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Healthcare Regulatory Update – 2014

Apr 30, 2014

EisnerAmper's Healthcare Services Group presents 2014 Healthcare Regulatory Update.

EisnerAmper's Healthcare Services Group are healthcare consultants in New Jersey, New York and Pennsylvania (serving the northeast market). Our Healthcare Services professionals, with 20+ years of combined experience in the ever changing healthcare marketplace, consistently monitors regulations and updates from the Centers for Medicare and Medicaid Services (CMS) as well as the latest in healthcare reform from Washington. The group is committed to promoting the discussion of healthcare regulations and healthcare regulatory issues, and offers educational presentations and articles targeted to healthcare providers, office staff and outside healthcare professionals, containing the latest information on issues impacting the healthcare industry.

Our 2014 Healthcare Regulatory Update includes the latest information on: Marketplace Challenges, Healthcare Reform, Ambulatory Services, Hospital Services and Compliance issues.


Marketplace Challenges

  • New Payment Methodologies
    • Accountable Care Organization's
    • Quality versus quantity
  • Cost Increases
    • Lower than previous years
  • Consolidation
    • Merger/Acquisition
      • Lease Provider
      • Employee
  • Overpayment Audits
  • Health Reform

Health Reform

  • Many health plans offer renewal dates in December 2013 - More and more insurers are offering small employers and individuals the option to renew their policies at the end of December — a strategy that could let them sidestep the Affordable Care Act's (ACA) market-protection rules for a year.

  • Exchange development confronts complexities - Software must be written and computers purchased to enable people, most of whom know little about insurance, to choose sensibly among perhaps dozens of insurance plans and enroll in one of them— online, over the phone, or in person. Data systems have to be developed to permit enrollment officers to check all of that information in real time.

  • First set of premium rates for exchange products - Observers say such rate hikes and high rates for new individual products likely will be "the norm" for consumers nationwide, at least until the market adjusts to the new rules of the Affordable Care Act (ACA). But other experts point out that states increasingly are using their power to set insurance rates, and that the early proposed rates are far from set in stone.

  • ACO boom eyed by some entrepreneurs - Health plans are continuing their move away from fee-for-service contracts in favor of performance-based arrangements with providers in accountable care organizations (ACOs) — a development that one health care investor expects will accelerate exponentially in the coming years.

  • Thousands are trained as navigators, assistors, and call-center staff for the exchanges - With less than two months to go before the insurance exchanges go live, tens of thousands of paid personnel and volunteers across the country are wrapping up the training they will need to effectively market and promote the Affordable Care Act (ACA).

  • Health plans invest in efforts to raise awareness of their products on the exchanges - Raising awareness of the Oct. 1 launch of the insurance exchanges is a crucial step in the long effort to fully implement the Affordable Care Act.

  • California exchange sets agent commissions at 6.5% for shop - Small-group insurance agents in California will receive a 6.5% commission next year for signing up entities on the Covered California insurance exchange's Small Business Health Options Program (SHOP), a level that some insurance brokerage experts describe as "competitive."

  • Insurers cancel hundreds of thousands of individual plans, but aim to keep members - Insurers and experts contacted by HRW say the termination of pre-ACA policies should not come as a surprise, and that most insurers are taking steps to educate members and re-enroll them into ACA-compliant plans with more comprehensive benefits, both on and off the insurance exchange.

  • More democrats want to delay ACA mandates - Aetna disagrees with any delay or weak individual mandate - Mark Bertolini, president and CEO of Aetna Inc., told financial analysts on an Oct. 29 conference call that his company would "worry about" an extended open-enrollment period and a weakened individual mandate.

  • More than a dozen states now are balking at reform statute's Medicaid expansion - Reflecting both ideological and budgetary concerns, as many as 15 states are leaning toward or firmly committed to not participating in the health reform law's provision to expand the Medicaid program by allowing adults with annual incomes up to 133% of the federal poverty level (FPL) to enroll starting in 2014. All of the 15 states, except for Missouri, are led by Republican governors.

