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).

Article

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.

 

0 Comments

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 HealthCare.gov 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.

 

0 Comments

Health care spending on the rise

After six years in which the annual rate of spending increase was less than 4 percent, health care spending’s rate of increase is, well, increasing.

By Jeff Atkinson | Reform Recap | Winter 2016

 

The U.S. Census Bureau’s Quarterly Service Report compared expenditures for the first two quarters of 2014 and 2015 and found that expenditures for “health care and social assistance” rose by 6.7 percent. That’s up from an annual rate of spending increase of less than 4 percent from 2008 to 2013.

The increase in spending could be due to many factors, including a moderate level of economic recovery and more people covered by insurance under the Affordable Care Act. The proportion of the population without public or private health insurance in 2015 is 10.2 percent—down from a high of 18.2 percent in 2010.

Higher proportion of GDP for health care

According to the Centers for Medicare & Medicaid Services (CMS), national health care expenditures take up 17.2 percent of the gross domestic product. In 1990, it was 12.1 percent of GDP. Health expenditures per person in 2014 were $9,695. Health care spending in 2013 overall was $2.9 trillion. The largest single source of funds was private insurance (33 percent). Government health programs, when combined, constitute a larger portion of health care funding: Medicare (20 percent), Medicaid (16 percent), and other government health programs (7 percent).

Total US Expendisure

Health care spending

As the U.S. population ages and as more people are eligible for Medicaid under the Affordable Care Act, the size of government programs has increased. Between 1995 and 2014, the number of enrollees in Medicare increased by 44 percent, and the number of enrollees in Medicaid and the Children’s Health Insurance Program (CHIP) increased by 90 percent.

Medicare enrollment includes people age 65 and over as well as disabled people under age 65. In 2014, the number of Medicare enrollees age 65 and over was 45 million; the number of disabled people under age 65 was 9 million. Medicare also provides coverage for 512,000 people with end-stage renal disease (2013 data).

Hospitals receive the largest proportion of health care dollars—32 percent. Physicians and clinics (combined) receive 20 percent. Expenditures on prescription drugs are 9 percent.

The proportion of health care dollars going for prescription drugs is expected to rise with increasing use of specialty drugs. A report by Peterson-Kaiser Health System Tracker estimates that pharmaceutical spending increased by 12.6 percent in 2014.

Although hospitals receive the largest portion of health care dollars, the number of hospitals has decreased somewhat—from 6,522 nationwide in 1990 to 6,164 in 2013. During the same time period, the number of ambulatory surgical centers providing services to Medicare beneficiaries has increased more than four-fold. The number of hospices has grown five-fold.

Exceeding general inflation rate

Even during the years in which the rate of increase in health care spending slowed, the rate of increase still exceeded the general rate of inflation. (Since 2008, the Consumer Price Index (CPI) has risen by 3 percent or less per year. Between the end of 2013 and the end of 2014, the CPI rose only 0.8 percent.) The average annual increase in U.S. health care spending from 2008 to 2013 was 3.2 percent and is projected to rise in the coming years.

The proportion of resources devoted to health care cannot rise indefinitely. Health care is, of course, of vital importance—but so is defense, education and infrastructure. Advances in technology and efficiency should improve the quality of health care, but balancing health care with other needs also will have to take place.

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

 

0 Comments

Supreme Court upholds ACA’s use of tax credits

In upholding another portion of Obamacare, the Roberts majority focused on the purpose of the act rather than on six words.

By Jeff Atkinson | Fall 2015 | Reform Recap

 

The U.S. Supreme Court has upheld a key portion of the Patient Protection and Affordable Care Act (ACA)—the provision by which people can receive tax credits to help pay for health insurance. The case was King v. Burwell, decided by the Court in June.

The 6-3 opinion was written by Chief Justice Roberts. The Chief Justice said that the ACA “adopts a series of interlocking reforms designed to expand coverage in the individual health insurance market.” The three key reforms are:

  1. Prohibiting insurers from considering a person’s health when deciding whether to issue insurance and how much to charge for insurance;
  2. Requiring people to acquire insurance or pay a penalty to the Internal Revenue Service; and
  3. Providing tax credits to people earning less than 400 percent of the poverty level to help make insurance more affordable.

The Kaiser Family Foundation estimated that in 2014 more than 17 million people were eligible for tax credits to help purchase insurance on exchanges.

Meaning of six words

The case turned on the meaning of a phrase in the ACA that describes the people who are eligible to receive tax credits. Under the act, the amount of the tax credit depends in part on whether a person enrolled in an insurance plan through “an Exchange established by the State.” Under the ACA, states had the option of creating their own exchanges to sell insurance, and if the states did not, the federal government would establish the exchanges.

