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The Supreme Court Reviews the ACA’s Individual Mandate Provisions

The Supreme Court is Examining the Individual Mandate Provisions of the ACA.(April 2, 2012):  The fate of universal health care for all Americans currently hangs by a thread — and several Judges on America’s highest Court appear anxious to cut that thread.  As you may know, the Supreme Court of the United States is currently hearing arguments about the constitutionality of the health care reform law enacted two years ago, the Patient Protection and Affordable Care Act (Affordable Care Act). This case, United States Dept. of Health and Human Servcs. v. Florida, specifically challenges aspects of 26 U.S.C. § 5000A, otherwise known as the individual mandate provisions. Essentially, Congress has mandated in health care reform that every U.S. citizen who files a tax return secure a minimum amount of health insurance coverage or pay a penalty collected by the Internal Revenue Service (IRS). Congress has the power to regulate interstate commerce under the Constitution, and even has the power to regulate intrastate commerce after expansive decisions in Wickard v. Fillburn and Gonzales v. Reich. However, many critics think that the health care reform law now regulates inactivity, and argue that such regulation goes too far. Whatever your personal views on the matter, this case is shaping up to be one of the most important in the history of the country, both politically and from the perspective of the health care industry.

I.  The First Day of Debate:

The Supreme Court set aside three days  (March 26, 27 and 28, 2012) to hear argument regarding the various issues in the health care reform case. The first day was entirely devoted to a complex and obscure question, but one that would entirely block the Court from hearing the rest of the case if decided in a certain way. Specifically, the Court heard argument about the Anti-Injunction Act of 1867, which requires that an individual challenging the propriety of a tax pay that tax first. The original idea of this law was to safeguard the government’s revenue stream – if everyone simultaneously filed suit to challenge paying a tax, the Federal government would quickly run out of money. This Act requires that individuals first pay, and then challenge, the tax. In the situation currently before the Court, the determination of whether this is a tax or other penalty, and whether the Anti-Injunction Act applies, is paramount.

II. Health Care Reform — Is it All or Nothing?

It is amazing to think that a case involving the constitutionality of a major healthcare reform currently hinges on a tax law from the 1800’s, but that is how Congress set up the relevant penalty provisions of the Affordable Care Act. But beyond the constitutionality of the individual mandate, the outcome of this case could have a number of important effects. First and foremost, all of the work and funding that has gone into new health care programs as a result of the Affordable Care Act would likely be for naught. This is because the individual mandate provision is most likely not severable from the rest of the law. While a complex concept in practice, severability basically refers to whether one section of a law can be removed from the rest of the law or whether the entire thing must be declared invalid. While laws passed by Congress usually have a severability clause, Congress did not, for whatever reason, put such a clause in the Affordable Care Act. This means that accountable care organizations, health insurance exchanges, mandatory compliance plans, qui tam cases based on the Anti-Kickback Statute, and many other government healthcare programs would be affected. There would be a significant amount of confusion in the healthcare community. While individual providers and small practices may not be greatly impacted, payors, clearinghouses, larger hospitals and group practices, and managed care organizations may need to consider what changes they have made in the last two years, and make sure that such changes are consistent with applicable law, whether that law is the Affordable Care Act or whatever else came before it.

III.  Final Thoughts on the Individual Mandate Issue:

Overall, this case presents an interesting political and legal dynamic, one that is highly charged with political rhetoric, deeply-entrenched opposing views, and above all else — confusion.  If you are like most Americans (myself included), you tend to consider these situations from a personal perspective.  As a father with a child who suffers from a chronic, critical illness (for which there is no cure or treatment), there isn’t a day that goes by that I don’t worry what my son will do when he is no longer eligible for coverage under our health insurance policy.   The passage of the Affordable Care Act is truly a Godsend for my son.  Therefore, despite its many flaws, I hope that our government officials can work through their disagreements and allow this legislation to move forward.

Robert Liles Healthcare AttorneyLiles Parker is a full-service health law firm focusing on regulatory compliance and provider representation. Our attorneys are highly skilled in designing and implementing effective Compliance Plans for physician practices, clinics, home health agencies, DME suppliers and other health care providers.  Moreover, our attorneys are experienced in handling an array of complex health law matters, including Medicare overpayment appeals, PRRB appeals, negotiations with DOJ, OIG and state MFCUs, along with a full range of health care transactional projects. For more information on the Supreme Court case or to discuss your own matter, call us today.  Robert W. Liles, Esq, Managing Partner at the firm, can be reached at: 1 (800) 475-1906.  Please call him today for a free consultation.

