June 22, 2010

Key Provisions of the New Federal Health Reform Law Impacting Providers

Holland & Knight Alert
Maria T. Currier

The “Patient Protection and Affordable Care Act” (H.R. 3590) and the “Health Care and Education Reconciliation Act of 2010” (H.R. 4872) (collectively, the “Act”) include major provisions impacting providers. In addition to these provisions, which are described in this alert, the Act contains significant demonstration projects to test new reimbursement models linking payment to quality and research studies aimed at improving quality and decreasing the cost of health care. These new payment models using bundled payments across an episode of care and provider settings, new medical home care models and accountable care organizations will be the subject of future alerts developed by our Health Reform Center. We will discuss these programs in detail and provide our view on how these changes will transform the existing U.S. health care delivery system and how providers will need to respond in order to comply.

Provisions Impacting Hospitals

Standard Charges. The Act requires each U.S. hospital to establish, update, and make public a list of the hospital’s standard charges for items and services provided by the hospital.

DSH Payments. In 2014, Medicare and Medicaid payments to hospitals that serve a disproportionate share of uninsured patients will be decreased based on the reduction in the number of uninsured patients.

Value-Based Purchasing Program. In 2013, the Act reduces hospital diagnosis related groups (DRGs) by 1 percent and 2 percent by 2017 through a withhold in payment. The pool created from the withhold will be used to establish value-based incentive payments to be made each fiscal year to hospitals that meet certain performance criteria, as evidenced by achievement of certain quality measures.

Hospital-Acquired Conditions Penalty. Effective in 2015, the Act will penalize hospitals with high hospital-acquired condition rates by lowering payments to these hospitals.

Avoidable Readmissions. Effective in 2012, the Act reduces payments to hospitals that have readmission rates above certain thresholds for patients re-hospitalized for preventable inpatient hospital admissions.

Critical Access Hospital Eligibility. The Act allows a critical access hospital to continue to be eligible to receive 101 percent of reasonable costs for providing: (1) outpatient care regardless of the eligible billing method the hospital uses; and (2) qualifying ambulance services.

Special Provisions for Nonprofit Hospitals. The Act requires tax-exempt charitable hospitals to: (1) conduct a community health needs assessment every two years; (2) adopt a written financial assistance policy for patients who require financial assistance for hospital care; and (3) refrain from taking extraordinary collection actions against a patient until the hospital has made reasonable efforts to determine whether the patient is eligible for financial assistance. Hospitals that fail to comply with these requirements will be subject to penalties.

Provisions Impacting Physicians

Incentive Payments. The Act extends the authority for incentive payments under the physician quality reporting system through 2013. Effective in 2015, the Act also prescribes a penalty for physicians who do not report quality measures satisfactorily.

Value-Based Payment Modifier. The Act requires the establishment of a value-based payment modifier, under the physician fee schedule, based upon the quality of care furnished compared to its cost.

Increased Medicaid Payments for Primary Care. The Act will increase Medicaid payments to primary care physicians beginning in 2013 and increase Medicaid payments to reflect Medicare levels by 2014.

Medicare Incentive Payments to Primary Care and Certain General Surgeons. The Act will provide Medicare incentive payments to: (1) primary care practitioners providing primary care services on or after January 1, 2011, and before January 1, 2016; and (2) general surgeons performing major surgical procedures in a health professional shortage area on or after January 1, 2011, and before January 1, 2016.

Elimination of Physician-Owned Hospitals. The Act virtually eliminates the Stark “whole hospital” exception which allowed physicians to own hospitals. Grandfathered physician-owned hospitals with a Medicare provider agreement as of December 31, 2010, will be permitted to remain operational. The Act further places substantial restrictions on the ability of these hospitals to add operating or procedure rooms and beds.

Disclosure of Ownership in Imaging and Other DHS. Effective immediately, the Stark In-Office Ancillary Services exception is amended by the Act. A referring physician must inform patients in writing at the time of a referral that the patient may obtain the particular imaging services and other DHS, as designated by the HHS Secretary, from another independent supplier and provide the patient a list of those suppliers who furnish the required services in the patient’s geographic area.

