• GOP leaders question Kagan on health reform
• Physicians alerted to PPACA changes
• Rules clarify office visit reimbursements for preventive care services
• Electronic health records: final rules issued on meaningful use, IT certification

• San Francisco employer mandate shows potential effect of national reform

• With dependent eligibility expansion looming, Mercer advises plan sponsors to take action

GOP leaders question Kagan on health reform

Seven Republican members of the Senate Judiciary Committee on July 13 sent a letter to Solicitor General Elena Kagan, President Obama’s nominee for the U.S. Supreme Court, asking her to clarify what role she played regarding legal issues related to the Patient Protection and Affordable Care Act (P.L. 111-148). The senators are particularly concerned about the standard Kagan would use to decide whether to recuse herself as a Supreme Court justice from cases involving the health reform law.

Noting that numerous state attorneys general have joined in a lawsuit contesting the constitutionality of the reform law (in particular Florida v. U.S. Department of Health and Human Services, No. 3:10cv91/RV/EMT, N.D. Fla, March 23, 2010), the senators asked Kagan if she was ever at any meetings where this lawsuit was discussed; if she was ever asked her opinion about the legal merits of the case; if she ever offered any views on the U.S. government’s legal strategy regarding the case; or if she ever approved any document for filing related to the case. Further the senators asked “Have you ever been asked about your opinion regarding the underlying legal or constitutional issues related to any proposed health care legislation, including but not limited to P.L. 111-148, or the underlying legal or constitutional issues related to potential litigation resulting from such legislation?” The senators then specifically asked Kagan that if she had a positive response to any of their questions, would she recuse herself from any related case that made it to the U.S. Supreme Court.

The letter was signed by ranking member Sen. Jeff Sessions (Alabama), as well as Sens. Orrin Hatch (Utah), Chuck Grassley (Iowa), Jon Kyl (Arizona), Lindsey Graham (South Carolina), John Cornyn (Texas), and Tom Coburn (Oklahoma). At press time, there was no response from Kagan.

CCH Chicago Bureau, July 15, 2010.

Physicians alerted to PPACA changes

Physicians are advised that the Patient Protection and Affordable Care Act (P.L. 111-148) (PPACA) made several changes to payment rules and services covered. Beginning January 1, 2011, Medicare will cover an annual preventive examination and certain screening tests for every Medicare beneficiary. Physicians with specialties that are considered primary care, that is, internal, geriatric, pediatric or medicine, and for whom at least 60 percent of Part B payments during a designated period were for primary care, will receive incentive payments of 10 percent of allowed charges beginning January 1, 2011.

From January 1, 2011, through December 31, 2016, a 10 percent incentive payment also will be made for performance of major surgical procedures in rural areas. Major procedures are those with a 10- or 90-day global period under the Physician Fee Schedule. The services must be performed by a general surgeon in a zip code located in a designated primary care Health Professional Shortage Area.

Changes also will be made to the practice expense geographical adjustment. The self-referral exception for physicians who provide certain diagnostic imaging services has been amended to require physicians to disclose to patients that there are other providers of imaging services and furnish a list of providers before referring to their own facilities. The adjustment factor for use of this equipment also has been modified. Finally, beginning with services furnished on or after January 1, 2010, physicians must submit bills for Medicare services within 12 months of the date of service.

MLN Matters, No. SE1023, July 2, 2010.

Rules clarify office visit reimbursements for preventive care services

Cost-sharing requirements may be imposed on preventive care services if the services are provided during an office visit whose primary purpose is not preventive care and if the services are not billed separately, according to new interim final rules issued jointly by the Internal Revenue Service, the Department of Labor’s Employee Benefits Security Administration (EBSA), and the Department of Health and Human Services’ Office of Consumer Information and Insurance Oversight (OCIIO).

The rules implement the preventive care in Public Health Service Act Sec. 2713, as added by the Patient Protection and Affordable Care Act (P.L. 111-148). The rules are scheduled to be published in the July 19 Federal Register.

