US Supreme Court Challenges to Health Care Reform

How will therapy companies be affected?

Last month marked a historical and unprecedented challenge to health care reform at the US Supreme Court.  The justices offered sharply divided views on controversial issues such as individual mandate, pre-existing conditions, severability and the Anti-Injunction Act in one of the most anticipated Supreme Court hearings in years.

I would like to focus on individual mandate and how it will affect therapy providers, what changes can be expected and the impact it will have on how therapy companies operate.

The Patient Protection and Affordable Care Act (PPACA), informally referred to as Obamacare, is a United States federal statute signed into law by President Barack Obama on March 23, 2010. The law (along with the Health Care and Education Reconciliation Act of 2010) is the principal health care reform legislation of the 111th United States Congress. PPACA imposes federal mandate on all US citizens and legal residents to have qualifying health insurance (the next question should be, what constitutes "qualifying" health insurance?) and provides tax penalties for non-compliance (with only limited exemptions).  

The question before the US Supreme Court is whether Congress has the power under the Commerce and Necessary and Proper Clauses of the Constitution to enact such legislation.  The Commerce Clause of the Constitution is typically a very strong and broad power that allows Congress to pass legislation, if it has a substantial impact on economic activities.  One on hand, the challengers to this legislation takes the position that the power to regulate commerce does not include the power to compel individuals to purchase health insurance. However, the federal government defends its position by looking at uninsured participants in the health care market as individuals who shift substantial risks and costs to other market participants.  Therefore, according to the federal government, Congress may regulate the actions of the uninsured.

If the individual mandate is struck down, the US Supreme Court must decide whether this portion of the Act may be severed from the rest of PPACA. But, if the individual mandate is upheld, PPACA remains in place and the only remaining open issue is whether the Medicaid expansion is constitutional.

Individual mandate has been viewed as the economic force that makes PPACA's various health care reforms viable by increasing the pool of insureds.  At this point, it will be imperative for Congress to answer whether, absent this increased pool of insured, Congress would have enacted the remainder of the Act. 

With such large stakes at hand, many employers and workers will be waiting anxiously to see how it may affect them.  More specifically, I see a lot of potential changes which will impact the occupational therapy industry as a whole.  First, therapy companies will experience increased operational costs due to an increased need to provide more employees medical insurance.

To compound these effects are costs associated with more therapists adding their spouses to their insurance plan because their spouse may work for an employer who decided to opt for the penalty instead of providing medical insurance coverage. This has a trickling affect because therapy companies will be forced to decrease their hourly employee pay rate, coupled with asking for decreased rates from therapy staffing agencies to cover the shift in higher costs associated with medical insurance coverage.

Moreover, to offset the rise in costs, I expect therapy companies to decrease home office labor costs, which will make non-revenue producing departments leaner. Unfortunately, this could be problematic because there will be less support staff and management to act as a resource to treating therapists, which will have an effect on reimbursement, productivity, efficiency and accuracy issues. This will be especially true if Medicare B caps are fully implemented, thus, having a more dramatic end result for therapy companies.  

Before I wrap up my brief discussion on individual mandate, I think it should be understood that based on past case precedence, politics and how the existing justices ruled on past cases involving the Commerce Clause, the challengers of health care reform had an uphill battle and carried the burden of "sweeping the other justices" in order for the proposed healthcare reform mandates to be struck down.  Why? 

It is because in Ginsberg's and Bryer's written dissenting opinions for both Morrison v. US and Lopez v. US, they both indicated Congress possessed extremely broad powers to regulate interstate commerce, which meant that Congress was authorized to regulate almost any activities having an economic impact, even ones having an indirect economic impact. Justices Sotomayor and Kagan were not Supreme Court justices during the era of Lopez or Morrison. However, history has shown that Democrats tend to appoint strong liberal justices with views that lean to the far left, as opposed to Republicans who will appoint justices possessing centralistic or strong conservative judicial perspectives.

With that said, the challengers to health care reform already have four out of nine justices (Kagan, Sotomayor, Ginsberg and Bryer) who will, almost without a doubt, vote to uphold health care reform, including the individual mandate provisions.  Conversely, justices who are likely to challenge the constitutionality would include Thomas, Scalia and Alito, with Kennedy and Roberts being the two swing votes. As such, I echo my statement that the health care reform challengers had the burden of "sweeping the other justices," which meant they had to convince Justices Thomas, Alito, Scalia, Roberts and Kennedy to strike down certain provisions of the healthcare reform, giving them a 5-4 victory.

My estimation is that it will be a 6-3 vote upholding the constitutionality of the individual mandate provision or a version containing minor revisions.  The final decision will most likely be rendered in late June. Until then, we must be patient.   

Richard Cheng, JD,OTR/L is the General Counsel and a senior executive member at Senior Care Centers, based in Dallas, TX. Previously, he was the General Counsel and VP of Medical Appeals at Century Rehabilitation and an associate attorney at Pearson Randall & Schumacher & LaBore, P.A. where he practiced civil litigation and worked as a staff attorney for Thomson Reuters, Inc. Richard has successfully conducted multiple trials, won the 2011 Best Corporate Counsel Rising Star for the Dallas Business Journal and recognized as a finalist for the D CEO Magazine/ACC best corporate counsel award. In addition, he was recognized by Texas Tech Health Sciences Center for the 2010 Distinguished Alumni award and received the 2011 Texas Occupational Therapy Association Distinguished Service award. Prior to his legal career, Richardworked as a licensed occupational therapist in rehabilitation, acute care, long term care, outpatient and home health care. He has served as an adjunct faculty at Saint Catherine University and Nova Southeastern University and has lobbied in Washington D.C. through AOTA.   


Great analysis of what to expect from this Court. It will be interesting to see just how broad these Justices believe the Commerce Clause to be.

Nicole LeBoeuf,  Trial Attorney,  Shackelford Melton McKinleyMay 01, 2012
Dallas, TX

Great and informative article!

Kathy PatrickApril 30, 2012
Dallas, TX

As back offices become leaner the potential for billing errors increases. Software helps a lot but cannot reason through all the permutations of billing regs thus increasing the risk for regulatory scrutiny. That will then diminish revenue as revenue for resulting from providing reasonable and necessary care is magically transformed into to Fraud. Costs will go up as providers spend millions of 'health care' dollars defending themselves against fraud allegations. I get paid a lot for participating in fraud investigations. The lawyers get paid even more. We all recognize there are better ways to make money but when payment is suspended to a good provider, there is a limited number of people who can help them. When it is cut off for a fraudulent provider, we don't stand a chance of winning appeals. The sad thing is that the good providers survive longer than the bad ones and actually end up spending more for consultants, lawyers, statisticians, etc. I keep thinking maybe this isn't the best use of health care dollars but Obamacare counts it as a win. I am not happy with healthcare 'deform'.

Julianne April 29, 2012

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