Local Attorneys Weigh in on Anticipated Changes, Advice for the New Year
In today’s increasingly complex healthcare landscape, terms like “meaningful use” and “regulatory compliance” are the new normal. While it might not take a law degree to understand every new ruling or regulation, there’s no question it sure helps. To that end, we asked some of Nashville’s top healthcare attorneys their advice on navigating healthcare law in 2015.
Regulatory Compliance: Changes on the Horizon
“The general theme in healthcare regulation is that it is continuously evolving and increasingly complex,” said Danielle Sloane, healthcare attorney at Nashville’s Bass, Berry & Sims.
Driven significantly by the Affordable Care Act, increased costs, risks and regulations are chipping away at the healthcare model of yesteryear. Industry-wide consolidation and movement from acute to outpatient care will mean fewer new hospitals and heavier oversight of services seeing a boom in both volume and technology. Laboratory, pharmacy, long-term care/hospice/home health, telemedicine and urgent care are among those facing the greatest regulatory changes.
“The lab segment is really interesting right now, as we’re seeing sophisticated technology that’s making genetic and molecular testing widely available,” Sloane said, citing the simple DNA/RNA blood test driving women to undergo pre-emptive mastectomy. “Labs now can test for biomarkers that can have a significant impact on patients.” While labs are regulated by CMS, the Food and Drug Administration hasn’t historically looked at test accuracy or its associated risks.
In 2014 the FDA issued draft guidance describing its plan to regulate lab-developed tests: those designed, manufactured and used within a single lab, often blurring the line between testing and medical device innovation. Those guidelines are now under review with the comment period to wrap February 2015.
“The question is how to protect quality without stifling innovation,” said Sloane, who expects regulatory changes to unfold over the next decade.
Pharmacology is seeing similar changes driven by sophistication in medicine and the hands-on role pharmacists are adopting in patient care. Compounding pharmacies, for example, are under stricter guidelines in many states following a nationwide fungal meningitis outbreak from a Massachusetts drug-compounding firm that killed 16 Tennesseans in 2012. The following year, Congress passed the Drug Quality and Security Act in an effort to improve medication standards and safety.
According to Sloane, regulations are underway in Tennessee to establish guidelines defining how pharmacists could work collaboratively with physicians to help manage medication regiments with patients, along with other important roles.
Consolidation among long-term care, home health and hospice organizations also is ramping up, due in part to government oversight of Medicare patient billing. The Office of Inspector General 2015 Work Plan referenced their 2012 report, which found one in four home health agencies had questionable billing, prompting more fraud review.
“For small providers who service mostly Medicare patients, the risk of running afoul of regulations can be high … not necessarily due to bad intent but because it’s challenging to keep up with all the rules, documentation requirements and continual regulatory changes,” Sloane said.
Still a relatively young industry, urgent care is a booming service touting convenience, time and cost savings over traditional emergency rooms. But changes are on the horizon for this market segment.
Freestanding and retail clinics are regulated, though not as tightly as more established industry segments. And some states do not require licensure, making it seemingly easier to operate. However, clinics still must navigate other regulatory issues, such as the federal Stark Law and corporate practice of medicine laws in various states.
The industry of telemedicine is evolving, as well. While Medicare reimbursement of telemedicine remains quite limited, more state Medicaid programs and commercial insurers are reimbursing for telemedicine.
“Regulations are struggling a bit to keep up with the growing model of telemedicine,” Sloane said. In an effort to promote some uniformity across states, the Federation of State Medical Boards recently published a Model Policy for the Appropriate Use of Telemedicine Technologies in the Practice of Medicine, which is aimed at helping state medical boards evaluate and develop state guidelines and regulations on the appropriate use of telemedicine. “Medicare is still quite limited with telemedicine, but the ability to use technology to remotely monitor patients is a current topic of conversation and may become more prevalent,” Sloane said.
Meaningful Use in 2015
While CMS mandates are nothing new, the onset of Meaningful Use kicked the reimbursement game into high gear. The three-stage process provides electronic health record mandates to improve the quality, safety, and efficiency of patient care. MU established specific objectives that eligible professionals and hospitals must achieve to quality for CMS Incentive Payments. Stage 1 (2011-2013) MU focused on data capture and sharing, while stage 2 (2014) addressed advanced clinical processes. Stage 3 (2017) focuses on improved outcomes.
“Right now many providers are transitioning between stages 1 and 2, and there’s still a lot of confusion and frustration on the part of providers trying hard to get newly required technology,” said Michaela Poizner, healthcare regulatory attorney for Baker Donelson in Nashville. “There’s been a lot of vendor backlog and providers are doing the best they can given the quick turnaround.”
