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The PPACA Supreme Court Challenge: What Every Practice Manager Should Know

Supreme Court of the United States of America

 

 

 

 

 

 

The PPACA (Patient Protection and Affordable Care Act) reforms that were passed almost two years ago have been contested in court almost from the moment President Obama finished signing the bill.

Several constitutional challenges to the law have rather quickly (in terms of the Supreme Court anyway) made it to the very top of the legal chain. Supporters and those opposed to the new law both want to see a quick decision by the Court on the most controversial components of the law – specifically, the “individual Mandate” that requires people not receiving health insurance benefit opportunities from their workplace, or through government programs like Medicare, Medicaid, or Tricare, to purchase health insurance through an exchange with help from government subsidies. Those who do not purchase insurance that meets a minimum standard of coverage would pay a penalty to the Federal Government.

The individual mandate is by far the least popular of the of the pieces of the reform law’s so-called “Three-Legged Stool” of policies. By regulating insurers so that they cannot:

  • deny people coverage based on pre-existing conditions,
  • drop them arbitrarily because of new ones,
  • or impose lifetime spending caps,

the private market is opened up to people with chronic and congenital conditions that otherwise would be denied, while the mandate ensures that younger and healthier people also participate in the market so that risk is spread, and premiums can be kept low. The Federal Tax Subsidies to new purchasers help to offset the costs to individuals and families that are new to the market.

The twenty six states bringing suit believe that the federal government can not force an individual to buy insurance through the threat of a fine.

The Federal Government believes that it does have this power based on Article 1, Section 8, Clause 3, better known as the “commerce clause”, which enumerates the power to

To regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes.

This section of the Constitution is the basis for many of the powers granted to the federal government over the states, and the limits of the commerce clause are the foundation of powers declared by, or given back to the states from the Federal Government. Many of the most important questions put before the Supreme Court are cases of the nature of Federal versus State power, so the Commerce Clause is one of the most hotly debated parts of the American Constitution.

The Obama Administration argues that the Individual Mandate is part of the broad powers given to the Federal Government to “tax” individuals in order to regulate interstate commerce.

The states involved in the suit, and conservatives opposed to the Reforms argue that this amounts to the Federal Government requiring individuals, under penalty of law, to purchase a product whether they want to or not – an intrusion on both individual and State freedom.

This week, the Court heard six hours of oral arguments from lawyers representing both the states suing, the federal government, and unbiased outside council brought in to argue positions held by neither side.  Four different challenges are being considered, including:

  • Can the Supreme Court rule on the law before the fine has ever been imposed?
  • Is the Individual Mandate constitutional?
  • If the Individual Mandate is not upheld, does it invalidate the rest of the law?
  • Can the federal government force the states to expand their Medicaid programs, even if the federal government pays for the state program expansion?

Of the nine Justices on the Supreme Court, five were appointed by Republican Presidents and four were appointed by Democrats, including two appointed by Obama. The four democratic appointees – Ginsburg, Breyer, Sotomayor and Kagan- are presumed to vote to uphold the bill, while Clarence Thomas, one of the five Republican appointed justices is presumed to vote to repeal. The other four justices: Scalia, Thomas, Roberts, and Alito are considered to be “swing votes”. With mixed or limited records on Commerce Clause cases and Federal Power, many Court observers widely believe that their votes will be the deciding factors.

A decision will be handed down by the Supreme Court in late June.

What does this mean for medical practices as small businesses with more than 50 employees?

If the PPACA is upheld, and the practice does not offer medical insurance benefits to its employees and your employees receive income tax credits for purchasing health insurance through a state exchange, you will be required to pay a fee of up to $2,000 per FTE for every employee after the first 30.

Currently, practices with 25 or less employees with an average wage of up to $50K annual wages can get a tax credit of up to 35% of the cost of health insurance premiums.

What does this mean to medical practices of all sizes?

If the PPACA is upheld, in 2014 our world will change.

In 2014, we would expect to see patients moving away from the ER as a source of primary care and into practices, and there would literally be no more “Self-Pay” patients in traditional private practices!  This will expand the complexity of pre-visit eligibility and claims filing and patients will continue to be confused over benefits, but that is what insurance is all about.

What are your concerns for your practice or business if the PPACA is or is not upheld?