  • There won't be any state-specific rate-review thresholds Sept. 1 - The standard means that any insurer requesting a rate increase in the individual and small-group markets of 10% or more must have its request reviewed, either by states in cases where HHS deems them to have effective rate review processes or by HHS for states where it did not find such effectiveness.

  • Maine Gov. Says supreme court decision gives states right to cut Medicaid rolls - A contention by Maine's governor that the June 28 Supreme Court ruling gives his state the right to reduce Medicaid spending for existing enrollees and not just refuse the expansion called for in the health reform.

  • New debate focuses on impact of essential health benefits (EHB) on affordability of coverage - The ten categories of "essential health benefits" (EHB) insurers will have to provide inside and outside the exchanges beginning Jan. 1, 2014.

  • Private exchanges market more employers, but real traction won't begin until 2015 - While a lot of employers are looking at private exchanges, they will likely defer to 2015, says Steve Kreuger, partner and exchange solutions leader at Mercer, which launched a multicarrier exchange last January. "Our research — as well as other surveys — seems to indicate that over the next three to five years, 25%.

  • Employers can't reimburse employees for coverage – on or off public exchanges - Stand-alone health reimbursement arrangements (HRAs) and employer payment plans — where an employer pays or reimburses an employee's health insurance costs — for active employees are considered group health plans by the ACA and are subject to various requirements.

  • Migration to fully insured exchanges may boost carrier profits, shift risk to workers - Health insurers could see their profit margins more than double if their large employer clients transition from a self-insured model to full risk via private insurance exchanges, at least one equities analyst predicts.

  • Milliman: pricing next year's plans won't be any easier for insurers - As was the case this year, carriers will — for the most part — need to rely on claims history that is several years old when pricing qualified health plans (QHPs) to be sold through the exchanges. Moreover, the reinsurance, risk-adjustment and risk-corridors (3Rs) programs established by the Affordable Care Act (ACA) will add new complexities in the year ahead.

  • 13 Pioneers earn savings for 2012, while nine drop out, citing program benchmarks - Thirteen out of 32 Medicare Pioneer accountable care organizations shared more than $76 million in savings for their first year, and the entire group improved quality of care while keeping cost growth below that of fee-for-service beneficiaries, according to a CMS analysis released July 16. Nonetheless, nine out of the 32 Pioneers decided to jump ship — seven intend to move to the Medicare Shared Savings Program (MSSP) and two will leave Medicare ACOs completely.

  • ACOs more tightly manage formularies to drive quality, adherence improvements - Few commercial accountable care organizations currently make use of formularies to manage prescription drug utilization, but accountable care insiders predict that's about to change as ACOs become more sophisticated and gather data that would help them choose preferred medications.

  • ACOs fear legislative fix is needed for reset of MSSP benchmark - Accountable care organizations hoping to continue beyond three years in the Medicare Shared Savings Program will face a reset of their savings benchmark that could make it too difficult for them to achieve savings in the second three-year period.

Ambulatory Services

  • Watch for higher Medicaid E/M, vaccine payments as states start doling them out - Increased payments for Medicaid primary care services have started reaching providers more than six months after the two-year program began Physicians who attested their eligibility for the program by April 1 will receive payments retroactive to Jan. 1 via weekly claims adjustments that start with claims with dates of service in January 2013. The adjustments for retroactive payments will continue in chronological order.

  • Implement a 3-point approach to NPP diagnostic tests to avoid denials - Check that your NPP is a recognized provider and check supervision requirements for tests.

  • CMS: August launch of PECOS surrogate program will let others enroll providers - Practice staff will have a legal way to complete physician enrollment using the Provider Enrollment, Chain and Ownership System (PECOS) as CMS rolled out its long-awaited surrogate program for use by the end of August.

