Indiana Health Care Association's 2012 Convention & Expo

Transcription

1 Indiana Health Care Assciatin's 2012 Cnventin & Exp Health Refrm Update: Status f Litigatin, "Suspicius" Crimes and Accuntable Care Organizatins April 25, 2012 Gregry L. Pembertn (317) gregry.pembertn@icemiller.cm *This utline is intended fr general infrmatin purpses and des nt and is nt intended t cnstitute legal advice. Ice Miller LLP

2 Tpics t Discuss Status f Supreme Curt PPACA case Elder Justice Act and "Suspicius" Crimes Update n Accuntable Care Organizatins

3 Status f PPACA Supreme Curt Case

4 Curt Challenges Within minutes f President Obama signing PPACA, 20 states, including Indiana, tw private citizens and the Natinal Federatin f Independent Business filed a cmplaint seeking declaratry judgment and injunctive relief challenging the cnstitutinality f the law Six states later jined the lawsuit

5 Curt Challenges (Cnt d)

6 Curt Challenges (Cnt d) On January 31, 2011, Senir Judge Rbert Vinsn issued a declaratry judgment finding PPACA uncnstitutinal Key Findings Individual mandate, which beginning in 2014 wuld require Americans, with certain limited exceptins, t purchase apprved health insurance r pay a mnetary penalty, exceeded Cngress authrity under the Cmmerce Clause Individual mandate and remaining prvisins are all inextricably bund tgether in purpse and must stand r fall as a single unit Since the individual mandate cannt be severed frm the Act, entire Act is uncnstitutinal

7 Curt Challenges (Cnt d) U.S. Curt f Appeals fr the Sixth Circuit (Cincinnati, Ohi) On June 29, 2011, a divided 6 th Circuit panel (2-1) declared the individual mandate t be a valid exercise f cngressinal authrity under the cmmerce clause The curt said that the individual mandate is a regulatin n the activity f participating in the natinal market fr health care delivery, and specifically the activity f self-insuring fr the cst f these services Cngress had a ratinal basis t believe that the individual mandate has substantial effects n interstate cmmerce

8 Curt Challenges (Cnt d) U.S. Curt f Appeals fr the Eleventh Circuit (Atlanta, Gergia) On August 12, 2011, a divided 11 th Circuit panel (2-1) declared that the individual mandate exceeded Cngress pwers under the Cmmerce Clause and was uncnstitutinal; but, the curt did nt strike dwn all f PPACA, as the lwer curt had dne Majrity said Cngress culd d many things under the Cmmerce Clause, but it culd nt mandate that individuals enter int cntracts with private insurance cmpanies fr the purchase f an expensive prduct frm the time they are brn until the time they die Such a mandate is unprecedented, lacks cgnizable limits, and imperils ur federalist structure Individual mandate is severable

9 Curt Challenges (Cnt d) U.S. Curt f Appeals fr Furth Circuit (Richmnd, Virginia) On September 8, 2011, a 4 th Circuit panel threw ut a pair f cases challenging the cnstitutinality f PPACA ruling fr varying reasns that the plaintiffs did nt have legal standing t bring their claims Tw f the 3 judges vlunteered that they wuld have upheld the law if they had been able t rule n the substance f the cases U.S. Curt f Appeals fr D.C. Circuit On Nvember 8, 2011, a panel upheld the Act n a 2-1 vte Majrity pinin written by a judge with a cnservative reputatin

10 Curt Challenges (Cnt d) Rather than appeal t full circuit in any f these cases, the Obama Administratin petitined the Supreme Curt in late September t hear the 11 th Circuit decisin Imprtant plitical decisin Ultimately, the U.S. Supreme Curt decided t accept Cert. n the 11 th Circuit Case

11 Supreme Curt Review In granting certirari, the Curt identified fur areas fr ral argument As an initial inquiry, des the litigatin n the Act vilate the Anti- Injunctin Act? Is the individual mandate cnstitutinal? Is the individual mandate severable frm the Act? Is the Medicaid expansin cntained in the Act cnstitutinal? Oral arguments were held March 26-28, 2012 Very uncertain as t hw the Curt will rule The Curt will likely issue a decisin by June, 2012