As of 2015, 16 states set up their own insurance exchanges. The federal government set up the remainder of exchanges, in some cases in partnership with the states.

The plaintiffs in King were four individuals living in Virginia who did not wish to purchase health insurance. In Virginia, the exchange was established by the federal government. As part of their argument, the plaintiffs asserted that tax credits were available only to persons who obtained insurance through an exchange established by a state—and that tax credits were not available if insurance was obtained through an exchange established by the federal government. If that view had prevailed, millions of people would have lost the tax credits.

“Inartful” phrasing

Chief Justice Roberts acknowledged that the drafting of the phrase in question (as well as some other portions of the 900-page law) was “inartful” and “ambiguous,” making it less than clear if people who obtained insurance on a federal exchange were eligible for tax credits. To decide how to construe the statute, the Chief Justice looked to a prior opinion of the Court that held, “the words of a statute must be read in their context and with a view to their place in the overall statutory scheme.”

In this case, the chief justice said, “Congress passed the Affordable Care Act to improve health insurance markets, not to destroy them.” He noted the interlocking nature of the act’s provisions and argued, “the coverage requirement would not work without the tax credits.” Thus, the majority of the Court held that federal exchanges, as well as state exchanges, were included in the phrase “established by the State,” at least for the purpose of granting tax credits.

Vigorous dissent by Scalia

Justice Scalia, joined by Justices Thomas and Alito, vigorously dissented. Justice Scalia said that the phrase “established by the State” was amply clear, referring only to exchanges set up by the states. The majority’s reasoning, he said, was “absurd,” “pure applesauce,” and “interpretive jiggery-pokery.”

He added: “I wholeheartedly agree with the Court that sound interpretation requires paying attention to the whole law, not homing in on isolated words or even isolated sections. Context always matters…. It is a tool for understanding the terms of the law, not an excuse for rewriting them.”

Justice Scalia thought it plausible that the choice of language in the act was deliberate–perhaps a way to encourage states to establish their own exchanges. If there was a problem with the language, he said, it should be fixed by Congress and not the Court. Quoting another Court opinion, Justice Scalia said, “This Court…has no free-floating power ‘to rescue Congress from its drafting errors.’”

Decision favored by public

A poll conducted by the Kaiser Family Foundation reported that 62 percent of Americans approved of the Supreme Court’s decision to make health insurance subsidies available in all states to people of low and moderate income; 32 percent disapproved of the ruling. The remainder said they had no opinion or declined to answer. Democrats were more likely to approve of the decision (82 percent) than Republicans (29 percent). The approval rating by Independents was 61 percent.

The Affordable Care Act has had two significant victories in the Supreme Court.

The constitutionality of the ACA now seems well-settled, although arguments about the law still are likely to continue in Congress and on the campaign trail.

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

 

0 Comments

Federal laws change payments to providers

Congress, federal regulators and the Supreme Court each have taken actions affecting payments to physicians and hospitals.

By Jeff Atkinson | Reform Recap | Summer 2015

 

The law that threatened to reduce physicians’ pay for Part B Medicare services has been repealed. In April of this year, President Obama signed the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA). The passage was a rare act of bipartisanship on a major issue. The act passed the Senate by 92-8 and the House by 392-37.

Had the law not passed or another temporary fix been implemented, physicians’ pay for Medicare services would have been reduced by 21 percent. Under the old law, which had been in effect since 1997, a “Sustainable Growth Rate” formula was applied that would automatically reduce payments if budget targets were not met.

In addition to providing what has been termed the “doc fix,” the new law also extended for two years the Children’s Health Insurance Program (CHIP) and funding for community health centers.

Payments based on quality

At the outdoor signing ceremony, President Obama said, “Not only does this legislation permanently fix payments to doctors, but it also improves it because what it starts doing is encouraging payments based on quality and not the number of tests that are provided or the number of procedures that are applied.”

Under MACRA, physicians will receive a 0.5 percent increase for Medicare services for each of the next five years. During this time the government will develop “Alternative Payment Models” and “Merit-Based Incentive Payment Systems.” Providers’ performance will be assessed in four areas: quality of care, resource use, meaningful use of electronic health records and clinical practice improvement.

By 2020, bonuses and penalties will be utilized to reflect these measures. Bonuses can provide up to a 12 percent increase from the base payment rate, and penalties can deduct up to 4 percent from the base payment rate. In 2022, bonuses can be up to 27 percent and penalties can be up to 9 percent.

Under the merit-based system, clinicians who receive the highest scores relative to benchmarks also could earn additional “exceptional performance” payments. A technical advisory committee within the Centers for Medicare & Medicaid Services (CMS) will develop details of the payment models.

