Health Care Lawyer Blog

Under a new federal reporting requirement, drug companies must now disclose all payments made to physicians – or else risk getting hit with hefty penalties.

The new “sunshine” provisions were included as part of the 2010 Patient Protection and Affordable Care Act, but proposed guidelines for reporting were not released until recently. The public will have until February 17 to comment on the proposals, after which time Medicare officials will issue final rules.

Under the guidelines, drugmakers and manufacturers of medical devices will have to report any payments made to physicians to develop, assess or promote new products. Royalty payments to doctors for inventions or discoveries, and payments to teaching hospitals for research or other activities will also have to be reported. (Payments to physicians who are employees of the device/drug manufacturer will not have to be reported.)

All payment data will be posted on a website where it will be available to the public. Companies who fail to properly report such payments face fines – the government will impose a penalty of $10,000 for each payment the company fails to report. A company that knowingly fails to report payments will be subject to a penalty up to $100,000 for each violation, up to a total of $1 million per year.

The “sunshine” reporting requirements were enacted out of concern that payments to physicians were skewing health care providers’ professional judgment and detracting from the patients’ best interests.

The U.S. Department of Health and Human Services (HHS) has rejected Michigan’s request to be exempted from a provision of the health reform law that would require insurers to spend a certain percentage of each dollar collected on premiums for quality improvement activities.

This August, two Michigan lawmakers issued a letter to HHS asking to be waived from the percentage requirement, which is commonly known as the “medical loss ratio.” This requires insurance companies selling policies in the individual market and small group market (up to 100 employees) to spend at least 80 percent of premium dollars collected on medical care and health improvement activities. Insurance companies selling policies in the large group market (over 100 employees) must spend at least 85 percent on such activities.

In the letter, Reps. Dave Camp (R-MI) and Fred Upton (R-MI) claimed that based on 2010 data, only two of Michigan’s seven health plans would be able to meet the 80 percent threshold, and the seven plans combined would suffer a net estimated loss of $30.9 million if forced to comply. While the law provides for exceptions for states if “there is a reasonable likelihood that market destabilization, and thus harm to consumers, will occur” HHS rejected the lawmakers’ claims.

The Michigan Office of Financial and Insurance Regulation said yesterday that the office won’t appeal HHS’ Dec. 19 ruling. Michigan is the sixth state to have its waiver request denied.

Today the Supreme Court of the United States agreed to hear arguments on whether or not the provisions of the Patient Protection and Affordable Care Act (PPACA), which require all individuals to obtain health insurance coverage by 2014, are constitutional.

The Supreme Court granted certiorari in three separate federal cases, each challenging the law's constitutionality. The Court will hold two hours of oral argument on the "individual mandate," which requires the purchase of health insurance by 2014; 90 minutes on whether the "individual mandate" requirement can be severed from the rest of the Act; one hour on whether the Anti-Injunction Act applies (the Anti-Injunction Act generally provides that an individual cannot challenge a tax until they have to pay it); and one hour on the constitutionality of expanding the Medicaid program. It is not clear if all of the cases will be heard on a single day.

In this week's health law round-up:

- A case originally filed in a Michigan federal court challenging the constitutionality of the Patient Protection and Affordable Care Act (PPACA) is now headed to the Supreme Court of the United States. Thomas More Law Center v. Obama, et al. was among the first of a series of federal court decisions to weigh in on whether a provision of PPACA which requires all American citizens to purchase insurance by 2014 was a proper exercise of Congress' power. Judge George C. Steeh ruled in October 2010 that the law was constitutional, and the plaintiffs, a conservative public interest law firm, appealed to the Sixth Circuit. In June 2011 a Court of Appeals panel ruled 2-1 that the insurance coverage provision was a "valid exercise of legislative power by Congress under the Commerce Clause" and affirmed the district court's ruling.

Last week, Plaintiffs filed a petition for a writ of certiorari with the Supreme Court, asking the Court to rule on the issue. A response from the Obama Administration is due August 29, 2011. It is worth noting (since nearly every Republican-appointed judge has ruled against the constitutionality of PPACA) that the Supreme Court is currently comprised of five justices appointed by Republican presidents (CJ Roberts, Scalia, Kennedy, Thomas, and Alito) and four justices from Democratic presidents (Ginsburg, Breyer, Sotomayor, and Kagan). Further tipping the balance is the fact that Kagan, a former Solicitor General for the United States, may have to recuse herself from taking part in the decision of the case.

- Two Michigan lawmakers have issued a letter to the United States Department of Health and Human Services supporting the State of Michigan's request to waive the medical loss ratio (MLR) requirements for the individual health insurance market. The MLR requirement, which were included as part of PPACA, requires health insurance companies to spend a minimum amount of premium dollars on medical care and health improvement activities. This minimum amount, expressed as a percentage, is called the "medical loss ratio."

The regulation sets forth a medical loss ratio of 80 percent for insurance companies selling policies in the individual market and the small group (up to 100 employees) market, and 85 percent for insurance companies selling policies in the large group (over 100 employees) market. Accordingly, insurance companies selling policies in the individual market and the small group market must spend at least 80 percent of their premium dollars on medical care or health care quality improvement activities.

Although the Aug. 4 letter cited the predicted disaster that would occur if Michigan is not exempted from the MLR requirements, the letter was not clear on why exactly Michigan could not comply.

FHW law clerk Scott Malott authored today's post.

