Easing regulatory burdens

To promote efficiency and save costs, the federal government has issued new regulations covering telemedicine, staff privileges and other subjects.

By Jeff Atkinson | Reform Recap | Summer 2012


In 2011, President Obama issued an Executive Order (No. 13563) directing each agency of the federal government to review its existing regulations and repeal or modify regulations that are “outmoded, ineffective, insufficient or excessively burdensome.”

The Centers for Medicare & Medicaid Services (CMS) and the Department of Health and Human Services responded with revised regulations on multiple issues. The new regulations affecting physicians reflect changes in the way medicine is practiced and an increased use of technology.

Credentialing for telemedicine

Telemedicine is a method of providing clinical services to patients from a distance. It can include communication and examination of patients by audio-visual electronic communication as well as non-simultaneous services such as teleradiology. Telemedicine facilitates providing services to rural locations and giving prompt access to experts in a variety of settings.

Under old CMS rules, a provider of telemedicine services (who often was affiliated with a major hospital) had to be credentialed not only at his or her home hospital, but also at any hospital at which the patient was being treated.

CMS concluded “that our present requirement is a duplicative and burdensome process for physicians, practitioners, and the hospitals involved in this process, particularly small hospitals….” CMS also noted that small hospitals may not have the expertise to evaluate physicians in a wide range of specialties.

Related: Read more about health care reform at ow.ly/aP0Q5

A new final rule, issued in 2011, allows hospitals obtaining telemedicine services to rely on the credentialing process of the provider’s home institution rather than go through its own credentialing process.

Under the rule, the hospital at which the physician is based must provide the hospital at which the patient is located with evidence of the internal review of the physician’s credentials.

The rule provides “[a]t minimum, this information must include all adverse events that result from the telemedicine services provided by the distant-site physician or practitioner to the hospital’s patients and all complaints the hospital has received about the distant-site physician or practitioner.”

CMS estimates that the streamlined credentialing process will save approximately $1,500 per physician credentialed in time spent by physicians, hospital administrators and attorneys. The new regulation and official comments about the regulations are available online at ow.ly/aP0Zq.

Hospital privileges to non-physicians

CMS issued a proposed rule in October 2011 to allow more flexibility for hospitals to grant privileges to non-physicians.

Under the proposed rule, if state law allows certain categories of non-physician practitioners, those practitioners also may obtain privileges to work at hospitals within the scope of their practices. Examples of such practitioners include advance practice registered nurses, physician assistants, physical therapists, speech language pathologists and doctors of pharmacy.

The proposed rule states that being a member of the medical staff is not a prerequisite to being granted privileges. The hospital may treat the non-physicians as members of the medical staff, but is not required to do so. Another option for hospitals is to have additional categories of staff membership such as “associate” or “limited” memberships for non-physicians.

For multi-hospital systems, CMS said it did not believe that a separate medical staff is necessary for each hospital within the system. Instead, multi-hospital systems, if they wish, could grant practitioners privileges which would encompass more than one hospital.

CMS has sought comments about whether clarification of the rules on this issue was necessary. Under a related proposal, systems with more than one hospital will have the option of having a single governing body for all the hospitals in the system rather than separate governing bodies for each hospital.

Other efficiency initiatives

Other proposed regulations to streamline procedures and save costs include:

• Increased use of pre-printed and electronic standing orders.
Hospitals may use such orders as long as they “have been reviewed and approved by the medical staff in consultation with the hospital’s nursing and pharmacy leadership” and “are consistent with nationally recognized and evidence-based guidelines.”

• Patient self-administration of medications.
Hospitals will have the option of allowing patients (or caregivers) to self-administer medications issued by the hospital as well as medications the patient has brought to the hospital. The practitioner responsible for the patient’s care will have to approve the arrangement, and procedures will need to be in place to ensure the safety of the administration of medications.

• Interdisciplinary care plans.
Instead of having a patient’s nursing care plan be separate from other parts of the patient’s record, hospitals may use interdisciplinary care plans that incorporate a nursing plan.

• Revising HIPAA rules.
While maintaining privacy rights for health care records, the Department of Health and Human Services plans to reduce the burden associated with distributing notices of privacy practices under the Health Insurance Portability and Accountability Act (HIPAA). In addition, the department plans to make it easier to distribute students’ immunization records to schools. The department estimates the changes in rules could save up to 2 million “burden hours” and $120 million.

• Uniform ID number for health plans.
The Department of Health and Human Services plans to establish “unique health plan identifiers” of a standard length and format for each health plan. Currently, a wide range of identifiers are used, and this results in misrouting of transactions, rejection of transactions due to insurance identification errors, and difficulty in determining patient eligibility. The department estimates this change will save providers and health plans $4.6 billion over the next 10 years.

