Revamping Your Employee Benefits?

Understanding the Forces Currently Shaping Health Care

By Andrew M. Pirtle
Tax Manager

In economics, competition and consumer demand dictate the market. Outside forces such as legislation further impact the market. The current healthcare profession finds itself being transformed by these forces. Forces reshaping healthcare include insurance carrier movement on the federal exchange, reform of Medicare reimbursement, and consolidation of healthcare providers.

Departures From the Exchange

Obamacare may be facing one of its biggest challenges yet as some of the largest insurance carriers are exiting the state and federal health care exchanges. Insurance providers are reducing their plan offerings available on the Affordable Care Act exchange in droves due to their financial losses. Aetna, one of the six largest health insurance companies in the U.S., is the most recent insurance provider to significantly reduce its plan offerings.

Other companies that have or are expected to unveil major reductions in their Affordable Care Act plan offerings are UnitedHealth Group and Humana. The withdrawal of insurance providers impacts the plans available to the public. Certain counties may find they have fewer than two insurers available through their exchange. Consumers may find their physicians aren't available under the new plans or providers in the federal exchange.

Physician Payment Reform

Physicians and the hospitals they partner with may be unaware of the changes and risk involved with implementing changes under the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA). MACRA replaces the historical volume-based Medicare reimbursement model with a pay-for-performance model based on the quality and efficiency of care provided. A survey performed by Deloitte Center for Health Solutions found 50 percent of physicians had not heard of the (MACRA). The three major Medicare reimbursement changes to implement under MACRA are:

  1. The discontinued use of the highly unpopular Sustainable Growth Rate
  2. Implementing new payment mechanisms that are intended to compensate physicians for quality
  3. The consolidating of several quality reporting programs into one system

Providers will have the option to use either the Merit-based Incentive Payment System (MIPS)  or Alternative Payment Models (APMs). MIPS is a new program designed to adjust Medicare payments based on quality, resource use, clinical practice improvement activities and meaningful use of technology.

Clinicians participating in advanced APMs are exempt from using MIPS. Under APMs, clinicians accept the risk and reward for providing coordinated, high-quality and efficient care. Physicians may not have the capital to implement an APM and may not want to bear the risk of subpar performance under an APM. The expectation is a majority of physicians will undertake MIPs instead of APMs.

MACRA continues the industry transition from volume-based to performance-based care.

As a health care provider, it is important to understand implementation of MACRA and the impact it will have on Medicare physician payments. The Centers for Medicare & Medicaid Services estimates approximately 836,000 clinicians will be affected by MACRA changes in the first performance year, 2017. A physician’s reimbursement for treating Medicare patients may increase or decrease by as much as 4 percent in 2019 and then up to 9 percent in later years. The quality of services will dictate whether reimbursements received in following years will be positively or negatively impacted.

Growth and Consolidation of Providers

The manner in which North Texas residents are obtaining care is changing. An example is the recent joint venture between Texas Health Resources and Adeptus Health in the Texas Health Emergency Room, which opened 31 freestanding emergency rooms in September. Consumer desire for shorter wait times at a facility that is relatively closeby has resulted in facilities sprouting up at an increasing rate.

In order to provide service on a larger scale, organizations have consolidated. Baylor Health Care System and Scott & White Healthcare merged in 2013. The result of this consolidation was 43 hospitals, more than 500 patient care sites and more than 5,800 physicians. And in January, Baylor Scott & White and Tenet Healthcare entered into a joint-venture to own five North Texas hospitals.

Andrew M. Pirtle, CPA, is a Tax Manager with JTaylor and is writing this column on behalf of the Fort Worth Chapter of the Texas Society of Certified Public Accountants. The Fort Worth CPAs are a regular contributor to FW, Inc. JTaylor is a full-service accounting and business consulting firm based in Fort Worth.