Questions linger, but CNY moves ahead after health-care ruling

Health-care providers, insurers, and businesses operating in Central New York say they are dealing with a still-unclear prognosis after the U.S. Supreme Court opted not to pull the plug on the 2010 federal health-care reform law on June 28.

“Most of the provisions of the law take place over time,” says Dr. Paul Kronenberg, president and CEO of the 506-bed Crouse Hospital in Syracuse. “We’re not going to really completely understand this bill and its unintended and intended consequences until we have a better understanding of how these things will become operational.”

The court ruled 5-4 on June 28 that the law’s individual-mandate provision was constitutional under the federal government’s taxing power. The mandate will require almost all Americans to purchase health insurance or pay a penalty starting in 2014.

That decision left nearly all of the law’s other components intact, with the exception of a piece concerning the federal government’s ability to encourage state expansion of the Medicaid program. Still, its long-term prospects are not entirely clear, as Republicans in Congress and presidential candidate Mitt Romney are pledging to repeal the legislation if they are elected in November. 

Even if the law isn’t later repealed or changed significantly, it is not yet apparent how some of its provisions will be implemented. For example, a health-insurance exchange is still taking shape in New York after Gov. Andrew Cuomo, Democrat, ordered its establishment in April. 

Despite the uncertainty, Central New York health-care leaders say they are taking what steps they can to prepare for the law’s requirements. The following is a snapshot of what health-care and business officials say they are watching regarding the law.

Effects on providers

Many hospitals did not wait for the Supreme Court’s ruling to follow the reform law’s lead by focusing on reducing readmissions and coordinating care between providers, according to Kronenberg.

“I would suspect that most of the hospitals in New York State, and maybe even around the country, have sort of been trying to move directionally,” he says. “I think some things just made sense, whether it relates to care efficiency or helping to reduce the cost of care.”

Crouse’s efforts to slash readmissions predate the reform law, Kronenberg says. They include a transition program that aims to make patients leaving the hospital self-sufficient at home — a program that is more than five years old.

One of the law’s funding provisions Crouse is preparing for is a Medicare Value-Based Purchasing program that will tie a portion of hospitals’ Medicare payments to quality-of-care and patient-satisfaction measurements. For the 2013 fiscal year starting in October, hospitals could see their Medicare rates reduced by as much as 1 percent, depending on their performance. 

That would put about $700,000 of annual Medicare funding at risk at Crouse, Kronenberg says. But hospitals aren’t yet sure how much funding they will actually lose.

“It’s hard to know, because the calculations have to get done by the government,” Kronenberg says. “The measurement period for this particular program ended at the end of March 2012. No one’s sent me a letter yet.”

Providers are also bracing themselves for a wave of demand for primary care once the reform law’s individual mandate becomes active. Having more insured New Yorkers is likely to lead to more patients visiting doctors, according to Kathryn Ruscitto, president and CEO of the 431-bed St. Joseph’s Hospital Health Center in Syracuse.

“We just opened a new emergency room, and we have been knocked over by how many patients we have coming to the emergency room who are really in need of primary care and can’t get access,” she says. 

In April, the hospital reported that patient visits to its emergency room were up 15 percent for the first five months of the year, compared to the same period last year. It was on pace to receive 65,000 to 70,000 visits in 2012.

St. Joseph’s is trying to boost primary-care availability, Ruscitto adds. Six physicians who are graduating from residencies at its family medicine program have committed to enter private practice in Syracuse, she says.

Dr. David T. Page, president of the Onondaga County Medical Society, believes the federal government should take steps to encourage more physicians to enter primary care. Loan-forgiveness programs and tuition support could help the physician shortage, he says.

However, doctors should be concerned about more than overflowing waiting rooms, Page adds. They also need to be aware of more stringent anti-fraud and anti-kickback regulations in the health-care reform law, he says. 

“Physicians are going to have to understand about anti-kickback laws,” he says. “And I think we’re going to be under increasing scrutiny for fraud, real or imagined, from the federal government.”

Effects on insurers

Insurers have plenty of work to do to prepare for state-run insurance exchanges, says David Oliker, president and CEO of Schenectady–based MVP Health Care. The insurer, which has a Syracuse office at AXA Tower 2 at 120 Madison St., has 41,000 members in Central New York, according to the 2012 Book of Lists.

Although New York’s exchange is not yet online, it is slated to open for state residents to purchase coverage at the beginning of 2014. That leaves about 18 months for MVP to plan, Oliker points out.

