Two health care lawyers in Chicago say they are seeing the Patient Protection and Affordable Care Act (PPACA) shape a big new market for everyday compliance, deal-making and dispute resolution legal services.

Deborah Dorman-Rodriguez, the leader of the health care practice group at Freeborn & Peters LLP, Chicago, and David Kaufman, another partner in the group, said in an interview that they are now seeing plenty of activity somewhere on the PPACA audit spectrum, and that they are starting to get an idea of what future PPACA-related litigation might look like.

Read: Carriers debate future with PPACA

“There are a lot of audits,” Dorman-Rodriguez said.

Clients are also getting many requests for information, and they are involved with other types of pre-audit activities that could lead to formal enforcement action, she said.

Dorman-Rodriguez previously was the chief legal officer at Health Care Service Corp. (HCSC), the company that runs the Blue Cross and Blue Shield plans in Illinois, Montana, New Mexico, Oklahoma and Texas.

Kaufman has been general counsel to the New Mexico State Corporation and Commission, and the New Mexico superintendent of insurance.

The lawyers said that much of the audit, pre-audit and audit-like activity they are seeing involves matters such as the PPACA medical loss ratio (MLR) reporting program or compliance with PPACA benefits mandates.

Kaufman said the entities starting the proceedings include state insurance regulators, the U.S. Department of Labor, and the Center for Consumer Information and Insurance Oversight (CCIIO)–the arm of the Centers for Medicare & Medicaid Services (CMS) in charge of administering CMS-PPACA programs that affect the commercial health insurance market.

Deborah Dorman-Rodriguez, the leader of the health care practice group, Freeborn & Peters LLP, Chicago “It's a very, very active space,” Dorman-Rodriguez (photo, left) said.

Until recently, many health care lawyers were rushing to help clients set up PPACA-related programs and procedures.

Some health care lawyers were still focusing on providing basic advice about how PPACA is supposed to work, and whether various provisions, such as the individual coverage mandate or the birth control benefits mandate, were really constitutional.

Some reported seeing a somewhat surprising lack of litigation, or the kinds of activities that could lead up to litigation.

Lawyers involved with PPACA compliance said they were seeing some letters from state or federal agencies asking various parties for information, but not a flood of audit and pre-audit activity.

Freeborn & Peters is also seeing plenty of legal work involving the creation of accountable care organizations (ACOs), helping health-related organizations consolidate, and helping providers get into taking insurance-like risk and insurers get into providing health care.

Health care providers, insurance agents and other parties that are seeking money from failed insurance carriers, including the nonprofit, member-owned Consumer Operated and Oriented Plan (CO-OP) carriers, may need legal help to file claims through state liquidation proceedings or other legal proceedings, the lawyers said.

PPACA, U.S. Department of Health and Human Services (HHS) regulations and congressional opposition to providing additional funding, require CCIIO to get all of the cash for two major PPACA insurer risk management programs, the three-year risk corridors program and the permanent risk-adjustment program, from the health insurers selling exchange coverage.

The risk corridors program calls for exchange plan issuers with good results to provide cash to help issuers with poor results.

The risk-adjustment program calls for exchange plan issuers with low-risk enrollees to send cash to issuers with low-risk enrollees, to reduce incentives for issuers to shun older, sicker enrollees.

Dorman-Rodriguez said the programs may give insurers an incentive to try to take action when they believe competitors have not paid their fair share into the risk corridors or risk-adjustment programs.

If a competitor has not paid enough into a PPACA risk management program, “there's not really a clear remedy,” Dorman-Rodriguez said.

The carriers seem to want the exchange system and the risk management programs to work, and they seem likely to do everything possible to avoid litigation when resolving disputes, Dorman-Rodriguez and Kaufman (photo, left) said.

But health insurance “is a very much a low-margin business,” Kaufman said.

Because insurers have such little room for error, they have a keen interest in getting the amounts they believe they are owed, Kaufman said.

The lawyers said they also see private health insurance exchange work, but less of that than they were seeing two years ago.

Instant Insights /

PPACA legal work heats up

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