1. Stark Law Self-Disclosure
Providers subject to the physician self-referral law (Stark Law) continue to struggle with the ramifications of unintentional or so-called “technical” violations of the Stark Law. Until the issue is resolved by reform legislation, it will continue to be a source of considerable stress for healthcare providers.
2. Compliance Program Effectiveness
The recent expansion of the False Claims Act and the further expansion of fraud enforcement will have a significant impact on the newest generation of physician-hospital integration initiatives. This comes in the wake of the ever-expanding connection being drawn by regulators between the quality of care and false claims liability.
3. Complex RAC Audits
Enhanced RAC audits, called “complex reviews” are taking RAC concerns to entirely new heights starting in 2010. While routine RAC audits are time-consuming for the subject hospitals, the process is largely automated. In contrast, complex reviews are far more labor- and time-intensive for audited hospitals.
4. Health Insurance Industry Reform
Even with healthcare reform on a slower track than anticipated, the health insurance market is likely to face significant changes. The potential establishment of premium rating limitations, the elimination of lifetime coverage limits and the regulation of medical loss ratios (MLRs) are likely to affect the pricing of insurance products in a material way.
5. Health Information Technology
The HITECH Act, enacted in February 2009, included about $20 billion allocated over five years to health information technology projects, including incentive payments, beginning in 2011, to eligible professionals and eligible hospitals to acquire electronic health record technology. In 2015, however, the incentives turn into penalties by way of reduced Medicare reimbursements if meaningful use is not demonstrated.
6. Focus on Tax Exemption
Tax-exempt hospitals must, for the first time, fully complete Schedule H to Form 990 when filing their 2009 tax returns. In addition to Schedule H, tax-exempt hospitals must fully complete Schedule K to provide supplemental information on tax-exempt bonds, including disclosure of private business use.
7. Accountable Care Organizations and Medical Homes
If passed, health reform legislation is likely to promote the creation of cost-saving delivery models, such as Accountable Care Organizations and Medical Homes. Careful evaluation of participation in these models should include examination of the implications for tax-exempt status, existing quality initiatives, and regulatory compliance.
8. Patient Safety Organizations
The Patient Safety and Quality Improvement Act of 2005, which applies to all healthcare providers, authorizes the creation of patient safety organizations to receive and analyze information relating to patient safety, and confers broad federal privilege and confidentiality protections to information held by PSOs. The Patient Safety Act also imposes significant penalties for breaches.
9. Pension Plans and Benefits
Two items of guidance that could affect executive compensation provided by tax-exempt organizations are likely to be published in 2010. The first is Internal Revenue Service guidance regarding the application of Internal Revenue Code Section 409A, while the second item of importance to be finalized this year is cafeteria plan regulations.
10. Loosening Credit Markets and Increasing M&A Activity
After a slowdown in 2009, mergers and acquisitions activity is expected to increase in 2010 as healthcare systems evaluate their operations, plan strategic acquisitions, and look to offload underperforming or non-core service lines and facilities.
Stephen W. Bernstein is a partner in the law firm of McDermott Will & Emery and is head of the firm’s Health Industry Advisory Practice Group.