Daschle Named Secretary of Health and Human Services

President-elect Barack Obama announced former South Dakota Senator Tom Daschle as his nomination for the next Secretary of the Department of Health and Human Services (HHS). Obama also announced that Daschle will serve as director of a newly created White House Office of Health Reform. As director, Daschle would be the “lead architect” of programs for expanding health coverage and controlling health care costs.

By way of background, after leaving the Senate, Daschle wrote a book entitled “Critical: What We Can Do About the Healthcare Crisis,” detailing his ideas for reforming the health care system. His most notable idea involves the creation of a Federal Health Board, similar in concept to the banking system's Federal Reserve Board. The Federal Health Board would be made up of a variety of experts nominated by the President and confirmed by the Senate, for 10-year terms. The board would decide on the scope of coverage for federal health programs and, according to Daschle, would reduce or deny payment for new drugs and devices that it finds are not as effective as currently available products. The Secretary-designate sees the board as a way to control health care costs and introduce efficiency in the delivery of health care services. The concept of a central board may be viewed negatively by drug and device manufacturers as the board effectively would be picking winners and losers among makers of drugs and medical devices. Critics further point out that the board could deny patients access to safe, effective treatments.

Daschle has also proposed the establishment of a federal health insurance plan that would compete with private plans. He believes that costs would be reduced and care would be improved if private insurers had to compete with a government plan. Others believe the government plan would have an unfair advantage and could cause private insurers to leave the market.

Controversial Final Regulation Allows Health Care Providers to Refuse Providing Certain Services

According to a final federal regulation issued by HHS, federally funded health care providers may refuse providing services to which they object. The rule takes effect January 19, 2009. Specifically, the final rule:

  • Clarifies that nondiscrimination protections apply to institutional health care providers as well as to individual employees working for recipients of certain funds from HHS;
  • Requires recipients of certain HHS funds to certify their compliance with laws protecting provider conscience rights (this requirement may be phased in by October 1, 2009); and
  • Designates the HHS Office for Civil Rights as the entity to receive complaints of discrimination addressed by the existing statutes and the regulation.

In the preamble to the final regulation, HHS encourages providers to engage their patients early on in “full, open, and honest conversations” to disclose what services they do and do not provide. Critics argue that the regulation will lead to significant censorship in vast areas of medical care and research, particularly those involving reproductive health. Proponents suggest that health care workers and providers should not be compelled or coerced into performing services with which they take moral issue. However, federal protection of so-called “provider conscience rights” has a history dating back to the 1970s, when Congress enacted the Church Amendments that protected health care providers from discrimination by recipients of HHS funds on the basis, among other things, of their refusal, due to religious belief or moral conviction, to perform or participate in any lawful health service or research activity. To view the final rule, please click here.

CMS Launches Antifraud Efforts

The Centers for Medicare & Medicaid Services (CMS) is requiring certain durable medical equipment suppliers to post a surety bond. In addition, CMS has revoked the billing privileges of more than 1,100 medical equipment suppliers in Florida and California, among others. CMS issued a final surety bond regulation, required by the Balanced Budget Act of 1997, that requires certain suppliers of durable medical equipment, prosthetics, orthotics and supplies (DMEPOS) to post a $50,000 surety bond. Existing suppliers must comply with the requirement by October 2, 2009, while newly enrolling suppliers must meet this requirement by May 4, 2009. The surety bond requirement is designed to limit the risk to the Medicare program from fraudulent equipment suppliers and to help ensure that those suppliers that remain in the program furnish only reasonable and necessary items to Medicare beneficiaries. Suppliers that have had certain adverse legal actions imposed against them in the past also may be required to post a higher bond amount. All newly enrolling suppliers covered by the rule will be required to have a surety bond in place before they can enroll in the Medicare program. Please read the entire rule here.

Nursing Homes Rated

CMS released quality ratings for all of the country’s almost 16,000 nursing homes that participate in the Medicare or Medicaid programs. Facilities are assigned star ratings from a low of one star to a high of five stars based on health inspection surveys, staffing information and quality of care measures. CMS developed the rating system based on each nursing home’s performance in three critical areas:

  • Health inspection surveys. These surveys are designed to help protect the health and safety of residents, including a resident’s rights and general quality of life. Surveyors also conduct about 50,000 complaint investigations each year. The most recent three years of survey findings were used to develop the ratings.
  • Quality measures. The quality rating system uses 10 key quality measures. Areas analyzed include the percentage of at-risk residents who have pressure ulcers (bedsores) after their first 90 days in the nursing home, the number of residents whose mobility worsened after admission and whether residents received the proper medical care.
  • Staffing information. This measure reports the number of hours of nursing and other staff care per patient per day. This measure is adjusted to account for the level of illness and services required by each facility’s residents.

In this first round of quality ratings, approximately 12 percent of the nation’s nursing homes received a full five star rating, while 22 percent scored at the low end with one star. The remaining 66 percent of facilities were distributed fairly evenly among the two, three and four star rankings. You can find more information here.

CMS Selects the Final Five Medicare Contractors to Administer Medicare Claims

CMS announced the final five Medicare Administrative Contractors (MACs) that will process and pay Medicare claims for health care services. The new contracts will be administered for up to five years for Medicare Part A and Part B claims in 14 states, mostly in the South and Midwest. CMS now has met its goal of awarding all 15 MAC contracts.

The contractors will assume full responsibility for the claims processing work in their respective jurisdictions no later than March 2010. During the implementation period, the Part A and Part B MAC contractors will be conducting extensive outreach to health care providers and others in their jurisdictions to provide education and information about the implementation. The five new MACs are:

Noridian Administrative Services, LLC (NAS) has been awarded the contract for handling Part A/Part B Medicare claims payments in Jurisdiction 6, comprised of Illinois, Minnesota and Wisconsin. NAS is headquartered in Fargo, North Dakota. For more information about NAS, please click here.

