PPACA Impact and Opportunities : Health Care Lawyer & Attorney : Epstein Becker Green Law Firm : Insurance & Costs : Health Reform Musings Blog

Our colleagues at Epstein Becker Green have issued a client alert: "HIPAA Omnibus Rule's Impact on Notices of Privacy Practices," by Patricia M. Wagner, Brandon C. Ge, and Alaap B. Shah.

Following is an excerpt:

This health reform alert summarizes the key changes to the Notice of Privacy Practices ("NPP") requirements in the revised Health Insurance Portability and Accountability Act ("HIPAA") regulations (the "Omnibus Rule") as well as what covered entities need to do to be compliant. Because many covered entities may have modified their NPPs based on the Notice of Proposed Rulemaking issued on July 14, 2010 ("NPRM"), this alert also details the similarities and differences between the NPRM and the Omnibus Rule related to NPPs. In addition, Table 1 of this alert provides a quick summary of the NPRM proposals adopted—or not adopted—by the Omnibus Rule.

As covered entities work toward compliance, they should keep in mind that the Omnibus Rule becomes effective on March 26, 2013, but the deadline for compliance is September 23, 2013.

Read the full alert here.

Our colleagues at Epstein Becker Green have issued a client alert: "U.S. Supreme Court Opinion Addresses Availability of State-Action Antitrust Immunity," by Patricia M. Wagner, Ross K. Friedberg, and Daniel C. Fundakowski.

Following is an excerpt:

On February 19, 2013, in FTC v. Phoebe Putney Health System, Inc., a case that highlights vigorous enforcement activities by the Federal Trade Commission (“FTC”) in the health care arena, the Supreme Court of the United States issued a unanimous opinion (“Opinion”) that overturned a ruling by the U.S. Court of Appeals for the Eleventh Circuit and limited the invocation of the state-action doctrine where state laws grant government authorities general corporate powers. This new decision supports the FTC’s position that it has the authority to pursue a challenge to the hospital acquisition at issue in the case. Although the Opinion addressed the specific legislative powers granted to a hospital authority under state legislation, the Opinion will likely impact judicial interpretation of other state legislation that purports to provide parties with immunity from the federal antitrust laws, such as state hospital cooperation acts, and similar types of legislation being created to allow cooperation and integration of hospital and provider systems.

Read the full alert here.

This autumn, health insurance exchange ("Exchange") implementation issues can be characterized as either meeting impending deadlines or waiting on necessary federal guidance. We will shortly experience a cascade of developments on federal Exchange guidance and state implementation through the remainder of 2012. 

State Options

Exchanges are intended to operate a "one-stop marketplace" in each state for individuals and small employers to obtain health insurance. The Exchanges also have the responsibility of setting standards for participating qualified health plans (“QHPs”). States are given the option of establishing their own State-Based Exchange; coordinating with the U.S. Department of Health and Human Services (“HHS”) to establish a Partnership Exchange; or declining to establish any exchange, in which case HHS will establish and run a federally-facilitated exchange (“FFE”) in the state.

Fast Approaching Deadlines

States have until November 16, 2012 to submit a complete proposal to operate a State-Based Exchange in plan year 2014. A state proposal will be approved by HHS no later than January 1, 2013. HHS may issue a conditional approval at that time if it appears that a state has made significant progress towards implementation and its Exchange is likely to be operational in 2014.

Operating in the 2014 plan year requires being ready for open enrollment in October 2013 and plan contracting with network providers before then. This means a very busy 2013 preparing for the inaugural exchange plan year. 

The pressures may be greatest on plans, providers, and state regulators in those 25 states that have not yet decided whether to establish a State-Based Exchange.  As noted in a recent report on Exchange implementation by PricewaterhouseCoopers Health Research Institute, “the pace of state exchange planning . . . poses challenges for insurance companies that are evaluating which markets to enter or exit.”

Still Awaiting Guidance

States, in turn, face difficulty in evaluating Exchange options before the November 16 deadline because promised information from the federal government is still forthcoming. This difficulty has been articulated by

• September 12, 2012 testimony by Pennsylvania Insurance Commissioner Michael Consedine before the House of Representatives Ways and Means Committee
• A September 24, 2012 letter from Sen. Orrin Hatch, ranking member of the Senate Finance Committee, and
• A September 27, 2012 letter from Gov. Bob McDonnell, Chair of the Republican Governors Association. 

