Category: Health Care Law

Imminent Withholding of Medicare Physician Payments Appears Likely

Recently posted in the National Law Review an article by attorney Frank R. Ciesla of Giordano, Halleran & Ciesla, P.C. regarding the Medicare payment rate which are scheduled to go into effect January 1, 2012:

 

 

As of today, there still has not been a resolution of the threatened reductions to the Medicare payment rate which are scheduled to go into effect ten (10) days from now .  As you are aware, the Medicare Sustainable Growth Rate will require reducing payments by over 27% as of January 1, 2012.

While the news seems to be focused on the deadlock in regard to the payroll tax cut and extension of unemployment benefits, the issue regarding physician compensation is as vital, not only to the physicians, but to the Medicare population, as either of the other two issues.  The pending Republican proposal for resolving the physician payment issue is focused on reducing payment to other healthcare providers.  This appears to be unacceptable to the Democratic contingent in both the House and the Senate.

As of this point in time, Medicare will withhold all Medicare physician payments for services rendered during the first ten (10) days of 2012, until there is either:  (1) a resolution of the issue; or (2) implementation of the reduction because the Sustainable Growth Rate issue has  not been resolved.  Clearly, the providers of healthcare to the Medicare population are being held hostage in this crisis.

See our prior blog as to steps you can take regarding your continued provision of services to Medicare patients.

© 2011 Giordano, Halleran & Ciesla, P.C. All Rights Reserved

7th Drug & Medical Device Litigation Forum, 7-8 Mar 2012, Philadelphia

The National Law Review is pleased to inform you of the 7th Drug & Medical Device Litigation Forum: Implementing Appropriate Litigation Readiness and Costs Management Policies That Ensure An Effective Defense at Trial

 

Event Date: 7-8 Mar 2012

Location: Philadelphia, PA, United States

Key conference topics

 

  • Mitigate and maintain costs associated with litigation
  • Gain judical insight on drug and medical litigation and its recent developments
  • Build better relationships with outside counsel in order to reduce the miscommunciation factor
  • Understand the limitations of marketing and advertising as it relates to emerging social media issues
  • Learn the latest on medical device product liability

Conference focus

 Pharmaceutical and medical device manufacturers have faced a growing array of legal challenges this year. With the increase of mass tort litigation, as it relates to product liability, pharmaceutical and medical device manufacturers must be prepared to defend the increasingly sophisticated, well-funded and multi-jurisdictional product liability campaigns against their companies.

The 7th Drug and Medical Device Litigation Conference will be a two-day, industry focused event specific to those within Drug & Medical Device Litigation, Product Liability and Regulatory Affairs in the Medical Device, Biotech and Pharmaceutical industries.

By attending this event, industry leaders will share best practices, strategies and tools on incorporating litigation readiness, utilizing cost efficient litigation strategies and accurately managing policies to ensure an effective defense at trial.

Attending This Event Will Enable You to:
1. Review the current landscape of drug and medical device litigation
2. Learn strategies in settlements and mass tort issues
3. Manage litigation expenses in order to effectively manage costs
4. Review recent case rulings, including the Mensing and Levine cases
5. Take a view from the bench: explore drug and medical device litigation
from a judicial point of view
6. Tackle product liability issues and challenges
7. Uncover the risks for drug and medical device companies when leveraging social media for marketing and advertising campaigns

With a one-track focus, the 7th Drug and Medical Device Litigation Conference is a highly intensive, content-driven event that includes case studies, presentations and panel discussions over two full days.

This is not a trade show; our Drug and Medical Device Litigation conference series is targeted at a focused group of senior level leaders to maintain an intimate atmosphere for the delegates and speakers. Since we are not a vendor driven conference, the higher level focus allows delegates to network with their industry peers.

