regulations. The amendments prohibit a physician owner from referring his or her Medicare patients for designated health services to a joint venture in which the physician has an ownership interest and which provides services “under arrangements” with a hospital. They also prohibit payments for space and equipment rentals that are based on percentage-based or “per click” compensation. In an “under arrangement” transaction, the hospital contracts with a physician-owned joint venture (or any other third party) for the performance of a hospital service, but the hospital is responsible for billing and collecting payments for such services.
A non-profit corporation (“CUI”) comprised of businesses that provide equipment and technical personnel for performing various urological medical services initiated a lawsuit to challenge the validity of the regulations. Urologists had formed joint ventures to purchase expensive laser surgery equipment with the intention of entering into an “under arrangements’ agreements with hospitals. CUI’s members consist largely of these urologist-owned joint ventures. CUI claimed that CMS violated the Administrative Procedure Act (“APA”) in adopting the amendments, that Congress intended to allow “per click “ payments, that CMS acted arbitrarily and capriciously in adopting the regulatory amendments, and that the adoption of the amendments violated the Regulatory Flexibility Act.
The court rejected each of the arguments advanced by the plaintiff and granted the government’s motion for summary judgment. The court first reviewed CMS’ regulatory expansion of what it means to “furnish” designated health services so that both the billing entity (i.e. the hospital) and the entity that performed DHS (i.e. the joint venture) were deemed entities that “furnish” designated health services under the Stark law. The court found that nothing in the Stark law foreclosed CMS from expanding its definition of the term “furnishing” designated health services so as to include the provider of designated health services (such as a physician-owned joint venture), and that the CMS interpretation of the Stark law was both a permissible construction of the law and was reasonable in practice.
The court also upheld the prohibition on “per click” payments in leasing arrangements. The court noted that the Stark law did not contain any language which would permit lease payments calculated according to units of service. The court also found that CMS was entitled to rely on evidence that per-click payments lead to patient abuse or harm to the Medicare system in the context of physician self-referrals, and that Congress “included the means to address evolving fraud risks by inserting into many of its exceptions . . . specific authority for the Secretary to add conditions as needed to protect against abuse.”. Finally, the court found that CMS adequately complied with the requirements of the regulatory Flexibility Act before finalizing the regulatory change.
The court’s decision in this case underscores the broad deference that will be accorded by a court to CMS in evaluating whether or not the agency’s interpretation of the Stark law is a reasonable one. Given the fact that the restrictions on “under arrangements” joint ventures and “per click” leasing payments have been upheld as a reasonable interpretation of the Stark law, it is unlikely that these restrictions will go away any time soon. Physicians evaluating whether or not to get involved in joint ventures or leasing arrangements will need to carefully consider whether or not a proposed financial arrangement could be viewed as potentially violative of the Stark law, and should consult with legal counsel before moving forward with any plans to invest in such arrangements.
RECENT HEALTH CARE LEGISLATION IN NEW JERSEY
March 28, 2013
Posted by Beth Christian
The following represents a summary of laws that have been recently enacted in the State of New Jersey that may impact health care facilities and other health care providers:
- P.L. 2012, c. 62 – prohibits health care facilities from discharging prescription medications into sewer or septic systems in certain circumstances and provides for civil administrative penalties for violations of the law.
- L. 2012, c. 65 – allows license suspension or revocation of certain health care professionals and medical waste facilities, generators and transporters for willful, illegal or improper medical waste disposal.
- L. 2012, c. 67 – prohibits health care providers from charging workers compensation claimants fees for treatments or medical services that have been authorized by the employer or its carrier or its third party administrator, or determined by the Division of Workers Compensation to be the responsibility of the employer, its carrier or third party administrator, or have been paid by the employer, its carrier or third party administrator.
- L. 2012, c. 69 – provides protections for individuals with developmental disabilities residing in community care residences and for investigations of abuse of individuals with developmental disabilities.
- L. 2012, c. 76 – provides for temporary nurse licensure of qualified non-resident military spouses who wish to practice nursing in the State of New Jersey on a temporary basis.
Providers Sequester or its Alternatives
March 4, 2013
Posted by Frank Ciesla
While health care providers will be penalized under the sequester, if the approach going forward in lieu of the sequester is to provide for alternate cuts in government spending, the result as shown in the linked articles (http://www.businessweek.com/ap/2013-02-27/no-ruckus-about-medicare-cuts-in-sequester; http://www.modernhealthcare.com/article/20130227/NEWS/302279950/sequesters-medicare-cuts-would-start-with-services-provided-in-april?AllowView=VW8xUmo5Q21TcWJOb1gzb0tNN3RLZ0h0MWg5SVgra3NZRzROR3l0WWRMWGJWdjhHRWxiNUtpQzMyWmVwNVhzWUpibWhiUVE2MWxZYzhYdVNIdUY4amk2UXI5SzVRTnI0Vk; http://www.modernphysician.com/article/20130301/MODERNPHYSICIAN/303019975?AllowView=VW8xUmo5Q21TcWJOb1gzb0tNN3RLZ0h0MWg5SVgra3NZRzROR3l0WWRMWGJWLzBBRWxYek9UYktwUGZUamg5b1g4WFFERmhzbHhCSnN6Yk9XNmM9&utm_source=link-20130301-MODERNPHYSICIAN-303019975&utm_medium=email&utm_campaign=mpdaily) to the providers could be much worse.
The one thing that seems to be clear is that the current administration, while willing to entertain reductions in the reimbursement to the providers, is not willing to alter the benefits, raise the cost to the beneficiaries or change the Medicare entitlement age.
February 19, 2013 Regulatory Developments
February 28, 2013
Posted by Beth Christian
Here are the most recent health care related regulatory developments as published in the New Jersey Register on February 19, 2013:
- On February 19, 2013 at 45 N.J.R. 243, the Department of Human Services published notice of its proposal of amendments to its rules which will implement a new payment methodology for out-of-state acute care hospitals for inpatient and outpatient services for New Jersey Medicaid and NJ FamilyCare recipients.
- On February 19, 2013 at 45 N.J.R. 248, the Audiology and Speech-Language-Pathology Advisory Committee published notice of its proposal of amendments to its rules governing licensure. The proposed rule will require applicants for licensure to complete jurisprudence on-line orientation in order to familiarize themselves with New Jersey statutes and rules applicable to the practice of licensed audiologists and speech-language pathologists.
- On February 19, 2013 at 45 N.J.R. 249, the Audiology and Speech-Language-Pathology Advisory Committee published notice of its proposal of amendments to its rules and proposed new rules governing continuing education requirements for licensed audiologists and speech-language pathologists.
- On February 19, 2013 at 45 N.J.R. 332, the Department of Banking and Insurance published notice of its adoption of amendments to its rules governing the Small Employer Health Benefits Program in order to comply with federal law.
- On February 19, 2013 at 45 N.J.R. 332, the Department of Banking and Insurance published notice of its adoption of amendments to its rules governing licensure of third party billing services.
- On February 19, 2013 at 45 N.J.R. 334, the State Board of Medical Examiners published notice of its repeal of an existing rule and the adoption of a new rule governing the prescribing, administering and dispensing of anabolic steroids and human growth hormone.
- On February 19, 2013 at 45 N.J.R. 386, the State Board of Medical Examiners published notice that it would be extending the period for Board deliberation on a petition for rulemaking filed on behalf of the New Jersey Hospital Association which seeks to permit licensed physicians to be employees of a corporation which is a wholly controlled subsidiary of a licensed hospital under certain circumstances.
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