2014 Health Care Year in Review

Dec 09, 2014 at 10:00 am by steve

What can you say about a year that brought Ebola to the United States, record fraud and abuse recoveries, increased HIPAA investigations, Affordable Care Act changes, and a release of $77 billion in Medicare payment data. It's no wonder that many physicians are exploring the "safety" of hospital employment, or considering growth strategies to weather the storm of regulations, government oversight and constant change. It has been said, however, that with change there is opportunity. Perhaps one does not need to look any further than the shift in the Medicaid program to a managed care system to see a prime example of opportunity in the health care industry. So, with a look to the past year, following are my top ten 2014 health care events for Alabama providers.

10. New OIG Rules and Guidance. On May 9, the Office of Inspector General ("OIG") issued a proposed rule pursuant to the Affordable Care Act ("ACA") that significantly expands the OIG's exclusion authority. The proposed rule would allow the OIG to increase the time of exclusions and impose exclusions for audit related offenses and for making a false statement, omission or misrepresentation of a material fact in a federal health care program credentialing application. On September 19, the OIG issued a Special Advisory Bulletin, entitled Report on Manufacturer Copayment Coupons. Under the Bulletin, the OIG states that pharmaceutical manufacturers could be at risk of sanctions under the federal Anti-Kickback Statute by using coupons to fund copayments for drugs paid for by Medicare Part D. Finally, on October 2, the OIG proposed new safe harbor provisions to the federal Anti-Kickback Statute and expanded exceptions to the federal Beneficiary Inducement Civil Monetary Penalty Statute. The proposed rule addresses pharmacy rewards programs, Part D cost-sharing waivers by pharmacies, Medicare coverage gap discount programs, patient access to care with a low risk of harm, financial need-based exceptions, and cost-sharing for the first fill of a generic drug.

9. HIPAA Enforcement on the Rise. The number of HIPAA investigations by the Office of Civil Rights ("OCR") increased significantly in 2014, along with the number of HIPAA settlements. Of note, Parkview Health System in northwest Ohio agreed to pay $800,000 because of a Parkview employee who left 71 cardboard boxes containing medical records on the driveway of a retired physician's home. New York-Presbyterian Hospital and Columbia University Medical Center agreed to a $4.8 million settlement regarding a breach of unsecured electronic protected health information. In another matter, Concentra Health Services agreed to pay $1.7 million to settle HIPAA violations associated with the theft of an unencrypted laptop which contained patient data. Most recently, Community Health Systems reported that it was the victim of a criminal cyber-attack originating from China affecting approximately 4.5 million individuals.

8. CMS Posts Physician Data. In April of this year, CMS posted 2012 Medicare payment data on close to 900,000 health care providers reflecting $77 billion in physician fee-schedule payments. According to a CMS press release, "[w]ith this data, it will be possible to conduct a wide range of analyses that compare 6,000 different types of services and procedures provided, as well as payments received by individual health care providers." The American Medical Association, however, was critical of the "broad data dump," stating "releasing the data without context will likely lead to inaccuracies, misinterpretations, false conclusions and other unintended consequences." As a result of the data release, several Alabama health care providers were identified in the press as one of the "highest paid" physicians in their specialty, even though in many cases the reimbursement was attributed to the cost of medications administered through the physician's office. Since the data does not include any quality metrics (only payment information), it remains questionable whether the data provides any meaningful information to patients.

7. ACA Marketplace Enrollment. The first enrollment period for the ACA's insurance exchange resulted in roughly 7.1 million people purchasing coverage. The second open enrollment period begins on November 15, 2014 and ends on February 15, 2015. Despite the Congressional Budget Office's projection of about 13 million enrollees, HHS recently announced that between 9 million and 9.9 million individuals would enroll, which includes individuals who are expected to re-enroll. According to the Kaiser Family Foundation, just shy of 100,000 Alabamians have enrolled in an exchange plan.

