Assignment 1 summer

Chapter 4

The Legal and

Regulatory

Environment of

Health Care

Learning Objectives

1.Understand how legal and regulatory issues shape and define good financial management of a healthcare organization.

2.Appreciate the consequences of failing to manage the finances of a healthcare organization with regard for the complex and ever-changing array of laws and regulations that are unique to this industry.

Learning Objectives

3. Recognize when and how to involve legal counsel on a Medicare or Medicaid reimbursement issue or other financial matter that has regulatory compliance implications, or would otherwise require you to seek legal advice before making a decision.

4. Identify the most common federal regulatory issues such as fraud and abuse, Stark, HIPAA privacy and security, EMTALA, and IRS requirements for tax-exempt organizations, as well as less-common concerns that arise under the antitrust laws, Red Flag Rules, and state insurance regulations.

Learning Objectives

5. Identify the major components of a corporate compliance plan, including the establishment of internal controls relating to the finances of an organization.

6. Be prepared to respond to a compliance audit or investigation, particularly when the subject of that inquiry includes financial records.

7. Be aware of the most important aspects of the Patient Protection and Affordable Care Act of 2010 (Health Reform Act) as it relates to financial management in the post-Reform environment. 4

Law and Healthcare Financial

Management

• Corporate Compliance Plans

• Office of Inspector General (OIG)

requirements

• Internal control and corporate

compliance

• AICPA elements

Primary Regulatory Issues

1.Medicare reimbursement

– Parts A–D

– Certification of providers

– Payment to providers

2.Medicaid reimbursement

– Eligibility determination

• Federal poverty level (FPL)

• Supplemental security income (SSI)

– Coverage of services

– Establishment of payment rates

– Medicaid DSH payments

Primary Regulatory Issues, cont.

3. Beneficiary appeal rights & process

– Medicare’s 5 levels

4. Fraud & abuse

– False claims act

– Qui tam actions

– Kickbacks and self-referrals

• Anti-kickback statute

• Stark physician self-referral law

– Safe harbors

Privacy of Healthcare Information

(HIPAA)

• HIPAA overview

• Privacy standards

– Protected health information (PHI) • Security standards

Third-Party Payer Contracts

• State regulator

– “Any willing provider” • Federal law

– ERISA

Tax Exemption Issues

• 501 (C)(3) organizations

• Public charity versus private foundation

• Charity care

• Unrelated business income

• Form 990

Antitrust Issues

• Purpose of laws

– Promote a competitive free marketplace • Sherman Act

– Agreements that unreasonably restrain trade

– Price fixing • IPAs and PHOs

• Per se violations

• Reviews of mergers, acquisitions, and

joint venture agreements

– “Statements of antitrust enforcement policy in health care” (August 1996)

• Sharing competitive information

– Financial and/or clinical integration

Antitrust Issues, cont.

• Prohibits mergers and acquisitions that may

substantially lessen competition

• Analytical methodology provided

– Will the merger increase concentration in the

market?

– Does increased concentration raise

anticompetitive concerns?

– Can another competitor enter the market?

– Are there efficiencies to be realized?

– Without merger, would either of the merging

parties fail?

Clayton Act

Emergency Medical Transfer and

Active Labor Act (EMTALA)

• Prohibits hospitals from transferring an

emergency patient because of inability to

pay

Summary • Healthcare financial managers need to have some

understanding of the major rules and regulations

related to health care.

• The legal and regulatory environment in health care is

increasingly complex.

• A prudent manager must plan for and adapt to this

environment.

• Failure to comply can put the organization at significant

financial risk and can put individuals at both criminal

and financial risk.

• Proper planning, implementation, execution,

documentation, and evaluation of corporate

compliance programs is vital for the financial security

of today’s healthcare organizations.