Navigating Your Medical Group

Practice Through the Health Care

Reform Minefield June 18, 2010

R. Richard Cirilli, Jr.Jonathan R. Werne

Lane W. Staines

• On March 23, 2010, President Obama signed into law the Patient Protection and Affordable Care Act (“PPACA”).

• Seven days later on March 30, 2010, President Obama signed the Health Care and Education Reconciliation Act of 2010 (the “Reconciliation Act”), which amends certain provisions of PPACA

• PPACA, as amended, will have a major impact on all participants in the healthcare delivery system, including physicians and physician groups

Impact on Physician Practices

• Payment Changes & Emphasis on Primary Care/Preventative Services

• Changes in Imaging Payments• Increasing Practitioner Fees in Rural Areas• Misvalued Codes• Medicare Advantage• Independent Payment Advisory Board• Sustainable Growth Rate Methodology• Quality and Value Requirements

Impact on Physician Practices (cont.)

• Physician Feedback and Consumer Data Access• Value-Based Payment Modifier• Center for Medicare and Medicaid Innovation• Patient-Centered Outcomes Research Institute• Changes in Delivery Model of Care• Healthcare Workforce and Access to Care• Fraud and Abuse

Primary Care/Preventative Services

• Due to expansion of the Medicaid program and focus on primary care services, the health care reform will increase the current shortage of primary care physicians

• Medicaid payment rates to primary care physicians for providing primary care services will be no less than 100% of Medicare payments rates in 2013 and 2014.

• Federal government will provide 100% of the funding to States for the incremental costs.

Primary Care/Preventative Services (cont.)

• 10% incentive payment for select primary care services provided by a primary care physician

• 10% incentive payment amount for select major surgical procedures performed by a general surgeon in a HPSA

• Extend the current physician fee schedule mental health add-on payment provision through December 31, 2010

• Provides Medicare coverage of personalized prevention plan services (i.e., annual wellness visit), including a health risk assessment for individuals. Prohibits cost-sharing (i.e., no co-payments or deductibles) for such services.

Payment for Imaging Services• Sets the assumed utilization rate at 75% for the

practice expense portion of advanced, expensive diagnostic imaging services (CT and MRI).– MedPAC previously suggested actual use rate was 90%– Amends the Medicare Physician Fee Schedule

(“MPFS”) previously set utilization rate at 90%, phased in over 4 years

• Increases the technical component payment “discount” from 25% to 50% for additional imaging services on contiguous body parts during the same visit.

Independent Payment Advisory Board

• Establishes an Independent Medicare Advisory Board with the sole purpose to reduce the per capita rate of growth in Medicare spending

• Proposals cannot include:– any recommendation to ration health care, – raise revenues or Medicare beneficiary premiums, – increase Medicare beneficiary cost sharing

(including deductibles, coinsurance, and copayments), or

– otherwise restrict benefits or modify eligibility criteria

IPAB Cont.• If the projected growth rate exceeds the target

growth rate for that year, Secretary is required to implement proposals unless Congress enacts alternative legislation

• Fifteen member Board appointed by the President will include – Individuals with national recognition for their

expertise in health finance and economics, actuarial science, health facility management, health plans and integrated delivery systems, reimbursement of health facilities, allopathic and osteopathic physicians

– Individuals who are directly involved in the provision or management of the delivery of items and services covered shall not constitute a majority of the Board

Practitioner Fees in Rural Areas

• Extends through 2010 the floor on geographic indexing adjustments to the work portion of the physician fee schedule, which increases practitioner fess in rural areas

• Directs Secretary to analyze current methods of establishing practice expense geographic adjustments and make appropriate further adjustments for subsequent years to ensure accurate geographic adjustments across fee schedule areas.

• Requires MedPAC to conduct and submit a study by January 1, 2011 on the adequacy of payments for items and services furnished by rural area providers, including any adjustment in payments, access by Medicare beneficiaries, and the qualify of care provided

Misvalued Codes• Directs the Secretary periodically to identify

physician services as being potentially misvalued and make appropriate adjustments to the relative values of such services under the Medicare physician fee schedule.

• The Secretary examine the following:– codes for which there has been the fastest growth;– codes that have experienced substantial changes in practice

expenses;– codes for new technologies or services; – multiple codes frequently billed in conjunction with a single

service; – codes with low relative values– codes not reviewed since the implementation of the RBRVS

Misvalued Codes Cont.

