business basics for the health care professional

5.1.12

How quickly can you set up a corporation for my practice?” the physician asked the attorney over the telephone.

“Why do you want to incorporate?” the attorney asked in return.

“Because I am going to set up a holistic health center with a friend who is a naturopathic physician, and I want to protect my personal assets and I do not want to be responsible for my partner if something happens,” the doctor responded.

“Okay, that’s fine, do you have a general business plan and a good accountant? Also, have you projected your income and expenses for the first twelve months? Do you know if you will be equal monetary partners? Have you planned for employees? Do you know who will manage the practice? Have you begun to plan for retirement? Do you know if you will bring on other owners, and whether they will be physicians or other types of allied health providers? Do you have an idea of how to get out of the business if you want to retire or change jobs?”

“No, why does all that matter? I just want a corporation,” the doctor blurted back, getting somewhat agitated by the seemingly bothersome questions.

“Well, your attorney can pretty much set you up immediately in any type of business form that you want, but what your business form should be may be a different story. All I am saying is that we should take a few moments to consider some initial questions and talk with your financial advisors before we fill out the paperwork.”

The doctor paused. “So how much is all this going to cost me?”

Finding the Right Fit For Your Business

There are so many choices out there and very little agreement on what the best form of business entity is for the professional. Further, there is a perception that the only way to protect yourself in business is to register as a corporation.

So is this akin to rocket science? Unfortunately, sometimes there can be a feeling of too much complexity because of something called the Internal Revenue Code and other laws that affect the health care industry such as the Stark Law. The purpose of this article is to outline the types of business entities available for health care professionals. Note that while this article touches on Oregon law, each state will have varying limitations regarding its business entities, so professionals should consult with an attorney licensed in their state.  The main point here is that business entities are not “one size fits all,” and professionals must weigh the pros and cons of the various options before deciding upon what is right for them.

Choice of Business Entities for the Health Care Professional

Traditionally, there were very few options available to health care professionals for setting up their business entities. Many professionals simply operated as sole proprietors or got together with a few colleagues and (by default) operated their business as a general partnership. And, historically, the only real choice for formally establishing a business was to incorporate as a professional corporation. Now, with limited liability companies and limited liability partnerships, the choices for professionals are varied. The following is a list of the most common businesses for health care professionals. Other forms of businesses such as general partnerships, limited partnerships, private corporations, and nonprofit corporations are not discussed in this article.

• Sole Proprietor

Basically, this form of business is the simplest. A single professional conducts business in his or her name, pays all the expenses, and retains all the profits. There is no need to register officially with the state as a sole proprietor. The advantage to this form of business is the ease of administration. The disadvantage to this form is that the sole proprietor is personally responsible for all the liabilities of the business. The secret for the sole proprietor is to have as much insurance in place as necessary for business activities in order to protect personal assets.

• Limited Liability Partnership

As stated above, many professionals who got together with their colleagues, simply operated the business as a general partnership. The main reason for using the general partnership probably was due to the ease of administration and lack of formalities required by more organized business forms. (The more likely reason, however, was that a group of sole proprietors simply started working together and never bothered formally organizing.) The danger from operating in a general partnership, is that each of the partners is personally liable for every other partner. And, in the medical professions this liability exposure can be significant (even though it may be insurable). As an alternative to the general partnership, professionals may register their business as a limited liability partnership (“LLP”). The protection this offers is similar to the professional corporation (and the limited liability company), in that, a partner’s personal liability exposure for the bad acts of his partners is capped by statute for all claims made against him (with that cap adjusted periodically by regulation). For this single reason, any group of professionals that are operating as a general partnership should ask their advisors about registering with the state as a limited liability partnership. Compared to LLCs or PCs, advantages to this form of business are that the LLP is almost identical to the ease of administration and operation of the general partnership and there is some flexibility in allocating profits and losses among the partners. The disadvantages are that partners generally may bind each other without consensus, and everyone in the partnership usually has a say in the management of the business (this could be difficult as the number of partners increases).

