Heman A. Marshall, III Christine F. Underwood Woods Rogers PLC 540.983.7600 woodsrogers

1. The Affordable Care Act of 2010How Does it Affect Network Provider Members and How Can Your Network Help? Heman A. Marshall, III Christine F. Underwood Woods Rogers PLC 540.983.7600 www.woodsrogers.com September 25, 2012

2. Health Care Reform Law • Patient Protection and Affordable Care Act of 2010 (the “Act” or “ACA”; Pub. L. 111-148) signed March 23, 2010 • Health Care and Education Reconciliation Act of 2010 (Pub. L. 111-152) signed March 30, 2010

3. Initially, A Rocky Road

4. Initial Legal Challenges • 6th Circuit declared the Act unconstitutional • 11th Circuit declared the Act unconstitutional • 4th Circuit dismissed the case for lack of standing

5. The Act and The Supreme Court June 28, 2012 U.S. Supreme Court Declared the Act (mostly) ConstitutionalIssues Before the Court • Can the Court hear the case? • Is the “Individual Mandate” constitutional? • Is the “Medicaid Mandate” constitutional? • If either or both are unconstitutional, must the entire Act fall?

6. The Decision • 5-4 Opinion • 2 Majority Opinions – The Chief Justice and Remainder of the Majority • Upheld the Individual Mandate as a “Tax” not as an exercise of the Commerce Clause • Upheld “most” of the Medicaid Mandate • Struck withdrawal of all funds if a State refuses to participate in expanded coverage

7. Effect of the Decision • We are where we were in 2010! • Except states can decline to expand Medicaid and continue to receive existing levels of support In short, the Act is alive and well!

8. Four Major Focuses of the Act • Provisions applicable to Health Care Providers • Hospitals • Physicians/Physician practices • Drug and Device Makers • Provisions applicable to health insurance plans (private and government)

9. Four Major Focuses of the Act • Provisions applicable to all employers regarding the workplace and employer sponsored plans/benefits • Provisions applicable to CMS funding for innovation and reform

10. This Presentation Addresses Provisions Applicable to Health Care Providers

11. Generally The Major Direct Effects on Providers: • Self-Referral Notice Requirements • So Called “Increased Accountability” Requirements • Overpayments • Changes to the Federal False Claims Act • Amendments to the Anti-Kickback Act • Expanded Civil Monetary Penalties

12. Generally • Modified Timely Filing Requirements for Medicare Claims • Stark II Self-Disclosure Protocol • Physician/Hospital Ownership Restrictions • So Called “Transparency” Requirements • Compliance Mandate • Medicaid Payment Changes • Specific Requirements for Tax Exempt Hospitals • Value-Based Purchasing for Hospitals • Readmission Penalties for Hospitals

13. Major Indirect Effects Major Indirect Effects • Creation of ACO concept • EHR Incentive Program • Other Alternative Reimbursement Models

14. Self-Referrals

15. Self-Referrals • Referring physician is required to inform patients, in writing, at the time of a referral that patients may obtain specified services (e.g., MRI, CT, PET) from a provider other than the referring physician or another provider in the same group practice

16. Self-Referrals • Notice must list other suppliers who furnish such services in the area where the patient resides • Effective Date: January 1, 2011

17. Self-Referrals • June 13, 2010 - CMS published a proposed rule See 75 Fed. Reg. 40140-2 • Required written notice to include no fewer than 10 other suppliers within a 25-mile radius unless fewer than 10 suppliers within such radius  • List must include the name, address, phone number, and distance from the referring physician’s office location  • The physician must obtain the patient’s signature on the disclosure notice and retain a copy of the signed disclosure in the patient’s medical record

18. Self-Referrals • The Final Rule was effective January 1, 2011 See 75 Fed. Reg. 73443-73447 • Under the Final Rule, CMS: • Reduced the number of suppliers that must be listed from 10 to 5 • Removed the requirement that the distance from the physician’s office be listed • Removed the patient signature and retention requirement

19. Self-Referrals State Laws Also check your state laws – Many have similar Provisions Example: • Virginia Law • Requires that practitioners, prior to a referral to a facility, must provide the patient with a notice in bold print that discloses any known material, financial interest of or ownership interest by the practitioner in such facility, and states that the services may be available from other suppliers in the community • Va. Code § 54.1-2964

20. “Transparency”

21. Transparency • The Act requires manufacturers that provide a payment or other item of value to a physician (or to an entity or individual at the request of a covered recipient) to disclose annually the value, nature, purpose and recipient of the payment • Generally applies to device, drug, medical supply and biologic companies, and requires reporting payments or transfers of value of $10 or more ($100 aggregate in the calendar year) • Effective Date: March 31, 2013

22. Medicare Payment Changes

23. Medicare Payment Changes • The Act provides a 10% bonus on select primary care services for physicians in family medicine, internal medicine, geriatrics and pediatrics whose Medicare charges for office, nursing facility and home visits comprise at least 60% of their total Medicare charges and to general surgeons performing major surgery in health professional shortage areas. • Effective January 1, 2011 – December 31, 2015

24. Medicaid Payment Changes • Medicaid payment rates to primary care physicians will be raised to no less than 100% of the Medicare payment rates for 2013 and 2014.

