Congress renews Children’s Health insurance program

CHIP is funded primarily by the federal government; states operate the program following federal guidelines.

By Jeff Atkinson | Fall 2018 | Reform Recap


Concept of insured house, family and car

Congress renewed the Children’s Health Insurance Program (CHIP) for an additional six years in January. The program provides free or low-cost insurance for 8.9 million children in low- and moderate-income families. Those families earn too much to qualify for Medicaid, but have difficulty affording or accessing private insurance.

The Medicaid program covers 26.8 million more children. At the states’ option, CHIP also can provide coverage to pregnant women.

Bipartisan support

CHIP was enacted in 1997 during the Clinton presidency with strong bipartisan support. The program helped reduce the percentage of children in the United States without health insurance from 14 to 4.5 percent.

Although both Democrats and Republicans support CHIP, the program became a bargaining tool in 2017 and early 2018 as members of Congress fought over other issues including immigration, Obamacare and the federal budget. Long-term funding of CHIP was suspended for more than three months before the six-year deal was reached.

Federal funding

CHIP is primarily funded by the federal government with some contribution from the states. In fiscal year 2016, the federal government spent $14.8 billion on the program; $2.1 billion came from other sources.

States manage CHIP, including eligibility requirements. A state’s programs can be freestanding, folded into the Medicaid program, or a combination of both. In 46 states, CHIP is available to families with income up to 200 percent of the poverty level; 24 of those states provide coverage up to 250 percent of the poverty level or higher. The federal government will give a state matching funds for coverage up to 300 percent of the poverty level.

For a family of four, 200 percent of the federal poverty level in the contiguous 48 states and D.C. is $50,200. The poverty level dollar amounts are higher in Alaska and Hawaii.

In most states, there is no waiting period to enroll a child in CHIP. Federal regulations allow states to impose a waiting period of up to 90 days, and 15 states have exercised that option. An advisory commission to Congress has proposed eliminating waiting periods in all states.

Scope of benefits

The federal government established guidelines for what must be covered and then gives states leeway regarding additional details of coverage. Services that must be covered include: routine checkups, doctor visits, immunizations, prescriptions, dental care, vision care; inpatient and outpatient hospital care; laboratory, X-ray and emergency services.

Routine well-child visits and routine dental visits must be available at no additional charge to families, but states may require copayments or deductibles for other services, provided the total amount for those charges and premiums do not exceed 5 percent of a family’s income for a year.

To determine the details of coverage, states are directed to use what the federal government calls “benchmark coverage.” The benchmarks are: the standard Blue Cross/Blue Shield preferred provider option service benefit plan offered to federal employees; state employee coverage plan; or the HMO plan that has the largest commercial, non-Medicaid enrollment within the state. In addition, a state can provide coverage that is “actuarially equivalent” to the benchmarks, or the state can ask the Secretary of the U.S. Department of Health and Human Services for a waiver to provide a different type of coverage.

Cost savings for families

A commission that advises Congress about CHIP, the Medicaid and CHIP Payment and Access Commission (MACPAC), notes that CHIP provides substantial savings for low- and moderate-income families. Using data from 2015, the commission said that the average premiums and cost-sharing per child under CHIP was only $158 per year, whereas the cost per child in an employer-sponsored plan was $891.

In addition, CHIP provides for more coverage for dental, vision and audiology services than most employer-sponsored plans.

Looking to the future, the commission advocates using CHIP funds to promote innovation, some of which may be similar to changes in health care for the adult population. Innovations might include focus on treatment of chronic conditions, obesity, managed care and alternative payment models. In addition, the commission urges more seamless coverage when children transition between different health insurance plans, including between CHIP and Medicaid.

Support from AAP and AMA

The American Academy of Pediatrics and the American Medical Association supported extension of funding for CHIP, both calling it a “vital program.” The Pediatric Academy’s policy statement would go a step further. The academy urged coverage not only for children through age 18, but added that all children, adolescents, and young adults to the age of 26 “should be covered by an affordable, quality health insurance plan that allows access to comprehensive essential care.”

Jeff Atkinson is a professor for the Illinois Judicial Conference and has taught health care law at DePaul University College of Law in Chicago.



Fraud and abuse issues facing physicians

The federal government is stepping up investigations of fraud and abuse. Physicians can take steps to reduce the risks.

By Jeff Atkinson | Reform Recap | Summer 2018


Security sign in the hand of the engineer.

A Texas internist with a home health care practice along with two others billed Medicare for more than $40 million in services, including for services that were not rendered or were not necessary.

A Detroit physician billed Medicare for unnecessary opioids and pain-killing back injections. The prosecutor said that over a three-year period, the doctor prescribed for a single patient 2,640 Norco, 100 Percocet, 2,138 Soma, 1,220 Valium pills, and 4,200 doses of Promethazine with codeine.

A New York City doctor took more than $25,000 in payments in exchange for referring patients to a particular laboratory.

Five physicians in a California cardiology practice were accused of performing nuclear stress tests without first determining whether the test were medically necessary (or at least not having a consultation appointment within 30 days of the tests).

For the first three cases, prison sentences were (or are likely to be) imposed. For the fourth case, the cardiologists agreed to settle the case for $1.2 million.

The cases are part of an increased focus by law enforcement on fraud and abuse in health care.