Testimonials:

“Great selection & breadth of speakers. Uniformly high quality of presentations. Intimate nature of meeting provided excellent opportunities for networking” – Abbott

“Great venue to learn and exchange best practices. More importantly how to leverage lesions learned from others.” – Baxter

“One of the best meetings I’ve attended. Excellent organization, topics and speakers. Overall extremely well done.” – Sanofi Aventis

 

marcusevans


Thirty-Two Health Care Organizations to Participate in Pioneer ACO Program

Barnes & Thornburg LLP‘s Heather Fesko Delgado recently posted in the National Law Review  an article about  32 health care organizations from around the country will participate in the Pioneer Accountable Care Organization (ACO) program.

According to a U.S. Department of Health & Human Services media release that was issued earlier today, 32 health care organizations from around the country will participate in the Pioneer Accountable Care Organization (ACO) program.

Under the program, which is operated by the Centers for Medicare & Medicaid Services (CMS) Innovation Center, groups of health care providers that have formed ACOs will be rewarded by Medicare based on how well they are able to both improve the health of their Medicare patients and lower their health care costs. HHS hopes the program will save up to $1.1 billion over the next five years by encouraging health care specialists “to provide better, more coordinated care for people with Medicare.”

The 32 Pioneer ACOs were selected from a pool of over 80 applicants. According to the media release, “selected Pioneer ACOs include physician-led organizations and health systems, urban and rural organizations, and organizations in various geographic regions of the country, representing 18 states and the opportunity to improve care for 860,000 Medicare beneficiaries.”

The first performance period of the Pioneer ACO Model will begin Jan. 1, 2012.

Additional information on the Pioneer ACO model can be accessed by downloading the CMS Fact Sheet here.

© 2011 BARNES & THORNBURG LLP

Is Coming Together to Form the Larger Same (or Multi) Specialty Medical Practice the Answer?

Recently posted in the National Law Review an article by David Schick of Baker Hostetler regarding solo medical  practitioners have come together to form larger same (or multi) specialty groups for the following reasons:

Many small or solo practitioners have come (or are considering coming) together to form larger same (or multi) specialty groups for the following reasons.  The principle reason is to get a leg up on managed care.  Managed care entities often take advantage of small or solo practitioners in the same geographic area by forcing them to accept lower reimbursements rates.  Small or solo practitioners, who join together in a single group, can effectively negotiate with managed care as a unit and obtain higher reimbursement rates.

This same principle applies to negotiating for lower malpractice insurance and group health, life and disability insurance premiums, as well as other employee benefits.  The larger groups are able to obtain discounts on the premiums they pay, because the insurance carriers are covering a larger population of physician providers or employees, thereby spreading the risk across a larger population, and thereby reducing the cost of coverage per physician or per employee.  These are the same principles Wal-Mart, Costco and other large businesses use when negotiating with vendors.  They use their purchasing power to influence the vendors to lower the costs because of the volume.

Purchasing power has another twist.  Small or solo practitioners, who come together to form a larger group, can use their own numbers and collective net worth to purchase the sophisticated equipment used to generate ancillary revenue.  A new sonogram machine, MRI, PET, CT or linear accelerator can cost hundreds of thousands or millions of dollars.  On their own, physicians cannot afford these items and banks will not lend them the money to purchase the same because the banks feel the risk is too great.  By coming together, physicians can spread the cost over their numbers and either purchase the equipment themselves and/or obtain financing to purchase the same.  Once again, there is safety in numbers and purchasing power eliminates the obstacle.

Of course, the reason physicians want to obtain this equipment is to obtain the ancillary revenues this equipment generates.  Physicians typically can only bill for the professional component or the component of the health care generated only by the physician’s efforts (i.e. the consult, the surgical procedure, etc.).  Hospitals, on the other hand, can bill a facility fee and/or fees for the images or tests the equipment generates.  These fees are often much higher than the professional component.  Physician groups, with the purchasing power to obtain this equipment on their own, can bill for both the professional and technical components.

The federal and state antitrust, Medicare fraud and abuse, antikickback and self-referral prohibitions prohibit groups of small or solo practitioners from negotiating with managed care and from sharing ancillary revenues when they are loosely organized in “name only”, and not legally organized and operated as a “true” group practice.  As a fully organized and operated group practice, the physicians are no longer competitors, they are on the same team.  The same is true for sharing ancillary revenues, so long as that sharing is done in a legally permissible manner.

