Recent Health Care Reform Legislation Impacts Patients, Insurers, Employers and Providers

April 20, 2010

On March 23, 2010, President Obama signed into law the Patient Protection and Affordability Reconciliation Act of 2010, as amended by the Health Care and Education Reconciliation Act of 2010 (collectively the “Act”). The Act is one of the most comprehensive pieces of health care legislation to be enacted in decades. The legislation calls for the implementation of a number of new health care coverage and patient rights’ initiatives in 2010, including the following:
  • Prohibition of pre-existing coverage exclusions for children by health insurers;
  • Access to affordable coverage for the uninsured with pre-existing conditions;
  • Institution of patient protections, including choice of physician, removal of preauthorization requirements for ob-gyn visits, and increased access to emergency care;
  • Extension of health insurance coverage for young adults on family policies until age 26;
  • Allowance for free prevention and wellness benefits in all new plans and Medicare;
  • Access to quality care for vulnerable populations through an investment in Community Health Centers;
  • Elimination of lifetime limits on coverage and regulation of annual limits;
  • Protection against recissions of existing coverage except in instances of fraud or intentional misrepresentation;
  • Availability of health insurance consumer information to assist individuals with the filing of complaints and appeals, enrollment in health plans, and other issues;
  • Increase in the number of primary care providers through investments in training programs; and
  • Implementation of a new, voluntary, long-term care insurance program to be financed by voluntary payroll deductions to provide benefits to adults who become disabled.
In addition to the above initiatives that will impact patients, insurers, employers and providers alike, the Act has certain provisions that are of particular interest to health care providers. Among these are amendments to existing criminal, civil, and administrative fraud and abuse statutes intended to aid in reducing health care fraud and abuse and increase government health care program integrity. For example, Section 6409 of the Act instructs the Secretary of Health and Human Services (“HHS”) to collaborate with the Office of the Inspector General (“OIG”) to develop and implement a self-referral disclosure protocol for actual and potential Stark law violations within six months from the date of enactment. This represents a departure from the OIG’s March 24, 2009 Open Letter to Health Care Providers which made clear that the OIG would no longer accept disclosure of a matter that involves liability under the Stark law alone. The new legislation also clarifies the ambiguity that existed as to whether there was any room to reduce or compromise amounts owed for violations under the Stark law. Section 6409 expressly authorizes the Secretary of HHS to compromise payment and penalty amounts due and owing for Stark law violations. Section 6003 of the Act amends the Stark law in-office ancillary services exception. This Section imposes a requirement on referring physicians to inform patients in writing that they may obtain certain designated health services from a person other than the referring physician or related physician. This provision was technically effective on January 1, 2010, but could not be enforced until the law was passed on March 23, 2010. Further, Section 6001 of the Act significantly impacts physician ownership in hospitals. It effectively bars future physician investments in hospitals and imposes substantial limitations and restrictions to the Stark law exception that permits physicians to have ownership interests in hospitals if they meet the whole hospital exception. Although this Section grandfathers existing hospitals, it places restrictions on future actions and expands disclosure requirements. The Act also has brought about changes in the federal Anti-Kickback statute. Notably, the Act amends the specific intent requirement judicially recognized under the Act to now provide that a person may violate the Anti-Kickback statute without actual knowledge of a violation or specific intent to violate the statute. In addition, the Act amends the Anti-Kickback statute to clarify that claims for services resulting from a kickback constitute a false claim under the Federal False Claims Act. Finally, the False Claims Act has been impacted under the Act as well. Prior to the Act, a key defense against qui tam lawsuits was to argue that a whistleblower’s complaint is based on publicly available information. Under the new law, the definition of what constitutes publicly available information has been narrowed and the requirement that a qui tam relator have direct knowledge of the facts underlying the allegations has been removed. It is now sufficient for a qui tam relator's allegations to be based on indirect or secondhand information, provided those allegations add to whatever information is already contained in the public domain. The foregoing are just a few examples of a variety of provisions of the Act that may impact our firm’s clients. The Act will continue to be clarified as accompanying regulations are developed by government agencies in the future. We will continue to provide our clients with updates on specific portions of this comprehensive legislation as warranted in future alerts. For additional information, please contact Celia S. Bosco or Christina B. Murphy