What Would the Supreme Court's Ruling Mean for Neurologists?

April 5, 2012

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The constitutionality of the 2010 health care reform law—the Affordable Care Act (ACA)—is at the core of the arguments heard by the Supreme Court challenging and defending the ACA's individual mandate and Medicaid expansion.

The individual mandate requires individuals who are not already insured to purchase health care insurance or face a fine. In this way, the mandate makes health insurance almost universal, distributing insurers' financial risks over a greater group of people. Minimizing risks is important to the insurance industry because, under the ACA, insurers will have to provide coverage to people with pre-existing conditions.

Plaintiffs also challenged the ACA's Medicaid expansion to cover all poor. Currently, the Medicaid program provides services to low income adults only if they meet other eligibility criteria, such as pregnancy or disability. Under the ACA, the Medicaid program would be expended to insure all adults under the age of 65 with incomes below 133% of the federal poverty level. Although the federal government would pay for most all of the expansion, states would have to participate in the expansion in order to received federal support for the entire Medicaid program.

The Supreme Court may decide to strike down the entire health care reform law, parts of the law, or rule that the law is constitutional. The public will learn of the court's final ruling in June. For now, here's an analysis of what these possibilities may mean for physicians.

If upheld in entirety, the ACA will move the health care market to near-universal coverage, accelerating the demand for health care services.

The ACA tries to answer the increased demand with policies intended to strengthen the primary care workforce. Specifically, the ACA directs Medicare to pay a 10-percent bonus to primary care physicians including family physicians, internists, geriatricians, pediatricians as well as nurses and physician assistants. The bonus is paid on top of the traditional Medicare fee-for-service fees for a five-year period, starting in 2011.

Clearly, the law consistently ignores estimates of physician shortages in all other specialties other than primary care. Furthermore, although the demand for all medical specialties would increase, physician supply is limited by restrictions placed on the number of available graduate medical education (GME) positions.

GME costs are partially financed by states' Medicaid programs. For example, states appropriate funds for medical school training. But because of the current and upcoming financial constraints put on states, we may expect states to cut GME funding. In fact, some states already are considering ending their financial support to teaching hospitals (Iglehart, 2011).

Some policy experts suggest that the Supreme Court ruling also may interfere with the operations of Medicare programs. The health reform law introduces several new initiatives designed to reduce costs and improve quality of care of Medicare beneficiaries. For example, the law directed CMS to create the Center for Medicare and Medicaid Innovation, also known as the CMS Innovation Center.

The Center evaluates payment and delivery innovations that already are being tested or soon will be tested in the Medicare program such as bundled payments and accountable care organizations. These payment innovations use incentives to influence physician decision-making in order to reduce costs of care because physician decision-making has been found to be one of the largest determinants of overall medical spending.

Although these payment innovations are included in the ACA, they originated in the private sector and were pioneered by health care systems such as Geisinger. Currently, all major private insurers such as Humana, United Healthcare, and Cigna plan to create ACOs. In other words, innovations in payment and delivery will still happen regardless of the Supreme Court decision since insurers are also looking for ways to lower health care costs.

Some consequences of these trends can be observed already with the increasing rates of hospital mergers and acquisitions. The Medicare Shared Savings Program (MSSP)—a pathway for groups of providers to become an ACO—states that joint venture arrangements between hospitals and professionals, and hospitals employing professionals, are eligible to create ACOs. For that reason, some hospital systems are buying physician practices with intent of becoming an ACO and hiring physicians directly. But health care systems and medical groups have acquired or merged with physician practices long before the MSSP final rule was published in November 2011.

In 2010, 61 percent of management leaders said that their hospital/system plans on acquiring medical groups over the next 12-36 months, according to the HealthLeaders Media Physician Alignment Survey. To some extent, acquisitions and integration have been replacing traditional recruitment while hospitals employ more physicians, mostly primary care physicians and hospitalists.

In the most recent AAN Medical Economics survey however, only 15 percent of respondents said that they considered affiliating with a hospital in the next 24 months. This percentage might be increasing while hospitals are gaining greater market power.

Ultimately, changes already are occurring in the way physicians are paid and in the way health care is delivered and will undoubtedly continue whether or not the Supreme Court strikes down the health care reform law itself.

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