The legal entity constituting the group practice can be virtually any form of legal entity including, but not limited to, a corporation, whether a C corporation or S corporation; a limited liability company; a limited liability partnership, etc.  However, the choice of entity analysis is an involved one and should not be taken lightly.  A properly trained corporate attorney with a tax and health care background should be consulted to put this together, as it is not simply a matter of filing articles of incorporation with the Secretary of State.

Next the entity needs an agreement between its shareholders, members or limited liability partners, as well as properly drafted employment agreements: to govern their relationship with each other; to set forth the manner in which they will be compensated and share in ancillary revenues; and to govern the parties obligations in the event the physician shareholders’, members’ or limited liability partners’ employment and relationship with the entity is terminated for reasons including, but not limited to, the physician’s death, disability, retirement, or by the entity with or without cause.

Typically, the practice owners also own interests in the building within which the practice is located; as well as other joint ventures or entities such as ambulatory surgical or imaging centers.  Properly drafted shareholder, buy-sell, operating and/or partnership agreements governing these other entities define the physicians’ rights, duties and obligations to each other during their association, and specify whether and how the departing physician is to be bought out in the event that association terminates.

I often hear the following objections to coming together, the first of which is the most common.  “I generate the most ancillary revenues and I should get all of the ancillary revenues I generate one for one”.  The permissible rules for sharing ancillary revenues do not permit this and this thought process is short sighted.  Typically, it only takes one conversation to convince this same physician that he can get a 100% of $50,000 worth of ancillary revenues on his own; or he can get 20% of $1,000,000 (depending on the permissible sharing method used) by coming together with other physicians to former a larger group that generates significantly more and different ancillary revenues, than he can on his own.

Another objection I hear is, “Our group compensates each other equally, their group compensates each other on productivity, and the other group compensates each other using a hybrid of the two.  Further, our group is lean and mean, our office is nice and efficient and our rent is much lower than the other group.  We cannot bear their higher overhead”.  These obstacles can be overcome by cost center accounting whereby the revenues generated, and expenses incurred, by one cost center can be allocated to that cost center.

I once brought together four practices that wanted to come together for all the reasons described above.  The fact pattern was not exactly as follows, but this will do for purposes of illustrating my point: the four practices were located in four different cities; one practice was used to sharing revenues equally, one practice was used dividing revenues based on productivity, one practice used a hybrid model of 50% equal sharing and 50% productivity based, and the fourth practice was a solo practitioner; two of the practices had very high end expensive offices, lots of granite, marble and expensive improvements, the other practices were more modest; one practice had six members to begin with, another five, another two and the last practice was a solo practioner. The members of the larger practices were significantly younger than the members of the smaller practices, but the older practitioners had more mature practices, longstanding community relationships and well established referral patterns.

Each practice had strengths and weaknesses, and they were all tired of being beat up by managed care forcing them to compete against each other.  They came to me to bridge their differences so they could peacefully and successfully coexist and change their prognosis for the future.  We formed an S corporation and prepared a sophisticated shareholders’ agreement to govern their relationship with each other.  We set forth decision making parameters that gave every member an equal voice in decision making, but also set forth specific parameters designed to protect the smaller practices from being out voted by the larger blocks on key issues including compensation, termination, etc.

We designed a cost center accounting and compensation arrangement that shared global overhead by number of physicians and allocated revenues and non-global expenses to the cost centers.  The group used their purchasing power to negotiate higher rates and to purchase malpractice and group health, life and disability insurance at a lower cost per man.  They also were able to eliminate duplicate positions across the group thereby further reducing overhead.  Finally, they were able to use their purchasing power to purchase sophisticated and expensive equipment and they began sharing the ancillary revenues therefrom.  They have grown a lot since the beginning.  However, they remain nimble, have little trouble governing themselves and have enjoyed very little physician turnover.