12 Oral Arguments: Anti-Injunctin Act The initial ral argument in the Curt's cnsideratin f the Act dealt with the federal Anti-Injunctin Act (the AIA) Generally, the AIA requires that a persn must first pay a federal tax and then sue fr a refund rather than seek an injunctin t prevent the cllectin f the tax in the first place Althugh, neither f the parties tk this psitin n appeal, the Curt tk up the issue and appinted an experienced appellate attrney t argue the applicability f the AIA t this litigatin

13 Oral Arguments: Anti-Injunctin Act In shrt, the gvernment, the states and the private individuals all agree n the utcme; the Curt shuld cnsider the Act challenges and d s nw and nt later It remains t be seen whether the Curt agrees If the Curt takes psitin that the individual mandate penalty is a tax fr AIA purpses, then n curt will have jurisdictin t hear the case until after the tax has been assessed, likely in 2015

14 Oral Arguments: Individual Mandate Beginning in 2014, the individual mandate requires mst individuals in the United States t maintain "minimum essential cverage" (i.e., health insurance cverage with certain minimum prescribed benefits) Fr any mnth in which this minimum cverage is nt maintained, a penalty is assessed against such individual based n the individual's husehld incme, which is filed with the individual s incme tax return

15 Oral Arguments: Individual Mandate The Act s challengers cntend that the individual mandate is nt a valid exercise f Cngress' legislative pwers, and have centered their arguments n three cnstitutinal prvisins: the Cmmerce Clause, the Necessary and Prper Clause and the Taxing Pwer Cmmerce Clause. The states and individuals cntend that the Act exceeds the bunds f Cngress authrity under the Cmmerce Clause, as the individual mandate attempts t regulate the health care market by requiring individuals t participate in a separate market, specifically the insurance market The gvernment defends the actin by fcusing n the intercnnectedness between the tw markets, explaining that health insurance is the primary financing mechanism t pay fr health care. Uninsured participatin in the health care market causes cst shifting and significant distrtin in the insurance market Ultimately, the decisin f the Curt is likely t hinge n whether the gvernment was able t cnvince the justices that uphlding the individual mandate will nt lead dwn a slippery slpe t a federal gvernment with unlimited pwer t regulate individual cnduct, r, as many pundits have psited, a federal gvernment that can require everyne t buy brccli

16 Oral Arguments: Individual Mandate Tax Due t Cngress brad authrity t lay and cllect Taxes and despite the fact that the Obama administratin has always taken the psitin the Act des nt impse new taxes, in supprting the cnstitutinality f Act the gvernment has taken the psitin that the individual mandate paired with the penalty perates as a tax. The gvernment argued that because the nly enfrcement mechanism fr the individual mandate is the penalty, the tw prvisins are inseparable, and in substance perate as a tax. The states and the individuals cunter by pinting ut that the individual mandate and the penalty are separate prvisins f the Act, the applicability f the individual mandate is much wider than the applicability f the penalty and Cngress specifically chse nt t characterize this as a tax Necessary and Prper In supprting the Act, the gvernment finally cntends that the health care regulatins fund in the Act, including the individual mandate, are necessary and prper fr carrying int executin its pwer t regulate interstate cmmerce, specifically, the health care market On the cntrary, in the states' and the individuals' cllective view, the necessary and prper clause nly grants Cngress the pwer t act in ways which are "cnsist[ent] with the letter and spirit f the Cnstitutin" and, they cntend that the individual mandate is nt cnsistent

17 Oral Arguments: Severability In the event the individual mandate is fund t be uncnstitutinal, a significant issue faced by the Curt is whether the rest f the Act is severable The gvernment argues that the Act shuld stand (with the exceptin f the guarantee issue and cmmunity rating prvisins, which it cncedes are inextricably tied t the mandate in rder t avid adverse selectin prblems). The gvernment supprts its psitins with several pints: the lin s share f the Act has nthing t d with the individual mandate; many prvisins f the Act are already in effect and nt related t the individual mandate; and the wrd essential was cnspicuusly left ut f the Titles f the Act that address these ther whlly unrelated prvisins. Ultimately, the gvernment argued that Cngress culd nt pssibly have intended the extrardinary disruptin that cmplete inseverability wuld have n the ther prvisins