Coordinated enforcement

The federal government takes the lead on many investigations, but it has ample help from state investigators and from insurance companies that alert the government to suspicious billing. A formal structure has been established to facilitate the coordination: the Healthcare Fraud Prevention Partnership, which includes most major insurance companies as well as the FBI, the Department of Justice and the U.S. Department of Health and Human Services.

Federal laws used to fight fraud and abuse are criminal and civil. Criminal laws include the False Claims Act, health care fraud, mail fraud and wire fraud. In addition, civil laws are used to impose monetary penalties and to exclude providers from participation in Medicare, Medicaid and other federal health care programs.

Since 2007, the Medicare Fraud Strike Force has charged more than 3,000 individuals with fraud. In fiscal year 2016, the federal government collected $3.3 billion as a result of health care fraud judgments, settlements and administrative dispositions. The government says the fraud control program returned $5 for each dollar invested.

Exposure by whistle-blowers

Employees of health care providers also may be part of the mix. Whistle-blower laws give employees—often disgruntled ones—a percentage of the amounts recovered for improper billing.

For example, a nurse employed by a Houston surgical center reported that a gastroenterologist performed many colonoscopies in less than two minutes, failed to follow proper sanitation procedures, and failed to perform procedures necessary to catch cancerous lesions. The case settled for $1.6 million, and the nurse will receive part of the settlement.

Investigation techniques

One of the government’s tools for enforcement is data analysis, which may include looking for outliers (a process sometimes referred to as “anomaly-detection models”), such as providers who are ordering a substantially larger number of services than would be expected for similar providers. Investigators also study data from past fraud cases, then program their computers to look for similar patterns.

In addition, CMS applies a “social network analysis” on the “birds of a feather…” theory. Providers should be careful of who their friends are.

If reliable information of an overpayment exists, CMS has authority to suspend Medicare payments to a provider. In FY2016, CMS made 508 suspensions on that basis.

The inspector general says that the Fraud Prevention System (FPS) “is not as effective in preventing fraud, waste and abuse in Medicare as it could be.”

The report suggested the FPS identify aberrant providers more promptly because, by the time action is taken, more overpayments by the government have been made and the providers may have fewer assets from which to collect.

Preventing problems

Physicians, their office managers and billing services can take steps to prevent small problems from becoming big problems. If a government payer or insurance company wants more documentation regarding a claim, respond promptly.

For billing procedures, extra attention should be paid to high-value and high-volume procedures.

If CMS determines that a provider has received an overpayment and a refund to the government is due, payments should be made promptly (generally within 60 days).

If a physician is serving in an administrative or advisory position for a referral source or an entity to which the physician may make referrals, the agreement should be in writing, reflect fair market value, and not be a remuneration in exchange for a referral.

Jeff Atkinson is a professor for the Illinois Judicial Conference and has taught health care law at DePaul University College of Law in Chicago.



An update on the opioid epidemic

As record numbers of Americans die, projects (and prosecutions) emerge.

By Jeff Atkinson | Reform Recap | Spring 2018


Opioid pain killers

Approximately 64,000 people died in the U.S. in 2016 from opioid overdoses—a four-fold increase from 2000. That compares with 40,000 deaths in motor vehicle accidents in 2016. Drug overdoses are the leading cause of death of Americans under age 50.

The rate of deaths from opioid overdose has increased so much that it is responsible for a 2.5-month reduction of average life expectancy for Americans between 2000 and 2015 after several years in which average life expectancy was increasing.

According to data from the Centers for Disease Control and Prevention (CDC), the states with the highest death rates from opioids are in Appalachia, New England and the Southwest.

Precise, current data on drug overdoses is not possible to obtain because of the delays by medical examiners in determining the cause of death and submitting data to the CDC. Toxicology reports often take several months to process.

Blame for the crisis

Drug companies and the insurance industries have received part of the blame for the opioid crisis. Beginning in the 1990s, drug companies increased funding for organizations and CME programs to encourage the expanded use of opioids. Spending on opioids increased by more than 40 percent between 2006 and 2010.

Insurance companies often preferred to pay for comparatively cheap drugs rather than alternate therapies and interdisciplinary pain clinics.

Murder conviction for physician

In egregious cases, a physician’s involvement in opioid abuse can lead to criminal penalties. In 2016, a California general practitioner, Hsiu-Ying “Lisa” Tseng, was sentenced to 30 years to life in prison following her conviction for second-degree murder in the deaths of three patients. She also was found guilty on more than 12 counts of illegally prescribing drugs.

One of the patients who died of an overdose of drugs prescribed by Tseng traveled more than 300 miles with friends to obtain prescriptions from the physician.

The federal government is stepping up its effort to punish over-prescription of painkillers. In 2017, Attorney General Jeff Sessions announced funding for 12 experienced Assistant United States Attorneys who, for three years, will focus exclusively on fraud issues related to opioid prescriptions.

Law enforcement officials will examine whether physicians prescribe opioids far in excess of their peers.

