Health Care Regulations: A Year in Review

During 2011, the Department of Health and Human Services and the Centers for Medicare and Medicaid Services issued over 50 final rules regulating different parts of federal health care programs. Many of these Final rules are annual events, for example, updating the various prospective payment systems under Medicare.

Many of them, however, represent new regulations, mainly reflecting new programs authorized under the 2010 health care reform law. Even as the constitutionality of the reform law now rests with the U.S. Supreme Court, the agencies responsible for implementing the law are moving ahead.

Accountable care organizations.  The Patient Protection and Affordable Care Act (PPACA) (P.L. 111-148) added Soc. Sec. Act §1899 which provides that qualified providers and suppliers may form an accountable care organization (ACO) to manage and coordinate care for Medicare fee-for-service beneficiaries. ACOs can participate in the one-sided shared savings-only model where savings only is shared in the first two years and both savings and losses in the third year for the entire length of their first agreement period.

There is a cap on the amount of shared losses an ACO would be liable for, that being 5 percent of a benchmark for the first year of the program, 7.5 percent in the second year, and 10 percent in the third.

The following groups of providers and suppliers are eligible to participate: (1) ACO professionals in group practice arrangements; (2) networks of individual practices of ACO professionals; (3) partnerships or joint venture arrangements between hospitals and ACO professionals; (4) hospitals employing ACO professionals; (5) rural health clinics (RHCs); (6) federally qualified health centers (FQHCs); and (7) certain critical access hospitals (CAHs. Final rule, 76 FR 67802, November 2, 2011.

Waivers for ACO organizations.  In response to the Shared Savings Proposed rule, many commentators argued that some fraud and abuse laws may hinder the development of the care models necessary under Shared Savings. HHS agreed to waive a number of these laws in certain circumstances.

There are five waivers, three of them are waivers of the Physician Self-Referral Law, the federal anti-kickback statute, and the Gainsharing Civil Monetary Penalties (CMP) law. The other two waivers include compliance with the Physician Self-Referral Law waiver; and (2) patient incentive waiver of the Beneficiary Inducements CMP and anti-kickback statute for medically related incentives offered by ACOs to encourage beneficiaries to follow treatment recommendations and obtain preventive care. Those ACOs participating in Shared Savings, including those participating in the Advance Payment Initiative, will be eligible for these waivers, and need only fit one waiver to be protected. Final rule, 76 FR 67992, November 2, 2011.

Health information technology. Standards and operating rules were announced to govern electronic transactions with and among private health plans concerning patient eligibility and claim status. The rule is effective immediately. Because PPACA requires that covered entities be in compliance with the standards by January 1, 2013, the standards should be finalized by January 1, 2012. Interim final rule with comment period, 76 FR 40458, July 8, 2011.

Permanent certification program. Under this program the National Coordinator for Health Information Technology will authorize organizations to certify complete electronic health records (EHRs), EHR modules, or other types of health information technology (HIT). Meaningful use of certified EHR technology is a core requirement for eligible health care providers who seek incentive payments under the Medicare and Medicaid Electronic Health Record Incentive Programs as authorized by the Health Information Technology for Economic and Clinical Health (HITECH) Act. Testing and certification under the permanent certification program is expected to begin on January 1, 2012, or upon a subsequent date when the National Coordinator determines that the permanent certification program is fully constituted. Final rule, 76 FR 1262, January 7, 2011   

Pre-enrollment screening and revalidation of compliance. Effective March 25, 2011, all providers participating in Medicare, Medicaid or the Children’s Health Insurance Program will undergo screening before initial enrollment and will be required to revalidate their compliance with enrollment requirements every five years (every three years for suppliers of durable medical equipment, prosthetics, orthotics and supplies (DMEPOS)). CMS may require any provider to revalidate, and undergo screening, at any time. Three levels of risk are established (limited, moderate and high) and each type of provider is assigned to one of the three risk categories. CMS may suspend payments to any provider based on a “credible allegation of fraud,” which may include calls to the hotline, law enforcement requests and data mining. Beginning March 25, 2011, providers initially enrolling in Medicare will be required to pay an application fee. Current providers will have to pay the fee when they revalidate. Final rule with comment period, 76 FR 5862, February 2, 2011

Insurance market reforms.  The definitions of “individual market” and “small group market” in the regulations governing health insurance coverage have been amended. In addition to incorporating the definitions of these terms under state law, the rate review requirements apply to policies sold to individuals and small groups by associations, notwithstanding that many state regulators apply more lenient standards to associations that issue health insurance coverage. Final rule, 76 FR 54969, September 6, 2011.

Religious exemption from reform law. Religious organizations may be exempt from having to offer health insurance to their employees that provides coverage for contraceptive services without cost sharing. The Health Resources and Services Administration (HRSA) is given the discretion to exempt religious employers from the HRSA’s “Women’s Preventive Services: Required Health Plan Guidelines” where contraceptive services are concerned. An earlier Interim final rule enacted sections of The Patient Protection and Affordable Care Act (PPACA) (P.L. 111-148) and the Health Care and Education Reconciliation Act (HCERA) (P.K. 111-152) requiring that group health plans or health insurers cover certain items and services, without cost-sharing, as recommended by the U.S. Preventive Services Task Force, the Advisory Committee on Immunization Practices of the centers of Disease Control and Prevention, and HRSA. Interim Final rule, 76 FR 46621, August 2, 2011.

Insurance appeals. The July 23, 2010 Interim final regulations implementing the requirements for internal claims and appeals and external review processes for group health plans and health insurance coverage in group and individual markets have been amended by the Internal Revenue Service (IRS), the Department of Labor (DOL), and HHS. The amendments are effective July 22, 2011, and comments are due by July 25, 2011. Amendment to interim final rules with request for comments, 76 FR 37208, June 24, 2011

Insurance rate increase review. Effective September 1, 2011, issuers of health insurance policies in the individual and small group markets must submit preliminary justifications for proposed rate increases exceeding 10 percent to CMS or the appropriate stage agency for review. The state insurance agency will review the material if CMS has determined that the state has an effective rate review program with respect to the particular market. The preliminary justification must be submitted before the rate increase is implemented. CMS or the state agency will determine whether the proposed increase is unreasonable in relation to the benefits provided based on the projected medical loss ratio, the evidence supporting the assumptions on which the increase is based, and the adequacy of the documentation of supporting the proposed increase. The requirement will not apply to issuers of plans that are “grandfathered” under 45 C.F.R. §147.140  or excepted under Public Health Service Act §2791(c).  Final rule, 76 FR 29964, May 23, 2011.