• Limited Liability Company

The limited liability company (“LLC”) has become more common in the last ten years or so because it offers many of the same advantages of a partnership and a professional corporation but without the corporate formalities. Understand, however, that no matter what business form is decided upon, there are basic formalities that must be followed or the business may be deemed nonexistent and indistinguishable from the individuals that own it. In that case, individual owners (called “members” in a LLC as compared to “partners” in a LLP or “shareholders” in the PC) may find themselves exposed to personal liability similar to that of sole proprietors or general partners.

The advantages of a limited liability company, therefore, are the ease of administration (although somewhat more complex than the LLP), and flexibility in allocating profits and losses among members (again, similar to the LLP). The disadvantages of operating as a limited liability company include the lack of familiarity with this form of business entity including the terms associated with the LLC such as “articles of organization,” “operating agreement,” and “members.” In addition, the operating agreement for LLCs can be a cumbersome document and very technical from a tax perspective.

• Professional Corporation

Clearly, as the most structured of all professional associations, the professional corporation (“PC”) is widely used by groups of individuals who want a healthy dose of organization and formality for their business. For all practical purposes, this is a corporation that elects a board of directors and officers who manage the corporation. The professional corporation also “employs” its health care professionals even though they are considered the owners (“shareholders”). One of the best advantages to this form of business is that professionals are likely to treat it as a separate business because of the degree of formality required. Other advantages come from the fact that the professionals are employees of the business, and therefore, may receive similar benefits of employment that other companies provide to their employees. Notably, the disadvantages are almost a mirror image of the advantages because some professionals do not like the formalities required to maintain corporate status, and still others may prefer not to be treated as employees.

Recommendations

“So what business entity should I choose?” You ask four different lawyers, you are likely to get four varied answers. The following recommendations are by no means exhaustive, but they may help to generate some common sense thinking as the professional goes about deciding what business form to set up.

• Have a general business plan, and get good tax and accounting advice before you select the business entity

Most lawyers can repeat stories about people who visited their office demanding that the lawyer set up a corporation. In this situation, the general perception seems to be that there must be a corporation set up before anything else can be done for the business. Sure, the lawyer can set up the corporation and can bill for his or her services, but does that mean the business will succeed? Of course, not. The only point here is that the lawyer probably should be the last person the health care professional calls in this process. A general business plan should be mapped out (nothing too fancy but at least some projections on revenue and expenses), and a good business accountant should be sought out to address the bookkeeping aspects and tax planning issues. Once those steps have been taken, interview some attorneys and bring the person you are comfortable with into the process of deciding upon the right business entity.

• Know your industry and your costs

This may seem like a no-brainer, but all too often we forget that the health care industry has many restrictions. There are different licensure statutes for physicians, dentists, chiropractors, naturopaths, and nurse practitioners, each with their own subtle differences. There are the Medicare and Medicaid laws and accompanying fraud and abuse prohibitions that may dictate how a professional should set up a business. There also are the unique tort law vicarious liability principles applied to health care professionals that may cause one “partner” to be liable for another partner’s bad acts. This liability exposure should be examined in each of the business forms, and it also should be insured against. These are just a few industry-specific considerations to review when deciding upon business entities.

In addition to understanding your industry, the phrase “it takes money to make money” should not be forgotten. Many people who start up businesses whether health care related or not, fail to grasp the concept that it costs money to maintain an effective business. Know your costs before you start. How much will it cost to set up the business? How much will it cost to maintain the office on a monthly basis? Frugality should be a guiding principle until a solid cash flow is established. Some professionals go out and buy the latest and greatest office equipment and furniture or hire a lot of staff, and max-out multiple credit cards well-before the first dollar is generated by the business. Unless the item or individual is an absolute necessity to your business (such as a piece of diagnostic equipment or an office manager that is adored by patients and keeps chaos in check), avoid the temptation to have it all right away. Start small, and make spending decisions based upon the success of the business.