For reasons of pragmatics as well as politics, the administration directed CMS and the Department of Health and Human Services to pause and consider how existing regulations can be made more efficient.

The most recent round of rules and proposed rules should indeed save time and money, although there also will be costs in implementing the new rules.

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



Affordable Care Act bringing changes to Medicaid

More patients will be covered under Medicaid, and primary care providers will receive higher payments

By Jeff Atkinson | Reform Recap


An important component for reforming health care under the Patient Protection and Affordable Care Act is expansion of the Medicaid system. Currently, Medicaid (established in 1965) and its associated program, the Children’s Health Insurance Program—CHIP—(established in 1997) cover nearly 60 million Americans, particularly low-income adults and children.

The federal Centers for Medicare & Medicaid Services (CMS) explains that the “Affordable Care Act fills in current gaps in coverage for the poorest Americans by creating a minimum Medicaid income eligibility level across the country.” And, CMS notes, beginning in January 2014, people under age 65 with income below 133 percent of the federal poverty level will be eligible for Medicaid.

In 2012, 133 percent of the poverty level was $14,856 for an individual and $30,657 for a family of four. (The method used by the government to define “modified adjusted gross income” will have the effect of raising the eligibility for Medicaid to 138 percent of the federal poverty level.) more »



Insurance exchanges explained

State insurance exchanges are designed to make health insurance more accessible to individuals and small employers.

By Jeff Atkinson | Reform Recap


One of the techniques for making health insurance more available under the Patient Protection and Affordable Care Act (PPACA) is the establishment of insurance exchanges. Although PPACA was passed by Congress in 2010, the insurance exchanges are not scheduled to become operational until Jan. 1, 2014.

In July 2011, the U.S. Department of Health and Human Services issued proposed rules regarding insurance exchanges. After receiving and evaluating comments on the rules, the department will issue final rules in 2012.

Leveling the playing field
Insurance exchanges are designed to make insurance more available to individuals and small employers. (A “small employer” is defined as an employer with an average of 100 or fewer workers in the preceding calendar year.) When issuing the proposed rule, the department said that “[i]nsurance companies will compete for business on a level playing field” and the program will “give individuals and small businesses the same purchasing clout as big businesses.”

Health and Human Services Secretary Kathleen Sebelius said it was currently common for small employers to pay up to 18 percent more than large employers for the same level of coverage for employees.

The federal government has provided large grants to help states set up insurance exchanges. It anticipated that most states will set up their own insurance exchanges, but states also have the option of joining together to establish a regional exchange.

If a state does not set up an insurance exchange, the federal government will establish an exchange directly or will contract with a non-profit entity to establish the exchange. Although states are supposed to have a working exchange by 2014, the federal government has the option of giving states an additional year to set up the exchanges.

Qualified health plans
The insurance exchanges will offer—in the terminology of the proposed rule—“qualified health plans,” most of which are likely to be provided by private insurance companies. All plans must offer “minimum essential coverage.” That level of coverage will be set by the federal government with guidance from the Institute of Medicine, an arm of the National Academy of Sciences, which provides unbiased scientific information to the government and public.

Under the PPACA and the proposed rules, qualified health plans may not refuse coverage or discriminate against applicants for insurance on the basis of a pre-existing condition. Qualified health plans also must include in their provider networks “essential community providers” that serve predominantly low-income and medically underserved individuals. Privacy rules for electronic transactions of exchanges will be governed by the Health Insurance Portability and Accountability Act (HIPAA).

Applicants will be offered plans that pay a varying percent of covered services (90 percent for a “platinum plan,” 80 percent for a “gold plan,” 70 percent for a “silver plan,” and 60 percent for a “bronze plan”).

Insurance exchanges are required to establish “navigator programs” to provide “fair, accurate and impartial” information and services to health insurance consumers about the health plans that are available and to facilitate enrollment in those plans. (Health insurance companies cannot serve as “navigators.”) As with many private insurance programs, there will be an open enrollment period.

Tax credits are available to persons with low to middle income to purchase insurance through the exchanges. The tax credits will be based on the federal poverty level, with sliding scale tax credits being available to persons at 100 to 400 percent of the poverty level. (In 2011, a family of four in the 48 contiguous states and District of Columbia was at the poverty level with an income of $22,350 or less; four times the poverty level for a family of four would be $89,400.) In addition, under the PPACA, persons with incomes at 133 percent of the poverty level will be eligible for Medicaid.