Months of "Will they? Won't they?" speculation ended Monday morning when the United States Supreme Court officially declined early intervention into Virginia’s health care law challenge. Following a decision from a U.S. District Court in Virginia that held the Patient Protection and Affordable Care Act’s (PPACA) individual mandate is unconstitutional and severed it from the rest of the Act, Virgina filed a “petition for certiorari before judgment” in February that asked the Supreme Court to review the lower court’s decision - BEFORE the case could be heard by the United States Court of Appeals for the Fourth Circuit.

The Supreme Court rarely grants these petitions, and it did not make an exception here. There were no comments issued with the denial, and no dissents noted.

However, it still appears that an eventual hearing before the Supreme Court is inevitable. Challengers of the law have been pushing for an expedited review because some parts of the Act, including some small-business tax credits, federal grants, and consumer protection measures, are already in effect and are being enforced. However, while the challengers were hopeful that this would be a prime instance for the nation’s highest court to hear a case before court of appeals review, the Supreme Court traditionally prefers that the major issues in the cases it hears be fully fleshed out in the lower courts.

Virginia has a law on its books that specifically states that residents cannot be forced to buy health insurance. As an extension, and in support of its own law, Virginia’s argument against PPACA is that the Commerce Clause of the United States Constitution does not grant the government the power to require that private citizens purchase a commercial product. While Virginia officials have indicated disappointment with the Supreme Court’s decision, advocates of the Act opine that constitutional challenges to the Act have no merit and should be rejected unanimously. At least until one of the cases works its way to the Supreme Court through the proper channels (estimates range from late 2011 to sometime in 2012), implementation of the Act will be allowed to press on.

The United States Court of Appeals for the 11th Circuit in Atlanta has granted the U.S. Justice Department’s request to expedite its appeal of Judge Roger C. Vinson’s January 31 holding that PPACA is unconstitutional. The Justice Department’s request followed Judge Vinson’s decision on March 3, in which the judge clarified that he intended his January 31 holding to be the practical equivalent of an injunction as to implementation of PPACA but offered to stay his ruling as long as an appeal to the 11th Circuit or the U.S. Supreme Court was filed within a week.

Parties on both sides have now moved for quick review of the ruling. A group of GOP state governors sent a February 9 letter to President Obama and the Justice Department that requested swift appeals of all pending cases regarding PPACA. The letter stated that “[g]iven the daunting and costly financial and regulatory burdens that our states and the private sector will face in implementing PPACA over the coming years, particularly during this unprecedented budgetary time, public interest requires expediting a final resolution of the litigation to give certainty as soon as possible.”

Florida Attorney General Pam Bondi made a similar request when she asked that the expected review by the 11th Circuit be before all 10 active 11th Circuit judges rather than the typical three-judge panel. Supporting her request, Bondi pleaded that “This case is so significant to all Americans that it needs to be resolved as quickly as possible . . . . If granted, the petition would allow a faster track to the Supreme Court.”

If the new scheduled is followed without changes, then review by the 11th Circuit is expected in June 2011.

Last week a D.C. district court judge held that PPACA’s individual coverage mandate is a constitutional exercise of Congress’ power under the commerce clause, which marks the third federal court decision in favor of the health reform Act.

Not to be outdone in the ongoing volley over the constitutionality of the Act, however, yesterday Judge Roger Vinson of Pensacola – who held last month that PPACA is UNconstitutional – ordered the Obama administration to stop enforcing any part of the 2,700 page Act. However, Vinson then immediately put his ruling on hold on the condition that the Administration quickly appeal the case either to the Eleventh Circuit or to the Supreme Court.

Vinson’s ultimatum is part of an ongoing push by anti-PPACA groups to have the Act immediately thrust before the Supreme Court for review. Although Vinson’s ruling was handed down Jan. 31, under the Federal Rules of Civil Procedure the federal government has 60 days after a ruling to appeal. However, anti-PPACA groups are clamoring to have PPACA’s review be excused from normal appeal procedures and timelines on the basis of compelling public interest.

Today's post was authored by FHW attorney Louis C. Szura.

The concept of the government reimbursing physicians for counseling their elderly patients regarding “end-of-life” issues (“EOL”) has, unfortunately, become more about politics than about patients. Medicare reimbursement for such counseling has almost become reality on a number of occasions, but it still seems like a distant possibility at this point.

During the extensive political debates surrounding the passage of health care reform acts, known as the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act, the divisive issue of the government reimbursing for EOL counseling claimed much of the spotlight. Although it was eventually removed from the health care reform acts, the issue is still with us today. Despite the merits of EOL counseling, it appears that the political attention the issue attracted during those debates may continue to prevent Medicare for reimbursing physicians for EOL counseling anytime soon.

EOL counseling as part of health care reform first arose in the U.S. House. Section 1233 of U.S. House, H.R. 3200. That section was entitled “Advance Care Planning Consultation” and provided for physicians to be reimbursed by Medicare for consulting with patients about advance directives, living wills, palliative and hospice care, among other EOL issues. That provision soon became a political lightning rod. Opponents of the measure repeatedly, and inaccurately, characterized the provision as government-mandated “death panels,” which would allow physicians and government employees to “pull the plug” on the elderly. Even though the reality of Advance Care Planning is much different than that, the short and frightening description of a “death panel” found traction with some of the public. Ultimately, the Advance Care Planning provision was dropped from the health care reform bill.

