Updates for Individuals and Families from the IRS0

Updates for Individuals and Families from the Internal Revenue Service

This e-Bulletin from the Health Law Committee of the Business Law Section for the California State Bar regarding updates for individuals and families from the IRS was published on January 27, 2015.

Tax Form with StethoscopeThe Affordable Care Act’s impact on tax provisions in 2014 was significant, especially relating to individuals and families. IRS Publication 5187 provides an overview, explaining how taxpayers satisfy the individual shared responsibility provision by enrolling in minimum essential coverage, qualifying for an exemption, making a shared responsibility payment, and the new premium tax credit. The IRS also has a useful chart showing the ways in which health insurance qualifies as minimum essential coverage.

The IRS also published new forms for 2014, including Health Coverage Exemptions (Form 8965), Premium Tax Credit (Form 8962), and Health Insurance Marketplace Statement (Form 1095-A).

The IRS also issued Revenue Procedure 2015-15 which provides the 2015 monthly national average premium for qualified health plans that have a bronze level of coverage for taxpayers to use in determining their maximum individual shared responsibility payment under Section 5000A(c)(1)(B) of the Internal Revenue Code. Effective January 1, 2015, the maximum monthly national average premium for qualified health plans that have a bronze level of coverage and are offered through the Health Insurance Exchanges is $1,035 for a shared responsibility family with five or more members.

Finally, true to the Affordable Care Act’s commitment to transparency as it relates to health insurance benefits and coverage, on December 30, 2014, the Departments of the Treasury, Labor and Health and Human Services released the Summary of Benefits and Coverage and Uniform Glossary (79 Federal Register 78578).

The Poor Get Poorer: the Fate of California’s Hospitals Under the Affordable Care Act0

iStock_000013550840SmallThis article appeared in California Health Law News, Volume XXXII, Issue 3, Fall 2014/Winter 2015

[1] By Samuel R. Maizel[2] and Craig B. Garner[3]


Distressed hospitals in California operate on small or non-existent profit margins.[4] For many of these hospitals, Medicare and Medicaid (Medi-Cal in California) are the largest payors.[5] The Patient Protection and Affordable Care Act of 2010 (the “Affordable Care Act”)[6] was designed in part to increase the number of insured nation-wide,[7] the result of which logically should have been positive for California hospitals. Any cause for celebration, however, must first prevail over the cost containment provisions firmly entrenched in the Affordable Care Act, as these regulations created new concerns for California’s financially distressed hospitals.[8] Included among the multitude of threatening provisions in the Affordable Care Act are:

  1. A complete recalibration of Medicare disproportionate share payments (“DSH”) to hospitals[9];
  2. A reduction in Medicare revenue up to 1.5% during Fiscal Year 2015 (and 2.0% by Fiscal Year 2017) for hospitals which perform poorly under the Hospital Value Based Purchasing (“VBP”) Program[10]; and
  3. A penalty of as much as 3.0% for the hospitals which fail to meet the standards set forth in the Hospital Readmission Reduction Program (“RRP”).[11]

In addition to a penalty up to 2% for lapses in inpatient quality reporting and similar penalty relating to outpatient quality reporting, [12] a 2% cut in Medicare due to sequestration[13] as well as a penalty for those hospitals which fail to attest for “Meaningful Use”,[14] collectively the potential for any hospital to lose more than 10% of its Medicare revenue creates daunting challenges, especially with those institutions in California already struggling financially not to mention lacking the resources to establish the necessary infrastructure to compete in this era of change.[15]Read more →

The Nexus Between Compliance and Reputation0

This article first appeared in Corporate Compliance Insights on December 11, 2014.

reputation conceptual meter“It is easier to cope with a bad conscience than with a bad reputation.” — Friedrich Nietzsche

The past few years have been fraught with litigation for the health care industry, with major companies feeling the sting of compliance in both their reputations and their pocketbooks. In early November, Stryker settled hip implant litigation for more than $1 billion. In 2012, GlaxoSmithKline paid $3 billion to settle claims of overcharging, kickbacks and other health care transgressions, while, Abbott Laboratories paid $1.5 billion and Johnson & Johnson $1.2 billion, both for alleged violations of law. Even so, during the first week of November 2014, Stryker traded at its 52-week high, as Abbott and Johnson & Johnson traded near their 52-week high, though GlaxoSmithKline dipped near its 52-week low. GlaxoSmithKline’s downward trend began before a court in Changsha, China fined the company $500 million after a bribery conviction, coupled with the company’s pending bribery charges in the United Arab Emirates, Syria, Jordan, Iraq and Poland. Sadly, bribery charges are not uncommon in today’s health care market, as can be seen by the events of 2013, when prosecutors in Poland investigated Stryker, and those in 2014, when Abbott settled claims in India. China also fined Johnson & Johnson in 2014 for bribery charges, with a penalty of just over $3 million.Read more →

The Problem With Value-Based Purchasing0

This article first appeared in AHLA Weekly on October 31, 2014.