Who knows what lies ahead.  Are ACOs and physician/hospital integration the future?  What about comanagement of patients?  No one knows for sure, but some form of integration and/or comanagement will likely be in the future.  If so,the larger group is likely to have more leverage when it comes time to negotiating integration and comanagement arrangements with area hospitals.

It is the golden rule: He who has the gold makes the rules and patient control is the gold.  Control the number of patients, the care they need and manage their healthcare in a way that discourages duplication and over utilization, while maintaining their health and maximizing the chances they stay out of the system, and you control the flow of the health care dollar.  The country also gets healthier in the meantime and individual suffering can be reduced.

I represent hundreds of physicians all across Florida; and although many enjoy a nice lifestyle, not one of them ever told me they got into medicine to get rich.  They took an oath and they wanted to help people.  Hospitals, the federal government, and managed care entities cannot treat patients without you; and, although they serve a valuable purpose, they are not the front line of defense and are not the tip of the sword.  Never forget that.  The patient needs his physician now more than ever.  Let us see to it that the patient gets what he needs and you do not go broke delivering it.

© 2011 Baker & Hostetler LLP

Health Care Information Privacy and Security Forum

The National Law Review is pleased to inform you of American Conference Institute’s Health Care Information Privacy and Security Forum Conference on Monday, December 05 to Tuesday, December 06, 2011 at the Union League, Philadelphia, PA.

ACI

Our Nation is poised to harness the power of information technology to improve health care. Transforming our health care system into a 21st century model is a bold agenda… [I]t is more important than ever to ensure consumer trust in theprivacy and security of their health information and in the industry’s use of new technology.

Statement on Privacy and Security, Building Trust in
Health Information Exchange, July 8, 2010.
We Have Entered the Era of Health Information Technology and Face New and Daunting Challenges in Keeping Health Information Private and Secure. Assess Your Current HIPAA Compliance Program to Ensure Best HIT Practices as You Prepare for New Privacy and Security Responsibilities in the Age of HITECH.

Privacy and security of health care information are critical concerns for HIPAA covered entities and an ever expanding circle of business associates.  Knowing the basics of the HIPAA are no longer enough in the age of HITECH when mandates giving rise to the predominance of EHRs and HIEs are taking center stage in the privacy and security challenges with which privacy, information, and security officers, and their counsel must contend every day.  The modes and modalities for storing health care information are becoming more and more complex in the age of HIT — as are the safeguards for keeping this information from unauthorized disclosure.

Now is Not the Time for Regulatory Paralysis, but for Action.

Industry stakeholders are analyzing their obligations under the draft accounting and disclosure rule and awaiting the release of the final HIPAA privacy rule. However, they know that they cannot remain paralyzed with anticipation, but must act upon the information they have and that which they are already obligated to do. Now is the time to ensure that all systems are in compliance with existing law and regulation and flexible enough for reconciliation with new requirements.

Attend ACI’s Health Care Privacy and Security Forum and Get the Critical Information that You Need to Meet Your HIPAA
and HITECH Privacy and Security Challenges Head-On. 

ACI’s Health Care Privacy and Security Forum has been designed to help you navigate the legal and business complexities associated with HIPAA, HITECH (as well as state privacy and security laws and regulations) and the ever evolving legal and regulatory privacy and security landscape. Our faculty of privacy and security experts will walk you through legal and business challenges associated with the anticipated regulations; HIT infrastructure and EHRs; HIEs; business associates; breach; encryption; and enforcement.

Benefit from Special Training and Strategy Sessions that Will Address the Essentials of HIPAA and HITECH and Critical Privacy and Security Compliance Audit Competencies.

