Licensing Boards with a majority of members actively practicing in the regulated profession are vulnerable under the antitrust laws.

North Carolina State Board of Dental Examiners v. Federal Trade Commission, U.S. Supreme Court No. 13-534 (decided February 25, 2015).

Iowa health professional licensing boards, by law, are comprised of a majority of actively practicing licensed members of their professions appointed by the governor and approved by the Senate. For instance, the Iowa Board of Medicine (IBM) has 10 members, seven (7) of whom must be licensed physicians active in medical practice in this state. The Iowa General Assembly has determined that the expertise of licensed and practicing professionals is critical to informed board decision-making in setting parameters of practice, establishing qualifications for licensure, and determining appropriate grounds for licensee discipline.

Professional licensing boards in Iowa also are agencies of state government. They must exercise their authority and meet their responsibilities consistent with processes and procedures and powers and duties set forth in laws passed by the General Assembly. The legislature grants authority to licensing boards to assure that only appropriately educated, trained and qualified individuals practice in the profession. Periodically, licensing boards like the IBM issue cease and desist orders against persons for unlawfully practicing in the profession absent medical licensure.

A recent case decided by the U.S. Supreme Court examined enforcement actions of a state licensing board for the unlicensed practice of the profession under the microscope of the federal antitrust laws. In North Carolina State Board of Dental Examiners v. FTC, the Court examined the extent to which professional licensing boards enjoy “state action” immunity from federal antitrust liability. The case centered on alleged anticompetitive behaviors of the North Carolina Dental Board against non-licensed providers of teeth whitening services and products.

Dentists had been providing teeth whitening services in North Carolina since the 1990s. Starting in 2003, however, non-licensees began offering these services at prices substantially lower than those charged by dentists. The Dental Board received complaints from its licensees, most of which focused on the lower charges and not on harmful impacts to the public. The Board investigated and then, without adopting a rule, took aggressive action through cease and desist letters issued to non-dentist teeth whitening service providers and product manufactures; letters to shopping malls advising them that kiosk providers of teeth whitening services were in violation of the practice of dentistry; and warnings it convinced the cosmetology licensing board to send its licensees against teeth whitening practice. As a result of the Board’s actions, non-dentists ceased offering teeth whitening services in North Carolina.

The Dental Board is an agency of its state government with eight members, six of whom are actively practicing licensed dentists; one is a licensed dental hygienist; and one is a public member. Members of the dental profession elect the dentist members; dental hygienists elect the dental hygienist member; and the governor appoints the pubic member. Eight of the ten dentists who were members of the Board during the time of this dispute earned substantial fees from teeth whitening services.

In 2010, the Federal Trade Commission (FTC), a federal antitrust enforcement agency, filed an administrative complaint against the Dental Board. After motions and hearings, the FTC concluded that the Dental Board’s enforcement actions against teeth whitening competitors had unreasonably restrained trade in violation of the antitrust laws. The FTC rejected the Board’s public safety justification, saying that a wealth of evidence suggested that tooth whitening by non-dentists is a safe cosmetic procedure. The FTC also rejected the Board’s claims that as an agency of the state, it had state action immunity from federal antitrust liability.

The Board challenged the FTC’s decision in federal court. The 4th Circuit Court of Appeals, however, found in favor of the FTC. The Board then took its case to the U.S. Supreme Court.

A significant fact permeating the Supreme Court’s analysis of state action antitrust immunity for this licensing board was its composition. A majority of member decision makers from among the regulated dental profession created the potential for concerted action against competitors. It seemed to make no difference to the Court that the Dental Board members were elected by other dentists rather than appointed by the governor with approval authority from the legislature, as is the case in Iowa.

The Court explained two ways in which state action immunity from federal antitrust enforcement may attach. The first is immunity afforded to anticompetitive conduct by states acting in a sovereign capacity. In its 1943 case, Parker v. Brown, the Supreme Court explained that state action immunity from antitrust liability is accorded to states without need for further proof so long as the challenged activity is an exercise of the State’s “sovereign” power, such as legislation passed by a state general assembly or decisions entered by a state supreme court. “[T]he Sherman Act confers immunity on the State’s own anticompetitive polices out of respect for federalism.”

The Dental Board argued that as an agency of state government, it could claim Parker state action immunity without need for further proof. The Supreme Court disagreed. “State agencies are not simply by their governmental character sovereign actors for purposes of state-action immunity.” State action immunity for state agencies, the Court said, requires more to ensure that the State sovereign accepts political accountability for the agency’s challenged anticompetitive behavior.

The Court then turned to the second path for claiming state action immunity from federal antitrust liability. A non-sovereign entity, to claim state action protection, must meet a two-part test established by the Supreme Court in its 1980 case, California Retail Liquor Dealers Assn. v. Midcal Aluminum Assoc. The Midcal test requires a non-sovereign actor to prove that 1) the challenged restraint is a clearly articulated and affirmatively expressed state policy which 2) is actively supervised by the State. Successfully meeting this two-pronged test solidifies that the State, in its sovereign capacity, has accepted political accountability for the anticompetitive conduct, thereby justifying state action immunity from antitrust liability for the non-sovereign’s challenged activity.

The Court moved from speaking generally about agencies of state government to focus particularly on those non-sovereign government actors, like the Dental Board, comprised of a majority of active market participants from within the profession. “Limits on state-action immunity are most essential when the State seeks to delegate its regulatory power to active market participants, for established ethical standards may blend with private anticompetitive motives in a way difficult even for market participants to discern.” To claim state action immunity, then, the Dental Board was required to meet the two-pronged Midcal test, thereby showing that it did not act on its own but, rather, was clearly and affirmatively carrying out state policy and, in doing so, was actively supervised by the State.

The FTC did not make an issue of whether the Board’s cease and desist actions against non-licensee teeth whitening providers met the first Midcal test so the Court moved to the second, “active state supervision,” prong. The Dental Board, however, never argued that its cease and desist actions were actively supervised by the State; instead, it unsuccessfully relied on Parker immunity. As such, the Court had no facts to analyze on this point. Even so, it noted that the North Carolina legislature had not defined teeth whitening as a practice requiring a dental license nor had the Board used “any of the powers at its disposal that would invoke oversight by a politically accountable official.”

The Court’s final holding or ruling was narrowly focused: “The Court holds today that a state board on which a controlling number of decisionmakers are active market participants in the occupation the board regulates must satisfy Midcal’s active supervision requirements in order to invoke state-action antitrust immunity.” Whether the test is met depends upon the circumstances of each case. While day-to-day involvement of the State in the agency’s challenged action is not required, “active supervision” calls for State review of the substance of the board’s anticompetitive decision, along with the power to veto or modify that decision.

In addressing the uncomfortable facts in this case, the Court issued a ruling of significant implication for all professional licensing boards. Whether this decision will deter qualified professionals from serving on state licensing boards for fear of antitrust liability remains to be seen. More importantly, however, may be the extent to which licensing boards with majority membership and essential expertise from active participants in the regulated profession will be chilled by this decision in making tough enforcement judgment calls on non-licensee practice of the profession.

