3 Major Issues That Will Challenge Health Care In 2021

By Keith Smith and Kimberly Kirk
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Law360 (December 8, 2020, 4:10 PM EST) --
Keith Smith
Keith Smith
Kimberly Kirk
Kimberly Kirk
Many clients relying on health care attorneys in 2021 for advice on operational, transactional and regulatory matters will be managing the continuing effects of three issues that were significant for all U.S. industries in 2020: the COVID-19 pandemic, the anti-racism and social justice movements, and the presidential election.

This year, the pandemic presented health care attorneys with unusual issues such as how to obtain physical and other protections for essential health care workers and to comply with waivers of existing legal requirements designed to facilitate adjustments to care models and ensure access to care during a public health emergency.

The ongoing challenges of the pandemic will be prominent again for health care attorneys in 2021, as will questions from clients responding to the impact of racism and social justice movements and of a new administration. Below we discuss some of the major takeaways from 2020 and offer some predictions for 2021.

1. COVID-19 Pandemic

In 2020, health care attorneys answered the call to help identify, prioritize and manage the myriad unique issues generated by the pandemic, from pursuing assistance under the CARES Act Provider Relief Fund,[1] to setting up field hospitals for an overflow of patients sick from the coronavirus.[2]

The health care system's response to the pandemic accelerated the use and acceptance of telehealth, uncovered weaknesses in the public health system,[3] and highlighted limitations of the traditional fee for service reimbursement model as hospitals struggled to meet demand for inpatient beds yet saw revenues plummet because elective procedures were cancelled and patients postponed medical care.

In 2021, health care organizations and their attorneys will wrestle with these and other pandemic-related issues.

Drawing on their experience from the unanticipated increased use of telehealth ushered in by the pandemic, health care providers in 2021 will be evaluating when telehealth is, in fact, effective for patient care and seeking clarity on reimbursement for telehealth services post-pandemic.

Federal and state lawmakers, similarly, will be assessing the benefits of waivers and coverage policies for telehealth implemented because of the pandemic. Health care attorneys will need to keep abreast of (1) federal and state legal and regulatory developments on telehealth, including reimbursement, privacy and security safeguards, and licensing and supervision requirements, particularly for providing services out of state, and (2) how courts recognize telemedicine as part of the prevailing community standard of care.

Also, following government law enforcement efforts focused on telefraud in 2020,[4] health care attorneys must advise clients how to avoid risk areas associated with telehealth and enhance compliance and privacy programs.

After an initial slowdown at the onset of the pandemic, health care merger and acquisition activity picked up and is predicted to finish at an overall healthy level for 2020.[5] Health care attorneys can expect that the forces encouraging consolidation before the pandemic will gain momentum in 2021, as health care organizations absorbing the financial blows of the pandemic look to follow through on prepandemic strategic growth initiatives to achieve cost savings and efficiencies.[6]

For example, some M&A experts foresee significant continuing consolidation ahead in the post-acute services sector.[7] In addition to being mindful of antitrust concerns, health care attorneys will want to monitor efforts in Congress and state legislatures targeting surprise billing and providing for oversight of acquisitions of health care entities by private equity firms, hedge funds and large health care systems.[8]

When conducting due diligence review of health care organizations involved in transactions, health care attorneys should (1) determine if those entities have repayment or other obligations following receipt of funds from the Provider Relief Fund and complied with pandemic-related waivers, and (2) identify indications of the impact of the pandemic on the business performance of those entities.

If a health care organization has outstanding Provider Relief Fund obligations, any M&A transaction documents will require, at a minimum, disclosure of those obligations. If Congress passes additional relief measures for providers in 2021, health care organizations will look to health care attorneys for interpretation of the terms and conditions of financial support.

2. Racism and Social Justice

Health system leaders and the American Medical Association issued statements this year calling racism a public health problem.[9] The COVID-19 pandemic highlighted racial disparities of care[10] and the relevance of social determinants of health.

In 2021, with social justice movements serving as accelerant, physicians and health care organizations should expect demands for remediation of systemic racism and other root causes of disparities of care to gain in importance.