18 Oral Arguments: Severability On the ther hand, the states and individuals argue that the entire Act shuld be invalidated because the individual mandate was the heart f the Act. All f the ther prvisins, they argue, were included t strike a balance between the prvisins designed t ensure a supply adequate t meet the demand created by the mandate. On the demand side, the petitiners argue that Cngress enacted the individual mandate t frce all individuals int the insurance market in rder t expand the risk pl and lwer csts fr insurers On the supply side, the petitiners argue that Cngress enacted a series f measures t guarantee that everyne wuld have affrdable insurance cverage available t them Petitiners pint t the text f the Act which deemed the mandate essential t the regulatry scheme it intended t create. Petitiners argue that even seemingly unrelated aspects f the Act all wrk tgether t achieve Cngress' gal f near-universal cverage because these prvisins and the series f revenue ffsets they create are part f the delicate fiscal balance that the Act was designed t achieve.

19 Oral Arguments: Severability Ultimately, the challenge t the severability f the individual mandate prvisin frm the rest f the Act is fundamentally a questin f cngressinal intent Wuld Cngress have intended the entire Act t fall if the individual mandate is fund uncnstitutinal? Justice Ginsburg qualified the Curt s decisin as a chice between a wrecking peratin and a salvage jb

20 Oral Arguments: Medicaid Expansin The states are als challenging the cnstitutinality f the Medicaid expansin fund in the Act One f the Act s key elements fr achieving near universal health care cverage is the significant expansin f the existing Medicaid prgram t all adults under 65 years f age with incmes up t 133 percent f the federal pverty level The basic questin presented t the Curt is whether the expansin represents an uncnstitutinally cercive use f Cngress' spending pwer

21 Oral Arguments: Medicaid Expansin While the gvernment has always enjyed the right t attach cnditins t the use f federally apprpriated funds, the states cntend that the use f cntinued Medicaid participatin as leverage fr the expansin amunts t impermissible ecnmic cercin Specifically, the states maintain that the take it r leave it apprach in the cntext f Medicaid, a prgram states have cme t rely n, is uncnstitutinally cercive The gvernment respnded that, by definitin, n cercin may exist where the states are given a vluntary chice t accept federal funds. The gvernment recgnized that althugh fr sme states it may be a plitically difficult chice, such difficulty is nt a matter f cnstitutinal cnsequence

22 Reprting "Suspicius" Crimes

23 Reprting Reasnable Suspicin f a Crime in a Lng-Term Care Facility Sectin 1150B f the Scial Security Act as established by Sectin 6703(b)(3) f PPACA June 12, 2011 CMS memrandum t State Survey Agency Directrs Revised August 12, 2011 t include Questins and Answers dcument Revised again n January 20, 2012

24 Reprting Crimes Applicatin LTC Facilities include nursing facilities, skilled nursing facilities, hspices prviding services in LTC Facilities, and intermediate care facilities fr the mentally disabled. The Act applies t thse facilities that received at least $10,000 in federal funding annually during the preceding year. Cvered Individual includes wners, peratrs, emplyees, managers, agents, and cntractrs f an LTC Facility

25 Reprting Crimes (Cnt d) Duties f LTC Facility Obligatins. The respnsibility fr reprting lies slely with the Cvered Individual, nt the entity. Hwever, LTC Facilities have certain bligatins with respect t this sectin. Annually prvide ntice t all Cvered Individuals f the duty t reprt Prevent retaliatin f an emplyee making a reprt Pst cnspicuus ntice regarding emplyee rights under this prvisin

26 Reprting Crimes (Cnt d) Duties f LTC Facility (cnt d) Recmmendatins. In additin, CMS als recmmends that LTC Facilities ensure cmpliance with existing plicies, as investigatins f reprted events may lead t citatins fr the LTC Facility. Crdinate with lcal law enfrcement t understand lcal criminal cde Ensure adherence t existing CMS reprting plicies and prcedures Develp specific plicies and prcedures fr emplyees t ensure cmpliance with the new reprting requirements (ensure apprpriate dcumentatin)

27 Reprting Crimes (Cnt d) Duties f Cvered Individual A Cvered Individual has an individual affirmative duty t reprt a reasnable suspicin f a crime ccurring in an LTC Facility t (i) any lcal law enfrcement agency, and (ii) the state survey agency Timing. The timing requirements are based n real hurs, nt business hurs. Result n Serius Bdily Injury = 2 Hur Reprting Limit (immediately but n later than 2 hurs after frming suspicin) All Others = 24 Hur Reprting Limit