The Court gave some counsel. If a licensing board’s enforcement action is supported by specific state law directing what otherwise might be viewed as anticompetitive activity, the board likely meets the Midcal test. Yet, it is not realistic to expect a state legislature to define with specificity all acts that fall within the scope of a regulated profession; indeed, that is one of the functions delegated by the Iowa General Assembly to its licensing boards. Rulemaking, the Court seems to hint, also may provide effective support for licensing board immunity from antitrust challenge under the Midcal test. In Iowa, a licensing board’s proposed rule is subject to review by the Iowa Administrative Rules Review Committee, composed entirely of lawmakers from both the House and the Senate and with authority to delay a rule and refer it to the General Assembly for its review and action.

The behavioral checks imposed by the Supreme Court make sense under the bothersome facts of this case. A strident reading of Midcal by regulators and courts in future licensing board cases, however, risks shifting the pendulum of free market health care practice too far away from the critical role professional licensure plays in assuring quality, competent and safe medical care. In that regard, the consumer the antitrust laws seek to protect is not well served.

The Senate passed H.R. 2, the Medicare Access and CHIP Reauthorization Act (MACRA), on a vote of 92-8. Iowa’s Senators Joni Ernst and Charles Grassley voted in favor of the bill. The Senate considered amendments to the bill as passed by the House, but none were adopted. The H.R. 2 now goes to the President who has said he will sign the bill.

The bill immediately repeals the SGR and, of interest to Iowa physicians, extends the 1.0 Work GPCI floor through 2017. Physicians will receive an annual update of 0.5% for the next five (5) years, with the first update slated for July 1, 2015, and annual 0.5% updates effective on January 1 in each year 2016-2109. A fuller explanation of the bill is available from an earlier posting: click here to read.

CMS had placed a 10-day hold on submitted claims for services provided on April 1 and after which otherwise would have been paid at a rate reflecting the 21% SGR cut and loss of the 1.0 Work GPCI floor, both of which were effective as of April 1. Those claims, however, now can be paid at the same rate as in effect on March 31. Any claims that may have been paid at a rate reflecting the 21% SGR cut will be reprocessed by CMS and do not require further action by providers who submitted the claims.

BIPARTISAN HOUSE VOTE TO REPEAL THE SGR – 0.5% PHYSICIAN INCREASE EACH YEAR THROUGH 2019 — EXTENSION OF THE 1.0 WORK GPCI FLOOR THROUGH 2017 – NO ICD-10 DELAY

Senate to Vote When It Returns – CMS Issues Payment Advisory

The House of Representatives took what the House of Medicine rightfully can call a historic vote late in the evening of March 26 to really, truly repeal the SGR and to provide the nation’s physicians with minimal but predictable 0.5% Medicare physician payment increases beginning July 1, 2015, and continuing for each year through calendar year 2019.

H.R. 2, the Medicare Access and CHIP Reauthorization Act (MACRA), passed the House on a strong bipartisan vote of 392-37. Iowa’s congressional delegation split. Iowa Representatives David Loebsack and David Young voted in favor of the bill; Representatives Rod Blum and Steve King voted against it.

H.R.2 moved to the Senate on the heels of the congressional April recess. The Senate took no action but Senate leadership indicated the likelihood of passage of SGR repeal upon the Senate’s April 13 return. It is not clear whether the Senate will support all other provisions now in H.R. 2 or seek to amend the bill. The President has indicated his support for permanent SGR repeal.

The 21% SGR payment reduction will go into effect on April 1. CMS issued a payment advisory on March 24 in light of the looming April 1 date, clarifying that all claims for services rendered on or before March 31 would not be affected if the SGR went into effect on April 1; those claims would be paid under the physician fee schedule now in effect. Under current payment processes, CMS would not pay claims for services rendered on or after April 1 until 14 calendar days after electronic receipt or 29 calendar days after paper receipt of such claims. In light of the Senate’s decision to not take a vote on H.R. 2 prior to recess, CMS has advised Medicare carriers to hold claims for services provided on or after April 1 for 10 days to avoid any need to make payment adjustments in this interim time period. The Iowa Medical Society’s website (www.iowamedical.org) provides billing guidance to its physician members for services provided on April 1 and onward until repeal legislation is finally approved.

H.R. 2, the MACRA bill, is a “bill within a bill,” incorporating Medicare physician payment reform provisions set forth in H.R. 1470, a bipartisan, bicameral committee bill, and including provisions of its own addressing Medicare extenders and payment offsets. Key provisions of H.R. 1470/H.R. 2 include the following:

  • Immediate and permanent SGR repeal.
  • A positive 0.5% annual physician Medicare payment update, with the first update to occur on July 1, 2015, and then in each of calendar years 2016-2019. MedPAC must submit reports to Congress in 2019 evaluating the impact of the 2015-19 updates on beneficiary access and quality care and making recommendations on further updates. Medicare rates in effect in 2019 would be maintained through 2025, shifting focus to payment increases through incentives for achieving identified quality program goals.
  • Consolidation of three current Medicare quality reporting programs – the Physician Quality Reporting System (PQRS), the Value-Based Modifier (VBM), and Meaningful Use for EHRs (EHR MU) – into a simplified, merit-based incentive payment system (MIPS), effective in calendar year 2019. Eligible professionals, including physicians and several other health professionals, will be measured on four areas of performance: quality; resource use; EHR meaningful use; and clinical practice improvement. Public reporting of results is addressed.
  • A 5% incentive payment to those physicians who participate in alternative payment models and meet certain performance thresholds.
  • The 1.0 Work GPCI floor is extended through December 2017, a provision of benefit to Medicare Part B payment localities like Iowa with labor costs set by CMS at lower than the national average.
  • The therapy cap exceptions process is extended through December 2017, allowing patients who exceed Medicare’s annual per-patient therapy expenditure limit to ask for an exception based on medical necessity.
  • Funding for Community Health Centers (CHC) and National Health Service Corps Fund (NHSC) and Teaching Health Centers is extended through fiscal year 2017.
  • The Children’s Health Insurance Program (CHIP) program and funding for it is extended through fiscal year 2017. While CHIP has been authorized through 2019, current funding for CHIP is slated to end at the close of the 2015 fiscal year. H.R. 2 also extends funding support for several CHIP-related programs.
  • Guidelines or standards developed and/or implemented under any Federal health care provision, including Medicare, cannot be construed on their own as standards or duties of care owed by a health care professional to a patient in any medical malpractice action or claim. This provision is not meant to preempt any state or common law governing medical malpractice actions or claims.
  • Electronic health records must be interoperable by 2018.
  • The Government Accounting Office (GAO) shall issue a report on barriers to expanded use of telemedicine and remote patient monitoring.
  • Funding offsets to meet the $140 billion estimated costs of this legislation require, among other things, that effective with new plans sold in 2020, beneficiaries new to Medicare must have the same deductible under their private Medigap insurance policies as they have under Medicare Part B; currently that amount is $147 per year. In addition, beginning in 2018, bump-up Part B and Part D premium amounts that Medicare beneficiaries with higher annual incomes now must pay would be increased. Too, a scheduled one-time 3.2% hospital payment increase in fiscal year 2018 would instead by phased-in at 0.5% increases each year over 6 years beginning in fiscal year 2018.

