POSTED BY SHERYL ROSEN
ON NOVEMBER 25, 2014
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
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,