28 Reprting Crimes (Cnt d) Duties f Cvered Individual (cnt d) Hw t Reprt. There are n specific requirements at this time regarding the specific methd f reprting, and states are free t adpt their wn frms. Currently, reprts may be made in any medium (i.e., telephne, , fax, etc.). What t Reprt. The statute requires reprting reasnable suspicin f a crime. Crime is defined accrding t lcal laws f the jurisdictin in which the LTC Facility is lcated. Reasnable suspicin des nt require first-hand knwledge. Other Reprts. These reprting requirements are specific t suspected criminal activity, and d nt alter existing incident reprting requirements t the state survey agency. All nn-criminal incidents remain subject t reprting requirements accrding t current incident reprting guidelines and state licensure regulatins.

29 Reprting Crimes (Cnt d) Penalties Individual. The penalty fr failure t reprt includes a civil penalty as well as pssible exclusin frm any federal health care prgram. The maximum civil penalty is $200,000, which rises t $300,000 if increased harm resulted. LTC Facility. Penalties fr retaliatin include a civil mnetary penalty nt t exceed $200,000, and may include exclusin f the facility fr a perid f 2 years.

30 Reprting Crimes (Cnt d) Miscellaneus Crdinatin. LTC Facilities may crdinate the reprting activities f its Cvered Individuals t minimize the administrative burden f multiple reprts fr the same incident. Hwever, it may nt prhibit individuals frm making direct reprts. LTC Facilities must maintain plicies t encurage reprting. When t Reprt. Many incidents will invlve a case specific individual judgment regarding whether a perceived harm resulted frm the cmmissin f a crime. In the examples f unexplained bruising and patient altercatins, these situatins will turn n the individual s judgment n the underlying circumstances. If there is n reasnable suspicin f a crime, then the incident shuld be reprted under existing incident reprting prcedures

31 Reprting Crimes (Cnt d) Miscellaneus (cnt d) Facility Liability. CMS will defer t the curts the issue f whether an LTC Facility may be held liable in a civil r criminal case fr a Cvered Individual s failure t reprt. Excluded Individuals. LTC Facilities risk lsing Federal funding fr emplying an individual wh has been excluded due t failure t reprt. The Office f Inspectr General will create a database that will include a list f all such excluded individuals.

32 Update n Accuntable Care Organizatins

33 Accuntable Care Organizatins PPACA requires CMS t create a Medicare shared savings prgram thrugh which grups f prviders and suppliers wrk tgether t manage and crdinate care fr Medicare fee-frservice beneficiaries: Accuntable Care Organizatins r ACOs ACOs agree t be accuntable fr the quality, cst and verall care f thse beneficiaries assigned t it PPACA prvides few details

34 ACOs: PPACA Requirements Varius rganizatins may frm an ACO Each ACO is required t Agree t participate fr a minimum f three years Have a frmal legal structure t receive and distribute shared savings Have sufficient primary care ACO prfessinals fr the number f beneficiaries assigned t it (minimum f 5,000 beneficiaries) Have in place leadership and management structure that includes clinical and administrative systems

35 ACOs: Issues Left Open by PPACA PPACA required the Secretary t establish a shared savings prgram by January 1, 2012, and left several fundamental issues fr the Secretary t address Hw are beneficiaries ging t be assigned t ACOs What are the quality perfrmance standards ACOs must achieve t qualify t share in savings What are the benchmarks that must be achieved in rder t share in savings What percentage f savings will be shared with ACOs Hw will ACOs be impacted by varius existing laws that impact health care prviders Stark, AKS, Antitrust, CMP

36 ACOs: Prpsed Regulatins CMS Prpsed Rules n ACOs issued n March 31, 2011 Prpsed answers t key questins Beneficiary assignment t be based n utilizatin f primary care services prvided by physicians assigned t PCP wh has histrically prvided plurality f primary care services Quality measures based n five key areas: Patient/caregiver experience; Care crdinatin; Patient safety; Preventive health; and At-risk ppulatin/frail elderly health.