PHSA Sec. 2713 requires group health plans to cover, with no cost sharing, the following:

• certain evidence-based items (with A or B ratings) in the recommendations of the United States Preventive Services Task Force;
• immunizations recommended by the Advisory Committee on Immunization Practices of the Centers for Disease Control and Prevention;
• evidence-based preventive care and screenings for infants, children, and adolescents provided for in the comprehensive guidelines supported by the Health Resources and Services Administration (HRSA);
• additional women’s preventive care and screenings “in comprehensive guidelines supported by the HRSA.”

The complete list of recommendations and guidelines that are required to be covered under these interim final regulations can be found at http://www.HealthCare.gov/center/regulations/prevention.html.

Office Visit Clarification. The interim final regulations clarify how the preventive care cost-sharing requirements work during an office visit. First, if a recommended preventive service is billed separately from an office visit, then a plan may impose cost-sharing requirements for the office visit (but not for the preventive care services).

Second, if a recommended preventive service is not billed separately from an office visit and the primary purpose of the office visit is the delivery of a preventive service, then a plan may not impose cost-sharing requirements with respect to the office visit.

Finally, if a recommended preventive service is not billed separately from an office visit and the primary purpose of the office visit is not the delivery of a preventive service, then a plan may impose cost-sharing requirements for the office visit.

Additional Guidance. The interim final rules also provide for the following:

With respect to a plan that has a network of providers, the regulations make clear that a plan is not required to provide coverage for recommended preventive services delivered by an out-of-network provider.

The regulations clarify that a plan continues to have the option to cover preventive services in addition to those required to be covered by PHSA Sec.2713. For such additional preventive services, a plan may impose cost sharing requirements at its discretion. Moreover, a plan may impose cost-sharing requirements for a treatment that is not a recommended preventive service, even if the treatment results from a recommended preventive service.

Finally, these interim final regulations make clear that a plan is not required to provide coverage or waive cost-sharing requirements for any item or service that has ceased to be a recommended preventive service.

The interim final regulations are effective 60 days after publication in the Federal Register. However, the rules generally apply to group health plans and group health insurance issuers for plan years beginning on or after Sept. 23, 2010.

Comments on the interim rules, which must be received within 60 days after publication, may be submitted through the federal eRulemaking Portal at http://www.regulations.gov. Comments to EBSA should be identified by RIN 1210- AB44; comments to HHS should refer to file code OCIIO-9992-IFC; and comments to the IRS should be identified by REG-120391-1010.

For more information, contact the following: Amy Turner or Beth Baum, EBSA, (202) 693-8335; Karen Levin, IRS, (202) 622-6080; or Jim Mayhew, OCIIO, (410) 786-1565.’

Electronic health records: final rules issued on meaningful use, IT certification

On July 14, the Department of Health and Human Services (HHS) announced two companion final rules dealing with electronic health records (EHR) and related technology requirements of the Health Information Technology for Economic and Clinical Health (HITECH) Act of 2009.

Regulations issued by the Centers for Medicare and Medicaid Services (CMS) define the minimum requirements and specified objectives that providers must meet through their use of certified EHR technology in order to qualify for incentive payments. The other rule, issued by the Office of the National Coordinator for Health Information Technology (ONC), identifies the standards and criteria and the technical capabilities required for the certification of EHR technology, so that eligible professionals and hospitals may be assured that the systems they adopt are capable of performing the required functions. Both rules are scheduled to be published in the July 28 Federal Register.

With “meaningful use” definitions in place, EHR system vendors can ensure that their systems deliver the required capabilities, and providers can be assured that the system they acquire will support achievement of “meaningful use” objectives. In addition, a concentrated five-year national initiative to adopt and use electronic records in health care can begin, HHS asserted.

HHS may spend as much as $27 billion in incentive payments to medical providers over ten years. Eligible medical professionals may receive as much as $44,000 under Medicare and $63,750 under Medicaid, and hospitals may receive millions of dollars for implementation and meaningful use of certified EHRs under both Medicare and Medicaid.

