Impact of the Supreme Court Decision


Now that the Supreme Court has upheld the constitutionality of most of the Affordable Care Act, it behooves us to take a closer look at that law’s potential impact on physicians.

Last year I wrote that most physicians would see few changes in the near term, largely because the essential changes sought by physicians – tort reform, and revision of the ill-conceived Medicare compensation rules that threaten to cut payments by 25% every few months – were never addressed.

That said, many of the law’s provisions did favor physicians in the short term. As of last year, insurers could no longer cancel policies already issued, nor could they exclude applicants who were previously uninsurable because of chronic ailments. This provision indirectly triggered the Supreme Court’s involvement, since insurers cannot afford to cover patients with existing conditions without a mandate that all individuals purchase coverage. (Without that, healthy people would have no reason to buy insurance until they got sick, the equivalent of waiting to buy fire insurance until your house was aflame.) The case before the court centered on the constitutionality of the individual mandate, which was upheld.

Other highlights of the Affordable Care Act include prohibition of lifetime coverage limits and guaranteed coverage of dependents on their parents’ policies until they are 26 years old. Early retirees do not have to risk going uninsured until they qualify for Medicare, and Medicare’s infamous "doughnut hole" is gradually closing. Small businesses now receive tax-credit incentives to insure their workers.

All of this adds up to more paying patients, with better insurance. However, as additional provisions come online this year, the long-range potential impact on private practitioners becomes more uncertain, and more ominous.

"Physician payment reforms" will begin to appear. Although no one yet knows exactly what that means, the law mandates the formation of "accountable care organizations" to "improve quality and efficiency of care." The buzzword will be outcomes – the better your measurable results, the higher your reimbursements. This is supposed to reward quality of care over volume of procedures, but the result could be exactly the opposite if less-motivated providers cherry pick the quick, easy, least-risky cases and refer anything time consuming or complex to tertiary centers.

In 2013, Medicare will introduce a national program of payment bundling. A single hospital admission, for example, will be paid with a single bundled payment that will have to be divided among the hospital and treating physicians. The idea, ostensibly, is to encourage physicians and hospitals to work together to "better coordinate patient care," but arguments over how to divide the pie could, once again, have the opposite effect.

And it won’t take long for hospitals to figure out that they can keep the whole pie if the partnering physicians are their employees. So look for more private offices to be absorbed by hospitals, which already employ almost a third of all physicians.

By 2014, states will have to set up "SHOP Exchanges" (Small Business Health Options Programs), allowing small businesses (defined as 100 employees or less) to pool their resources to buy health insurance. Most people will, by then, be required to have health insurance coverage or pay a fine if they don’t. Employers not offering coverage will face fines and other penalties, and health insurance companies will begin paying a fee based on their market share, which will no doubt be passed along to those they insure, nullifying some of the savings garnered by the SHOP Exchanges, which are already predicted to be marginal.

The big Medicaid expansion will be in place by 2014 as well, but few physicians are likely to accept more Medicaid patients unless compensation increases. That is unlikely to happen without substantial reductions in the states’ woeful budget deficits – and probably not even then, since state governments already complain about their Medicaid budgets. Hospitals, with their deeper pockets, will get most of the new Medicaid patients and will hire even more physicians away from private practice to treat them.

If this sounds like a potential problem for private practice as we know it, it is. Then again, it’s too early for reliable predictions: The recent Supreme Court decision notwithstanding, there is a lot of potential leeway in the new law’s future specifications; and a lot can happen between now and full implementation, from modifications and amendments to outright repeal. Only time will tell.

Dr. Joseph S. Eastern practices dermatology and dermatologic surgery in Belleville, N.J. To respond to this column, email him at our editorial offices at

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