Looking Ahead: Legal and Regulatory Issues for 2011Georgia Neurological Society February 27, 2011 Richard D. Sanders The Sanders Law Firm, P.C. 3525 Piedmont Road 7Piedmont Center, Suite 300 Atlanta, GA 30305 (404)364-1819 (866)-871-2238 Fax firstname.lastname@example.org
Overview • Status of Challenges to Patient Protection and Affordable Care Act (PPACA) • PPACA Changes to: FCA, FERA, AKS and the Stark Law • Federal Fraud and Abuse Enforcement Efforts
Summary of Challenges to PPACA • Commonwealth of Virginia v. Sebelius • Florida v. HHS • U.S. House of Representative Repeal Efforts • U.S. Senate Repeal Efforts
Is PPACA Constitutional? • Four courts have ruled- two say “yes”, two say “no” • Bases for constitutional challenge: • Individual mandate exceeds the power that Congress possesses under the Commerce Clause • Minimum essential health benefits exceed Congressional power • Expansion of Medicaid eligibility criteria
Commonwealth of Virginia v. Sebelius • Filed in Eastern District of Virginia • Plaintiffs: Attorney General Ken Cuccinelli, et al. (VA) • Defendants: Kathleen Sebelius, Sec. of U.S. Dept. of HHS • Judge: Henry E. Hudson • Appointed by George W. Bush
Commonwealth of Virginia v. Sebelius • Plaintiffs challenge the constitutionality of enforcement mechanism, §1501, Minimum Essential Coverage Provision. • Individual Mandate exceeds the power of the Commerce Clause and Necessary and Proper Clause of the Constitution. • Requiring an individual to purchase a good or service from a private vendor is beyond the boundaries of congressional Commerce Clause power. • The individual mandate cannot be sustained as a legitimate exercise of the congressional power of taxation under the General Welfare Clause. • Characterized as a tax but really a penalty for passive activity. • Also conflicts with Virginia Health Care Freedom Act, thus implicating the 10th Amendment • Unlawful exercise of police power and encroaches on the sovereignty of the State. • Does Congress have the power to regulate-and tax- a citizen’s decision not to participate in interstate commerce? • Unprecedented action • Neither Commerce Clause nor Tax Clause have been interpreted to allow.
Commonwealth of Virginia v. Sebelius • “The unchecked expansion of congressional power to the limits suggested by the Minimum Essential Coverage Provision would invite unbridled exercise of federal police powers. At its core, this dispute is not simply about regulating the business of insurance-or crafting a scheme of universal health insurance coverage- it’s about an individual’s right to choose to participate.” • - Judge Henry E. Hudson
Commonwealth of Virginia v. Sebelius • On December 13, 2010, Judge Henry E. Hudson issued the opinion that: • “Despite the laudable intentions of Congress in enacting a comprehensive and transformative health care regime, the legislative process must still operate within constitutional bounds. Salutary goals and creative drafting have never been sufficient to offset an absence of enumerated powers.” • Sebelius’s expansive interpretation of economic activity subject to congressional regulation lacks logical limitation and is unsupported by Commerce Clause jurisprudence. • The Necessary and Proper Clause may not be employed to implement the individual mandate. • Use of the term “tax” is a tactic to achieve enlarged regulatory license. It’s a penalty and is not a bona fide revenue raising measure of taxation under the Genera Welfare Clause. • The revenue generate under the individual mandate is incidental to a citizen’s failure to obey the law. • Section 1501 of the PPACA-Minimum Essential Coverage Provision-exceeds the constitutional boundaries of congressional power. • Severed any “problematic portions while leaving the remainder intact”. • No Injunction Granted.
Florida, et al. v. HHS • Filed in Northern District of Florida • Plaintiffs: Attorney Generals representing the 26 States of Arizona, Indiana, Mississippi, Nevada, North Dakota, Alabama, Colorado, Florida, Idaho, Louisiana, Michigan, Nebraska, Pennsylvania, South Carolina, South Dakota, Texas, Utah, Washington, Georgia, Alaska, and as of January 19, Ohio, Wisconsin, Kansas, Maine, Iowa, and Wyoming. Also, the National Federation of Independent Business and two individuals, Mary Brown and Kaj Ahlburg. • Defendants: U.S. Department of Health and Human Services • Judge: Roger Vinson • Appointed by Ronald Reagan
Florida, et al. v. HHS • Plaintiffs challenge the PPACA based on its inclusion of the individual health insurance mandate. • Congress exceeded its authority by controlling the budgetary process and legislative agendas of the States • States forced to assume responsibility of exorbitant costs of the Act. • Plaintiffs claim the federal government has no authority under the Commerce Clause on the Taxing and Spending Clause of the Constitution. • Cites Article ; §2, §9: Federal cannot use the mandate as a means to impose a direct tax. • Plaintiffs also contend that the PPACA violates the Tenth Amendment • A mandate that forces individuals to either have health insurance coverage or pay a penalty is unconstitutional. • States are concerned with the top-down unfunded mandates through the expansion of Medicare and Medicaid that impose increased conditions from which they cannot withdraw. • States cannot afford the increased costs.
