ObamaCare Report #5/The ACA drives closer organizational ties, leads to to legal issues

August 6, 2013

health-care-lawThis is #5 in a series of Obamacare Reports by Mitchell Law Office

Implementation of the Affordable Care Act (ACA) is combining with other recent trends to push health care organizations to develop closer ties. Attorneys will be affected as new types of cooperation and conflict emerge.

Consider a sampling of the activities by insurance companies and providers, employers and employees, federal agencies and individuals, hospitals and physicians, and physicians and suppliers.

Insurance companies want to help shape provider services and costs in order to create more efficient proprietary networks. When insurance companies press provider organizations to change, the result may be higher-quality services and better coordination of care. But if cost becomes the dominant measure of organizational success, the quality of services may be reduced.

Employers are becoming more involved in setting up captive insurance arrangements. When employers set up their own insurance, the result may be a better deal for both employers and employees. On the other hand, too much involvement by employers in the lives of employees can threaten privacy and neutrality in decision making.

Federal agencies want to encourage individuals to enroll in the New Health Exchanges, while many individuals often would prefer to reduce governmental involvement in their lives. As federal agencies ramp up the Health Exchanges, and try to bring in as many enrollees as possible, they may run the risk of not providing balanced information to the public. The public may also become uncomfortable that so much personal information is being combined in a single location.

The new provider Accountable Care Organizations (ACOs)  involve a deliberate effort to link together the costs of hospital services and physician reimbursement. The ACOs may control costs and improve the quality of services, as hoped. But incentives may also cause physicians to cut corners, despite safeguards intended to prevent this outcome.

And some physicians and suppliers of medical goods are developing ties in the pursuit of new approaches to profits. Arrangements are being sought through which both providers and suppliers are able to gain through cooperative relationships. Close linkages between providers and suppliers can enhance care, or can result in the unwarranted adoption of specific medical goods by physicians who have the ability to profit as a result; such ties can impact the quality of care.

As these and other similar organizational ties expand in depth and scope, both opportunities and risks are developing for the Health Care System. In such circumstances, legal issues cannot be far behind.

As organizations become tied together in new ways, and more extensively, they become more likely to function—in some ways—as if they were a single operation to achieve common objectives.

From a positive perspective, the result can be improved services and cost control. From a negative perspective, the result can be reduced service quality and increased costs.

All of these organizational linkages can affect legal practices. Coordination requires new contractual relationships and conflict-of-interest safeguards. And outcomes that seem favorable to two groups may be challenged by those who have different interests or perspectives, so that legal help may be required to deal with barriers in order to achieve cooperative effort.

Potential conflict may be associated with almost all new relationships—and changes in previous ways of operating—resulting in the need for legal intervention.

As this evolution toward informal mergers and unstructured arrangements continues, the interests of all other organizations—and the public—are continually being affected. A need for attorney assistance by all affected organizations is often experienced in order to deal with these issues.

More on these and related topics may be found in a recent book by the authors that describes implementation of the ACA and its impact on legal practices.

Previous installments of “Obamacare Reports” address the various ways in which implementation of the ACA is affecting legal practices:

Report #1   Report #2   Report #3   Report #4