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Health reform will bring more risks and compliance concerns
Act includes new provisions aimed at fraud and abuse
The Patient Protection and Affordable Care Act (PPAC), recently signed into law by President Obama, will affect many areas of concern for risk managers. Sorting through the lengthy and complex law will take some time, but it already is apparent that there are provisions that received little or no attention during the health care reform debate but which could create new compliance obligations and exposures for health care providers.
PPAC will have a big impact on providers separate and apart from expanding access to health insurance, says Gina Kastel, JD, a partner with the law firm of Faegre & Benson in Minneapolis. She is analyzing the provisions buried in PPAC and finding that there are many important changes that were not publicized.
"Enhancing laws designed to prevent waste, fraud, and abuse was a top priority as a means to cut federal health care program costs and find new revenue to pay for the legislation," Kastel says. "Risk managers can expect the trend toward increased enforcement will continue to grow."
She suggests risk managers pay attention to the following issues, which are not hitting the general news headlines:
The act includes significant new fraud and abuse prevention provisions. The White House summary of the legislation and president's proposal stated: "The House and Senate health reform bills contain an unprecedented array of aggressive new authorities to fight waste, fraud, and abuse. The President's proposal builds on those provisions by incorporating a number of additional proposals that are either part of the administration's FY 2011 Budget Proposal or were included in Republican plans."
Congress put its money where its mouth was on fraud prevention. The act increases funding for the Health Care Fraud and Abuse Fund by $250 million over 10 years.
Compliance is becoming compulsory. All Medicare providers and suppliers will be required to implement compliance programs as a condition of enrollment. The U.S. Department of Health and Human Services (HHS) will be required to establish the elements of a compliance program for the various types of providers. "This provision should help level the playing field among health care providers, who have taken the time and trouble to make compliance a priority, and their competitors, who may not have done so," Kastel says.
New providers and suppliers face new barriers when enrolling in federal health programs. For example, HHS will have to screen new providers and suppliers who wish to bill Medicare. Depending on the perceived risk of waste, fraud, and abuse for the category of provider, the screening may include criminal background checks, fingerprinting, unannounced site visits, database checks, or other measures the secretary deems appropriate. Also, the secretary is instructed to establish procedures to provide a provisional period of 30 days to one year in which new providers of medical or other items or services would be subject to enhanced oversight, such as prepayment review and payment caps.
The act enhances the amount of civil monetary penalties that can be imposed for various legal violations. Some of the circumstances in which those penalties can be imposed also have been changed.
The legislation continues the recent trend of frequent changes in the federal physician self-referral (Stark) law. One potentially helpful change requires the Secretary of Health and Human Services to develop, in consultation with the Office of Inspector General (OIG), a self-disclosure protocol for providers who violate the Stark law. In 2009, OIG announced it would no longer permit providers to self-disclose Stark violations that did not also involve a genuine federal anti-kickback violation. That left providers with technical violations of the Stark law in a quandary, as there was no clear mechanism to disclose violations of the statute. The act also permits the secretary to compromise fines and penalties related to Stark violations.
"These changes should help providers address Stark violations more efficiently and avoid disproportionate penalties for minor Stark infractions," Kastel explains.
Another change to the Stark law impacts physicians who provide certain imaging services, relying on the Stark exception for in-office ancillary services to offer them without violating the prohibition on self-referrals.When those physicians make referrals for the services, they will have to inform their patients in writing that the patients could obtain the services from another provider and give the patient a list of other providers offering the service in the area where the patient resides, Kastel says.
The act also will severely limit the ability of physicians to own specialty hospitals by restricting the whole hospital exception under the Stark law. There are grandfather provisions for existing physician-owned hospitals, but their ability to expand or add new investors will be curtailed, she says.
There are a number of new transparency provisions. These include provisions that require reporting concerning prescription drug samples and financial relationships between physicians and medical device and drug manufacturers.
The legislation expands the Medicaid program the Recovery Audit Contractor (RAC) program. Under this program, federal contractors currently have the power to audit Medicare providers and recover a portion of any overpayments they discover in the process.
Some effects not yet clear
Risk managers should start now with efforts to fully understand PPAC and its implications, advises Christine G. Leyden, RN, MSN, vice president and general manager for client services, and chief accreditation officer with URAC, an independent, nonprofit organization in Washington, DC, that promotes health care quality through its accreditation and certification programs.