H.R. 2 does not extend the October 1, 2015 effective date for implementation of ICD-10. The ICD-10 Coalition, with membership including the American Hospital Association (AHA), American’s Health Insurance Plans (AHIP), the American Health Information Management Association (AHIMA), and the BlueCross and Blue Shield Association (BCBSA) – hailed the lack of extension, claiming that ICD-10 coding will assure the availability of data needed to accurately assess quality and value.

Further details about H.R. 2 and incorporated provisions of H.R. 1470 can be found in summaries prepared by staff of the House Committees on Energy and Commerce and Ways and Means.

http://energycommerce.house.gov/sites/republicans.energycommerce.house.gov/files/114/Analysis/20150324-HR2-SectionbySection.pdf

The text of the bill is available at http://www.gpo.gov/fdsys/pkg/BILLS-114hr2ih/pdf/BILLS-114hr2ih.pdf

The Iowa Board of Medicine (IBM), at its April 3, 2015 meeting, approved a final rule setting forth disciplinary standards applicable to physicians who use telemedicine in diagnosing and treating patients located in Iowa.

That rule also includes standards and prohibitions that all physician licensees must comply with in providing patient care whether by telemedicine or not. The adopted Rule will be published in the April 29 Iowa Administrative Bulletin and then reviewed by the legislature’s Administrative Rules Review Committee at a time yet to be set. The rule is slated to go into effect on June 3, 2015.

The IBM, in the final rule, made several changes to its proposed telemedicine practice rule.  Those changes reflect the IBM’s responses to public comments on its originally noticed proposed rule and its next draft.  Changes, for the most part, bring clarity to the rules and their expectations.

The final rule primarily addresses requirements for physicians who use telemedicine. Those requirements are substantial. Failure to satisfy any of these requirements subject the physician using telemedicine to IBM discipline. Failure to comply with the rules also might be claimed by plaintiffs alleging medical negligence in the delivery of telemedical care.

It is critical that physicians using telemedicine understand the IBM’s substantial expectations of them. The fact that a hospital or other telemedicine site ordinarily is operationally responsible for certain of the IBM’s proposed requirements (i.e., equipment compliance with safety codes, HIPAA privacy and security compliance), standing alone, does not relieve the telemedicine physician from assuring compliance with such requirements as set forth in the IBM’s telemedicine rule. The final rule made changes to reflect this concern, yet physicians continue to face discipline for non-compliance on each of the final rule requirements.

The following is a summary of the IBM’s final rule. Click here to read the final rule.

The IBM defines telemedicine by clarifying what telemedicine means and includes as well what it does not include for purposes of this rule.

  • Telemedicine means the practice of medicine using electronic audio-visual communications and information technologies or other means, including interactive audio with asynchronous store and forward transmission, between a physician licensee in one location and a patient in another location with our without an intervening health care provider. Telemedicine includes store-and-forward technologies, remote monitoring, and real-time interactive services, including tele-radiology and tele-pathology.
  • Telemedicine does not include the provision of medical services only through an audio-only telephone, email messages, facsimile transmissions, mail service, or any combination thereof.

For physicians using telemedicine, the rule makes it clear that –

  • Physicians using telemedicine will be held to the same standards of care and professional ethics as physicians using traditional in-person encounters with patients.
  • Physicians using telemedicine must do so within the physician’s scope of practice and the physician’s education, training, experience, ability, and licensure/certification.
  • Physicians using telemedicine in the diagnosis and treatment of a person located in Iowa must have an active Iowa medical license consistent with federal and state law (unless an exception to licensure already provided in the IBM’s licensure rules applies) regardless of the in-state or out-of-state site from which the physician provides those telemedicine services.
  • Physicians using telemedicine must utilize evidence-based telemedicine practice guidelines and standards of practice to the degree they are available.

Physicians using telemedicine must establish a valid physician-patient relationship with the person who receives telemedicine services. For purposes of this rule —

  • The physician-patient relationship begins when 1) a person with a health-related matter seeks assistance from a physician; 2) the physician agrees to undertake diagnosis and treatment of that person; and 3) the person agrees to be treated by the physician even if there has not yet been an in-person encounter between the physician and that person.
  • A valid physician-patient relationship may be established in one of three ways: 1) an in-person encounter with an in-person medical interview and physical exam where standards of care would require an in-person encounter; 2) consultation with another physician or other health care provider who has an established relationship with the patient and who agrees to participate in or supervise the patient’s care; or 3) a telemedicine encounter if standards of care do not require an in-person encounter and consistent with evidence-based telemedicine practice guidelines.
  • An “in-person encounter” is defined to mean the physician and the patient are in the physical presence of each other and in the same physical location during the physician-patient encounter.

Further, physicians using telemedicine must –

  • Ensure that systems are in place to ensure that non-physician health care providers whom the physician relies upon or delegates to in the provision of a telemedical service are qualified and trained to provide such service within the non-physician’s scope of licensed practice; further, the physician must be available either in-person or electronically to consult with non-physician health care providers, particularly in the event of an injury or an emergency in the course of telemedicine service delivery.
  • Verify the identity of the patient receiving the telemedicine services and ensure the patient can verify the identity, licensure status, certification and credentials of all health care providers involved in providing the telemedical service prior to the provision of that care.
  • Ensure the patient is interviewed to collect the patient’s relevant medical history, receives a physical examination when medically necessary, sufficient for diagnosis and treatment prior to providing treatment via telemedicine, including issuing a prescription electronically or otherwise. The medical interview and physical examination need not be in-person if the telemedical encounter is sufficient to establish an informed diagnosis as though the medical interview and physical exam had been performed in-person.  A static Internet questionnaire alone cannot suffice for the medical interview and physical exam prior to treatment, including issuing a prescription either electronically or otherwise.  “Static” is defined in the rule.
  • Ensure that patient informed consent is provided, including consent for the use of telemedicine, and that such consent is timely documented in the patient’s medical record.
  • Identify and provide the patient’s medical record to the patient’s treating physician and/or medical home, when available and medically appropriate, where in-person medical services can be delivered in coordination with the telemedicine services the patient receives.
  • Have access to or adequate knowledge of local medical resources for appropriate follow-up care.
  • Refer a patient receiving telemedical services to an acute care facility or emergency department in the event of an emergency or for the safety of the patient.
  • Ensure complete, accurate, and timely medical records, as appropriate, including notation of when telemedicine is used and other matters set forth in the rule, and, further, ensure that the patient and other health care providers have timely access to such information and that the patient, upon request, receives a timely summary of each telemedical encounter.
  • Ensure that all telemedicine encounters comply with HIPAA privacy and security measures.  Written protocol must be established and periodically reviewed, addressing measures specified by the IBM in its proposed rule to assure the confidentiality and integrity of patient-identifiable information.
  • Equipment and technology used in the telemedical encounter must comply with safety laws and codes and are of sufficient quality/size/resolution/clarity to safely and effectively provide the telemedicine service.
  • Ensure that information is disclosed to the patient re: the type of services to be provided via telemedicine; contact information, identity and credentials of all health care providers involved in the provision of the telemedical service; limitations, if any, on drugs and services as provided via telemedicine; fees/costs sharing if different than in an in-person encounter; financial interests, if any; limitations on the use of the telemedicine technology; and other information as detailed in the proposed rule.
  • Ensure the patient’s ability to amend their patient information, to provide feedback on the quality of the telemedical encounter, and to register complaints.

