This installment of Hall Render's Health Law Broadcast series on health care reform is designed to provide you with the insight, analysis and practical suggestions with respect to the various reform initiatives that will affect your organization. 

HEALTH CARE REFORM: IMPLICATIONS FOR PROVIDERS IN RURAL AND UNDERSERVED AREAS

Part II of II

As noted in our first Health Law Broadcast addressing provisions related to rural and underserved population providers found in the Patient Protection and Affordable Care Act of 2010 and its amendments (commonly referred to as the "Health Care Reform Bill") (the "Act"), there are numerous, important, and potentially paradigm shifting provisions impacting rural, shortage area, primary care and similar providers found in the Act. 

Continuing our introduction to the issues that will alter landscape for these providers in coming years, we address below some major provisions of the Act impacting Federally Qualified Health Centers (FQHC), new Community Health Center and delivery models, and National Health Service Corps Loan Repayment Program funding/enhancements.

1. Federally Qualified Health Centers - New Prospective Payment System, New Covered Services, Funding Access and Funding Increases

FQHC Prospective Payment System

One of the more significant developments for FQHCs is the pending implementation of an FQHC Prospective Payment System (PPS).  Currently, FQHCs are reimbursed on a reasonable cost basis, subject to a per visit limit.  The new FQHC PPS system is slated to begin on October 1, 2014.  The Act provides that FQHC PPS payments are to be set at 100% of the estimated then-current aggregate amount paid to all FQHCs.  In subsequent years, the FQHC PPS payments will be updated by the Medicare Economic Index (Year 1) and by an FQHC Market Basket Update factor thereafter.  Interestingly, the Act did not provide for the application of a budget neutrality adjustment as is currently applied to Medicare PPS hospital payments.

Expanded Scope of Covered FQHC Preventive Services

Effective January 1, 2011, the Act provides for an expansion to the scope of covered FQHC services to be consistent with the new Medicare covered preventive services noted above (e.g., colorectal screening).

Hospital Access to FQHC Funding

Consistent with the goal of enhancing access to primary care already noted above, the Act provides for substantial funding increases to FQHCs.  For non-FQHC providers, the Act also codifies the ability of non-FQHCs to receive FQHC grant funding from an FQHC to provide services consistent with an FQHC's mission.  Specifically, FQHCs may pass through grant payments to a low volume hospital, CAH, SCH or MDH for delivery of certain primary care services via contract.  These pass-through payments will require that the receiving hospital have in place nondiscrimination policies and a sliding fee scale.

Spending for FQHCs

Appropriations for FQHC grant funding provided for in the Act are substantial.  As a result, the access to FQHC care is likely to increase substantially in the coming years.  Specifically, the Act provides for the following FQHC grant funding appropriations:

FY 2010 - $2.98 Billion
FY 2011 - $3.86 Billion
FY 2012 - $4.99 Billion
FY 2013 - $6.44 Billion
FY 2014 - $7.33 Billion
FY 2015 - $8.33 Billion

2. New Health Center & Delivery Model Opportunities - School Based & Nurse Managed Health Centers; Community First Choice Option 

School-Based Health Centers

It appears as though the Act is attempting to extend the means by which primary care services may be delivered as well.  One such example is the new grant program for the development of School-Based Health Clinics (SBHC).  Although funding allotments are substantially less than is provided to FQHCs ($50 million for each of fiscal years 2010, 11, 12 and 13), the nature of the development is significant.

Generally speaking, SBHCs are clinics that are to be located in or near a school facility and that are to be organized through school, community, and health provider relationships.  They will be administered by a "sponsoring facility" (i.e., hospital, community health center, nonprofit health care agency, school or school system) and will provide primary health services (e.g., basic physical care/referral, mental health counseling/referral) to children.

Finally, the Act does state that grant-funded FQHCs are not eligible to receive SBHC-related grants (although the Act is silent with respect to FQHC look-alikes).

Nurse-Managed Health Clinics

The Act provides for a $50 million grant program in 2010 (and "such funds as may be necessary for 2011 through 2014") to support nurse-managed health clinics (NMHC).  NMHCs must provide FQHC primary services (e.g., prenatal, immunization, preventive dental, etc.) and are defined as a "nurse-practice arrangement, management by advanced practice nurses" that is "associated" with a school, college, university or department of nursing, FQHC, or independent nonprofit health or social services agency.  Although it is unclear what exactly a "nurse-practice arrangement" is, it is possible that this is simply a reference to a contract or employed nurse clinic manager situation.

New Delivery Models - Community First Choice Option

Beyond extending access and coverage, the Act also implements a variety of new delivery models intended to meet patient needs while reducing related overhead costs where reasonably possible.  One such model is referred to as the "Community First Choice Option."  This model is a new optional Medicaid benefit that provides attendant services/support for Medicaid beneficiaries with disabilities that would otherwise require hospital, nursing facility, or ICF/MR (Independent Care Facility for the Mentally Retarded) care. 