“The products have to be designed,” he says. “We need to think about how they’re going to be supported as far as our networks are concerned — that is, the providers that are going to be involved.”

Some plans cannot be solidified yet, Oliker continues. MVP does not yet know the exact rules for insurance sold on New York’s exchange.

“If we had that information, we would certainly run with it,” he says.

An immediate change insurers face is a requirement to provide members and prospective members with “Summary of Benefits and Coverage” documents. Those documents, designed to provide standardized summaries of health plans, will be required starting this September.

Effects on businesses

A key provision of the health-care reform law affecting businesses requires companies with 50 or more full-time employees to offer health insurance starting in 2014 or risk paying a penalty. 

That penalty, which is tied to whether employees receive tax credits for coverage through an insurance exchange, will be $2,000 per year per employee — with a company’s first 30 employees exempted.

Now that the Supreme Court upheld the reform law, some employers are looking at whether they should offer coverage or pay the penalty, according to Hermes Fernandez, a health-law attorney at the Albany office of the Syracuse–based law firm Bond, Schoeneck & King, PLLC.

“I think the largest piece now is, how do employers get out in front, how do they get lined up with the mandate, and how do they get their coverage done?” he says. “How do they make those decisions to provide coverage or pay the tax penalties?”

That employer mandate is likely to have the biggest effect on businesses with just more than 50 employees, says William Killory, a partner at Syracuse–based Dermody, Burke & Brown, CPAs, LLC. Larger employers are probably already offering health insurance, and businesses with fewer than 50 employees are exempt from the penalties, he says.

“It’s really the small employers, restaurant owners, places like that where the margins were pretty thin anyway,” he says. “I think it’s going to be quite a burden for them.”

Killory suggested small-business owners look into tax credits if they plan on offering health insurance for their employees. For example, for small businesses with fewer than 25 employees that provide health insurance, the reform law created a tax credit of up to 35 percent of contributions toward health-insurance premiums. The credit will increase to 50 percent in 2014.

The complexity of the health-care reform law poses a challenge for small-business owners, Mike Durant, the New York State director of the National Federation of Independent Business (NFIB), contends. The NFIB is one of the parties that sued the federal government over the health-care reform law in the case the Supreme Court decided June 28.

“You take that and you layer it on top of all the things we have going on at the state level, and it’s just very difficult to be a small entrepreneur in the state,” Durant says.  

Health-care providers, insurers, and businesses operating in Central New York say they are dealing with a still-unclear prognosis after the U.S. Supreme Court opted not to pull the plug on the 2010 federal health-care reform law on June 28.

“Most of the provisions of the law take place over time,” says Dr. Paul Kronenberg, president and CEO of the 506-bed Crouse Hospital in Syracuse. “We’re not going to really completely understand this bill and its unintended and intended consequences until we have a better understanding of how these things will become operational.”

The court ruled 5-4 on June 28 that the law’s individual-mandate provision was constitutional under the federal government’s taxing power. The mandate will require almost all Americans to purchase health insurance or pay a penalty starting in 2014.

That decision left nearly all of the law’s other components intact, with the exception of a piece concerning the federal government’s ability to encourage state expansion of the Medicaid program. Still, its long-term prospects are not entirely clear, as Republicans in Congress and presidential candidate Mitt Romney are pledging to repeal the legislation if they are elected in November. 

Even if the law isn’t later repealed or changed significantly, it is not yet apparent how some of its provisions will be implemented. For example, a health-insurance exchange is still taking shape in New York after Gov. Andrew Cuomo, Democrat, ordered its establishment in April. 

Despite the uncertainty, Central New York health-care leaders say they are taking what steps they can to prepare for the law’s requirements. The following is a snapshot of what health-care and business officials say they are watching regarding the law.

Effects on providers

Many hospitals did not wait for the Supreme Court’s ruling to follow the reform law’s lead by focusing on reducing readmissions and coordinating care between providers, according to Kronenberg.

“I would suspect that most of the hospitals in New York State, and maybe even around the country, have sort of been trying to move directionally,” he says. “I think some things just made sense, whether it relates to care efficiency or helping to reduce the cost of care.”

Crouse’s efforts to slash readmissions predate the reform law, Kronenberg says. They include a transition program that aims to make patients leaving the hospital self-sufficient at home — a program that is more than five years old.

One of the law’s funding provisions Crouse is preparing for is a Medicare Value-Based Purchasing program that will tie a portion of hospitals’ Medicare payments to quality-of-care and patient-satisfaction measurements. For the 2013 fiscal year starting in October, hospitals could see their Medicare rates reduced by as much as 1 percent, depending on their performance. 

