2017 Healthcare Legal Predictions

government2017 is literally weeks away, and there are some big possible changes for the healthcare industry.  The Ambulatory M&A Advisor takes a look at some of the legal concerns that healthcare M&A  lawyers are looking at for the industry in the new year.

Sandra Greenblatt, partner at Lubell Rosen and a Board Certified Health Lawyer explains that the government continues to be very active in identifying fraud and abuse and overpayment of claims by Medicare and Medicaid. She says now, there is the 60 day rule mandating timely repayment of overpayments of government funds.

“If providers don’t comply, those claims turn into false claims, having both civil and criminal implications. Enforcement has also increased under the Stark Law and Anti-Kickback Statute and many cases are the result of whistle blower reports by disgruntled employees, competitors and others.  Payments to referring physicians that exceeded fair market value led last year to hundreds of millions of dollars paid by hospitals to settle cases,” Greenblatt says.

Greenblatt says the government is one area of concern, but providers also should be concerned about what is coming from the private sector.  According to Greenblatt, commercial payors are increasingly doing claims audits and asserting large overpayments against providers for various reasons.  In addition to lack of medical necessity, they are challenging whether providers are collecting deductibles and copayments, whether patients are from outside the coverage area and whether providers fail to follow payor payment policies, which are often not readily available to providers.

“In Florida, we have prompt payment lawsunder which claims are supposed to be paid or denied within a certain timeframe.  There is no exception under these prompt payment timeframes for audits.  Yet, when these payors send out audit notices, they generally stop the providers’  payments.  What they are doing is starving out the providers.  Insurers did this years ago with mental health partial hospital programs and caused the closing of many quality programs along with poor ones,” Greenblatt says.

Kenya Woodruff, partner with the law firm HaynesBoone says that MACRA is going to be a large issues in 2017 healthcare since it is a push to change the way physicians are compensated.  It is a continuation of the volume to value type of considerations when insurance companies are looking at reimbursement.

“MACRA is going to end the current sustainable growth rate formula and replace it with the newest format and formula for compensating physicians.  MACRA will also incorporate some of the existing quality reporting programs that we have seen coming into play over the last several years,” Woodruff says.

“I think the vast majority of physicians are probably unaware of MACRA and the changes that are coming.  That is one of the criticisms of MACRA going into effect in January 2017.  Many physicians are really not aware of all of the details involved in this new compensation structure and may not have the tools to be able to report or control the things that they are going to be paid on,” Woodruff says.

William Horton, partner, Jones Walker says that the field is continuing to see a pretty big risk enforcement environment since the industry is now in the HIPAA audit phase two, so providers and business associates have got to be concerned about their compliance and whether they are maintaining appropriate security for protected health information.

“We have seen the government get demonstrably more serious about that in the last year or so and I think that will continue.  We have seen a growing focus by the government on the fraud enforcement side to pursue individuals personally, rather than simply going after provider organizations.  That seems to be continued focus for the government in its enforcement efforts,” Horton says.

Changes with a new President:

Horton says the new administration helps paint the big picture thing that providers need to worry about, which is what is going to happen in the new administration for healthcare regulation, both as to the potential for repeal and replacement of the ACA; and more generally in terms of the administration’s approach to regulation.

“We have gotten a lot of high level talk out of the Trump team during the campaign and so far during the transition, but really not with a lot of specificity.  Providers and payors large and small have invested a lot in changing to adapt to the ACA over the last few years, so how much of that is going to have to be undone or redone is anybody’s guess,” Horton says.

“Of course, the new administration is talking about repealing the ACA.  Number one, you have 20 plus million Americans who now have health insurance coverage whodid not have it before.  Sudden and rapid repeal would be tragic and chaotic for them,” Greenblatt says.

All of the discussion in the media and politics about the ACA is focused on the individual insurance coverage issue.  As a health lawyer representing the provider community, Greenblatt says she takes a much broader view.

“The ACA has more complexity and is changing the structure of delivery of care and payment for healthcare in the U.S.  The provider community has spent millions of dollars going down that road already, creating ACOs, going to value-pay and other models.  Many changes are already implemented.  It would be wasteful and damaging to reverse the progress that has been made, including increasing the quality of care and patient outcomes and reducing the cost of the health care system.  If politics cause the ACA to be repealed, I hope it is not repealed instantly, but is repealed after several years, so that there is time to study which parts of the law should be kept and so a suitable replacement can be created for the others,” Greenblatt says.

According to Greenblatt, the ACS was not perfect legislation but it was a huge step forward for universal health coverage and bringing modern technology into the healthcare industry.  She believes it would be very hard for the whole healthcare system if it was just thrown out the window.

Acquisitions:

As far as acquisitions are concerned, Horton expects there will continue to be a lot of interest in hospital acquisitions of urgent care companies.

“I think what that has been driven by in part is the continued pressure from the reimbursement system to better coordinate care across the full continuum.  Increasingly, I think people don’t have the traditional family physician that we had in the past, and people are using urgent care centers as their principle source of primary care.  Hospitals looking to control that frame of patients and to be able to respond to the demand for greater coordination care, I think are going to continue being very interested in continuing to pursue urgent care acquisitions,” Horton says.

“One of the things to be mindful of if you are an urgent care operator considering a sale is if you’re  a physician operator who is active in the business, and want to continue to stay active in the business, know how your life is going to change.  Are there services that the hospital is going to take out of the UCC and roll into a hospital outpatient department setting? Is there a consistency between the hospital’s philosophical approach to how you deliver urgent care and what you as an independent operator may have been used to?”

If you have an interest in learning more about the subject matter covered in this article, the M&A process or desire to discuss your current situation, please contact Blayne Rush, Investment Banker at 469-385-7792 or Blayne@AmbulatoryAlliances.com.

 

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