To enhance and complete your conference experience, we are pleased to offer the following training and strategy sessions:

•    HIPAA and HITECH Boot Camp: Intensive Training in Privacy and Security Essentials for Health Care Professionals which will provide you with the legal and regulatory backdrop for the more in-depth HIPAA and HITECH controversies discussed in the main conference. This is the perfect course for attendees who are new to health care privacy and security matters or for more experienced professionals who are in need of a refresher; and

•    The Working Group on Auditing, Updating and Perfecting Your Existing HIPAA / HITECH Privacy and Security Compliance Program which will help you implement best practices to ensure that your current health care privacy and security program is in-check with current law and regulations and prepare you for HITECH-mandated HHS compliance audits applicable to both HIPAA covered-entities and business associates.

As an added bonus, your conference registration includes
your choice of one of these sessions.

Reserve Your Place Now at this Critical HIPAA and HITECH Event.
Clearly, this is the health care privacy and security conference that every legal or business advisor to a HIPAA covered entity or business associate cannot afford to miss. Register now by calling 1-888-224-2480, faxing your registration form to 1-877-927-1563 or logging on to www.AmericanConference.com/HIPAA-HITECH.

Health Care Information Privacy and Security Forum

The National Law Review is pleased to inform you of American Conference Institute’s Health Care Information Privacy and Security Forum Conference on Monday, December 05 to Tuesday, December 06, 2011 at the Union League, Philadelphia, PA.

ACI

Our Nation is poised to harness the power of information technology to improve health care. Transforming our health care system into a 21st century model is a bold agenda… [I]t is more important than ever to ensure consumer trust in theprivacy and security of their health information and in the industry’s use of new technology.

Statement on Privacy and Security, Building Trust in
Health Information Exchange, July 8, 2010.
We Have Entered the Era of Health Information Technology and Face New and Daunting Challenges in Keeping Health Information Private and Secure. Assess Your Current HIPAA Compliance Program to Ensure Best HIT Practices as You Prepare for New Privacy and Security Responsibilities in the Age of HITECH.

Privacy and security of health care information are critical concerns for HIPAA covered entities and an ever expanding circle of business associates.  Knowing the basics of the HIPAA are no longer enough in the age of HITECH when mandates giving rise to the predominance of EHRs and HIEs are taking center stage in the privacy and security challenges with which privacy, information, and security officers, and their counsel must contend every day.  The modes and modalities for storing health care information are becoming more and more complex in the age of HIT — as are the safeguards for keeping this information from unauthorized disclosure.

Now is Not the Time for Regulatory Paralysis, but for Action.

Industry stakeholders are analyzing their obligations under the draft accounting and disclosure rule and awaiting the release of the final HIPAA privacy rule. However, they know that they cannot remain paralyzed with anticipation, but must act upon the information they have and that which they are already obligated to do. Now is the time to ensure that all systems are in compliance with existing law and regulation and flexible enough for reconciliation with new requirements.

Attend ACI’s Health Care Privacy and Security Forum and Get the Critical Information that You Need to Meet Your HIPAA
and HITECH Privacy and Security Challenges Head-On. 

ACI’s Health Care Privacy and Security Forum has been designed to help you navigate the legal and business complexities associated with HIPAA, HITECH (as well as state privacy and security laws and regulations) and the ever evolving legal and regulatory privacy and security landscape. Our faculty of privacy and security experts will walk you through legal and business challenges associated with the anticipated regulations; HIT infrastructure and EHRs; HIEs; business associates; breach; encryption; and enforcement.

Benefit from Special Training and Strategy Sessions that Will Address the Essentials of HIPAA and HITECH and Critical Privacy and Security Compliance Audit Competencies.

To enhance and complete your conference experience, we are pleased to offer the following training and strategy sessions:

•    HIPAA and HITECH Boot Camp: Intensive Training in Privacy and Security Essentials for Health Care Professionals which will provide you with the legal and regulatory backdrop for the more in-depth HIPAA and HITECH controversies discussed in the main conference. This is the perfect course for attendees who are new to health care privacy and security matters or for more experienced professionals who are in need of a refresher; and

•    The Working Group on Auditing, Updating and Perfecting Your Existing HIPAA / HITECH Privacy and Security Compliance Program which will help you implement best practices to ensure that your current health care privacy and security program is in-check with current law and regulations and prepare you for HITECH-mandated HHS compliance audits applicable to both HIPAA covered-entities and business associates.

