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Preparing For 2011: Recent PPACA Developments and Newly Effective Provisions, Kentuckydoc, March 2011, Volume 2, Issue 6

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Kentucky doc, February/ March 2011, Volume 2, Issue 6

Authored by: Lisa English Hinkle and Benjamin M. Fiechter

2010 brought a great deal of change to the health care world. In March, President Obama signed the Patient Protection and Affordable Care Act ("PPACA") into law, ending many months of debate on the topic of healthcare reform. While another major change is not likely to occur in 2011, some smaller developments may impact your practice and your provision of care.

Coverage of Preventive Services

One of PPACA's basic aims is to control rising healthcare costs by encouraging wellness and preventive care. The scientific evidence back this up — an article published by the Journal of the American Medical Association noted a study that found that the effective delivery of cancer screening, flu vaccination, and counseling on smoking cessation and regular aspirin use can save 100,000 lives annually. Several provisions encouraging these and other preventive services went into effect on January 1. Medicare will now provide coverage for an annual wellness visit and the development of a personalized prevention plan, not just a one-time preventive care physical examination as it has in the past. Additionally, Medicare beneficiaries will no longer have to meet a deductible or make a co-payment to receive preventive services that the U.S. Preventive Services Task Force classifies as "strongly recommended" or "recommended." Finally, cost-sharing for proven preventive services was eliminated from Medicare and Medicaid.

Primary Care and General Surgery Bonus Payments

PPACA's emphasis on wellness and preventive care will be beneficial for physicians as well as their patients. The 2011 Medicare Physician Fee Schedule provides a 10 percent payment bonus for primary care physicians (i.e., physicians for whom primary care services accounted for 60 percent or more of their allowed charges) and general surgeons practicing in health professional service areas will receive a 10 percent Medicare payment bonus for certain services. Eligibility for these bonuses began on January 1 and will continue to the end of 2015.

The Center for Medicare and Medicaid Innovation

PPACA created the Center for Medicare and Medicaid Innovation. The goals of the CMI are to improve patient care, to encourage payment bundling, to improve coordination among providers and to improve community care. The CMI will act as a testing ground for new healthcare practices and will allow the Centers for Medicare and Medicaid Services ("CMS") to implement successful programs on a broader scale. Providers will have the opportunity to contribute to the CMI through open forums, listening sessions and other meetings.

Proposed Screening Requirements for Providers

In its proposed Final Rule September 23, 2010, CMS created a screening process for provider enrollment. The process assigns one of the three categories of risk-limited, moderate and high-to each provider seeking enrollment. Depending on the risk category assigned, CMS would perform different levels of screening prior to certifying the provider. Fortunately, CMS considers physicians and group practices to be limited risk providers. The moderate risk category will include non-publicly traded providers that are "generally highly dependent" on government health care programs to pay salaries and operating expenses such as mental health centers, outpatient rehabilitation facilities, hospice organizations, and non-governmental ambulance services. Finally, the high-risk category will include newly enrolling home health agencies and durable medical equipment providers.

Health Plan Medical Loss Ratio

In an effort to address rising health care costs, PPACA targets the rising administrative costs of insurance companies. PPACA required that CMS issue regulations setting a "medical loss ratio" requiring that health plans spend a certain percentage of premium dollars on medical care. CMS has stated that individual and small-group insurance companies will be required to spend 80 percent of premiums on medical care, while large-group companies will be required to spend 85 percent. If the companies do not reach this threshold, they will be required to make a refund to their beneficiaries. Certain administrative expenses, like fraud and abuse costs, contracting fees, and agent and broker commissions, are excluded from this general rule.

Court Challenges to PPACA's Constitutionality

PPACA's "individual mandate," which requires that individuals purchase health insurance or pay a fine, has been a source of controversy since PPACA was signed into law. Attorneys General from several states have combined to challenge the lawsuit in a United States District Court sitting in Florida, alleging that the individual mandate provision of PPACA is unconstitutional. On December 12, Judge Henry Hudson of the U.S. District Court for the Eastern District of Virginia ruled that the individual mandate "exceeds the constitutional boundaries of congressional power," but refused to strike down the entirety of PPACA as unconstitutional. Prior to Judge Hudson's ruling, however, two other federal judges upheld the constitutionality of the individual mandate, and numerous courts have upheld other provisions of PPACA. This split in judicial opinion all but guarantees future developments — including the likelihood that the issue will come before the Supreme Court.

Lisa English Hinkle is a partner of McBrayer, McGinnis, Leslie & Kirkland, PLLC. Ms. Hinkle concentrates her practice area in health care law and is located in the firm's Lexington office. She can be reached at lhinkle@mmlk.com or at 859-231-8780.

This article is intended as a summary of newly enacted federal law and does not constitute legal advice.

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