Florida v. HHS • On January 31, 2011, Judge Vinson issued an opinion finding that: • Medicaid expansion is not coercive to the States • Failing to buy health insurance is not an act of interstate commerce • The Necessary and Proper Clause does not allow Congress to impose an individual mandate • The individual mandate is not severable from the rest of the PPACA. • Therefore, THE ENTIRE ACT MUST BE VOID.
Florida v. HHS • “I must reluctantly conclude that Congress exceeded the bounds of its authority in passing the act with the individual mandate. That is not to say, of course that Congress is without power to address the problems and inequities in our health care system. The health care market is more than one-sixth of the national economy and without doubt Congress has the power to reform and regulate this market. That has not been disputed in this case. The principal dispute has been about how Congress chose to exercise that power here.” • --Judge Roger Vinson
Florida and Virginia • The Justice Department expressed its intentions to file an appeal with the 11th Circuit and 4th Circuit Court of Appeals. • 4th Circuit Court hearing is currently scheduled between May 10-13, 2011 in Richmond. • Virginia Attorney General intends to file an appeal directly with the Supreme Court. • Neither Judge granted an injunction barring implementation because such a step is unnecessary because there is a presumption that the federal government will adhere to the ruling. • The White House stated that, in the absence of an injunction, “implementation will proceed apace.”
House Repeal Efforts • January 5, 2011, Rep. Eric Cantor [R-Virginia] introduced H.R. 2: Repealing the Job-Killing Health Care Law Act • 182 Co-Sponsors • The Bill would repeal the Patient Protection and Affordable Care Act, effective as of its enactment. • It restores provisions of the law which were amended by the PPACA. • Repeals the health care provisions of the Health Care and Education and Reconciliation Act of 2010, effective as of the Act’s enactment. • It restores provision of the law amended by the Act’s health care provisions.
House Repeal Efforts • January 19, 2011, Republican-led House voted on H.R. 2: Repealing the Job-Killing Health Care Law Act. • Vote: PASSED the House 245 to 189 • 3 Democrats sided with unified GOP • House Republicans on February 18, 2011 passed an amendment to the continuing resolution (which keeps the federal government running before a budget is adopted • The amendment to the continuing resolution bars all payments to 'any employee, officer, contractor, or grantee of any department or agency' to implement [PPACA]."
Senate Repeal Efforts • On February 2nd, U.S. Senate blocked a formal vote on the repeal of the health care reform bill on a procedural motion • 51-47 • Still need 13 votes to reach cloture. • Obama has vowed to veto any legislative measure that would repeal the PPACA • However, the President is open to fine tuning the PPACA • Later that day, the Senate passed an amendment to the Federal Aviation Administration authorization bill, which repealed the first piece of Obama’s health care overhaul. • Amendment eliminated 1099 tax filing requirement which required business owners to report in tax documents purchases totaling more than $600 from any vendor through the year. • Bipartisan support, 81-17
Insurance Coverage • No pre-existing condition exclusions for children (temporary national high risk pool created for adults); • No rescissions except for fraud; • No lifetime value limits; • Waiting periods limited to 90 days; • Guaranteed issue and renewal; and • Strict rating rules.
Republican Challenges to Health Reform Implementation • Overall repeal of PPACA unlikely • Challenges to implementation will include: • Restricting appropriations for reform-related projects in 2011 and 2012 • Blocking the formation of new agencies in PPACA (including Medicare Payment Advisory Board and CMS Center for Innovation) • Negotiating rollback of reform with Pres. Obama and Sen. Reid • State-level opposition • 2012 Strategy
Conclusion • The Obama Administration has promised that implementation of the PPACA will continue, whether U.S. District Courts declare it (or its funding mechanism) unconstitutional. • Other Democratic appointed Judges have thrown out many suits. • The case is likely to be heard by the Supreme Court before the Individual Mandate effective date of 2013. • In the mean time, expect legislative revisions to the PPACA. • Always the possibility of reform via the political process in 2012.