As an added bonus, your conference registration includes
your choice of one of these sessions.

Reserve Your Place Now at this Critical HIPAA and HITECH Event.
Clearly, this is the health care privacy and security conference that every legal or business advisor to a HIPAA covered entity or business associate cannot afford to miss. Register now by calling 1-888-224-2480, faxing your registration form to 1-877-927-1563 or logging on to www.AmericanConference.com/HIPAA-HITECH.

Physician Separation Issues

Posted in the National Law Review an article by attorney David Schick of Baker Hostetler physician Separation Agreements:

Physician Separation Issues are best dealt with upfront in the documents the physician enters into with the practice, when the physician joins the practice as an employee and/or when the physician becomes an owner of the practice.  Obtaining a Separation Agreement at the time a physician departs, while ideal, is often not possible, especially if the departure is not amicable; which is generally the case when the practice has terminated the physician’s employment.  The best way to avoid costly and time consuming litigation at the time of separation is to have carefully drafted documents prepared up front.  Think of these documents as a prenuptial agreement of sorts designed to govern post practice relationship issues, rather than post marital relationship issues.

For example, a well drafted Employment Agreement will specify the manner in which the physician’s employment may be terminated whether for cause (i.e. a specific set of reasons the practice may terminate the physician’s employment immediately); or for no cause (i.e. by the practice or by the physician voluntarily with a required period of notice).  This Agreement also will specify the parties’ rights and obligations to each other following termination.  These rights and/or obligations can vary depending upon whether the physician terminated his employment, whether the practice terminated the physician’s employment for cause, or whether the practice terminated the physician’s employment without cause.

For example, the practice usually will pay for the physician’s malpractice insurance during the physician’s employment.  However, the physician is usually responsible for the cost of “tail” coverage upon termination of employment, which can be very expensive. A common compromise, however, is for the physician to be responsible for the cost of “tail” coverage if the physician terminates his own employment (i.e. quits), or if the practice terminates the physician’s employment for cause (i.e. because the physician committed one of the wrongful acts specified in the Employment Agreement); however, the practice may be obligated to purchase the “tail” coverage if the practice terminates the physician’s employment without cause.

The well drafted Employment Agreement also will specify that all patients treated by the physician are the practice’s patients, not the physician’s patients; and upon termination, the patients’ medical records remain the property of the practice.  However, the Employment Agreement should grant the physician the right to make copies of such records for any legitimate (non-competitive) purpose including defense of a malpractice action or a third party audit at the physician’s expense.

These Employment Agreements also will specify the parties’ obligations to each other regarding the non-disclosure of confidential information, the non-solicitation of the practice’s patients and employees, and non-competition, both during employment and following termination.  The non-competition provisions will typically specify a certain geographic service area within (and a time period during which) the physician may not practice or establish an office.  These provisions are of particular importance to both the physician and the practice; and if not properly drafted can be rendered unenforceable.  A non-competition provision that turns out to be unenforceable will come as a pleasant surprise for the departing physician and as a bitter pill for the practice to swallow.  This area of the law is currently in a state of flux, and legal expertise is critical to draft critical to draft contractual language that stands the best chance of meeting the parties’ expectations during and following the parties’ relationship with each other.

Carefully drafted buy in and entity governing documents also are necessary to deal with the issues pertaining to the practice’s and the physician’s relationship with each other during the period of ownership, and upon termination of such ownership.  The physician owner’s Employment Agreement will not only deal with the issues described above, but also will deal with the payment of any earned, but unpaid compensation payable upon the physician’s termination of employment.  This earned, but unpaid compensation typically represents the physician’s share of the practice’s accounts receivables based on a formula set forth in the Employment Agreement.  The amount payable can sometimes vary depending upon whether the practice terminated the physician’s employment for cause or without cause; or whether the physician terminated his employment.

