Welcome to Health Reform Connect. My name is Brian Heaton and I am a member of Krieg DeVault's health care, business, and nonprofit practice groups. My practice is primarily focused on providing general corporate and business law advice and assisting various forms of health care provider organizations with health law changes, everyday operations and extraordinary transactions. You may contact me directly at bheaton@kdlegal.com or at (317) 238-6354.Welcome to Health Reform Connect. My name is Brian Heaton and I am a member of Krieg DeVault's health care, business, and nonprofit practice groups. My practice is primarily focused on providing general corporate and business law advice and assisting various forms of health care provider organizations with health law changes, everyday operations and extraordinary transactions. You may contact me directly at bheaton@kdlegal.com or at (317) 238-6354.
On December 17, 2010, the OIG released a report summarizing its review of payments for ambulatory surgery center (ASC) services provided to beneficiaries in skilled nursing facility (SNF) stays under Medicare Part A in calendar years 2006 to 2008. The report may be found here:
http://oig.hhs.gov/oas/reports/region1/10900521.pdf.
SNFs are responsible for billing Medicare for virtually all services furnished to residents of the SNF during a Part A covered stay regardless of whether services are provided by the SNF or an outside supplier, including an ASC. Under this concept, known as consolidated billing, the outside supplier will bill the SNF, and not Medicare Part B, for services performed for SNF residents. Physician professional services are not subject to this consolidated billing.
The report, which was based on a sample of 100 services provided by 88 ASCs, concluded that at least $6.6 million in overpayments were made from 2006 to 2008 when ASCs billed Medicare Part B for services provided to SNF residents at the same time that the SNF received Part A payments for such resident.
This report will likely lead to greater enforcement against both SNFs and ASCs and will make it more critical for these facilities to address and finalize payment arrangements between the parties before services are performed for SNF residents.
If you would like additional information, please contact Brian M. Heaton at bheaton@kdlegal.com or (317) 238-6354.
On November 1st, The Centers for Medicare & Medicaid Services (CMS) issued a final rule to update payment policies and rates for services provided at ambulatory surgery centers (ASCs) and hospital outpatient departments (HOPDs) starting in 2012.
This final rule will increase payment rates in calendar year 2012 by 1.6% for ASCs and by 1.9% under the Outpatient Prospective Payment System. Designated cancer hospitals received a much larger payment adjustment, as required by the Affordable Care Act, with an increase of 11.3%.
The final rule finally creases a new quality reporting program for ASCs, establishes an electronic reporting pilot to report clinical quality measures, and strengthens the hospital value-based purchasing program for inpatient stays beginning October 1, 2012.
The final rule will appear in the November 30th Federal Register, and comments to the final rule are due by January 3, 2012. A copy of the full final rule is available here:
If you have any questions regarding the impact of these developments on your organization, please contact Brian Heaton at bheaton@kdlegal.com or (317) 238-6354.
On October 31, 2011, The United States Department of Health & Human Services (HHS) released revised and final survey standards to be used to consistently measure race, ethnicity, sex, primary language, and disability status in an effort to highlight and target disparities in health status.
These new standards for data collection and reporting were mandated under the Affordable Care Act. Proposed standards were published in June of this year and comments were accepted until August 1st.
The new standards became immediately effective and will be used in all new surveys sponsored by HHS. A copy of the final standards and an accompanied explanation can be found here.
Please contact Brian Heaton at bheaton@kdlegal.com or (317) 238-6354 with any questions regarding these new standards.
On November 1st, The Centers for Medicare & Medicaid Services (CMS) issued a final rule to update payment policies and rates for services provided at ambulatory surgery centers (ASCs) and hospital outpatient departments (HOPDs) starting in 2012.
This final rule will increase payment rates in calendar year 2012 by 1.6% for ASCs and by 1.9% under the Outpatient Prospective Payment System. Designated cancer hospitals received a much larger payment adjustment, as required by the Affordable Care Act, with an increase of 11.3%.
The final rule also creates a new quality reporting program for ASCs, establishes an electronic reporting pilot to report clinical quality measures, and strengthens the hospital value-based purchasing program for inpatient stays beginning October 1, 2012.
