New Supreme Court Rulings and Their Impact on Your Practice

by Michael J. Schoppmann, Esq.

In two very recent holdings, the United States Supreme Court has stepped into the arena of healthcare with perhaps more significant impact than ever before. These holdings may portend short and long term shifts in both the global structure of medical practices and the overall methods of operation under what has been previously accepted as traditional managed care models.

In Clackamas Gastroenterology Associates, P.C. vs. Wells, the nation’s highest Court has issued a ruling, which should forever alter the legal environment for physicians who are owners or partial owners of their medical practice. Traditionally, physician/owners as shareholders in a professional corporation, or partners in a professional partnership, were business owners and, therefore, were employers and not employees. This distinction which bore significant impact as the test for whether a practice must comply with federal discrimination statutes (Title VII of the Civil Rights Act of 1964, The Americans with Disabilities Act and the Age Discrimination in Employment Act) is predicated upon the number of persons so designated as employees of the medical practice. Therefore, the Court’s dramatic expansion of the potential number of employees may well, for the first time, push many medical practices under the umbrella of obligations imposed by these federal antidiscrimination laws.

Practices previously close to such thresholds, or unaware of the specific standards, should review their practice structure immediately so as to insure compliance or potentially implement present and/or future changes so as to avoid the need to comply with such onerous obligations.

In a second new ruling, Kentucky Association of Health Plans, Inc. v. Miller, Kentucky Department of Insurance, the Court has set in place what may well be a model for the elimination of all restricted physician panels or networks as normally structured by managed care companies across the country.

In challenging the Kentucky “Any Willing Provider” laws (which forbade any managed care company from discriminating against any physician willing to meet the terms and conditions of participation as established by the insurer) the Association of Health Plans argued that a consequence of upholding the law would be the elimination of any type of closed network of health care providers. The Court, while openly acknowledging such an impact, was unmoved and upheld the validity of the Kentucky laws.

As a result, in those states holding, or passing, such “Any Willing Provider” laws, the application of such a ruling should bring about significant changes in the structure of present managed care company/insurer models, reduce the negotiating power of such entities and potentially allow previously disaffected physicians to demand reentry or access to patients/panels previously denied to them.

Physicians, and their practice managers, should be mindful that such a ruling may well bring about new methods, tactics, structures and/or standards of participation by the managed care plans/insurers they contract with. New variations on the same theme of restriction and control should be carefully watched, vigorously scrutinized and potentially challenged or rejected.