The buy-in documents (i.e. shareholder buy-sell, operating and/or partnership agreements) depending on the nature of the entity involved, also will deal with the amount of money, if any, the physician is entitled to be paid for the physician’s ownership interest in the practice.  These Agreements, if properly drafted, spell out how the value of such ownership interest will be determined, and the manner in which payment for such interest will be made (i.e. immediately, via insurance proceeds in the event of death, and/or via a promissory note over time).  Once again, the purchase price and/or the manner of payment can vary depending upon the reason for the separation and/or on whether the physician’s separation occurs close to (or coincidently with) another owner’s separation.  Simultaneous withdrawal provisions are critical to prevent the practice from having to pay out multiple physicians at the same time, when those physicians leave together or within a relatively short period of time of each other.  Otherwise, these “simultaneous” withdrawals can create a financial burden on the practice (or a “run on the bank”) that the practice may not be able to satisfy; a disappointing result for both the practice and the departing physician.

Similar documents govern the parties’ relationship with each other, during (and upon termination of) the parties’ relationship with each other, in connection with other business entities connected with the practice.  Typically, the practice owners also own interests in the building within which the practice is located; as well as other joint ventures or entities such as ambulatory surgical or imaging centers.  Properly draft shareholder buy-sell, operating and/or partnership agreements governing these ancillary entities, also will define the parties’ rights, duties and obligations to each other in the event the physician’s relationship with the practice is terminated, and will dictate whether the departing physician also is to be bought out or otherwise removed from these entities.

In summary, not all physician departures are amicable; and in fact, many are not.  Further, the practice might not even be dealing with the physician at the time of separation; which is the case in the event of a physician’s death.  Emotions typically run high at this juncture, and carefully drafted documents will give the parties’ the security of knowing what will be expected of them at the time of separation.  The time and expense spent up front also will be significantly less than the time and expense associated with the litigation that is almost certain to ensue in the absence of pre-existing definitive agreements that govern the separation.

© 2011 Baker & Hostetler LLP

Government Coercion As A Vehicle To Alter Healthcare

Posted on November 14, 2011 in the National Law Review an article by attorney Frank R. Ciesla of Giordano, Halleran & Ciesla, P.C.  regarding  the Massachusetts Legislature, which previously mandates health insurance for all, has now moved into its next stage of attempting to contain the cost of healthcare:

 

The front page of the New York Times on Tuesday, October 18, 2011 stated that the Massachusetts Legislature, which previously mandates health insurance for all, has now moved into its next stage of attempting to contain the cost of healthcare.  One way of containing the cost that has been applied around the globe is to regulate the rates charged by insurers, which forces insurers to regulate the rates paid to providers.  Another way is to set an overall budget for healthcare as is done in Canada or certain European countries.  As the Times describes the Massachusetts plan, the approach being considered there is a flat “global payment” to networks of providers for keeping patients well.   All of these approaches alter the way providers are paid and attempt to shift the risks to the insurance companies or the providers.  In my opinion, each of these approaches illustrates the use of the governmental power of coercion to alter the healthcare field.

This use of coercion is shown in various ways in the Affordable Care Act (ACA), by penalizing employers for not providing healthcare insurance so that employer provided healthcare is no longer “voluntary,” by penalizing individuals who do not obtain healthcare insurance, and by requiring the expansion by the states of the State Medicaid programs to cover a larger portion of the population.

Coercion is not new to the healthcare field.  The federal government has long used its power of coercion to compel individuals and employers to pay the Medicare tax, and while Medicare Part B is voluntary, higher income individuals who select Part B are required to pay a higher premium than the vast majority of individuals participating in Part B.  The Medicare and Medicaid programs, while “voluntary” for physicians but not for hospitals in New Jersey, sets the rates they pay.

One of the new approaches to cost control under the ACA is the creation of Accountable Care Organizations (ACO) in which some of the risk of patient outcomes is shifted to the providers.

