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 By
Donald Antrim
On June 8, 2005 the moratorium on
the development of physician-owned specialty hospitals
expired. This moratorium was enacted as part of the
Medicare Prescription Drug Improvement and Modernization
Act of 2003 (“MMA”). At the same time, the Centers for
Medicare and Medicaid Studies (“CMS”), the administrative
agency charged with responsibility for administering the
Medicare and Medicaid programs, announced that it would
not approve any physician-owned specialty hospital
applications for participation in the Medicare/Medicaid
programs until, at a minimum, the end of 2005. This
announcement by CMS came on the heels of the May 11, 2005
introduction by Sen. Chuck Grassley, Chairman of the
Committee on Finance, and Sen. Max Bacus of legislation to
impose a permanent moratorium on the development of new
physician-owned specialty hospitals and to impose further
restrictions on the growth of those hospitals
grandfathered under the moratorium provisions enacted as
part of the MMA (S. 1002). Commentators on both sides of
the issue viewed the announcement by CMS as the imposition
of a de facto moratorium, but the debate is far
from over.
GAO ANALYSIS
To add fuel to the current debate
on whether there should be a permanent ban on
physician-owned specialty hospitals, the Government
Accounting Office (“GAO”) weighed in on the topic when it
released a report on June 9, indicating that, regardless
of any moratorium by Congress, the number of
physician-owned specialty hospitals would grow. The GAO
reported that, in all probability, at least 12 new
hospitals would be opening as a result of favorable
advisory opinions issued by CMS. Those hospitals would not
be subject to any permanent moratorium that Congress might
impose (see Specialty Hospitals: Information on Potential
New Facilities, GAO-05-647R). The GAO further indicated
that CMS had received requests for 40 advisory opinions
from physician-owned specialty hospitals seeking a
determination that they fulfilled the requirements to be
grandfathered under the original 18-month specialty
hospital moratorium. CMS has yet to make determinations
on 25 of the 40 applications, has approved 12, and has
denied two. One request was withdrawn. The GAO further
reported that at least six facilities now under
development had not requested an advisory opinion from CMS
and that there may be as many as 17 for which the GAO
could not obtain data.
According to a report issued by the
GAO in October 2003 discussing specialty hospitals
throughout the United States (Specialty Hospitals:
Geographic Location, Services Provided and Financial
Performance), there were approximately 100 specialty
hospitals located primarily in seven states: Arizona,
California, Kansas, Louisiana, Oklahoma, South Dakota and
Texas, while 28 states had at least one. About 70% of the
specialty hospitals in existence or under development had
some form of physician ownership. Among these hospitals,
total physician ownership averaged slightly more than
50%.
The Moratorium
The 18-month moratorium on the
development of physician-owned specialty hospitals was
signed into law on December 8, 2003 as §507 of the MMA.
It was aimed at preventing the development of specialty
hospitals that offer cardiac, orthopedic or surgical
services. The intent of §507 was to prevent referrals to
specialty hospitals based upon the perceived conflict of
interest when physicians have an ownership interest in the
limited-service hospitals to which they refer and to
provide a time period during which the government could
study the impact of specialty hospitals on the cost and
quality of the delivery of health care services. For a
period of 18 months §507 did away with the whole-hospital
exemption found within the Stark II law, which permitted
physicians to invest in the whole hospital and not just in
a particular department or component of the hospital. A
grandfather provision exempts those physician-owned
specialty hospitals in operation or under development as
of November 18, 2003 and provides a mechanism for an
applicant to seek an advisory opinion from CMS concerning
exclusion from the moratorium.
Section 507 mandated that two
separate studies be completed within 15 months of the
effective date of the legislation. The Medicare Payment
Advisory Commission (“MedPAC”) was to examine the
financial issues related to specialty hospitals versus
community hospitals, including an analysis of how the DRG
system should be updated to better reflect the cost of
hospital care. The second study was to be conducted by
the Department of Health and Human Services (“HHS”), and
HHS’ mission was to determine the referral patterns
created by specialty hospitals and their impact on the
quality of care and the coverage provided for
uncompensated care.