  • Proposed changes to PQRS reporting likely to add costs, burdens for practices - CMS proposals to require reporting of more Physician Quality Reporting System (PQRS) measures for 2014 are likely to add complexity for practices looking to avoid potential payment penalties.

  • ACA loophole allows for unpaid care for some health exchange patients - If patients who get subsidized insurance coverage through exchanges don't pay their premiums, they have a three-month grace period before the insurance policy is canceled. To minimize health plans' financial risk, plans can hold those patients' claims after the first month of the grace period.

  • Weigh clearinghouse price of 4010 conversions to avoid added ICD-10 costs - You could actually save money in the long run by switching your systems to the 5010 HIPAA standard rather than relying on your clearinghouse to convert from 4010 to 5010. Some 20% of practices that use clearinghouses aligned with the Cooperative Exchange (CE) still rely on them for the switch, according to data from the industry group, which represents 19 clearinghouses.

  • CPT 2014 preview: new codes, increased bundling for cardiology practices - Expect to see at least 19 new cardiology procedure codes in CPT 2014, sources have confirmed to Part B News. Deleted and added cardio-related codes approved by the CPT Editorial Panel over the last year will be included in the 2014 code set, according to sources who have previewed the CPT 2014 code changes that have not yet been released.

  • Practices share lessons of benefiting from concierge care while accepting Medicare - A 2012 physician survey by Merritt Hawkins found most respondents wanted to cut back their hours, and about 7% of them planned to do so by switching to a "concierge" or cash-only practice - But some practices employ models, sometimes called "hybrids," in which Medicare providers serve patients who pay a fee for personalized services and those who don't.

  • Update business associate agreements by HIPAA 'mega-rule' deadline - You don't need to require that business associates be compliant with all HIPAA rules because the mega-rule applies only certain privacy elements and the security rule standards for protection of electronic protected health information (PHI) to business associates.

  • Ensure certification, installation of 2014 EHR technology or risk losing thousands - Your providers are required to use a three-month reporting period in 2014 to attest to meaningful use with a 2014 version of a certified EHR. That means they can start the reporting period no later than Oct. 1, 2014 - The Office of the National Coordinator for Health Information Technology's website allows providers to look up their EHRs on lists of product certified for the 2011 edition, 2014 edition or combination of 2011 and 2014.

  • Hardship exceptions that waive EHR penalties will be hard to get - The first payment adjustments for failure to demonstrate meaningful use come in 2015, based on 2013 and 2014 attestations. If providers plan to attest for the first time in 2014, the latest they can start the required 90-day reporting period is Oct. 1, 2014. Providers who first attested in 2013 must attest for 2014 based on an entire year of meaningful use, not the 90-day period — and after 2014, all eligible providers must attest on a full-year basis for all stages.

  • Hundreds of changes will affect how you code cardio, GI and ortho procedures - Physician practices can expect big changes in the CPT codes they report next year for their upper and lower GI endoscopies, breast biopsies, peripheral vascular stents and chemodenervations, among other changes, according to CPT® 2014 Professional Edition, released recently by the AMA.

  • New data: high-level E/Ms still growing, more new patient visits billed - CMS' 2012 E/M utilization and denial numbers are out. They show that utilization is still climbing, though not as much as in the previous year, and new patient codes are growing faster than established patient codes. But billing higher-level E/Ms comes with new risks — after a long decline, denial rates are rising again, and certain popular coding gambits may draw the scrutiny of CMS.

  • Ensure EHR vendor readiness for dual compliance deadlines to avoid penalties - Find out now whether your electronic health records (EHR) vendor will be ready for ICD-10 and stage 2 meaningful use in 2014, or risk claim submission delays and penalties.

  • Create guidelines, agreements to streamline use of scribes with EHRs - Doctors are slowing down as they have to enter documentation into electronic health records (EHR), says Maxine Lewis, president of Medical Coding & Reimbursement Management in Cincinnati. But physicians are finding that the real-time entry of medical notes into an EHR by scribes speeds up the process.

