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The Health Reform Decision: The Answer Begs the Questions

Lauren A. DeWitt

By Lauren A. DeWitt, Esq. and Catherine J. Flynn, Esq.

The recent Supreme Court decision upholding the Affordable Care Act (ACA) has left health care providers with many concerns.  The ACA brings sweeping changes to health care and is the largest expansion in health coverage since the initiation of Medicare and Medicaid.  However, the concerns of providers today are not necessarily new but rather involve trends that are already in progress now moving exponentially faster by virtue of the Supreme Court’s ruling that the ACA is constitutional.

Dwindling reimbursements, insurance companies dictating care and stringent fraud regulations and recoupment efforts have been concerns of providers for years.  The ACA and the recent Supreme Court decision have magnified these concerns by creating greater uncertainty in the health care landscape as implementation of the provisions of the ACA gets underway.  The details of exactly how the many provisions of the ACA will be implemented, enforced and operate in concert with one another are unclear.  We are currently awaiting legislative guidance on some of the key provisions following the Supreme Court’s decision. This leaves many questions for all health care providers on how the provisions of the ACA will ultimately affect them.

Catherine J. Flynn

For physicians and institutional providers reimbursement concerns weigh heavily, especially for hospitals providing services to large numbers of low-income patients.  While Medicaid expansion and the individual health insurance mandate promise more paying customers, that far from alleviates the concerns of hospitals and other institutional providers.   The ACA calls for drastic cuts to Medicare and Medicaid’s disproportionate share of hospital payments over the next ten years.  These are payments to hospitals that service a large low-income population to help compensate them for caring for these patients.

The reduction in disproportionate share payments could financially threaten many hospitals if the loss is not balanced by more reimbursement from insured patients.  This is of great concern following the Supreme Court’s ruling which allows states to opt out of the Medicaid expansion provisions without losing all funding for their failure to participate.  As a result, hospitals in states that opt out of Medicaid expansion might face even greater challenges. In those states, there may not be additional Medicaid recipients or funding to offset the reduction in disproportionate share payments.  Additionally, those hospitals serving areas with large numbers of illegal immigrants will still have to provide treatment to those individuals with shrinking charity care funds.

If the implementation of Medicaid expansion and the individual health insurance mandate result in more insured patients and fewer uninsured patients, there are still concerns that the bottom line will suffer.  With insurance companies now required to offer affordable options to this new insurance market, it is anticipated that a reduction in reimbursement rates will occur.  To help fund these new health plans, insurance companies might move toward reimbursing less for standard procedures as a cost saving measure, ensuring providers that the difference will be made up with payments for individuals who would otherwise be uninsured.  It remains to be seen whether the increase in paying patients will offset any reimbursement rate reductions or if providers will suffer due to reduced payments from insurance companies.

Reimbursement will also be affected by new mechanisms designed to increase quality of care while reducing cost.  Measures such as value based purchasing and shared savings will impact payments to providers.  While payments can be impacted positively as a result of these quality initiatives, for some providers this heightens the concern of insurance dictated health care.  Physicians have long been frustrated with the insurance companies’ ability to dictate health care decisions by simply refusing to pay for procedures or treatment options that they deem unnecessary or inappropriate.  With the ACA’s push toward evidence based medicine and statistical approaches to health care, some providers fear the worst.

While the goal of providing better quality care with less cost is undeniably beneficial for all, the necessity of physicians to make the best care recommendations for their patients cannot be impeded.  Many physicians feel there needs to remain room for the “physician’s gut instinct” and treatment decisions that stem from the total presentation of a patient and a physician’s experience.  It is unknown whether an increasing number of insured patients, greater insurance involvement and quality and outcome based initiatives will impede physicians’ ability to make independent medical recommendations with regard to their patients, or whether it will work as intended, creating better outcomes at less cost.

The ACA also requires more stringent fraud regulations and greater recoupment efforts for Medicare and Medicaid over-payments.   Fraud enforcement measures will continue to increase in both the public and private insurance sectors in order to help fund expanding health coverage. These efforts have already begun to affect providers with many insurance companies auditing records and initiating actions to recover payments.  This has been a growing concern of many providers and will continue to be a concern as Medicaid audits mandated by the ACA are already underway and are expected to result in the recovery of more than $2 billion over the next four years.

In the wake of the Supreme Court’s ruling on the ACA, we are left with uncertainty regarding the practical effect that these provisions will have on health care providers.   We still need more information regarding how these provisions will be carried out in order to determine the implications on the health care landscape.  Ultimately, we will have to wait over the coming years as the provisions of the ACA become integrated components of our health care system to see the full extent of its impact.

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Catherine J. Flynn, Esq. is Chair, and Lauren A. DeWitt, Esq. is an associate, of the Health Law Group at Weber Gallagher Simpson Stapleton Fires & Newby LLP (www.wglaw.com).

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