• The Secretary may make appropriate coding revisions (including using existing processes for consideration of coding changes) which may include consolidation of individual services into bundled codes for payment under the fee schedule

• The Secretary shall establish a process to validate relative value units under the fee schedule

Medicare Advantage• CBO estimated MA payments will be reduced

by $131.9 billion from 2010 to 2019• MA payments will now be set to different

percentages of Medicare fee-for-service (“FFS”) rates– 115% of FFS for areas with low FFS rates– 95% of FFS for areas with high FFS rates

• Bonuses will be provided to plans that receive 4 or more stars, based on the current 5-star quality rating system, beginning in 2010

• MA totals payments, including bonuses, are capped at current payment levels

SGR Methodology• Sustainable Growth Rate (“SGR”) is used by

CMS to control spending by Medicare on physician services.

• SGR ensures that the yearly increase in the expense per Medicare beneficiary does not exceed the growth in GDP.

• Each year, MedPAC reports to Congress on the previous year’s total expenditures and the target expenditures for Medicare.

• The report includes a conversion factor that will change the payments for physician services for the next year in order to match the target SGR.

SGR Methodology (cont.)• PPACA and the Reconciliation Act does not alter

SGR methodology• On multiple times, Congress delayed enforcement

of 21.3% reduction in Medicare physician reimbursement

• House approved a plan to stall the 21% reduction until December 31st and change conversion factor for 2010, but the Senate has yet to act

• CMS requested contractors not to process any claims for medical services delivered on the first 10 business days of the month (until June 15th)

Quality and Value Requirements

• PPACA contains elements designed to achieve a value-based purchasing program-Transforming Medicare into an “active purchaser of care”

• PPACA extends the Physician Quality Reporting Initiative (“PQRI”) bonus payment through 2014

-Incentives• Beginning in 2014, eligible professionals who do not

satisfactorily submit quality information will face a penalty, resulting in reduced reimbursement rates in 2015-98.5% for 2015; 98% for 2016 forward

Physician Feedback and Consumer Data Access

• HHS Secretary to provide feedback to physicians on their performance in submitting data on quality measures

• Physicians can seek a review of decision that they failed to satisfactorily submit PQRI data (January 1, 2011)

• Secretary must develop a “physician compare” web site by January 1, 2011 and implement a plan for making publicly available information on physician performance with comparable information on quality and patient experience measures by January 1, 2013

• By January 1, 2012, Secretary must integrate the PQRI program with the standards of meaningful use of certified health records under the American Recovery and Reinvestment Act of 2009

• HIPDB will cease operating and transition data to NPDB

Value-Based Payment Modifier

• Secretary required to implement a budget-neutral payment adjustment (a “payment modifier”) that will provide for differential payments to a physician or a physician group based on the quality and cost of care that they deliver

• Quality and cost measures must be published by January 1, 2012 and implemented through the 2013 physician fee schedule rule-making process

• Secretary must also develop and update provider level outcome measures for hospitals and physicians

Center for Medicare and Medicaid Innovation

• PPACA expands authority of Secretary to resolve healthcare financing issues and use experiments and demonstration projects to develop innovative modes for the administration of Medicare and Medicaid

• CMI designed to improve and enhance quality of care and reduce program expenditures (cost of care provided to Medicare, Medicaid and CHIP beneficiaries), with no requirement of budget neutrality and approval by OMB

• Secretary must select models that address a defined population with poor outcomes or avoidable expenditures.– Preference is given to models that will improve

coordination, quality and efficiency of health care services available to applicable individuals.

• CMI must begin operations by January 1, 2011.

Patient-Centered Outcomes Research Institute

• PCORI is authorized to be established and will operate as a nonprofit corporation to undertake comparative clinical effectiveness research

• Will assist patients, clinicians, purchasers and policy-makers in making informed decisions by advancing the quality and relevance of evidence concerning the manner in which diseases, disorders, and other health conditions can be prevented, diagnosed, treated, monitored and managed.

• Duties will include identifying research priorities and carrying out a research project agenda

Changes in Delivery Model of Care

• One underlying theme of PPACA is a shift from traditional fee-for-service model of payment by the government and an increased focus on rewarding quality/savings in the Medicare program.

• Proposed payment models will push providers toward clinical integration

• Different payment models include bundled payments, accountable care organizations, health homes or medical homes

Changes in Delivery Model of Care – Bundled Payments

• HHS to implement 5-year “National Pilot Program on Payment Bundling” by January 2013

• Hospitals, physicians, and post-acute care providers will integrate care during an “episode of care”

• The “episode of care” will involve a hospitalization, and a bundled payment would be paid reflecting the savings realized as a result of integrated care

• “Episode of care” includes 3 days prior to an admission, length of hospital stay (including ED services), 30 days post-discharge

• “Bundled payment” models – establish a single DRG that includes post-acute care; bundling of physician and hospital payment

• A Medicaid bundling demonstration project was approved under PPACA to include up to 8 states

• Stark, Anti-kickback, and Antitrust issues?