National Government Services (NGS) has been awarded the contract for Jurisdiction 8, comprised of Indiana and Michigan. NGS is headquartered in Indianapolis, Indiana. You can find more information about NGS here.

Cahaba Government Benefit Administrators, LLC (CGBA) has been awarded the contract for Jurisdiction 10, comprised of Alabama, Georgia and Tennessee. CGBA is headquartered in Birmingham, Alabama.

Palmetto Government Benefits Administrators, LLC (Palmetto) has been awarded the contract for Jurisdiction 11, comprised of North Carolina, South Carolina, Virginia and West Virginia. Palmetto has its operational headquarters in Columbia, South Carolina, with some operations performed in Columbus, Ohio. For more information about Palmetto, please click here.

Highmark Medicare Services (HMS) has been awarded the contract for Jurisdiction 15 comprised of Kentucky and Ohio. HMS is headquartered in Camp Hill, Pennsylvania. You can find HMS’s website here.

Concerns Regarding the Four New Imaging Measures

The American Hospital Association (AHA) has sent a comment letter to CMS urging the agency to suspend four new imaging efficiency measures it included in its final rule updating payment policies and rates for both hospital outpatient departments and ambulatory surgical centers for 2009. Under the rule, CMS is expanding its quality requirements by adding four imaging efficiency measures that hospital outpatient departments would be required to report in 2009, making a total of 11 reportable measures required to receive the full inflation update in 2010. In the letter, AHA emphasized that it has “serious concerns about these measures,” including that two are not based on medical evidence, and the process by which the measures were proposed, reviewed and adopted by CMS.

Government Announces the Hospitals to Participate in Demonstration Project Testing Bundled Payments

CMS has announced the hospitals for its Acute Care Episode (ACE) demonstration project: Baptist Health System (San Antonio); Oklahoma Heart Hospital LLC (Oklahoma City); Exempla Saint Joseph Hospital (Denver); Hillcrest Medical Center (Tulsa); and Lovelace Health System (Albuquerque).

ACE is a new hospital-based demonstration project that will test the use of a bundled payment for hospital and physician services for a select set of inpatient episodes of care. For the ACE demonstration, a bundled payment will be a single payment for both Part A and Part B Medicare services furnished during an inpatient stay. Under the current system, CMS generally pays the hospital a single prospectively determined amount under the Inpatient Prospective Payment System for all care it furnishes to the patient during the inpatient stay. The physicians who provide services during the patient’s stay are reimbursed separately under the Medicare Physician Fee Schedule for each service they perform. This is the opening salvo in a growing idea within the Agency to consolidate payments based on episodes of care as opposed to reimbursement based on provider type. Such a concept could eventually lead to significant changes in how providers are reimbursed under Medicare.

For the demonstration project, 28 cardiac and non-orthopedic inpatient surgical services and procedures will be included in the bundled payment. These elective procedures were selected because volume has historically been high and there is sufficient marketplace competition to ensure interested demonstration applicants, among other things.

E-Prescribing Bonus for Physicians Begins in January

Beginning on January 1, 2009, physicians who use e-prescribing technology may receive bonus payments from Medicare. The bonus payments will last until 2012, when physicians who are still using paper to prescribe drugs will have their Medicare payments reduced. One rationale for the "paperless push" is to improve safety. Medication mistakes cause 1.5 million Americans to be injured each year. Some of the mistakes occur when a doctor's handwriting is unclear. E-prescribing programs can catch mistakes by alerting the practitioner if the patient is using another drug that might cause an interaction or if the dose seems incorrect. According to Michael Leavitt, Health & Human Services Secretary, another reason for promoting e-prescribing is that $156 million can be saved over a five-year period.

New Jersey Proposes Identity Theft Rules

On December 15, 2008, the New Jersey Division of Consumer Affairs proposed rules to the Identity Theft Prevention Act that will apply to every entity doing business in New Jersey and every New Jersey public entity that possesses computerized personal information, holds records containing personal information that are to be destroyed, or has access to the Social Security numbers of New Jersey residents. The Act defines personal information as information that links an individual’s first name or initial and last name with a Social Security number, a driver’s license or state identification card number, or an account, credit card, or debit card number in combination with any required security or access code, password security question or authentication device. The proposed rules require every business or public entity to maintain a written information security program. In addition, a business or public entity is required to report a breach of security to the Division of State Police before notifying the affected individual of the disclosure. Disclosure is not required if a determination is made that misuse of the personal information is not reasonably possible. However, a written record that includes how and by whom the investigation was performed and a brief description of the facts that formed the basis for the decision not to disclose the security breach must be maintained by the entity.

New Jersey Senate Clarifies the New Jersey Health Care Facilities Financing Authority Law 

Assembly Bill 3389, which would clarify provisions governing the hospital asset transformation program within the New Jersey Health Care Facilities Financing Authority Law, passed both the New Jersey Senate and Assembly in December and was signed by Governor Corzine on January 15, 2009.  The New Jersey Health Care Facilities Financing Authority established the hospital asset transformation program with the purpose of providing financial assistance to New Jersey nonprofit hospitals in connection with the termination of the provision of hospital acute care services at a specific location. Under the bill, nonprofit hospitals would be authorized to apply for and receive transitional aid to pay off any outstanding bonds or existing debt service, regardless of the status of any third-party appeal into the closure of the hospital.

Source: Health Law Regulatory Update