From a corporate governance standpoint, health care entity boards will need to maintain focus on board diversity and understand management efforts to combat racism and reduce disparities of care. Counsel should assist boards in understanding their duties of care and inquiry under state law and how to demonstrate discharge of these duties.

Another effect of rising awareness among boards and health care executives of racial disparities of care and social determinants of health has been increases in the minimum wage for workforce members at hospitals and health systems.[11] The duration of the pandemic and attendant stress on essential health care workers combined with the disparate impact of COVID-19 based on socioeconomic status make protecting the health and safety of the health care workforce crucial.

Going into 2021, health care attorneys serving as trusted advisers should anticipate clients having employment law-related questions ranging from access to physical safety in the workplace to overtime pay requirements to negotiating with organized labor.

In addition to advising on final rules released from the U.S. Department of Health and Human Services on Nov. 20, which are designed to reduce regulatory barriers to care coordination and moving to value-based care, health care attorneys are likely to be counseling clients that accept some measure of financial risk for population health on how to structure legally compliant initiatives that mitigate social determinants of health such as lack of reliable housing or adequate nutrition.

3. Change of Administration

During the presidential campaign, President Donald Trump and President-elect Joe Biden expressed clear differences of opinion on health care policy issues from health care coverage to COVID-19 response. With election results not affording dominance for either party, only common ground issues will move through Congress.

For example, incentivizing moves to value-based care, prohibiting surprise billing and updating laws and regulations to accommodate increased use of telehealth are areas conducive to gaining bi-partisan support. At a minimum, health care organizations should expect executive branch policy-focus adjustments and a different approach to coordination between federal and state public health entities.

In 2021, health care attorneys will help clients understand new regulations and possibly new federal legislation prompted by the pandemic, including guidance on managing the distribution of COVID-19 vaccines.

Conclusion

The COVID-19 pandemic will have significant influence on health care organizations in 2021, as will social justice movements and the shift to a new administration.

Looking ahead and preparing to best serve clients in another year of probable extreme stress for health care providers, health care attorneys need to devote time to stay current on regulatory developments at the federal and state levels, and to remember that their clients will have increased price sensitivity.

At a time when numerous new operational, financial and other risks are emerging, lawyers should assist health care clients to be well-informed and make risk-intelligent decisions, thereby adding value as strategic advisers who not only solve problems but help identify business options.



Keith Smith is a member and Kimberly Kirk is senior counsel at Moore & Van Allen PLLC.

The opinions expressed are those of the author(s) and do not necessarily reflect the views of the firm, its clients or Portfolio Media Inc., or any of its or their respective affiliates. This article is for general information purposes and is not intended to be and should not be taken as legal advice.


[1] CARES Act Provider Relief Fund, U.S. Dep't. of Health & Hum. Services (last accessed July 2, 2020), https://www.hhs.gov/coronavirus/cares-act-provider-relief-fund/index.html.

[2] See, e.g., Priyanka Dayal McCluskey, Patients start to fill field hospitals amid surge in coronavirus cases, BostonGlobe.com (Last updated April 18, 2020, 6:26 PM), https://www.bostonglobe.com/2020/04/18/metro/patients-start-fill-field-hospitals-amid-surge-coronavirus-cases/; COVID-19: Alternate Care Facility at State Fair Park, Wisconsin Department of Health Services (Last accessed November 18, 2020, 3:00 PM) https://www.dhs.wisconsin.gov/covid-19/alternate-care-facility.htm.

[3] See, e.g., Nicholas Kulish, Sara Kliff and Jessica Silver-Greenberg, The U.S. Tried to Build a New Fleet of Ventilators. The Mission Failed, THE NEW YORK TIMES (Published March 29, 2020, and updated April 20, 2020) https://www.nytimes.com/2020/03/29/business/coronavirus-us-ventilator-shortage.html (describing holes in the nation's emergency response stockpile).