Collections Basics – Part 1: Know Your Payers

In a traditional healthcare setting, the revenue cycle begins with the insurance companies who pay the majority of the bill. There are multitudes of payers and each payer can have many plans.  How can a healthcare organization catalog this information, keep this information updated and make this information easily accessible to staff so they can discuss payments with patients in an informed and confident way?

Start by breaking your payers into five main categories as a logical way to organize the data.

  1. Payers with whom you have a contract
  2. Payers with whom you do not have a contract
  3. State and Federal government payers (Medicare, Medicaid, TriCare)
  4. Medicare Advantage payers
  5. Patients

Payers with whom you have a contract

Your organization has signed a contract with a payer and you have agreed to accept a discounted fee called an allowable, and to abide by their rules.  What is the information you need to collect?

  • A copy of the contract
  • A detailed fee schedule, or a basis for the fees, such as “150% of the 2008 Medicare fee schedule.”
  • Any information about the fees being increased periodically based on economic indicators, or rules (notification, timeline, appeals) on how the payer can change the fee schedule.
  • The process and a contact name for appealing incorrect payments.
  • Information on what can be collected at time of service.  Hopefully your contract does not have any language that prohibits collections at time of service, but you must know what the contract states.
  • Process for checking on patients’ eligibility and benefits: representative by phone, interactive voice response (IVR), website or third-party access.

The contract allowables should be loaded into your practice management system so you can calculate the patient’s responsibility at check-out and you can identify incorrect payments at the time of check-posting.  If your practice management system does not have this feature, you will need a cheat sheet for each contracted payer, showing the most common services, the allowables, and the percentages of the allowables for fast calculation of the patient’s portion at check-out.  The same or a modified cheat sheet will work for the check posters so they can verify the payer is reimbursing according to the contract.

Your cheat sheet should look like this:

Plan A
Service Allowable 20% 40% 50% 60% 80% 90%
99213 75.00 15.00 30.00 37.50 45.00 60.00 67.50

The check-out staff will write the patient’s portion on the encounter form (you may call it a charge ticket, fee ticket, rounding slip, or superbill), add the numbers together and give the patient the total.  Alternately, the computer system will total the patient’s portion based on the payer and the plan for the check-out person.

The balance of the information collected will be used to develop a payer matrix that might look something like this:

 

Payer

 

Employers

Collectible 

At TOS

Elig/Benefit 

Verification

Plan Year Contract 

Dates

How to Notify
XYZ WalMart Deductible & Co-Pay website July-June – Exp Dec 2013, must neg. <Aug1, 2012 Call June Jones at 1-800-555-1212
State Employees Deductible & Co-Ins. Website 

 

Jan –Dec 

 

same same

Another excellent way your organization can catalog payer and plan information is electronically in a document management system such as FileConnect, which I use and recommend.

FileConnect is an electronic filing cabinet with many great attributes, one of which is particularly helpful in this scenario. Every time there is a change in a payer contract, or a new plan is added by a local employer, you can update the staff’s spreadsheet tools simultaneously and the newest version will be instantly available on their desktops.

Payers with whom you do not have a contract

Your primary payers in your community or region will most likely offer you a contract.  Payers with less covered lives will not find it worthwhile to contract with healthcare providers, so you must decide how you will work with these companies and with these patients.

You are not required to file claims with payers that you are not contracted with.  Most healthcare providers do file claims with non-contracted payers to ensure patient satisfaction.   Where providers may differ, however, is whether or not they will ask patients with non-contracted payers to pay in full at time of service, and assign the payment to the patient OR ask the patient to pay only the expected patient portion at time of service and assign the payment to the provider.  This decision will be made as part of your Financial Policy (covered in Part 2.)

State and Federal government payers (Medicare, Medicaid, TriCare)

There has been a tremendous discussion in healthcare for the last several years about physicians limiting how many Medicare patients they will see, or even discontinuing to see Medicare patients completely.  The rate at which Medicare pays is not enough to support the provision of services in most ambulatory practices, so some physicians do not participate in the Medicare program but still see Medicare patients (the fee they can charge Medicare patients is federally controlled and is called the “limiting” charge) or have opted out of the Medicare program altogether and will see Medicare patients on a cash basis only.

If a practice does accept Medicare patients, whether participating or not, there are set amounts to be collected from patients with Medicare – deductibles and co-insurance, as well as services that are never covered by Medicare.

