How Physician Practices and Physicians Can Take Advantage of the Supreme Court's ACA Ruling

by Saul Ewing Arnstein & Lehr LLP

The June 28th Supreme Court ruling to uphold the Patient Protection and Affordable Care Act ("ACA") removed some of the uncertainty surrounding the immediate short-term prospects for health care reform. Now that the debate over the ACA is over, it is time for physician practices and physicians to move forward and ensure they remain vibrant.

What should physician practices do to take advantage of the changing health care landscape?

Invest in Your Practice

Physicians should take steps to improve the management of their medical practices to meet the expected increase in demand resulting from expanded insurance coverage under the ACA. Many practices have already begun implementing electronic health record (EHR) systems to increase practice efficiencies through integrated scheduling systems, centralized chart management and enhanced communication and information sharing.

Implementing EHR systems also allows practices to take advantage of financial incentives offered to "meaningful users" of health information technology. Physicians that invest in EHR will enable their practices to better handle the influx of patients caused by the ACA's coverage requirements.

It is anticipated that payors will continue to shift provider reimbursement away from traditional fee-for-service reimbursement and more toward payments based on performance (i.e., improved outcomes, cost savings). Having sophisticated IT systems in place will benefit the practice in managing this transition from fee-for-service to risk-based payment.

Consider New Opportunities and Strategies

The ACA authorizes the Medicare Independent Payment Advisory Board (IPAB) to restrict pay to physicians when total spending exceeds predetermined targets. As a result, practices should consider new opportunities and business strategies to offset potential reductions in revenue.

Many practices have been motivated to join with hospital and other health care providers in forming accountable care organizations (ACOs). The ACA promotes the formation of ACOs by financially rewarding groups that meet certain performance levels on a range of specific quality measures. A number of private insurers have also adopted ACO-style payment arrangements through their provider contracts.

Some smaller practices may decide to sell their practices to hospitals or merge with larger physician practices to increase their bargaining position in negotiating with health plans over reimbursement rates. While bigger may not necessarily be better, there is increasing consolidation among health care providers in preparing for health reform under the ACA. Staying apprised of trends and significant developments in your community is invaluable. Different specialties will have different considerations and reimbursement models to address.

Depending upon reimbursement changes, other practices may decide to reduce or limit the number of new Medicare and Medicaid patients or simply opt out of the federally funded health care programs.

Stay Informed

Although the Supreme Court's decision resolved much of the uncertainty surrounding the ACA, some areas of the health care reform remain unsettled, and it will be critical for medical practices to stay abreast of future developments.

The Court's ACA ruling allowed the law's Medicaid expansion, which has been projected to cover an additional estimated 17 million low-income individuals, to stand, but stipulated that the federal government cannot threaten to withhold all Medicaid funding from states that refuse to extend coverage. As a result, some states may opt out of the Medicaid expansion, which would impact the number of newly covered patients seen by practices. Physicians should follow the Medicaid developments in their states to stay informed and better position their practices for the future.

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Saul Ewing can help physician practices and physicians align their business interests to take advantage of the opportunities presented by the ACA and keep apprised of state and federal health care reform developments.

For more information on the Patient Protection and Affordable Care Act, read our previous Alerts here.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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