[4] U.S. Department of Health and Human Services Office of Inspector General, 2020 National Health Care Fraud Takedown (Last updated October 1, 2020), https://oig.hhs.gov/newsroom/media-materials/2020takedown/ ("Since 2016, HHS-OIG has seen significant increase in 'telefraud': scams that leverage aggressive marketing and so-called telehealth services. The conspirators include telemedicine company executives, medical practitioners, marketers, and business owners who scammed hundreds of thousands of unsuspecting patients in their homes").

[5] Jacqueline LaPointe, Healthcare Merger and Acquisition Activity Increased in Q3 2020, Revcycle Intelligence (October 8, 2020), https://revcycleintelligence.com/news/healthcare-merger-and-acquisition-activity-increased-in-q3-2020. ("The pace of healthcare merger and acquisition activity continues to be unhindered by the COVID-19 pandemic, according to the latest M&A Quarterly Activity Report from Kaufman Hall. The report highlighting healthcare merger and acquisition activity in the third quarter of 2020 found that providers announced 19 transactions between July 1 and September 30, 2020. The number is up from just 14 transactions during the second quarter of 2020 and is on par with historical third-quarter activity, the firm reported. Total transacted revenue for the quarter was also in line with historical third-quarter activity, according to the report.").

[6] Anu Singh, Healthcare Mergers & Acquisitions Activity Report: Q3 2020, Kaufman Hall, https://www.kaufmanhall.com/ideas-resources/article/healthcare-mergers-acquisitions-activity-report-q3-2020 ("[T]he pandemic may be acting as a catalyst for strategic partnerships and tactical transactions. We anticipate that the ongoing financial pressures of the pandemic will only strengthen the need for partnerships, with new opportunities emerging in the months ahead").

[7] Joyce Famakinwa, M&A Experts 'Can't Recall a Time When Demand Has Been Higher' in Sizzling In-Home Care Market, HOME HEALTH CARE NEWS (October 20, 2020), https://homehealthcarenews.com/2020/10/ma-experts-cant-recall-a-time-when-demand-has-been-higher-in-sizzling-in-home-care-market/.

[8] See, e.g., Chris Cumming, California Bill to Rein in Private-Equity Health-Care Buyout Dies, THE WALL STREET JOURNAL (September 4, 2020 4:07 PM), https://www.wsj.com/articles/california-bill-to-rein-in-private-equity-health-care-buyouts-dies-11599250052 (California Attorney General Xavier Becerra "said the push for reform would continue despite the setback in the Democratically controlled legislature").

[9] Healthcare Anchor Network, It is undeniable: Racism is a public health crisis (September 27, 2020) (Thirty-nine large health systems commit to address racism as a public health crisis), https://healthcareanchor.network/2020/09/it-is-undeniable-racism-is-a-public-health-crisis/; and Steven Ross Johnson, AMA calls racism a 'public health threat' MODERN HEALTHCARE (November 16, 2020 04:55 PM), https://www.modernhealthcare.com/physicians/ama-calls-racism-public-health-threat ("The American Medical Association Monday voted to recognize systemic racism and interpersonal bias by healthcare workers as a 'serious' threat to public health that hinders efforts to achieve health equity and reduce disparities among minority populations").

[10] Daniel Wood, As Pandemic Deaths Add Up, Racial Disparities Persist – And In Some Cases Worsen, NPR.org (September 23, 2020 1:01 PM), https://www.npr.org/sections/health-shots/2020/09/23/914427907/as-pandemic-deaths-add-up-racial-disparities-persist-and-in-some-cases-worsen, ("Today, as the U.S. has surpassed 200,000 COVID-19 deaths, and reached nearly 7 million confirmed cases, racial data is more complete, and the trend is crystal clear: People of color get sick and die of COVID-19 at rates higher than whites and higher than their share of the population").

[11] Ginger Christ, Hospitals raising front-line workers' minimum wage during coronavirus pandemic, MODERN HEALTHCARE (November 14, 2020 01:00 AM), https://www.modernhealthcare.com/labor/hospitals-raising-front-line-workers-minimum-wage-during-coronavirus-pandemic.

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