37 ACOs: Prpsed Regulatins (Cnt d) Shared Savings. Shared savings tw tracks: Track 1 benefit frm savings ver first tw years, but share in lsses in third year; and Track 2 share in any savings and lsses fr all three years, but eligible fr higher savings rates than under Track 1. Detailed mdel: CMS prpsed benchmarks be based n a risk adjusted, per capita fee fr service expenditures fr Parts A and B fr the previus three years, adjusted t take int accunt characteristics f beneficiaries assigned t ACO; Minimum savings rate ( MSR ) fr each ACO; and MSR applied t benchmark and if ACO s per capita expenditures are less than adjusted benchmark, difference will be shared.

38 ACOs: Prpsed Regulatins (Cnt d) Track 1 50% f savings nt t exceed 7.5% f benchmark Track 2 60% f savings nt t exceed 10% f benchmark» Lsses capped at 5% fr first year, 7.5% in secnd year, and 10% in year 3 Crdinatin with ther federal laws Permit waivers f Stark law and AKS fr ACO participants t allw fr distributin f shared savings and fr activities directly related t ACO participatin IRS Ntice DOJ and FTC

39 ACOs: Prpsed Regulatins (Cnt d) Reactin Almst universally negative American Medical Grup Assciatin Letter t CMS Overly prescriptive, verly burdensme, and incentives t difficult t achieve t make the prgram attractive Despite the fact that multi-specialty physician grups may be best pised t becme ACOs in the shrt term, survey f AMGA members reflected that 93% wuld nt enrll as an ACO under prpsed rules Cncerns risk-sharing requirement, static risk adjustment, retrspective attributin, minimum savings requirements, etc.

40 ACOs: Prpsed Regulatins (Cnt d) Reactin (cnt d) American Hspital Assciatin estimated the cst t a hspital f starting an ACO in the first year $11,000,000 t $26,000,000 Indiana Hspital CEO fast track t bankruptcy Unicrn

41 Final Regulatins Received Over 1,300 Cmments Gvernment s Respnse Eliminate the risk sharing in Track 1 (n risk fr first 3 years) Reduced the number f quality measures frm 65 t 33 ACOs will be made aware f likely assigned Medicare beneficiaries at the frnt end

42 Final Regulatins (Cnt d) Cmmunity health centers and rural health clinics allwed t lead ACOs Relaxed timetable fr launch f ACOs s ACOs can apply thrughut 2012 Sme physician-wned and rural prviders can have early access t sme f the expected savings t help frm ACOs Justice Department and FTC eliminated the requirement f a mandatry review f certain new ACOs

43 Final Regulatins (Cnt d) Industry Reactin Psitive pleased with the significant changes, mre attractive?: Were the changes enugh t get hspitals t jump in especially with uncertainty as t legal challenges under health refrm law CMS prjected 50 t 270 ACOs t be frmed ver the first few years affecting 2 millin Medicare beneficiaries Indiana hspital CEO we will wait t see what happens

44 ACOs-Update As f April 1, 2012, there are nw 65 ACOs 32 Pineer Mdel ACOs annunced in December Physician Grup Practice Transitin Demnstratins 27 started as f April 1

45 ACOs-Update CMS estimates brings the ttal number f beneficiaries receiving care in all Medicare shared savings initiatives t 1.1 millin. CMS is currently reviewing mre than 150 additinal applicatins frm ACOs applying t enter the prgram in July, 2012.

46 ACOs-Update List f Pineer Mdel ACOs Organizatin Service Area 1. Allina Hspitals & Clinics Minnesta and Western Wiscnsin 2 Atrius Health Eastern and Central Massachusetts 3. Banner Health Netwrk Phenix, Arizna Metrplitan Area (Maricpa and Pinal Cunties) 4. Bellin-Thedacare Health Partners Nrtheast Wiscnsin 5. Beth Israel Deacness Physician Organizatin Eastern Massachusetts 6. Brnx Accuntable Healthcare Netwrk (BAHN) New Yrk City (the Brnx) and lwer Westchester Cunty, NY 7. Brwn & Tland Physicians San Francisc Bay Area, CA 8. Dartmuth-Hitchcck ACO New Hampshire and Eastern Vermnt 9. Eastern Maine Healthcare System Central, Eastern and Nrthern Maine 10. Fairview Health System Minneaplis, MN Metrplitan Area 11. Franciscan Alliance Indianaplis and Central Indiana 12. Genesys PHO Sutheastern Michigan 13. Healthcare Partners Medical Grup Ls Angeles and Orange Cunties, CA 14. Healthcare Partners f Nevada Clark and Nye Cunties, NV 15. Heritage Califrnia ACO Suthern, Central, and Castal Califrnia 16. JSA Medical Grup, a divisin f HealthCare Orland, Tampa Bay, and surrunding Suth Flrida Partners

