Health Care Reform

The Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act of 2010 ' commonly known as federal health care reform ' will significantly impact lawyers endeavoring to keep their clients informed on the reform's effect on their health-care practices and businesses. From compliance to quality improvement to reimbursement, the changes are far-reaching. Certain segments of reform will impact health care clients' practice guidelines, patient load, reimbursement structure, and exposure to litigation and administrative proceedings. Lawyers must inform their health-care clients on compliance requirements and be prepared to defend them in compliance hearings and litigation.

Quality

Health care reform mandates a strong quality improvement initiative with compliance incentives for those providers accepting Medicare and Medicaid patients. According to the Department of Health and Human Services (HHS), the goal is for the Centers for Medicare and Medicaid Services to restructure payment systems to encourage providers to offer the highest, most efficient level of care while curtailing costs.

By 2014, the reform package will expand incentive payment categories to providers to include efficiency measures in addition to quality measures. Further, an innovation center receiving $10 billion in funding over 10 years is going to be established to develop and evaluate new patient-care models aimed at lowering costs while maintaining or improving quality.

The government will reward providers that are successful in coordinating care and implementing stringent quality measures with a bigger portion of the reimbursement pie; accordingly, it will penalize those that are not with lower reimbursement rates. For example, poorly performing hospitals that rank in the top quartile of hospital-acquired illnesses will receive reduced payments for Medicare patients. Physicians in the bottom 10th percentile of adjusted use of resources ' those who are least efficient in using supplies, lab studies, procedures, etc. ' will receive a 5% payment reduction. Much of this quality push harkens to the 1990s during the reign of the health maintenance organization. Lawyers will have to guide their clients through these compliance issues, assist them with maximizing reimbursement and potentially litigate reimbursement reductions.

Lawyers for providers are not the only ones affected by this movement. Reporting requirements are increasing for insurance companies, which face penalties starting in March 2012 for failing to report. Lawyers for insurance companies will need to help insurers navigate these changes.

Bundled Payments

Under the reform, the government must develop bundled payment and value-based purchasing programs as an incentive to coordinate care among various providers treating Medicare/Medicaid patients. According to a Rand study of policy options, “Bundled payment systems (also known as 'case rates' or 'episode-based payment') would make a single payment for all services related to a treatment or condition, possibly spanning multiple providers in multiple settings.” Similarly, value-based purchasing, also known as pay for performance, encompasses the concept of providing efficient, quality, evidence-based care in the most cost-effective manner.

Savings at the Expense of Quality?

The concern becomes whether these initiatives actually will incentivize providers to under-treat to maximize profit (or simply to break even). With the public's concern over this issue, providers may become more vulnerable to medical malpractice suits as the scrutiny of their care magnifies.

The implementation of these quality initiatives and reimbursement models will prompt providers to decide whether they want to continue to care for Medicare/Medicaid patients. If they do, they will need legal advice regarding how to implement such programs properly and ensure that they report outcomes as the government requires to maximize reimbursement while minimizing litigation exposure.

Peter H. Anderson is a partner and Kimberly K. Bocell is a senior associate with Chamblee & Ryan in Dallas. They have represented physicians in medical-malpractice suits and in front of the Texas Medical Board. Anderson also serves as counsel for physician groups. Bocell is a former registered nurse. This is a condensed version of an article that first appeared in the Daily Business Review, an ALM sister publication of this newsletter.

The Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act of 2010 ' commonly known as federal health care reform ' will significantly impact lawyers endeavoring to keep their clients informed on the reform's effect on their health-care practices and businesses. From compliance to quality improvement to reimbursement, the changes are far-reaching. Certain segments of reform will impact health care clients' practice guidelines, patient load, reimbursement structure, and exposure to litigation and administrative proceedings. Lawyers must inform their health-care clients on compliance requirements and be prepared to defend them in compliance hearings and litigation.

Quality

Health care reform mandates a strong quality improvement initiative with compliance incentives for those providers accepting Medicare and Medicaid patients. According to the Department of Health and Human Services (HHS), the goal is for the Centers for Medicare and Medicaid Services to restructure payment systems to encourage providers to offer the highest, most efficient level of care while curtailing costs.

By 2014, the reform package will expand incentive payment categories to providers to include efficiency measures in addition to quality measures. Further, an innovation center receiving $10 billion in funding over 10 years is going to be established to develop and evaluate new patient-care models aimed at lowering costs while maintaining or improving quality.

The government will reward providers that are successful in coordinating care and implementing stringent quality measures with a bigger portion of the reimbursement pie; accordingly, it will penalize those that are not with lower reimbursement rates. For example, poorly performing hospitals that rank in the top quartile of hospital-acquired illnesses will receive reduced payments for Medicare patients. Physicians in the bottom 10th percentile of adjusted use of resources ' those who are least efficient in using supplies, lab studies, procedures, etc. ' will receive a 5% payment reduction. Much of this quality push harkens to the 1990s during the reign of the health maintenance organization. Lawyers will have to guide their clients through these compliance issues, assist them with maximizing reimbursement and potentially litigate reimbursement reductions.

Lawyers for providers are not the only ones affected by this movement. Reporting requirements are increasing for insurance companies, which face penalties starting in March 2012 for failing to report. Lawyers for insurance companies will need to help insurers navigate these changes.

Bundled Payments

Under the reform, the government must develop bundled payment and value-based purchasing programs as an incentive to coordinate care among various providers treating Medicare/Medicaid patients. According to a Rand study of policy options, “Bundled payment systems (also known as 'case rates' or 'episode-based payment') would make a single payment for all services related to a treatment or condition, possibly spanning multiple providers in multiple settings.” Similarly, value-based purchasing, also known as pay for performance, encompasses the concept of providing efficient, quality, evidence-based care in the most cost-effective manner.

Savings at the Expense of Quality?

The concern becomes whether these initiatives actually will incentivize providers to under-treat to maximize profit (or simply to break even). With the public's concern over this issue, providers may become more vulnerable to medical malpractice suits as the scrutiny of their care magnifies.

The implementation of these quality initiatives and reimbursement models will prompt providers to decide whether they want to continue to care for Medicare/Medicaid patients. If they do, they will need legal advice regarding how to implement such programs properly and ensure that they report outcomes as the government requires to maximize reimbursement while minimizing litigation exposure.

Peter H. Anderson is a partner and Kimberly K. Bocell is a senior associate with Chamblee & Ryan in Dallas. They have represented physicians in medical-malpractice suits and in front of the Texas Medical Board. Anderson also serves as counsel for physician groups. Bocell is a former registered nurse. This is a condensed version of an article that first appeared in the Daily Business Review, an ALM sister publication of this newsletter.