A final regulation addressing many Exchange implementation issues was released in March of this year, brief guidance on FFEs was released in May, and a template “Blueprint” was released in August to aide states in submitting proposals to HHS for state-run exchanges. Yet-to-be released information includes the following:

• Expanded guidance on FFEs, including detailing state responsibilities, costs, and any management reimbursement
• FFE guidance clarifying how many FFEs will be established and what flexibility they will have to meet unique state needs
• Proposed and final regulations defining required essential health benefits for QHPs
• Final standards for Multi-State Plans
• Quality standards for Exchanges
• Details on the conditional approval process for State-Based Exchanges

Stay Tuned

Reasons for the delay in guidance may vary, but it is unlikely that we will see significant state exchange announcements or further HHS guidance until after the November 6 election. After that point, stay tuned to this blog as the pace of Exchange implementation accelerates into 2013. 

In addition to tracking these and other PPACA regulatory developments, EBG counsels plans and providers on the arrangements necessary to participate in Exchanges. For more information, contact the author at phall@ebglaw.com. 

As we ended the summer of 2012, the Obama administration touted one of the more popular aspects of the Affordable Care Act – the requirement that health insurers spend at least 80 cents of every premium dollar on medical care and health care quality (85 cents for large employer groups purchasing health insurance), and if they do not, requiring these insurers to rebate the difference back to subscribers or their employers. According to the Administration, the “80/20 Rule” or the “Medical Loss Ratio (MLR) Rule,” as it alternately known, resulted in 12.8 million Americans receiving directly or indirectly more than $1.1 billion in health insurance rebates this past August. The 80/20 Rule sets this national minimum MLR standard that can only be lowered by a state’s insurance commissioner applying for, and receiving, a waiver from HHS. To receive a waiver, the state has to demonstrate that the application of the 80 percent threshold may destabilize the individual market. These waivers have been hard to come by – at least 18 states and territories have sought HHS approval to permit their insurers to spend below the 80 percent threshold on medical care and quality in the individual and/or small group markets (and therefore to spend more than 20 percent for administrative expenses and profits). Yet HHS has only approved six of these waivers, and most at levels, and for durations, different than requested by the state. On the flip side, states that want to impose a higher MLR threshold – like Massachusetts at 90 percent, and New York at 82 percent -- have done so without federal approval.

Meanwhile, this past month, House Republicans have advanced legislation that would give states the authority to adjust the MLR down in the individual and small group markets in their state without federal approval, thereby giving insurers greater flexibility to spend more on administrative expenses, and to earn higher profits. House Bill 1206 is primarily designed to allow insurers to count broker fees as “medical expenses” in their MLR calculation, a policy choice that continues to be hotly debated between the broker industry and consumer advocates. But buried in the bill is a provision that would require the Secretary of HHS to “defer to the State’s findings and determinations regarding destabilization” of their individual and small group markets in justifying lower MLR thresholds. The bill has over 200 sponsors, bipartisan support, and was recently approved by the House Energy and Commerce Subcommittee.  

What is particularly interesting in following the proposed tweaking of the MLR Rule is that there appears to be an acknowledgment by lawmakers on both sides of the aisle, and many stakeholders across the health care spectrum, that some minimum MLR requirement on insurers makes sound public policy. But does it?

Not necessarily. As recently posted by David Kestenbaum on NPR’s Planet Money Blog, “as is sometimes the case, what is popular with the people is not so popular with economists.” Kestenbaum spoke with six health care economists, and he claims that none thought the MLR would do much good, “and several thought it could be harmful.” In particular, he cites Jonathan Gruber, an MIT economist who helped write the ACA, as opposing the idea of a minimum MLR requirement, and indicating that “the rule has the potential to do exactly the wrong thing — to drive up the cost of health care.” Here are a couple of my own thoughts on some of the problems with relying on a minimum national MLR requirement as opposed to addressing health care costs directly:

• It assumes there are no competitive health insurance markets –  in competitive insurance markets (like in Massachusetts), competitive forces provide the incentives that drive insurers to offer consumers the highest quality products at the lowest possible premium rates. Massachusetts insurers are consistently the highest quality insurance plans in the country (as ranked by the NCQA), while having among the lowest administrative costs and margins. This has been the case even before Massachusetts lawmakers recently required these insurers to meet a 90 percent MLR for 2012 and 2013 – by far the most stringent threshold in the country. Ironically, some of the states with the least competitive insurance markets (the ones that, arguably, would benefit from a more stringent MLR requirement), are those states that received waivers from HHS that allow their insurers to meet lower MLR thresholds. 
• It penalizes the most efficient insurance carriers – in a competitive market (without an MLR requirement), if an insurer is able to reduce medical expenses below targets, it is rewarded with additional margin that it can invest in innovation and infrastructure, making it an even more competitive and efficient market participant. But under the MLR Rule, it must give that money back. As one insurance executive has observed, the MLR Rule gives plans the incentive to spend money on staff and systems that could reduce medical expenses and improve quality, but little incentive to actually achieve those savings and quality improvements.