What is missing so far in the discussion of ACOs and in the Massachusetts debate, is a general obligation on the part of the beneficiaries as to their compliance with medical instructions, as well as their election to live a healthy lifestyle.  The government has exercised some coercion in this area, for instance, with significantly higher taxes on cigarettes as well as the numerous bans on smoking in various places.  Society’s experience with Prohibition has made it clear that that is not the approach to take again, in the area of cigarettes, or quite frankly, in any other area.  It should be noted that we are seeing calls for the legalization of marijuana and the taxation of marijuana rather than continuation of the current prohibition against the use of marijuana.  A similar approach is being taken in the area of alcohol with higher taxes on alcohol.

Whether or not this coercive tool, taxation or in the case of smoking, prohibition in certain areas, will be extended to other activities or circumstances, such as obesity, which result in additional healthcare costs is yet to be seen.  However, the changing of the paradigm in the healthcare delivery system, from payment to providers for the care they render to patients (whether or not the party is compliant with medical directions or the patients choose an unhealthy lifestyle) to shifting the risk resulting from bad patient conduct to the providers, is a giant step into the unknown.  One question that will need to be addressed is what authority will providers have in this new paradigm to require patient compliance with both medical directives and with lifestyle changes.

© 2011 Giordano, Halleran & Ciesla, P.C. All Rights Reserved

2011 Wisconsin Act 49: Wisconsin Tax Law Amended to Conform with Federal Adult Child Coverage Requirements

Posted in the National Law Review an article by Alyssa D. Dowse and Timothy C. McDonald of von Briesen & Roper, S.C.  regarding Wisconsin’s state income tax law for health coverage provided to an employee’s adult child to the exclusion provided for that coverage under federal income tax law.

As expected, Governor Scott Walker has signed legislation to conform the exclusion under Wisconsin state income tax law for health coverage provided to an employee’s adult child to the exclusion provided for that coverage under federal income tax law. If an employer’s health plan extends coverage to an employee’s adult child, then, through the end of the tax year in which the child attains age 26, the employee will not be subject to either federal or Wisconsin state income tax on the value of that coverage. This is the case regardless of whether the child otherwise qualifies as the employee’s tax dependent. This change in Wisconsin law is effective for tax years beginning on or after January 1, 2011.

If employer health plan coverage is provided to an employee’s adult child after the tax year in which the child attains age 26, then, as under current law, the employee will be subject to federal and Wisconsin state income tax on the value of that coverage unless the child qualifies as the employee’s tax dependent for health plan purposes.

Governor Walker signed 2011 Wisconsin Act 49 (the “Act”), which amends Wisconsin tax law to conform the state income tax exclusion for coverage provided to an employee’s adult child to the federal income tax exclusion, on November 4, 2011.

©2011 von Briesen & Roper, s.c

CMS Releases its CY 2012 OPPS Final Rule

Posted recently in  the National Law Review by Scott J. Thill of von Briesen & Roper, S.C.  regarding  CY 2012 Outpatient Prospective Pzyment System:

 

CMS has released its CY 2012 Outpatient Prospective Payment System (OPPS) Final Rule, effective January 1, 2012.  Notable provisions of the Final Rule include:

  • A market basket update of 1.9%.
  • Adjustment to payment rates for certain cancer hospitals.
  • A process for the APC Panel to evaluate requests for alternative supervision levels for hospital outpatient therapeutic services and issue recommendations to CMS on the same.
  • The addition of three quality measures for hospital outpatient departments to report for purposes of the CY 2014 and CY 2015 payment determinations.  The new measures include: (i) a measure relating to cardiac rehabilitation patient referrals; (ii) a measure relating to the use of a safe surgery checklist; and (iii) a measure relating to hospital outpatient department volume for selected surgical procedures.
  • A reduction in the number of randomly selected hospitals (from 800 to 450) for validating hospital outpatient quality reporting data for the CY 2013 payment determination.
  • Revisions to the hospital value-based purchasing program.
  • A process for physician-owned hospitals to apply for an exception to the federal prohibition on expanding facility capacity in physician-owned hospitals.