The final rule will appear in the November 30th Federal Register, and comments to the final rule are due by January 3, 2012. A copy of the full final rule is available here. http://www.ofr.gov/(X(1)S(h2non102de2t5dfsoq3k2uxk))/inspection.aspx?AspxAutoDetectCookieSupport=1
If you have any questions regarding the impact of these developments on your organization, please contact Brian Heaton at bheaton@kdlegal.com or (317) 238-6354.
This final rule will increase payment rates in calendar year 2012 by 1.6% for ASCs and by 1.9% under the Outpatient Prospective Payment System. Designated cancer hospitals received a much larger payment adjustment, as required by the Affordable Care Act, with an increase of 11.3%.
The final rule also creates a new quality reporting program for ASCs, establishes an electronic reporting pilot to report clinical quality measures, and strengthens the hospital value-based purchasing program for inpatient stays beginning October 1, 2012.
The final rule will appear in the November 30th Federal Register, and comments to the final rule are due by January 3, 2012. A copy of the full final rule is available here. http://www.ofr.gov/(X(1)S(h2non102de2t5dfsoq3k2uxk))/inspection.aspx?AspxAutoDetectCookieSupport=1
If you have any questions regarding the impact of these developments on your organization, please contact Brian Heaton at bheaton@kdlegal.com or (317) 238-6354.
Indiana health care providers and other entities who have been holding unclaimed funds of patients or other persons are required to submit their annual report to the Indiana Attorney General on or before November 1st. Generally, the property that will be subject to the 2011 report will be that property that has been abandoned between July 1, 2007 and June 30, 2008.
Penalties for non-compliance with Indiana's unclaimed property rules include (i) a late fee of $100 for each day the annual report is late (up to $5,000), (ii) payment of interest for the time of delinquency at a rate equal to the one-year T-Bill rate plus 1% (currently 1.19%), (iii) the cost of any audit performed and associated administrative expenses in investigating the failure to pay, and (iv) if found to have intentionally failed to pay or deliver property, an additional civil penalty of 10% of the value of the property.
The instructions for filing a Report with the Indiana Attorney General are available on its website at: http://ucp.indianaunclaimed.com/attorneygeneral/ucp/holder_reporting.html. For any other questions regarding Indiana's unclaimed property rules, please contact Brian Heaton at (317) 238-6354 or bheaton@kdlegal.com.
On September 28, 2011, the United States Department of Health and Human Services (HHS) announced a new initiative to provide bonuses to primary care physicians who are able to deliver higher quality, better coordinate care and use health care funds more wisely. The initiative, made possible by the Patient Protection and Affordable Care Act (PPACA), is voluntary and will initially begin as a demonstration project in 5 to 7 geographic markets.
Public and private health care payers must submit a Letter of Intent by November 15, 2011 to be eligible to be selected for the initiative. In selected markets, primary care providers will be enrolled and then provided a monthly fee by CMS.
Additional information about the initiative can be found at here. For any other questions regarding this initiative or other health care reform grants, please contact Brian Heaton at (317) 238-6354 or bheaton@kdlegal.com.
On July 1, 2011, the Centers for Medicare and Medicaid Services (CMS) released its proposed payment rule for 2012 for ambulatory surgery centers (ASCs), which is available here. Under the proposal, ASCs will receive a comprehensive 0.9% increase to their rates, which is the net of a 2.3% increase due to inflation and a 1.4% reduction mandated by the Affordable Care Act. In comparison, hospital outpatient departments will receive a comprehensive 1.5% increase in rates for 2012. Rates for individual procedures at individual ASCs will vary due to a number of factors.
As part of the proposed rule, CMS also proposed to implement an ASC quality reporting program with eight proposed quality measures to be reported starting January 1, 2012. These measures would affect the calendar year 2014 payment determination and include seven outcome and surgical infection control measures and one healthcare associated infection measure. More measures are likely to be added in calendar year 2013.
Comments to the proposed payment rule are due by August 30, 2011, with final rules to be released around November 1, 2011.
If you have any questions regarding this article, please contact Brian Heaton at (317) 238-6354 or bheaton@kdlegal.com.