Although the Advance Care Planning Consultation provision was removed from the House bill, the Patient Protection and Affordable Care Act that passed both houses of Congress and was signed into law on March 23, 2010, provided a Medicare benefit for “personalized prevention plan services.” Those benefits allowed Medicare recipients to receive an “Annual Wellness Visit” by their physician at no cost to them. However, the procedures for those Annual Wellness Visits would, once again, raise the issue of EOL counseling.

After the jump - why the EOL counseling provision was ultimately dropped

Continue reading "Will Medicare Ever Pay for End-of-Life Counseling?" »

A federal district court judge in Pensacola, Florida dealt the controversial Patient Protection and Affordable Care Act (PPACA) another blow today by holding the entire Act to be void because a key provision - the individual mandate - does not pass constitutional muster.

In a 78-page opinion, Judge Rodger Vinson of the Northern District of Florida held that Congress exceeded its constitutional authority by enacting PPACA, which imposes fines upon all U.S. citizens who do purchase health insurance coverage by 2014.

“The individual mandate is indisputably necessary to the act's insurance market reforms, which are, in turn, indisputably necessary to the purpose of the act,” Vinson wrote in his opinion. “Because the individual mandate is unconstitutional and not severable, the entire act must be declared void. This has been a difficult decision to reach, and I am aware that it will have indeterminable implications.”

In reaching his opinion, Vinson reasoned that since PPACA imposes fines on all citizens who do NOT purchase health insurance, by its implementation Congress is essentially attempting to regulate inactivity instead of commercial activity. As Vinson noted in his opinion, "It would be a radical departure from existing case law to hold that Congress can regulate inactivity under the Commerce Clause."

The U.S. Department of Health and Services, the named Defendant in the case, alleged that due to the "unique nature" of the health market, individuals who do not purchase insurance are not "inactive" and have a substantial impact on commercial activity. Specifically, HHS alleged that:
1) Human beings are always susceptible to injury, and thus cannot "opt out" of the healthcare market.
2) If and when emergency health care services as sought, hospitals are required by law under the Emergency Medical Treatment and Active Labor Act (EMTALA) to provide such services, regardless of an individual's ability to pay.
3) The costs are then passed along to third parties, which has economic implications for everyone. (According to congressional estimates, uncompensated care cost $43 billion in 2008 alone).

In response to Defendant's argument, Vinson drew parallels to other markets that individuals cannot "opt out" of, such as the food market or housing market. Vinson noted that Congress could accordingly force individuals to buy broccoli, or that costs from markets where individuals cannot "opt out" also get passed along - for example, people who buy houses and then default on their mortgages then have the costs passed along to third parties. (Incidentally, Vinson's opinion did not address the fact that while the food market is not one that can be opted out of, there is no law requiring grocery stores to give people food when they cannot afford it.)

The case is State of Florida, et al. v. United States Department of Health and Human Services, et al., Case No. 3:10-cv-71. Twenty-five other states, all with Republican governors or Attorney Generals, joined the case as Plaintiffs. As another indication of how heavily partisan the PPACA debate remains, both federal judges who have ruled PPACA unconstitutional are Republican-appointed, and both who have ruled it constitutional were appointed by Democratic presidents.

As repeated pleas for bi-partisan cooperation reverberate in Congress following the Tucson, Arizona shooting earlier this month, Democrats and Republicans continue to battle over the fate of the Patient Protection and Affordable Care Act (PPACA).

This week several Democratic leaders, including Senate Majority Leader Harry Reid and House Democratic Leader Nancy Pelosi, filed an amicus brief in a pending Sixth Circuit Court of Appeals case which questions the constitutionality of PPACA. The case, Thomas More Law Center v. Obama, et al. (Court of Appeals Docket #: 10-2388), is on appeal from the Eastern District of Michigan, where Judge George C. Steeh ruled last October that Congress had the power under the Commerce Clause to implement PPACA’s mandatory coverage provision.

Although dozens of lawsuits have been filed challenging PPACA constitutionality, the More case is the first to reach the appellate court level. So far two other district court judges have upheld the law, and another has declared the individual mandate unconstitutional. Many other cases have been tossed out of court on procedural grounds.

The amicus brief filed by Democratic leaders alleges that PPACA is a valid exercise of Congress’ power to regulate commerce, and that Congress also has power under the Constitution’s “Necessary and Proper Clause” to adopt the individual mandate. Dozens of other amicus briefs have been filed in the case for both pro and anti-PPACA groups; a few participants to date include the American Cancer Society, American Hospital Association, March of Dimes, and countless other professional and medical specialty organizations.

Several Democratic Attorney Generals said last week that they have formed a coalition to defend the constitutionality of the law in the More case, and in other cases. They include Oregon, Iowa, California, New York, Vermont, Connecticut, Hawaii, Maryland, and Delaware. Conversely, twenty-six other states (most represented by the state Attorney General) have filed a separate lawsuit in Florida challenging the health reform law.

While last week the House of Representatives passed H.R. 2, the two-page bill which repeals PPACA, the fate of PPACA is likely to be resolved in the Supreme Court and, depending on how quickly an opinion is rendered, More will likely be the first case to present the issue before the nine justices. It is almost certain that regardless of whether the Sixth Circuit affirms, reverses, or remands the case, any holding will be appealed by either the More Law Center or the federal government to the Supreme Court.

Oral argument has not yet been scheduled in the More case. The Health Care Lawyer Blog will continue to follow More and other cases regarding PPACA.

Amongst all of the pomp and circumstance surrounding the New Year, the federal government has quietly implemented the next round of provisions from 2010’s Patient Protection and Affordable Care Act.