• Plan for ownership changes or dissolution

Finally, the most important recommendation on this list is to plan for ending the venture or extricating individuals from the business. Suppose two professionals co-own a new practice, and eight months into the honeymoon, they decide to part ways. What happens to the business assets? Who will keep the office space? Who will keep the patients and the medical records? Will one person buy the other out, and at what price? Getting a clear understanding early on of how the business will deal with ownership changes or winding down is critical in order to avoid potential legal disputes months or years later when everyone has forgotten all the verbal promises. So what does this mean? Get it in writing. Document in a partnership agreement (for the LLP) or operating agreement (for the LLC) or bylaws and shareholder/employment agreement (for the PC), how individuals may come and go, and ultimately what happens to all the assets and liabilities if the business is ever dissolved.

In closing, remember that attorneys are good at generating the documents to set up businesses, but the decision about which business entity to operate within should be a combination of both legal and business thinking. Health care professionals should take a few moments to consider their business goals. They should interview different attorneys and accountants to find individuals they can work with effectively, and then the professionals and their advisors can sit down and decide upon the best choice of business entity

health reform and the supreme court

4.2.12

“If the lawyers are having fun, what does that say about federal health care reform?” joked the physician to his health care lawyer. “Democracy at work and a new car,” retorted the lawyer.

Joking aside for the moment, the federal effort to reform the American health care system in March 2010, ended up being questioned as unconstitutional during an unprecedented three days of oral argument before the Supreme Court in the last week of March 2012. For health care and constitutional lawyers, admittedly, it was a fun week. But that fun surely was felt only by a few given the millions, if not billions, of dollars in time and money that have been spent these past two years by federal, state, and local governments, health care providers, hospitals, health insurers, and the entire health care industry working to decipher and begin implementation of a rather complex system of health insurance reform, massive Medicaid expansion, and test programs such as accountable care organizations.

The uncertainty Congress left the country with when rushing to enact the law in a partisan manner has come home to roost. The nine Supreme Court Justices met secretly after oral arguments on Friday, March 30, 2012 and cast their first votes on whether to uphold the law, strike parts of it, or strike all of it. We now must wait and see for a few months what the Justices decided.

In a nutshell, there were four main issues before the Court. The first was a threshold issue and asked the question whether the penalty for failure to comply with the individual mandate to purchase health insurance was a “tax” assessed by Congress. An official “yes” answer would mean the case before the court was premature because an arcane federal statute, the Anti-Injunction Act, basically says a federal tax cannot be challenged in the courts until actually paid by an individual. Any tax associated with the individual mandate would not occur until after 2014 when the Internal Revenue Service intends to begin collecting penalties. So, in essence the case would be moot until that time. This would be an easy out right now for the Court should it decide the case cannot be brought until after taxes are imposed.

If the Court gets past the threshold issue, and likely will do so, the second issue focuses on the constitutionality of the individual mandate. In sum, for the federal government to do anything, that power to do something must be spelled out in the U.S. Constitution. Unlike the states, the federal government does not possess a general police power to regulate for the welfare of its residents. So without the benefit of a general police power, the federal government argued that the Commerce Clause provides Congress with the power to require individuals to purchase health insurance because insurance is simply part of regular commerce. The states and business representatives challenging the law contended the Commerce Clause only permits Congress to restrict or regulate commercial activity, not to force someone to buy this or that.

From a pure insurance perspective, the mandate is significant because it guards against the insurance concept of adverse selection, that is, only people needing health insurance will buy it. Without people buying insurance who do not use the benefit, it would be far more expensive to purchase health insurance, at least in theory. There are many subtle and even constitutional issues associated with the individual mandate and the use of health insurance to finance the delivery of health care services, but the sole focus before the Court is only the Commerce Clause question of whether Congress can require people to buy insurance.

The third issue that not much attention had been paid to before oral argument was the issue of severability. Basically, as the argument goes, if the individual mandate is deemed unconstitutional, and if the mandate is a key component of the statutory scheme, the entire law must be struck down, not just the individual mandate. Legal commentators were doubtful the Court would go that far, but after oral argument, this issue seemed to generate only more uncertainty. Some of the Justices raised questions about the financial viability of the law if the mandate is declared unconstitutional.