1379617_thumbnailFrom its inception on October 1, 2012,[1] the Hospital Value-Based Purchasing (VBP) Program shifted Medicare’s paradigm to emphasize performance over costs in determining hospital reimbursement.[2] Reducing the overall Medicare reimbursement to hospitals by an estimated $1.4 billion for Fiscal Year (FY) 2015,[3] the VBP Program was quick to secure the attention of the nation’s health care providers. Technically “budget neutral,”[4] the VBP Program will return this same $1.4 billion to hospitals the following year in the form of performance incentives.[5] According to the federal government: The program’s “benefits will be seen in improved patient outcomes, safety, and in the patient’s experience of care. However, [the federal government] cannot estimate these benefits in actual dollar and patient terms.”[6]

As the federal government waits to assess the accuracy of its prediction, the FY 2015 reduction of 1.50% will finally level off at two percent (2%) in 2017.[7] An additional two years, however, are unnecessary to evaluate the VBP Program under fundamental accounting principles when using a general overview into the ways in which successful and profitable companies operate. Viewed from this perspective, the VBP Program is fundamentally flawed, and data from 2015, 2016, or 2017 will not present opportunities for correction. This article suggests that while smaller hospitals may bear the greatest collateral damage from the VBP Program, larger systems may suffer as well. The number of hospitals forced into financial distress or insolvency by the Hospital VBP Program remains to be seen, although consideration should be given to the number of hospitals lost to their communities it would take to undermine the projected benefits relating to outcomes, safety, and the overall patient experience. … Read more →

Medicare: The Gift That Keeps On Giving0

This article was first published at Corporate Compliance Insights on September 5, 2014.

iStock_000010996009Small“The darkest places in hell are reserved for those who maintain their neutrality in times of moral crisis.”  — Dante Alighieri

The end of summer brings with it change across the United States.  Children and many young adults prepare themselves for the new school year, professional baseball players set their sights on what has come to be known as the Fall Classic, and foliage undergoes the first stages of fall’s impending metamorphosis. For America’s health care professionals, August has also become synonymous with the release of the final rule from the Centers of Medicare & Medicaid Services (“CMS”), which covers the Medicare Program’s Hospital Inpatient Prospective Payment Systems for Acute Care Hospitals (“IPPS”), and sets the rules of the game for those in the field, at least for another year.

Including such updates to the hospital IPPS for operating and capital-related costs as CMS continues to implement the Affordable Care Act, changes relating to graduate medical education (“GME”) and indirect medical education (“IME”) payments, revisions to the Hospital Value-Based Purchasing (“VBP”) Program, the Hospital Readmissions Reduction Program (“HRRP”), and the Hospital-Acquired Condition (“HAC”) Reduction Program, technical corrections to the provider administrative appeals and judicial review process, expanded use of Medicare Advantage (“MA”) risk adjustment data, not to mention the alignment of reporting and submission timelines for quality measures within the Medicare E.H.R. Incentive Program and IQR Program, this is one millenary regulation not to be missed. For those who may shy away from such Federal Register epics, the following is a brief overview of two critical topics. … Read more →

Medicare: The Perpetual Balance Between Performance and Preservation0

This article was first published in the Journal of Contemporary Health law & Policy on August 1, 2014.

iStock_000039923254Medium“Confusion is a word we have invented for an order which is not understood.” — Henry Miller, Tropic of Capricorn

Passed by Congress and signed by President Lyndon Johnson into law in 1965, Medicare has weathered storms from all directions, growing to be the preeminent standard for health insurance in the United States.  The idea of losing Medicare as a vital public benefit still remains the single greatest fear with which each passing generation of Americans must contend, and yet, these challenges over the past fifty years, designed to fortify Medicare’s foundation and ensure its longevity, continue to take a toll on the program.

The most recent climate of reform includes changes implemented by the Patient Protection and Affordable Care Act (“PPACA”).  The PPACA is designed to expand coverage for a broader group of people, yet it adds unprecedented layers of complexity such that it may be but a matter of time before the confusion experienced by today’s providers proves to be Medicare’s undoing altogether.  The decades of trial and error upon which health care in the United States have been built, at least from the point of view of both physicians and lawmakers who watch from the sidelines, may give way to confusion and disruption industry-wide as a result of newly enacted regulations.

Today, Medicare is the preeminent standard for health insurance in the United States, expanding despite fluctuations in the economic, political and social climate since its initial passage.  However, in its struggle toward sustainability, the Medicare Program must understand the resulting consequences as it distances itself further and further from its original simplicity in 1965.