  • Practices race to get ready for ICD-10, but have concerns about productivity, vendors - The next six months are when most physician practices expect to determine what they need to do to be ready for ICD-10 implementation on Oct. 1, 2014, followed by taking the necessary training and testing steps, according to a recent Part B News survey of 237 physician practices.

  • Long-awaited PECOS surrogate program debuts despite shutdown - The surrogate program allows certain third parties, such as nonclinical practice staff, to enroll providers online via the Provider Enrollment, Chain and Ownership System (PECOS). Previously, it was a common practice for staff to enroll providers using the providers' login and password, which was contrary to CMS' rules.

  • Help providers ace meaningful use audits - Retain all supporting documentation for six years, Reduce or eliminate "red flags" that catch auditors' attention, Conduct a thorough security risk analysis, Be particularly careful with the "yes-no" answer attestations, Store the meaningful use documentation in a central location, Review all material before submitting it to an Auditor, Conduct a formal review of the audit to see what areas you need to improve for next year.

  • Avoid POS confusion when your office patient becomes a hospital patient - Recovery auditors (RACs) have found that "some physicians were incorrectly reporting place of service as office (11) when the services were provided in an outpatient hospital (22) setting, resulting in incorrect reimbursement," according to MLM Matters SE1313, "Place of Service Coding for Physician Services in an Outpatient Setting," issued June 29.

  • Don't let surge in private payer denials threaten your bottom line - Private payers have noticed the extra scrutiny your Medicare fee-for-service claims face from different auditors, and they've been getting in the act as well – launching aggressive audits, claims reviews and denials management strategies hitting your bottom line.

  • ICD-10 update: some payers aren't ready, but you can do lots of testing alone - With CMS out of the picture, you're left with private payers and partners to test with. But these comprise so much of your transactions, our experts say, that any effort you spend getting them right should pay off handsomely when the new system goes into effect.

Hospital Services

  • IRS details community assessment fine rules - The final rule specified the time frame in which hospitals must pay penalties if they fail to meet a new requirement under the Affordable Care Act to conduct regular community health needs assessments. Hospitals that fail to perform the assessment to IRS specifications every three year face the loss of their tax exempt status and a $50,000 fine. Proposed rules governing most aspects of the community health needs assessment were issued in March and hospital officials are awaiting final version of the major provisions. However, the requirement began for the taxable year of each hospital beginning after March 23, 2012.

  • Narrow networks expand through marketplaces - Among the 955 individual market health plans filed for 13 of the state insurance marketplaces authorized by the Affordable Care Act, 47 percent will offer narrow provider networks, according to recently released preliminary results of an unpublished McKinsey & Co. analysis. McKinsey found 42 percent of the exchange plans will use HMO models and another 5 percent will be similar exclusive provider organization plans.

  • Survey: high-deductible plans an increasingly attractive option for employers - The rate of large employers offering only plans with high deductibles is expected to reach 22 percent of large employers in 2014, up from 19 percent this year, according to the latest employer survey by the National Business Group on Health.

  • Moody's: hospital costs grew faster than revenue - Not-for-profit hospitals' 5.2 percent revenue growth in the past fiscal year was eclipsed by a 5.5 percent increase in expenses, the ratings agency concluded in a report released Aug. 23.

  • North Carolina enacts hospital transparency law - North Carolina hospitals and ambulatory surgical centers will soon need to begin submitting prices for many of the most common procedures they perform to the state for public release.

  • CMS issues guidance on inpatient admissions - The guidance specified the new paperwork required for hospital admissions, including physician certifications and medical record documentation. The guidance also specified the timeframe for completion and submission of a physician certification in accordance with the "two-midnight benchmark," and what qualifying elements patient records must contain.