The fourth issue, lesser publicized but as significant as the individual mandate, addressed the constitutionality of the Medicaid expansion. By 2014, federal reform expands eligibility requirements for the Medicaid program (the federal medical recipient program for certain categories of financial or medical need). This is different from the Medicare program (the federal medical beneficiary program for the elderly). Because administration of the Medicaid program falls to state governments, the new Medicaid eligibility standard would require states to enroll individuals under age 65 whose income is at or less than 133% of the federal poverty level (currently set at an annual income of less than $14,856 for an individual and $30,657 for a family of four). With the new standard in place, the Medicaid program is expected to grow in size by 16 million recipients nationally. While the federal government is requiring itself to fund that expansion initially, the cost-sharing by the states increases over time. A group of states challenged the Medicaid expansion and argued that this would be an unprecedented expansion of the program and the all or nothing approach forced on them by Congress gives them no ability to opt out of the expansion. In other words, if a state did not want to expand its state run program, it would lose all federal dollars for its entire Medicaid program and essentially would have to shut it down or go it alone.

While analysis of questions by the Justices at an oral argument is not a solid indicator of how the Court will rule on any particular issue, commentators surmise that the Court, similar to the divided Congress, also will rule in a divided manner along the lines of individual conservative or liberal constitutional beliefs. For a bit of Constitutional Law 101, the conservative or liberal judicial philosophies are not exactly the same as being labeled a member of a particular political party. If a judge is considered conservative, he or she generally believes in deferring to legislative or executive authority as long as that authority clearly flows from a constitution like the U.S. Constitution. A judge with more liberal leaning generally supports the protection of individual rights and may not be as deferential to legislative schemes that hinder individual rights flowing either explicitly or implicitly from a constitution. Here, with federal health care reform, the main constitutional question is whether the federal government had the power to do what it did. The conservative philosophy is skeptical whether the power exists, and the liberal philosophy is not so skeptical and favors an expanded view of federal power if individuals obtain more rights under reform. The distinction, obviously, is not clear-cut and can be rather complex.

So what does all this mean? In short, there either will be legal change coming for part or all of the law, or nothing will change. There may very well be opportunity too for federal and state governments to revisit the concept of health care reform and make sound and more systemic changes. For example, there were many things Congress did not do that it probably should have done such as focus first on price transparency for health care items or services, get better data on the overlooked aspect of rapidly increasing out-of-pocket insurance costs, and consider a broader approach to health care system reform instead of the limited focus on insurance reform.

Understandably, hindsight is not worth much in this debate. Our elected officials could step forward and rework the legislation, but that effort is highly unlikely. We all apparently will just sit and wait, respectfully, for our nine Justices to tell us how and why they voted.

 

top ten issues for 2012

3.5.12

While no top ten list from the desk of a health lawyer could be complete given the ever-changing nature of the health care industry, here are a few significant legal issues to think about this year.

1. Federal Health Reform

Passed in March 2010, federal health reform has dominated much of the health care administrative work of federal and state government agencies. A 2012 presidential election and a possible Supreme Court decision could keep the debate over federal reform interesting, to say the least.

2. State Health Reform

In the wake of federal reform, states too are trying to manage the cost of state-run Medicaid programs while grappling with budget deficits. States like Oregon and Washington are looking for ways to keep providing services within tighter budgets. The anticipated expansion of the Medicaid program in 2014 also will present significant administrative and financial challenges. Some states could see as many as 1 in 4 residents become eligible for enrollment in Medicaid.

3. HIPAA Breaches

The first few multi-million dollar fines for Health Insurance Portability and Accountability Act (HIPAA) breaches levied by the oversight arm of Health and Human Services, the Office for Civil Rights (OCR), achieved their intended trickle down effect and instilled fear in health care privacy officers and experts who advise providers. Most providers are still figuring out how to standardize responses to breach situations and will need to keep up the due diligence when breaches are suspected. In many instances, the alleged breach is not a breach, but will require the same initial review as actual breach situations.