Government initiatives

Federal and state governments have launched initiatives to combat abuse of opioids. Among the initiatives:

  • The federal 21st Century Cures Act has provided $1 billion in funding over two years to fight opioid abuse. More than $140 million is for opioid treatment medication (particularly Naloxone/Narcan) and training of first responders; $200 million will go to community health centers
  • The FDA is requiring drug companies to develop more post-market data on long-term impact of opioid use
  • In August 2017, President Trump declared that opioid addiction was “a national emergency,” though the statement was not promptly followed by a formal declaration and specific emergency actions
  • Approximately 20 states require physicians to check a prescription drug monitoring database before prescribing painkillers to a new patient
  • Some state licensing boards require physicians to receive training on controlled substance guidelines if the physician prescribes controlled substances

Medicaid coverage

State Medicaid programs provide coverage to more than 650,000 non-elderly adults with opioid addiction. The coverage is mostly likely to be available in the 32 states that expanded Medicaid coverage under the Affordable Care Act (Obamacare).

Jeff Atkinson is a professor for the Illinois Judicial Conference and has taught health care law at DePaul University College of Law in Chicago.



Growth in Medicare — and in proposals to change how it is funded

Congress is weighing proposals that include converting Medicare to a voucher system.

By Jeff Atkinson | Reform Recap | Winter 2018


Arrows up, increase and success business illustration
Medicare is a program undergoing significant growth, and there are several proposals on the table that could change it.

Two types of plans

Medicare delivers care through two main programs: Original Medicare (Part A and Part B) and the Medicare Advantage Plan (Part C). The original plan is fee-for-service with patients free to choose their physicians and hospitals (assuming the providers accept Medicare).

Under Medicare Advantage (MA), patients sign up with a private company approved by Medicare, and the plan is responsible for delivering care. Medicare Advantage plans generally are HMOs or PPOs where the patient’s choice of providers is more limited. A patient will pay a higher share (or potentially all) of the costs for out-of-network care. Medicare Advantage plans receive a fixed amount each month per enrollee from the federal government.

Medicare Advantage plans usually offer benefits to patients that are not available under original Medicare, such as coverage of vision and dental care. Enrollment in Medicare Advantage plans has increased more than 70 percent since 2010 to about 19 million, according to the Kaiser Family Foundation.


Private contracting with patients

Among the proposals to change Medicare is to allow physicians who participate in Medicare to enter into contracts with patients to pay more than the Medicare rates. Under current law, physicians who participate in Medicare agree to accept the Medicare fee schedule and not balance-bill the patient for anything beyond the 20 percent copay that is paid by the patient or the patient’s supplemental insurance.

Physicians who opt out of Medicare are free to charge whatever they wish. Psychiatrists make up the largest portion of the opt-out group. Under current law, a physician who opts out must do so for all of the physician’s Medicare patients.

Proposals to change the law would allow physicians to obtain reimbursements at normal rates from Medicare and balance-bill the patient for an agreed additional amount. The additional payments could be determined on a patient-by-patient or service-by-service basis.

A report by the Kaiser Family Foundation notes three arguments in support of these changes:

  • Higher payments to physicians to offset what some view as unduly low payments from Medicare that do not keep up with practice costs.
  • Increasing the number of physicians willing to accept Medicare patients.
  • Reducing costs to patients who wish to see physicians who had opted out of Medicare since Medicare, under the new program, would pay part of the costs.

The Kaiser report also notes drawbacks to the proposal:

  • Costs would increase for patients who enter into such contracts with their physicians. Added payments may be unaffordable, especially for the half of Medicare enrollees who live on $24,000 or less per year.
  • If physicians decide to see only patients who are willing to pay more than the Medicare rates, access to physicians will be reduced.

Voucher plan

Another proposal is to convert Medicare into a system of “premium support”—also referred to as a “voucher” plan. Instead of having the government pay health care bills directly to providers, as is done under original Medicare, the government would provide a fixed dollar amount to Medicare beneficiaries who would use the money to purchase insurance in the private market or in the original Medicare program.

If the level of premium support does not cover the full cost of insurance (which is likely), the beneficiary would have to make up the difference. Some versions of the premium support proposal also would allow insurance companies to provide different levels of benefits. Under current law, all Medicare beneficiaries receive a base level of benefits.

Another uncertainty regarding the premium support proposal is the future of Graduate Medical Education (GME). The current Medicare program heavily subsidizes GME. The premium support plan does not specify how GME will be funded.

Jeff Atkinson is a professor for the Illinois Judicial Conference and has taught health care law at DePaul University College of Law in Chicago.



Trump’s Plan to Cut Federal Health Care Spending

Proposals by President Trump and other Republicans would sharply reduce spending for Medicaid, health insurance subsidies and medical research.

By Jeff Atkinson | Fall 2017 | Reform Recap


Stethoscope wrapped around hundred dollar bills

The plans of President Trump and congressional Republicans for reducing health care spending are a work in progress. Republicans prioritized tax cuts for people with high incomes, as well as increased spending for defense and border protection. As part of the process, they looked for areas in which to reduce spending. Social services and health care are among the areas likely to take the biggest hits.

Medicaid spending

The largest potential reduction in health care spending is from the Medicaid program, which serves low-income people. Earlier this year, the American Health Care Act (introduced in the House) and the Better Care Reconciliation Act (introduced in the Senate) would cut Medicaid.

At the time of this printing, the Congressional Budget Office estimated that the most recently introduced act (the Senate version) would cut Medicaid spending by $772 billion over the next 10 years.

The reductions in Medicaid spending would result from having fewer people enrolled in Medicaid and from changes to the funding formula for Medicaid. Currently, federal payments to states for Medicaid are open-ended. The more a state spends insuring its people, the more the federal government reimburses the states.