According to a report recently released by the Centers for Medicare and Medicaid Services (CMS) to Congress, the U.S. Department of Health and Human Services (HHS) plans to implement a value-based purchasing program under Medicare for ambulatory surgery centers (ASCs). The Patient Protection and Affordable Care Act (PPACA) mandated that the Secretary of HHS develop such a plan and submit it by January 1, 2011. The full report may be found here.
The report discusses the principals that CMS considered in developing the report, revised ASC payment systems and quality control efforts that have been implemented in the last few years, feedback received from the ASC community regarding the plan, including at the CMS Special Open Door Forum held on October 14, 2010, and lessons that can be learned from the current hospital value-based purchasing program and the home health pay-for-performance demonstration.
According to the CMS roadmap, several steps will be required to design and implement a value-based purchasing program for ASCs, including (i) enactment of statutory authority by Congress, (ii) continuous development of a quality improvement framework, (iii) development of appropriate data abstraction and submission methods that allow for maximum, timely, and accurate participation without imposing unnecessary burdens on ASCs, (iv) creation of an enhanced data infrastructure and validation process, rather than relying solely on quality data provided to CMS, (v) development of a quality performance scoring and evaluation model, and (vi) efforts towards transparency and public reporting of quality information, including standardization of such information, to allow patients to make informed decisions regarding their consumption of health services.
While the report noted that the implementation of a value-based purchasing program and steps described above would be phased-in over time, the ASC community, including the Ambulatory Surgery Center Association, expressed some concern that the program would not be implemented in a timely fashion.
If you have any questions regarding this article, please contact Brian Heaton at (317) 238-6354 or bheaton@kdlegal.com.
A District Court in the Western District of Pennsylvania recently ruled in a False Claims Act qui tam action that a leasing arrangement between a nonprofit hospital and physician group in Bradford, Pennsylvania violated the Stark Law and likely violated the Anti-Kickback Statute and False Claims Act. The case, United States ex rel Singh, et al. v. Bradford Regional Medical Center, et al., showcases a number of issues that will have implications for structuring and documenting leasing and other joint venture arrangements and for obtaining and reviewing fair market value analysis.
The arrangement at issue involved the sublease of a nuclear camera by the hospital from the physician group for a fixed, monthly amount. Although the compensation was fixed and a fair market value report was obtained, the court found that the report and arrangement took into account anticipated referrals from the physician group to the hospital, and was therefore improper. The finding of payment for anticipated referrals was also supported by testimony from the hospital’s CEO and the fact that the physician group was highly compensated for a non-compete restriction on the referral of imaging services to anyone other than the hospital.
Further, although the hospital and physician group did execute a formal sublease, the only provisions of that sublease that were followed involved the fixed payments described above. Other issues, such as the location of the nuclear camera and additional compensation for space rental and billing, were not properly memorialized according to the court. Based on this deficiency and the failure of the compensation to be fair market value, no exception to the Stark Law was available and the court found that a violation had occurred.
The court also found that a direct compensation relationship existed between the hospital and the physician group’s individual physicians based on the fact that the physicians had personally guaranteed certain payments to the equipment leasing company that were subsequently guaranteed and/or made by the hospital.
Other important issues addressed by the court include the burden of proof to establish Stark compliance (the court placed this burden on the defendants) and the use of economic credentialing.
The court set the issues of intent and damages for purposes of the Anti-Kickback Statute and False Claims Act for trial, so more information regarding this case will be forthcoming.
If you would like any additional information regarding this decision, or have any questions regarding the impact of this decision on your current leasing or other joint venture arrangements, please contact Brian Heaton at (317) 238-6354 or bheaton@kdlegal.com.
On April 14, 2011, President Obama signed into law a repeal to amended Form 1099 reporting requirements that were introduced as part of the Patient Protection and Affordable Care Act (PPACA) and scheduled to take effect in 2012. The repeal unwinds new requirements that would have mandated that businesses send a Form 1099 tax form to nearly all vendors from whom the business obtained goods or services in excess of $600 in a year. This requirement met strong opposition from a wide range of businesses and associations that viewed the change as imposing an excessive and costly compliance burden on businesses.
If you have any questions regarding this article, please contact Brian Heaton at (317) 238-6354 or bheaton@kdlegal.com.
