Legal landscape: M&A, managed care top hot spots

YARMOUTH, Maine - With increased complexity in the HME industry, comes increased legal ground to cover, say healthcare attorneys, particularly in the areas of mergers and acquisitions, and managed care.

In M&A, Jeffrey Baird has seen an increasing number of companies selling their stakes in certain geographic markets or certain product categories, or terminating their competitive bidding contracts.

In the case of the former, providers must alert the CBIC and make plans to transition their patients to another contract provider, says Baird, chairman of the Health Care Group at Brown & Fortunato in Amarillo, Texas. While terminating a bid contract isn't grounds for revocation, abandoning your patients is, he says.

“That's where you have to be careful—you can't abandon your patients,” he said.

In Baird's experience, it's not that difficult to transition patients, unless they're oxygen patients, he says.

“Once you sign up to take care of an oxygen patient, you're locked up for 60 months, so that's trickier,” he said. “But usually there are other contractors who are willing to pick up the load.”

Also in M&A: Baird has seen an increasing number of companies closing their doors and wondering whether or not they're liable for any outstanding audits.

“The short answer is no,” he said. “It's an unsecured claim against a company, not an individual. Ultimately, it will end up with a government agency that serves as a collection agency, and it never goes beyond that. It may, however, prevent an individual from going out and getting another PTAN to start another company.”

You've got a right to fight

Another area that has increased the complexity of the HME industry is exclusive or preferred contracting between managed care companies and certain providers and distributors, says Neil Caesar, president of the Health Law Center in Greenville, S.C.

This is an area, however, where the law can be on the side of providers, rather than something they need to be worried about violating, Caesar says.

“The idea is (to use legal means) to stop it from moving forward, or help shape the contracts, or find loopholes within them,” he said. “It's important for providers to find strength in numbers, stay on top of it and have their voice heard.”

Caesar cited Texas, where Superior HealthPlan began a preferred contract with Medline for supplies for Medicaid recipients starting Oct. 1, as an example of how providers can make a difference. The contract was originally exclusive and scheduled to start Sept. 1

“Providers were able to leverage a new policy in the state that required managed care companies to give an opt-out and clearly state that,” he said.

While instances of these contracts are popping up in a number of states, they're likely to become more widespread, Caesar says, because managed care companies with different names in different states are often owned by the same regional or national company. For Superior HealthPlan, for example, that's Centene Corp., which has more than 12 million members in 28 states.

“It's not an isolated trend,” he said.