One major provision dictates to health insurance providers how they can spend their money. Specifically, insurers are required to allocate 80 percent of the money they bring in back to the customers. That is, they can use it to pay claims or for other programs that help to improve customer health. Large group policies have a different standard – they must cycle 85 percent back to the insured. The bright side for the insurance companies is that they can use the remaining 20 or 15 percent respectively for whatever they want; they can pay salaries, use it for marketing and overhead, or simply keep it as profit. The government says that this provision was necessary because as insurance costs continued to increase, some companies were keeping up to 50 percent as profit. The insurance companies, on the other hand, claim that they may have to decrease services offered or possibly completely remove themselves from states that have higher administrative costs.

Another provision that has been closely watched and is now current helps seniors by closing what has become known as Medicare’s “doughnut hole.” It has been called this because under the former system, seniors’ prescription costs would eat away at the Medicare doughnut until they reached $2,830. Once the costs hit that level, the Medicare beneficiaries were out of luck until their costs reached $3,610, where Medicare would take over again. Effectively, seniors would be responsible for 100 percent of their prescription costs for the $780 in the middle of the hole. This year’s newly implemented provision will now reimburse beneficiaries for 50 percent of the cost of brand-name drugs. It is hard to find fault with this provision, but those that are concerned believe this gives drug companies licenses to increase prices whereby seniors will be paying the same amount and the government will be matching their payments.

Finally, Medicare beneficiaries can now get preventive screenings free of charge. Where there used to be one covered “welcome to Medicare” exam, now the seniors can get an annual wellness visit as well as any screenings rated “A” or “B” by the U.S. Preventive Services Task Force. Depending on the age, sex, and health of the beneficiary, those screenings may include mammograms, cancer screenings, measurement of bone mass, and even counseling on nutrition.

To get the full benefit of this Act, it is imperative that insurance companies follow the new rules and seniors take advantage of the new prescription drug coverage and wellness visits. The main premise of the Act is that if we can remain healthier, we will end up costing the system less in emergency care. Insurance companies still have enough margin to make a healthy profit while providing real service to their customers.

Today's post was written by FHWN law clerk Scott Malott.

PPACA, HITECH, HIPAA, HCPCS. While the health care industry is uniquely full of acronyms, expect one to become a new buzzword in the coming months - ACOs. An abbreviation for "Accountable Care Organizations," ACOs were established as part of this year's health reform bill (PPACA) as a new way to decrease costs and increase health care providers' ability to exchange and share electronic patient information.

What exactly IS an ACO?
Simply put, an ACO is a group of health care providers - primary care physicians, specialists, hospitals, and nursing facilities - that have grouped together to provide comprehensive patient care. The appeal of ACOs lies in the fact that participating providers can receive monetary awards for meeting certain quality criteria such as improved patient outcomes, low hospital readmission rates, streamlining the cost of care, etc. Essentially, if ACO participants can figure out ways to cut the costs of care, they can participate in the subsequent gainsharing. There is a risk, however; ACOs who fail to meet certain goals will be subjected to monetary penalties.

Unique Considerations
While health care providers may jump at the chance to join an organization that will seamlessly allow them to exchange and receive patient health information, physicians who join ACOs may need to make costly up-front payments in order to obtain the requisite technology and software to do so.

Additionally, it is still unclear how a health care model that relies on in-network referrals - with the opportunity to profit from the same - will fit into the current fraud and abuse landscape. Notably, regulations like the Stark Laws and Anti-Kickback Statute have traditionally prevented such arrangements. It is anticipated that an exception will have to be carved out in order to allow ACOs to function as intended. Similar challenges may also be raised with respect to anti-trust issues.

Finally, since ACO members are jointly accountable for care, any physician seeking to join an ACO may want to vet his/her future cohorts carefully.

For more information about ACOs, contact an experienced health law attorney.

Following several judicial victories for the 2010 Patient Protection and Affordable Care Act ("PPACA"), a federal judge ruled yesterday that the health reform law is unconstitutional and "goes beyond the historical reach" of Supreme Court precedent limiting federal regulation of commercial activity.

The opinion written by Judge Henry E. Hudson, who was appointed to the federal bench by George W. Bush, was issued in response to a lawsuit filed by the Commonwealth of Virginia challenging the constitutionality of PPACA. The law requires all American citizens to obtain health insurance coverage by 2014 or face monetary penalties.

During oral arguments held in October, Hudson commented that the law would give Congress "boundless" authority to force Americans to "buy an automobile, to join a gym, to eat asparagus." (The remarks about joining a gym and eating asparagus are ostensibly aimed at PPACA's wellness provisions, which encourage - but do not require - healthy eating and physical fitness.) In his opinion, Judge Hudson held that PPACA requires an overly-broad reading of economic activity which "lacks logical limitation and is unsupported by Commerce Clause jurisprudence.

However, Hudson's opinion is hardly the end of health reform in America. Several other district court judges have upheld PPACA's constitutionality, including in an opinion issued just two weeks ago by another federal judge in Virginia. As Hudson himself noted, the issue is likely to be eventually presented to the U.S. Supreme Court, which is currently comprised of five justices appointed by Republican presidents, and four appointed by Democratic presidents, including two Obama appointees.

The case is Commonwealth of Virgina v. Sebelius, Case No. 3:10-cv-00188 (E.D. Va.) (Editor's Note: Although opinions are available free of charge on the PACER federal court docket, the opinion could not be accessed at the time of this post.)

