Health Care Reform: Specialty Practice Impact
For most medical practices, the Patient Protection and Affordable Care Act (ACA) brings a mixed bag of challenges and opportunities. While experts continue to sort through the details of this wide‐reaching legislation, physicians need to know what is most likely to – and, in many cases, already has – affected their practices.
In this article, you will learn how to:
- Determine which aspects of the Patient Protection and Affordable Care Act (ACA) may have an impact your practice
- Recognize the potential impacts and opportunities presented by the demonstration projects and pilot projects called for in the ACA
- Identify the major reimbursement changes likely to emerge from the ACA and their potential influence on physician reimbursement and medical practice ownership
For most medical practices, the Patient Protection and Affordable Care Act (ACA) brings a mixed bag of challenges and opportunities, While experts continue to sort through the details of this wide-reaching legislation, physicians need to know what is most likely to – and, in many cases, already has – affected their practices.
First, it pays to understand the intentions of the federal government, starting with how legislators eventually crafted the ACA after it was proposed by President Obama. The act seeks to:
- Extend health insurance coverage to all (or nearly all) Americans through a new federal structure of private, employer-based and public insurance;
- Create publicly funded subsidies so that low-income individuals and families can access health insurance through Medicaid;
- Rein in rising Medicare costs; and
- Shift the focus of medical reimbursement to emphasize quality outcomes based on measurement and widespread adoption of compatible health information technologies.
The foundation of the ACA’s ambitious goals is a requirement for all individuals to carry health insurance starting in 2014, whether purchased through an employer plan, individually, or from a publicly subsidized plan.
These initiatives will introduce a distinct shift in the focus of the health care system in the United States: from one that was historically built around the individual patient to one that is based on "population health" and "outcomes" – terms that we can expect to hear for years to come as the ACA’s many provisions are implemented.
For physicians, this shift will introduce greater accountability for collecting and reporting quality indicators about patients. Additionally, physicians should expect to see measures of their performance take into account their adoption and use of quality standards. Those results will be reported to the federal government, which has announced that it will make the data available to the public. With commercial insurers already requesting similar measurements, the government intends to use the indicators it gathers as a basis for medical reimbursement. Already, the ACA is nurturing a new emphasis on the Accountable Care Organization (ACO) model in which physicians assume a share of the cost associated with caring for groups of patients.
Additional changes coming, or already here, as a result of the ACA are:
Medicare Bonus Payments. Primary care providers, as well as general surgeons working in areas designated as health care professional shortage areas, are eligible to receive Medicare reimbursement bonuses of 10 percent through 2016;
Imaging Referrals. Physicians who refer patients for MRIs and other advanced imaging services must now provide them with a list of other providers in the community who also offer those imaging services.
Stark Law Disclosure. Since 2010, the Medicare Self-Referral Disclosure Protocol authorized by the ACA has given the Centers for Medicare & Medicare Services (CMS) the discretion to reduce fines as a result of Stark Law violations when physicians voluntarily disclose potential violations that are, in fact, deemed violations. The protocol also allows CMS to suspend the 60-day deadline for the reporting and return of overpayments for voluntary disclosures by providers.
Medicaid Expansion. The ACA’s mandate that all American purchase health insurance beginning in 2014 will be accompanied by subsidies to help lower-income workers and their families purchase insurance coverage through an expanded Medicaid program. At the very least, this will boost the number of patients seeking care. If your practice has more than 50 employees and you do not that offer health insurance, you might face fines intended to discourage employers from shifting employee insurance costs to Medicaid.
Demonstration Pilots and New Models. The ACA introduces a host of demonstration projects and pilots for new delivery models, such as Accountable Care Organizations (ACOs), which include bundled payments. The most successful models may expand nationwide. If you are in an ACO, become an active participant; if you are on the sideline but interested, consider participating in the recently launched Patient-Centered Specialty Practice (PCSP) recognition program by the National Committee for Quality Assurance (NCQA).
Health Insurance Exchanges. If your practice has fewer than 50 employees, the ACA’s creation of health insurance exchanges and subsidies for the smallest firms could produce savings in your employee health insurance costs.
Quality Metrics. A value-based modifier will be introduced to enable the use of quality metrics in Medicare physician payments. A pilot starts in 2015 for groups of 100 physicians or more; in 2017, it expands to all physicians.