Impact on physician groups

In a program already underway, payments to physician groups are adjusted by a “value-based payment modifier.” The program is being phased in, starting with large physician groups.

In 2015, payments were subject to adjustment for group practices of 100 or more physicians serving Medicare patients. There were 127 such groups: 14 groups received an upward adjustment of 1 percent; 11 groups received a downward adjustment of 0.5 or 1 percent; 81 groups received no adjustments based on their quality and cost data; and 21 groups received no adjustments because Medicare had insufficient data to make calculations about cost and quality. Quality measures are based on the Physician Quality Reporting System.

In 2016, physician groups of 10 or more will be subject to the program, and in 2017 all physicians, including solo practitioners, will be covered. Starting in 2017, potential reductions in payments will be increased to 4 percent, although solo practitioners and groups of 99 or less will not be subject to downward adjustment during their first year in the program.

Hospital-acquired conditions

One of the initiatives under the Affordable Care Act to promote quality and save costs is the Hospital-Acquired Condition Reduction Program. The program is designed to reduce preventable conditions, particularly infections, that the patient did not have upon admission to the hospital but that developed during the hospital stay.

The CMS reports that the program currently saves Medicare approximately $30 million annually. Those savings come from not making payments for treatments of conditions that CMS deems to be preventable.

Under another part of the program, CMS gives hospitals a score based on their record regarding preventable conditions. The higher the score, the less well the hospital did. Starting in 2015 the hospitals that rank in the quartile with the highest scores (i.e., the poorest records) will have a 1 percent reduction in their payments. For 2015, approximately 724 hospitals have reductions in their payment rates.

In some situations, reductions in payments might be due to poor record keeping. When a patient is admitted, it is important for the hospital and physicians to determine and document the patient’s condition. For example, if a patient has pneumonia or bed sores, even if those are not the reason for admission, those conditions should be part of the patient’s record so that the illnesses are not regarded as hospital-acquired conditions.

Another CMS program, the Hospital Value-Based Purchasing Program, will adjust payments to hospitals based in four quality domains: clinical process of care, patient experience of care, outcome and efficiency.

For 2015, the number of hospitals that will experience a positive change in the payments is slightly larger than the number of hospitals that will experience a negative change.

Accountable Care Organizations

Accountable Care Organizations (ACOs) have had a somewhat bumpy path in the quest to deliver high quality, cost-efficient care. ACOs are groups of physicians, hospitals and other health care providers that join together to give coordinated care to Medicare patients (as well as other patients). “Pioneer ACOs” were the first to join the program.

In the first performance year (2012), there were 32 Pioneer ACOs. Since then, 13 of the Pioneer ACOs have dropped out. CMS reports that Pioneer ACOs have saved the Medicare program $118 million for which the ACOs received $76 million in bonuses. Other ACOs have joined the program. In 2015, there are 405 ACOs participating in Medicare’s Shared Savings Program.

Court challenge of Medicaid rates

In March of this year, the U.S. Supreme Court issued a ruling regarding a challenge to reimbursement rates paid by the Medicaid program (Armstrong v. Exceptional Child Center, Inc.). In this case, providers of habilitation services to persons covered by Idaho’s Medicaid plan argued that the rates being paid were insufficient and violated the Medicaid Act.

Section 30 of the Act requires that a state’s Medicaid plan “assure that payments are consistent with efficiency, economy and quality of care and are sufficient to enlist enough providers so that care and services are available under the plan….” The issue before the Court was whether this language gave providers the right to sue in federal court to challenge the reimbursement rates. The Court held the providers did not have such a right.

In an opinion written by Justice Scalia, joined by three justices with Justice Breyer concurring, the Court held that the only remedy Congress intended was for the Secretary of Health and Human Services to withhold Medicaid funds. Private parties could not sue under the act.

Justice Breyer explained that the requirement of Section 30 of the Medicaid Act is “broad and nonspecific” and that when it comes to ratemaking, “administrative agencies are far better suited to this task than judges.”

The process of setting reimbursement rates for physicians and other health care providers will be an ongoing balancing act that will include assessments of quality of care and efficiency. For the federal health care programs, the primary forums for setting rates will be legislatures and administrative agencies, but not the courts.

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

 

0 Comments

Saying “I’m sorry…”

Most states enact “apology laws” to protect physicians who express sympathy to a patient.

By Jeff Atkinson | Reform Recap | Spring 2015

 

Here’s one case’s background: After taking Tylenol 3 after dental work, a woman went to a Utah emergency room needing treatment due to an allergic reaction. The emergency room physician ordered subcutaneous administration of epinephrine and two other medications to be administered intravenously. The nurse administered all three medications intravenously.