The Patient Protection and Affordable Care Act and the Healthcare Education Reconciliation Act of 2010 (PPACA) • Signed into law by President Barak Obama on March 23, 2010 • PPACA impacts a variety of laws that apply to health care facilities and providers • Many of these changes became effective the day the law was enacted
False Claims Act The False Claims Act prohibits the submission of false, fraudulent or misleading claims to any government entity or third-party payer, including: • claims for services not rendered • claims for services that are misrepresented, or • claims that do not comply with applicable program criteria
Qui Tam Actions The FCA includes a “qui tam” provision, which allows private citizens to file suit on behalf of the federal government to recover damages incurred by the federal government as a result of false claims. The Public Disclosure Bar requires that individuals seeking to bring qui tam Actions: (1) be the original source of information, and (2) introduce information that has not been previously subject to public disclosure. Once a qui tam suit is filed, the federal government conducts an investigation of the claims alleged in the suit and upon completion of the investigation, the Department of Justice must take one of the following actions: (1) intervene in one or more counts; (2) decline to intervene in one or all counts; or (3) move to dismiss the complaint.
PPACA Changes to the FCA • PPACA weakens the Public Disclosure Bar by allowing the government discretion to waive the Public Disclosure Bar. • PPACA weakens the Public Disclosure Bar by redefining “Public Disclosure” to apply only to disclosures made in: • Federal administrative settings • Federal courts • News Media • The Public Disclosure Bar no longer applies to disclosures made in: • State court • State administrative proceedings • Publicly posted state audit reports
PPACA Changes to the FCA • PPACA authorizes HHS to withhold Medicare payments to providers and withhold the federal portion of Medicaid payments based on a credible allegations of fraud
Fraud Enforcement and Recovery Act of 2009 • FERA makes it a FCA violation to: • Knowingly make a false statement material to an obligation to pay money to the government • Knowingly conceal or improperly decrease an obligation to pay or transmit money or property to the government
PPACA Changes to the FERA • Under the PPACA, overpayments must be returned by the later of: • 60 days after the overpayment is identified, OR • the day the corresponding cost report is due • Overpayments retained beyond the 60 day or corresponding cost report period become obligations under the FCA
Anti-Kickback Statute The Anti-Kickback Statute prohibits the offer or receipt of anything of value in exchange for a referral of any item or service for which payment may be made under a federal health care program, including Medicare and Medicaid. There are exceptions and safe harbor provisions written into the Anti-Kickback Statute, and its supporting regulations.
PPACA Changes to AKS • Under PPACA, claims for service provided that violate the AKS now violate the FCA • PPACA removes the false certification limitations • The PPACA removes the heightened intent standard from the AKS: • Physicians are no longer required to know of the AKS and specifically intend to violate the AKS in order to be held liable under the AKS
Stark Law The Stark Law prohibits physicians who have a financial relationship with an entity from referring patients to that entity to receive a designated health service for which payment may be made under Medicare or Medicaid Commonly arises when a physician refers a patient for ancillary services such as: • laboratory services • durable medical equipment • physical therapy • scans
PPACA Changes to Stark Law • Modifies the Stark Self-Referral Disclosure Protocol: • Department of Health and Human Services (HHS) in conjunction with the Office of Inspector General (OIG) will implement a disclosure protocol for use by providers that discover actual or potential Stark Law violations • Centers for Medicare and Medicaid Services (CMS) will post guidance for disclosure along with information on how this will affect corporate integrity and corporate compliance agreements
PPACA Changes to Stark Law • PPACA eliminates the Stark safe harbor for physician-owned hospitals • Physician-owned hospitals currently in existence are not allowed to expand their physical space including the number of beds and operating rooms within the hospital • Physician-owned hospitals currently in existence will be grandfathered into the law, and the percentage of physician ownership cannot increase after December 31, 2010
PPACA Changes to Stark Law • PPACA Creates a Medicare In-Office Ancillary Exception Regulation • Physicians who refer patients for in-office ancillary services must, at the time of the referral, inform the patient in writing that he or she may obtain the ordered services from a person other than the ordering physician or the physician’s group • The physician is then required to provide the patient with a list of providers who perform the service in the area in which the patient resides
General Fraud and Abuse Enforcement Efforts in the PPACA • PPACA provides $350 million to fight fraud and abuse over the next ten years • PPACA expands the subpoena power of HHS and allows HHS to delegate this power to the OIG • PPACA establishes a penalty of $15,000 per day for individuals or entities that delay or refuse to grant HHS access to information in connection with audits or investigations
Fraud and Abuse Enforcement Efforts in the PPACA (cont.) • Allows for the suspension of Medicare and the federal portion of Medicaid payments • Expands HHS’s authority to exclude individuals or entities from participation in federal health care programs • Adds new conditions for imposing civil monetary penalties such as the known retention of an overpayment
PPACA—The Sunshine Act • Requires drug and device manufacturers to annually report payments to physicians and teaching hospitals. • Manufacturers will have to submit information the the Secretary of HHS beginning March 31, 2013 regarding payments made the preceding calendar year. • The Secretary is required to make the information reported by manufacturers publically available in a searchable format by Sept. 30, 2013.