The CMS rule also finalizes a proposed rule that was issued on Jan, 13, 2010. The final rule includes modifications addressing stakeholder concerns while retaining the intent and structure of the incentive programs. In particular, while the proposed rule called on eligible professionals to meet 25 requirements (23 for hospitals) in their use of EHRs, the final rule divides the requirements into a “core” group of requirements that must be met, plus an additional “menu” of procedures from which providers may choose. This “two-track” approach ensures that the most basic elements of meaningful EHR use will be met by all providers qualifying for incentive payments, while at the same time allowing flexibility in other areas to reflect providers’ needs and their individual path to full EHR use.

“CMS received more than 2,000 comments on the proposed rule,” said Marilyn Tavenner, principal deputy administrator of the CMS. “Many comments were from those who will be most immediately affected by EHR technology—health care providers and patients. We carefully considered every comment and the final meaningful use rules incorporate changes that are designed to make the requirements achievable while meeting the goals of the HITECH Act.”

Meaningful Use Incentives. Requirements for meaningful use incentive payments will be implemented over a multi-year period, phasing in additional requirements that will improve performance on information technology (IT) and quality objectives over time. The final CMS rule specifies initial criteria that eligible professionals (EPs) and eligible hospitals must meet. The rule also includes the formula for the calculation of the incentive payment amounts; a schedule for payment adjustments under Medicare for covered professional services and inpatient hospital services provided by EPs and eligible hospitals that fail to demonstrate meaningful use of certified EHR technology by 2015; and other program participation requirements.

Key changes in the final CMS rule include the following:

• Greater flexibility for eligible professionals and hospitals to meet and report certain objectives for demonstrating meaningful use. The final rule divides the objectives into a “core” group of required objectives and a “menu set” of procedures from which providers may choose any five to defer in 2011-2012.
• Objectives for providing condition-specific patient education resources for both eligible professionals and eligible hospitals and of recording advance directives for eligible hospitals, according to recommendations from the Health Information Technology Policy Committee.
• A definition of a hospital-based eligible professional as one who performs substantially all of his or her services in an inpatient hospital setting or emergency room only, according to the Continuing Extension Act of 2010.

CMS’ and ONC’s final rules complement two other recently issued HHS rules. On June 24, ONC published a final rule establishing a temporary certification program for health information. On July 8, the Office for Civil Rights announced a proposed rule that would strengthen and expand privacy, security, and enforcement protections under the Health Insurance Portability and Accountability Act of 1996.

As part of this process, HHS is establishing a nationwide network of Regional Extension Centers to assist providers in adopting and using in a meaningful way certified EHR technology.

A CMS/ONC fact sheet on both rules is available at http://www.cms.gov/EHRIncentivePrograms/. Technical fact sheets on CMS’s final rule are available at http://www.cms.gov/EHRIncentivePrograms/. A technical fact sheet on ONC’s standards and certification criteria final rule is available at http://healthit.hhs.gov/standardsandcertification.

San Francisco employer mandate shows potential effect of national reform

If the experience of San Francisco is any guide, an employer play-or-pay mandate to provide for employees’ health coverage would increase the number of individuals with access to health care and receive support for a public health care option, according to the National Bureau of Economic Research (NBER). The working paper No. 16179, How Do Employers React to A Pay-or-Play Mandate? Early Evidence from San Francisco, was published in July 2010.

In 2006, San Francisco become the first city to enact a pay-or-play employer minimum health spending mandate. The city also created Healthy San Francisco, a “public option” to allow affordable, universal access to care. The San Francisco Health Care Security Ordinance (HCSO) went into effect on Jan. 9, 2008, for employers with at least 50 employees, and on April 1, 2008, for employers with 20 to 49 employees. For-profit employers with fewer than 20 employees and non-profit employers with fewer than 50 employees were exempt from the minimum funding requirement. Employers can meet the HCSO requirement several ways, including providing insurance, reimbursing individuals directly for their health care expenses, paying into employees’ health savings accounts (HSAs) or health reimbursement arrangements (HRAs), or paying into the Healthy San Francisco program.