For all physicians, whether in the course of using telemedicine or otherwise, the final rule –

  • Sets forth several circumstances under which standards of medical care may not require a physician licensee to personally examine a patient. Circumstances include where the physician prescribes medications on a short-term basis for a new patient and has scheduled or is in the process of scheduling an appointment to personal examine the patient; call or cross-coverage situations in which a physician licensee is taking call or is covering for the other physician licensee who has an established physician-patient relationship with the patient; situations in which the patient has been examined in person by an advanced registered nurse practitioner or physician assistant or other licensed practitioner with whom the physician licensee has a supervisory or collaborative relationship; and other circumstances set forth in the rule.
  • Prohibits physician licensees from prescribing based solely on an Internet request or an Internet questionnaire. An internet questionnaire is defined to mean a static questionnaire provided to a patient to which the patient responds with a static set of answers, in contrast to an adaptive, interactive and responsive online interview.
  • Prohibits physician licensees from prescribing based solely on a telephonic evaluation for any person absent a valid physician-patient relationship.

See our page dedicated to Telemedicine for all related articles.

.05% PHYSICIAN INCREASE EACH YEAR THROUGH 2019

EXTENSION OF THE 1.0 WORK GPCI FLOOR THROUGH 2017

NO ICD-10 DELAY
Senate to Vote When It Returns – CMS Issues Payment Advisory

The House of Representatives took what the House of Medicine rightfully can call a historic vote late in the evening of March 26 to really, truly repeal the SGR and to provide the nation’s physicians with minimal but predictable 0.5% Medicare physician payment increases beginning July 1, 2015, and continuing for each year through calendar year 2019.

H.R. 2, the Medicare Access and CHIP Reauthorization Act (MACRA), passed the House on a strong bipartisan vote of 392-37. Iowa’s congressional delegation split. Representatives David Loebsack and David Young voted in favor of the bill, Representatives Rod Blum and Steve King voted against it.

H.R.2 moved to the Senate on the heels of the congressional April recess. The Senate took no action but Senate leadership indicated the likelihood of passage of SGR repeal upon the Senate’s April 13 return. It is not clear whether the Senate will support all other provisions now in H.R. 2 or seek to amend the bill. The President has indicated his support for permanent SGR repeal.

The 21% SGR payment reduction will go into effect on April 1. CMS issued a payment advisory on March 24 in light of the looming April 1 date, clarifying that all claims for services rendered on or before March 31 would not be affected if the SGR went into effect on April 1; those claims would be paid under the physician fee schedule now in effect. Under current payment processes, CMS would not pay claims for services rendered on or after April 1 until 14 calendar days after electronic receipt or 29 calendar days after paper receipt of such claims. In light of the Senate’s decision to not take a vote on H.R. 2 prior to recess, CMS has advised Medicare carriers to hold claims for services provided on or after April 1 for 10 days to avoid any need to make payment adjustments in this interim time period. The Iowa Medical Society’s website (www.iowamedical.org) provides billing guidance to its physician members for services provided on April 1 and onward until repeal legislation is finally approved.

H.R. 2, the MACRA bill, is a “bill within a bill,” incorporating Medicare physician payment reform provisions set forth in H.R. 1470, a bipartisan, bicameral committee bill, and including provisions of its own addressing Medicare extenders and payment offsets. Key provisions of H.R. 1470/H.R. 2 include the following –

• Immediate and permanent SGR repeal.

• A positive 0.5% annual physician Medicare payment update, with the first update to occur on July 1, 2015, and then in each of calendar years 2016-2019. MedPAC must submit reports to Congress in 2019 evaluating the impact of the 2015-19 updates on beneficiary access and quality care and making recommendations on further updates. Medicare rates in effect in 2019 would be maintained through 2025, shifting focus to payment increases through incentives for achieving identified quality program goals.

• Consolidation of three current Medicare quality reporting programs – the Physician Quality Reporting System (PQRS), the Value-Based Modifier (VBM), and Meaningful Use for EHRs (EHR MU) – into a simplified, merit-based incentive payment system (MIPS), effective in calendar year 2019. Eligible professionals, including physicians and several other health professionals, will be measured on four areas of performance: quality; resource use; EHR meaningful use; and clinical practice improvement. Public reporting of results is addressed.

• A 5% incentive payment to those physicians who participate in alternative payment models and meet certain performance thresholds.

• The 1.0 Work GPCI floor is extended through December 2017, a provision of benefit to Medicare Part B payment localities like Iowa with labor costs set by CMS at lower than the national average.

• The therapy cap exceptions process is extended through December 2017, allowing patients who exceed Medicare’s annual per-patient therapy expenditure limit to ask for an exception based on medical necessity.

• Funding for Community Health Centers (CHC) and National Health Service Corps Fund (NHSC) and Teaching Health Centers is extended through fiscal year 2017.

• The Children’s Health Insurance Program (CHIP) program and funding for it is extended through fiscal year 2017. While CHIP has been authorized through 2019, current funding for CHIP is slated to end at the close of the 2015 fiscal year. H.R. 2 also extends funding support for several CHIP-related programs.

• Guidelines or standards developed and/or implemented under any Federal health care provision, including Medicare, cannot be construed on their own as standards or duties of care owed by a health care professional to a patient in any medical malpractice action or claim. This provision is not meant to preempt any state or common law governing medical malpractice actions or claims.

• Electronic health records must be interoperable by 2018.

• The Government Accounting Office (GAO) shall issue a report on barriers to expanded use of telemedicine and remote patient monitoring.

• Funding offsets to meet the $140 billion estimated costs of this legislation require, among other things, that effective with new plans sold in 2020, beneficiaries new to Medicare must have the same deductible under their private Medigap insurance policies as they have under Medicare Part B; currently that amount is $147 per year. In addition, beginning in 2018, bump-up Part B and Part D premium amounts that Medicare beneficiaries with higher annual incomes now must pay would be increased. Too, a scheduled one-time 3.2% hospital payment increase in fiscal year 2018 would instead be phased in over 6 years beginning in fiscal year 2018.