CMS WEIGHS IN
What permitted the moratorium to
expire without an extended and rancorous debate was the
announcement by CMS (stated in the Finance Committee
hearings and followed by its release on June 9, 2005) that
it would undertake a review of its procedures for
enrolling specialty hospitals in the Medicare and Medicaid
program and would not grant any new specialty hospital
applications to participate in the Medicare and Medicaid
programs for a period of six months. CMS indicated that
it would undertake a series of steps to reform Medicare
and Medicaid payments that may provide specialty hospitals
with an unfair advantage, competitively and in
reimbursement, over other types of providers such as
community hospitals and ambulatory surgery centers. The
focus of this study would be on specialty hospitals that
that treated only cardiac, orthopedic and surgical cases
(CMS, Specialty Hospital Fact Sheet,
http://www.cms.hhs.gov/media/press/release.asp?counter=1478).
Shortly after MedPAC and HHS submitted their reports
(March 8, 2005 and May 12, 2005), CMS indicated that it
would look at four subjects:
-
CMS indicated that it
would evaluate potential changes in the inpatient prospective-payment system to more accurately reflect the
severity of the patient’s illness in setting the payment
level. CMS would also review specific DRGs, such as
cardiac, orthopedic and surgical, that are alleged to be
overpaid and therefore incentivize physicians to create
specialty hospitals. The argument has been that
specialty hospitals treat less severely ill individuals
but maintain existing compensation levels, therefore
shifting the more severely ill to community-based
hospitals which must, consequently, absorb greater costs.
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In its study of
specialty hospitals, CMS would examine payment rates based
upon its finding that orthopedic and surgical specialty
hospitals tend to have few inpatient beds, raising the
question of whether these entities concentrate on
outpatient care. Physician-owners may seek specialty
hospital designation because payment rates for hospital
outpatient services under the Outpatient Prospective
Payment System are often higher than those for the same
procedure when performed in an ambulatory surgery center.
CMS is already planning to reform the ASC payment system
to diminish these differences.
-
Reviewing the procedures for participation in the Medicare
and Medicaid program, CMS indicated that it would
scrutinize the process for approving and starting to pay
new specialty hospitals. Under the Medicare program,
hospitals must primarily furnish care to inpatients.
CMS has expressed concern that some specialty hospitals
may concentrate on outpatients and therefore fail to meet
the definitions necessary for participation. CMS
indicated in a May 4, 2005 proposed rule (updating the
Hospital Inpatient Prospective Payment System for Fiscal
Year 2006) that if specialty hospitals are not primarily
engaged in inpatient care, new applications for hospital
provider agreements will be denied and existing provider
agreements may be terminated.
-
CMS will review its
standards for approval of participation and payment to
determine whether additional or different standards should
apply to specialty hospitals in light of the focused
nature of their services. Specifically, CMS will meet
throughout the summer with state survey agencies, JCAHO
and AOA, the organizations that accredit hospitals, to
discuss standards for determining whether specialty
hospitals meet statutory requirements to be a hospital
under Medicare.
CMS plans to conduct forums on the
development of administrative controls and corrections in
the reimbursement of specialty hospitals. To understand
the total nature of the industry, one open-door forum will
provide an opportunity for live dialog between CMS and the
provider community at large. These forums will take place
in September, and the provider community and other
interested parties may participate through the open-door
website at
www.cms.hhs.gov/opendoor.
During the review period, CMS has
notified its regional offices not to issue any new
specialty hospital provider agreements and not to
authorize any initial survey by any state agencies for new
specialty hospitals. Medicare fiscal intermediaries have
been instructed not to process new provider enrollment
applications for specialty hospitals until further
notice. The suspension does not apply to specialty
hospitals that have submitted an enrollment application
prior to June 8, 2005, or by that date have requested an
advisory opinion from CMS concerning whether or not the
hospital is subject to the moratorium under §507 of MMA.
CMS has committed to complete the review process by
January 2006.
CONCLUSIONS
The debate over the development of specialty hospitals has
been ongoing since the 1980s, when the issue concerned the
development of psychiatric and rehabilitation hospitals.
What makes this debate perhaps a little more vitriolic, if
that could be possible in the arena of the development of
specialty hospitals, is the fact that psychiatric and
rehabilitation hospitals may not have been mainstream
services for community hospitals or health care systems.
In contrast, cardiac, orthopedic and surgery services are
mainstream, if not predominant components of the medical
services offered by community hospitals and medical
centers. The debate continues to rage over whether
specialty hospitals increase quality and efficiency at
reduced costs as a result of their focused service lines.
