WK Health Law Daily

Every day, the WK Health Law Daily features the latest news involving Medicare, Medicaid, health care reform, health care compliance, fraud and abuse, food and drug law developments, and many more health care reimbursement, compliance, and life science topics. The Daily is delivered via email to the customer’s desktop or laptop computer, tablet, or smart phone. News stories include links to full text documents: cases, administrative decisions, regulations, new laws, and more. Past daily releases are also available on IntelliConnect, which makes it easy to search for specific topics that we have covered in this dynamic new service.

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Make sure to tell all current customers as well as prospects to bookmark the Wolters Kluwer Law & Business Health Law web site and blog: Here are examples of some of the stories that first appeared on the blog this past month

CMS Delays Enforcement of “Two Midnight” Rule.CMS is delaying until the end of 2013 enforcement of new regulations that would allow recovery audit contractors (RACs) to review inpatient admissions of one midnight or less that begin on or after October 1, 2013. The Final rule incorporating changes to the inpatient hospital prospective payment system for fiscal year 2014 (which starts October 1) includes two changes regarding reviews by Medicare contractors, such as RACs, when an inpatient admission is considered reasonable and necessary:

  • a two-midnight presumption, which directs Medicare review contractors not to select inpatient claims for review if the inpatient stay spanned two midnights from the time of admission, absent evidence of gaming or abuse; and
  • a two-midnight benchmark, which instructs admitting practitioners and Medicare review contractors that an inpatient admission is generally appropriate when the admitting practitioner has a reasonable and supportable expectation, documented in the medical record, that the patient would need to receive care at the hospital for a period spanning two-midnights.

Public Perception Clouds Future Reductions in Medicare Spending.An article published by the New England Journal of Medicine (NEJM) discussed the underlying beliefs that may help shape public response to future efforts to slow down projected Medicare spending. The article theorized that there is a huge gap in what experts believe about the financial state of Medicare and what the public believes, and how these differences will impact the way politicians address this issue. The article concluded with two key points. First, it would help in the long-term resolution of issues related to Medicare spending if there was a nonpartisan, broad-based public education campaign that focused on how Medicare works financially. Second, it would be beneficial if discussions about the financial sustainability of Medicare could be separated from public debates over reducing budget deficits or enacting tax cuts.

Health Care Access Sharply Divided by Geography and Income.When it comes to health care, a study from the Commonwealth Fund found that there are two Americas, divided by geography and income. The report, titled “Health Care in the Two Americas,” analyzed 30 indicators of access, prevention and quality, potentially avoidable hospital use and health outcomes, finding sharp health care disparities among states. There are also wide differences within states by income, but many benchmarks for low-income populations in the top states were better than those for higher-income or more-educated individuals in the lagging states.

IPPS 2014 Challenges: “Two-Midnight” Rule, DSH Changes, and Part B Rebilling.The Final rule (78 FR 50496, August 19, 2013) implementing changes to the inpatient hospital prospective payment system for fiscal year 2014 was the focus of a webinar sponsored by Wolters Kluwer Law & Business on September 4, 2013. The webinar focused on three significant changes in hospital reimbursement that will start October 1: (1) the “two-midnight” rule for determining inpatient admissions; (2) changes in the calculation of the disproportionate share hospital (DSH) payment; and (3) rebilling options for hospitals after a Part A claim is denied.

HHS Develops Model Privacy Practice Notices for Health Plans and Providers. HHS’s Office for Civil Rights and Office of the National Coordinator for Health Information Technology have developed model Notices of Privacy Practices for health care providers and health plans to use to communicate with their patients and plan members. The Notices are required under 45 CFR 164.520, which provides that an individual has a right to adequate notice of how a covered entity may use and disclose protected health information about the individual, as well as his or her rights and the covered entity’s obligations with respect to that information. Under the regulations, a covered entity must make its notice available to any person who asks for it. A covered entity also must prominently post and make available its notice on any web site that it maintains, which provides information about the entity’s customer services or benefits.