  • HHS: consumers saved $1.2 billion on premiums in 2012 - The "rate review" provision of the Affordable Care Act saved 6.8 million consumers an estimated $1.2 billion on health insurance premiums in 2012, according to a report released Wednesday by the U.S. Department of Health and Human Services (HHS).

  • Hospitals tentative in ACA enrollment push - Hospital organizations backed enactment of the Affordable Care Act (ACA) primarily because its new insurance coverage options promised to reduce the number of uninsured charity care cases at hospitals. But on the eve of the Oct. 1 launch of enrollment in new health insurance marketplaces, or exchanges, and as 25 states prepare to expand Medicaid programs, few hospitals plan broad coverage pushes in their communities.

  • Final rule issued on Medicare DSH cuts - The Centers for Medicare & Medicaid Services (CMS) issued an interim final rule Sept. 30 tweaking some of the details of the cuts in Medicare disproportionate share hospital (DSH) payments required by the Affordable Care Act (ACA). The rule slightly modified details of the cuts in payments to hospitals that serve disproportionately large numbers of low-income seniors, as previously set forth in the FY14 inpatient prospective payment system final rule issued in August. Overall, the ACA was expected to reduce DSH payments by up to $50 billion over 10 years.

  • Physician groups of 100 or more: register by October 18th to avoid a negative payment adjustment - Today is the last day physician groups of 100 or more may register with the Physician Value-Physician Quality Reporting System (PV-PQRS) to avoid a -1 percent payment adjustment.

  • Deadline for attestation for 2013 EHR incentive: Nov. 30 - Eligible hospitals and critical access hospitals have until Nov. 30 to register and submit meaningful use attestation for the Medicare EHR Incentive Program to receive a 2013 incentive payment.

  • HHS: hospitals not prohibited but should not pay premium costs of patients - Payment adjustments for Medicare-eligible hospitals that have not successfully demonstrated meaningful use will be applied beginning in FY15 (starting Oct. 1, 2014).

    HHS Secretary Kathleen Sebelius stated in a letter to Rep. Jim McDermott (D-Wash.) that the federal anti-kickback statute barring assistance to patients covered by federal health programs does not apply to those with coverage from private plans sold under the new federal marketplaces, also known as exchanges. CMS issued guidance this week that raised concerns over the possibility that hospitals or other healthcare entities could help their patients pay premiums or cost-sharing components of insurance sold through the new public insurance marketplaces, also known as exchanges, created by the Affordable Care Act. The agency stopped short of saying the practice was illegal, but discouraged this practice and urged insurers to reject it as well. "[The U.S. Department of Health and Human Services] has significant concerns with this practice because it could skew the insurance risk pool and create an unlevel field in the marketplaces," the guidance stated.

  • Medicare part B premiums, deductibles unchanged - The recent slowdown in the growth of Medicare costs continued this week when the Centers for Medicare & Medicaid Services announced Part B premiums and deductibles would not increase in 2014.

  • CMS finalizes program integrity rule for exchanges - The Centers for Medicare & Medicaid Services (CMS) released a final rule outlining financial integrity and oversight standards for the health insurance marketplaces, also known as exchanges.

  • Survey: most hospitals partner on home health - Three-quarters of hospitals have or plan to establish relationships with a home healthcare provider as part of their efforts to reduce readmissions, according to a recent survey.

  • CMS delays post-payment reviews under "two-midnight" rule - Hospitals will have three months more to prepare for post-payment reviews under the "two-midnight" rule after Medicare delayed any such action until April 1. The new rule specified that inpatient hospital admissions were eligible for Medicare Part A payments when the physician both expected the beneficiary to require a stay of at least two midnights and admitted the patient based upon that expectation.

Compliance Concerns

  • Use of short stays, observation varies widely; new compliance ideas adopted - Hospitals are all over the map in their use of inpatient, observation and "long outpatient stays," and are paid three times more for Medicare short stays than for observation services, the HHS Office of Inspector General says in a July 30 report.