Medicare’s original cost-based system gave way in the 1980s to the Prospective Payment System (“PPS”), an event noted by many with great concern.  Under PPACA, the Medicare system takes another monumental step as it incorporates elements of performance into the PPS.  Formulaic and confusing, Medicare’s recent approach to provider reimbursement has been likened to Finnegan’s Wake by James Joyce, a book that some critics warn requires “skeleton keys” to understand.  In many ways, the need for hospitals and physicians to understand these performance-based measures may seem less important when fear of Medicare insolvency looms in the distance,13 especially as it relates to Medicare Part A (hospital insurance benefits for inpatient services) and Medicare Part B (supplemental insurance for outpatient services, among other things).  Irrespective of the fleeting grasp providers may have over PPACA’s new Medicare system, hospitals and physicians alike are mindful that the PPS as they once knew it is gone, replaced in part with the beginnings of a performance-based Medicare in which they may lose precious revenue, one percentage point at a time.

The entire article can be viewed here.

Health Care Reform Without a Revolution0

This article was first published in the Los Angeles Daily Journal on July 9, 2014.

iStock_000003498126MediumHealth care reform is insignificant in comparison to the fundamental purpose of the system it must change. Unlike a terminal illness, which doubles as a harbinger to remind us of the inescapable permanence of death, much of the influence of health care reform over which the nation has debated these past four years will prove to be fleeting at best. Time will shape and reshape the Affordable Care Act (ACA) in ways outside today’s imagination, but the hospital bed, that symbolic and functional centerpiece of American health care, will never be anyone’s destination of choice.

The transformation of Medicare from its humble origins in 1965 into the template for American health care’s payer system was certainly no small feat, although maintaining the Part B premiums at Medicare’s original price tag of $3.00 per month never stood a chance. Whether as a result of Medicare’s effect or in spite of it, advances in medicine since 1965 have played a large part in the program’s evolution, with today’s emphasis on performance in lieu of costs standing as a reflection of an inherent expectation that modern medicine should have the twofold intention to never do harm and excel at all times. Perhaps ACA’s greatest achievement is that it has granted an aura of entitlement to all hospital patients, for now society has not only come to expect quality medical care at any time, it also expects this service free of charge. … Read more →

The Light at the End of the Tunnel . . . or Cliff0

 This article was published on June 5, 2014, in Corporate Compliance Insights.

iStock_000000261863Small“Truth emerges more readily from error than from confusion.”  — Francis Bacon

With each passing day health care reform in America gains momentum, even as the chasm between successful and unsuccessful providers continues to expand. Earlier this month, the Federal Government tested the fortitude of the system when it released thousands of regulatory pages explaining the many ways in which Medicare providers will get paid and penalized over the next few years.  Eagerly awaited by those in the field, the 2015 Hospital Inpatient Prospective Payment System regulations for acute care hospitals lives up to all expectations as it journeys through the labyrinth created by such diffuse entities as the Hospital Value-Based Purchasing Program, the Hospital Readmissions Reduction Program, and the Hospital-Acquired Conditions Reduction Program.  Not to disappoint its devoted readers, the Powers That Be issued regulations the same week for skilled nursing facilities, inpatient psychiatric facilities, inpatient rehabilitation facilities, hospices, and federally qualified health centers. … Read more →

Lessons Learned from Dial-Up0

This article was first published in the Daily Journal on May 15, 2014.

iStock_000013044243MediumIn the largest cities across the U.S., locating an Internet connection has become as easy as finding a cup of coffee. In modern times, however, the ability to effectively communicate in business is inextricably connected to the rate by which one is able to transfer data. Like a bad cup of coffee, we may tolerate a slow connection when options are limited, but no one really enjoys it. Lessons from both support the notion that we not only prefer quality speed, but it also improves our performance at work.

If bit rates are the standard measurement for telecommunications, hospital beds present the equivalent in health care. … Read more →

What Are We Fighting to Reform?0

This article was first published in California Healthcare News on May 6, 2014.

IMG_2220“Revelation can be more perilous than Revolution.”  — Vladimir Nabokov

As in baseball, the history of war favors the home team, especially when the home team prevails.  Not surprisingly, those who come in second place on the battlefield have little say in the telling of the tale. What became of the Ottoman and Austria-Hungarian Empires receives anecdotal attention, though those who live in Istanbul, Vienna and Budapest remember the Great War much like the City of Buffalo remembers Scott Norwood. So, too, will the success or failure of America’s struggle to provide universal health care be decided in the grand scheme, with little thought given to the smaller scale of unfortunate losses incurred upon the way. … Read more →