Jun 2011

Texas Health Care Providers and Insurers Face New Mandates and Increased Penalties Regarding Electronic Health Records

Texas health care providers and insurers face new mandates and increased penalties over the use of electronic health records (EHR) as a result of HB300, which was passed in the 2011 Texas legislative session and signed into law by Governor Perry.

The Texas legislation expands privacy rights of patients beyond that contained in federal HIPAA legislation and regulation. The new law, which is not effective until September 1, 2012, is designed to better ensure the security and privacy of protected health information (PHI) that is exchanged via electronic means. However, the law will also increase mandates on covered entities (health care providers and health insurers), grant new enforcement authority to a variety of state agencies, establish standards for the use of EHR, and increase penalties for the wrongful electronic disclosure of PHI, including creating a new felony for the wrongful accessing or reading of EHR via electronic means. With the recently increased federal enforcement activity regarding patient privacy, covered entities in Texas can expect similar enforcement action from state agencies as well.

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Jun 2011

Senators Criticize OIG for Lack of Guidance on Physician Joint Ventures: Request Study on Physician Owned Distributorships

A bipartisan U.S. Senate committee has asked both the Centers for Medicare & Medicaid Services (CMS) and the Office of Inspector General (OIG) for the U.S. Department of Health and Human Services to study the proliferation of physician owned distributorships (PODs), citing a lack of regulatory guidance on how these arrangements square with existing federal law.

PODs, arrangements in which physicians purchase ownership shares in entities that serve as a distributorship for products used in surgeries, can save hospitals millions of dollars in supply costs, and allow physicians to share in the savings. At the same time, critics of PODs claim they cause an increase in utilization, especially in spinal fusion surgeries. The Senate’s action will focus regulatory and legislative attention on this rapidly evolving development in the healthcare industry.

Senators Cite OIG Confusion

U.S. Senator Orrin Hatch (R-Utah) in June 2011 released a report compiled by the Senate Finance Committee that examined the complicated issues surrounding PODs. The report blamed the proliferation of PODs – which now exist in at least 20 states – on the lack of regulatory guidance. Over 40 PODs have been identified in California, and in particular there seems to be a marked increase in rural areas where PODs are being used very aggressively.

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Apr 2011

ACOs Face Large Start-Up Costs Under Proposed Rules from CMS

Accountable Care Organizations (ACOs) will face large start-up costs under proposed rules issued on March 31 by the Centers for Medicare and Medicaid Services (CMS).

An ACO is an organization of health care providers that agrees to be accountable for cost, quality and the overall care of Medicare beneficiaries who are assigned to it. ACOs are mandated under the Affordable Care Act (ACA). Because ACOs represent a new health care delivery and payment model, the proposed regulations were eagerly anticipated by the healthcare community.

CMS estimates average start-up costs and first-year operating expenses of $1.7 million for an ACO. The large costs are due to the numerous and highly detailed requirements that organizations must meet in order to be allowed to participate as an ACO under the Medicare Shared Savings Program (MSSP) established by ACA. CMS expects that 1.5 to 4 million Medicare beneficiaries will align with an ACO in the first three years and that an estimated 300 to 800 ACOs will participate in the program. The median estimate of savings to the Medicare program over the three-year period is $510 million.

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Dec 2010

Driving Provider Integration: Implications for Hospitals and Health Systems of the Patient Protection and Affordable Care Act

On March 23, 2010, President Obama signed into law the most sweeping health care legislation since Medicare was enacted in 1965.

The Patient Protection and Affordable Care Act1 (the “Act”) seeks to transform the American healthcare delivery system through a variety of cutting-edge initiatives and by amending a series of existing laws. The law has been described as allowing the “biggest transformation of government since World War II”2 in its effort to provide increased healthcare coverage to millions of Americans while also seeking to control the spiraling cost of healthcare.

The law will impact hospitals and health systems in numerous ways as it seeks to achieve the two goals of increased coverage and controlling costs. Hospitals will face increased demands for primary and preventive care from an increasing number of patients. At the same time, hospitals will see reimbursement changes, increased reporting requirements relating to quality outcomes and experimentation with new payment models. The result of these changes, assuming the Act is implemented,3 will be an increased drive toward integration of hospitals and healthcare systems as they, along with physicians and other providers, react to this massive transformation of the U.S. healthcare delivery system.

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