Virginia Judge Concludes That Health Care Reform Law is Unconstitutional

Health Care Reform(December 13, 2010):  A Federal Judge for the Eastern District of Virginia concluded that the provision of the recent Health Reform Law may be unconstitutional.  that penalizes/taxes individuals who fail to purchase health insurance, violates the United States Constitution.  In doing so, the Court reaches a different conclusion than two other Federal courts – one in Virginia and one in Michigan, that have concluded that the provision – frequently referred to as the individual mandate — is valid and within Congress’ constitutional authority.

The Court, however, also realized that the final arbiter of the validity of the individual mandate and the health reform law – is likely to be the US Supreme Court.  Moreover, the Court recognized that the specific provision of the Law at issue – the individual mandate – does not become effective until 2014, and therefore refrained from issuing an injunction.  As a result, the decision is unlikely to have any impact on the implementation of the health care reform law at this time.

Liles Parker attorneys provide health law guidance and advice to health care providers around the country.  Should you have questions regarding health care reform, please give Michael Cook us a call.  He can be reached at:  1 (800) 475-1906.

HHS Publishes Proposed Rules on Medicaid RACs

Medicaid RACs(November 30, 2010):  The United States Department of Health and Human Services (“HHS”) recently published a Proposed Rule applying the Recovery Audit Contract (RACs) process to claims under the Medicaid program.  As background, the RAC process has been a part of the Medicare program since 2005, first as a demonstration project from 2005 – 2008, and then extended to the entire nation effective no later than January 1, 2010.

I. Overview of the Medicare RAC Program:

 Under the Medicare RAC program, HHS retains private contractors for a post payment review process to identify over and under payments on a contingency fee basis.  There are two types of reviews – data mining, which involves simply reviewing data to identify improper payments, and complex reviews, which require reviews of medical records to determine the “legitimacy” of a payment.  To date, HHS has contracted with four RACs – one covering each of four national regions.  HHS pays the RAC a contingency fee based upon a percentage (currently ranging from 9 – 12.5 percent) of the amounts of overpayments that the Federal government recovers and underpayments that HHS repays providers based upon the RAC review.  Overpayment recoveries have far exceeded underpayments that the program has reimbursed providers.

The process was highly controversial during the demonstration, and HHS implemented a number of changes for the national roll out.  Among others, HHS:  shortened the look back period; set limits on the number of records that the RACs could request at any one time; precluded RACs from retaining their contingency fee payments where the provider prevailed at any stage of the appeals process; required RACs to receive approval from HHS, and publish, the types of claims that they were reviewing; and required RACs to retain physicians as medical directors.  Despite theses changes, the process still requires providers to expend substantial amounts of increased administrative expenditures to accommodate these reviews.

II.  Medicaid RAC Programs are Now Required by Law:

Although several States have conducted RAC type audits under their Medicaid programs, most have not.  However, as part of the health care reform legislation, Congress required all States to establish a Medicaid RAC program by December 31, 2010.[1] See §6411 of the Patient Protection and Affordable Care Act.

The proposed rules require that States submit a state plan amendment (“SPA”) by the December 31, 2010 deadline.  However, recognizing that responses to the proposed rule are not even due until January 10, 2010, the proposal also indicates that States are not required to implement the program until April 1, 2011.  The proposal also recognizes that some States may need to change their State laws to implement the RAC program, and thus states that HHS may grant exceptions in certain areas, albeit on a limited basis.

The proposed rules would grant substantial flexibility to states in how they establish their RAC programs.  However, the rules provide that the fees States pay Medicaid RACs for overpayments and underpayments combined may not exceed the amounts that the State collects from overpayments.  This means that both the States and RACS will be strongly incentivized for the RACs to find over, as opposed to under, payments.

III.  Medicaid RAC Appeals:

The rules require the State to establish an appeals process for providers to dispute overpayments identified by the RACS.  However, the preamble to the proposed rules would require states to return the Federal match for an overpayment that is identified even if the State does not recover that overpayment from the provider.  If this is construed to require the State to return the Federal share of overpayments that the RAC identifies even if the provider prevails on appeal, this would place a strong disincentive for the State to establish a vigorous and unbiased appeal process.  Similarly, it is unclear whether HHS would recover the Federal portion of identified overpayments even in those cases where the State otherwise would have settled a claim in this process.

Further, it is not clear whether HHS will attempt to recover the share of the entire identified overpayment, even if it is clear that the provider would have been entitled to a partial payment if the claim had been properly submitted, e.g. in States that pay hospital providers under a DRG system, hospital transfer cases, or cases where the RAC concludes that a hospital case that was billed as an inpatient admission should have been billed as observation.  Absent such authorization, the State would avoid payment for even the portion of treatment that its RAC concluded was legitimate and actually provided, albeit mistakenly claimed.