H.R. 2 does not extend the October 1, 2015 effective date for implementation of ICD-10. The ICD-10 Coalition, with membership including the American Hospital Association (AHA), American’s Health Insurance Plans (AHIP), the American Health Information Management Association (AHIMA), and the BlueCross and Blue Shield Association (BCBSA) – hailed the lack of extension, claiming that ICD-10 coding will assure the availability of data needed to accurately assess quality and value.

Further details about H.R. 2 and incorporated provisions of H.R. 1470 can be found in summaries prepared by staff of the House Committees on Energy and Commerce and Ways and Means.

http://energycommerce.house.gov/sites/republicans.energycommerce.house.gov/files/114/Analysis/20150324-HR2-SectionbySection.pdf

The text of the bill is available at http://www.gpo.gov/fdsys/pkg/BILLS-114hr2ih/pdf/BILLS-114hr2ih.pdf.

MONOPSONY AS A VIABLE THEORY, BUT REQUIRING THE RIGHT FACTS

Mueller v. Wellmark, Inc., Iowa Supreme Court No. 13-1872 (filed February 27, 2015)

Physicians long have been in tough negotiation positions with large, often dominant commercial health insurers. In its 13th edition report, “Competition in Health Insurance – A Comprehensive Study of U.S. Markets,” the AMA found, based on 2012 data, that 72% of the nation’s metropolitan commercial health insurance markets are highly concentrated as measured against federal antitrust guidelines. Concentration raises a red flag on the ability of a market to compete.  In 41% of those metropolitan markets, a single commercial health insurer had at least a 50% market share. Seventeen states, including Iowa, had a single health insurer with a statewide commercial market share of 50% or more. Such marketplace dynamics sometimes lead the nation’s physicians to conclude they have little choice but to accept what commercial insurers offer to them.

Federal and state antitrust laws are designed to protect consumers from certain harmful behaviors of market players. A decision entered by the Iowa Supreme Court at the end of February of this year examined whether Wellmark BlueCard® and Wellmark third party administrator agreements amounted to per se price fixing prohibited by the Iowa Competition Law. In this case, the Court was not called upon to discuss Wellmark’s dominance in Iowa’s commercial health insurance market; per se price fixing, if established, violates the antitrust laws regardless of market power. Nonetheless, the Court’s discussion in this case is instructive for physicians and other providers who contract with dominant commercial health insurers like Wellmark.

In Mueller v. Wellmark, plaintiff chiropractors challenged Wellmark Blue Cross and Blue Shield of Iowa (Wellmark) and its HMO, Wellmark Health Plan of Iowa (WHPI), of conspiring to set prices paid to its contracted providers of health care services with out-of-state Blue Cross Blue Shield Association (BCBSA) affiliates through the BlueCard® program and with in-state self-funded employers administered by Wellmark and utilizing Wellmark’s provider networks. BCBSA affiliates, through the BlueCard® program, pay Iowa claims at Wellmark rates even if the affiliate’s reimbursement rates for the same services when provided to the affiliate’s insureds are higher or lower. In the same vein, self-funded employers who enter into an administrative contract with Wellmark that includes use of Wellmark’s provider network to reimburse providers consistent with Wellmark’s fee schedule.

The plaintiffs alleged that these Wellmark agreements amounted to per se price fixing in violation of Iowa’s Competition Law, Iowa Code chapter 553. A per se price fixing agreement is considered so pernicious and predictable in its anticompetitive effect that no marketplace justification can support the pricing arrangement. If a plaintiff successfully establishes per se price fixing, the antitrust laws are violated and damages are due.

The district court, in its examination of this issue, concluded that the facts surrounding these agreements did not support a finding of per se antitrust price fixing. The Iowa Supreme Court agreed. In making its findings and arriving at its conclusions, the Court addressed “monopsony” arguments important to commercial health insurance reimbursement arrangements with contracted providers.

Pricing challenges under the antitrust laws most commonly address the ability of market players to increase prices charged to consumers in the sale of their product; this scenario raises antitrust “monopoly” concerns.  On the other hand, pricing challenges by providers who contract with commercial health insurers relate to the ability of insurers to lower prices for services purchased from providers; this scenario raises antitrust “monopsony” concerns, an arena infrequently addressed by the regulators and the courts.

The Iowa Supreme Court acknowledged that monopsony-like arrangements to lower reimbursement rates to medical providers can pose competitive threats – i.e., resultant “suboptimal output, reduced quality, allocative inefficiencies, and (given the reductions in output) higher prices for consumers in the long run.” Nonetheless, the Court rested its decision in this case on other grounds. Wellmark’s agreements, the Court said, were not per se price fixing as much as they were joint ventures.

The Court explained that self-funded employers have not agreed with Wellmark to fix prices, rather they have purchased a package of claims-administration services which include Wellmark’s negotiated pricing structure. The resultant marketplace impact of these agreements for consumers is self-funded insurance options through employers who, themselves, lack the resources needed to establish a comprehensive provider fee schedule. Similarly, the BlueCard® program allows Wellmark to offer a 50-state product that meets the needs of its insureds without having to maintain a provider network and rate structure in each of these states where it has relatively few claims; BlueCard® agreements are not meant to fix prices, rather they seek to achieve economies of scale to the benefit of consumers.

The per se price fixing issue before the Court was a narrow one. As such, the Court’s conclusion also is narrow. Importantly, the Court went on to explain that an examination of the antitrust implications of these agreements – which, the Court said, are widespread in the health insurance marketplace – calls for a “rule of reason” analysis to assure consideration of both their procompetitive and their anticompetitive effects. The issue before the Court did not allow a rule-of-reason examination nor had facts been presented to support a rule-of-reason analysis.

The underlying impact of these challenged agreements for Iowa providers is a greater number of players in the commercial health insurance market place utilizing a market-dominant commercial insurer’s provider fee schedule, for ill or for good. According to the AMA’s report cited above, Wellmark controls 50% of the Iowa statewide commercial health insurance market, placing our state’s commercial health insurance marketplace as the 17th most concentrated among the 50 statewide and DC markets. In the Iowa PPO market alone, Wellmark has a 79% share. While the Court in this case was not faced with a rule-of-reason issue, the Court noted in closing: “We are not today foreclosing a rule of reason claim against Wellmark if it were shown that the anticompetitive consequences of its practices exceeded their procompetitive benefits.”

The plaintiffs’ per se price fixing claims against Wellmark were not successful here. The Court’s reasoning in rejecting the per se approach was well supported in law and fact. A beneficial outcome of the decision, however, is the Court’s recognition of antitrust monopsony theories and likely elements of a viable monopsony challenge by providers of medical services against market dominant commercial insurers.

Mounting such a challenge requires credible marketplace facts and, ultimately, compelling evidence of negative marketplace impacts upon consumers. Defining geographic and product markets demands expertise, time, and great expense. In the end, practices that may be anticompetitive and harmful to providers may, nonetheless, be procompetitive and beneficial to consumers, the ultimate beneficiaries of the antitrust laws. Antitrust challenges by providers of medical services present no easy task, indeed.