Of course, many stakeholders and policy makers believe health insurance markets are far from competitive, and argue that the MLR requirement – which is essentially a form of rate regulation – is necessary to force insurers to become more efficient. They may be right – in the short term. But in the long term, as Professor Gruber observed, the MLR requirement may prove counter-productive in the fight to reduce actual health care costs. 

EBG counsels insurance carriers on MLR compliance as well as ACA implementation requirements. For more information, contact the author at jcaplan@ebglaw.com.

The Physician Payment Sunshine Act, which was incorporated into Section 6002 of the Affordable Care Act, requires pharmaceutical, medical device, biological and medical supply manufacturers to file annual reports on payments to physicians and teaching hospitals. Despite the requirement in the law that manufacturers submit their first report in March 2013 disclosing payments made during 2012, two events have pushed back that obligation or taken the sting out of noncompliance.

First, although Centers for Medicare & Medicaid Services (CMS) was required to publish standards for reporting information and making that information available online to the public, it has yet to publish final regulations. As recently as May 2012, it posted a blog notice on its website announcing that manufacturers will not be required to start collecting data until January 1, 2013. The reason given for the delay was that it simply needed time to sort through the over 300 comments that were received.

The second event that should be good news to manufacturers comes from Vermont. Vermont, along with eight other states and the District of Columbia, already have laws requiring manufacturers to report payments to physicians as well as financial penalties for failing to submit reports. Even though the Sunshine Act supersedes those state laws, any part of a state law that contains different or broader reporting requirements than the federal law remains in effect. However, since CMS has not published its regulations, answering that question may be more difficult than it appears at first. The good news is that the Vermont Attorney General has offered a limited amnesty to manufacturers of medical devices and biologics (but not pharmaceuticals) who did not report during any period between July 1, 2009 and December 31, 2011. The reprieve waives the penalties, but not registration fees or penalties under other state laws. While a complete report is not required immediately, the offer is for a limited time only and is good through October 1, 2012. Any inquiries should be sent to the Vermont Attorney General’s office at prescribedproducts@atg.state.vt.us.

For more information, contact the author at rwanerman@ebglaw.com.

by Joan A. Disler, Michelle Capezza, and Gretchen Harders

Now that the Supreme Court of the United States has upheld essentially all of the provisions of the Obama administration’s Affordable Care Act (“ACA”), employers are faced with looming deadlines to bring their group health plans into compliance with the ACA’s numerous new requirements. We have prepared for employers a timeline of the highlights of the upcoming deadlines for compliance with the ACA that apply to non-grandfathered group health plans.

Click here to access a copy of the timeline (PDF).

by Dale C. Van Demark

Not by much – but perhaps in a unique way.

The increased pace of hospital and health system merger activity we’ve seen in the marketplace has had little to do with the Patient Protection and Affordable Care Act (the “ACA”). Rather, broader market conditions, some of which are affected by the ACA, have been driving hospital market consolidation. The financial crisis, which negatively impacted many hospitals’ ability to raise capital or maintain their credit ratings, and the downturn in the broader economy, which resulted in fewer people seeking care, have created the primary incentive for hospital consolidation.

In addition, just as capital has become scarce and business has slowed, infrastructure upgrades are becoming critical. The push for “meaningful use” of information technology and increased emphasis on quality reporting are creating more and more budget demands. Further, staffing shortages and increasing government investigations have created more financial pressure.

Read the full post on the Hospital Deal Blog

by Lynn Shapiro Snyder, Clayton J. Nix, and Lesley R. Yeung

The U.S. Department of Labor (“DOL”) released a survey report on April 15, 2011, that is being used to satisfy a requirement in the Patient Protection and Affordable Care Act (“ACA”) that the Secretary of Labor “conduct a survey of employer-sponsored coverage” as a condition precedent to the development of the “essential health benefits package” by the Secretary of Health and Human Services (“HHS”). This DOL survey is the first step in the process laid out in ACA for establishing the minimum benefits package to be offered in the various health insurance exchanges for which subsidies and tax credits will be available. Under ACA, the Secretary of HHS ultimately has the discretion for determining the “essential health benefits package,” which goes to the heart of federal health reform. Companies that are interested in the scope of the “essential health benefits package” will want to review not only this published DOL survey in detail, but also other DOL survey information, and should consider weighing in with the Secretary of HHS before any preliminary positions are published by HHS in proposed or interim final regulations.

Read the full alert online

Please join the attorneys of EpsteinBeckerGreen on June 7, 2011, at the National Press Club, as we present eight panels covering labor and employment topics that have increasingly impacted employers in the health care industry. 

