Affordable Patient Protection Care Act

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On June 28, 2012, the U.S. Supreme Court (the “Court”) upheld the Patient Protection and Affordable Care Act (the “Act”) of 2010 by a 5 to 4 vote. The Court indicated in their decision that the healthcare reform legislation does not violate the Constitution based on Congress’ power to tax or fine for non-compliance with a law.One of the key components of the Act is the individual health insurance mandate, which would take effect in 2014. Under the health insurance mandate, individuals would be required to have health insurance or face penalties. Many states currently provide health insurance to adults with children. Childless adults who are not covered by Medicaid will now be required to obtain health insurance in accordance with the health insurance mandate. Uninsured low-income adults that cannot afford health insurance coverage may apply for a financial hardship exception or pay a penalty.Learn how the recent decision by the US Supreme Court to uphold this law will impact you - OConnor Davies - NY CPA Firm.

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US Supreme Court Ruling on the Patient Protection and Affordable Care Act of 2010
Contact: New York, NY (downtown) 212.867.8000 New York, NY (midtown) 212.286.2600 Harrison, NY 914.381.8900 Stamford, CT 203.323.2400 Paramus, NJ 201.712.9800 New Windsor, NY 845.220.2400 Wethersfield, CT 860.257.1870

On June 28, 2012, the U.S. Supreme Court (the “Court”) upheld the Patient Protection and Affordable Care Act (the “Act”) of 2010 by a 5 to 4 vote. The Court indicated in their decision that the healthcare reform legislation does not violate the Constitution based on Congress’ power to tax or fine for non-compliance with a law. One of the key components of the Act is the individual health insurance mandate, which would take effect in 2014. Under the health insurance mandate, individuals would be required to have health insurance or face penalties. Many states currently provide health insurance to adults with children. Childless adults who are not covered by Medicaid will now be required to obtain health insurance in accordance with the health insurance mandate. Uninsured low-income adults that cannot afford health insurance coverage may apply for a financial hardship exception or pay a penalty. In addition, accountable care organizations ("ACO") should continue to expand under the Act. An ACO is a type of payment and delivery reform model that seeks to tie provider reimbursements to quality metrics and reductions in the total cost of care for an assigned population of patients. With the expansion of ACO’s and the continued government budget restraints in health care spending, consolidation of provider organizations such as hospitals and nursing homes will also continue to increase. One part of the act that was determined to be unconstitutional related to Medicaid expansion. The Act would have forced states to expand their pool of Medicaid-eligible members or risk losing all Medicaid funding. Under the ruling, the Court indicated that this was beyond the authority of Congress to change the nature of Medicaid for individual states. Accordingly, the expansion of the Medicaid program is constitutional as long as the federal government does not bar states from continuing to participate in the existing Medicaid program based on the condition that they agree to expanded coverage. Effect of the Act on Healthcare The Act will have several effects on our healthcare system. Key items that

we would expect in the future as a result of the Supreme Court’s decision are: • • • • • • • • The accountable care organization model use to provide health care will increase With the uncertainty removed regarding the Act, health care investment and expansion capital should increase Regulatory pressure will continue to increase from government entities Consolidation of providers will continue due to on-going reimbursement cuts Medicaid managed care will increase substantially as states look for ways to control spending and limit their risk related to healthcare costs Employers will begin to get ready and budget for 2014, when the Act requires that most employers provide health insurance for all full-time employees and their dependents or pay a penalty Seniors who are eligible for the Medicare drug benefit will pay less for drugs paid after the initial Medicare coverage The Medicaid Redesign Team should receive the final green light to move forward with its initiatives

Reminder of provisions included in the Act While much time has been spent deliberating whether or not the Act would be repealed, certain provisions included in the Act are approaching that will effect providers. Below are some key provisions of the Act that providers should keep in mind: • Under the Act, nursing homes are required to have effective compliance and ethics programs. The Act gives nursing homes until 2013 to adopt such a program. After three years, the Department of Health and Human Services will conduct an evaluation to determine whether this requirement has resulted in a decrease in nursing home citations or other indications that nursing home quality has improved. The Act empowers state ombudsmen to demand nursing home companies make the details of elaborate corporate structures public. This could have an effect on the structures of private providers of health care. In accordance with the Act, grants to state-approved community colleges or community-based training programs are available for the development, evaluation and demonstration of training programs for nursing home aides and home health aides oncampus, at alternative sites, and through telehealth methodologies. Accordingly, resources for these type of providers should increase.







Hospitals will be required to conduct a community health needs assessment (CHNA) at least once every three years. (This CHNA requirement is effective for tax years beginning after March 23, 2012). Beginning federal fiscal year 2013, the Centers for Medicare & Medicaid Services will be able to penalize hospitals based on readmission rates.



Final thoughts As a trusted business advisor and leader in the health care industry, O’Connor Davies will continue providing guidance and analysis of this historic decision and the effect it has on our healthcare system. If you have any questions about the information discussed in this Alert, please contact Chris McCarthy at 914-341-7018 or Keith Solomon at 914-341-7078. O’Connor Davies, LLP is a member firm of the PKF International Limited network of legally independent firms and does not accept any responsibility or liability for the actions or inactions on the part of any other individual member firm or firms.
About Our Practice:
O'Connor Davies, LLP, is a full service Certified Public Accounting and consulting firm that has a long history of serving clients both domestically and internationally and providing specialized professional services of the highest quality. With roots tracing to 1891, seven offices located in New York, New Jersey and Connecticut, and approximately 400 professionals including 70 partners, the Firm provides a complete range of accounting, auditing, tax and management advisory services. O’Connor Davies is ranked as number 39 in Accounting Today's 2012 "Top 100 Firms" in the United States. The Firm is also among the 20 largest accounting firms in the New York metropolitan area according to Crain's New York Business and the Westchester and Fairfield County Business Journals. O’Connor Davies is a member firm of the PKF International network of legally independent member firms, the tenth largest global network in 2011, with 440 locations in 125 countries around the world. PKF International Limited is a network of legally independent firms and does not accept any responsibility or liability for the actions or inactions on the part of any other individual member firm or firms. IRS CIRCULAR 230 DISCLOSURE: To comply with IRS regulations, we are required to inform you that unless expressly stated otherwise, any discussion of U.S. federal tax issues in this correspondence (including any attachments) is not intended or written to be used, and cannot be used, (i) to avoid any penalties imposed by the Internal Revenue Code, or (ii) to promote, market, or recommend to another party any transaction or matter addressed herein. Our firm provides the information in this e-newsletter for general guidance only, and it does not constitute the provision of legal advice, tax advice, accounting services, investment advice, or professional consulting of any kind. The information provided herein should not be used as a substitute for consultation with professional tax, accounting, legal, or other competent advisers. Before making any decision or taking any action, you should consult a professional adviser who has been provided with all pertinent facts relevant to your particular situation.

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