  • RACs to back off longer stays as "two-midnight" standard survives in IPPS rule - Starting Oct. 1, recovery audit contractors (RACs) generally won't scrutinize inpatient stays that last two midnights or more. RACs and other Medicare auditors will focus on shorter stays because CMS generally will assume admissions that cross two midnights are medically necessary unless they're delayed on purpose, according to the 2014 final inpatient prospective payment system.

  • Final rebilling rule with one-year deadline will drive internal audits - According to the final 2014 inpatient prospective payment system (IPPS) regulation unveiled Aug. 2, hospitals may resubmit claims to Part B when they realize admissions are not medically necessary in Medicare's eyes or they are denied by auditors.

  • Physician certifications take center stage as hospitals plan for "two-midnight" rule - Physician certifications are about to become decisive documents for Medicare Part A reimbursement. CMS has made a connection between certifications and the medical necessity of admissions, although physicians have until discharge to complete them.

  • CMS recoups all meaningful use money from providers if audits turn up errors - With meaningful use audits, "if you fail to document your security risk assessment but otherwise operated with a certified EHR system and documented everything else properly, they want all the money back." That kind of all-or-nothing approach is tempting providers to forgo incentive payments.

  • How to meet government expectations for greater board involvement in compliance - Regulators are concerned about the "knowledge gaps" between management and their boards, and have started to fill in the gaps by talking to board members about audit findings, sanctions and fines, according to two consultants with Pricewaterhouse-Coopers.

  • CMS eases up on physician certifications under IPPS; will its auditors follow suit - Hospitals were shaken up by the certification requirements because it's another demand on harried physicians. But CMS eased up in its Sept. 5 "subregulatory" guidance on the "hospital admission order and certification," compliance experts say. For one thing, if hospitals don't have a separate certification form, CMS and its contractors will consider a "default methodology for initial certification."

  • Consider as momentum builds in the quality fraud arena - In addition to false claims cases for medically unnecessary stents implanted in hospitals and substandard care in nursing homes and the August arrest of a physician for medically unnecessary cancer treatment (RMC 8/12/13, p. 1), there is growing risk of fraud allegations for inaccurate reporting for pay for performance and other quality improvement programs — especially with whistleblowers and their lawyers expanding into new areas.

  • 'Audit-proof' electronic medical records are seldom audit-proof - Some electronic medical record (EMR) systems are advertised as audit-proof, which may give providers a false sense of security about their coding and billing compliance. Contracts with EMR vendors may tell a different story than the ads, because they typically state there is no guarantee the software is error-free and the vendor has no financial responsibility for overpayments, one lawyer says.

  • Navigating the stark nonmonetary compensation rule - Because the $500 iPad fell outside the Stark law exception for nonmonetary compensation, which allows hospitals to bestow up to $380 worth of non-cash gifts on each physician annually, the hospital took another route: the fair-market value compensation exception.

  • Hospital keeps sales reps from MDs - The academic health system has changed its vendor policy, effective Oct. 1., to curtail the sales hype without interrupting the flow of meaningful clinical information. The purpose of the new policy: "to limit industry bias in our decision making," says Greg Radinsky, chief corporate compliance officer.

  • DOJ trial attorney provides insights into how to avoid medical necessity cases - We are focusing on the last three: trends, patterns and agendas," Di Dio said. Di Dio spoke Sept. 30 at the Fraud and Compliance Forum Medical necessity is on the front burner at DOJ, with a number of False Claims Act settlements with hospitals over stents and other procedures (RMC 1/14/13, p. 1) and criminal prosecutions or charges pending against physicians.

  • Medicare may soon recoup payments to hospitals for NPP credentialing problems - Starting Jan. 1, hospitals could owe Medicare money – and potentially face false claims lawsuits – if their nonphysician practitioners (NPPs) and other "auxiliary personnel" don't have the right qualifications to provide outpatient therapeutic services.

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