Under the Republican plan, states would receive fixed amounts that would not increase based on the scope of coverage provided by state Medicaid plans. The fixed amount would either be in the form of a block grant to each state or a limit on how much the federal government would pay per enrollee. Additional reductions in Medicaid spending could come from allowing states to reduce the benefits that enrollees receive.

Subsidies for health insurance

The second largest reduction in federal health care spending would come from elimination of the subsidies that have helped people purchase non-group health insurance. The subsidies were provided under the Affordable Care Act (also known as Obamacare). The Congressional Budget Office estimated that eliminating subsidies under the Senate’s Better Care Reconciliation Act would reduce federal outlays by $408 billion over 10 years.

According to the Congressional Budget Office, 9 million people received subsidies for insurance in 2017.

Instead of directly subsidizing payment of health insurance premiums, the Trump plan would give people tax credits when they purchase insurance. The Kaiser Family Foundation analyzed the impact of eliminating insurance subsidies and substituting tax credits and found that government costs would increase.

According to Kaiser, when insurance companies lose revenue from lack of federal subsidies for insurance, the insurance companies will raise premiums by an average of 19 percent. The increase in premiums will result in higher tax credits for those who purchase insurance, and, thus, reduce tax revenue to the federal government.

Kaiser estimates that added cost to the government by shifting from subsidies to tax credits would be $2.3 billion in 2018.

Cuts at NIH

President Trump’s proposed budget for 2018 cut $5.8 billion from the National Institutes of Health (NIH). That amounts to an 18 percent cut of NIH’s $31.7 billion budget. Tom Price, Secretary of the Department of Health and Human Services, said the cuts will be for “indirect” costs of research, such as payments that the department makes to universities to cover the administrative costs of running research programs.

Congress is likely to push back on the proposed sharp reductions in research spending.

Risk pools

Establishment of high-risk pools for sale of insurance is among the reforms considered by some Republicans. The pools become particularly important if the mandate for individuals to have insurance is dropped and if insurance companies are allowed more flexibility on setting rates, including basing rates on an individual’s pre-existing conditions.

In that circumstance, the cost of insurance is likely to become quite high or not be available for some individuals. A high-risk insurance pool would be a market of last resort. If the insurance pool is funded only by the insured’s premiums, people seeking insurance may technically have “access” to insurance, but they probably will not be able to afford it.

If the government subsidizes the insurance pool, insurance may be affordable, but it will cost the government more money. In this scenario, the government will have closed down some programs, only to have opened others—a strategy that may or may not save money.

Jeff Atkinson is a professor for the Illinois Judicial Conference and has taught health care law at DePaul University College of Law in Chicago.



Payments to Physicians and Hospitals Become Increasingly Quality-Based

Reform Recap | Summer 2017


Government and private insurers are adopting payment plans based more on service quality and less on service quantity. At the end of 2016, the Centers for Medicare & Medicaid Services (CMS) issued regulations implementing the new Quality Payment Program, which will increase Medicare payments if quality goals are met and reduce them if goals are not met.

Eligibility Requirements

The Quality Payment Program regulations apply to physicians who participate in the Medicare program, who bill Medicare for more than $30,000 per year and who provide care for more than 100 Medicare patients per year. Physicians who do not meet the eligibility requirements are not subject to the Quality Payment Program’s benefits or penalties.

The new regulations and the law that authorizes them add to the number of health care acronyms to keep track of. The law, which was passed by Congress in 2015, is the Medicare Access and CHIP Reauthorization Act (MACRA). The term “CHIP”—an acronym within an acronym—stands for the Children’s Health Insurance Program.

After passage of the law, CMS began drafting the rules to implement the law. CMS received more than 4,000 comments from people and organizations including physicians and professional associations. CMS then issued final rules that required more than 800 pages, including commentary on the rules.

The goal of the program, according to the rule, is to support “transitioning from fee-for-service payments to payments for quality and value.” The program replaces the prior systems—the Physician Quality Reporting System (PQRS) and the Sustainable Growth Rate formula (SGR). The SGR formula was the statutory provision that Medicare payments to physicians would be sharply reduced each year unless Congress stepped in to stop the reduction—which Congress did, although sometimes after the rate cuts took effect for a few months.

Two Tracks for Participation

The Quality Payment Program has two tracks that clinicians can choose from: Merit-based Incentive Payment Systems (MIPS) and Advanced Alternative Payment Models (APMs).

The MIPS apply not only to physicians, but also to physician assistants, nurse practitioners, clinical nurse specialists and nurse anesthetists. Data collection and reporting are the foundations of the program. Clinicians report data in multiple categories:

  • Quality performance (e.g., documentation of current medications in the medical record, colorectal cancer screening)
  • Improvement activities (e.g., care transition documentation practices improvement, collection and use of experience and satisfaction data on access)
  • Advancing care information (e.g., e-prescribing, public health record reporting)

CMS says the program offers a “flexible, pick-your-own pace approach to the initial years of the program.” Under the regulations, clinicians reporting for 2017 can report varying numbers of quality measures for periods between 90 days and one year. Those who want to participate fully should generally report data in six categories. Groups should report data in 15 categories covering one year. Data must be reported by National Provider Identification numbers tied to a Tax Identification Number.

