HEALTH LAW SUPPLEMENT Spring 2010

Changes to NYS Managed Care Laws: Several changes, all favorable for practitioners, were recently enacted into law in New York State as part of a comprehensive bill (A. 8402). They became effective January 1, 2010. The most significant were:
1. The Prompt Pay Law was amended to reduce the amount of time that health plans have to pay claims submitted electronically. It was 45 days; now it’s 30.
2. Health plans may no longer require practitioners to submit claims within 60 or 90 days or else forfeit payment, a common practice now. The plans must allow 120 days, and if in filing after 120 days, the practitioner can demonstrate a prior pattern of timely compliance, the plan must still pay at least 75% of the claim.
3. Health plans must process credentialing applications of prospective panel members within 90 days.
4. Plans may no longer unilaterally change material provisions of their contracts, including reimbursement rates, with panel members, as they have done so frequently in the past. They must provide 90 days notice of any material change, and affected practitioners will have the right to terminate the contract on the effective date of the change.

Federal Mental Health Parity Law takes effect: The federal Mental Health Parity and Addiction Equity Act passed by Congress in 2008 took effect January 1, 2010. It applies to benefits offered by employers of more than 50 persons, including self-funded (ERISA) plans and plans subject to state laws. This federal law does not require that all health plans offer coverage for mental illness; however, if they do, then benefits must be on a parity with coverage for physical disorders, i.e., no differences in deductibles, co-payments, length of hospital stays, number of psychotherapy sessions, out-of-network coverage. It also allows plans to exclude coverage entirely for certain mental disorders. But it defers to state laws that may mandate broader benefits and coverage. For example, in New York State, under Timothy’s Law, all health plans must offer certain limited mental health benefits (20 outpatient visits and 30 days in hospital) and all plans offered to groups of 50 or more must offer parity coverage of “biologically based” adult mental illness and “severe emotional disturbances” of children.

And Medicare follows suit: The above-mentioned Federal Mental Health Parity Law does not apply to general Medicare Part B. But another law, also passed in 2008, does. The Medicare Improvements for Patients and Providers Act (MIPPA) is a mental health parity law for all Medicare insureds that takes effect gradually, beginning January 1, 2010. Prior to passage of the law, Medicare insureds paid 50% of the cost of their Medicare-covered outpatient mental healthcare. During calendar years 2010 and 2011, that patient co-payment will be reduced to 45%. The co-payment will continue to be incrementally decreased until January 1, 2014, when Medicare patients will pay just 20% of covered charges, the same as they have always paid for their other Part B benefits. Note that diagnostic evaluations are covered at parity – 80% – immediately, as of this year, and will not be subject to the gradual phase-in.

A consequence of parity: Some Medicare Advantage managed care plans already have full parity for mental health benefits. A recent study indicated that patients insured under these plans appear to have significantly higher rates of usage of their mental health benefits than patients with intermediate or no parity. (But also note prior studies that patients who make use of their mental health benefits are less likely to use more expensive physical healthcare benefits.)

Malpractice risks in psychiatry: A recent article complained of the lack of precise data but attempted to list in order the malpractice risks for psychiatrists: patient suicide; lack of emergency availability; failure to warn third parties of danger from patients; medication side-effects; boundary violations with patients; and internet therapy and prescribing. Patient suicide is not the most frequent cause of lawsuits but is considered the highest risk because of economic exposure; damages sought are the loss of lifetime earnings. Psychiatrists who solely prescribe and don’t provide psychotherapy have less risk of lawsuits. Psychiatrist-psychoanalysts have fewer claims against them than psychiatrists with other psychotherapeutic orientations, presumably because the intense relationship between analyst and analysand inoculates against legal action.

Crackdown coming on employees mis-characterized as independent contractors: Healthcare practices that retain healthcare professionals and others as 1099 independent contractors are advised to have such relationships reviewed closely now by an attorney or accountant. Last month the IRS announced it would begin a new initiative to penalize any mis-classification of employees as contractors. New York State has recently begun a similar effort. Issues of mis-classification by our healthcare clients that have arisen upon audit have most often been due to: the use of full-time contractors or those without other engagements; required supervision of the ongoing work of contractors; control over work hours of contractors; restrictive covenants imposed on contractors; and payment arrangements for contractors that simulate hourly wages. Penalties for mis-classification can be severe and multiple.

Penalties for HIPAA violations increase: Prior to the 2009 HITECH revision of HIPAA (see the Winter 2009 Newsletter at our website), the federal Department of Health and Human Services did not impose penalties if a covered entity established that it was reasonably diligent in its compliance efforts but still did not know that its conduct violated HIPAA standards. This “lack of knowledge” defense was abolished last month. Penalties will now be imposed on all violations, ranging from $100 for violations attributable to “lack of knowledge,” to $50,000 for uncorrected willful neglect. Ignorance even if justified is no longer an excuse. The previous educational approach taken by HHS toward first-time non-willful offenders is no more.

The military endorses online therapy: As of last year, on an experimental basis, TRICARE (formerly CHAMPUS to you old-timers; a single payer health insurance available to members of the US military, including the National Guard, and their families) has offered video-webcam online short-term mental health counseling to its insureds in the US. Skype is used to deliver the service. It’s free, available 24 hours a day, and is staffed by psychologists. It was theorized that this means of access might alleviate concerns about confidentiality and stigmatization that are believed to predominate among members of the military. It seems inevitable to me that this method of delivering mental health services to the public will eventually be reimbursable by most insurers.

INFORMATION IN THIS NEWSLETTER IS NOT LEGAL ADVICE FOR ANY PARTICULAR CLIENT OR SITUATION. CONSULT WITH AN ATTORNEY INDIVIDUALLY FOR LEGAL ADVICE REGARDING YOUR SITUATION.

Categories