By Donna J. Craig
An Overview—On March 23 2010 President Barack Obama signed into law the Patient Protection and Affordable Care Act (“PPACA.” In a 5-4 decision by the United States Supreme Court, PPACA was held to be constitutional on June 28, 2012. The Supreme Court held that the individual mandate to purchase health insurance by 2014 was a tax and therefore was constitutional. The Supreme Court did, however, limit the federal government’s ability to penalize states that refused to implement Medicaid expansion programs, by preventing the federal government from taking away existing Medicaid funding should a State choose not to expand its Medicaid program. Currently, the State of Michigan has not made a decision on whether it will expand the Medicaid program to those individuals not currently covered by Medicaid.
While several aspects of PPACA have already taken effect, the law was designed to be phased in over a ten year period. As it currently stands, the following sets forth upcoming phases of PPACA.
2013—Individuals making more than $200,000 and couples more than $250,000 would pay an increased Medicare payroll tax of 2.35% (up from 1.45%).
Tax sheltered flexible spending accounts would be limited to $2,500 a year, with yearly inflation indexing in the following years.
Medical device manufacturers would have a 2.3% sales tax on medical devices. Devices such as eyeglasses, contact lenses and hearing aids would be exempt from this sales tax.
2014—State health insurance exchanges would be created to offer a variety of health insurance options for individuals and employers with small employee populations. (Michigan announced that it will work with the federal government to establish a health insurance exchange for its legal residen6ts, as opposed to establishing a state health insurance exchange.)
Medicaid would be expanded to cover low income individuals up to 133% of the federal poverty level, unless states opt-out.
Insurance companies would be prohibited from denying coverage to people with pre-existing conditions, or charging higher rates to those with poor or chronic health conditions. Premiums could only vary by age, place or residence, family size, and tobacco use.
Insurers would be required to cover maternity care as they do other medical procedures.
All legal residents would be required to have health insurance, except in cases of financial hardship, or pay a tax to the IRS. The individual yearly tax would start at $95 in 2014 and rises to $695 in 2016. A family tax would be capped at $2,250 per year.
2018—A tax would be imposed on an employer sponsored health insurance plan worth more than $10,200 for individual coverage, and $27,500 for a family plan. The tax would be 40% of the value of the plan above the thresholds, indexed for inflation.
2020—The doughnut hole coverage gap in Medicare prescription benefits would be phased out. Seniors would continue to pay the standard 25% of their drug costs until they reached the threshold for Medicare catastrophic coverage.
Disputes Now and in the Future—Typically health care disputes in the past have focused on medical malpractice claims, guardianship, patient rights and individual insurance coverage disputes, reimbursement for patient care services provided by health care providers and facilities, and vendor and business disputes. These types of disputes will continue into the future, and as is common currently will be resolved by the use of arbitration, mediation and a combination of mediation/arbitration, all processes which have been fully discussed in prior PREMi articles.
As a result of PPACA, we can expect that the disputes will be more complex and involve more than two or three parties. It is anticipated that there will be many more types of disputes involving employers, self-funded programs, and health plans, over whether: (i) they are in compliance with PPACA requirements; (ii) they are subject to penalties, and if so, are the penalties consistent with the PPACA requirements; and (iii) community rating rules are applied correctly.
Besides employers and health plans and insurers, disputes will arise from different stakeholders. Individuals will continue to initiate claims against self-funded employer programs and health plans if coverage is not provided or is wrongfully restricted in violation of law. In the future, we will also see disputes arising when primary care physicians and general surgeons do not receive Medicare bonuses. Drug and device manufacturers will find themselves in disputes with health care facilities over overcharging and undercharging for the devices and pharmaceuticals provided in the care of patients. Individuals and entities seeking redress for a perceived wrong will now find themselves in multi-party, complex matters.
In anticipation of the need to resolve disputes between various stakeholders, Congress requires the Secretary of Health and Human Services to establish various dispute resolution procedures under many aspects of PPACA. These dispute resolution processes are required for the following events:
• Before a health plan has a penalty fee imposed for noncompliance with applicable standards and operating rules associated with electronic funds transfers, health plan eligibility, health claim status and health care payment and remittance advice, the health plan would have the opportunity to engage a dispute resolution process.
• Before a civil monetary penalty may be imposed upon a skilled nursing facility who self-reports a violation of federal law, the facility would have the opportunity to participate in informal dispute resolution processes prior to the collection of such penalty.
• While employees and prospective employees in long term care facilities will be subject to a nationwide background check program, they would have access to an independent process appeal to dispute the accuracy of the background information.
• Following an adverse action by a state’s licensing division against a health care provider or facility, the health care provider and facility will be able to dispute the accuracy of the information reported against them.
• A facility participating in the 340 B discounted drug program that is overcharged for drugs purchased would have the opportunity to access an administrative process to resolve the claim.
• States will be encouraged to develop alternatives to civil litigation as a way of encouraging the efficient resolution of disputes over medical malpractice claims, increasing the availability of prompt and fair resolution of disputes, while preserving an individual’s right to seek redress in court.
It should be noted that, in furtherance of Congress’ intent to encourage resolution of disputes by informal means, Section 399 V-4[42 U.S.C. 280g-15] of PPACA authorizes Congress to award demonstration grants to States for the development, implementation, and evaluation of alternatives to current tort litigation for resolving disputes over injuries allegedly caused by health care providers or health care organizations. Pursuant to the grants, States will be required to demonstrate how the proposed alternative: (i) makes the medical liability system more reliable by increasing the availability to prompt and fair resolution of disputes; (ii) encourages the efficient resolution of disputes; (iii) encourages the disclosure of health care errors; (iv) enhances patient safety by detecting, analyzing, and helping to reduce medical errors and adverse events; (v) improves access to liability insurance; (vi) fully informs patients about the differences in the alternative and current tort litigation; (vii) provides patients the ability to opt out of or voluntarily withdraw from participating in the alternative at any time and to pursue other options, including litigation, outside the alternative; (viii) would not conflict with state law at the time of the application in a way that would prohibit the adoption of an alternative to current tort litigation and would not limit or curtail a patient’s existing legal rights, ability to file a claim in or access a state’s legal system, or otherwise abrogate a patient’s ability to file a medical malpractice claim.
While the scope and complexity of health care disputes will expand in the future, then like now, the best way to obtain a resolution in a cost effective and efficient manner is for the parties to take advantage of the use of mediation, arbitration or a combination of both. These processes allow for a confidential forum to address the issues and obtain resolution. In that regard, PREMi is available to provide these services to meet your needs.
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Donna J. Craig is the principal of Donna Craig & Associates PLC where she specializes in health care transactional and administrative law, as well as general corporate transactions.
