HHS: Part D Premiums Steady While Donut Hole Shrinks – In a press release issued last Monday, HHS predicted that premiums paid by Medicare beneficiaries for Medicare's Part D prescription drug benefit in 2013 will remain level with last year’s premiums, at about $30 per month. This is the third consecutive year that premiums for the drug benefit have not changed. The estimate, which is based on bids submitted by drug companies and health plans for basic coverage, comes on the heels of a provision in the Affordable Care Act (ACA) that slowly begins to close the so-called “donut hole” in Part D coverage by providing a discount on drug prices for people who enter the gap in Medicare’s drug coverage. This year, for example, Medicare beneficiaries received a 50 percent discount on covered brand name drugs, and 14 percent coverage of generic drugs, in the donut hole. According to the press release, CMS previously announced that more than 5.2 million people with Medicare have saved over $3.9 billion on prescription drugs in the Medicare Part D donut hole since the ACA was enacted. Had Part D premiums increased, however, it would have drawn into question the true monetary benefit to beneficiaries of closing the Part D donut hole.
The HHS press release is available here.
Reporter, Daniel J. Hettich, Washington, D.C., +1 202 626 9128, dhettich@kslaw.com.
Obama Administration Issues New Rule on Electronic Fund Transfers, Potentially Saving Physicians and Hospitals Up to $9 Billion – On August 7, 2012, HHS Secretary Kathleen Sebelius announced the release of a new rule for making health care claim payments electronically, stating that the rule will “cut red tape, save money and ensure doctors spend more time seeing patients and less time filling out forms.” Entitled “Administrative Simplification: Adoption of Operating Rules for Health Care Electronic Funds Transfer and Remittance Advice Transactions,” this rule is projected to save up to $9 billion over the next ten years for physicians, hospitals, and health plans.
The new rule implements “operating rules” for making electronic health care claim payments and describing claim payment adjustments. Because many physician practices and hospitals accept and deposit paper checks and manually post these payments in their accounting systems, the average physician practice spends approximately three weeks a year on billing and insurance-related tasks. These operating rules will allow physician practices and hospitals to receive and post payments electronically, significantly decreasing administrative time and costs.
The operating rules expand upon the electronic fund transfer (EFT) standards adopted by HHS in January 2012 and also include guidance on electronic remittance advice (ERA). Among other things, the operating rules:
- outline best business practices on the transmission of EFT;
- target potential problems that health insurers and physicians have using EFT;
- require insurers to offer a standard, online enrollment for EFT and ERA, making it simpler to enroll with multiple health plans; and
- require health plans to send EFT within a required amount of days of the ERA, helping providers to efficiently reconcile accounts.
For more information, click here to view the regulation, which will be published in the Federal Register on August 10, 2012. A fact sheet with technical information on the new rule can be found here.
Reporter, Katy Lucas, Atlanta, +1 404 572 2822, klucas@kslaw.com.
Massachusetts Governor Inks Bill Targeting Rising Health Care Costs – Massachusetts Governor Deval Patrick on August 6, 2012 signed into law legislation that aims to control health care costs in the Bay State. According to a press release issued by the governor’s office, the bill—which is titled “An Act improving the quality of health care and reducing costs through increased transparency, efficiency and innovation”—represents the next phase of health care reform in the state. In 2006, Massachusetts became the first state in the country to enact universal health coverage legislation, which was signed into law by then-Governor Mitt Romney. As a result of the 2006 law, notes the press release, 98 percent of Massachusetts residents currently have health care coverage.
According to the press release, the law could trim up to $200 billion in health care expenditures over the next 15 years. To do this, the law will, among other measures, implement a “first-in-the-nation target” to control increases in heath care costs. In the first five years, the annual increase in health care spending target will be set at the annual rate of growth of Massachusetts’ Gross State Product (GSP)—which the law sets at 3.6 percent for 2013. In the following five years, the target will decrease to half of a percentage point below the annual GSP growth rate. After that, the target will return to the annual GSP growth rate. Health care entities identified as having costs exceeding the annual targets will be required to create and work in good faith to implement a “performance improvement plan.” Under certain circumstances—for example, if a health care entity “willfully neglect[s]” to create and file a plan with the overseeing government agency or knowingly fails to provide information required by the law—noncompliant health care entities may receive a civil penalty of up to $500,000. The law, however, states that the monetary penalty shall be imposed only “as a last resort.”