The woman cried out in pain, her heart began palpating, and she was transferred to the hospital’s ICU for observation. During the course of her treatment, her physician said, “I’m really sorry. There was kind of a complication. We messed up.” The woman filed an action for malpractice and sought to admit into evidence the statements of the physician.

Utah has an “apology statute,” which provides that in medical malpractice actions, statements or conduct of a health care provider expressing “apology, sympathy, commiseration, condolence, or compassion; or a general sense of benevolence” are not admissible in court.

Protected statements vary

Apology statutes (also referred to as “I’m sorry statutes”) have been adopted in 37 states. The most recent state to adopt such a statute was Wisconsin, which enacted its law in the spring of 2014.

The scope of the laws vary, and it is important for physicians to know which statements are protected and which are not. The most common laws are similar to the statute in Utah and focus on statements reflecting sympathy or condolence.

Some states, such as Colorado, go a step further and prohibit admission into evidence of expressions of fault as well as expressions of sympathy.

The Utah Court of Appeals ruled that the physician’s statements that “I’m really sorry” and “There was kind of a complication” were inadmissible under the state’s apology rule. On the other hand, the statement that “We messed up” was considered to be an admission of fault and, therefore, admissible against the physician and hospital. (In this case, the verdict was nonetheless in favor of the health care providers since the plaintiff did not present sufficient evidence of injury resulting from the breach of standard of care.)

Promoting better communication

Apology statutes create an exception to legal principles that usually allow a defendant’s “admissions” or “admissions against interest” to be used in evidence. A person’s admission of wrong-doing or an apology are relevant to determining if the person did something wrong, but there also can be reasons for not allowing admission of such evidence in court.

The policy behind apology statutes is to promote better communication between providers and patients. Apologies are a way of showing respect to the patient and providing more of an opportunity for closure.

They also are consistent with a physician’s ethical duties. The AMA Code of Medical Ethics, Opinion 8.12 states:

“Situations occasionally occur in which a patient suffers significant medical complications that may have resulted from the physician’s mistake or judgment. In these situations, the physician is ethically required to inform the patient of all the facts necessary to ensure understanding of what has occurred. Only through full disclosure is a patient able to make informed decisions regarding future medical care.”

Effect on liability costs

Although the research is not definitive, there is evidence that apology statutes can reduce medical liability costs. Patients and family members to whom explanations are given tend to be less angry and more likely to settle for a lower amount than if no explanation or expression of apology was made. And, in some cases, the patients may choose not to file suit.

In addition, the statutes in some states require that in order to obtain the protections of the apology statute, the statement of apology must be made within 30 days of the adverse event. Vermont and Washington are states that apply such a time limit.

Apologies or admission of fault can be difficult. The individual making the apology may fear loss of face or exposure to liability. The laws of most states offer some protection, and at least in some cases, the expression of apology can improve the physician’s relationship with the patient and the patient’s family.

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

 

0 Comments

The Affordable Care Act in progress

More people signed up for health insurance, but there will be delays for ICD-10, a permanent “doc fix,” the Two-Midnights Rule and the employer mandate.

By Jeff Atkinson | Reform Recap | Summer 2014

 

Enrollment of patients under the Affordable Care Act (ACA) grows, but some parts of the program have been postponed. When the period of open enrollment closed earlier this year, more than 8 million people had signed up for private health care insurance under the act.

The ACA also increased coverage for uninsured Americans by expanding the Medicaid program, making eligible anyone with income less than 138 percent of the federal poverty level. (In 2014 in the 48 contiguous states, 138 percent of the poverty level is $16,105 for one person and $32,913 for a family of four.) The Rand Corporation estimates that Medicaid enrollment increased by 5.9 million since enrollment expanded under the ACA.

The number of persons covered by expanded Medicaid would have been larger had it not been for the U.S. Supreme Court decision, which although upheld most of the ACA, gave states the right to opt out of Medicaid expansion (National Federation of Independent Business et al v. Sebelius, 2012). Approximately 24 states have opted out.

The cost of not expanding Medicaid 

Researchers at Harvard University Medical School and City University of New York, writing in the Health Affairs Blog, estimated that between 7,115 and 17,104 will die each year because of the lack of Medicaid expansion in opt-out states. The deaths occur because many patients without insurance will forego screenings and treatments, including medications.

The decision by some states to not expand their Medicaid programs was made even though the federal government will pay 100 percent of the costs of expansion in the first three years of the program and 90 percent of the costs thereafter.