Will insurance be affordable?
A challenge for many families will be: Will insurance through exchanges be affordable—even if there are economies of scale by obtaining insurance through the exchanges and even if the government provides tax credits for some families? Families might be able to reduce one type of health care cost by purchasing “bronze plans” instead of “platinum plans.” But if a family has significant health expenses in a given year, the savings on premiums is likely to be exceeded by the added out-of-pocket costs.

A report by the Kaiser Family Foundation said that annual health insurance premiums for employer-sponsored family health coverage increased to $15,073 in 2011. Employers, on average, paid $10,944 and workers paid $4,129. The 2011 insurance premiums were a 9 percent increase from 2010 for family coverage—a significantly higher rate of increase than the preceding several years.

Health insurance exchanges will make insurance more available and are likely to make the cost of insurance less than it would be without the exchanges. Nonetheless, a challenge will remain to control health care costs while also providing high-quality care.

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




ACOs to become operational

The Medicare program's use of Accountable Care Organizations will impact how medicine is practiced and physicians are paid.

By Jeff Atkinson | Fall 2011 | Reform Recap


Establishment of Accountable Care Organizations (ACOs) has been described as the most significant change in health care delivery since the Medicare and Medicaid programs were begun in the 1960s.

The creation of ACOs is part of the “Medicare Shared Savings Program” of the Patient Protection and Affordable Care Act passed by Congress in 2010.
Starting January 1, 2012, the federal government will pay ACOs for caring for Medicare patients. The goal is to have health care providers join together to deliver care in a high-quality, cost-efficient manner. If costs are saved, the ACOs will receive bonuses that will be shared with the providers. If costs exceed benchmarks established by the Centers for Medicare and Medicaid Services (CMS), the ACOs will have to pay back some of the funds they have received.

In April 2011, CMS issued a proposed rule governing ACOs. Health care providers and members of the public had two months in which to submit comments on the rule. After considering the comments and probably making some modifications to the proposed rule, CMS will issue a final rule.

Requirements for ACOs
Under the proposed rule, in order to qualify as an ACO, the organization must care for at least 5,000 Medicare beneficiaries and enter into a three-year agreement with CMS to provide care. CMS will assign beneficiaries to an ACO if a beneficiary has received a plurality of his or her primary care from physicians associated with the ACO, although beneficiaries are free to change physicians (and ACOs) if they wish.

Use of electronic health records is an important part of achieving the goals of ACOs to improve quality and reduce costs. Under the proposed rule, at least 50 percent of the primary care physicians in an ACO must be “meaningful users” of electronic health records. (“Meaningful use” of electronic health records is the subject of other federal regulations. It includes recording and transmitting patient demographics, vital signs, diagnoses, allergies, clinical quality measures and prescriptions, as well as use of electronic systems for clinical decision support.)

Physicians who are working with an ACO are likely to find their practice of medicine more subject to controls by the organization than would be the case in small medical practices. Under the proposed rule, “The ACO must implement evidence-based medical practice or clinical guidelines and processes for delivering care consistent with the aims of better care for individuals, better health for populations, and lower growth in health care expenditures.” The rule adds that the guidelines should “tak[e] into account the circumstances of individual beneficiaries.”

Management of ACOs
The proposed rule is flexible regarding what types of organizations can set up ACOs. The most likely types of organizations are hospitals, large groups of physicians and insurance companies. An organization will need significant amounts of capital and administrative support to establish an ACO.

Clinical management of an ACO must, in the words of the rule, be handled “by a full-time senior-level medical director who is physically present on a regular basis in an established ACO location, and who is a board-certified physician and licensed in the State in which the ACO operates.” The rule also provides that “At least 75 percent control of the ACO’s governing body must be held by ACO participants.” ACO participants include physicians, hospitals, skilled nursing facilities, hospices, home care agencies and suppliers.

Two tracks for level of payments
The proposed rule provides two tracks for payments to ACOs. Both tracks make reference to “benchmarks” established by CMS for each ACO that are based on multiple factors, including the claims history of Medicare beneficiaries cared for by the ACO, the health status of the beneficiaries, and CMS’s estimate of what it would have paid for services without the cost-saving measures being implemented by the ACO. The tracks involve different levels of payment and risk for the ACOs, and the ACOs may choose which track to be on.

Under Track 1, also known as the “one-sided model,” in the first two years of the program, participating ACOs may receive bonuses up to 7.5 percent of its benchmark for savings achieved, provided the ACO achieved a minimum level of savings. That minimum level of savings varies between 2 and 3.6 percent of Medicare Part A and Part B payments, depending on the number of beneficiaries served. In the first two years, there is no downside. If costs exceed the benchmark, the ACO would not be obliged to pay back money to CMS. In the third year, however, ACOs on Track 1 would be sharing risks as well as the savings. The maximum payback amount (“recoupment”) in the third year would be 5 percent of the benchmark.