Providers were required to have 2014 technology in place by Jan. 1, 2015. Hospitals, which run on a fiscal year calendar, began the 2015 reporting year Oct. 1, 2014. That leaves two years to integrate new systems before the next MU stage begins in 2017. (CMS is likely to propose the next round of required technology as early as 2015.) However with pricey EHR equipment being adopted nationwide, CMS now is calling for interoperability between systems – a function not stressed earlier in the MU process.
“Technology companies have created great products that work with one group of hospitals but don’t talk to the hospital down the street,” Poizner explained. “CMS is coming in on the back end saying they want these systems to talk to each other, and that’s frustrating for both providers and vendors who are doing their best to check all the boxes.”
Reimbursement reductions are another concern for providers. Beginning in 2015, Medicare providers who are eligible to participate in MU but chose not to do so will be subject to downward payment adjustments of 1 to 5 percent.
Another very real challenge for 2015 is the threat of audits. Providers now face a 1 in 20 chance of being audited. Introduction of prepayment audits in 2013 required providers to show detailed documentation before receiving any incentive payment. And then there’s the interplay between MU and detailed fraud and abuse laws, i.e. anti-kickback and Stark Law issues. These issues are especially important where hospitals and physicians share equipment.
“There’s a very delicate balance, and it tends to get overlooked when providers are trying to meet other requirements,” Poizner said. “Sometimes all the responsibility for monitoring falls to one person, and it’s just a lot of work. It’s easy to slip up, and regulations can be gray in terms of what a particular measure actually requires. Providers are having to make their best guess about what they’re required to do.”
Poizner’s best piece of advice to providers: Document everything.
“If you can’t turn over a file to CMS or a third party auditor explaining why you’re entitled to payment [in a prepayment audit], you won’t get paid,” she said.
Poizner urges clients to prepare now for a smooth audit experience including practical steps like printing and filing copies of reports and keeping meticulous records.
“Providers will live and die by their organization skills, and that saves so much time and stress,” Poizner said. She also assists clients in conducting mock audits, which gives them a better understanding of the documentation process. “We get a lot of questions from providers preparing for an attestation and questioning how to interpret a particular phrase. For example, what qualifies as a patient encounter?” Poizner said. “I tell them to hang in there. There’s a lot to wade through, but it really is doable and ultimately a worthwhile endeavor.”
Antitrust Laws vs. ACA
Antitrust laws were designed to promote economic competition while preventing monopoly in the marketplace. Ideal? Yes … but how does that translate in today’s era of unprecedented healthcare consolidation?
“Healthcare reform has encouraged more collaboration between providers, and as a result there’s more investigation and activity in healthcare,” said Beth Vessel, partner and antitrust attorney at Waller Law. “Just because you’re claiming efficiencies with the Affordable Care Act doesn’t mean that you’re safe from antitrust laws.”
She cautioned against using the “failing firm” argument for a buy-out, which only works with hospitals or facilities in extremely dire circumstances. And it’s not only the billion-dollar deals garnering attention. While the Federal Trade Commission’s HSR (Hart-Scott-Rodino) Act notification thresholds for 2014 was $75.9 million, it’s not unheard of for smaller transactions to warrant second requests for information.
When contemplating a buy-out, companies must consider the real rationale for the transaction and know their market share. Taking a community from three healthcare providers down to only two could quickly send up flags. Keeping a close eye on email and other internal communication also matters. Vessel warned against discussing market domination or increased prices, focusing instead on efficiencies and improved quality of care while specifying benefits of the transaction. She also cautioned against sharing competitively sensitive information.
Addressing physician practice acquisitions, she said less is often more. She advised considering network affiliations rather than full-blown acquisitions.
Companies often make the mistake of thinking smaller deals will avoid scrutiny. In reality, any complaint from an insurance company could get the ball rolling on possible antitrust violations. Last year, a district judge in Idaho sided with the Federal Trade Commission and ordered the unwinding of a merger between one of the state’s biggest hospital systems and its biggest independent network of doctors.
“This case points to the principle that they are looking at physician practices and not just hospitals and hospital systems,” Vessel said. “This is a very fact-specific inquiry, and investigators will interview competitors and payers to see how easy it is for a competitor to enter the market and what competitive effects are likely to be,” she explained. “In this case, the judge acknowledged the transaction would help with efficiencies but said there were less competitive ways to achieve that. Efficiencies under the ACA aren’t enough,” she noted.
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