President Obama celebrates during an election night rally in Chicago. His victory speech included an anecdote about how the national health system reform law was already helping people. Photo by Landov Media

Physician pay a major unknown despite health reform certainty

Obama’s re-election eliminates chances of ACA repeal but renews questions about implementation of coverage expansions and payment reforms.

By — Posted Nov. 19, 2012

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President Obama’s victory in the November election clears up one major element of uncertainty on how the nation will proceed with health system reform. The Democratic Party’s continued control of the Senate and the White House means that the Obama administration will move ahead with implementing the Affordable Care Act’s payment and coverage reforms in the coming months.

The election “relieves any doubts in people’s minds that the Affordable Care Act will be repealed or aspects of it will be repealed — or that payment reform is going away,” said Laura Jacobs, executive vice president with the Camden Group, a business advisory consulting firm. For doctors, “the things we’ve been talking about for the last year-and-a-half in terms of new ways of being paid, quality reporting, concerns about cost, transparency and quality” all remain important, she said.

The certainty provided by the election will make it easier for doctors to plan for the future, said Fred Ralston Jr., MD, an internist in Fayetteville, Tenn., and past president of the American College of Physicians. Still, now that the focus is squarely on ACA implementation, the physician community faces many new health system variables — especially when it comes to payment from both public and private payers.

Physicians and other health care professionals will be entering a new world “where many more of the people they see will have some kind of insurance coverage. That’s the good news,” said Joel Ario, former director of the Dept. of Health and Human Services Office of Insurance Exchanges, currently a managing director at Manatt Health Solutions. The bad news is some disruptions may occur as the health care market transitions to these new coverage options, and it’s unclear how all of the changes are going to affect payments, he said.

Insurance exchange deadline delayed

Within a week of the election came the first new wrinkle in ACA implementation. With the possibility of ACA repeal out of the way, many health care observers assumed that HHS would move quickly in issuing guidance and regulations that effectively had been on hold before the election. But because some states were in a holding pattern on preparing for the health insurance exchanges that will handle much of the ACA’s new coverage in 2014, HHS decided to give states more time on at least one area of implementation.

States originally had until Nov. 16 to inform HHS of their exchange strategies and submit blueprints if they were planning to launch exchanges of their own. While those pursuing state-based exchanges still must announce their intentions by that date, HHS Secretary Kathleen Sebelius, in a recent letter to governors, indicated that these states will have until Dec. 14 to submit blueprints for the health coverage marketplaces. The deadline for submitting declaration letters and blueprints for partnership exchanges that will be operated by both states and the federal government was extended to mid-February 2013.

An analysis by consultant Avalere Health LLC released shortly after the election projected that at least 20 states would be running their own insurance exchanges by 2014, with 13 states choosing partnership exchanges. Any state that doesn’t choose one of those options would default to a federal exchange.

In Ohio, where internist David Bronson, MD, practices, officials have yet to determine what direction the state will take on the exchange question and on whether to expand Medicaid under the ACA. The state probably will end up with a federally facilitated exchange, said Dr. Bronson, president of the American College of Physicians.

As states ready themselves to develop health insurance exchanges, plans moving into these marketplaces will look to offer lower-cost options to consumers, Jacobs said. Insurers that want to keep spending down might gravitate toward more restrictive networks of health professionals who will accept lower negotiated pay rates.

An important activity for physicians in 2013 will be to observe what local health insurers are doing to organize networks for their exchanges, Jacobs said. Doctors must develop strategies on what health plans they want to participate in, whether they could take lower rates and how they’re going to manage collecting deductibles, she said.

Forecast for Medicaid, Medicare pay

Insurance exchanges are just one of three big questions facing physicians postelection, said Jeffrey Cain, MD, president of the American Academy of Family Physicians, whose practice is in Denver. The other two involve Medicare’s sustainable growth rate formula and the law’s Medicaid expansion.

Primary care doctors will receive higher rates starting in January 2013 for providing primary care services to Medicaid patients, Dr. Cain said. The enhanced payments will be offered in 2013 and 2014, paying those doctors on par with Medicare rates.

Not all doctors qualify for this pay increase, however, and physicians who typically don’t see many Medicaid patients may be reluctant to take more, because there’s no guarantee that Medicaid pay parity will continue, Dr. Ralston said. “It would be risky to expand staff and make investments that would require ongoing payment bumps without the knowledge that these would be long term.”

It will be important for physicians to secure a long-term extension of this pay increase, Dr. Cain said. “We know if we can give people insurance, even if it’s Medicaid, and we give them a primary care physician, they’ll be healthier” and less costly to treat.

Unless it is extended, the pay increase will sunset just a year after a major expansion to the program takes effect. Starting in 2014, states will have the option of extending their Medicaid rolls up to an effective rate of 138% of the federal poverty level, but as the Avalere Health analysis noted, governors of at least six states have said they will not implement the expansion.

“Several more having been leaning against expansion, but states may change their decisions now that the elections are over,” the analysis stated. Avalere Health suggested that the federal government may offer states the flexibility to expand their programs partially to encourage more buy-in. Some states might be willing to expand to 100% of poverty, “shifting those above the poverty line into subsidized exchange coverage” through insurance exchanges, the analysis stated.

Casting another cloud of doubt over ACA implementation efforts are the spending issues that continue to plague Medicare and the implications for physician fee schedules, Jacobs said.

The SGR has threatened cuts to physician payments for the last decade. Physicians facing a nearly 27% SGR pay cut on Jan. 1, 2013, will work to obtain a payment patch during the lame-duck congressional session that started Nov. 13, said Bonnie Washington, senior vice president of Avalere Health. Paying for the patch will be complicated by the fact that everyone’s attention is going to turn toward striking a deal on separate sequestration deficit reductions that otherwise could translate into large cuts to Medicare and other government programs, she said.

After the election, several physician organizations appealed to Obama to address a permanent SGR fix in his second term. In congratulating the president on his win, American Medical Association President Jeremy A. Lazarus, MD, emphasized that it was time “to transition to a plan that will move Medicare away from this broken physician payment system and toward a Medicare program that rewards physicians for providing well-coordinated, efficient, high-quality patient care while reducing health care costs.”

Dr. Cain said he didn’t expect the House and Senate to fix the SGR permanently during a lame-duck session. “But I do think in the next couple of months that the Congress should be able to put in a patch while we figure out a long-term solution.”

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What’s on deck for the ACA in 2013

Although most of the coverage expansions and insurance reforms under the Affordable Care Act don’t kick in until 2014, several key ACA provisions are scheduled to take effect next year, including:

  • Medicaid payments to primary care physicians for primary care services will increase to 100% of Medicare rates for two years.
  • States that offer Medicaid coverage with no patient cost-sharing for recommended preventive services will receive a one percentage point increase in federal matching payments.
  • Medicare will test bundled payments for physician services, acute inpatient hospital services, outpatient hospital services and postacute care services for a patient’s episode of care.
  • The federal government will impose an excise tax of 2.3% on the sale of taxable medical devices.
  • Reductions will begin on disproportionate share hospital payments under Medicare and Medicaid.
  • Nonprofit, member-run health insurance companies known as Consumer Operated and Oriented Plans (CO-OPs) will launch.

Source: Kaiser Family Foundation Health Reform Implementation Timeline (link)

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