Changes in Delivery Model of Care – Accountable Care

Organizations• PPACA establishes a “shared savings program” and directs HHS to establish this program by January 1, 2012

• Shared savings programs only apply to Medicare beneficiaries in traditional fee-for-service programs

• A Medicaid pediatric ACO demonstration project will begin January 1, 2012 and run through January 2016

• Eligible ACOs are rewarded based on costs (i.e., savings to the Medicare program) and quality of the care received over time by their patient panel

• Stark, Anti-kickback, and Antitrust issues?

Accountable Care Organizations (cont.)

• Eligible ACOs include:– Physicians and practitioners in group

practices– Networks of group practices – Partnerships or joint ventures between

hospitals and physicians or practitioners

– Other groups of providers or suppliers as Secretary deems appropriate

Accountable Care Organizations (cont.)

• To participate in the program, ACOs must meet the following requirements:– Have a mechanism for shared governance– Be willing to be accountable for quality, cost, overall care– Enter into a 3-year agreement– Have a formal legal structure so they can distribute payments to

participating providers– Have a sufficient number of primary care physicians and other

practitioners– At least 5,000 beneficiaries must be assigned to the ACO– Provide information/disclosure to HHS regarding participating

providers– Have a leadership/management structure that includes

clinical/administrative systems– Have processes to promote evidence-based medicine, report on

quality/cost measures, coordinate care (note: opportunities for telehealth and remote patient monitoring activities)

– Meet patient-centeredness criteria – patient/caregiver assessments; individualized care plans

Changes in Delivery Model of Care – Health Homes

• PPACA provides States with option of enrolling Medicaid recipients with chronic conditions into a health home – begins January 1, 2011-What is a chronic condition? What is a health home?

• Planning grants for states to develop a state plan amendment to implement health homes will be awarded starting January 1, 2011

• Health homes: teams of health professionals that provide a comprehensive set of medical services, including care coordination

Changes in Delivery Model of Care – Medical Homes

• PPACA creates a program to establish and fund community “health teams” to support the development of patient- centered medical homes

• Secretary will enter into contracts with states to create health teams, and these teams will contract with primary care physicians to provide primary care support services

• “Patient-centered medical homes”: coordinated and integrated care to support primary care practices

• Must have plan for achieving long-term financial sustainability within 3 years; also must report health team activities to Secretary

Healthcare Workforce and Access to Care

• New National Health Care Workforce Commission will make recommendations to develop sustainable integrated workforce that supports a readily accessible health delivery system that meets patient/population needs – high priority area is to examine barriers to primary care careers

• PPACA provides grants, scholarships and repayment programs – primary care, dentistry, pediatrics, nursing, mental health

• Easing of residency position requirements – hospitals may apply to increase residency limits for primary care and general surgery

Fraud and Abuse

• Areas of focus:– More rigorous monitoring of providers and

suppliers– Stricter statutes and regulations; more

severe penalties– Enhanced investigative tools for the Gov’t– Increased transparency and accountability– New fraud and abuse risks (quality,

public/private intersect, new payment models)

Fraud and Abuse –More Rigorous Monitoring

• Provider screening– Prior to PPACA, provider screening was not part of the

Medicare and Medicaid provider enrollment process– PPACA adds a new provider screening requirement to the

enrollment process– May include, for example, licensure checks, background

checks, and fingerprinting– Will apply to all new providers and revalidation of

existing providers• Enhanced oversight of new providers and

suppliers– For example, prepayment review and payment caps, for

an initial period of 30 days to one year• Providers in Govt’s cross-hairs – DME, home

health, SNFs

Fraud and Abuse –Stricter Statutes and

Regulations; More Severe Penalties (cont.)Anti-kickback statute amendments

– AKS makes it a felony to offer or pay remuneration to induce referrals of items or services paid for by Medicare, Medicaid, or other federal health care program

– Prior to PPACA, some courts had required that the Gov’t prove defendant had the specific intent to violate the AKS

– NOW, person need not have actual knowledge of AKS or specific intent to commit violation of AKS (i.e., cannot plead ignorance of the law as a defense)

– Another feature of PPACA: now claims resulting in violation of AKS also constitute false or fraudulent claims under the False Claims Act