PPACA's constitutionality hinges upon a reading of the Commerce Clause, which provides Congress with the power to “regulate commerce…. Among the several states.” The Commerce Clause is generally liberally construed by courts, and case precedent sets out that Congress has the inherent authority to regulate any state-level activities having a “substantial effect” on interstate commerce.

Medicare coverage for wellness visits and other preventative services will be enhanced under the newly-released 2011 Medicare Physician’s Fee Schedule ("PFS").

The new PFS incorporates many of the mandates imposed by this year’s health reform bill, which emphasizes preventative medicine and wellness as a strategy to combat high costs of care. Starting January 1, 2011, beneficiaries will be able to obtain many preventive screenings and services free of charge, including any co-pays or deductibles.

Some of the new services to be offered to beneficiaries free of charge include:

- An annual “wellness visit,” where physicians will be able to update a patient’s care plan, screen for impairments, obtain information such as height, weight and blood pressure, and coordinate other tests and screenings based on the patient’s medical/family histories.

- Screening tests for various cancers, such as annual mammograms for women 40 and older, and one baseline mammogram for women between 35 and 39; pap tests and pelvic exams, annually for women at high risk for cervical or vaginal cancers and biannually otherwise; annual prostate cancer screening tests (excluding digital rectal examinations) for men over 50, and colorectal cancer screening tests (excluding barium enemas) generally for individuals over 50, except for colonoscopies which have no minimum age requirement.

- Diabetes screening tests for beneficiaries with hypertension, history of abnormal cholesterol and triglyceride levels, obesity, or a history of high blood sugar. However, diabetes self-management training services remain subject to coinsurance and deductibles.

- Cardiovascular disease screening blood tests (but not electrocardiograms) to test cholesterol, lipid and triglyceride levels are fully covered once every five years.

- Bone density tests, smoking cessation counseling, and medical nutrition therapy for individuals with diabetes, kidney disease or a kidney transplant.

- Additionally, under a National Coverage Determination issued in August of 2010, Medicare will fully cover HIV testing for high-risk populations.

- Vaccinations for pneumonia, influenza and hepatitis B

Physicians who treat Medicare beneficiaries should expect to see a sharp increase in requests for these types of preventative services in 2011. For more information about the 2011 PFS, contact an experience health care attorney.

Following the results of Tuesday's election - which President Barack Obama referred to as a "shellacking" for the Democratic party - many states and congressional districts across the country are "seeing red." While post-election days are usually filled with lofty speeches from incumbents touting their agendas to-be, many of the newly-elected GOP politicos seem to have a similar goal - repealing PPACA (or, as many call it, "Obamacare").

The day after the election, Speaker of the House-to be John Boehner stated that the Republican plan is to lay the groundwork for repealing PPACA. Reports from other sources, including the Dow Jones Newswire, also state that the House Republicans plan to vote early next year on legislation to repeal the law. However, even if the vote happens very quickly, whether the GOPers will actually be able to achieve their mission remains doubtful. Specifically, even if the GOP-dominated House votes to repeal the bill, a similar initiative will likely fail in the Senate and has no chance of avoiding a presidential veto. (The Senate membership currently is roughly equal Republicans and Democrats, with Democrats having a small advantage in numbers.) Additionally, some provisions of PPACA - such as allowing dependents to stay on their parents' coverage until the age of 26, and forcing insurers to cover children with pre-existing conditions, are quite popular and may prohibit a full-scale rollback.

Notwithstanding the projected political gridlock, another option for Republicans is to deny the funding needed to carry out PPACA's mandates. According to health care policy experts, the GOP will not be able to stop funding completely but they can keep it from growing by putting the Department of Health and Human Services "on a diet". However, since Congress does not have a current budget (rather a stop-gap measure to keep important agencies - such as HHS - funded at past levels), Congress is likely to pass another resolution to keep the government running at such levels through the spring. This means that any funding cuts won't kick in until Spring 2011, and it's likely they may even be delayed until October.

In light of PPACA’s wellness incentives and First Lady Michelle Obama’s initiative to reduce childhood obesity, maintaining a healthy body weight has been increasingly encouraged as a way to help reduce the costs of health care. While people who are overweight are frequently advised by their physicians to lose excess pounds, a new study shows whether or not such advice is effective depends on how it is dispensed.
Specifically, researchers found that the “tough love” approach – i.e., harsh admonishments or scoldings – are actually less likely to be effective than collaborative discussion between a physician and patient.

In the study, the results of which were published in the October issue of the American Journal of Preventive Medicine, researchers recorded conversations between 40 primary care doctors and 461 of their overweight/obese patients between January 2007 and June 2008. The researchers noted whether nutrition, physical activity, or weight and body mass index came up during the conversation, and then followed up with the patients three months later to determine if the talk about weight resulted in any weight loss.

Results showed that physicians who used “motivational interviewing” were generally more successful in inducing patients to lose weight. “Motivational interviewing” includes strategies that reinforce a patient’s own desire for change, and empowers patients by conveying that change can only be achieved by the patient, not by the physician. As reinforcement, physicians used language and tactics that accept patients’ weaknesses, praises success, and highlights the “team” relationship between a patient and physician.

After reviewing results from the 320 patients who discussed weight with their physician, the study showed that the “motivational interview” technique was associated with a significant weight loss, or 3.5 pounds more than those who had a non-motivational conversation.