The opposing argument is that they are less costly only
because they divert less severely ill patients and do not
share the burden of supporting other necessary health care
services in the community. CMS’s intrusion into this
debate creates a focal point. Up to this point in time,
the battles have been localized, costly and very
hard-fought. Having entered the debate, CMS has a
significant challenge and responsibility on its hands.
______________________________
Donald Antrim
is a Shareholder of the
Health & Medicine Practice Group. He can be contacted at
dantrim@bdblaw.com
or
614.227.4292.
By:
Shila Nalawadi
 When
most health care providers think of HIPAA, the Health
Insurance Portability and Accountability Act of 1996,
privacy and security come to mind. But privacy and
security are only two components of HIPAA’s Administrative
Simplification provisions. Another HIPAA mandate aims to
improve the efficiency and effectiveness of the electronic
transmission of health care information by streamlining
data interchange. To achieve this goal, health care
providers and health plans are required to adopt unique
identifiers.
Health care providers
will apply for a “National Provider Identifier” (NPI),
while health plans will obtain a “National Health Plan
Identifier” (NPlanID). These new identifiers will replace
the multiple identification numbers currently in use for
standard transactions, such as claims processing and
eligibility determinations. Thus, once a health care
provider is assigned a NPI, it will no longer use its
Medicaid number, UPIN, Medicare Provider number, health
insurance plan number, or other identifying number to
complete electronic transactions involving health care
information.
All health providers
and health plans who transmit any health information in
electronic form must have NPIs and NplanIDs in place by
May 23, 2007. Small health plans, generally defined as
health plans with annual receipts of $5 million or less,
have an additional year to comply. Even if a health care
provider uses a business associate to complete electronic
transactions, it must still apply for the NPI.
Large-scale health care providers, such as hospitals, may
receive multiple NPIs for different “subparts” of their
operations or to meet federal requirements. After the May
23, 2007 compliance date, all electronic transactions
processed by health plans, including Medicare, Medicaid,
and private health insurers, and health care
clearinghouses will use these unique identifiers.
The Centers for Medicare and Medicaid Services (CMS)
oversees the implementation of HIPAA’s mandate for unique
identifiers through the National Plan and Provider
Enumeration System. A health care provider can obtain
more information and apply for the NPI via a web-based
application at
https://nppes.cms.hhs.gov. A paper application may be
obtained from the CMS website or by calling (800) 465-3203
or TTY (800) 692-2326. Note that the NPI and NplanID do
not replace tax identification numbers.
______________________________
Shila Nalawadi
is an Associate of the
Health & Medicine Practice Group. She can be contacted at
snalawadi@bdblaw.com
or
330.491.5238.
 By
Susan Rank
Finally, doctors who want to volunteer their skills to
provide care for the indigent and uninsured can breathe a
small sigh of relief. Ohio’s Good Samaritan Law (Ohio
Revised Code §2305.234), which went into effect on July
12, 2004 (SB 86, effective July 12, 2004, and SB 80,
effective April 7, 2005, amending and expanding the
previous law), provides some broader protections against
medical malpractice lawsuits when doctors volunteer. The
new Act covers not only physicians but other healthcare
professionals, including occupational therapists, speech
language pathologists, clinical nurse specialists,
certified nurse midwives, and certified nurse
practitioners.
Most importantly, however, the Act protects volunteer
health professionals for medical, dental or other
health-related care or treatment provided by them to
indigent or uninsured persons regardless of where
the diagnosis, care or treatment is provided. The old law
stated that only treatment provided in a “nonprofit
shelter or healthcare facility” was protected, but the new
law covers other types of “healthcare facility or
location,” including hospitals, clinics, ambulatory
surgical facilities, healthcare professionals’ offices,
training institutions for healthcare professionals, and
any other place where a medical, dental, or other
health-related diagnosis, care, or treatment is provided.
Keep in mind, however, that volunteer health professionals
must still comply with certain requirements prior to
providing medical care. Most importantly, the volunteer
must provide notice to the indigent or uninsured person
that by giving informed consent, the person cannot hold
the healthcare professional liable for damages unless the
professional’s action or omission constitutes willful or
wanton misconduct.
On a national level, for states that do not provide such
protections to volunteer physicians, the federal
government has established a liability program for
physicians working in free clinics, legally recognizing
qualified physicians as employees of the U.S. Public
Health Service and thereby limiting their liability risk.
