Blog Post

Five Insights from the 2018 American Health Lawyers Association’s Physicians and Hospitals Law Institute

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Arriving at the AHLA’s Physicians and Hospitals Law Institute in New Orleans during the middle of Mardi Gras was at once color and chaos. A seemingly never-ending procession of large, bright distractions in the form of parade floats blocked many attendees’ paths as they tried to reach the conference hotel. But most ended up catching a few treasured beads while waiting for the hubbub to subside. It was, in some ways, a metaphor for the healthcare landscape as a whole—many distractions and some roadblocks, but much wisdom being thrown if you know where to look.

Once inside, talk was lively at the roundtable luncheon for the Antitrust, In-House Counsel, Hospitals and Health Systems, and Labor and Employment Practice Groups luncheon that ECG sponsored, and participants had unique perspectives on the current healthcare environment based on whether they represented a large system, stand-alone hospital, or private practice. Through numerous breakout sessions, keynotes, and conversation, five themes emerged. We are excited to share these below.

1. Unconventional Mergers and Acquisitions Are Changing the Industry Landscape

Unique transactions are emerging in the health industry. We are seeing entities consolidate in such a way that they do not even need to contract with commercial insurers—as evidenced by the recent announcement from J.P. Morgan, Berkshire Hathaway, and Amazon. All we know so far is these companies will be providing healthcare directly to their employees, which leads us to believe one of their goals is to cut out the middleman: the insurance company. In-house counsel at the conference commented on how the hospitals they work for are in the process of offering their own insurance plans. Also, as more hospitals become part of larger systems, there is less need for commercial insurers. This could be why health plans are acquiring providers or merging with other entities outside the payor realm, such as the CVS-Aetna merger; insurers are realizing they need to offer other services if they want to remain viable.

2. Value-Based Care Remains a Discussion Point, But with Minimal Action

Value-based care is at the forefront of everyone’s mind; however, many organizations are still in the early stages of implementation because of the need to obtain provider buy-in. Systems are trying to determine how to redesign provider compensation to incorporate quality metrics, but they are having difficulty measuring/reporting within their EHR. In addition, healthcare executives are not certain how to ascertain fair market value when providers may be receiving quality payments from more than one stream.

3. Providers Must Be Appropriately Compensated without Being Paid Twice

Providers are requesting that health systems compensate them in additional ways instead of strictly for clinical services. Organizations that never paid for call coverage and comanagment in the past are now considering these types of arrangements, but there is concern about paying twice for the same service. This is partially because the benchmark survey data typically used to help set professional compensation includes physicians who take call, though they are not separately compensated for doing so; therefore, it can be argued that the professional compensation encompasses payments for call.

In addition, some systems are trying to align physicians through comanagement arrangements who might have separate medical directorships. It is important that the services in these arrangements are unique and have defined measurable targets, which should be adjusted every year so providers are incentivized to further improve their service line and not just maintain the status quo.

4. Cybersecurity Risks Are on the Rise

Electronic data flows between providers, as well as emerging technologies, are increasing cybersecurity risks. Health systems are vulnerable, and some have even paid a ransom to retrieve patient information that was hacked. It is important to improve cybersecurity awareness and education and that organizations implement a cybersecurity program.

Individuals also need to be more careful; for example, there are multiple apps that store health information, and this is an additional way that hackers can steal data. It remains to be seen if new solutions such as blockchain will provide a way to better secure data.

5. The Regulatory Environment Is Uncertain

The DOJ is holding more individuals accountable using the “Yates Memo” on individual accountability for corporate wrongdoing, issued in 2015. The DOJ recovered over $3.7 billion from False Claims Act cases in fiscal year 2017; this is a substantial amount, but it is $1 billion less than the year before. Most cases are settled instead of going through the costly trial process. It is unclear if we will see even less False Claims Act settlements in 2018 under the current administration. However, one trend that does seem to be increasing is holding individuals accountable, and this could result in more individuals being compliant with fair market value standards.