4. HIPAA Audits

As of November 2011, covered entities could be subjected to HIPAA audits as part of a pilot audit program being conducted by OCR. The pilot program is scheduled to be completed by December 2012. Future HIPAA audits are anticipated to include business associates in addition to covered entities. Providers will need to weave HIPAA reviews into their general compliance efforts, and be prepared to respond to audits in a timely manner.

5. Payor Audits

Providers are becoming used to audits by Medicare and Medicaid contractors such as Recovery Audit Contractors (RACs) and state Medicaid auditors. Commercial payors are increasing their audit activity too. The old compliance mantra “if it is not documented, it did not happen” is once again an auditor’s rule of thumb. Providers need to respond appropriately to audits, do so cost-effectively, and be careful not to miss administrative deadlines.

6. Payment Models

Put simply, the cost side of the health care equation is going to be about getting services provided for less money. As a result, traditional fee for service payments likely will give way to global budgets and other fixed payment models. The new payment model game will be about who controls the purse strings. Front line providers such as physicians likely could bear the brunt of payment reductions if they are not at the design table as new payment models get worked out.

7. Medicare Overpayments

In February 2012, the Centers for Medicare and Medicaid Services (CMS) issued a proposed regulation intended to implement statutory language from federal health reform requiring providers to return identified Medicare or Medicaid overpayments within 60 days. The general consensus in the health care industry is that the proposed rule is unfair and could create significant liability for innocent providers. Simple billing mistakes could turn into false claims between day 60 and 61. So a mistake of even $1 on a claim, overnight, could become an $11,000 liability. Further, CMS is now saying it can look back ten years to collect on identified overpayments. This result is wrong and CMS should to listen intently to industry comments or Congress needs to step in and restore some sanity to this part of health reform.

8. Medicare Claims Processing

CMS is in the early stages of shifting from a pay and chase enforcement model, after payments are made to providers, to a prevent and detect model, before payments are made. This shift will not be without problems for providers. Massive databases of claims now are being data-mined by computer programs and analysts. Potentially problem providers, or outliers, will be reviewed closely to look for improper billings. If providers are not adhering to defendable billing practices, the risk of being called out by CMS data mining efforts simply will increase with time.

9. Access to Clinical Data

Unlike managed care programs of twenty years ago that focused more on cost-reduction by not providing services, today’s programs hold up the ideal that coordinated care among providers who care for a particular patient will yield both cost-savings and improved health. To achieve the ideal, providers will need access to relevant clinical data in as close to real time as possible as well as access to payment data from payors to analyze the cost piece of the puzzle. Patient data, whether clinical or financial, generally is considered proprietary as well as subject to privacy and security laws (i.e., think HIPAA). Providers, payors, and even patients, will continue to struggle to equitably gain access to this information.

10. Compliance Plans

Federal health reform also called for the mandatory implementation of compliance programs by providers. CMS is charged with developing rules to enforce this provision, and there is no indication yet of when rulemaking is expected to be completed.

 

the patient and the driver’s license

1.11.12

“We need to make a copy of your driver’s license,” insisted the young front desk assistant at the doctor’s office. “Why?” asked the reluctant gray-haired patient. “Well, this is just something we are required to do for HIPAA,” responded the assistant. “Really? What if I do not let you?” the patient huffed.

Who is right? All too often today, we hear responses in health care settings that “we must do this,” or “we are required to do that,” or the dreaded “HIPAA makes us do this.” Unfortunately, quite a few of these seemingly mandated legal requirements are merely myths, HIPAA myths, if you will. (HIPAA refers to the federal Health Insurance Portability and Accountability Act.) Laws like HIPAA were well-meant, but given the complexity of the regulations that make up HIPAA, there can be quite a bit of confusion about what to do and what not to do. So, what to do?