Further, many insurers offer additional coverage for
charity services at a nominal cost (e.g., in Illinois,
coverage can be had for $60 annually). This low premium
may reflect actuarial evidence that patients who receive
free health care rarely sue the physicians who provide it.
According to the Robert Wood Johnson Foundation, some
375,000 physicians volunteer their skills and services
each year. The American Medical Association’s Code of
Ethics urges that doctors “devote their energy, knowledge,
and prestige to designing and lobbying at all levels for
better programs to provide care for the poor.”
Volunteerism, in fact, has become an important part of
many medical school and residency programs, providing more
direct clinical experience earlier than in the past. Some
educators even believe that volunteerism can serve as a
form of continuing medical education for experienced
physicians, exposing them to situations they might not see
in their daily practices. Fortunately for Ohio’s
physicians and healthcare professionals, the importance of
volunteering is being embraced now at the legislative
level. This article was previously published in
the May/June issue of M.D. News.
______________________________
Susan Rank
is an Associate of the
Employment & Workers' Compensation and Health & Medicine Practice Groups. She can be contacted at
srank@bdblaw.com or
330.491.5247.
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Dirk Riemenschneider is a member of the Health &
Medicine Practice Group, resident in the Cleveland
office. He explains that he became interested in
health law “because I come from a long line of
physicians. This background gave me a base of
knowledge that I can utilize to help out family and
friends – and clients. I like to know what I’m talking
about when I’m talking to a physician.”
To his work in medical
malpractice defense, Dirk also applies his own life
experiences – “in college, in sports … just being in
tough situations, being the underdog. When a
physician, or a nurse, is sued, it’s traumatizing.
These people have devoted their lives to helping
people. For hospitals, too, this is their mission. But
sometimes there is a bad outcome when no one is at
fault. All of us in the Health & Medicine Practice
Group have a deep-seated feeling that we’re doing our
utmost to help our clients through this. They need all
the psychological support we can offer them. As I
prepare cases, I draw on fifteen years of experience
in building relationships with doctors – with any
health professional. When a doctor is sued, their back
is up against the wall – people are pointing fingers
at them. You’ve got to rely on your systemic beliefs
that ultimately it will come out well.“
Dirk feels strongly that most bad
outcomes, however tragic, are not result of any
individual’s error. “In my experience,” he says, “it
is fairly rare that the health professional is sued
for an obvious mistake. If it does happen, we turn
over every stone to see that the case is settled under
the level of the insurance policy, and that the
physician is taken care of.”
Changes in the legal environment
have greatly reduced the number of nuisance cases and
increased the stakes for those that come to trial.
“Less serious cases are too expensive for the
plaintiff to proceed,” Dirk explains. “It’s an
expensive undertaking, so cases are no longer brought
with the expectation that they will be settled for the
nuisance value. Today the cases are very complex,
dealing with death or permanent neurological problems.
“We take a lot of cases to
trial,” Dirk adds. “We look to turn over every
possible stone concerning the patients’ medical
history, and work with the highest caliber co-counsel
and expert witnesses. Working with expert witnesses
effectively depends on years of experience in
developing relationships with people, and being able
to communicate with them on a person-to-person basis.
When the witnesses know you’ve done your homework,
they work harder, too.
“We have had good results.
Everybody’s humble and comes across in court as
likeable – because we are. It’s true for our whole
group. It’s based on what the physicians need from a
support standpoint – that, and having a work ethic and
being available whenever we can.”
A graduate of Baldwin-Wallace College, Dirk
Riemenschneider earned his J.D. from Cleveland State
University, Cleveland-Marshall College of Law.
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Governor Taft Signs Biennial
Budget Bill
On Thursday, June 30, 2005, Governor Taft signed H.B. 66,
the state’s biennial budget bill for fiscal years
2006-2007. The Governor vetoed 27 items in the bill,
including two long-term-care-related items. For a
complete analysis of the long-term care provisions and
related items visit:
www.ohca.org/uploads/news/05budgetanalysis.pdf.
____________________________________
OHCA Sues State Over Budget Bill
Provisions
On behalf of its members, the Ohio Health Care Association
(“OHCA”) filed a class-action lawsuit on Wednesday, July
20, 2005, against the state of Ohio. The suit challenges
several provisions of the budget bill passed on June 30,
2005. The OHCA has filed this case because it feels as
though the concerns raised by the association on behalf of
its members were not adequately considered in the budget
process. Further, the lawsuit lists several ways that
provisions of the budget bill violate federal and state
law. A copy of the complaint and OHCA’s press release
regarding this lawsuit are available at:
www.ohca.org/uploads/news/lawsuit7-20-05.pdf.