Make sure that current Medicare allowables for your locality are loaded into your computer to do the math for you.  You can use the same type of spreadsheet shown above to develop a cheat sheet of 80% of the Medicare allowable.

Service Medicare Allowable 20% Owed by Patient
99213 66.74 13.34

What is confusing to most providers is what an insurance that is secondary to Medicare will pay.  Many providers do not collect any fees at time of service for Medicare patients with a secondary payer, as there may or may not be any balance left that is the patient’s responsibility.

Medicaid pays less than Medicare does, and based on the very low fee schedule, many ambulatory providers will not accept Medicaid patients.  Many Medicaid patients must depend on health departments, hospital clinics, federally-qualified health centers (FQHCs) and rural health clinics (RHCs) for care.

Tricare may be accepted on a case-by-case basis.  A healthcare provider does not need to accept the health insurance for retired military across the board, and may decide individually whether to accept a Tricare patient or not.

Medicare Advantage

Medicare Advantage Plans, formerly called Medicare Choice + and now called Medicare replacement plans or Medicare Part C, are plans offered by non-government payers which replicate Medicare benefits for seniors, sometimes offering enhanced benefits as part of the package.  There are several types of Medicare Advantage Plans, but the main types are local or regional HMO plans which require you to sign a contract, and the Private Fee For Service Plans (PFFS), for which no contract is required.  If you see a Medicare Advantage PFFS patient, you have in essence agreed to accept their terms.  The one thing you should ask prior to accepting a Medicare Advantage PFFS plan/patient, is what percentage and what year of Medicare rates are they paying.

Patients

So we finally arrive at the payer with whom most healthcare entities have the most difficulties – the patient.  Why is it so difficult to collect from patients?

First, as we have seen throughout this article, insurance can be very confusing.  Without a plan for organizing and sharing information, a healthcare provider may have significant difficulty assessing the patient’s payment responsibility.

Second, it has been a cultural norm until recently that patients do not have to pay at time of service, with the exception of their co-pay, and will be billed for their portion after insurance pays.

We know now that we must collect the correct payment at time of service.  This is the only way to reduce the administrative expense of billing the patient for the balance and/or refunding the patient if too much has been collected.  This is also the only way to maintain adequate cash flow as much of what used to be paid to the providers from insurance companies has now become the responsibility of the patient.  Higher co-pays, higher co-insurance and most of all, extremely high deductible plans have left patients owing much more out-of-pocket and largely being unprepared to pay it at time of service.

In the next part of this series, Collections Basics Part 2: Develop Your Financial Policy, we will discuss setting up your financial policy so both patients and your staff can understand it, and how to collect from patients according to your policy.




91 Physician Organizations Sign Statement Naming Congress in “Mismanagement of the Medicare Program” and Imploring it to “Honor its Obligation”

UPDATE: On June 25, 2010, President Obama signed into law the “Preservation of Access to Care for Medicare Beneficiaries and Pension Relief Act of 2010 (H.R. 3962)” which includes a delay in the 21+% Medicare fee cut until November 30, 2010. CMS will have the MACs start processing new claims with dates of service of June 1, 2010 and later at the 2009 fee schedule plus a 2.2% increase.  The MACs will also have to reprocess the claims already paid for dates of service June 1, 2010 and later that were processed with 2010 fee schedule and that big fat cut.

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Note: On June 16, 2010 the Senate failed to pass a proposal that would increase the Medicare reimbursement for physicians by 2.2% for the balance of calendar year 2010 and by 1% for calendar year 2011.   Senate leadership is now working on a plan to extend the freeze until year-end.  The following statement was released by the state medical societies of all 50 states and the District of Columbia, as well as 41 specialty physician organizations.

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Statement of the State and Specialty Medical Societies on the Medicare Physician Payment Crisis

Failure by Congress to fulfill its responsibilities is undermining patient care in America.  Three times this year, Congress has missed a deadline for dealing with Medicare’s sustainable growth rate (SGR) formula, raising the specter of a 21 percent payment cut for physician services.  The disruption and uncertainty for patients and physicians has made Medicare an unreliable program.

If Congress does not act this week, Medicare physician payments will be cut 21 percent.  These cuts will also extend to the TRICARE program which serves military families, as well as some Medicaid programs, workers compensation programs and private insurance plans.  The ripple effect of the 21 percent Medicare cut will be devastating to physician practices.