That would put about $700,000 of annual Medicare funding at risk at Crouse, Kronenberg says. But hospitals aren’t yet sure how much funding they will actually lose.

“It’s hard to know, because the calculations have to get done by the government,” Kronenberg says. “The measurement period for this particular program ended at the end of March 2012. No one’s sent me a letter yet.”

Providers are also bracing themselves for a wave of demand for primary care once the reform law’s individual mandate becomes active. Having more insured New Yorkers is likely to lead to more patients visiting doctors, according to Kathryn Ruscitto, president and CEO of the 431-bed St. Joseph’s Hospital Health Center in Syracuse.

“We just opened a new emergency room, and we have been knocked over by how many patients we have coming to the emergency room who are really in need of primary care and can’t get access,” she says. 

In April, the hospital reported that patient visits to its emergency room were up 15 percent for the first five months of the year, compared to the same period last year. It was on pace to receive 65,000 to 70,000 visits in 2012.

St. Joseph’s is trying to boost primary-care availability, Ruscitto adds. Six physicians who are graduating from residencies at its family medicine program have committed to enter private practice in Syracuse, she says.

Dr. David T. Page, president of the Onondaga County Medical Society, believes the federal government should take steps to encourage more physicians to enter primary care. Loan-forgiveness programs and tuition support could help the physician shortage, he says.

However, doctors should be concerned about more than overflowing waiting rooms, Page adds. They also need to be aware of more stringent anti-fraud and anti-kickback regulations in the health-care reform law, he says. 

“Physicians are going to have to understand about anti-kickback laws,” he says. “And I think we’re going to be under increasing scrutiny for fraud, real or imagined, from the federal government.”

Effects on insurers

Insurers have plenty of work to do to prepare for state-run insurance exchanges, says David Oliker, president and CEO of Schenectady–based MVP Health Care. The insurer, which has a Syracuse office at AXA Tower 2 at 120 Madison St., has 41,000 members in Central New York, according to the 2012 Book of Lists.

Although New York’s exchange is not yet online, it is slated to open for state residents to purchase coverage at the beginning of 2014. That leaves about 18 months for MVP to plan, Oliker points out.

“The products have to be designed,” he says. “We need to think about how they’re going to be supported as far as our networks are concerned — that is, the providers that are going to be involved.”

Some plans cannot be solidified yet, Oliker continues. MVP does not yet know the exact rules for insurance sold on New York’s exchange.

“If we had that information, we would certainly run with it,” he says.

An immediate change insurers face is a requirement to provide members and prospective members with “Summary of Benefits and Coverage” documents. Those documents, designed to provide standardized summaries of health plans, will be required starting this September.

Effects on businesses

A key provision of the health-care reform law affecting businesses requires companies with 50 or more full-time employees to offer health insurance starting in 2014 or risk paying a penalty. 

That penalty, which is tied to whether employees receive tax credits for coverage through an insurance exchange, will be $2,000 per year per employee — with a company’s first 30 employees exempted.

Now that the Supreme Court upheld the reform law, some employers are looking at whether they should offer coverage or pay the penalty, according to Hermes Fernandez, a health-law attorney at the Albany office of the Syracuse–based law firm Bond, Schoeneck & King, PLLC.

“I think the largest piece now is, how do employers get out in front, how do they get lined up with the mandate, and how do they get their coverage done?” he says. “How do they make those decisions to provide coverage or pay the tax penalties?”

That employer mandate is likely to have the biggest effect on businesses with just more than 50 employees, says William Killory, a partner at Syracuse–based Dermody, Burke & Brown, CPAs, LLC. Larger employers are probably already offering health insurance, and businesses with fewer than 50 employees are exempt from the penalties, he says.

“It’s really the small employers, restaurant owners, places like that where the margins were pretty thin anyway,” he says. “I think it’s going to be quite a burden for them.”

Killory suggested small-business owners look into tax credits if they plan on offering health insurance for their employees. For example, for small businesses with fewer than 25 employees that provide health insurance, the reform law created a tax credit of up to 35 percent of contributions toward health-insurance premiums. The credit will increase to 50 percent in 2014.

The complexity of the health-care reform law poses a challenge for small-business owners, Mike Durant, the New York State director of the National Federation of Independent Business (NFIB), contends. The NFIB is one of the parties that sued the federal government over the health-care reform law in the case the Supreme Court decided June 28.

“You take that and you layer it on top of all the things we have going on at the state level, and it’s just very difficult to be a small entrepreneur in the state,” Durant says.