Adjustments to Payments

Under MIPS, if an individual or group does not report any data for 2017, they will receive a 4 percent negative payment adjustment on Medicare reimbursements for the following year. If minimum data are submitted (for example, a physician submits one quality measure and one improvement activity for a 90-day period in 2017), a downward adjustment can be avoided. If a full report is made for the year, bonuses of up to 4 percent can be paid.

The penalty and bonus percentages increase in subsequent years—up to 9 percent in 2022.

The second track of the program, APMs, is designed for providers who are already part of an organization designed to save costs and promote quality, such as Accountable Care Organizations (ACOs) and Medicare Shared Savings Programs. Such organizations receive bundled payments for providing care for patients. For example, Medicare may pay a fixed sum for hip replacement or certain cardiac problems, covering the period of hospitalization and 90 days of follow-up care.

As with the MIPS, participants in APMs must submit quality data, which will determine whether payment rates will be raised or lowered.

More information on the Quality Payment Program, including specific measures for medical specialties, can be obtained from the CMS website,

Private Sector Initiatives

The private sector is also shifting to payments based on service quality rather than just quantity. UnitedHealthCare, Blue Cross and Aetna, for example, use a variety of initiatives to promote value-based care. These initiatives include ACOs, patient-centered medical homes, bundled payments and pay-for-performance, by which payments go up or down depending on quality measures.

A recent study reflects the cost savings that can come from the initiatives. The study, “Cost of Joint Replacement Using Bundled Payment Models” by Amol S. Navathe M.D., Ph.D., and others, appeared in the February 2017 issue of JAMA Internal Medicine. The researchers studied 3,942 patients who received joint replacement surgery and whose procedures Medicare paid for using bundled payments.

The average cost per procedure was reduced by 20.8 percent, from $26,785 to $21,208, when compared to traditional fee-for-service payments. The savings come primarily from reduced costs for implants, supplies and institutional care. The study said, “Patient illness severity remained stable.”

Jeff Atkinson teaches health care law at DePaul University College of Law in Chicago.



The health care policies of President Trump

Many parts of the Affordable Care Act may be eliminated during Donald Trump’s presidency, but some popular features, including prohibiting discrimination based on pre-existing conditions, are likely to continue.

By Jeff Atkinson | Reform Recap | Spring 2017


During his campaign for president, Donald Trump proclaimed, “On day one of the Trump administration, we will ask Congress to immediately deliver a full repeal of Obamacare.” Trump’s disdain for Obamacare under the Affordable Care Act was echoed on the 2016 Republican platform, which said the ACA “imposed a Euro-style bureaucracy to manage its unworkable, budget-busting, conflicting provisions.” Thus, it is expected that President Trump and the Republican-controlled House and Senate are likely to dismantle many provisions of the ACA.

Dismantling Obamacare

High on the list of provisions to dismantle will be the ACA’s mandates that employers provide health insurance and that people without insurance either acquire it or face tax penalties.

In addition, the current requirement that insurance plans offer minimum-benefit packages is likely to be abolished. Insurance companies will probably offer a wider variety of policies, some of which will have minimal benefits. There may also be more insurance companies offering policies in a given state if Trump follows through on his promise to enact laws to allow sales of insurance across state lines.

Trump favors increased use of health savings accounts and allowing full deductions of health insurance premiums on individual tax returns. Such steps would be helpful to middle- and high-income families but would have little benefit for families who are in low tax brackets or pay no taxes.

Medicaid Block Grants

Under Trump’s plan, which is supported by many Republicans, the federal government’s role in Medicaid will also be reduced. Traditionally, the federal government has provided states with funds for Medicaid and issued detailed regulations about how the funds could be spent (although states could be granted waivers).

Under the new approach, the number of federal regulations will be much lower, and Medicaid funds may be lumped into block grants, perhaps including welfare payments, leaving the states to allocate the funds as they see fit. The amount of federal money to fund Medicaid will likely also be reduced. The Trump-Pence policy statement says, “The state governments know their people best and can manage the administration of Medicaid far better without federal overhead.”

Parts of Obamacare that may Remain

Although Republicans are eager to get rid of Obamacare, some parts of it may remain, particularly provisions that are popular with both Republicans and Democrats. Those provisions could be retained in a scaled-back ACA or incorporated into a Republican bill that replaces it.

There is widespread support to have a law that prohibits insurance companies from discriminating on the basis of a person’s pre-existing conditions. Such a law would prevent insurance companies from denying coverage or sharply increasing rates simply because of a person’s health problems. Such protection, however, may be restricted to those who have had continuous insurance coverage, thereby discouraging people from foregoing insurance until the need for it arises.

Other Obamacare provisions that draw bipartisan support include allowing adult children to remain on their parents’ insurance policies until age 26 and using health care payment systems that promote cost-effective care.

Future of Medicare

Republicans vary in their opinions on what the future of Medicare should be.

Some Republicans, including House Speaker Paul Ryan, favor significant changes in Medicare, including converting Medicare into a voucher or premium-support system by which the government would pay a certain amount for retirees’ health insurance, which could be obtained through government or private insurance. If the cost of insurance exceeds the amount the government would pay (which is likely), retirees would have to pay the difference. Ryan would also raise the eligibility age for Medicare from 65 to 67.