The ACA has reduced the number of people without insurance, but 32 million are estimated to still be without insurance. According to Gallup, those most likely to be without insurance are Hispanic (37 percent) or Black (18 percent). Eleven percent of Whites are uninsured.

The Obama administration has acted to prohibit discrimination against same-sex married couples under the ACA. Insurance companies issuing policies through insurance exchanges will be obliged to offer coverage to same-sex married couples, even if the marriage is not recognized by the state in which the couple lives.

Postponement for parts of program

As a result of lobbying by various groups and administrative difficulties within the government in setting up the expanded health care program, the start dates for some parts of the ACA have been delayed, generally by about one year.

ICD-10: The tenth revision of the International Classification of Diseases (ICD-10) will not be implemented until October 1, 2015. Originally, it was to be implemented in 2013; then it was postponed to 2014; and, in April of this year, President Obama signed the Protecting Access to Medicare Act of 2014, which moved the date to 2015. ICD-9 uses 13,000 codes; ICD-10 will use 68,000 codes, providing more precision in tracking treatments and use of products. Many small physician groups and hospitals opposed the earlier implementation of ICD-10 because of the administrative burdens. Many larger hospitals, physicians groups and insurance companies favored more prompt implementation.

“Doc Fix” for Medicare rates: Congress punted again on passing a law to permanently fix the Sustainable Growth Rate (SGR) formula, which determines physician payment rates under Medicare. Without legislation to fix the SGR, the formula would have mandated a 24 percent cut in physician pay. Democrats and Republicans had agreed in principle that the current formula needed to be replaced by a system based more on quality guidelines than on fee-for-service. They also agreed that the payment system did not have to be a zero-sum game and that all physicians who meet quality guidelines could be eligible for increased payments. Congress could not agree, however, on how to pay for the new payment system, the cost for which is estimated to be between $128 and $180 billion over 10 years. So Congress, as part of the Protecting Access to Medicare Act, voted for the 17th time to suspend application of the formula and its reduction in payment rates.

Two-Midnights Rule: A third feature of the Protecting Access to Medicare Act was to extend the moratorium on the Centers for Medicare and Medicaid Services’ enforcement of the Two-Midnights Rule. Under the rule, a patient’s admission to the hospital is usually considered “reasonable and necessary” if the patient stays in the hospital for two midnights. If the patient is admitted to a hospital for less than that, Recovery Audit Contractors may impose penalties. Under the act, the audit contractors will not be able to audit for enforcement of the rule until April 1, 2015.

Employer mandate for medium-size companies: The obligation of companies with 50 to 99 full-time employees to provide health insurance to their employees has been postponed from Jan. 1, 2015 to Jan. 1, 2016. The mandate—referred to in the law as “employer shared responsibility”—was delayed by rules issued by the Treasury Department. In order for a company with 50 to 99 employees to postpone their obligation to provide insurance, the employers will need to certify that they have not laid off any employees in order to be under the 100-employee limit. Employers with 100 or more employees still will have to meet the Jan. 1, 2015 deadline.

Though the Affordable Care Act is accomplishing its primary purpose—providing health insurance to more individuals—several administrative aspects of the program have been difficult to implement, and the time for full implementation has been
delayed.

Jeff Atkinson (JAtkin747@aol.com) teaches health care law at DePaul University College of Law in Chicago.

 

0 Comments

Peeking into physician pockets

New federal regulations allow the public to seek information about the amount of money physicians receive from Medicare and the health care industry.

By Jeff Atkinson | Reform Recap | Spring 2014

 

Transparency has become a theme in health care reform. In 2014, the transparency spotlight has turned to payments received by physicians from Medicare and the health care industry.

For 33 years, the amount of money that individual physicians received from Medicare was confidential. A lawsuit brought by the American Medical Association and the Florida Medical Association in the 1970’s resulted in an injunction prohibiting the release of Medicare reimbursement information for individual physicians.

In 2013, a Florida federal court judge revisited the issue and held that the federal Privacy Act no longer barred release of reimbursement information under the Freedom of Information Act.

The Centers for Medicare & Medicaid Services (CMS) then drafted regulations to comply with the court ruling. The regulations were announced in January and took effect March 18. Under the regulations, the public—including the news media—does not have an automatic right to the reimbursement records for individual physicians, and, in no case, will names of individual patients be released.

“Case-by-case determination” regarding release 

Instead, in the words of the new policy, CMS “will make a case-by-case determination” about whether to release the information after balancing “the privacy interest of individual physicians and the public interest in disclosure of such information.”

The legal issue involves exemption 6 of the federal Freedom of Information Act, which exempts from the requirement of release of information “personnel and medical files and similar files the disclosure of which would constitute a clearly unwarranted invasion of personal privacy.”