HOSPITAL CHARGING STRUCTURE SURVIVES CHALLENGES IN THE IOWA COURTS

Butts et al. v. Iowa Health System and Central Iowa Hospital Corp., Iowa Court of Appeals, No. 13-1034 (filed March 11, 2015)

Complaints about hospital and medical costs and bills are legion. This week the Iowa Court of Appeals decided a case challenging hospital billing practices and their impact on uninsured, private paying patients. While Iowa Court of Appeals decisions cannot be cited as legal authority unless or until approved for publication by the Iowa Supreme Court, the Appeals Court’s discussion and conclusions in this case may be instructive.

Plaintiffs were uninsured, private paying patients who had received hospital care at Iowa Methodist Medical Center (IMMC) in Des Moines. The plaintiffs filed their action against Iowa Health System (IHS) and the Central Iowa Hospital Corporation; IMMC (as well as Iowa Lutheran Hospital and Methodist West) is operated by the Central Iowa Hospital Corporation which, in turn, is an IHS subsidiary. As private pay or self-pay patients, the plaintiffs were billed directly for the care and medical services they received at IMMC; two of the patients paid their bills in full, one made no payments, and the fourth continued to make regularly scheduled payments.

The crux of the plaintiffs’ complaint was what they called the hospital’s “two-tiered pricing scheme,” resulting in what they alleged were unreasonable rates charged to uninsured patients in comparison to charges for services received by patients who are insured. The plaintiffs, among other things, claimed hospital breach of contract and violations of Iowa’s Consumer Fraud Act.

The plaintiffs had filed a motion asking the district court to convert their case into a class action lawsuit. They defined the class to include all Iowa residents from year 2000 to the present who were billed (or against whom collection efforts were made) for hospital services by or on behalf of any hospital or facility owned, operated, or managed by IHS or Central Iowa Hospital Corporation and who were uninsured at the time they were patients in the hospital. The district court determined that the class was overly broad and denied the plaintiffs’ motion for failure to satisfy legal requirements for class certification. The Iowa Court of Appeals agreed, particularly noting that the reasonableness or unreasonableness of a billing charge received by an uninsured patient must be measured against facts peculiar to each such patient, including the services they received and actual charges imposed upon them. “The management of the proposed class suit would pose unusual difficulties and would be impractical and inefficient, thereby rendering the class vehicle inappropriate.”

Moving on to the plaintiffs’ allegations, the Court of Appeals first looked to the facts. Each hospital in the IHS system utilizes a hospital-specific “Chargemaster” computer file containing rate information for that hospital’s procedures, services, supplies, and medications. Patients are billed or charged based upon the hospital-specific Chargemaster rates, but not all patients pay the same amount for the same service. Many health insurers negotiate amounts they will pay; government programs like Medicare and Medicaid have fee schedules establishing amounts they will pay for each hospital service; and uninsured patients sometimes qualify for and receive financial assistance and other discounts. IHS’ Des Moines hospitals showed that from 2000-2010, their charges to self-paying patients totaled $202 million, of which those uninsured patients paid $17 million due to discounts, write-offs, and uncollected debt.

To support their breach of contract claim, the plaintiffs looked to an agreement each had signed stipulating that they would pay for their medical care according to the hospital’s “regular rates and terms.” This terminology, they claimed, constitutes an indefinite, open-ended pricing term requiring determinations of reasonableness by the court. Neither the district court nor the Court of Appeals agreed. “As a general rule, where there is an agreement to pay for medical services in accord with the hospital’s regular rates and terms, the contract is not indefinite,” the Appeals Court concluded. Earlier, in its findings of fact, the Court noted that patients can, and sometimes do, request hospital Chargemaster rate information.

The Court of Appeals, like the district court, also found no merit to the plaintiffs’ allegations of hospital violation of Iowa’s Consumer Fraud Act, Iowa Code chapter 714H. That law sets forth processes for filing private causes of action for consumer fraud. However, as the Court found, section 714H.4 specifically excludes hospital services from its reach.

In closing, the Court of Appeals cited with favor to statements made by a federal court in deciding a case similar to this one. “This action seeks judicial intervention in a political morass,” the federal court said. It is not for the courts to determine what a reasonable charge is for each hospital service. “For a court to presume to address these problems would be rushing in where angels fear to tread.” In these types of cases, plaintiffs are asking the courts “put simply, to solve the problems of the American health care system, problems that the political branches of both the federal and state governments and the efforts of the private sector have, thus far, been unable to resolve.”

Plaintiffs in this case could seek further review by the Iowa Supreme Court. The decisions of the district court and the Iowa Court of Appeals, however, leave little reason to suspect that different factual findings and conclusions of law would be reached by the Iowa Supreme Court.  Nonetheless, more yet may come from the Iowa courts on this matter.

UPDATE: Subsequent to this post the IBM has adopted the Telemedicine Rule. See our page dedicated to Telemedicine for all related articles, including our most current post.

The Iowa Board of Medicine Amends Its Proposed Telemedicine Rule – Final Adoption Slated for the IBM’s April 3 Pubic Meeting

The Iowa Board of Medicine (IBM) has made several changes to its proposed disciplinary rule for physicians using telemedicine in Iowa. Those changes reflect the IBM’s responses to public comments on its originally noticed proposed rule. The IBM will accept comments on its amendments but no public hearing or comment period has been scheduled nor is the IBM required to do so.  The IBM expects to adopt a final telemedicine practice rule at its April 3, 2015, public meeting. The rule’s effective date, once adopted, will be set in the final rule.

While there are provisions in this proposed rule that apply to all physicians, for the most part the rule as amended remains focused on standards of practice for physicians who use telemedicine. The requirements of the rule are substantial. Failure to satisfy any of these requirements subject the physician using telemedicine to IBM discipline. Failure to comply with the rules also might be claimed by plaintiffs alleging medical negligence in the delivery of telemedical care.

It is critical that physicians using telemedicine in diagnosing or treating a patient located in Iowa understand the IBM’s substantial expectations of them. The fact that a hospital or other telemedicine site ordinarily is operationally responsible for certain of the IBM’s proposed requirements (i.e., equipment compliance with safety codes, emergency protocols, HIPAA privacy and security compliance), standing alone, does not relieve the telemedicine physician from assuring compliance with such requirements as set forth in the IBM’s telemedicine rule.

The following summary addresses the IBM’s proposed telemedicine disciplinary rule as now amended. Click here to read the amended proposed rule. The IBM has invited feedback on the draft amendments so further changes are possible prior to the IBM’s April 3 vote on adoption of the rule.

The IBM’s definition of telemedicine was amended to clarify what telemedicine means and includes as well as to affirm what it does not include for purposes of this rule.

• Telemedicine means the practice of medicine using electronic audio-visual communications and information technologies or other means, including interactive audio with asynchronous store and forward transmission, between a physician licensee in one location and a patient in another location with our without an intervening health care provider. Telemedicine includes store-and-forward technologies, remote monitoring, and real-time interactive services, including tele-radiology and tele-pathology.