Impact on Physicians

The full impact of “Trumpcare” on physicians remains to be seen. It is likely that payments to physicians and other providers from government-sponsored programs will be reduced. Unless Republicans develop a way for those who gained coverage through the Obamacare exchanges to retain their insurance, many currently insured people will return to being uninsured or will be significantly under-insured by policies with stripped-down benefits.

Payments under Medicaid—which are already low in most states—will be lower still if the federal government reduces funding for Medicaid and allows states to use block grants for purposes other than health care. If a state chooses to fund its Medicaid program generously, payments to providers may not be cut, but in an era of tight state budgets, added payments to Medicaid providers do not seem likely.

If Trump follows through on his general promise not to change Medicare significantly, Medicare reimbursement rates may not be adversely affected. Additionally, regulations are likely to be reduced in the Trump administration, which may result in lighter burdens of medical records and other paperwork.

Paths to Change

There are multiple paths to implementing Donald Trump’s health care reform. Some actions can be taken quickly by issuing executive orders—no action by Congress required. Reforms that President Obama implemented by executive orders can also be eliminated by President Trump’s executive orders.

If the Republicans seek to repeal the ACA outright and replace it with a Republican plan, Democrats may be able to slow the process with a filibuster. Republicans have a majority of seats in the Senate, but, under current rules, they do not have the 60 votes necessary to cut off a filibuster.

On the other hand, if reforms are made through a budget reconciliation process, only 51 votes in the Senate are necessary. Budget reconciliation bills are intended to focus on budgetary matters, and under Senate rules, debate can be limited to 20 hours. When the ACA was amended six years ago, the budget reconciliation process was used to make the amendments.

Jeff Atkinson teaches health care law at DePaul University College of Law in Chicago.



Navigating the rapid growth of telemedicine

Telemedicine is a useful way to practice medicine, but physicians need to be aware of legal and regulatory issues regarding licensure, credentialing and malpractice liability.

By Jeff Atkinson | Fall 2016 | Reform Recap


Telemedicine is on the rise. From 2013 to 2015, the number of people using telemedicine increased from 10 million per year to 15 million, according to the American Telemedicine Association. More than half of U.S. hospitals use some form of telemedicine, and insurers are adding telemedicine coverage too.

There are multiple definitions of telemedicine (sometimes referred to as telehealth). The Centers for Medicare & Medicaid Services in its Medicaid regulations states:

Telemedicine seeks to improve a patient’s health by permitting two-way, real-time interactive communication between the patient and the physician or practitioner at the distant site. This electronic communication means the use of interactive telecommunications equipment that includes, at a minimum, audio and video equipment.

Cost-effective visits

Telemedicine is viewed as a cost-effective alternative to face-to-face meetings. It can be particularly important for providing care in rural areas and for patients who have mobility problems. Telemedicine may also encompass remote diagnostic services such as interpretation of imaging studies. Telemedicine is not a distinct specialty, but a method of delivering service.

Telemedicine has been found to be useful in many settings and situations, for instance:

  • For geriatric patients, a televisit may eliminate the need for hospitalization or a trip to the emergency room. This is particularly useful for patients in assisted-care facilities or nursing homes.
  • For patients who have access only to small community hospitals and need expertise beyond what those hospitals offer. In some cases, live consultations with physicians in larger hospitals could prevent these patients from needing to be transported to larger hospitals.
  • For patients who prefer the conveniences of being at home—or want access to medical help at late hours and on weekends—telemedicine provides an opportunity for them to consult with health care providers. In some cases, they can even attach medical equipment to their computers or telephones to transmit information to the providers. University of Iowa Health Care offers such a service to residents of the state via computer, tablet or smartphone, and patients pay a flat fee of $50 by credit card.

Variation in state laws

State laws vary considerably when it comes to telemedicine. A 2015 survey by the American Telemedicine Association reports that, regarding licensure and standards, “22 states averaged the highest ‘composite grade,’ suggesting a supportive landscape that accommodates telemedicine adoption and usage.” Twenty-six states and the District of Columbia were rated “in the middle with room for improvement,” and two states were described as having “many barriers for telemedicine and advancement.”

Texas and Alabama are the two states with the highest barriers. Texas’s barriers include a regulation by the state medical board that requires an in-person physical exam before telemedicine can be utilized. This regulation is being challenged under federal antitrust laws. A trial court enjoined enforcement of the regulations, and the state is appealing the decision (Teladoc, Inc. v. Texas Medical Board, 5th Circuit Court of Appeals, appeal docketed Jan. 8, 2016). Critics of the Texas regulation say the regulation stifles competition and interferes with access to care, particularly in remote areas of the state.

States with laws or regulations that are friendlier to telemedicine do not require in-person visits as a precondition to telemedicine services. Laws in some states require insurance companies to pay for telemedicine on the same basis as face-to-face diagnosis and treatment (when telemedicine services are an appropriate standard of care for the issue at hand). Such laws are sometimes referred to as “telemedicine parity laws.”

Medicare and Medicaid will pay for telemedicine services, although in the case of Medicare, payment is often limited to services provided to rural Health Professional Shortage Areas. There are proposals before Congress and regulators to expand the telemedicine services for which government programs will pay.

Information on state laws pertaining to telemedicine can be obtained from the American Telemedicine Association State Policy Resource Center.