The details of how CMS will administer the new policy are not clear, but the tenor of the policy seems to favor release of information.

Jonathan Blum, Principal Deputy Administrator of CMS, said in the CMS Blog (Jan. 14), “Given the advantages of releasing information on Medicare payment to physicians and the agency’s commitment to data transparency, we believe replacing the prior policy with a new policy in which CMS will make case-by-case determinations is the best next step for the agency.”

Among the benefits projected from the new policy are letting patients see which physicians have the most experience in areas of practice and particular procedures as well as providing data that could help determine if fraud, abuse and waste have occurred.

Broad access vs. safeguards

Some wish CMS had gone further and had opened reimbursement records to the public in a searchable database. The Association of Health Care Journalists, for example, said, “As long as patient confidentiality is protected, we see no reason why taxpayers should not know how individual physicians are spending public dollars.”

Medical associations generally prefer a go-slow approach. The American Medical Association and other physician groups told CMS: “Steps must be taken to ensure that the release of data does not mislead the public into making inappropriate and potentially harmful health care treatment decisions. In light of these considerations, the release of raw data regarding physician claims for providing medical services should be limited for specific purposes and with appropriate safeguards.”

Some physicians also would like a vehicle for presenting the data in context. If a physician received a very high amount of income from Medicare, the physician might want it known if they had very high expenses that offset the income, including rent, office staff, malpractice insurance and equipment.

Sunshine Act to illuminate industry payments

Another area in which the public will be able to obtain information is payments made to physicians by manufacturers of drugs, biologicals, devices and medical supplies. The Affordable Care Act contains a provision called “The Physician Payments Sunshine Act.” The act is modeled on proposals by the Medicare Payment Advisory Commission and the Institute of Medicine.

Under the act, beginning Aug. 1, 2013, manufacturers were obliged to collect data on payments they make to physicians. The payments include consulting fees, honoraria, fees from serving as a speaker at education programs, food and beverages. (For a full list of payments that need to be reported, see the sidebar at the bottom of this page.)

Reports also need to be made if a physician or an immediate family member of the physician have an ownership interest or investment interest in the manufacturer.

Manufacturers are to report the data annually to CMS with the first report due March 31, 2014. The public will have access to the data, including via a searchable website, beginning Sept. 30, 2014.

Payments that do not need to be reported include: ownership of shares in publicly traded companies and mutual funds; loans of devices for periods of 90 days or less; product samples that are provided at no cost to patients; payments with a value of $10 or less (provided the annual total payment to an individual physician does not exceed $100 per year); and educational materials that are of direct benefit to patients.

Physicians are encouraged to contact manufacturers with whom they work to review the manufacturer’s report for accuracy. In addition, under the statute and regulations, after the manufacturers submit reports to CMS, physicians must have at least 45 days to review the report and request corrections before the information is made available to the public.

To assist physicians in tracking payments made to them by manufacturers, free smartphone apps are available through the Google Play Store and the Apple App Store. The title of the app is “Open Payments Mobile for Physicians.”

Health care is increasingly data-driven in efforts to promote quality, control costs and inform consumers. Part of that effort is making available information regarding payments physicians receive from Medicare and from health care manufacturers.

Jeff Atkinson (JAtkin747@aol.com) teaches health care law at DePaul University College of Law in Chicago.

 

0 Comments

Challenges of the insurance exchanges

Insurance exchanges offer multiple plans as they seek to balance desires for broad coverage and affordable care.

By Jeff Atkinson | Reform Recap | Winter 2014

 

The six-month open enrollment period for obtaining health insurance through exchanges under the Affordable Care Act (ACA) got off to a bumpy start when 8.6 million people tried to visit the federal government website in the first week, millions more visited state websites, and the computer systems could not handle the initial surge. But as the computer systems improved and the volume of inquires per day decreased, operations have become smoother. Open enrollment continues through March 31.

In 36 states, the exchanges are operated by the federal government or a joint effort of the federal and state governments. In the remaining 14 states, the states operate the exchanges.

Insurance mandate for most
The purpose of the exchanges is to make it easier for individuals without insurance and small businesses (fewer than 50 employees) to obtain insurance. Under the ACA, people are mandated to obtain private insurance subject to a few exemptions. The exemptions include being covered by other government insurance programs, including Medicare and Medicaid, or having an exemption for religious reasons.

Individuals who do not acquire insurance and do not qualify for an exemption will be obliged to pay a penalty—also referred to as a “shared responsibility payment.” In 2014, that amount is a relatively modest $95 per person or 1 percent of income, but the amounts and percentages increase in subsequent years.