25. Tax-Exempt Hospitals • Requirements (cont.) • Set a limitation on charges for emergency or medically necessary care for eligible individuals not more than the amounts billed to the insured and eliminate gross charges; • Undertake reasonable efforts to determine whether an individual is eligible for assistance before engaging in extraordinary collection actions

26. Value-Based Purchasing • The Act establishes a value-based purchasing incentive payment to acute care hospitals paid under the Inpatient Prospective Payment System based on specific performance standards

27. Value-Based Purchasing • For the first year, incentive payments will be based on measures related to: • Acute myocardial infarction (AMI); • Heart failure; • Pneumonia; • Surgeries; and • Healthcare-associated infections • Effective Date: On or after October 1, 2012

28. Readmissions

29. Readmissions • The Act defines a “readmission” as the admission to the same hospital from which the patient was discharged, or to another hospital, within a specified time period (e.g. 30 days) from the date of the patient’s discharge

30. Readmissions • The Act reduces Medicare payments based on the percentage of potentially preventable readmissions for certain conditions • Effective October 1, 2012, conditions subject to this provision are AMI, heart failure and pneumonia and the readmission period is 30 days • HHS will publish readmission rates on a “Hospital Compare” website

31. Timely Claims Filing

32. Timely Filing of Fee-For-Service Claims • The Act reduced the statutory timely filing deadline for Medicare fee-for-service claims under Medicare Parts A and B to 1 year (previously 3 years), effective for services furnished on or after January 1, 2010

33. Increased Accountability New Enforcement Tools

34. By Way of Background The “HEAT” Initiative

35. HEAT • In May 2009, DOJ and HHS announced the creation of the “Health Care Fraud Prevention and Enforcement Action Team” (“HEAT”).

36. HEAT • Mission of HEAT • To gather resources across government to help prevent waste, fraud and abuse in the Medicare and Medicaid programs, and crack down on the fraud perpetrators who are abusing the system and costing us all billions of dollars • To reduce skyrocketing health care costs and improve the quality of care by ridding the system of perpetrators who are preying on Medicare and Medicaid beneficiaries

37. HEAT • Mission of HEAT (cont.) • To highlight best practices by providers and public sector employees who are dedicated to ending waste, fraud and abuse in Medicare • To build upon existing partnerships between DOJ and HHS such as Medicare Fraud Strike Forces to reduce fraud and recover taxpayer dollars

38. Overpayments

39. Overpayments ACA Requirements • Identified overpayments must be reported and returned within 60 days to the applicable contractor, intermediary or carrier along with a written notification of the reason for the overpayment • Failure to return such payments within 60 days can trigger liability under the Civil False Claims Act, 31 USC § 3729(b)(3) • Effective Date: March 23, 2010

40. Overpayments • CMS published a proposed rule on the reporting and returning of overpayments on February 16, 2012 • 77 Fed. Reg. 9179

41. Overpayments • Under the Proposed Rule, an overpayment is “identified” if the provider/supplier has actual knowledge of its existence or acts in reckless disregard or deliberate ignorance of the overpayment • (Standard is consistent with False Claims Act)

42. Overpayments • CMS acknowledged that time may be needed to conduct a “reasonable inquiry” of a suspected overpayment • Still little guidance as to what is “reasonable” • Failure to act “with all deliberate speed” could result in a determination of knowingly retaining an overpayment

43. Overpayments • Overpayments should be reported to Medicare contractors using the existing voluntary refund process (See Chapter 4, Medicare Financial Management Manual) • Overpayments that may have occurred within a 10-year look-back period should be reported • (Consistent with SOL under False Claims Act)

44. Anti-Kickback Amendments

45. Anti-Kickback Amendments • The Act amended the Anti-Kickback statute to state that “a person need not have actual knowledge” of the statute to commit a violation • Previously, regulators had to show specific intent to commit a violation of the AKS • Violations of AKS now constitute a false or fraudulent claim for purposes of the False Claims Act • Effective Date: March 23, 2010

46. Civil Monetary Penalties

47. Civil Monetary Penalties • The Act expanded the application of CMPs to: • Failure to report and return an overpayment; • Making a false statement in a provider enrollment application; • Making a false statement in a claim for payment; • Failure to timely grant access to HHS for investigations, audits or evaluations; and • Ordering or prescribing a medical item or service for an excluded individual • Effective Date: March 23, 2010

48. Stark II Self-Disclosure

49. Self-Disclosure • The Act established a self-disclosure protocol for actual or potential violations of the Stark Law, and granted HHS the discretion to reduce amounts due for violations

50. Self-Disclosure • HHS may consider the following factors: • Nature and extent of the improper or illegal practice; • Timeliness of self-disclosure; • Cooperation in providing additional information related to the disclosure; and • Such other factors as HHS deems appropriate • Self-Disclosure Protocol was published on September 23, 2010