Malpractice issues

An aspect of parity relates to medical malpractice issues. A physician who engages in telemedicine in a state outside the state of the physician’s office will be deemed to have submitted him- or herself to the laws of the state in which the service is rendered, according to the American Health Lawyers Association.

Physicians practicing telemedicine out-of-state (or perhaps in a different area within their state) should consult with their malpractice insurance carriers regarding scope of coverage. Insurance rates may be different when practicing in more than one state.

In addition, informed consent from a patient should include discussion, when applicable, of the limitation of telemedicine compared to in-person visits.

Licensing and credentialing

Physicians considering using telemedicine to deliver care also need to be aware of licensing and credentialing issues. Many states require that, in addition to being licensed in the state where his or her office or hospital is located, the physician who delivers diagnosis or treatment via telemedicine must also be licensed in the state where the patient is located. The license may need to be a full license to practice medicine (such as in California), or it may be a limited license for telemedicine only (such as in Louisiana and Minnesota).

A related issue is credentialing. The Joint Commission on Accreditation of Health Care Organizations (JCAHO) allows, in some circumstances, an institution to rely on the accrediting process of the telemedicine provider if the provider’s institution is accredited by the JCAHO.

Communications technology has enhanced many aspects of life—health care included. In the decades to come, we can expect to see a continuation in the rapid growth of telemedicine.

Jeff Atkinson teaches health care law at DePaul University College of Law in Chicago.



Congress advances laws for mental health and addiction treatment

Republicans and Democrats joined together to promote best practices and more options for delivery of mental health care and addiction treatment.

By Jeff Atkinson | Reform Recap | Winter 2017


Although Republicans and Democrats in Congress have gridlocked on many issues, they have managed to agree on new laws regarding mental health treatment and addiction treatment.

By a vote of 422-2, the House of Representatives passed the “Helping Families in Mental Health Crisis Act of 2016” (H.R. 2646). The act now moves on to the Senate.

Emphasis on best practices

The act calls for development of “evidence-based best practices and service delivery models” for providing mental health care. Areas of emphasis include coordination with physical health care, coordination with the corrections system, suicide prevention, and care for children and the homeless.

Several laws, including the Affordable Care Act, provide for parity between physical health care and mental health care. The difficulty in implementation can be in the details. The new mental health act directs regulators in multiple cabinet departments to develop more “illustrative examples of nonquantitative treatment limitations on mental health and substance use disorder benefits” as well as examples of medical and surgical benefits. Regulators will seek to make more clear to providers and patients the circumstances in which various inpatient and outpatient services are appropriate and should be covered.

Cost savings

Another goal of the act is cost savings. Lawmakers believe there have been unnecessary costs in delivery of personal care and home health care services under Medicaid. The act requires development and use of an “electronic visit verification system”—a more reliable method for making sure services are delivered and for tracking the amount of time spent on such services.

The details of this program will be developed between now and 2019 with input from stakeholders. Beginning in 2019, if a state does not have an electronic visit verification system for personal services, the federal government will reduce payments to the state for the state’s Medicaid program. For home health care services, the penalties for noncompliance will begin in 2023. The penalties begin at .25 percent and increase over a four-year period to 1 percent.

Changes in privacy rules

Drafters of the act are concerned that persons with serious mental illness often lack capacity to make sound decisions regarding their care, and that as a result their health suffers.

One of the findings in the act is that people with serious mental illnesses “die 7 to 24 years earlier than their age cohorts primarily because of complications from their chronic physical illness and failure to seek or maintain treatment resulting from emotional and cognitive impairments.”

The act directs the Department of Health and Human Services to amend regulations under the Health Insurance Portability and Accountability Act (HIPAA) in order “to permit health care professionals to communicate, when necessary, with responsible known caregivers of such persons, the limited, appropriate protected health information of such persons in order to facilitate treatment.”

In addition, the regulations are likely to permit providers to have limited communications with law enforcement to help determine when a person should be admitted for mental health treatment instead of being incarcerated. As with the regulations about the electronic visit verification system, there will be an opportunity for input by stakeholders and the public before the new privacy regulations are finalized.

When Congress wants to give added attention to an issue, one of its techniques is to make adjustments to the command structure of the department that is handling the issue. The mental health act creates a new high-level position in the Department of Health and Human Services: “Assistant Secretary for Mental Health and Substance Abuse.” There also will be a new “Deputy Assistant Secretary.” The act authorizes a variety of task forces to assist with implementation and directs that the department make periodic reports to Congress about progress on mental health issues.

Addiction and recovery act

In July, Congress, with strong bipartisan support, passed the “Comprehensive Addiction and Recovery Act of 2016” (S. 524). President Obama signed the bill into law (Public Act 114-198).


Statistics on mental health and drug abuse

The act is designed to update best practices for pain management and prescription of pain medication, particularly opioids. The new law will fund multiple initiatives, including research, alternatives to opioids, and more treatment facilities. The act has specific programs for treatment of veterans, prisoners and pregnant women.

The new law also provides funding for programs to increase availability of opioid overdose reversal drugs such as Naloxone. In order to make addiction treatment more available, the list of practitioners authorized to dispense or prescribe narcotic drugs for maintenance or detoxification is expanded. The authorized prescribers include licensed nurse practitioners and physician assistants, provided they have had proper training. If state law requires oversight of non-physicians, supervision or collaboration still may be required.