– New exception to AKS that permits prescription drug discounts for certain beneficiaries in the coverage gap

Fraud and Abuse –Stricter Statutes and

Regulations; More Severe Penalties (cont.)• Stark Law amendments and self-disclosure

– Stark prohibits physician or family member from referring patients to entity for certain DHS if physician has financial relationship with entity; unless meets one of the exceptions

– In-office ancillary disclosure requirement for patients referred for advanced imaging or certain other radiology or imaging services

– Restrictions on ability of physicians to own interests in hospitals to which they refer

Fraud and Abuse –Stricter Statutes and

Regulations; More Severe Penalties• False Claim Act amendments

– Amendments to the “public disclosure” bar– Amendment to the “original source” definition

• New administrative penalties (CMPs/exclusions)– Allows Gov’t to impose civil monetary penalties on

new grounds such as the knowing retention of an overpayment (i.e. provider may be liable for amt of overpayment PLUS CMP)

• New money for enforcement and prevention

Fraud and Abuse – Enhanced Investigative Tools for the

Gov’t• New access to information from providers

– Gov’t now has broad authority to obtain information, including medical records from any individual or entity in order to validate Medicare and Medicaid claims or to protect the integrity of the programs

– Supporting documentation, as well as claims data itself, may be requested

• New subpoena authorities• Suspension of payments during

investigation

Fraud and Abuse – Increased Transparency/Accountability

• Increased transparency and new requirements for the following:– Physician-owned hospitals– Disclosure requirements for imaging

services– DME and home health services– Physician Payment Sunshine Act

provisions

Increased Transparency/AccountabilityPhysician-Owned Hospitals• PPACA significantly impacts physician ownership

or investment in hospitals by restricting application of the “whole-hospital” and “rural area” exceptions under Stark

• Grandfathers licensed POHs with Medicare agreements in place as of 12/31/2010 – may continue to rely on “whole-hospital” exception

• Permanent moratorium on creation/expansion of new PHOs after 12/31/2010

• Prohibits aggregate increase of physicians’ equity in existing POHs after March 23, 2010

• BUT, POHs that treat significant numbers of Medicaid patients may expand

Physician-Owned Hospitals (cont.)

• Existing POHs face a number of restrictions:– No expansion of number of beds, ORs or procedure

rooms (except in very limited circumstances)– Submission of annual reports to HHS identifying

owners and nature/extent of ownership interests– Disclosure of ownership information on POHs

website and in advertising materials– Disclosure by physician owner to his/her patient

prior to admission to POH– Terms upon which physician obtains ownership

interest must be same for physicians/non-physicians; no loans or guarantees; proportional distributions; not related to volume/value of referrals

Increased Transparency and Accountability – Imaging

• New disclosure requirements for physicians referring patients under the Stark IOAS exception

• Written notice to patient at time of referral; patient may obtain services from others; provide a written list of other providers/suppliers

• Notice requirements became effective upon enactment (BUT, language states that it was effective for services provided after 1/1/2010)

Increased Transparency and Accountability - DME

• DME and home health services must be ordered by a Medicare eligible professional or physician enrolled in the Medicare program

• Eligibility certifications for DME and home health require face-to-face encounters by certifying physician

• Physicians must maintain and provide access to written orders or requests for payment for DME, certification for home health services, or other referrals – disenrollment or permissive exclusion for failure to maintain/provide adequate documentation to verify payment

Increased Transparency and Accountability – Physician

Payments• New disclosure requirements for payments to physicians and teaching hospitals by any drug, device, biological or medical supply manufacturer that sells a product covered under a federal health care program; also applies to GPOs

• Disclosure requirements begin on March 31, 2013 and continue annually thereafter

• Any payment or anything of value in excess of $10 requires manufacturer to submit a report to HHS in electronic form that includes: name and business address of recipient, the specialty and NPI of the recipient, the value/form of payment, description of transfer and its purpose, if the payment relates to marketing of a specific item or drug then the name of the item or drug must be included

Increased Transparency/Accountability –

Physician Payments (cont.)• Secretary of HHS will make disclosures

publicly available on the Internet, in a searchable form, beginning September 2013

• Delayed publication date if payments relate to product research or development agreements or clinical investigations – earlier of FDA approval/clearance or 4 years from payment date

New Fraud and Abuse Risks

• Quality as a risk area (i.e., increased linkage of quality to payment)

• New Federally-funded programs/private sector intersections with Federal dollars

• Implications for new payment and delivery models (ACOs, health and medical homes, bundled payments)