While "motivational interviewing" techniques can most easily be employed in the physician/patient setting, employers who offer voluntary wellness incentives for employees to help reduce the costs of health care coverage may want to consider implementing “motivational interviewing” techniques in order to boost the effectiveness of such programs. For more information about setting up an employee wellness program, contact an experienced health care law attorney.

Ever since the March 23, 2010 enactment of the Patient Protection and Affordable Care Act ("PPACA") public interest groups and other organizations have been decrying PPACA's individual coverage mandates as unconstitutional.

However, last week a federal court in Michigan confronted with the position held that such mandates were a proper exercise of Congress' Commerce Clause authority. The case of Thomas More Law Ctr. v. Obama, et al., Case No. 10-CV-11156, was filed by the Ann Arbor, Michigan-based Center, which is a conservative public interest law firm. Under PPACA, all U.S. citizens must obtain health insurance coverage by 2014 or pay a penalty. The complaint alleged that Congress lacked authority under the Commerce Clause to require individuals to buy insurance, and that the penalties for those who fail to do so are an unconstitutional "tax". Plaintiff's chief argument was that since the coverage mandate regulated economic inactivity, rather than activity, it was not protected by the Commerce Clause.

In response, the Court held that it was rational to conclude that decisions to forego insurance coverage actually drives up the cost of insurance. The classic example used is that individuals without health insurance tend to be unhealthier and that the decision not to treat medical conditions due to lack of coverage eventually leads to serious illness which must be treated with emergency coverage.

Specifically, the Court stated that "Congress had a rational basis to conclude that economic decisions not to purchase insurance to pay for [healthcare] services, taken in the aggregate, substantially affect interstate commerce by, among other things, shifting costs to third parties."

Last week the Centers for Medicare and Medicaid Services (CMS) released the new voluntary Self-Referral Disclosure Protocol (SRDP) for Stark violations. The SRDP is the counterpart to the OIG self-disclosure protocol, which allows providers to self-disclose violations of the Anti-Kickback Statute only, OR Stark violations that include a “colorable” AKS violation. The SRDP applies to Stark only violations.

The key take away-points are as follows:
- Pursuant to the SRDP, providers may self-report Stark violations resulting in overpayments via an electronic filing process. A disclosing party must provide a detailed description as to why the party believes a Stark violation has occurred, including a “complete legal analysis” of the application of the Stark law to the matter being disclosed.

- It is important for providers to realize that self-reporting under the SRDP does NOT guarantee them a "get out of jail free" card. While HHS is “authorized to reduce the amount due and owing for all violations under [Stark] to an amount less than that specified” if a provider self-reports, there is no requirement for HHS to do so. Whether such reduction will be made is based on a consideration of several factors, including:
(1) The nature and extent of the improper or illegal practice;
(2) The timeliness of the self-disclosure;
(3) The cooperation in providing additional information related to the disclosure;
(4) Other factors HHS may consider appropriate.
Additionally, CMS reserves the right to refer matters to “law enforcement for its consideration under its civil and/or criminal authorities.”

- It is also worth noting that the SRDP includes a provision requiring that CMS be granted access to all “supporting documents” and does NOT allow providers to assert privileges as to the same. This means that attorney/client privileged documents, if requested, must be turned over.

- What this all means that a provider may self-disclose, but still end up being hit with the same penalties as if he/she had not done so. Additionally, since there is no intent requirement for Stark, by admitting a violation a provider essentially proves the government’s case. Arguably, providers who self-disclose may protect themselves from being targeted by a qui tam whistleblower, but the SRDP as currently structured may cause some providers to think twice before self-disclosing.

This post is NOT meant to discourage providers from self-reporting, but only to provide a brief overview of the SRDP provisions. Providers who have specific questions relating to self-reporting, or any other Stark or Anti-Kickback issue, should contact an experienced health law attorney.

The Michigan Office of Financial and Insurance Regulation (OFIR) has received a $1 million federal grant to help the agency monitor insurance companies who unreasonably hike up the costs of coverage. The funds are part of a $250 million grant allocation provided for by the Patient Protection and Affordable Care Act, and other states will be receiving similar grants to promote oversight of insurance agencies.

Currently, under Michigan law OFIR has the authority to review and approve/reject rate increases proposed by Blue Cross Blue Shield of Michigan. However, OFIR does not have the legislative authority to conduct policy reviews, investigate complaints, or examine insurers. While the grant monies will not change the law, the funds are designed to allow OFIR to contract with consulting actuaries to perform a targeted, in-depth analysis and review of premium filings made by HMOs and commercial carriers.

OFIR will also conduct a study on the feasibility of posting health insurance rate information on a proposed website, and will create a public portal that will provide information to the public in a streamlined, consumer-friendly format. The $1M grant is in addition to funding that will be distributed to the states to help consumers appeal coverage decisions made by health plans and insurance companies.

For more information, visit http://www.healthcare.gov/center/grants/states/mi.html

You know the drill – you call your health care insurer to see if a certain procedure or drug is covered by your plan. After the friendly representative assures you it is, you go ahead and order the drug or procedure. However, a few weeks later you receive a hefty invoice for the allegedly “covered” procedure, leaving you in a nasty game of “He said, she said” and endless calls to your insurance company.

Relief from such scenarios may be on the way. Last week, the Departments of Health and Human Services (HHS), Labor, and the Treasury issued new regulations designed to help consumers appeal coverage decisions made by health plans and insurance companies, and to help boost the availability of resources to do so. The appeals regulations, which were issued pursuant to the Patient Protection and Affordable Care Act (PPACA), includes $30 million in Consumer Assistance Program grant funding to help states establish consumer assistance offices or strengthen existing ones. Consumers who live in the State of Michigan, for example, can appeal denied claims through the Office of Financial and Insurance Regulation.