Sunshine Act—Exclusions • Nothing under $10 unless the aggregate of payments are more than $100 • Free samples intended for patient use • Educational materials that directly benefit patients or are intended for patient use • Transfers to a physician solely for services related to a criminal, civil, or administrative proceeding, ie. consultation on a case or expert testimony • In kind items for charity care • Items or services provided under contractual warranty • Short term device loans for evaluation • Transfer of anything of value when the physician is a patient and not acting in his/her professional capacity • Discounts and rebates
Sunshine Act—Reporting • Name of physician or teaching hospital receiving money or anything of value • Specialty of physician or teaching hospital • Billing number for the physician or teaching hospital • The amount of the payment or transfer of value • The date of the transfer of value
Sunshine Act—Reporting • Physicians and teaching hospitals will have the opportunity to review and correct information before it is published. • The process for review will be developed by the Secretary of HHS. This process may be included in the publication of reporting procedures that the Secretary is required to establish by Oct. 1, 2010.
Proposed Rule Change for HIPAA/HITECH—Business Associates • Covered entity is directly liable for the violations of BAs that are agents, not independent contractors • HHS may impose civil and criminal penalties on BAs • Subcontractors will be BAs • Subcontractor—any agent or person who acts on behalf of a BA • BAs are required to ensure that subcontractors comply with the HIPAA rules • Clarification of who is a BA—Electronic Health Record Vendors are BAs
Proposed Rule Change for HIPAA/HITECH—Notice of Privacy Practices • The components of HIPAA Notice of Privacy Practices require new notices regarding marketing and fundraising • Authorization is required for any disclosure of PHI that is made in exchange for direct or indirect remuneration, unless a specified exception applies
Proposed Rule Change for HIPAA/HITECH—Additional Issues • Patients have a right to access PHI in an electronic format • Patient can restrict access of PHI to health plan if patient pays out of pocket • Privacy protection extends only 50 years after the death of the patient • Covered entities can charge patients for costs associated with providing and individual EPHI on electronic media
Proposed Rule Change for HIPAA/HITECH—Effective Date • The comment period for the proposed rule ended Sept. 13, 2010. • Most rule changes will not go into effect until 180-days after the effective date of the final rule
HITECH Revisions - Breach Notification – Interim Final Rule • Scope of Notification Requirements • Applies to Privacy Rule breaches involving both electronic and paper records • “Breach” means the unauthorized acquisition, access, use or disclosure of PHI which compromises the security or privacy of such information (at 45 C.F.R. §164.402)
HITECH Revisions - Breach Notification – Interim Final Rule • Risk Analysis to Determine Requirement for Breach Notification- Three-step process by CE and/or BA • Step One: Determine whether an impermissible use or disclosure of unsecured PHI under the HIPAA Privacy Rule occurred • Step Two: Perform a risk assessment to determine and document whether a significant risk of financial, reputational or other harm to an affected individual has occurred • Step Three: Determine whether the incident is excluded from the definition of breach because it satisfies an statutory exception set forth in the Act and interim final rule
HITECH Revisions - Breach Notification – Interim Final Rule • Exceptions to “Breach” Definition • Unintentional access to PHI by workforce member or other individual acting under the authority of a CE or BA if: • Good faith access and within the scope of authority of CE/BA; and • Information not further acquired, accessed, used or disclosed by such person in manner not permitted by Privacy Rule • Inadvertent disclosure by person authorized to access CE’s or BA’s PHI to another similarly situated person at same CE, BA or OHCA and PHI not further used in manner not permitted by Privacy Rule • Disclosure of PHI to unauthorized person if CE/BA has good faith belief that such person could not reasonably be able to “retain” such information
HITECH Revisions - Breach Notification – Interim Final Rule • Timing of Notice to Individuals by CE – Section 164.404(b) • Must be made without unreasonable delay and in no case later than 60 calendar days after unsecured PHI breach discovery • Content of CE Notice to Individual – Section 164.404(c) • The notice must include: • Description of breach (what happened including date of breach) • Types of information involved (such as SS#, DOB, address) • Mitigation, investigation, protective steps by CE • Steps for individuals to take for protection • Contact information to ask questions or obtain more information (must include toll-free number, email address, Web site or postal address)