Other highlights of the law include:
- The establishment of a “Health Policy Commission” that will, among other things, conduct cost and market impact reviews of providers or provider organizations making “any material changes to [their] operations or governance structure” (e.g., a corporate merger). Under the law, a provider or provider organization must give notice to the commission and other government agencies ahead of the proposed change. The commission will then undertake a cost and market impact review of the proposed change and must refer its report to the state attorney general if the commission concludes that certain criteria are triggered. The law states that the attorney general may conduct an investigation of the provider or provider organization based on the commission’s report.
- A requirement that Massachusetts government agencies, such as MassHealth, move to global and other alternative payment models—i.e., away from a fee-for-service model.
- Medical malpractice reform, including the implementation of a 182-day “notice period” before a claimant can file a malpractice lawsuit.
- Increasing transparency in health care pricing by requiring insurers to provide price information to consumers over the phone or by posting the information on their websites.
Click here to read the full text of the bill, and here to read the accompanying press release.
Reporter, Greg Sicilian, Atlanta, +1 404 572 2810, gsicilian@kslaw.com.
Senators Ask CFPB to Consider Regulation of Medical Debt Collection – Four Democratic senators recently submitted a letter to Consumer Financial Protection Bureau (CFPB) Director Richard Cordray requesting that the agency consider regulations restricting the use of medical debts in credit scoring.
In their letter, Senators Jeff Merkley (D-OR), Chuck Schumer (D-NY), Robert Menendez (D-NJ) and Sherrod Brown (D-OH) emphasized that medical debts are different from other consumer debts and are not as useful in predicting whether individuals are creditworthy. The senators explain in their letter that the factors that distinguish medical debt include: “the unplanned nature of the purchases, the opaqueness of the costs, the complex billing procedures, [and] the exceptionally high error rate in reporting.” The senators also noted that, because of the intermediation of insurance companies, providers frequently send bills to collections prior to notifying patients of the amount for which they are responsible. Referring such bills to collections frequently results in reporting to credit agencies, which may cause long-lasting damage to an individual’s credit score.
The four senators are also co-sponsors of the Medical Debt Responsibility Act (S.2149), which would require consumer reporting agencies to erase medical debts from an individual’s credit report within 45 days once the debt has been paid in full or settled. The senators’ letter requested CFPB to evaluate other methods of regulating the collection and reporting of medical debt.
The full text of the letter is available on Senator Menendez’s website here.
Reporter, Adam Laughton, Houston, +1 713 276 7400, alaughton@kslaw.com.
Federal Trade Commission Settles with Healthcare Group over Recent Acquisitions of Cardiologists – On August 6, 2012, the Federal Trade Commission agreed by a vote of 5-0 to enter into proposed settlements with Renown Health regarding that group’s recent acquisitions of two cardiology groups in Reno, Nevada. A King & Spalding client alert addressing this development in more detail is available here.
Medicare Hospital Payment Final and Proposed Rules – On Wednesday, August 15, 2012, King & Spalding will be hosting a Roundtable Webinar to discuss:
- CMS’s final hospital inpatient PPS rule for fiscal year 2013;
- CMS’s proposed hospital outpatient PPS rule; and
- Medicare IRF and IPF updates.
Speakers will include Dennis Barry, Dan Hettich and Susan Banks from our Washington, D.C., office and Greg Etzel from our Houston office.
You can register to participate in the Webinar by clicking here.
Healthcare Roundtable on Recent Medicaid Developments Resulting from the Implementation of and the Supreme Court's Ruling on PPACA, Enforcement Actions, and Other Medicaid Reforms – On Friday, August 24, 2012 at 1:00 - 2:30 P.M. Eastern Time, King & Spalding will host an Atlanta-based Roundtable focused on recent Medicaid developments.
The Roundtable will include the following topics:
- Status of PPACA Medicaid Expansion After Supreme Court’s Decision
- Medicaid Contractor Developments Including MIC Reports and Medicaid RAC Initiative
- Implementation of Health Reform Programs Affecting Medicaid
- Medicaid Supplemental Payment and 1115 Waiver Developments
- Medicaid Enforcement Update
You can register to attend in person or by Webinar by visiting http://www.kslaw.com/HealthcareRoundtable. If you are attending in person, lunch will be provided between 12:00 p.m. and 1:00 p.m. if you would like to arrive early for that.
This bulletin provides a general summary of recent legal developments. It is not intended to be and should not be relied upon as legal advice.
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