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September 1, 2008
Fall 2008 Topics
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Never Events
One of the main topics of discussion (and new terms) in 2008, which you may have heard about, is "Never Events." Never Events are defined as "adverse events that are serious, largely preventable, and have concern to both the public and healthcare providers for the purpose of public accountability." The National Quality Forum has compiled a list of 28 Never Events.
The Centers for Medicare and Medicaid Services (CMS) has announced that, beginning October of this year Medicare will not pay for the costs associated with the following six conditions.
- Certain serious pressure ulcers
- Acquired urinary tract infections from catheter use
- Acquired blood stream infections from catheters
- Air embolism (air bubble in a blood vessel)
- Giving the wrong blood type
- Foreign bodies left in surgical patients
Additionally, hospitals and other providers cannot balance bill these costs to patients who have been harmed (or their health plans). It is anticipated that CMS will add further conditions, including ventilator-caused pneumonia and drug resistant staphylococcus infections, in the future.
As healthcare providers are not permitted to bill for Never Events (at least not for those identified by CMS), and the fact that these events are fairly rare, excluding services and withholding payment is not expected to result in dramatic savings to health plans. It is expected, however, that the negative financial consequences to health care providers will result in a greater focus on safety and quality of care.
Heart Act Benefits Service People
In early June, President Bush signed the Heroes Earnings Assistance and Relief Tax (HEART) Act into law. This Act amends the Internal Revenue Code and the Social Security Act to provide tax benefits and incentives to military personnel.
One provision of the HEART Act that is of special interest is that distribution of unused amounts in the health flexible spending account of a reservist called to active duty will be allowed. Any distribution will be taxed; however, the reservist will not face losing unused funds due to the "use it or lose it" rule.
The distribution (called a "qualified reservist distribution") can be for all or for a portion of the unused funds in the reservist's account if he or she is called or ordered to active duty and:- The period of active duty is for a period of over 179 days or for an indefinite period, and
- The distribution is made between the date of the order or call to duty and the date that reimbursements from the health FSA would otherwise be made for the plan year.
Plan sponsors that wish to allow for the qualified reservist distribution must amend their plan documents and notify participants of the change prior to making any distributions. Further guidance regarding the HEART Act is expected from the IRS.
Using IRA Money to Fund an HSA
The IRS recently released Notice 2008-51 which provides guidance on funding an HSA with funds from an IRA or Roth IRA without facing federal income taxes or penalties. The amount deposited in the HSA cannot, however, exceed the individual's maximum contribution limit.
The funds from the IRA would not be included in the individual's gross income and would not be subject to tax or penalty provided the individual is covered by a high deductible health plan (HDHP) and the money goes directly from the IRA trustee to the HSA trustee. If, within 12 months, the individual ceases HDHP coverage, the funds would be subject to tax and penalty. The IRS confirmed, in Notice 2008-51, that an employer is "not responsible for reporting whether an employee remains an eligible individual" during this 12 month period.
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The Patient Protection and Affordable Care Act of 2010 