• Telemedicine does not include the provision of medical services only through an audio-only telephone, email messages, facsimile transmissions, mail service, or any combination thereof.

For physicians using telemedicine, the proposed rule makes it clear that –

• Physicians using telemedicine will be held to the same standards of care and professional ethics as physicians using traditional in-person encounters with patients.

• Physicians using telemedicine must do so within the physician’s scope of practice and the physician’s education, training, experience, ability, and licensure/certification.

• Physicians using telemedicine in the diagnosis and treatment of a person located in Iowa must have an active Iowa medical license consistent with federal and state law (unless an exception to licensure already provided in the IBM’s licensure rules applies) regardless of the in-state or out-of-state site from which the physician provides those telemedicine services.

• Physicians using telemedicine must utilize evidence-based telemedicine practice guidelines and standards of practice to the degree they are available.

For physicians using telemedicine, the amended proposed rule requires a valid-physician patient relationship with the person who receives telemedicine services. For purposes of this rule —

• The physician-patient relationship begins when 1) a person with a health-related matter seeks assistance from a physician; 2) the physician agrees to undertake diagnosis and treatment of that person; and 3) the person agrees to be treated by the physician even if there has not yet been an in-person encounter between the physician and that person.

• A valid physician-patient relationship is established in one of three ways: 1) an in-person encounter with an in-person medical interview and physical exam where standards of care would require an in-person encounter; 2) consultation with another physician or other health care provider who has an established relationship with the patient and who agrees to participate in or supervise the patient’s care; or 3) a telemedicine encounter if standards of care do not require an in-person encounter and consistent with evidence-based telemedicine practice guidelines.

• An in-person encounter means the physician and the patient are in the physical presence of each other and in the same physical location during the physician-patient encounter.

Further, physicians using telemedicine must –

• Ensure that systems are in place to ensure that non-physician health care providers whom the physician relies upon or delegates to in the provision of a telemedical service are qualified and trained to provide such service within the non-physician’s scope of licensed practice; further, the physician must be available electronically to consult with non-physician health care providers, particularly in the event of an injury or an emergency in the course of telemedicine service delivery.

• Verify the identity of the patient receiving the telemedicine services and ensure the patient can verify the identity, licensure status, certification and credentials of all health care providers involved in providing the telemedical service prior to the provision of that care.

• Ensure the patient is interviewed to collect the patient’s relevant medical history receives a physical examination, when medically necessary, sufficient for diagnosis and treatment prior to providing treatment via telemedicine, including issuing a prescription electronically or otherwise. The medical interview and physical examination need not be in-person if the telemedical encounter is sufficient to establish an informed diagnosis on par with an in-person medical interview and physical exam. An Internet questionnaire alone cannot suffice for the medical interview and physical exam prior to treatment, including issuing a prescription either electronically or otherwise.

• Ensure that patient informed consent is provided, including consent for the use of telemedicine, and that such consent is timely documented in the patient’s medical record.

• Identify and provide the patient’s medical record to the patient’s treating physician and/or medical home, when available and medically appropriate, where in-person medical services can be delivered in coordination with the telemedicine services the patient receives.

• Have access to or adequate knowledge of local medical resources for appropriate follow-up care.

• Establish written protocols for referral of a patient receiving telemedical services to an acute care facility or emergency department in the event of an emergency or for the safety of the patient.

• Ensure complete, accurate, and timely medical records, as appropriate, including notation of when telemedicine is used and other matters set forth in the rule, and, further, ensure that the patient and other health care providers have timely access to such information and that the patient, upon request, receives a timely summary of each telemedical encounter.

• Ensure that all telemedicine encounters comply with HIPAA privacy and security measures and, further, establish written protocols, which shall be periodically reviewed, addressing measures specified by the IBM in its proposed rule to assure the confidentiality and integrity of patient-identifiable information.

• Ensure that the equipment and technology used in the telemedical encounter comply with safety laws and codes and are of sufficient quality/size/resolution/clarity to safely and effectively provide the telemedicine service.

• Disclose clearly to the patient the type of services to be provided via telemedicine; contact information, identity and credentials of all health care providers involved in the provision of the telemedical service; limitations, if any, on drugs and services as provided via telemedicine; fees/costs sharing if different than in an in-person encounter; financial interests, if any; limitations on the use of the telemedicine technology; and other information as detailed in the proposed rule.

• Ensure the patient’s ability to amend their patient information, to provide feedback on the quality of the telemedical encounter, and to register complaints.

For all physicians, whether in the course of using telemedicine or otherwise, the proposed rule, as amended –

• Sets forth several circumstances under which standards of medical care may not require a physician licensee to personally examine a patient. Circumstances include where the physician prescribes medications on a short-term basis for a new patient and has scheduled or is in the process of scheduling an appointment to personal examine the patient; call or cross-coverage situations in which a physician licensee designated by the patient or other physician licensee is taking call or is covering for the other physician licensee who has an established physician-patient relationship with the patient; situations in which the patient has been examined in person by an advanced registered nurse practitioner or physician assistant or other licensed practitioner with whom the physician licensee has a supervisory or collaborative relationship; and other circumstances set forth in the rule.

• Prohibits physician licensees from prescribing based solely on an Internet request or an Internet questionnaire. An internet questionnaire is defined to mean a static questionnaire provided to a patient to which the patient responds with a static set of answers, in contrast to an adaptive, interactive and responsive online interview.

• Prohibits physician licensees from prescribing based solely on a telephonic evaluation for any person absent a valid physician-patient relationship.

Iowa Board of Medicine to adopt a final telemedicine disciplinary rule in April – House Energy and Commerce Committee considers legislation to expand Medicare recognition of telemedicine – IBM pursues Interstate Medical Licensure by Compact to, among other things, facilitate telemedicine practice in Iowa

The Iowa Board of Medicine (IBM) has reviewed public comments received on its proposed disciplinary rule for physicians using telemedicine in Iowa and, in light of those comments, has elected to make changes to those rules. Once drafting is complete, the IBM will post the rule as amended for public comment on the changes. The IBM intends to adopt a final rule at its April 2-3, 2015 meeting.

On the national front, the House Energy and Commerce Committee is looking at draft legislation that would expand upon current geographic and technological parameters for Medicare payment of telehealth services. Medicare now pays for a very limited number (75 service codes) of Part B medical services delivered via telecommunications and only if the system used is real-time interactive audio and video and only if the patient receiving the services is at an originating site located in a rural Health Professional Shortage Area (HPSA) either outside of a Metropolitan Statistical Area (MSA) or in a rural census tract or in a county outside of a MSA (unless a Medicare telemedicine demonstration project).  Originating sites in recognized geographic areas can be in the offices of a physician or other practitioner; a hospital or critical access hospital (CAH); a rural health clinic; a federally qualified health center (FQHC); a hospital/CAH-based renal dialysis center; a skilled nursing facility (SNF); or a community mental health center (CMHC). The following practitioners are recognized by Medicare as providers of telehealth services: physicians; nurse practitioners, nurse-midwives, clinical nurse specialists and CRNAs; physician assistants; clinical psychologists and clinical social workers (subject to limitations); and registered dieticians or nutrition professionals.

