October 05, 2015
Ever since the Patient Protection and Affordable Care Act ( PPACA) or shortened to ACA, and popularly known as the Obamacare health reforms, kicked in March 2010, there has been much discussion and debate on whether this has benefited or have caused setbacks to the reimbursements earned by physicians. The reforms were initiated to promote and lower healthcare costs and increase the quality of patient care. Moreover, the healthcare reforms also initiated a decision whereby many of the uninsured Americans would now have to be insured or risk financial penalties. A study in 2014 stated that nearly 9.5 million adults have recently become insured under the Affordable Care Act. This means that physicians should be seeing many more footfalls and an increase in reimbursements. But is this the ground reality?
The healthcare reforms seem to act like a two-edged sword according to most physicians. Further, Medicare reimbursements would also be linked to patient satisfaction and a host of other measures that would be used to calculate reimbursement rates. Most hospitals depend on Medicare reimbursements for a large portion of their revenues. Two payment systems were established with the aim to directly tie reimbursement to performance: value-based purchasing and bundled payments. However, these have not come without their pitfalls and instead of helping increase the smooth flow of revenue, has caused physicians to suffer a setback in some areas.
Under Medicare’s diagnosis-related-group (DRG) mechanism, payment is in the form termed as bundled payment, where Medicare reimburses a fixed amount for all care delivered to a patient during an inpatient admission. A transition to episode-based payment—wherein, an episode may extend from the inpatient period to days or weeks after discharge may soon be in the offing. This lengthening of the time period payments may entail fixed payments shared among all caregivers for the total care a patient may need in a given time period, based on actuarially determined rates. And this leads to disbursement of reimbursements thus leading to less in hand
Increasing regulations, the cost of installing electronic health record (EHR) systems, and the shifting referral patterns are also taking its toll on the revenues earned, especially the solo practicing physicians. This requires IT systems to be updated which can be costly if you have your own clinic
Medicare’s physician reimbursement is fraught with underpayments. The patients have come to bear these underpayments in terms of shorter visits, less sitting time with the doctors, a quick hospital discharge, and even compromised care leading to dissatisfied patients and thereby lesser footfalls. Moreover, since outpatient care may tend to increase, this will lead to decrease in revenues
Further, more readmissions means reduced reimbursements. The Centers for Medicare & Medicaid Services (CMS) will penalize those hospitals that evidence a higher-than-expected rate of readmissions especially for heart related diseases and pneumonia patients. This will affect both hospitals as well as patients alike
Another impact that healthcare reform has is on billing and coding modifications in reimbursement rates and allowances for patients. Nearly all insurance plans, whether they were on the federal or state exchange, have changed coverage as a result of the Affordable Care Act. Moreover the increase in the number of codes with the transition from ICD9 to ICD10 has and will continue to cause some errors that can lead to delay in denial claims causing a hit in revenues at least initially.