To facilitate comparison shopping for insurance, the ACA provides for standardization of insurance policies. Insurance companies are not allowed to discriminate on the basis of pre-existing conditions, and lifetime limits on coverage are prohibited. The types of services covered will be the same within a given state, although individual states may vary the types of services covered, including by requiring coverage of more services than the federal government’s minimum “essential health benefits.”

The requirement of having policies with the same level of benefits was modified in November when, in response to pressure from the public and political leaders, insurance companies were allowed to renew existing policies on the same terms as they had been issued, even if the policies do not meet the new requirements of the ACA.  It will be up to the insurance companies to decide whether to reissue the old policies as well as offer the new policies required by the ACA.

Premiums vary by state
The cost of premiums varies from state to state. As the exchanges opened, the U.S. Department of Health and Human Services said the nationwide premium average turned out to be 16 percent lower than earlier projections. The amount of premium that a person pays will depend on the proportion of costs covered by the plan chosen by the individual. The ACA established four “metal levels” of coverage. A bronze level plan will cover 60 percent of a patient’s expenses; a silver plan, 70 percent; a gold plan, 80 percent; and a platinum plan, 90 percent.

The average monthly premium for an individual in the 48 contiguous states will be $328 for a silver plan. According to analysis by the Kaiser Family Foundation, the range in costs for a silver plan for a single person will be from a low of $201 in Portland, Ore., to a high of $413 in Burlington, Vt.

These amounts reflect the premiums before providing tax credits to reduce the cost. The amount of the tax credit will depend on a person’s income, with credits available for those with income up to 400 percent of the poverty level. The ACA allows insurance companies to vary rates by the age and smoking habits of applicants. An older person can be charged up to three times the premium of a younger person for the same coverage, and smokers can be required to pay up to 50 percent more for premiums. States, however, can require that rates be uniform regardless of age and smoking habits. New York, for example, has such a regulation.

Adverse impact of low-cost plans
Those who choose low-cost plans may be in for unpleasant surprises. The premiums on a bronze or silver plan will be low compared to a gold or platinum plan, but the copay by the patient will be high. For example, if a patient incurs a $100,000 medical bill, the bronze plan will pay only $60,000, and the patient will be responsible for $40,000—perhaps even more if the patient received care out of network. This will have a ripple effect on providers who may have difficulty collecting the co pay from a patient who cannot afford it.

To determine eligibility for subsidies, insurance exchanges will rely on multiple sources, including the application forms, IRS records, Social Security data, and in some cases, other wage information that is available electronically, including through credit reporting firm Equifax. If an applicant for insurance claims a tax credit for which the applicant is not eligible, the IRS will require repayment the following year.

Physicians joining large groups or hospitals
Although physicians may have difficulty collecting large copayments from patients, they also are likely to find there are more patients coming through the door since the ACA is designed to provide insurance to people who currently do not have insurance. To gain access to the increased base of patients, physicians increasingly will join large physician groups or hospitals, particularly those that have contracts as preferred providers with multiple insurance companies or employers.

Private insurance companies will provide coverage through the exchanges. Plans affiliated with the Blue Cross and Blue Shield Association will be dominant players. Blue Cross is offering plans in 47 states and the District of Columbia. Under a contract with the federal government, Blue Cross’s offerings through the exchanges will include multi-state plans in 30 states. This will facilitate having additional health plans available, particularly in small states in which there otherwise might be fewer options for buying insurance.

Some companies—including UnitedHealthcare, Aetna and Cigna—are concerned about the profitability of selling products through insurance exchanges and have chosen to limit their participation by selling their products outside the exchanges or only through the exchanges of a few states.

The American Medical Association (AMA) has expressed concern about concentration in the health insurance market. In November, it issued a report entitled “Competition in Health Insurance: A Comprehensive Study of U.S. Markets.” AMA President Ardis Dee Hoven, M.D., said, “An absence of competition in health insurance markets places a particular strain on physicians in small practices who don’t have the leverage to be equal negotiating partners with large health insurers.”The AMA says the report “is intended to help researchers, lawmakers, policymakers and regulators identify markets where mergers and acquisitions among health insurers may cause competitive harm to patients, physicians and employers.”

The ACA seeks to balance competing interests. It wants to provide good quality coverage at an affordable cost. It seeks to give purchasers of insurance a choice, yet limit the range of choices to facilitate comparative shopping and promote price competition. Striking the best balance will be an ongoing challenge and adjustments can be expected in the years ahead.

Jeff Atkinson (JAtkin747@aol.com) teaches health care law at DePaul University College of Law in Chicago.