Unlike the Massachusetts health reform law, the San Francisco HCSO does not include an individual mandate to buy health insurance. Healthy San Francisco is a restricted medical provider network (not insurance) within the city of San Francisco. The mandate applies to all employees working at least ten hours per week, and to temporary and contract workers.

Using the 2008 Bay Area Employer Health Benefits Survey, the NBER found that most employers (75%) increased health spending to comply with the law, yet the majority (64%) supported the law. In the first year after implementation, 21% of firms used Healthy San Francisco for at least some employees. It appeared that few, if any, firms dropped existing insurance offerings. However, 28% added new insurance options, including an HRA (14%), a new high deductible health plan (HDHP, 10%), and a mini-medical plan (9%).

As of April 2009, more than 902 employers (out of a total 5,000 covered employers) elected to pay into Healthy San Francisco. According the San Francisco Department of Public Health, among the employees being paid for, approximately half live within San Francisco and are eligible for health care access through the Healthy San Francisco program, and half live outside San Francisco and receive their payments through a city-run HRA. As of June 4, 2010, Healthy San Francisco enrolled 53,058. There had been 60,000 uninsured adults at the time the program was implemented.

“Lessons from the San Francisco mandates can help policymakers determine what to expect with implementation of a national-level benefit mandate,” the NBER concluded. “First, pay-or-play mandates of this size are feasible; employers in San Francisco have been able to absorb the extra cost of providing health benefits without significant negative effects on employment or earnings. Some firms in industries where most competitors are also subject to the mandate, such as restaurants, have been able to pass the costs of the mandate directly along to consumers.

“Second, employers are likely to choose the lowest-cost option available. In the San Francisco case, this has largely played out through use of HRAs, Healthy San Francisco, and mini-medical plans, which are designed to just meet the health spending requirement. Finally, despite most employers having to make changes in their benefit policies to comply with the mandate, most employers are supportive of the HCSO. This bodes well for implementation of the national employer mandate in 2014.”

For more information, visit http://www.nber.org.

With dependent eligibility expansion looming, Mercer advises plan sponsors to take action

In preparation for the January 1, 2011 expansion of health care coverage to children up to age 26 (part of the comprehensive health care reform package recently enacted by Congress), Mercer is urging plan sponsors to review their current health plan for cost-saving opportunities. The influx of newly eligible dependents will on average increase total health care costs from 0.25% to 2%, Mercer estimates.

Because of this anticipated increase in the cost of providing coverage, Mercer believes it is important for plan sponsors to begin 2011 from the lowest cost base possible. By conducting a dependent eligibility audit before the end of the year, for example, plan sponsors may not only reduce their costs in the short term, but also identify data trends and issues for coming plan years that can be better managed and communicated to all plan stakeholders.

"We believe that, even without dependent eligibility expansion, dependent audits just make good business sense," explained Rich VanThournout, Health and Benefits Business Leader for Mercer's US Outsourcing business. "Not only do they almost always lower total plan costs, they also give plan sponsors some much needed clarity as to the demographics of their participant community, which empowers both sound cost forecasts and strategic plan design."

Prior to the passage of health care reform, Mercer conservatively estimated that 3% to 8% of covered family members (spouses and dependents) could not produce valid verification of eligibility during an audit. Although this figure may decrease slightly with expanded dependent eligibility, ineligibles can still translate into a significant unnecessary expense to employers, who pay an average of $2,100* annually to cover a single dependent, according to an estimate based on data from Mercer's National Survey of Employer-Sponsored Health Plans.

"With the recent economic volatility and difficult business environment, we have already seen a marked increase in clients conducting dependent eligibility audits," said Dan Priga, National Business Leader of Mercer's Performance Audit Group. "If costs do in fact increase in the ranges we estimate, this will further stress the budgets of plan sponsors. Our message to plan sponsors is this - find every dollar you can now to help minimize the likely cost spike that is just around the corner."

* Employers should consider their own cost per dependent when calculating their potential savings.

SOURCE: Mercer press release, July 13, 2010.