47 ACOs-Update List f Pineer Mdel ACOs (cnt.) Organizatin Service Area 17. Michigan Pineer ACO Sutheastern Michigan 18. Mnarch Healthcare Orange Cunty, CA 19. Munt Auburn Cambridge Independent Practice Eastern Massachusetts Assciatin (MACIPA) 20. Nrth Texas ACO Tarrant, Jhnsn and Parker Cunties in Nrth Texas 21. OSF Healthcare System Central Illinis 22. Park Nicllet Health Services Minneaplis, MN Metrplitan Area 23. Partners Healthcare Eastern Massachusetts 24. Physician Health Partners Denver, CO Metrplitan Area 25. Presbyterian Healthcare Services Central New Central New Mexic Mexic Pineer Accuntable Care Organizatin 26. Primecare Medical Netwrk Suthern Califrnia (San Bernardin and Riverside Cunties) 27. Renaissance Medical Management Cmpany Sutheastern Pennsylvania 28. Setn Health Alliance Central Texas (11 cunty area including Austin) 29. Sharp Healthcare System San Dieg Cunty 30. Steward Health Care System Eastern Massachusetts 31. TriHealth, Inc. Nrthwest Central Iwa 32. University f Michigan Sutheastern Michigan

48 ACOs-Update List f ACOs selected t begin April 1 ACO Name Service Area 1. Accuntable Care Calitin f Caldwell Nrth Carlina Cunty, LLC 2. Accuntable Care Calitin f Castal Gergia, Suth Carlina Gergia, LLC 3. Accuntable Care Calitin f Eastern Nrth Nrth Carlina Carlina, LLC 4. Accuntable Care Calitin f Greater Athens Gergia Gergia, LLC 5. Accuntable Care Calitin f Munt Kisc, New Yrk, Cnnecticut LLC 6. Accuntable Care Calitin f Sutheast Wiscnsin Wiscnsin, LLC 7. Accuntable Care Calitin f Texas, Inc. Texas 8. Accuntable Care Calitin f the Mississippi Mississippi Gulf Cast, LLC 9. Accuntable Care Calitin f the Nrth New Yrk Cuntry, LLC 10. AHS ACO, LLC New Jersey, Pennsylvania 11. AppleCare Medical ACO, LLC Califrnia 12. Arizna Cnnected Care, LLC Arizna 13. Chinese Cmmunity Accuntable Care New Yrk Organizatin

49 ACOs-Update List f ACOs selected t begin April 1 (cnt.) ACO Name Service Area 14. Cathlic Medical Partners New Yrk 15. Castal Carlina Quality Care, Inc. Nrth Carlina 16. Crystal Run Healthcare ACO, LLC New Yrk, Pennsylvania 17. Flrida Physicians Trust, LLC Flrida 18. Hackensack Physician-Hspital Alliance ACO, New Jersey, New Yrk LLC 19. Jacksn Purchase Medical Assciates, PSC Kentucky, Illinis 20. Jrdan Cmmunity ACO Massachusetts 21. Nrth Cuntry ACO New Hampshire, Vermnt 22. Optimus Healthcare Partners, LLC New Jersey 23. Physicians f Cape Cd ACO, Inc. Massachusetts 24. Premier ACO Physician Netwrk Califrnia 25. Primary Partners, LLC Flrida 26. RGV ACO Health Prviders, LLC Texas 27. West Flrida ACO, LLC Flrida

50 Questins and Answers Gregry L. Pembertn Ice Miller LLP One American Square Suite 2900 Indianaplis, IN (317) This presentatin is intended fr general infrmatin and des nt, and is nt intended t, cnstitute legal advice.