Provisions Impacting Long-Term Care Providers

Background Check Program. The Act requires the establishment of a nationwide program for national and state background checks on prospective direct patient access employees of long-term care facilities and providers, including skilled nursing facilities, nursing facilities, home health agencies, hospices, long-term care hospitals and assisted living facilities.

Transparency of Skilled Nursing Facilities and Nursing Facilities. The Act requires skilled nursing facilities under Medicare and nursing facilities under Medicaid to make available – upon request by the HHS Secretary, the HHS Inspector General, the states, or a state long-term care ombudsman – information concerning the ownership and governance of the facility, including a description of the facility’s organizational structure and the identity of the facility’s owners, officers and directors.

Ethics Programs for Skilled Nursing Facilities and Nursing Facilities. The Act requires skilled nursing facilities and nursing facilities to establish a compliance and ethics program that will promote quality of care and detect and prevent criminal, civil, or administrative violations within the facility.

Nursing Home Comparison Information. The Act requires the HHS Secretary to ensure that, as part of the information provided for comparison of nursing homes on the Nursing Home Compare Medicare website, certain additional information concerning nursing homes is provided prominently and updated on a timely basis. The comparison information includes: staffing data; links to state survey and certification information; information on the number, type, severity and outcome of substantiated complaints; the adjudicated instances of criminal violations by the facility or its employees; and a standardized complaint form, including information on how to file a complaint with the state survey and certification program and the state long-term care ombudsman program.

Nursing Home Survey and Complaint Information. The Act includes a new provision requiring skilled nursing facilities and nursing facilities to have reports with respect to any surveys, certifications and complaint investigations made with respect to the facility during the preceding three years available for any individual to review upon request; however, the Act prohibits facilities from making available identifying information about complainants or residents.

Value-Based Purchasing Programs. The Act requires the HHS Secretary to develop plans to implement value-based purchasing programs for Medicare payments to skilled nursing facilities and home health agencies. In developing these plans, the Secretary is required to consider measures of all dimensions of quality and efficiency, methods for public disclosure of performance information, and the structure of the value-based payment adjustments, including the determination of thresholds for improvements in quality that would substantiate a payment adjustment.

Payment Bundling. The Act requires the Secretary to establish a pilot program to test the effect of payment bundling in improving quality and reducing costs. Under the program, Medicare would make a single payment that would cover an “episode of care,” which could include the period of a patient’s hospitalization and post-acute care services provided by skilled nursing facilities, home health agencies, inpatient rehabilitation facilities, and long-term care hospitals for a period of 30 days following hospitalization in a short-term acute care hospital.

Notice of the Closings of Skilled Nursing Facilities and Nursing Facilities. The Act requires an administrator of a skilled nursing facility or nursing facility that is closing to notify all residents, legal representatives of residents or any other responsible parties, the Secretary, and the state long-term care ombudsman, in writing at least 60 days in advance of the closure of the facility. The Act requires this notice to include a plan for the transfer and relocation of all of the residents currently residing in the facility.

Physician Certification of Home Health and Durable Medical Equipment (DME). The Act requires that, prior to a physician’s certification for eligibility for home health services or durable medical equipment after January 1, 2010, the physician must document that the physician, or a nurse practitioner or clinical nurse specialist working in collaboration with the physician, or a certified nurse midwife or a physician assistant under the supervision of the physician, has had a face-to-face encounter with the individual within a reasonable timeframe.

Data Submission. Beginning with the rate year 2014, the Act requires each hospice, long-term hospital and inpatient rehabilitation hospital to submit to the HHS Secretary data on quality measures, in a form and manner and at a time to be specified by the Secretary by regulation. The Secretary is to establish procedures for making the data available to the public. The Act penalizes providers that fail to report such data.

New Hospice Requirements. The Act imposes new requirements on hospice providers participating in Medicare, including requirements for: (1) a hospice physician or nurse practitioner to have a face-to-face encounter with an individual regarding eligibility and recertification; and (2) a medical review of any stays exceeding 180 days, where the number of such cases exceeds a specified percentage for all hospice programs.

Revision of Hospice Care Rates. By no later than October 1, 2013, the HHS Secretary is required, by regulation, to implement revisions to the methodology for determining the payment rates for routine home care and other services included in hospice care.

Contact your Holland & Knight Healthcare lawyer to find out more about the new changes affecting your business, facility or organization.

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