MAPAM Fall Conference October 21, 2013 The ACA and Beyond –

MAPAM Fall Conference
October 21, 2013
The ACA and Beyond –
Continued Challenges, New Risks
Brett D. Witham, Esq.
Verrill Dana, LLP
One Portland Square
Portland, ME 04112-0586
[email protected]
Gary A. Rosenberg, Esq.
Verrill Dana, LLP
One Boston Place
Boston, MA 02108-4407
[email protected]
Topics to be Covered
Transparency of Cost
Financial Assistance Policies (“FAPs”) / Billing and
Collection Activities
Incident to Billing
ACA Performance Based Programs
ACO Update
Inpatient Admissions
OPPS Proposal
Repayments are Larger
and More Unique
• DoJ recouped nearly $3 billion last year
• Three different, recent examples -(1) Shands Healthcare
• 6 nonprofit hospital system in FL - $26m
• Billed short-stays as inpatients ’03-’08
• Whistleblower was an independent
contractor/consultant hired to audit billing practices
• Victim of ambiguous standards
Another Example
(2) Mass. hospital agreed to $66,000
• Patients without health insurance and with
unknown address or from other state or country
• Hospital somehow sent bills for emergency care to
homeless shelter
• Established paper trail so state HSN could be
• Whistleblower was former collections analyst at
• Breakdown of system
Third Example
(3) Florida doctors, hospital, clinics pay
$3.5m for improper radiation oncology
• Services not supervised by physician
• Services performed when doctors on vacation or
at another clinic
• No evidence in medical records of service
• Billed twice for service
• Upcoded
• Knowing improprieties?
Transparency of Patient Cost
• M.G.L. c. 111, Sec. 228
– Prior to service, on request, disclose allowed
amount or charge, including facility fees,
within 2 working days
– Allowed amount = amount paid by insurer
– Upon request, give patient info to use toll-free
number and website of health plan to
disclose patient’s out-of-pocket costs
– Effective 1/1/2014
Incident-to Billing
• Services that are furnished incident to
physician professional services in the
physician’s office (non-institutional setting)
• Review when and how to bill
– Integral part of normal course of treatment
– Physician performs initial service
– Physician remains actively involved
– Direct Supervision
Incident-to Billing
• Service of a type commonly furnished in a
physician’s office or clinic
• Included in physician’s bill and expense to
• If met, allows NPPs to provide services and
obtain 100% of fee schedule amount
• Some practices all or nothing
• On 2013 OIG work-plan
Incident-to Billing
• Takeaways
– The patient must be established
– No new conditions
– Must have physician in office suite and
– Physician involvement in record
• Compliance Pitfalls
– Billing configuration
– Small practices where PA/NP may be working
Incident-to Billing
• Experience with Overpayment Process
– May be able to net underpayments against
– May use payment amount differential as
basis for error rate
– If rate is less than 5%, then may be able to
take position that no extrapolation (just return
overpayment related to probe sample)
– Cost of compliance may exceed
IRS 501(r)
Financial Assistance Policies (“FAPs)
• ACA created new requirements for non-profit
• Establish a FAP
– Establish criteria for free or discounted care
– Basis for calculating amounts charged to pts
– Method for applying for financial assistance
– Measures to widely publicize the FAP in
• Statute in Effect
• Limitation on Charges
– Limits amounts charged for emergency or
medically necessary care to FAP eligible pt
– Not more than amounts generally billed to pts
with insurance (“AGB”)
– Prohibits the use of gross charges
• Billing and Collections
– Reasonable efforts to determine if pt is FAPeligible before extraordinary collection actions
Proposed FAP Regulations
• IRS proposed regulations on 6/26/2012
– Two methods to determine AGB as charge
– Look-back method:
• Actual claims paid, either Medicare FFS or with all
private insurers
• At least annually
• One average AGB for all emergency and
medically necessary care, or multiple for separate
items or services
Proposed Limit on Charges
– Prospective method:
• Determine AGB using same billing and coding
process as for a Medicare patient
• Then set the AGB at the total amount that
Medicare + beneficiary would pay
– Once selected, method cannot be changed
