A changing infrastructure Featured

8:00pm EDT March 26, 2009

The American Recovery and Reinvestment Act of 2009, signed into law by President Barack Obama on Feb. 17, combines massive spending and tax cuts and incentives to help stimulate the economy. The act affects many industries, including health care. The cost of the act is $787 billion, with $138 billion of those dollars targeted to health care initiatives.

“In the past, health care initiatives coming out of Washington have typically affected only a small portion of the population,” says Gina Ginn Greenwood, attorney with the law firm Baker, Donelson, Bearman, Caldwell & Berkowitz, PC. “But with health care representing approximately 15 percent of the gross domestic product, recent changes to policies and reimbursement structures should have far-reaching effects.”

Smart Business spoke with Greenwood about the changes made in the stimulus act, how these affect businesses and the legal implications of this act on health care.

What changes have been made to health care because of the stimulus act?

The act contains significant relief under certain government run and/or government subsidized health care medical payment systems. Some of these measures are Band-Aids to get the country by until more thought can be put into a complete overhaul of the health care system. But these changes could make a difference, particularly to hospitals that are suffering from decreased revenue and increased indigent care costs.

For example, the act continues Medicaid eligibility for a limited time for individuals who would lose coverage because of a new job. States will also receive increased reimbursement for their Medicaid expenses to ease their budgets and help with the increasing number of people who do not have jobs and do not have and cannot afford or qualify for health insurance.

The act also allows for federal subsidization of COBRA insurance premiums and extension of COBRA benefits to help employees who have been laid off afford the high cost of their insurance premiums.

The act encourages the implementation of electronic health records by providing more than $17 billion in information technology loans and/or increased reimbursement payments to hospitals and physicians. It also establishes penalties for entities that do not implement electronic records by certain dates. Congress’ theory is that widespread purchasing and adoption of electronic records will stimulate the economy and decrease the costs of duplicate testing and medical errors and increase patient safety.

The act calls for changes to the Health Insurance Portability and Accountability Act of 1996 (HIPAA) Privacy Rule and Security Standards. HIPAA changes will have a large impact on health care providers and the companies they do business with. For example, business associates — third parties who perform certain medical or billing-related tasks for health care providers — will now become subject to the same statutory and regulatory requirements as HIPAA-covered entities. They will also be required to implement administrative, physical and technical safeguards on the use and disclosure of medical and billing information, have written policies and procedures covering these requirements, and become subject to the same civil and criminal penalties as HIPAA-covered entities. There are also mandatory reporting requirements for breach of unsecured protected health information — a big change for providers and potentially a costly provision to adhere to if a breach were to occur.

How does this act affect businesses?

Even if you are not eligible for government subsidy or reimbursement, the health care portions of the stimulus act will affect you, your business and your children because health care is a big business that affects all. In the short run, hopefully the increase in dollars into the economy will directly benefit your business by increases in the buying and selling of services and product you offer. It could also benefit your investments in the stock market or real estate. The bad news is that eventually individuals and businesses will have to repay the debt that is being accrued as the result of the increase in governmental spending.

What are the legal implications of these changes?

This is one of the most significant acts to ever be passed by Congress and will require significant regulations to implement. Every lawyer in the country should be reading this act and finding ways to help clients take advantage of the perks and avoid the pitfalls.

Companies and trade associations should be proactive in the rule-making processes. They shouldn’t wait to be victims but rather should act now to let their voices be heard at the administrative agency level. Most of the provisions related to health care are complicated and will require high-end legal interpretations now, during comment periods, and after the regulations are issued.

How can you learn more about these changes?

Information about the act is available online. Also, lots of advisories have been released on various aspects of the act. Legal questions should be addressed to attorneys who are closely following this legislation and its impact.

GINA GINN GREENWOOD is an attorney with Baker, Donelson, Bearman, Caldwell & Berkowitz, PC. Reach her at (404) 589-0009 or ggreenwood@bakerdonelson.com.