"Hospitals and health care providers need to be aware of the resources available to them, such as the [U.S. Department of] Health and Human Services (HHS) web site, and their state department of insurance, which should be closely monitored by risk managers as various elements of the health care reform legislation roll out over the next several years," Leyden says. "Risk managers will need to identify changes with the time frames of the associated regulations from the new laws governing commercial insurance and the establishment of state qualified health plans. Otherwise, they will severely limit benefits of increased access to preventative health services and coverage to patients and consumers in the commercial sector."
Leyden says internal communication and collaboration will be a key component to achieving successful reform implementation. Risk managers need to talk to their corporate counsels about when certain changes go into effect, and they should evaluate existing contracts and the organization's market share analyses, she says. This will ensure that the organization is well positioned for compensated care arrangements with respect to the numerous phase-ins in health care reform.
Many of the other effects from PPAC may not be known for some time, suggests J.R. Thomas, president and CEO of MedSynergies, a company based in Irving, TX, that provides business services to health care providers. The law will bring many changes to the health care system in terms of access, payment system, and cost, he says.
"I don't believe we will know the impact of these actions for 12 to 18 months because of the jurisdictional fights between state and the federal governments and agencies or who will do what," he says. "I expect companies will take strict approaches to their health care insurance by reducing the benefit and increasing the price in anticipation. The mandated health insurance requirement will pose an adverse financial impact on the core, working middle class of this country, against the illegal immigrant who does not have to buy insurance, and it will act as a stimulus to employers to move jobs offshore, so they won't be subject to such mandates."
From the perspective of the health care business, there are a lot of absolutes, Thomas says.
"The fragmentation between hospitals and physicians cannot exist under this environment. There is margin pressure and technology pressure. There is no national technological infrastructure to achieve a measurement of quality health care in this country today," he says. "With the margin pressure that is coming, without fixing the sustainable growth rate or paying doctors, there won't be any money generated, and funding will have to come from outside. If banks aren't making loans to health care providers for these long-term assets, from where will it be funded?"
Thomas makes these additional observations about PPAC:
Taxes will increase to cover health care, because Medicare and Medicaid are underfunded.
Patients will pay more of their health care expenses out-of-pocket in terms of premiums and cost.
Margins from hospitals and physicians' practices are going to decline.
Capital expenditures for new technology will be required, but, without a viable bank marketplace, the source of those funds will be very difficult to find.
There is a major difference in regard to quality and access to health care between a patient, medical provider, payer, and employer. Until these four groups have established a commonality in the view of quality of health care, nothing substantial will be achieved in terms of quality health care.
The cost of collections is too high today at 15% of the benefit. This bill doesn't address any of those concerns and issues.
It is not clear today who will administer, execute, and make this bill and the provisions within it operational, because it crosses CMS, IRS, and Health and Human Services, both at the federal level and the state government level. The jurisdiction over these functions is unknown.
It does not appear that we will see significant reduction in medical malpractice, liability, or compliance liability.
"In fact, due to regulation and the oversight from multiple agencies at this point, you can assume the risk management for these functions will be more expensive, more time-consuming, and will not add to the quality or reduce the cost of health care delivery in this country," Thomas says.
Corporate-funded and commercial insurance are at risk in this arena, he says. There is a high probability current health insurance plans, such as PPO plans, will be extinct in 24 to 36 months, he believes. There will be opportunities for new insurance programs, however, as the majority of people will move to the federal plan and high-income individuals will buy additional plans above the federal coverage.
"It is extremely unclear whether having more insured people translates into more net revenue for under-funded hospitals in certain marketplaces, because of the indexing of the downward pressure of Medicare funding, which may have to be cut, and the indexing of commercial plans to Medicare," Thomas says. "While you picked up 20% on uninsured, the money may not offset the reduction on Medicare rates and the reduction in corresponding indexing due to commercial insurance. Where are you as a provider? The answer is: No one knows."
For more information on the effects of health care reform, contact:
Gina Kastel, JD, Partner, Faegre & Benson, Minneapolis, MN. Telephone: (612) 766-7923. E-mail: firstname.lastname@example.org.
Christine G. Leyden, RN, MSN, Vice President, General Manager for Client Services, Chief Accreditation Officer, URAC, Washington, DC. Telephone: (202) 216-9010.
J.R. Thomas, President and CEO, MedSynergies, Irving, TX. Telephone: ( 972) 791-1224.