On December 17, 2010, the OIG released a report summarizing its review of payments for ambulatory surgery center (ASC) services provided to beneficiaries in skilled nursing facility (SNF) stays under Medicare Part A in calendar years 2006 to 2008. The report may be found here:
http://oig.hhs.gov/oas/reports/region1/10900521.pdf.
SNFs are responsible for billing Medicare for virtually all services furnished to residents of the SNF during a Part A covered stay regardless of whether services are provided by the SNF or an outside supplier, including an ASC. Under this concept, known as consolidated billing, the outside supplier will bill the SNF, and not Medicare Part B, for services performed for SNF residents. Physician professional services are not subject to this consolidated billing.
The report, which was based on a sample of 100 services provided by 88 ASCs, concluded that at least $6.6 million in overpayments were made from 2006 to 2008 when ASCs billed Medicare Part B for services provided to SNF residents at the same time that the SNF received Part A payments for such resident.
This report will likely lead to greater enforcement against both SNFs and ASCs and will make it more critical for these facilities to address and finalize payment arrangements between the parties before services are performed for SNF residents.
If you would like additional information, please contact Brian M. Heaton at bheaton@kdlegal.com or (317) 238-6354.
On November 17, 2010, CMS will release a final rule to modify the rates for the Home Health Prospective Payment System ("HHPPS") starting January 1, 2011, as well as update the HHPPS outlier policy and make other revisions in accordance with the Patient Protection and Affordable Care Act of 2010 ("PPACA").The PPACA mandated that the standard payment amount for the HHPPS be reduced by 5%, that total outlier payments (adjustments due to unusual variations in the type or amount of medically necessary care) in a given fiscal year may not exceed 2.5% of total payments projected or estimated (this was previously 5%), and makes the 10% agency level outlier payment cap permanent.
In addition to revising the HHPPS directly, the PPACA also amended other provisions that indirectly affect home health services and payments. For example, the PPACA amended the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA) to require that payments for home health services in rural areas be increased by 3% for episodes and visits between April 1, 2010 and January 1, 2016.
The PPACA will continue to have an impact on home health services and payments, as it requires CMS to conduct a study on costs involved with providing home health services to patients with high severity of illness and to rebase home health payments beginning in 2014.
If you have any questions about the final rule or other Health Care Reform changes, please visit us at Health Reform Connect or contact one of our health care reform lawyers.
You may have noticed a reference on the top right of this blog to Health Reform Connect (SM), a new service made available by Krieg DeVault. Health Reform Connect (SM) is designed to offer a customizable way for health care providers to understand and keep updated on health care reform.More information regarding Health Reform Connect (SM) can be found by clicking the icon on the top right of this blog or visiting the blog of Leigh Ann Lauth O'Neill. Feel free to also contact me or any of our health care attorneys.
As pointed out by Tom Hutchinson in his blog "Physician Joint Ventures," it is important for physicians to consider the value of a buy-sell agreement when forming a new practice, starting an ambulatory surgery center, or investing in any other type of health care venture with other physicians and providers.
While it is always possible for investors to come to a mutual agreement in the future, a small amount of diligence upfront will reduce the time, effort, and expense needed once the priorities of the parties may start to differ or an unexpected event such as death, divorce, or disability occurs. Also, if parties have a difficult time negotiating the terms of the buy-sell agreement upfront, it may be a good opportunity for them to re-examine their business relationship.
On September 30, 2010, the Supreme Court of Arkansas held that a hospital located in Little Rock could not deny clinical staff privileges to a physician because he or she holds an ownership or investment interest in a competing hospital. The lawsuit commenced in 2004 when certain physicians who held an ownership interest in a nearby heart hospital lost their staff privileges at another hospital following its implementation of an economic conflict of interest policy.Both the American Medical Association (AMA) and Arkansas Medical Society supported the ousted physicians in successfully arguing that credentialing decisions should be made on competency and quality rather than economic factors.
If you have any questions regarding this ruling or the impact it may have on your physician relationships, please contact Brian M. Heaton at bheaton@kdlegal.com or (317) 238-6354.