Beginning October 1, 2010, the Community First Choice Option includes "Home or community based" services to assist in daily living tasks, but excludes room and board, assistive devices, durable medical equipment and home modifications.  The benefit is available to individuals at or below 150% of the Federal Poverty Level and will be delivered via an "Agency" (contract) or "Other" (e.g., voucher) model.

3. HPSA/MUA Updates, National Health Service Corps Program Updates and Provider Recruitment

Health Professional Shortage and Medically Underserved Area Criteria - Negotiated Rulemaking

Health Professional Shortage Area (HPSA) and Medically Underserved Area (MUA) designations are vitally important for a number of benefits including rural health clinic (RHC) status, J-1 visa waiver programs, Medicare HPSA 10% bonus payments and National Health Service Corps (NHSC) loan repayment program (LRP) participation (see below). 

Due in part to the perception that HPSA/MUA criteria are too lenient, HPSA/MUA designation criteria updates were proposed in February of 2008.  Due to the huge volume of comments received, this Proposed Rule was never finalized.  Perhaps as a mechanism to reduce costs associated with HPSA/MUA designations, the Act provides for negotiated rulemaking for development of revised HPSA/MUA methodology and criteria.  A target date for publication of final rule was set as July 1, 2011.

New Health Care Workforce Loan Repayment Programs

The Act implements a new NHSC pediatric specialty LRP (in addition to current LRPs) that will provide  up to $35,000 a year for 2 years to encourage recruitment of pediatric surgical and mental health providers providing care in a HPSA, MUA, or to a medically underserved population (MUP).  Funding for this new program is allocated as follows:  Pediatric surgery ($30 million for 2010-14) and child/adolescent mental/behavioral health ($20 million for 2010-13). 

Allied Professional Loan Repayment Programs

Previously, NHSC LRPs were only available for a subset of health care professionals that excluded "allied health professionals" such as non-registered nurse, non-physician assistant and non-physician health care providers with a certificate or degree in a health care field.  Although the Act is silent as to funding, there will be a LRP for allied health professionals providing care in a HPSA, MUA, or to a MUP.

General Funding for National Health Service Corps

The Act provides for substantially increased and extended appropriations for general NHSC LRP purposes (perhaps to be applied to the Allied Professional LRP noted above):

2010 - $320 million
2011 - $414 million
2012 - $530 million
2013 - $690 million
2014 - $890 million
2015 - $1.15 billion
2016 (and each subsequent year) - Formula-based increase

Elsewhere, the Act provides for still more NHSC LRP funding increases.  Below, we indicate the approximate aggregate impact of this new funding and the funding noted immediately above:

2011 - $290 million (414 + 290 = $704 million)
2012 - $295 million (530 + 295 = $825 million)
2013 - $300 million (690 + 300 = $990 million)
2014 - $305 million (890 + 305 = $1.195 billion)
2015 - $310 million (1,150 + 310 = $1.460 billion)

As a result, substantial opportunities will exist for providers interested in placing NHSC LRP participants at qualified NHSC sites.

4. Other Supplier Issues

Extension of Payment for Technical Component of Certain Physician Pathology Services

Under current regulations, independent pathology labs providing services to hospitals are prohibited from billing Medicare for the technical component of anatomic pathology provided to hospital patients unless those services are provided to "Covered Hospitals."  Covered Hospitals are hospitals which had an arrangement with an independent laboratory that was in effect as of July 22, 1999, under which the lab billed Medicare directly for technical component services.  The Act extends the ability of independent labs to bill Medicare directly for Covered Hospital technical component services through the end of 2010.

Extension of Ambulance Add-Ons: Urban and Rural Place of Pickup

The Act extends ambulance fee schedule bonus payments for rural and other areas through the end of 2010.  Specifically, ground ambulance fee schedule payments are increased by 2% for an urban place of pickup while ground ambulance fee schedule payments are increased by 3% for a rural place of pickup.

Exemption of Certain Pharmacies from DMEPOS Accreditation Requirements

The Medicare Improvements for Patients and Providers Act (MIPPA) recently required that all DMEPOS suppliers were to be accredited by October 1, 2009.  The requirement included pharmacies providing DMEPOS, no matter how little.  The Act recognizes that some pharmacies are providing only minimal DMEPOS and provides that pharmacies enrolled as suppliers for at least five years with less than 5% of revenues originating from DMEPOS sales (among other requirements) are exempt from this requirement.  The Act does provide, however, that related pharmacy-specific standards may be issued.

If you would like additional information about any of these issues, please contact David Snow (414-721-0447, dsnow@hallrender.com); Todd Nova (414-721-0464, tnova@hallrender.com); or your regular Hall Render attorney.

Visit our Health Law Broadcast at hallrender.com/reform for a comprehensive listing of health care reform resources.  Also sign up for health care reform alerts and periodic updates as we continue to monitor this important issue.