HOSPITALS v. RAC – ROUND TEN

Hospitals and Recovery Audit Contractors (RACs) continue a high stakes battle in court and in Congress over RAC audits of hospital billings to Medicare.

A bipartisan bill called The Medicaid Audit Improvement Act contains provisions that would limit certain RAC audit activities that hospitals have found objectionable.  In general, the RAC auditors would be limited to sample sizes of 2% of billings, and would be required to follow standards and pay penalties for auditors that do not comply with basic program requirements including deadlines and issuance of demand letters.

The RAC lobby claims that this would cripple RACs ability to save what RAC claims are billions recovered from Medicare.  If you are a hospital or a large medical practice, you may wish to weigh in with your legislators if you believe that RAC auditors have failed to follow the letter and spirit of the RAC legislation.

MEANINGFUL USE AUDITS

CMS’ Office of E-Health Standards and Services (yes, there is one) has decided that prepayment audits, in addition to post payment meaningful use audits, are necessary to make sure that EHR bonus checks are paid only in the case of proper requests and proper attestations of meaningful use of electronic health record systems.  To date, over 200,000 eligible professionals have been paid an EHR meaningful use bonus.  CMS is suggesting that between 5-10% of recipients will be subject to a prepayment audit.

SMALL EMPLOYER (100 OR LESS) HEALTH PLANS

The Affordable Care Act stipulated that each state must have a Small Business Health Options Program (SHOP Exchange) to help smaller employers compare health plans and enroll their employees.  This was a key to gaining congressional support for ACA to avoid relatively small employers drowning in the time and cost of finding, administering and helping employees select healthcare coverage.  The underlying idea was that an employer could pay a lump sum to a SHOP Exchange which would then assist the employees in selecting the insurance coverage, and then actually pay the money to each of the individual insurance companies covering the employees.  This avoided employers having to contract with multiple insurers.

The exchanges were scheduled to start enrolling people on October 1, 2013 for coverage that was to begin in January, 2014.

However, HHS has been unable to meet those deadlines, and the SHOP or choice option is now delayed until 2015.    The effect of this delay is yet to be determined, but it certainly will not help supporters of ACA.

“VOLUNTARY” WELLNESS PLANS

So called “voluntary” wellness plans permit employers to conduct medical examinations and obtain medical histories as a part of such plan.  There continues to be confusion regarding the definition of the word voluntary.  The EEOC has stated “[A] wellness program is voluntary as long as an employer neither requires participation nor penalizes employees who do not participate.”

This seems straightforward enough until employers determined while they would not “penalize” employees, that they would reward employees who do participate.  On January 18, 2013, EEOC stated that the EEOC “has not taken a position on whether and to what extent a reward amounts to a requirement to participate, or whether withholding of the award from non-participants constitutes a penalty, thus rendering the program involuntary.”  While the EEOC dithers on this issue, courts have begun to determine whether a reward or even a surcharge used to motivate employees are protected under the ADA’s Safe Harbor provision.  The courts have basically found that whether a wellness program was “voluntary” was irrelevant under the ADA Safe Harbor.  What does this mean?  I believe it means two things:

1.  Eventually Congress will have to sort out the apparent conflict between the EEOC and ADA statutory language positions relied upon the courts which seem to lead to opposite conclusions on this issue;

2.  The larger the penalty or the larger the reward amount, it is more likely that the wellness program will not pass the “voluntary” test.

STATE PRIVACY LAW v. HIPAA

The U.S. Supreme Court declined review of a State Supreme Court holding that HIPAA does not preempt state law claims alleging inappropriate access to medical records. 

This means that your NOPPs and your procedures must comply not only with HIPAA, but all applicable state laws.

This newsletter is edited by Paul Wallace of Jones • Wallace, LLC, a member of the American Bar Association Healthcare Law Section and the American Health Lawyers Association who has been representing physicians and healthcare practices for over 25 years.  Mr. Wallace assists physicians in health practices in contract items, federal legal compliance, creation of practice entities, estate and wealth planning and similar issues.  Please feel free to call if you have any questions about this newsletter or any other matter at (812) 402-1600 or pwallace@joneswallace.com.