 

0 Comments

Medicare’s Sustainable Growth Rate formula may finally be repealed

Democrats, Republicans, the White House and the AMA all agree: The Sustainable Growth Rate formula is not working. What’s next?

By Jeff Atkinson | Fall 2013 | Reform Recap

 

This may be the year in which  which Medicare’s Sustainable Growth Rate (SGR) formula is finally repealed. The formula is one of Congress’s less-successful attempts at controlling health care costs. It is part of a law that each year threatened to cut physicians’ pay for Medicare services by a substantial percent, but then Congress stepped in and canceled the cut for that year.

The SGR was enacted as part of the Balanced Budget Act of 1997. Congress was concerned that the Medicare fee schedule would not sufficiently constrain spending for physicians’ services under Part B of the Medicare program because physicians, for example, might increase the volume of services to make up for a loss in revenue on per-service payments. If the cost of Part B exceeded limits specified by the formula, Medicare rates for the following year would be reduced.

Formula tied to growth in economy
The formula is a complex one. It takes into account multiple variables, including change in physicians’ fees, the number of Medicare beneficiaries, growth in the gross domestic product (GDP) per capita, and changes in health care spending due to laws and regulations. The broad goal of the formula is to not allow spending for physicians’ services to increase faster than the growth of the economy.

For the first four years of the program, there was not a problem. Actual expenditures were less than or close to the target expenditures. So the updates to the physicians’ fee schedule provided increased reimbursements to physicians for each of those years. In 2002, expenditures exceeded targets, and physician reimbursements were cut by 4.8 percent.

That was not acceptable to physicians and lawmakers. So for all years after 2002, Congress provided what has been referred to as the “doc fix” or “pay patch”—a law that suspended the payment cuts and usually provided a moderate increase for physicians.

The underlying formula, however, was not changed or repealed. Each year, the amount of payment cuts that would have to be made in order to balance the books under the formula increased. Under the formula, if Congress does not solve the problem between now and the end of the year, Medicare reimbursement rates for physicians in 2014 will be reduced by about 25 percent.

Broad support for repeal
There is near-universal agreement that the SGR formula needs to be repealed or changed. The formula has not served to cut costs, and if the formula were applied, the number of physicians willing to treat Medicare beneficiaries would be reduced. Support for change comes from Republicans, Democrats, the White House, the Medicare Payment Advisory Commission, and the American Medical Association (AMA).

In a letter to Congressional leaders urging repeal of the SGR formula, the AMA’s Executive Vice President and CEO, James Madara, M.D., said, “Stable and predictable payment models are necessary to ensure physicians can plan for investments in capital improvements and continuously make advancements in delivering higher quality and more efficient care.”

Part of what has delayed coming up with a permanent remedy has been the cost of repeal. The Congressional Budget Office (CBO) scores legislative proposals to determine their cost. Until recently, the cost of repeal of the SGR formula had been set at $244 billion over 10 years. This year, the CBO reduced its estimate to $138 billion over 10 years. That will make repeal more politically palatable.

The Affordable Care Act provides alternate ways to save health care dollars, particularly in the Medicare program. The act provides for an increase in “value-based purchasing” by which the government (and private payors) will make more payments based on value received rather than just fee-for-service. Providers with good outcomes and cost-effective care may receive bonuses; providers who do not meet quality and cost targets may find their reimbursement rates cut.

There also will be increased use of “bundled payments” by which groups of providers—including hospitals, physicians and home care agencies—will receive a single fixed payment for treatment for an episode of care or of a particular condition. For example, the care of a patient with a broken hip or the care of a patient with diabetes for a certain period of time would be a fixed global payment that would be divided among providers. The payments likely will utilize adjustment factors for severity of the patients’ conditions and case mix.

Getting the details right on adjustment factors will be challenging. The AMA’s Madara said the Centers for Medicare and Medicaid Services “is not ready to implement the value-based payment modifier and…any efficiency measures [should] be tested in large group practices before they are imposed more broadly.”

Some political leaders view health care spending as a zero-sum game. If payments to physicians go up, payments to other health care providers will need to be reduced or at least not rise as rapidly as in years past. Thus, it is expected that payments to hospitals, skilled nursing facilities and home health agencies will be cut or rise more slowly. In a recent “doc fix,” the physicians’ rates did not drop, but the money for physicians came by reducing payments for public health, prevention and hospitals.

Health care reform has some similarities to squeezing a balloon. If one tries to fix a problem on one part of the balloon by squeezing it, another part of the balloon will bulge out and need its own fix.

Jeff Atkinson (JAtkin747@aol.com) teaches health care law at DePaul University College of Law in Chicago.

 

0 Comments

 

Return to Top

Page 2 of 3123