The U.S. Supreme Court has blessed the Affordable Care Act. Repeated congressional efforts to repeal President Barack Obama’s signature legislation have failed. Federal and state insurance exchanges are open for business, and 3.3 million people have signed up for coverage.
With some of the important uncertainties about the law now resolved, lawyers have rolled up their sleeves.
“Last year there was so much uncertainty. There was a lot of wait and see,” said health law partner Sandra Greenblatt of Lubell Rosen in Miami. “Now there is starting to be a lot more activity on all sides.”
With most of an ACA mandate that large employers provide coverage for their employees or pay penalties due to take effect next year, “I am taking extra vitamins every day,” quipped Sheldon Blumling, chair of Fisher & Phillips’ employee benefits practice group in Irvine, Calif. “It is going to be a long year.”
Health care providers and employers of all stripes are seeking legal advice on many fronts. The ACA has helped spur a flurry of consolidations among hospitals, doctors and ancillary services, such as diagnostic imaging centers. Those consolidations are prompting queries about how to avoid antitrust violations. Employers are weighing what it will cost to comply and whether to take steps to reduce the burden. And with so much change in the air, litigators foresee a host of disputes arising.
Uncertainties created by the law have prompted the provider consolidations, said Jerry Sokol, a partner who specializes in health care transactions at the Miami office of McDermott, Will & Emery.
“That was in large part the impetus behind hospital and health systems buying practices and employing physicians at a pace we have not seen since the early 1990s,” he said. “In light of the uncertainty, many of the smaller players want to consolidate with larger players in order to strengthen their position” by creating economies of scale and gaining leverage with insurance companies.
“The tenets of the ACA relate to quality of care and cost savings,” he said. “That pushed the health systems to want to control various providers in the health care industry.”
Many doctors were willing to be acquired because of concerns that their insurance reimbursement rates would fall unless they were part of a larger system with market leverage. They also feared losing referrals from other doctors who have consolidated with hospitals or joined large physician corporations, Sokol said.
Another source of work for lawyers spawned by the ACA is the creation of accountable care organizations, or ACOs. Hospitals and primary care and specialty doctors band together to provide care to large groups of Medicare patients. They are intended to better coordinate care and avoid unnecessary tests and procedures. ACOs that reduce costs while meeting quality benchmarks will share the savings they achieve for Medicare.
If ACOs prove successful, they could extend beyond caring for Medicare patients, said Lee Lasris, co-founder of the Florida Health Law Center in Davie who helps clients form ACOs. “Those law firms spending a lot of time setting up ACOs are getting a lot of business.”
Employee benefits lawyers have their hands full as they advise client companies on how to comply with the ACA.
“Employee benefits groups have always advised clients on compliance with group health plans,” said Beth Alcalde, a partner in Akerman’s West Palm Beach office. “Now that type of advice is much more of our total work.”
Companies are making key decisions now in preparation for the rollout of the employer mandate beginning next year. The 2010 law requires any business with more than 50 full-time workers to provide affordable health care coverage or pay penalties.
Will small companies elect not to grow beyond 50 employees? Will large employers make more of their employees part-time to avoid providing insurance? And what about part-timers already on the payroll? Retailers Target, Home Depot, Trader Joe’s and others have garnered headlines for their decisions to end health insurance coverage for part-time staff and send them to the insurance exchanges instead.
“I feel we are able to really help our clients decide those sorts of fundamental questions of how do we want to structure our company, how do we roll out the plan, how do we prepare for this, what sort of record systems do we need to have in place,” Alcalde said. “It allows law firms to be in the boardroom with their clients,” offering strategic advice.
Traps For Unwary
The law has broadened her client base. “In the past, I would have said (clients were) only large and sophisticated employers who had sophisticated compliance questions. Now I am seeing much smaller and local clients reach out for our assistance.”
Fisher & Phillips’ Blumling said employer questions fall into two categories: general information about the law and how it will impact their business, and are they subject to the employer mandate and, if so, what do they need to do.
“We have been doing almost financial analysis,” he said, on matters such as how much it will cost to offer coverage and who to cover.
“There are thousands of pages of regulations on this,” Blumling said. “It is very difficult for employers to resort to self-help on this. There are too many traps for the unwary.”
Many employers are evaluating whether they can run their business with more part-time employees. But they are finding difficulties with that approach, he said.
“I am finding it is a lot easier said than done,” he said. “You have to think about the pool of employees you can recruit from when it is a part-time position. There are pure operational issues. If you switch to more part-time employees you have more scheduling issues.” The result, he said, is more inefficiency.
Alcalde said she is getting questions about cutting back work hours from employers in industries such as restaurants and travel. But established companies that generally pay higher wages “are not focused on that at all. They won’t monkey with hours to minimize impact.”
Similarly, “I have had very few clients who seriously considered terminating (insurance) plans and sending people to the exchange,” in part because companies get tax benefits for offering coverage, she said.
As elements of the ACA continue to unfold, litigators predict their services will be needed.
Health care litigator Alan Lash of Lash & Goldberg in Miami and Weston sees a long list of potential disputes that could give rise to lawsuits. For example, as insurance companies create new hospital and doctor networks, disputes could arise over payment to a hospital not included in a network that provides emergency services to a patient. State and federal law provide no guidance on that, he said.
As health care providers continue to consolidate, “there will be disputes among those parties on any number of things,” such as how revenue is divided, Lash predicted.
Not all of the disputes will end up in court. “Alternative dispute resolution is becoming a big area in the health care space,” he said.
Anticipating the disagreements that could arise, the American Arbitration Association developed arbitration rules two years ago for disputes between insurers and health care providers with the intent of creating a faster, more efficient resolution mechanism than lawsuits, said Lash, who also serves as an arbitrator for the AAA and the American Health Lawyers Association.
Many have anticipated health care consolidation could raise antitrust issues as a group of hospitals and doctors grab a bigger share of the market.
Lawrence Silverman, a partner and antitrust litigator in the Miami office of Akerman, said he is now fielding more questions on what is permissible. But the law does not change existing antitrust rules on how much market share a group of providers can have, he said. So clear guidance is in place.
“The question is coming up more,” he said. “But the law hasn’t changed.”
As the ACA contributes to a hefty workload for health and labor lawyers, many firms are beefing up their ranks.
“I got two calls yesterday” from firms looking to lure her to launch a heath care practice, Lubell Rosen’s Greenblatt said in a January interview. “Health care is hot.”
Those firms with existing health law practices generally report they are staffing up at a steady, but not white-hot, pace.
“Probably every one of the large firms in South Florida has identified health law as an area for future growth and expansion,” said William Spratt Jr., a health law partner at Akerman’s Miami office.
“We are staffing up in the employee benefits area,” Blumling said. “There is more and more to be done.”
Christine Worthen, an experienced health care/ERISA attorney with substantial ACO experience, was hired as of counsel at Broad and Cassel’s Fort Lauderdale office in September as part of an expansion of the practice area. She previously served as assistant general counsel of an 8,000-employee New England health care delivery system.
“Having a growing, robust health care department is absolutely critical,” she said.