– Safe harbor – hospital does not violate law if
it charges more than AGB if pt fails to submit
a complete FAP application and hospital
continues to make reasonable efforts to
determine eligibility for financial assistance
Widely Publicize FAP
• Make paper copies of FAP, application and
plain language summary of FAP available
w/o charge in public locations of hospital
• Inform visitors to hospital about FAP
• Inform community
• Make FAP, application, and plain language
summary available online
Billing and Collection Activities
• Statute requires reasonable efforts to determine
patient’s eligibility for assistance before taking
extraordinary collection actions
• “extraordinary” =
– Reporting to credit agency
– Selling debt to a 3rd party
– Legal or judicial action
• Placing lien or foreclosing on property
• Attaching bank account
• Filing civil action
Before Engaging in Extraordinary
Collection Actions
• Notify patient of FAP during the “notification
period” – begins on date care is provided
and ends on 120th day after hospital provides
first billing statement
• If by end of notification period no
determination of eligibility, hospital must
accept FAP application during additional 120
day period
Before Engaging in Extraordinary
Collection Actions
• “Application period” – begins on date of
service, ends on 240th day after pt provided
with first billing statement
• Upon receipt of complete application, must
suspend any ECA in process
ACA Performance Based Programs
• Medicare Reimbursement – Quality Counts
– HACs
– Readmissions
– Value Based Purchasing
• By 2017 it is estimated that these three
programs will put up to 6% of a hospital’s
Medicare reimbursement at risk
• Final Rule issued August 2, 2013
ACA Performance Based Programs
• HAC Program
– Condition developed during stay not POA
– Beginning in 2015 hospitals in the top quartile of HACs
will receive 99% of their DRG payment
– Will use measures from IQR
– Payment reduction is across the board to all payments,
including IME, DSH, etc
– HAC reductions applied after adjustments for VBP
– Worse performance means more points
ACA Performance Based Programs
• HAC Program Takeaways
– CMS estimates teaching hospitals
disproportionately affected
– More quality based revenue is at risk
– Accurate and complete POA data is paramount
– Comprehensive physical exam
– Quality checks and training
– Full transition from DRA no additional payment
to penalty
ACA Performance Based Programs
• Readmission Reduction Program
– Reduction in payments to hospitals with
excessive readmissions relative to other
– If readmission occurs within 30 days of
discharge and is related to prior admission
– Maximum reduction increased from 1% to 2%
for FY 2014 and up to 3% for FY 2015
– Current measures acute myocardial infarction,
heart failure and pneumonia
ACA Performance Based Programs
• Readmission Reduction Program
– New measures COPD and elective hip/knee
– 2,225 hospitals impacted beginning October 1
(18 losing full 2%)
– Hospitals treating larger number of low income
patients more likely to be penalized
– Good news: expanded the types of planned
readmissions not counted against the
readmission rate
ACA Performance Based Programs
• Readmission Reduction Program Takeaways
– Many of the prominent academic medical centers
hit in the first round have improved in the second
– A lot of discussion and disagreement regarding
disparate impact
– Hospitals cannot afford to think they are not
responsible for patients once they leave
– Some now send nurses to check patients at home
and give free meds to low income patients
ACA Performance Based Programs
• Value Based Purchasing Program
– CMS compares performance during
performance period to performance during a
baseline period
• Clinical Process of Care
• Patient Experience of Care
• FY 2014 includes Outcome Domain
– VBP payments funded by reduction in DRG
ACA Performance Based Programs
• Value Based Purchasing Program
– Increases from 1% to 1.25% in IPPS Final
– Proposed Additional Measures for FY 2016
– New waiver program for natural disasters
ACA Performance Based Programs
• Value Based Purchasing Program Takeaways
– $1.1 Billion now at risk
– Transition to pay for reporting to pay for
performance and quality complete
– Groundwork for bundled payments
– Accurate data paramount
– Patient experience important
ACO Update