6. Medicaid Regional Care Organizations. This year a significant number of regulations were issued to move the Alabama Medicaid Program from a fee-for-service to a regional managed-care model. Under the regulations, the State is divided into five regions and in each region one or more regional care organizations ("RCOs") will be established. In exchange for a capitated payment, each RCO will be responsible for providing health benefits to assigned Medicaid beneficiaries. The RCOs will make money if they can provide care for less than the capitated payment. As of October of this year, there are twelve "probationary" RCOs, covering all five of the RCO regions. The RCOs will begin operation by October 2016.

5. Fraud and Abuse Recoveries and Enforcement Continue. According to a May 27 Semiannual Report to Congress, the OIG expects more than $3.1 billion in fraud and abuse recoveries for the first half of fiscal year 2014. Part of that amount includes a $350 million settlement by DaVita Healthcare Partners to resolve a False Claims Act ("FCA") whistleblower action alleging improper arrangements with physicians designed to induce patient referrals to the company's dialysis clinics. In addition, Community Health Systems agreed to pay $98.15 million to resolve multiple lawsuits alleging that the company knowingly billed government health care programs for inpatient services that should have been billed as outpatient or observation services. Closer to home, Infirmary Health System in Mobile, Alabama, two of its affiliated clinics, and Diagnostic Physicians Group agreed to pay $24.5 million to settle a FCA lawsuit alleging an improper referral arrangement for Medicare tests and procedures. Fueling increased enforcement is a May 29 OIG report that found that Medicare inappropriately paid $6.7 billion for evaluation and management ("E/M") services claims in 2010. According to the report, a shocking 55% of all claims for E/M services in 2010 were incorrectly coded and/or lacked documentation.

4. October 1, 2015 "New" Deadline for ICD-10. It's official, maybe. According to CMS, the "official" deadline for implementing ICD-10 is October 1, 2015. This new date comes after the most recent "official" deadline of October 2014, which followed the original October 2013 deadline. According to CMS,"…a delay beyond 1 year would be significantly more costly and have a damaging impact on the healthcare industry." According to Nachimson Advisors, the cost of ICD-10 implementation for a medical practice of three (3) physicians will cost at least $25,000, not including lost productivity.

3. Attack on the ACA. In a 5-4 decision issued June 30, the U.S. Supreme Court in the Hobby Lobby case held that a closely-held corporation was not required to comply with the ACA mandate for contraceptive coverage for employees if the owners of the corporation objected to such coverage on religious grounds. In another case with broader implications, the U.S. Supreme Court recently decided to review the validity of subsidies made available to individuals who purchase health insurance through a federally-run (rather than a state-run) insurance exchange. Plaintiffs have asserted that the ACA only allows subsidies for state-run exchanges. If subsidies for the 36 federally-run or federally supported exchanges are invalidated, it would be a significant blow to the entire concept of the exchanges and the ACA as a whole.

2. Still No Expansion to Alabama Medicaid. As I am writing this article, 27 States and the District of Columbia have elected to expand Medicaid, but not Alabama. It has been reported that this decision by Governor Bentley will leave close to 200,000 Alabama citizens without health insurance coverage. According to the Kaiser Commission on Medicaid and the Uninsured, if Alabama Medicaid was expanded the State would spend about $1 billion for additional services over the next 10 years while receiving about $14 billion in additional federal support.

1. The Ebola Crisis. One of the biggest health care stories this year was the migration of the Ebola virus to the United States. According to the World Health Organization, more than 13,000 people in West Africa have contracted Ebola and 4,500 have died. The Centers for Disease Control and Prevention published a report in September that outlined a worst-case scenario of 1.4 million cases. Fortunately, it appears that the number of Ebola cases, while remaining significant, is slowly declining. As of November 4, nine Ebola patients have been treated in the United States and ten in Europe. While no Ebola cases have been reported in this State, Alabama hospitals have scrambled to make sure that new policies, protocols and training are in place to address this crisis. In the modern age of travel, it is clear that an epidemic half way around the world can easily wind up very close to home.

May all of you have a happy, healthy and successful 2015!


Howard E. Bogard is Chair of the Health Care Practice Group at Burr & Forman LLP and exclusively represents health care providers in regulatory and corporate matters.

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