Players in the healthcare industry continue to identify ways to use technological innovations to decrease overhead expenditures and increase bottom lines.  AI software to automatize EHR documentation in place of human input, mobile apps and portals to grant patients immediate access to their medical records, and blockchain technology to accelerate claims adjudication are some examples. In particular, commercial health insurers have employed various cost containment measures to minimize non-claim expenses. One measure involves the use of virtual credit cards, or VCCs, in lieu of traditional payment methods to reimburse providers for services rendered to plan enrollees. A VCC is linked to the payer source’s credit card account but generates a new 16-digit single-use number each time the physical card’s 16-digit number is used. Payers send providers the number with instructions to access and process these payments electronically.
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Senate Bill 1264, which recently passed during the 86th Texas legislative session, places restrictions on certain out-of-network providers regarding the practice known as “balance billing” and establishes a process through which health plans and providers may resolve payment disputes. The bill is effective September 1, 2019 and applies to services and supplies provided on or after January 1, 2020.

I.  Balance Billing and SB 1264

The term “balance billing” refers to when a healthcare provider bills a patient for the difference between the reimbursement provided by the patient’s health insurance and the amount charged by the provider. SB 1264 places restrictions on balance billing by out-of-network (OON) providers of emergency services, facility-based services provided at an in-network healthcare facility, and lab and diagnostic imaging services that are related to an in-network service. The law disallows these providers from billing a patient for an amount greater than the applicable copayment, coinsurance, and deductible under the health plan based on the initial amount determined to be payable by the plan, or if applicable, a modified amount determined under the plan’s appeal process.
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Hospitals are not happy with CMS’ recent changes to hospital outpatient payments.  Two hospital associations and three hospitals claim in a federal lawsuit filed December 4, 2018, that CMS had no authority to change the payment scheme for off-campus provider-based departments (PBDs).  The change took effect January 1, 2019, and is estimated to reduce payments to hospitals by $380 million in the first year of a two-year phase-in period.

The plaintiffs, including the American Hospital Association and the Association of American Medical Colleges, are seeking judgment that the payment change is unenforceable as well as preliminary and permanent injunctive relief.  The complaint against US Department of Health and Human Services Secretary Alex Azar was filed in the U.S. District Court for the District of Columbia.

The plaintiffs’ assert that the reduced payments threaten patient access to care and harm the providers’ ability to meet the health care needs of their patients, including some of the most vulnerable populations. 
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With the global telehealth market projected to more than quadruple in value over the next five years, even slow-moving government payors have responded to the pressure to expand reimbursement options for telemedicine services. But reimbursement woes continue to top the list of concerns voiced by providers, and the U.S. Department of Health and Human Services, Office of Inspector General (“OIG”) is keeping a watchful eye on reimbursement-related growing pains. On April 30, 2018, OIG released a report that identifies the impact of some of these growing pains on Medicare claims payments.
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Hurricane Harvey. On August 26, 2017, the Secretary of Health and Human Services (HHS) issued a waiver of certain compliance requirements, retroactive to August 25, 2017, for providers in areas of Texas affected by Hurricane Harvey.  A similar waiver was issued August 28, 2017, for providers in Louisiana, retroactive to August 27, 2017.  Along with these waivers, the Secretary of HHS issued disaster declarations for the states of Texas and Louisiana pursuant to section 319 of the Public Health Service Act, and the President issued disaster declarations for the states of Texas and Louisiana pursuant to the Robert T. Stafford Disaster Relief and Emergency Assistance Act.

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On July 13, the Centers for Medicare & Medicaid Services (“CMS”) put out its 2018 Medicare Hospital Outpatient Prospective Payment System Proposed Rule. The Rule proposes, among other things, to dramatically reduce Medicare Part B reimbursement of drugs procured by hospitals at 340B prices—from the current rate of Average Sales Price (“ASP”) plus 6 percent to ASP minus 22.5 percent.  By CMS’s estimate, this could result in savings to the Part B program of $900 million and a corresponding cut to the 340B hospitals which currently receive those payments (and ostensibly use them in furtherance of the 340B program’s goal of assisting safety net providers in stretching their scarce resources).  
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On May 23, 2017, Texas Governor Greg Abbott signed Senate Bill (SB) 507, expanding the current law dealing with “balance billing.”

Balance billing occurs when an insured patient receives care from a physician, hospital or other healthcare provider, who is not part of a patient’s health plan provider network. The out-of-network provider then bills the

Insurers providing health care benefits to federal employees can obtain reimbursement when their insured obtains a tort recovery, despite a state law prohibiting such reimbursement, based on the preemption provision of the Federal Employees Health Benefits Act (FEHBA), pursuant to the U.S. Supreme Court’s decision in Coventry Health Care of Missouri, Inc., fka Group Health Plan, Inc. v. Nevils, issued April 18, 2017.

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A stethoscope and American money on a white background - HealthcSpecialists are generally subject to the MACRA merit-based incentive payment system (MIPS) in the same manner as primary care clinicians but are treated differently under MACRA in two situations:

  1. Certain specialists may qualify as “non-patient-facing” (for example, pathologists or radiologists that do generally not see patients) and have reduced MIPS reporting obligations; and
  1. A specialist who participates in more than one alternative payment model (APM) will receive the most favorable APM treatment of the APMs in which the specialist participates (for example, if the specialist participates in two Track 1 ACOs, the specialist will get the higher of the MIPS scores for those ACOs).


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A stethoscope and American money on a white background - HealthcAs of January 2016, there were 433 Medicare Shared Savings Program (MMSP) Accountable Care Organizations (ACOs) with almost 7.7 million assigned beneficiaries and more than 14,000 participants (a participant may be a group or an individual). Most of these ACOs are one-sided model ACOs that may generate shared savings and do not involve shared losses (Track 1 ACOs).

Importantly, Track 1 ACOs are not considered advanced alternative payment models (APMs) for purposes of MACRA. As a result, a clinician participating in a Track 1 ACO is subject to the merit-based incentive payment system (MIPS) just like a clinician that is not in an ACO (a participant in an advanced APM is not subject to MIPS).
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