• Brief Overview
– Must be willing to become accountable for the
quality, cost and overall care of the Medicare
fee-for-service beneficiaries assigned to it
– Must enter into an agreement with CMs for a
minimum of 3 years
– Must have a formal legal structure to receive
and distribute payments for shared savings
– Must include PCP and have a minimum of
5,000 Medicare beneficiaries
ACO Update
• Brief Overview
– Fee-for-service payment not going away, but
also eligible for shared savings payment if:
• Meet quality performance standards
• Reduce Medicare expenditures as compared to a
ACO Update
• 3 Types of ACOs
(1) Shared Savings ACO
• One-sided, no risk = 50% sharing in savings created
– Physicians paid FFS as usual
– If savings and performance measures achieved, 50/50 split
– If no savings, no downside
• Two-sided, limited risk = 60% sharing in savings created
– Physicians paid FFS as usual
– If savings and performance measures achieved, 60/40 split
– If no savings, fee adjustment occurs (capped)
ACO Update
(2) Advance Payment ACO
• Created for MD owned and/or rural providers
• Limited to two organizations:
– ACOs with no inpatient and annual revenue of less than
$50 MM
– ACOs with inpatient through CAHs/Rural hospitals and
revenue of less than $80 MM
ACO Update
(3) Pioneer ACO
• Minimum of 15,000 aligned beneficiaries
• Created for Advanced Health Care Organizations
• Intent is to allow advanced systems to move
quickly to population-based payment model
ACO Update
• ACO Adoption
– Growth continues unabated
– As of July 2013, more than double a year ago
– Medicare ACOs comprises more than half of the 488
ACOs nationwide (253)
– No single model has emerged as the most
successful—much variety in organization and
– Adjusting for population, Southern Maine has the
largest number of ACOs per capita
– Boston also has high concentration
ACO Update
• Initial Data - 32 Pioneer ACOs
– 18 of 32 delivered savings, with 13 eligible for
shared savings
– At least 1 of the 14 that did not deliver
savings must return dollars to CMS
– At least 8 of the 14 that did not deliver
savings are transitioning out of the Pioneer
program, with 6 transitioning to another type
ACO Update
• EHR Systems in use
– Among ACOs with savings no predominant
system being used
– 31% Epic
– 19% NextGen
– Allscripts, athenahealth, GE Centricity and
ACO Update
• Organizational Models
– Among 18 ACOs with savings
• 10 are Integrated Delivery Networks
• 3 are Hospital System/Physician Group partnerships
• 5 are Physician Groups
– Among 14 without savings
• 3 are Integrated Delivery Networks
• 4 are Hospital System/Physician Group partnerships
• 7 are Physician Groups
Inpatient Admissions
• 2014 IPPS update rule defined an inpatient:
– Stays for which the physician admits patient
based on expectation for stay of two or more
midnights presumed to qualify as inpatient
– Stays not spanning two midnights considered
as outpatient
Inpatient Documentation
• Physician order must specify intent to admit, “to
inpatient”, “as an inpatient”, “for inpatient
services” or the like
• Physician certification
– Must certify inpatient services were ordered in accordance with
federal regulations, such as inpatient services are reasonable
and necessary
– Must state reasons for hospitalization
– Must be signed and documented in the medical record prior to
the hospital discharge
– Certification begins with order for admission
OPPS Proposal
• For years CMS has let hospitals charge 5
varying E&M levels/rates for ED and clinic
services “facility fee”)
– Codes were designed by AMA for physician,
not hospital, billing
• For 2014 CMS proposes to replace 5 codes
with 1 flat rate for ED visits and 1 for clinic
OPPS Proposal
• Won’t distinguish new vs. established
• Intent is to simplify billing
• Is real intent to stop upcoding? Questionable
• Patients upset by provider-based clinic
facility charge
Facility Fees
• 2013 ED facility fees range: $51.82 - $344.71
• 2014 ED proposal: flat rate of $212.90,
regardless of intensity of treatment
• 2013 clinic rates range : $56.77 - $128.48
• 2014 clinic proposal: flat rate of $88.31
Facility Fee Proposal
• Physician fees and procedures not impacted
• There will be winners and losers –
– Minor ailments overpaid
– Trauma centers underpaid
• Eliminates compliance risks
• Final rule to be released soon