The “Advancing Telehealth Opportunities in Medicare” is one section (Section 4181) of the “21st Century Cures Act,” a 400-page bipartisan legislative proposal under discussion in the House. The telehealth portion directs HHS to develop a Medicare telehealth payment methodology that does not increase program costs and gives HHS authority under specified conditions to relax current geographic, site, and practitioner limitations for payment for telehealth services provided to Medicare beneficiaries.

The House Energy and Commerce Committee accepted testimony regarding this draft telehealth proposal in January with a goal of introducing legislation sometime in February. While commenters generally supported the draft’s intent, many suggested that the bill proposal did not go far enough to ease current geographic and site limitations and embrace a broader range of “store and forward” and other telecommunication technologies.

About compact medical licensure in Iowa

The IBM has introduced legislation into the General Assembly seeking authorization for Iowa’s participation in an interstate medical licensure system via compact. Compact medical licensure allows a physician licensed in a “home” state to become licensed in other compact signatory states via the compact process. Senate Study Bill 1019 and House Study Bill 20, companion bills to approve Iowa’s participation in the compact, are now under subcommittee review in their respective legislative chambers.

The design for interstate medical licensure by compact was developed by the Federation of State Medical Boards (FSMB); the IBM was a participant in that process. The compact licensure process is similar in many respects to expedited licensure currently provided for in IBM rules.

At least seven (7) states must pass legislation authorizing participation for the compact to effective. The FSMB reports that in addition to Iowa, ten (10) states have introduced compact legislation: Minnesota, Montana, Nebraska, Oklahoma, South Dakota, Texas, Utah, Vermont, West Virginia, and Wyoming.  An interstate medical licensure compact commission would administer the compact; each signatory state would have two (2) representatives on the commission. Actual licensure and discipline of physicians in compact states remains with the licensing boards.

Organizations in support of Iowa’s legislation include the Iowa Medical Society; the Iowa Hospital Association; the Iowa Academy of Family Physicians; the Iowa Chapter of the American Academy of Pediatrics; the Iowa Psychiatric Society; the Iowa Osteopathic Medical Association; and several health systems, including Unity Point, Mercy Network, Cedar Rapids PHO, Genesis Health System, and Gunderson Lutheran Health. The American Medical Association endorsed the compact in November. The draft federal “21st Century Cures” legislation discussed above includes a “Sense of Congress” provision encouraging compact medical licensure to facilitate multistate practice and the provision of telehealth services across state lines.

See our page dedicated to Telemedicine for all related articles.

HHS sets percentage targets for a Medicare value-based payment system — emphasis on ACOs/bundled payments/integrated care –

HHS calls for coordinated design across all payment sectors.

Secretary of Health and Human Services Sylvia Mathews Burwell announced last week that HHS will expand upon current efforts in transforming Medicare’s fee-for-service (FFS) payment system from one that long has been volume-based to one that is value-based. Payment reform initiatives will build in three ways: 1) increasingly tying payment to medical care received by beneficiaries through alternative payment models; 2) supporting integrated, coordinated care delivery models and provider efforts in advancing population health; and 3) harnessing vast data to improve patient care.  “Today’s announcement would continue the shift toward paying for what works,” HHS said in its January 26, 2015 press release.

The Secretary identified two distinct payment percentage goals —

  • By the end of 2016, 30% of all Medicare FFS payments will be tied to quality through alternative payment models such as accountable care organizations (ACOs), advanced primary care medical homes, and bundled payment mechanisms. By the end of 2018, 50% of all Medicare FFS payments will be made through these mechanisms. HHS says that approximately 20% of FFS dollars in 2014 were paid out through programs such as ACOs in the Medicare Shared Savings and Pioneer ACO programs, bundled payments, and the Comprehensive Primary Care Initiative.
  • By 2016, 85% of all Medicare FFS payments, including those made to ACOs and through bundled payments and similar mechanisms, will be tied to quality or value. Other payment programs added to this percentage mix are the Hospital Value-based Purchasing Program, the Physician Value-based Modifier, the Hospital Readmissions Reduction Program, and other initiatives. By 2018, HHS plans that 90% of all Medicare FFS payments will be tied in some way to programs of quality or value. HHS says that now a majority of Medicare FFS payments have a link to quality or value.

To meet its announced percentage goals, HHS will build upon program initiatives now in place and showing promise but also will develop new payment models, for instance, for specialty care (starting with oncology) and for care coordination for patients with chronic conditions. HHS also will invest $800 million through the Transforming Clinical Practice Initiative to provide hands-on support to 150,000 physicians and other practitioners in developing skills and tools needed to improve care delivery and transition to alternative payment models.

HHS will convene a Health Care Payment Learning and Action Network in March to not only develop sustainable payment models fostering coordinated, high quality medical care but also to align Medicare’s efforts with initiatives in other payment sectors. “Making operational changes will be attractive only if the new alternative payment models and payment reforms are broadly adopted by a critical mass of payers,” HHS notes. Representatives to this new Network have yet to be named but likely will include private payers, large employers, providers, consumers, and state and federal government programs. HHS expects the Network to facilitate joint implementation of agreed-upon models of payment and care delivery and to identify and implement common approaches on core issues like beneficiary attribution, financial models, benchmarking, and risk adjustment.

HHS anticipates an ongoing working alliance with the nation’s health insurance industry.  America’s Health Insurance Plans (AHIP), through its president, Karen Ignani, said that health plans have been on the forefront of implementing payment reforms in Medicare Advantage, Medicaid Managed Care, and the commercial marketplace. “We are excited to bring these experiences and innovations to this new collaboration.”

The American Medical Association (AMA) issued a statement saying that HHS’ efforts to align Medicare payment with innovative, high quality, and efficient health care delivery are consistent with AMA objectives. “We look forward to hearing more details behind the percentages HHS put forward as well as their plans to reach these percentage targets.” The AMA also emphasized the need for SGR payment relief, requiring congressional action before April 1 to avoid a 21% SGR reduction in Medicare payments to the nation’s physicians and loss of the 1.0 Work GPCI floor important to Iowa and other physicians in payment localities that otherwise would suffer Medicare Work GPCI payment adjustments below the national average.

It is not clear the extent to which HHS’ 2016 value-based payment percentage goals of 30%/85% will be reflected in its proposed 2016 Medicare physician payment rule (expected release in July of 2015). HHS emphasizes that these 2016 percentage goals are to be realized by the end of that calendar year, indicating implementation starting in 2016. Time is short to reach specified percentage objectives.

Medicare processes over 1 billion Medicare Part A and Part B FFS claims per year. In 2014, Medicare FFS payment outlays amounted to $362 billion.

This link accesses the HHS Fact Sheet supporting Secretary Burwell’s announcement.