____________________________________
CMS Part D Implementation
Campaigns
The Centers for Medicare and Medicaid Services (“CMS”) and
the Social Security Administration (“SSA”) are working
together to make eligible and potentially eligible
Medicare beneficiaries aware that extra help is available
to pay for prescription drug coverage, as implemented by
the Medicare Modernization Act of 2003. Both CMS and SSA
will be mailing important drug coverage information to
people before the open-enrollment period in attempt to
keep them informed of their eligibility for the new
prescription drug coverage. If you have any questions
about how the Medicare Modernization Act of 2003 will
impact your business or practice, contact Joe Feltes,
Don Antrim, or
Tom
Hess.
____________________________________
Medical Malpractice Breakthrough
As of July 1, 2005, health care providers may have an
additional shield against frivolous malpractice lawsuits.
This shield is an amendment to Civil Rule 10, which now
requires that complaints containing medical, dental,
optometric or chiropractic claims include an affidavit of
merit. This affidavit of merit would include expert
testimony that would establish liability for each
defendant named in the complaint. Specifically, the
affidavit of merit must include the following:
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A statement
that the expert has reviewed all medical records
reasonably available to the plaintiff concerning the
allegations contained in the complaint;
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A statement
that the affiant is familiar with the applicable
standard of care; and
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The opinion
of the expert that the standard of care was breached by
one or more of the defendants to the action and that the
breach caused injury to the plaintiff.
It is important to note that this affidavit of merit is
required only to establish whether the complaint is
adequate, and may not be admitted as evidence or used for
purposes of impeachment in the later court action.
Although this additional requirement may decrease the
number of frivolous lawsuits filed against health care
providers, its effects are yet to be known. If you have
any questions about Civil Rule 10 and its application to
medical malpractice claims, contact
Ronald Wilt.
OFFICE OF INSPECTOR
GENERAL UPDATES
THE OIG ISSUES REPORT ON FRAUD/ABUSE
SAVINGS ON JUNE 13, 2005
According to the report, during the first half of fiscal
year 2005, the Department of Health and Human Services
Office of Inspector General (the “OIG”) saved the federal
government nearly $17 billion against fraud, abuse, and
waste. Savings and expected recoveries from
investigations and audit reports included $15.6 billion
saved as a result of OIG recommendations and other actions
to put funds to better use. Additionally, during this
period, approximately 1,695 individuals and entities were
excluded from participation in federal health care
programs due to fraud and abuse.
A copy of the semiannual report is available at:
http://www.oig.hhs.gov/publications/docs/semiannual/2005/OIG_semiannual1-2005.pdf.
Although the OIG has already saved the government nearly
$17 billion, the OIG will be continuing its efforts to
expand its use of administrative sanctions. According to
its chief counsel, the OIG has announced plans to ramp up
its use of civil monetary penalties and Medicare program
exclusions to crack down on those in the health care
industry who accept or seek kickbacks or present false
claims.
Donald A. Antrim, Buckingham
ColumbusSM,
recently wrote an article for the Ohio Optometric
Association magazine. The article was entitled,
"The Combined Professional
Services Act Revisited." Also, Don
wrote another article for the Ohio Optometric
Association's Perspectives magazine. The
article is entitled, "More
HIPAA-Security Rules Compliance."
_______________________________
 Thomas
W. Hess,
Buckingham
ColumbusSM,and
G.
Brenda Coey,
Buckingham CantonSM,
gave two presentations at seminars sponsored by
Autumn Enterprises this past month. They spoke in
Canton and Cincinnati. Their topic was
"How to Survive the Nursing
Home Survey
Process." In addition, Mr. Hess will
be giving a presentation entitled,
"Confidentiality of Medical
Records" for Lorman Education Services
later this month in Akron.
_______________________________
If you are interested in obtaining information on
upcoming seminars or would be interested in having
speakers from BDB make a presentation to your
organization, please contact: Lorna J. Henderson, Client
Relations Administrator, at
800.686.2825 ext. 86473
or
lhenderson@bdblaw.com.
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