Our first panel, entitled Significant Labor and Employment Issues that Affect Health Entities, will include representatives from the health care industry, such as a hospitals, skilled nursing facilities, and emergency medical services. These executive panelists will discuss the critical labor and employment issues they are currently experiencing and the greatest challenges they expect to manage. 

EpsteinBeckerGreen attorneys representing the Labor and Employment, Health Care and Life Sciences, and Corporate Services practices will review the issues of concern and, over the course of the day, offer practical advice and solutions.

For more details and registration information, please visit the EpsteinBeckerGreen HEAL Summit page.

We hope to meet you and other readers of this blog.

As the health care world awaits the Medicare Shared Savings Program regulations expected to be issued soon by CMS, below is a wish list for key attributes that I hope the regulations evidence:

1. Flexibility. 

 "Transforming health care everywhere starts with transforming it somewhere." I hope that CMS takes Atul Gawande's advice and avoids being too proscriptive in launching the Share Savings Program. To me, the biggest risk to the program is being deemed a failure for having gone down too narrow a path that turns out to be unsuccessful.

Useful approaches have been suggested for tiering ACOs and providing for related payment methodologies based on levels of ACO capability. If some form of risk sharing model is going to be included along with simple share savings, let's not at the outset go so far along the risk axis that many start-up but promising ACOs would be excluded. Flexibility will encourage positive experimentation and inclusiveness in the interest of learning over time.

2. Discipline.

 At the same time, the ACO regulations need to have teeth. Despite the ongoing policy debates about how to measure quality and value, we know enough now for CMS to provide strong minimum requirements that will separate ACOs that show real promise from those that do not. In order to qualify for bonus or risk-based payments, ACOs will need to demonstrate both the current capability and the future capacity to further the triple aim goals of accountable care--improved patient outcomes, patient satisfaction and cost efficiency.

Such evidence will then justify appropriate recognition and protection under the fraud and abuse laws and antitrust laws, among others. And the discipline must be ongoing and progressive--continued qualification and continued improvement. Failure to maintain such qualification must have consequences--both financial and legal.

3. Simplicity.

One of the risk factors in the success of the Medicare Shared Savings Program is that it will be too complicated to implement effectively. There are a million ideas out there about ACOs--regarding structure and governance, assigning beneficiaries, what measures to use, how to allocate savings, etc.

Failure to construct a manageable pathway and an understandable set of rules at the outset--for diverse providers to follow and for consumers to understand and embrace--will severely threaten the ultimate success of the program. It would be easy to try to do too much too fast due to the pressure to "bend the cost curve," among others. I hope that CMS keeps it simple, straightforward and understandable with achievable program goals.

4. Patience.

Even if the regulations evidence flexibility, discipline and simplicity, we will need to be patient. "We" means CMS, Congress, private payers, providers and consumers. This program is one component of a broader set of ideas relating to health care payment and delivery reform in both public and commercial settings. The overall goal is to achieve the triple aim stated above--or as CMS Administrator Berwick often puts it, "better care, better health and lower costs"--through a variety of means and over time.

The Affordable Care Act in its entirety encompasses new quality reporting requirements, value-based purchasing programs, bundling pilots, gainsharing demonstrations, readmissions penalties and other methods of "testing, testing." Not to mention the efforts of the new Center for Medicare and Medicaid Innovation. If the Medicare Shared Savings Program tries to do too much too quickly on its own and the goals are not measured and paced, it inevitably will be judged unfairly and will not make as helpful a contribution as it otherwise might.

5. Harmony.

Another word I might have chosen here is coordination, but coordination is a means to harmonizing the activities and impact of the relevant federal agencies involved in ACO implementation, the various payment and delivery reform components of the Affordable Care Act and the public and private sector initiatives in this arena. Is such harmony too much to hope for? Perhaps, but it should be a goal and it should be achievable over time.

CMS, OIG, FTC and DOJ already have evidenced coordination in the days before and following their October 5, 2010 public workshop on the antitrust issues and fraud and abuse issues related to ACOs. Coordinated guidance is reasonable to expect. The ACA explicitly allows for the coordination of ideas and best practices in accountable care efforts in connection with both governmental and commercial health care payment practices. It certainly is within the power of Secretary Sebelius and Administrator Berwick to harmonize the implementation of Sections 3021, 3022 and 3023 of the ACA, along with the many other provisions that relate to achieving accountable care.

                                                   *                    *                   *

The ACO regulations should be out soon. They of course will constitute a start, not a finish. There will be much more work to be done. But my wish--and I am hopeful--is that they lay out a constructive and manageable pathway that fits with others in helping to advance the triple aim.

Doug Hastings