Impact of the Health Care and Education Affordability Reconciliation Act of 2010 (H.R. 4872)

On March 23, 2010, President Barack Obama signed the Health Care and Education Affordability Reconciliation Act of 2010 (the “Act”) into law. As is evident, barring any legal challenges that require a reconfiguration of the law, the Act will have a profound effect upon the business of medicine. By January 1, 2013, a national Medicare pilot program must be established to develop and evaluate paying a bundled payment for acute, inpatient hospital services, physician services, and outpatient hospital services.

The Act includes the following provisions, which are specifically tailored to primary care physicians: (1) the Act supports, through funding and grants, primary care training and capacity-building; (2) the Act establishes grants to provide capitated payments to primary care providers; and (3) the Act requires that Medicaid payment rates to primary care physicians be no less than 100% of the Medicare payment rates in 2013 and 2014 (and provides 100% federal funding for the incremental costs to states in meeting this requirement).

In contrast to certain favorable features, such as the above-referenced provisions relating to primary care physicians, the Act is poised to trigger material adverse consequences for a substantial number of radiology providers. For example, the Act immediately raises the imaging equipment utilization rate assumption (i.e. the time during office hours that imaging equipment is assumed to be in operation) from 50% to 75%. Since this metric is a major factor in determining reimbursement, this is expected to bring about significant reimbursement reductions. According to the American College of Radiology (the “ACR”), these reductions may restrict and possibly eliminate many nonhospital providers’ ability to furnish in-office imaging services, especially in rural areas. Further, the ACR takes the position that the imaging reductions will shift necessary imaging care to large hospital providers, thereby increasing the aggregate cost to Medicare for the provision of imaging services, require longer commutes and wait times for patients to receive necessary care, and cause potentially life-threatening delays in diagnosis and treatment of cancer and other serious illnesses.

For more information on the Health Care and Education Affordability Reconciliation Act, please contact Carey F. Kalmowitz, Esq. or Adrienne Dresevic, Esq. at (248) 996-8510, or visit the HLP website.