Healthcare Reform: 2012 Is Going to be a Busy Year

It seems like the healthcare industry has been in a constant state of flux. For better or for worse, this will continue to be the case in 2012. Indeed, between upcoming legal and political developments, this year is shaping up to be critical for the effort to implement the provisions of the Patient Protection and Affordable Care Act (“PPACA”) that are designed to reform the nation’s healthcare delivery and reimbursement systems through the development of accountable care organizations (“ACOs”) and other innovative programs. As an example, the 32 Pioneer ACOs (ACOs approved in December for mature groups ready to take risk) began operations on January 1. One of the Pioneer ACOs, JSA Medical Group, will be operating in the Orlando, Tampa and South Florida markets.

 

Here are a few more critical dates to keep in mind:

 

March 26. The United States Supreme Court will hear oral arguments on one of the most controversial provisions of PPACA, the so-called “individual mandate." The Court has allotted over 5 hours for oral arguments on that day. This unusually long time for oral arguments reflects the complexity of the issue, the Court’s evaluation of its importance and the number of parties who want to be heard. Although 26 state attorneys general have joined in the effort to strike down the individual mandate, there is substantial support for upholding this provision. In addition to the usual suspects, a group of over 500 state lawmakers, including lawmakers from all of the 26 states that are seeking to have it overturned, have filed a brief in support of the individual mandate. Most observers expect that by the time the Supreme Court’s current term ends in June, the Court will issue its decision regarding this keystone provision. However, whether the Court upholds or strikes down the mandate, PPACA’s Medicare Shared Savings Program (“SSP”) already has set in motion forces that likely will significantly alter the business, if not the practice, of healthcare.

 

April 1 and July 1. The ACOs that submitted their applications to CMS on or before January 20, 2012 will begin operation on April 1. ACOs that submitted their applications after that date but on or before March 30, 2012, and are approved will begin operation on July 1.

 

October 1. Notwithstanding the development of ACOs, this is the date on which the Medicare program will begin using value-based reimbursement criteria for hospital services. These criteria will link a part of a hospital’s Medicare payments to its ability to satisfy certain performance standards. In addition, hospitals who readmit patients for preventable complications will see their reimbursement for these readmissions adversely impacted.

 

November 6. The election. Separate and apart from what the Supreme Court decides concerning the individual mandate, the fate of PPACA and the current effort to reform the way in which the federal government pays for healthcare items and services may depend on who are the winners and losers. All of the major Republican candidates are running on platforms that include repealing “Obamacare”. However, none of them have provided a great deal of information concerning which aspects of PPACA (other than the individual mandate) they would seek to repeal. Some of PPACA’s provisions (for example, the coverage of minors up to age 26 and the prohibition concerning pre-existing conditions) have widespread popular approval. If it is upheld, the insurance industry is likely to fight to retain the individual mandate. In addition, ACOs and the SSP are designed (in part) to begin addressing the federal deficit. Thus, even if the Republicans win by a landslide, it seems unlikely that many of PPACA’s more significant provisions will be repealed.

 

December 31. Under PPACA, each state has the option of establishing its own health insurance exchange. While those exchanges will not “go live” until 2014, by the end of 2012 the federal government must certify that a state is progressing toward that goal or risk having to implement a federally run exchange. NOTE: so far Florida has opted not to establish its own health insurance exchange. Instead, citizens of this State will participate in a federally run exchange.