Hospitals, physicians and related health care providers have
just 20 months to react to changes in the way Medicare, and perhaps
the private sector, will begin to pay for services under the
comprehensive health care reform legislation signed into law
yesterday by President Obama.
The massive overhaul of the health care system enacted yesterday,
the Patient Protection and Affordable Care Act (the Act), is still
subject to revision under a reconciliation bill being debated in
the Senate (
Click here to download a summary of the Act ). The Act will
require the purchase of health insurance for nearly 95 percent of
the population covering approximately 32 million more Americans by
Jan. 1, 2014. The most significant taxes and penalties associated
with paying for this new entitlement begin in 2014 and following
years. Certain popular and well-publicized provisions, such as
access to parents' insurance for children, kick in later this
year.
Of particular importance to health care providers such as
physicians and hospitals are two provisions in the Act that should
motivate providers to create and participate in "Accountable
Care Organizations" (ACOs). The first is a shared savings
program to begin Jan. 1, 2012 (Shared Savings Program) and the
second is a pilot program to begin Jan. 1, 2013 that will bundle
payments for hospital and physician services for integrated care
surrounding a hospitalization (Payment Bundling Pilot). Throughout
our close analysis of this legislation while it was pending in the
last several months, we discerned consensus among insiders and
thought leaders, from health care strategists to Wall Street
financiers and government insiders from both parties, on three
points relevant to the government's interest in ACOs.
First, health care costs, both to the public and private sectors,
will rise substantially and quickly after passage of the Act
because the Act, in itself, does little to impede this upward cost
curve. Second, pressure to maintain output while lowering costs
will fall on providers. Finally, the most likely winners among
providers will be those in each region who can settle on a manner
of formal integration and cooperation in order to form
organizations that are poised to act as ACOs to manage costs and
take advantage of new reimbursement opportunities.
The Act does not establish how either the Shared Savings Program or
the Payment Bundling Pilot will structure payments. Instead, the
Department of Health and Human Services is directed to fill in
important details through regulation. However, it provides guidance
on what would constitute an acceptable ACO, in language influenced
by the Medical Group Management Association, emphasizing elements
of governance and revenue sharing necessary for ACO formation by
hospitals and physicians.
Beyond that opportunity, the new law is loaded with provisions that
will place many health care providers under further pressure and
scrutiny. Among them are new limitations on physician-owned
hospitals, new Stark self-referral requirements for referrals for
imaging services; a requirement for formal compliance programs; and
expanded resources for fraud and abuse enforcement.
Although portions of the law are subject to court challenge, those
provisions affecting providers likely will not be included in those
challenges. Most involve changes to the Medicare program that are
likely to influence the private sector to act in a similar
manner.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.