Well, the first rule of thumb is to review the actual statute or regulation that supposedly calls for the required action. An example of required action would be posting a notice of your office’s privacy practices (see, e.g., 45 Code of Federal Regulations, Section 164.520). Do not simply implement a policy in your office because someone else is doing it that way. If you have a difficult time, however, locating what is called primary legal authority, call your trade association and ask them to help you (you could call your legal advisor, we love to hear from clients, but your association may have that information handy without ticking time on a legal clock).

The next thing to do is inject a healthy dose of common sense into your policies especially when a patient may be asked to do something. And, notably, consider the patient’s perspective when you are about to require them to help you comply with a law. Here, let’s use the driver’s license as an example. A driver’s license contains a fair amount of personal information along with the usually unflattering photograph. There is the patient’s home address, the license number, a rough approximation of height and weight (most of us fudge a little, right?), and even more intimate details like date of birth, medical restrictions such as use of eyeglasses, organ donor status, and your signature. Personal stuff. So, you probably should have a better sense now that the seemingly innocuous request to photocopy that personal document may be met with the huffing and some puffing by the now disgruntled patient.

Okay, back to the first rule of thumb, are you required by a statute or regulation to photocopy a driver’s license? Short answer says, no. What? No? But, what about HIPAA? This scenario actually may not be a real HIPAA myth but an identity theft protection myth (obviously not as quotable, in a legal literature sense, as the term “HIPAA myth”). A few years back, the Federal Trade Commission (FTC) threatened that physicians would have to develop identity theft protection compliance plans under a regulatory program known as the Red Flags Rule. One of the requirements there would have been for a doctor’s office to verify the identity of the person presenting in the office. How do you do that? Check a driver’s license or other photo identification. The regulations did not require making a photocopy of the identification, but many folks probably assumed that was a simple way to check off compliance with verifying the patient was who they said they were. Is the Red Flags Rule law for physician practices? No, not at this time, and likely not any time too soon, if ever. The FTC backed off its decision to require physicians to comply with the rule largely due to legal action by the American Medical Association and the passage of clarifying legislation by Congress. Many doctor offices, however, did start implementing pieces of an identity theft protection program. For offices that have been duped by misuse or outright fraud of health insurance cards, having a procedure in place to verify the patient’s identity made sense. That process still makes sense today.

Legally, though, putting a photocopy of a driver’s license in a file could create more issues in the long run. Why? In addition to federal laws regarding the privacy and security of protected health information (i.e., HIPAA), there may be state legal requirements about privacy and identity protection issues too. For example, in Oregon, there is a law that addresses protection of personal information (see, Oregon Revised Statutes 646A.600). Both a driver’s license number and the identification card are included in the definition of “personal information” that must be safeguarded by a business that maintains that information in its files. There is a legal requirement to notify the person regarding any breach of that information, and there could be penalties assessed up to $1,000 for each violation of the state law.

So what about the request to photocopy a driver’s license? While there is no legal prohibition against photocopying a license and most patients probably do not think about the request too deeply, the decision about how to proceed does come down to a legal risk assessment along with some common sense and public relations consideration.

From a legal perspective, putting more personal information in your files such as a photocopy of a driver’s license does increase legal risk especially if that the information falls into the wrongs hands. Be mindful of federal and state reporting requirements too if there is a breach of that information. Providers accept that risk anyway with protected health information under HIPAA, so adding more information may not be a burdensome risk to accept. From a common sense and public relations perspective though, a patient should not be made to feel like their privacy is being invaded any more than is necessary. Yes, they are consenting to treatment and to telling their health care provider intimate details about their medical history. As for other private information like a driver’s license, think about whether you want to absolutely require a copy versus just spot checking the id, and noting that it was checked. Also, if a picture of a patient is desired for recordkeeping, rather than maintaining the driver’s license copy in the file, consider taking your own picture without all that other personal information.