According to an Internal Revenue Service (IRS) clarification on October 1, 2010, hospital systems that file consolidated returns will not have to file a separate audited financial statement for each hospital in its system. A new provision of the Patient Protection and Affordable Care Act (PPACA) required that organizations with audited financial statements attached such statements to the Form 990. Following concerns expressed by practitioners, the IRS explained that the necessary disclosure is not by facility, but rather by the corporate tax return employer identification number (EIN). Furthermore, if the individual hospital files its own Form 990 but is part of an affiliated group, the hospital will file the consolidated financial statement of the group rather than its own audited financial statements.
If you have any questions regarding this clarification or other related matters, please contact Brian M. Heaton at bheaton@kdlegal.com or (317) 238-6354.
In the days following the announcement by the Federal Trade Commission (FTC) of a joint workshop to discuss issues related to accountable care organizations (ACOs), officials of the Centers for Medicare and Medicaid Services (CMS) have continued to discuss the topic and raise additional issues that will be covered at the workshop and in months ahead. Jonathan Blum, a deputy administrator and director of the Center for Medicare at CMS, highlighted CMS' concerns regarding the impact that accountable care organizations could have on other health providers. Of particular interest to the FTC, there are ongoing concerns that the creation of accountable care organizations could result in further consolidation among hospitals, thereby leading to possible monopolistic practices. As agencies such as CMS, FTC, and the Office of Inspector General (OIG) develop guidance for the creation and operation of accountable care organizations, even providers not practicing as part of an ACO should keep updated on such guidance and regulations.
If you have any questions regarding these issues, please contact Brian M. Heaton at (317) 238-6354 or bheaton@kdlegal.com.
On Thursday, September 30, 2010, members of the health care practice group of Krieg DeVault LLP will host its third annual ambulatory surgery center (ASC) roundtable meeting at its offices in Carmel, Indiana. Advance reservations are required.The roundtable will give representatives from Indiana surgery centers the opportunity to discuss the issues and opportunities they currently face, including health care reform, changes to Medicare and Medicaid, physician ownership, investment, and compliance, co-management arrangements with local hospitals, and other business and legal matters.
If you have any questions regarding the issues facing ambulatory surgery centers and want to know how others in the industry have dealt with similar challenges, please contact Brian Heaton at (317) 238-6354 or bheaton@kdlegal.com.
On July 29, 2010, the IRS announced the creation of a one-time relief program for small tax-exempt organizations that failed to file a Form 990, Return of Organization Exempt from Income Tax ("Form 990") for the third straight year.
Under the 2006 Pension Protection Act (PPA), a non-church exempt organization’s failure to file a Form 990 for three consecutive years results in the automatic revocation of the organization’s exempt organization status. Form 990-series information returns are due on the 15th day of the fifth month after an organization’s fiscal year ends. Because the filing requirement had been in effect since the beginning of 2007 and 2009 was the third consecutive year under the new law, organizations using the calendar year as their fiscal year were in jeopardy if they did not meet the May 17, 2010 filing deadline for the third straight year (this was extended because May 15th fell on a Saturday).
In response to the large number of organizations that missed the May 17, 2010 deadline (the list for Indiana alone is 229 pages), the IRS created two separate relief programs that run until October 15, 2010. For exempt organizations with annual gross receipts of $25,000 or less, the IRS will allow a Form 990-N (postcard) to be filed electronically until October 15, 2010 without penalty. For exempt organizations with annual gross receives between $25,001 and $500,000 or total assets less than $1,250,000, the IRS will allow a Form 990-EZ to be filed along with the payment of a compliance fee that is based on 2009 gross receipts. The compliance fee ranges from $100 to $500.
Organizations that file a Form 990 or 990-PF rather than a 990-N or 990-EZ are not eligible to participate in the relief program. Similarly, organizations not using the calendar year as their fiscal year may also not need to utilize the program. For example, organizations with a June 30 year-end may not be at risk of failing to file for three consecutive years until November 15, 2010, after the relief program ends.
The IRS has posted on its website (available here) the names of organizations it believes are currently not in compliance and therefore should take advantage of the relief program. However, the IRS warns that the list may be incomplete and therefore all organizations should endeavor to verify that they are in compliance.
If you would like any additional information or have any questions regarding the impact of the relief program on your organization, please contact Brian Heaton at (317) 238-6354 or bheaton@kdlegal.com.
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