During much of 2013, implementation of the Patient Protection and Affordable Care Act (ACA) has been quietly humming along. Orchestration of the ACA is significantly changing how healthcare is delivered in the U.S. These changes are resulting in regulatory challenges and challenges adapting to shifting reimbursement models.Regulatory Challenges – One of the main concerns of both healthcare organizations and employers is the number of regulations that need to be followed under the ACA. The regulations encompass tens of thousands of pages of material, which will require extensive time and investment to comply. Interpretation of the regulations could be complicated. For example, there are many ways to interpret the 50-employee rule, which requires employers with more than 50 employees to offer health insurance or face a penalty.
This one rule alone (codified by the IRS in a regulation 144 pages long) seems to be causing great confusion as businesses try to interpret and comply. The 50-employee rule requires any employer with 50 employees or more to either offer health insurance or pay a fine computed as the lesser of $2,000 for each full-time employee or $3,000 per employee receiving a premium tax credit. Many employers exhibit confusion about the definition of full-time employment and incorrectly believe that they can avoid the fine (or tax) by reducing employees to part-time. What many employers do not realize is that the rule requires a calculation of the number of full time equivalent (FTE) employees, so having employees work part-time may not eliminate or reduce the tax. This particular rule was first scheduled to become effective for year 2014 but has been postponed to 2015 to give companies time to implement the regulations.
This is just one example of the complex rules resulting from the ACA. At last count, the ACA had at least 90 separate provisions each resulting in regulatory complexity.
Reimbursement Models – The ACA is also having a profound effect on how physicians and hospitals are paid for healthcare services. The traditional fee-for-service (FFS) model is still around but is slowly being challenged by newer “experimental” models such as bundled payments, shared-savings, capitation and others. Some of these models have been tried in the past with limited success but have now been rebranded under the ACA. Under some of these new arrangements, providers will need to collaborate, share information and battle logistical issues of providing care under a more integrated care system.
Under the bundled payment model, for example the organization receiving reimbursement will be responsible for coordinating care and distributing funds to numerous care providers. As you can imagine, such arrangements can become complicated and could potentially result in conflicts among providers if all parties cannot agree on the payout formulas. Organizations will need to establish how payouts will be structured and will need to have mechanisms in place to resolve disputes.
Other reimbursement models bring their own set of challenges, particularly when it comes to budgeting, determining and managing risk, aligning payment timelines, outlining contractual sharing arrangements and handling litigation. These matters can be daunting and must be considered as providers evolve and experiment with new and innovative arrangements.
The Times They are a-Changin – The Bob Dylan title The Times They Are a-Changin could not describe the healthcare industry better. New regulations are complex, reimbursement models are rapidly changing and the delivery environment is volatile. Transformation is the name of the game in healthcare today. For organizations to prosper diligence, openness and adaptability will be key.
