Changing reimbursement models and a shift to consumerism were two of the hot topics discussed at Akerman LLP’s recent Healthcare Briefing event titled “Financial and Corporate Implications of the Affordable Care Act: A Look at the Past, Present, and Future”. Health care and financial industry leaders gathered Friday, November 21 in Tampa for the interactive discussion. Panelists leading the discussion included:
- Jeff Bak, president and CEO of HealthPlan Services;
- George Huang, director and senior analyst of the non-profit healthcare sector for Wells Fargo Securities, LLC; and
- Lorraine Lutton, president of St. Joseph’s Hospital, Tampa, Florida
Hospitals Adjusting to Reimbursement Changes
From the outset of the conversation, the panelists highlighted the effect of the Affordable Care Act (ACA) on hospital reimbursement. Hospitals are undergoing a major financial transition because the ACA was funded, in part, by reduced reimbursements to hospitals through the Disproportionate Share Hospital and Low-Income Pool programs. These programs allocated additional money to hospitals serving a disproportionate amount of Medicaid enrollees and uninsured patients. The drafters of the ACA anticipated such payments would no longer be essential because of Medicaid expansion; however, that expansion has not materialized in many states.
Hospitals are also adjusting to the ACA’s shift to value-based purchasing, which focuses on quality and penalizes hospitals for factors like high readmission rates.
Hospitals have typically been reimbursed on a fee-for-service model, but the panel expected that more risk-based contracting will be on the way, resulting in an even greater emphasis on improving health outcomes and reducing costs.
Employers Lead Charge Toward Consumerism
A greater number of employers are choosing to offer high-deductible health plans and health savings accounts instead of traditional, low-deductible policies. The panel noted the number of high-deductible plans has tripled in the last five years, and this represents a 10-15 year ongoing trend of employers increasing cost-sharing requirements. The increased cost-sharing encourages consumerism, making employees more likely to ask “How much does it cost?” With low-deductible, cost-shielding plans less common, patients are incentivized to spend their healthcare dollars more like typical consumers, shopping around and comparing costs.
The Role of Physicians
The panel also addressed the effects the ACA continues to have on physicians with increased administrative and legal compliance burdens. One notable effect is the increased consolidation of physicians into larger physician groups and the affiliation of physician groups with hospitals to help physicians address the new concerns. Correspondingly, solo and duo physician practices are becoming more rare. More physicians also now work as employees of hospitals and health systems rather than as independent contractors.
Similarly to hospitals, the shift to integrated care networks and pay-for-performance reimbursement models – and the corresponding move away from fee-for-service – has changed incentives. Physicians now can earn more if they can improve health outcomes and decrease costs, such as by keeping patients from receiving services in the ER.
Additionally, because of an expected shortage of physicians, the panel foresees an even greater need to rely on physician extenders, such as nurses and physician assistants, for less complex ailments.
New Emphasis on Reducing Costs
With the changing reimbursement models and incentives discussed above, the healthcare sector has placed new emphasis on reducing the cost of healthcare. One cost reduction tool the panel addressed is telemedicine, which in some settings can improve care in addition to reducing costs. For instance, the panel discussed that one specialist, who can only be in one place at one time, can now monitor patients across multiple facilities using telemedicine technology. This gives patients better access to specialists and reduces the cost of providing the specialist’s services – especially in rural or other under-served areas.
Directing patients to the least-complex care setting needed is another way providers are reducing costs. In particular, giving patients alternatives to the costly ER for non-emergency conditions can have a significant effect.
Finally, with a large portion of health care expenses incurred during the last 6 months of a person’s life, end-of-life care is a very important factor that the panel agreed must be addressed. The panel noted that patients and families should be encouraged to have the difficult conversations about life and death.
Akerman’s Healthcare Briefing programs continue to highlight pressing issues facing healthcare companies today. To inquire about future healthcare events, please contact the author, Sheryl Rosen.