While many insurance plans already include a mechanism by which consumers can appeal coverage denials, under PPACA such provisions are now mandatory. Additionally, for the first time patients will have the right to appeal coverage decisions to an outside, independent decisions-maker. Specifically, consumers in states who lack such outside determination laws will not have access to a Federal external review program.

For more information on the appeals regulations, check out the HHS Fact Sheet or contact Mercedes Varasteh Dordeski.

Starting July 1, the federal government will begin financing “high-risk” insurance pools, which are aimed at providing coverage for uninsured individuals with pre-existing or chronic conditions.

Under PPACA, the government has set aside $5 billion for states to set up the high-risk pools for individuals who have been uninsured for six-months or longer. The pools are intended to be a stopgap to extend coverage until state insurance exchanges begin operating in 2014. (Under PPACA, insurance exchanges will be required to cover individuals with pre-existing conditions.)

The pools will have no restrictions based on pre-existing conditions, and will offer low deductibles and co-payments, and a ban on annual or lifetime limits.

While the pools will be funded by government subsidies, individuals will still have to pay premiums – specifically, PPACA requires that premiums for the “high-risk” coverage must be the same as the standard rate for a healthy adult in that state.

Under the law, each state can decide whether it wants to run the new high-risk pool itself, or whether it wants to have the federal government run the program instead. Michigan, for example, intends to run the new pool itself with the $140 million it will receive from the government. According to the Michigan Office of Financial and Insurance Regulation, patients can enroll in the new plan in September, with coverage slated to start in October. (Click here for additional information on Michigan's plan.)

However, there is some debate over whether the $5 billion set-aside will be sufficient to fund the high-risk pools until 2014. Since PPACA gives the Secretary of Health and Human Services discretion to adjust the state awards in anticipation of a projected deficits, states may be left with the unflattering option of either shouldering the burden, or un-insuring its residents.

For more information on state insurance pools, visit the National Association of Insurance Commissioners website, which has a directory of state insurance departments. Individuals interested in signing up for the high-risk pools should contact their corresponding state agency.

Editor's Note: Today's post was authored by FHWN attorney Sue Nolan.

The details on a new federal income tax credit for certain employers who make nonelective contributions towards employee health insurance premiums will be published next month in the Internal Revenue Service Bulletin.

Specifically, the new credit is designed to help small employers who have relatively low-wage employees. Businesses with 10 or fewer full-time equivalent employees earning less than $25,000 a year on average will be eligible in 2010 for a tax credit of 35% of health insurance costs. Companies with between 11 and 25 workers and an average wage of up to $50,000 are eligible for partial credits. On a state-by-state basis, this credit will change when the states set up Small Business Health Options Programs called "SHOP Exchanges" where small businesses can pool together to buy insurance. The SHOP Exchanges are required to be set up by 2014.

After the SHOP Exchanges are created, the tax credit will remain in place, increasing to 50% of health insurance costs for the first two years a company buys insurance through its state exchange.

Background

The Patient Protection and Affordable Care Act (PPACA) amends the Internal Revenue Code (by adding Section 45R) to provide a credit to small businesses for health insurance costs. The credit applies to any tax year beginning after December 31, 2009. There is a phase-out provision to limit the amount of the credit for small business employers who have more than 10 employees and/or whose average wage is higher than $25,000. Currently, there is a "transition" rule in place that applies until the sooner of 2014 or the time that the employer's state sets up a Small Business Health Options Program called "SHOP Exchange" where small businesses can pool together to buy insurance.

Current Provisions

Credit. The amount of the credit with respect to any eligible small business employer is equal to 35 percent (25 percent for a tax-exempt eligible small employer) of the lesser of (1) the eligible small employer's nonelective contributions for premiums paid for health insurance coverage for an employee or (2) an amount the Secretary of HHS determines is the average premium for the small group market in the State in which the employer is offering health insurance coverage or such area within the State as specified by the Secretary.

Phase-Out. The amount of the credit shall be reduced by the sum of the following:

(1) the amount of the credit multiplied by a fraction whose numerator is the total number of full-time equivalent employees of the employer in excess of 10 and the denominator of which is 15.

(2) the amount of the credit multiplied by a fraction the numerator of which is the average annual wages of the employer in excess of the dollar amount in effect under subsection (d)(3)(B) and the denominator of which is such dollar amount.

The dollar amount specified in (d)(3)(B) is currently $25,000.00. The amount of any credit taken reduces the employer's deduction for health care expenses.

After the jump - definitions

Continue reading "New Tax Credit Gives Break to Small Employers Contributing to Employee Health Plans" »

A frequent topic on the Health Care Lawyer Blog has been combating fraud and waste in the health care industry – both waste due to negligence, and “behavioral waste,” which is the term used to describe monies spent on treating preventable illnesses, such as those associated with obesity, smoking and non-adherence to medical regiments.

Therefore, I was pleased to learn that the new PPACA legislation seeks to combat behavioral waste by allowing employers to give further reductions in health insurance premiums to employees who practice healthy behavior. Prior to PPACA, employers were allowed to give a discount of up to 20 percent of the costs of premiums for employees who reached certain health goals – for example, maintaining a healthy weight, quitting smoking, and keeping blood pressure, blood sugar and/or cholesterol within a healthy range. Under PPACA, that cap is now lifted. Starting in 2014, employers can allow discounts of 30 percent and up to 50 percent in the cost of individual or family health care premiums.