Under the proposed rules, it appears that States would have substantial flexibility in designing their programs.  Thus, it would behoove providers and their trade associations not only to submit comments on the proposed Federal rules (which are due on January 10, 2010), but also to become involved in the development of the State process.  Liles Parker attorneys have had success in the past in assisting providers in one State to change the process in an analogous circumstance, to, among other things:  shorten the period for which claims were reviewed; assist providers in convincing the State to implement a routine process to minimize the chance that record requests would be lost; limit the number of medical records that could be requested; limit reveries to the difference between amounts that were claimed and those that could have been claimed under the RAC’s analysis; the qualifications of RAC staff that review medical necessity claims; and establishing the specific criteria that would be used to review medical necessity issues.

Also, providers will want to discuss with their States a number of other issues such as the extent to which physician judgment will be relied upon in second guessing medical necessity and treatment decisions, the process that will be used to challenge Medicaid RAC determinations, and the extent to which the State will increase Medicaid payments for the added administrative expense involved in staffing up for these reviews.  This is especially critical under the Medicaid program, where State payments often are far below the cost of providing the service as a result of deficient appropriations.

Finally, providers will need to develop their internal processes for ensuring that requests for records are properly tracked and timely processed, and for appealing appropriate cases.

Healthcare AttorneyLiles Parker attorneys have extensive experience in all of these areas and are prepared to assist providers and their trade associations in commenting on the proposed Federal rules, assisting in negotiations with States on the development of their Medicaid RAC programs, and appealing overpayment determinations.  Providers wishing to discuss these issues should contact Michael Cook at (202) 298-8750.

[1] Congress also expanded the Medicare RAC program to parts C (Medicare Advantage) and D (Medicare Outpatient Prescription Drug program) of Medicare.  We will address these changes in a later issue.


Michael Cook to Speak on The Future of Healthcare.

November 3, 2010 by  
Filed under Firm News

Michael Cook is speaking at Future of Health Care conference.(November 3, 2010): Michael Cook will be speaking at a national conference on the new healthcare reform legislation on November 8 and 9 in Arlington, VA.  Michael will speak during a segment on “The Future of Healthcare:  The Next 5 Years,” and will be addressing how providers are handling these new changes.

The conference, which is entitled, “Healthcare Reform – Dealing with the Hurdles & Building Up Success,” will feature a number of prominent experts in the area, including such notables as Hon. Henry Waxman, Chairman of the House Energy and Commerce Committee, and Douglas Holtz-Eakin, President of the American Action Forum and former senior advisor to Presidential candidate John McCain.  Michael’s presentation on the Future of Healthcare is being sponsored by GTCbio, and interested parties can obtain information on the conference at

Liles Parker attorneys provide health law guidance and advice to health care providers around the country.  Should you have questions regarding health care reform, give Michael Cook a call for a complimentary consultation.  He can be reached at: 1 (800) 475-1906.


Robert W. Liles Participates in Meeting with Congressman Culberson and Health Care Association Representatives in Houston

April 8, 2010 by  
Filed under Firm News

(April 8, 2010): On Wednesday evening, April 7, Robert W. Liles, Managing Member of the Firm, met with Congressman John Culberson and a group of  state and local medical association executives to discuss the recent passage of the health care reform bill.  Congressman Culberson heard from the participants, noting their views of how this legislation is going to impact Texas physicians and hospitals.  Mr. Liles discussed several provisions of the bill aimed at increasing health care fraud enforcement efforts.   He also discussed the current ZPIC audits being conducted in Texas by Health Integrity, a Medicare contractor.   The event was held at the Harris County Medical Society’s headquarters in downtown Houston.

Providers were understandably worried about the situation at hand. The Federal government’s recent emphasis on combating health care fraud and abuse – establishing nationwide RACs, ZPICs and HEAT teams in just the past year – has left hospitals, physicians and other health care providers in a state of panic. Audits of Medicare and Medicaid claims have been ramped up significantly, while Medicare reimbursement rates have been cut. While the deck seems stacked against health care providers, remember that providers themselves have a number of important rights under existing statutes, including rights for appealing denied claims. In this new environment though, it is imperative that health care providers accurately and appropriately document their services and that they use experienced and trained billers to process their Medicare claims.

If you would like more information on this meeting or the services of Robert W. Liles, please call us at: 1 (800) 475-1906 or send an email to