“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.