Starting in 2011, small businesses (defined as companies that have 100 or fewer employees working 25 or more hours per week) will be eligible to receive grant funding to help implement such wellness programs. There will also be technical assistance and other resources available to help employers evaluate and launch such wellness programs.

PPACA will also expand wellness discounts in the individual (i.e., non-employer sponsored) market – an initial demonstration project involving 10 to-be-determined states is to be launched in July 2014. Employers who want to learn more about seeing up a wellness incentive program should contact Mercedes Varasteh Dordeski.

(For more additional information about PPACA's wellness and prevention provisions, feel free to check out my article in this month's ABA Health eSource.)

A new prescription drug rebate formula found in the health reform bill (the Patient Protection and Affordable Care Act, or "PPACA") is designed to lower the costs of drugs sold to state Medicaid programs - unfortunately, instead of saving the states money, the provision may actually strip additional funds from several states' already cash-strapped coffers.

Specifically, the health law contains a provision designed to raise $38 billion over the next ten years by requiring drugmakers who sell to Medicaid to further discount their prices. While such "rebates" were previously divided between the states and the federal government, under PPACA a significant portion of the rebates will now go solely to the feds.

While some states may be able to offset these losses, PPACA may spell trouble for others - for example, according to California's deputy Medicaid director, the state may lose $50 million next year because of the revisions. Indiana's secretary of the Family and Social Services Administration estimated that losses for her state may amount for $400 million over 10 years.

Currently, drug firms must offer Medicaid programs a 15.1 percent rebate for most brand-name medications. Under PPACA however, the rebate is increased to 23.1 percent, and now includes certain generics. The changes are slated to take effect October 1 of this year.

By: Louis C. Szura

The new PPACA legislation includes a version of the previously proposed Physician Payment Sunshine Act, which requires drug, medical device, biological or medical supply manufacturers to disclose direct payments or transfers to physicians and teaching hospitals that are $10 or more (or total over $100 in a calendar year). It also requires those manufacturers to disclose any non-public ownership or investment interests of physicians and their immediate family members in the manufacturers. Those reporting requirements do not take effect until March 31, 2013 and the information will be available online to the public.

However, there are some significant limitations on these reporting requirements. First, there is no requirement to report payments made through third parties where the manufacturer does not known the identity of the physician. This means that typical survey and marketing research will not be covered. Second, certain transfers are not covered, including the loan of medical devices for under 90 days, product samples intended for patient use, discounts (including rebates) and other items. Third, in the case of payments made pursuant to product research or development of a new drug, technology or device in connection with a clinical investigation, the manufacture can delay reporting the payment for either four years or until the drug, device or technology is approved by the FDA. Overall, even with these limitations, the relationships between manufacturers and physicians will be clearer to the public. For additional information about these regulations, please contact Louis Szura.

I seem to be caught in an alarming pattern in which every time I leave the country, I return to fiscal and/or political turmoil. In September of 2008, for example, I departed to St. Lucia for a week and arrived back into the eye of the Wall Street collapse; Lehman Brothers had filed for bankruptcy, Fannie Mae and Freddie Mac had been placed in conservatorship, and general chaos reigned.

On Monday, I returned from a week in lovely Cabo San Lucas, Mexico in the wake of one of the most significant – and controversial – pieces of health care legislation in U.S. history. With the historic Patient Protection and Affordable Care Act (“PPACA”) now law and passage of the Reconciliation Bill looming (as of the time of this post, the bill had passed both the House and Senate and is awaiting President Obama’s signature), sweeping changes are scheduled to unfold during the next several years.

Some of the key provisions are as follows:

- Immediately, the Act will give small businesses a tax credit to help them pay for health insurance. Seniors will get a $250 rebate on prescription drug expenses. The federal government will begin providing significant funding to community health centers, eventually doubling the number of patients treated at these centers. The federal government will also provide funding to train additional primary care physicians, nurses and public health professionals to meet the increased demand for health care services.

- Within the next ninety days, individuals with pre-existing conditions will be able to purchase subsidized health insurance. Retiree health plans covering early retirees (ages 55 to 64) will qualify for a new federal reinsurance program which will reduce the costs of these plans, helping many Michigan businesses.

- In six months, all health plans will be prohibited from denying benefits to children because of pre-existing conditions or canceling coverage or a policy when a patient becomes sick or reaches a lifetime limit. Health plans will be required to permit young adults up to age 26 to remain on their parents' insurance policies. All new health plans will be required to provide free preventive care with no co-pays or deductibles.

- Beginning January 1, 2011, all insurance plans will be required to spend at least 80 percent of their revenues on paying claims. If an insurer spends too much on overhead, the insurer will be required to rebate some of the insurance premiums it collected.

- Many other significant changes will be made when Michigan's health insurance exchange is launched. Michigan residents and small businesses will be able to purchase insurance from the exchange at affordable rates. Michigan has until 2014 to launch this exchange. Once the exchange has been launched, no one can be denied insurance based on a pre-existing condition.

For a list of employer-specific considerations, please visit the linked article by FHWN attorney Michael Hamblin.

During the next weeks, the Health Care Lawyer Blog will continue to provide updates and details on the new PPACA, including new measures to fight "behavioral waste", new whistblower protection provisions, and amendments to the federal False Claims Act.