In closing, as with all HIPAA myths, the law could change. Someday perhaps a definitive identification process will be legally mandated in the health care setting. If you hear about that, what will you do? If your response is to ask to see the statute or regulation, well done, and class dismissed.

 

Fall In Review

12.27.11

“What has happened in health care since the end of summer?” asked the wayfaring senior partner. “Seriously?” responded the frustrated junior associate.

A. Health reform plods along.

Much of what dominates the health care industry these days is preparing and planning for federal health reform set forth in the Patient Protection and Affordable Care Act (“PPACA”) enacted in March 2010. While most reform efforts were targeted at the insurance side of health care, a lot of smaller programs and initiatives were included in the legislation. The practical effect of those initiatives will trickle out over the next few years. For example, Section 6402(d) of the law provided that Medicare and Medicaid overpayments must be reported and returned within 60 days after the date on which the overpayment was identified. Just what “identified” means in practice and how far the scope of potential new provider liability will stretch back in time for unreturned overpayments is open to debate. Apparently, the Centers for Medicare and Medicaid Services (CMS) is engaged in rulemaking to clarify what is being dubbed the “60 day rule,” but there has been no indication of when rules, if any, will be forthcoming. Given the potential for new and significant liability associated with delays in returning overpayments, the industry waits patiently to learn the type of implementing regulations CMS will have in mind (i.e., Draconian or a more balanced approach). At the very least, providers will need to be cautious when engaged in retrospective audits of claims during any compliance program activity.

B. Supreme Court to hear a narrow issue.

While many think the Supreme Court might overturn PPACA, that probably will not be the case. Five Circuit Courts have ruled to date on PPACA challenges. The Third and Fourth Circuits respectively dismissed challenges there due to court rules that the party bringing the lawsuit really could not do so (i.e., the party lacked standing) or the subject matter was not appropriate for that court (i.e., the court had no legal authority to hear the case). Both the Sixth Circuit and DC Circuit upheld the controversial mandate that all individuals purchase health insurance. The Eleventh Circuit, however, said the mandate was unconstitutional. In November 2011, the Supremes granted certiorari for (i.e., agreed to review) the Eleventh Circuit decision. Notably, the Court restricted the questions presented to narrow legal issues. The first and most controversial issue is whether the individual mandate to purchase health insurance is constitutional. A second and less publicized issue is whether the proposed Medicaid expansion exceeds the enumerated powers of the federal government. A yes or no answer to either issue in all likelihood means little legally to the rest of the 2010 federal legislation (even though it might mean a lot practically and financially). There is an outside chance the Supremes could strike down the entire act, but that result would be very remote. Will there be more confusion to come? Sure, especially since oral argument, and maybe an opinion, will not occur until next year in the midst of Presidential election campaigns.

C. To be, or not to be, an ACO.

A five-page section of PPACA, Section 3022, included a pilot program called the Medicare Shared Savings Program. The gist of the program was to allow providers to form entities called Accountable Care Organizations (“ACOs”) that would attempt to deliver cost-effective care to Medicare fee for service beneficiaries. In return, the ACO would be eligible for extra payments based upon savings related to the care of those patients. Initial rules proposed for the program were so onerous that most health care providers showed little interest. The rules were relaxed somewhat this past October.

D. Medicaid, how many, how much?

2014 looms as a confusing and potentially dark year for the state-managed Medicaid program. At that time, Section 2001 of PPACA will become effective and will change the eligibility requirement for the program. Nationally, Medicaid is expected to expand by at least 16 million recipients. States like Oregon and Washington have little public information available about how many new recipients will be added to their programs and how much such an expansion will cost. In the initial years of program expansion, the federal government picks up most of the tab for the added cost even though it is a joint federal and state funded program. Over time, however, states will have to bear more and more of the cost. Oregon itself currently covers about one in every six residents in its Medicaid program. Does 2014 mean the number could be closer to one in five, one in four? New York is projecting one in three will be Medicaid eligible. This is one of the critical unknowns associated with federal health reform, and will be of particular concern to states because of recession-induced budget issues.