2012 promises to be another challenging year for the healthcare industry, chocked full of debate over healthcare reform, adoption of new healthcare information technologies, and the creation of new business models. Through all of this, hospitals will continue facing tighter budgets and increased regulatory enforcement. The following list provides a big picture summary of what hospitals can expect in 2012.
United States Supreme Court to Rule on President Obama’s Healthcare Reform. The United States Supreme Court has agreed to hear arguments on the constitutionality of the Patient Protection and Affordable Care Act (the “Affordable Care Act”). The Affordable Care Act mandates that every American purchase health insurance or suffer tax consequences as a result. Twenty-six states (26), including Alabama, have joined together to challenge the law’s constitutionality. Several appellate courts have already ruled on the issue, including the 11th Circuit Court of Appeals in Atlanta, which held the provision unconstitutional. Other courts, including the District of Columbia Circuit Court have upheld the law. The Supreme Court will hear oral arguments in March of 2012, allotting an unprecedented five hours for argument. The Supreme Court’s decision, which would likely be issued in the summer of 2012, will certainly be a hot-button topic in the press and in this year’s presidential election.
Increasing fraud prosecutions. Amidst budget crises, the Obama administration has been particularly focused on eliminating healthcare fraud, waste and abuse. In the past year, large hospitals and hospital systems have been involved in healthcare fraud lawsuits or settlements. Catholic Healthcare West, for example, paid $9.1 million to settle allegations that seven of its hospitals had submitted fraudulent Medicare claims. The focus on healthcare fraud and abuse is not likely to subside in 2012. In order to prepare for 2012 and the host of federal investigations that may come with it, hospitals should review the 2012 Work Plan released by the Office of Inspector General (“OIG”) and available on the OIG website at www.oig.hhs.gov. The Work Plan outlines 23 projects specifically targeting hospitals, six of which are new projects. Some of the new projects identified for 2012 include: (1) reviewing hospitals’ inpatient and outpatient billing and using data mining to identify areas of risk for non-compliance; (2) reviewing hospital transfers to hospices and examining the financial or ownership relationship between the hospice and the hospital; (3) reviewing hospital outpatient payments for dental services; and (4) reviewing the appropriateness of admissions to independent rehabilitation facilities (“IRFs”) and the level of therapy provided in IRFs (including how much group/concurrent therapy is being provided).
Version 5010 and ICD-10 Implementation. 2012 will mark the final preparations for the highly anticipated, or rather, feared, transition to the International Classification of Diseases, 10 Rev., or “ICD-10” as it is more commonly called. ICD-10 is a coding system used to document diagnoses and treatments with far more specificity than its predecessor, ICD-9. Structurally, the ICD-10 code is much longer, up to seven characters, as opposed to a maximum of five in ICD-9, which means that the industry can now make use of a much higher number of codes. The change in coding puts hospitals and other healthcare providers in a “Y2K” type situation: failure to upgrade the IT systems could be disastrous, leading to payment delays and denials. The official roll-out date for ICD-10 is October 1, 2013, so hospitals still have time to prepare in 2012. During this year, hospitals must reevaluate all systems wherein ICD-9 codes are used, and determine whether to alter the system, or replace it. Hospitals must also retrain their staffs on the use of ICD-10. The tasks hospitals are facing can seem daunting, but 2012 should be the time wherein hospitals are practicing, preparing, testing and evaluating their ability to transition to the ICD-10 system. The Centers for Medicare and Medicaid Services (“CMS”) have prepared step-by-step guides for large and small hospitals to help with the ICD-10 transition. These guides are available on the CMS website at www.cms.gov.
Although some of the major healthcare topics have been listed above, there are a host of other regulatory and business changes set to arise in 2012. New and innovative joint ventures, Accountable Care Organizations and physician employment are just a few of the operational changes that will be taking shape this year. Clearly, 2012 will be another exciting year for providers in the healthcare industry.