Congressional mismanagement of the Medicare program will force more physicians to stop accepting new Medicare and TRICARE patients; lay-off staff; and defer investment in new medical equipment, health information technology, and other innovations that improve patient care.

Patients and physicians should not become collateral damage in a Congressional stalemate on budgetary matters.  We expect our elected officials to resolve the budget issues without punishing physicians, seniors and military families.

Past actions by Congress created the current budgetary challenge.  Further, since 2003, Congress has compounded this problem by employing budget gimmicks that defer immediate cuts by stipulating deeper cuts in future years.

Democrats and Republicans agree that the flawed Medicare formula that is responsible for pending cuts should be repealed.  The annual SGR battle diverts attention from more productive delivery and payment reform initiatives.  We must move to a payment system that fosters innovation and rewards physician efforts to lower the rate of growth in Medicare spending across the existing silos in the program.

Medicare must adequately cover the cost of care and close an existing 20 percent gap as measured by the government’s own conservative measure of annual increases in medical practice costs.

We must also allow seniors who wish to contract directly for their care with a physician of their choice to do so without foregoing the Medicare benefits for which they paid during their working years.  Medicare benefits were earned by and belong to Medicare beneficiaries.  They must be allowed to assign these benefits as they see fit.

Playing brinksmanship with the health care of seniors and military families is inexcusable and represents a dereliction of duty.  We urge Congress to honor its obligation to provide access to quality care to America’s seniors and military families by taking action to fix the Medicare physician formula problem now!

American Academy of Dermatology
American Academy of Facial Plastic & Reconstructive Surgery
American Academy of Family Physicians
American Academy of Hospice & Palliative Medicine
American Academy of Neurology
American Academy of Ophthalmology
American Academy of Pain Medicine
American Academy of Pediatrics
American Academy of Physical Medicine & Rehabilitation
American Academy of Sleep Medicine
American Association for Hand Surgery
American Association of Clinical Endocrinologist
American Association of Clinical Urologist
American Association of Neurological Surgeons
American Association of Neuromuscular & Electrodiagnostic Medicine
American Association of Public Health Physicians
American College of Cardiology
American College of Emergency Physicians
America College of Gastroenterology
American College of Obstetricians & Gynecologists
American College of Occupational & Environmental Medicine
American College of Rheumatology
American College of Surgeons
American Gastroenterological Association
American Institute of Ultrasound in Medicine
American Medical Association
American Orthopaedic Foot & Ankle Society
American Society for Clinical Pathology
American Society for Reproductive Medicine
American Society for Surgery of the Hand
American Society of Addiction Medicine
American Society of Cataract & Refractive Surgery
American Society of Cytopathology
American Society of Ophthalmic Plastic & Reconstructive Surgery
College of American Pathologists
Congress of Neurological Surgeons
Heart Rhythm Society
North American Spine Society
Renal Physicians Association
Society of American Gastrointestinal Endoscopic Surgeons
Society of Nuclear Medicine

Medical Association of the State of Alabama
Alaska State Medical Association
Arizona Medical Association
Arkansas Medical Society
California Medical Association
Colorado Medical Society
Connecticut State Medical Society
Medical Society of Delaware
Medical Society of the District of Columbia
Florida Medical Association, Inc.
Medical Association of Georgia
Hawaii Medical Association
Idaho Medical Association
Illinois State Medical Society
Indiana State Medical Association
Iowa Medical Society
Kansas Medical Society
Kentucky Medical Association
Louisiana State Medical Society
Maine Medical Association
MedChi, The Maryland State Medical Society
Massachusetts Medical Society
Michigan State Medical Society
Minnesota Medical Association
Mississippi State Medical Association
Missouri State Medical Association
Montana Medical Association
Nebraska Medical Association
Nevada State Medical Association
New Hampshire Medical Society
Medical Society of New Jersey
New Mexico Medical Society
Medical Society of the State of New York
North Carolina Medical Society
North Dakota Medical Association
Ohio State Medical Association
Oklahoma State Medical Association
Oregon Medical Association
Pennsylvania Medical Society
Rhode Island Medical Society
South Carolina Medical Association
South Dakota State Medical Association
Tennessee Medical Association
Texas Medical Association
Utah Medical Association
Vermont  Medical Society
Medical Society of Virginia
Washington State Medical Association
West Virginia State Medical Association
Wisconsin Medical Society
Wyoming Medical Society

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