Physician Fee Schedule Formula Change Would Cost $176 Billion Over 10 Years.Legislation under consideration in the House of Representatives to change the current formula for how physicians are reimbursed by Medicare would increase federal direct spending by $176 billion from 2014 to 2023, according to the Congressional Budget Office (CBO). The “Medicare Patient Access and Quality Improvement Act of 2013″ (HR 2810) would replace the existing Sustainable Growth Rate (SGR) formula with a new system of determining physician reimbursement rates. Under the existing SGR formula, Medicare payment rates for physicians would be cut by 24 percent starting January 1, 2014.

Federal Health Spending Will Continue Putting Pressure on Total Federal Debt.While the federal budget deficit has decreased much faster than projected in previous years, total federal debt remains at historically high levels and the costs of health care will continue to add to the debt, according to Congressional Budget Office (CBO) director Douglas Elmendorf. The federal budget deficit totaled $750 billion for the first 11 months of fiscal year 2013, down more than $400 billion from the deficit for the similar period in FY 2012. Receipts for the first 11 months of FY 2013 totaled $2.472 trillion, $284 billion more than receipts for the same period in FY 2012. Outlays for the first 11 months of FY 2013 were $127 billion less than spending during the same period in FY 2012. The biggest decreases in spending were on defense (because of the impact of the withdrawal of troops from Afghanistan and the effect of the sequester) and unemployment benefits (because fewer people were collecting these benefits in 2013). For all three of the government’s largest entitlement programs, however, spending increased. Social Security spending increased by $38 billion (5 percent); Medicare spending increased $10 billion (2 percent); and Medicaid spending increased by $14 billion (6 percent).

Nevada Psychiatric Hospital’s “Patient Dumping” Prompts Suit by San Francisco and Scrutiny from CMS.On September 10, 2013, the San Francisco city attorney, Dennis Herrera, filed a class action suit against the state of Nevada and Rawson-Neal Psychiatric Hospital (Rawson-Neal), accusing them of intentionally dumping 500 psychiatric patients in California. The suit seeks a court order from the San Francisco Superior Court that prohibits Nevada’s mental health facilities from sending patients to California unless (1) they are California residents or (2) their care has been prearranged. The suit also calls for $500,000 to reimburse the city for expenditures made to care for 20 patients bused to San Francisco from Nevada’s primary state mental health facility, Rawson-Neal.

Study: Medicaid Pays for Almost Half of All Births in the U.S.In 2010, Medicaid paid for almost half of all births in the U.S., according to a study published September 10 in Women’s Health Issues, and the percentage will increase as Medicaid coverage expands under the Patient Protection and Affordable Care Act (PPACA) (P.L. 111-148). Estimates pulled from state vital records and Medicaid data showed that Medicaid paid for 47.75 percent of all births in 2010. The study noted that estimates of Medicaid spending on births showed a 9 percent increase from 2009 to 2010 in the proportion of births paid for by Medicaid, and a 19 percent increase from 2008, when Medicaid paid for 40 percent of births, to 2010.

Lawsuit Filed in Information Breach Affecting 4 Million Patient Records.In July 2013, an administrative office for Advocate Medical Group in suburban Chicago was burglarized and four computers that contained patient information (though not medical information) were stolen. On September 5, a class action lawsuit on behalf of over 4 million current and former Advocate patients was filed in a Cook County, IL, circuit court. The lawsuit alleges that Advocate “was negligent in protecting private data and failed to use encryption and other basic security measures on behalf of its patients.” The lawsuit claimed violations of the Health Insurance Portability and Accountability Act of 1996 (HIPAA), the Illinois Personal Information Protection Act (815 ILCS 530), and the Consumer Fraud Act (815 ILCS 505). According to Advocate, the computers “contained patient information used by Advocate for administrative purposes and may have included patient demographic information (for example, names, addresses, dates of birth, Social Security numbers) and limited clinical information (for example, treating physician and/or departments, diagnoses, medical record numbers, medical service codes, health insurance information).”