Florida Seeks Relief from Healthcare Reform Provision

One of the requirements of the national healthcare reform law is that health insurers must spend at least 80% of their premiums on delivering healthcare services.  The current requirements (so called “medical loss ratios”) are 65% for traditional insurers and 70% for HMOs.  Earlier this month, state Insurance Commissioner Kevin McCarty requested US HHHS Secretary Kathleen Sebelius to delay the provision of the healthcare reform law that requires health insurers to spend 80% of their premiums on providing healthcare services.  If granted, the delay would allow insurers to meet the 60% and 70% established levels.  The reason for Commissioner McCarty’s request:  belief that the 80% requirement would decimate the health insurance market in Florida.

It is well known that Governor Scott campaigned against the healthcare reform law.  Similar requests for waivers can be expected around the country, as well as legal challenges to the law’s constitutionality.  Interestingly, there has been no delay in the state’s desire to curtail physician and hospital expenditures and their primary move in that direction, the quasi privatization of the state Medicaid program and introduction of a competitive bid process.  Though most will feel the squeeze, there is clear opportunity for those physicians and other healthcare business people willing to assume more economic and clinical risk.

OIG Crushes Proposed Sleep Study/Hospital Venture

 

The OIG weighed in on a request to give a green light to a proposed venture between a sleep testing provider and a hospital.  The proposed arrangement involved:

  1. A sleep testing provider providing the equipment, technology, supplies and staff necessary to operate a sleep lab at the hospital, as well as marketing services;
  2. The hospital contributing the space, utilities, pharmacy and other necessary support;
  3. The sleep testing provider charging the hospital a per test fee which has been independently fair market valued; and
  4. The hospital billing payers for the procedure as an “under arrangement” arrangement.

 

The OIG frowned on the proposed arrangement because of the per test fee and the marketing services provided by the sleep testing company.  The OIG correctly determined that the proposed arrangement does not fall within one of the Safe Harbors, which are regulatory exceptions to the federal Anti Kickback statute (“AKS”) because the compensation payable to the sleep testing company was not set in advance.

The Advisory Opinion is interesting because it has implications for many “under arrangements” collaborations between hospitals and businesses and also because it gives an idea of the OIG’s current enforcement inclination, not only based on the specific facts presented but also in general in terms of how we can expect the government to enforce the AKS.  It is no surprise that the OIG is taking a very conservative view of the AKS in light of the fact that the healthcare reform law has authorized stepped up enforcement in the healthcare arena to fund reform changes.

MD/DC Practices

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Right on!

This is absolutely dead on!  ACO theorists and consultants are so wrapped up in proving the model or selling services, as the case may be, that they fail to miss some core deficiencies, which include (1) anti-competitive effect of COS, (2) the hospital conflict of interest, and (3) the primary core fallacy.

ACOs are big business.  The capital and organizational requirements alone are staggering.  The nature of the “beast” will mean a collapse in the number of delivery systems and a strengthening of  the role that big business, chiefly hospital systems, play in delivering medical care.   

Hospitals have always seen the direct link between bodies in beds and profits.  ACOs are theoretically forcing risk based compensation and quality measures on care deliverers in a way that is thought to create economic efficiencies, but now that it is clear that hospital systems will lead ACO development, what’s to stop them from pumping patients into beds, thus frustrating the reduction of healthcare costs?  The conflict is between ACO leaders (hospital systems) that want to maintain profitability through increasing admissions and those that are committed to squeezing admissions into those which are most medically appropriate.  At the end of the day, ACO leading hospital systems may find themselves in the conundrum that Humana did when they were in the hospital business (get patients admitted!) and also the health insurance business (keep patients from being admitted!).

The ACO healthcare delivery model is once again (from the 90s) based on a primary care core.  And yet, primary care shortages are rampant around the country.  The answer is to “extend” physician expertise via the use of PAs, NPs and the like.  Moreover, as medicine has become increasingly specialized and the need for specialist consults and intervention has risen, so has cost.  The primary care core depends thus on an insufficient number of professionals who lack the professional self-sufficiency necessary to reduce specialist intervention and related costs.

The beat goes on!

http://www.healthleadersmedia.com/page-3/LED-261056/5-Reasons-Why-ACOs-Could-Fail