Under Track 2, also known as the “two-sided model,” ACOs share in the risk as well as the potential savings, beginning in the first year of the program. In exchange for the added risk, ACOs on Track 2 will have a higher cap on savings they may share—up to 10 percent of its benchmark (rather than the 7.5 percent limit for ACOs on Track 1). In addition, Track 2 ACOs share in the first dollar of savings and do not have to wait until a minimum level of savings is achieved. The maximum payback amount would be higher for ACOs on Track 2 than ACOs on Track 1: 5 percent in the first year, 7.5 percent in the second year, and 10 percent in the third year.

ACOs on both tracks can receive added bonuses for providing services for Federally Qualified Health Centers and Rural Health Centers. In order to receive bonus payments, ACOs, in addition to achieving savings, will need to meet quality performance measures in five areas: (1) patient/care giver experience, (2) care coordination, (3) patient safety, (4) preventative health, and (5) at-risk population/frail elderly health.

Potential losses
Although many providers would be pleased to receive bonuses for effective cost-saving programs, enthusiasm for ACOs is tempered by the high cost of setup and operation, which may exceed bonuses received. If an ACO incurs expenses that exceed the benchmarks set by CMS, the ACO will have to pay back money to CMS, and thus experience a loss for participation in the program.

For physicians considering participating in an ACO, it will be important to determine the degree to which individual physicians will share the savings or be at risk, depending on whether savings goals and quality measures are met. Under the proposed rule, ACOs must describe to CMS how savings will be shared with participants, but the rule does not specify how savings must be shared.

For now, participation in the program is optional as the government seeks the best way to promote the dual goals of improving quality and saving costs. If, a few years from now, the government continues to believe that ACOs are the preferred way to deliver care, we can expect that participation in ACOs may be more mandatory, or there will be financial penalties for providers that do not participate. In addition, private insurers may adopt payment models similar to those used by the government if the insurers find that ACOs are a useful method for controlling costs.

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




The constitutionality debate continues

Courts have issued conflicting rulings regarding whether health care reform legislation is constitutional

By Jeff Atkinson | Reform Recap | Summer 2011


The constitutionality of the Patient Protection and Affordable Care Act (PPACA) eventually will be determined by the U.S. Supreme Court. As of June 2011, five federal district courts (trial courts) have ruled on the issue. Three courts have upheld the law; one court struck down the mandate that individuals acquire health insurance; and one court struck down the entire law.

Starting in 2014, the PPACA requires citizens and legal residents of the United States to obtain health insurance unless they meet certain narrow exceptions, such as being a member of a recognized religious sect that is conscientiously opposed to accepting public or private health insurance benefits. Persons who do not obtain health insurance will be required to pay a monetary penalty with their tax returns.

The district court rulings are being appealed to the U.S. Circuit Court of Appeals in different circuits. When one or more of the Circuit Courts of Appeal issue their rulings (probably in the summer or fall), the Supreme Court is very likely to take the case(s) and settle the issue.

Challenges under the Commerce Clause 

The primary legal challenge is based on the Commerce Clause to the United States Constitution. Article I, Section 8, clause 3 of the Constitution gives Congress the power “To regulate Commerce … among the several states.” more »



Impact of the elections on health care reform

Reforms will impact physicians on many fronts, including insurance coverage for patients and possible changes in the malpractice system.

By By Jeff Atkinson | Reform Recap | Winter 2011


After the November 2 election, Senate Republican leader Mitch McConnell (R-Ky.) said, “We can—and should—propose and vote on straight repeal” of President Obama’s health care legislation. At the same time, Sen. McConnell acknowledged that a full repeal of the Patient Protection and Affordable Care Act (PPACA) was not likely. Although Republicans now have a majority in the House of Representatives, Democrats still have a majority in the Senate, and President Obama can veto legislation that reaches his desk.

The likely strategy of the Republicans is to seek to block implementation of portions of new laws they do not like by refusing to give full funding to certain programs. High on the list of health reforms disfavored by Republicans and some Democrats are the mandates on individuals and employers to purchase insurance and requiring states to expand Medicaid coverage.
The mandate on individuals to acquire health insurance also is the subject of challenges in the courts. On December 13, a federal trial court in Virginia held that the requirement that most Americans obtain health insurance was unconstitutional because it exceeded the power granted to Congress by the Commerce Clause. Two other federal trial courts, however, have upheld PPACA, including the individual mandate. Ultimately, the issue is likely to be decided by the Supreme Court. more »




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