Physician Comparisons: The ACA requires CMS to report performance data about physicians and other health care professionals enrolled in the Medicare program. Since 2011, the website Physician Compare has provided patients with basic demographics facts about Medicare-participating physicians. By early 2014, performance rates on the quality measures submitted by group practices under the 2012 Physician Quality Reporting System group practice reporting option will be on display. Data about patients' experience of care also will become accessible. By 2015, CMS intends to expand the website with more information and allow for comparison of individual physicians on quality, efficiency, and other measures.
Sunshine Act. The Physician Payment Sunshine Act, a companion act to the ACA, requires pharmaceutical and medical device companies to begin tracking their interactions with physicians starting in August 2013 and report them to CMS by March 31, 2014. That information will be made available to the public in a searchable database on CMS' ebsite starting in late 2014. The 14 exemptions to the law include payments of less than $10 (unless the annual total exceeds $100), patient education materials, discounts and rebates, and certain samples intended for patients.
Given these changes – and the capital required by some of them – physicians across the country have sold – or contemplated – selling to their practice to a hospital or health system. While many hospitals, eager to consolidate both facilities and physicians in competitive markets, have aggressively sought to employ physicians, working for a hospital may not be necessary. A similar wave of physician-hospital deals in the early 1990s led to hospitals and the many now-defunct physician practice management companies locking up many markets.
Yet, medical practices with strong, committed and visionary leaders will remain a significant force in the U.S. health care system. For independent physicians, as well as those who are employed, the key to success in the coming years will be the ability to understand the new dynamics of health care post-ACA and respond with new ideas for stronger, better performing medical practices.
Although professional organizations representing physicians differ on their viewpoints of the ACA, the Independent Payment Advisory Board (IPAB) seems to stand apart as one component of the ACA with which everyone in the medical community resoundingly disagrees. The IPAB was erected to monitor payments from the Medicare program to physicians and use its authority to curb rising Medicare spending that exceeds targeted growth rates.
Questions have been raised about the scope of the board’s authority; the timeline for Congress and agencies to act upon IPAB recommendations; the relationship between the IPAB (an executive-branch agency in the federal government) and other federal agencies and Congress; and the lack of clarity about the powers of this new advisory board. With continued focus on the future of the Medicare formula that includes the flawed Sustainable Growth Rate (SGR), which will generate another 30-plus percent payment cut to Medicare in 2014, the second in so many years, the debate over the powers and the future of this appointed board are being watched closely by physicians nationwide.
The ACA requires many types of commercial health insurance companies to deliver rebates to enrollees based on the company’s medical loss ratio (MLR): the share of health care premiums spent on medical benefits. The ACA sets a minimum ratio of 80 percent for small group and individual plans, and 85 percent for large group plans. For example, a large health plan that falls short of its ratio – spends less than 85 percent of collected premiums in aggregate on enrollees’ medical costs – may be required to issue rebates to premium payers instead of taking the excess as additional profit. The impact of this provision in the ACA includes a change in the relationship between insurance companies and physicians. It may lead to practice purchases or a move by insurance companies to seek contractual relationships that include significant risk-bearing by physicians.
Payer Specialty Practices
Insurers are buying physician practices across the country – yes, that’s right: insurance companies are purchasing medical practices. Led by CIGNA Medical Group which launched its CareToday urgent care clinics in 2006, other insurers have become owners of medical practices and, even, hospitals. These ownership models have expanded in recent years as insurers look for ways to respond to ACA provisions that may narrow their profit margins. These responses may include seeking opportunities to lead Accountable Care Organization (ACOs) through medical group and hospital ownership.
HEP: Hospital Employment of Physicians
As more rules and regulations roll out of the Affordable Care Act of 2010, the prospect of running a successful independent practice may start to look all that more difficult. For some, perhaps many, hospital employment may become a more tempting option. With purchase prices of today nowhere near the stratospheric levels of those in the past, the focus should shift to the compensation formula offered. This is no place to make assumptions without careful consideration and advice. The future of your staff, equipment and facility depends on the numerous details contained in agreements for buyout, compensation and life after the buyout, merger or joint venture. Of upmost importance, of course, should be the impact on your patients and the manner in which you care for them.