In 2016, the Centers for Disease Control and Prevention issued guidelines for the use of opioids for chronic pain other than active cancer treatment and end-of-life care.

Funding for the Addiction and Recovery Act was a source of tension. The Obama administration wanted $1.1 billion. Republicans wanted about half that amount. When the bill passed the Senate in July, the level of funding was not completely certain. The bill said the new programs were authorized, but the actual dollar amount won’t be set until an appropriations bill is passed later in the year.

In a year with high levels of political conflict, it was refreshing to have two health care acts receive bipartisan support. As the new Congress convenes in 2017, we’ll see how long the cooperation continues.

Jeff Atkinson teaches health care law at DePaul University College of Law in Chicago.



Insurance exchanges in a rocky period

Some insurance companies are dropping out of insurance exchanges, but revenues for other companies may increase with rising premiums.

By Jeff Atkinson | Reform Recap | Spring 2016


Insurance exchanges under the Affordable Care Act (ACA) have hit a rough patch, as many insurance companies are choosing not to offer individual policies through the exchanges. The United States’ largest insurer, UnitedHealth Group, said it is reducing marketing for individual plans and may abandon the market entirely in 2017. UnitedHealth said it expects to lose as much as $500 million in the individual market in 2016.

A survey by the Associated Press of nonprofit insurance cooperatives set up to offer insurance under the ACA shows that of the 23 cooperatives initially created, 12 have already folded. The Associated Press reviewed the financial statements of 10 of the survivors and found that they lost, on average, more than $21 million in the first nine months of 2015.

The cooperatives were designed to offer more competition in the insurance market. The cooperatives, like other insurance companies, have faced rapidly rising medical and drug costs, as well as startup costs for building networks, marketing and technology.

On the other hand, Anthem (a licensee of Blue Cross Blue Shield) and Molina Healthcare (a Medicaid coverage provider) both report they are making money from the exchanges.

“Risk corridor” payments

Part of the problem for insurance companies in the exchanges is that a federal program for “risk corridor” payments did not work out as initially planned. The drafters of the ACA recognized that when setting up a variety of new insurance plans that were not allowed to discriminate on the basis of an enrollee’s health condition, some plans were likely to have enrollees with relatively few health care needs while other plans were likely to have sicker patients with more expensive needs.

To balance the risks and the funding of insurance plans, the risk corridor program was set up on a temporary basis (to be in effect from 2014 through 2016). The program compared insurance companies’ premiums received with the amount the companies paid for claims. If a company’s claims were less than 97 percent of its premiums, the company would make payments to the program. If the company’s claims were more than 103 percent of its premiums, the company would receive payments from the program. In 2014, most insurance companies were having an unprofitable year. So, there was less money available to be transferred from one company to another.

ACA administrators were hoping to have the flexibility of being able to transfer funds from other parts of the federal health program to make up the lack of funds in the risk corridor program. But Congress passed a law that the program had to be budget-neutral, meaning the risk corridor program could not receive money from other ACA programs.

The Centers for Medicare and Medicaid Services said that in 2014, insurance companies requested $2.87 billion in risk corridor payments, but only $362 million in funding was available from profitable insurance companies. Companies that expected to receive payments to make up for their losses received only 12.6 percent on the dollar, adding to their financial stress and resulting in the closure of some companies.

Smaller companies were most vulnerable because they had fewer reserves, less ability to spread the risk, and fewer resources to track medical information about their enrollees in order to calculate the company’s expected claims and risks with more precision. In addition, some companies may have underpriced their insurance policies to try to gain greater market share.

Rising premiums

Premiums for insurance available from the federal website have risen an average of 7.5 percent for 2016. Changes in premiums vary. Indiana premiums dropped the most (12.6 percent) and Oklahoma premiums rose the most (35.7 percent). The data regarding premiums are based on plans with the second-lowest cost available under the ACA, the “silver” tier.

Most people buying health insurance through the insurance exchanges will receive subsidies through the ACA. Subsides in the form of tax credits are available for people with income up to 400 percent of the poverty level. The Department of Health and Human Services reports that 80 percent of returning consumers obtaining insurance through exchanges will be able to purchase a policy for less than $100 per month after tax credits.

Insurance difficult to afford

Nonetheless, payments for health insurance and medical expenses are difficult for some to afford. A survey by the Kaiser Family Foundation and The New York Times found that 20 percent of working-age Americans reported having problems paying medical bills during the last year. In that group, 63 percent reported using up all or most of their savings, and 42 percent took on an extra job or worked more hours.

For those with insurance, common problems include high deductibles, high copayments and higher-than-expected charges for out-of-network care.

For those who go without insurance, penalties will increase. In 2014, the first year in which there was a penalty, the penalty was $95 per adult or 1 percent of family income, whichever was greater. In 2016, the penalty rose to $695 per adult, plus $347.50 per child, up to a maximum of $2,085 per family or 2.5 percent of family income in excess of the 2015 tax filing thresholds—whichever of those two amounts is greater.

The insurance exchange market is in a period of uncertainty as companies struggle to break even or make a profit at a time when there is considerable pressure to hold down health care costs. The election of 2016 adds its own layer of uncertainty for the exchanges—and for Obamacare.

Jeff Atkinson teaches health care law at DePaul University College of Law in Chicago.




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