image_pdfimage_print
Ongoing processes that deserve annual review – Parts II and III
 
It is often said that, next to nuclear energy, healthcare is the most heavily regulated (and dynamic) industry in the United States. Despite the complexity of these regulations, which seem to be ever-changing, everyone who is involved in the healthcare industry is expected to know, understand and comply with those regulations that are relevant to their business. In this area, ignorance really is no excuse or even an effective defense.
 
Every year there are changes in both the business and legal environments that require examination and, from time-to-time, course corrections. Failing to make those corrections, whether as the result of ignorance, or deliberate disregard, can result in some very unpleasant and expensive consequences. The purpose of this article is to highlight several areas every business in the healthcare industry should review.
 
1. ACOs, PCMHs, etc.
One of the growing trends over the past 18 months has been the emergence of accountable care organizations ("ACO"), patient center medical homes ("PCMH") and other affiliations of healthcare providers to address the needs of individual patients and patient populations. There are several distinctions between these affiliations and the physician practice management companies of the 1990’s. Perhaps most importantly, the focus today is on establishing metrics that reward healthcare providers who provide cost effective services to populations of patients, rather than those who are able to inflate the cost of care.
 
In large part, the affiliation drive is based upon changes in the manner in which healthcare is going to be reimbursed in the near future. We already have seen efforts to squeeze payments to healthcare providers. ACOs, bundled payments and other mechanisms that are being developed will reduce the availability of fee-for-service reimbursement.
 
The question of how and how much healthcare providers are going to be paid for their services represents a significant business challenge. For many healthcare providers the question today is whether they believe that their future is likely to be better alone, or as a part of one of these affiliated delivery systems. The start of the year provides a point in time to put this question into focus.
 
2. Contract Compliance.
It is a sound business practice for any business to review periodically all of its contractual relationships. There are several reasons for doing this. One of the most obvious is to evaluate whether it is a business relationship that justifies continued maintenance, needs to be modified or even terminated.
 
An equally important reason for businesses involved in the healthcare industry to review their contractual relationships periodically is to ensure regulatory compliance. Not only HIPPA-HITECH, but other regulatory requirements such as the federal Stark Law and Kickback Prohibition, can create risks that need to be identified and evaluated in order to determine whether or not it makes business sense to maintain that relationship. As if to make matters even more complex, Florida has its own statutory scheme for regulating the healthcare industry that, in some significant ways, is not consistent with the federal statutes that are the focus of most of the attention.
 
During 2013 there have been a number of court decisions and settlements that may have a profound impact on how healthcare providers contract with physicians. While most of these cases have involved hospitals, the government is likely to look to expand their application to physician contractual relationships with a variety of healthcare providers. Thus, a prudent business involved in this industry should carefully reexamine all of its relationships with physicians and other referral sources.
 
One thing that seems certain in healthcare today is that the traditional business model, i.e., fee-for-service medicine, is rapidly changing. Whether capitated payments, bundled payments, pay for performance payments, ACOs, PCMHs, or some variation of these or other reimbursement mechanisms and healthcare delivery systems will dominate the future may be unclear. What is not unclear, however, is that every business involved in the healthcare industry needs to work with its legal counsel and business advisors in order to begin planning for the future.
 
The beginning of the year also is a good time to carefully review and determine which contracts should or should not be maintained and or renewed or otherwise renegotiated during the course of the coming year. As part of that review process, along with experienced legal counsel, every business should ensure that it has not inadvertently entered into an arrangement that might be viewed as violating one or more of the Florida or federal restrictions that are unique to this industry.