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How healthcare reform influences reimbursement trends?

June 9, 2015

Healthcare Reform Influences ReimbursementAside from Medicare providers, the Patient Protection and Affordable Care Act (PPACA), known simply as the Healthcare Reform Act, doesn’t directly address reimbursement issues. While the Act does impact how government insurance programs reimburse providers, as intended by its supporters, its influence will eventually include private insurers’ reimbursement methods as well.

One of the ACA’s results, however, will see insurers and providers working together to create new models for reimbursement with improved care coordination, information sharing and managing care-related expenses.

Effects of increased market competition

With over 32 million new members expected to enter the healthcare system, payers will see increased competition for group markets as well as regulations affecting medical cost caps. As a result, payment methodology is predicted to move from payment for individual services to quality-driven reimbursement for improved wellness and health outcomes. In addition, internal payer processes will be redesigned to further reduce administrative expenses.

Fewer network providers reduce payouts

Insurance companies may also be narrowing provider networks (meaning fewer network providers) to obtain larger discounts from providers, in the quest for reducing provider payouts while keeping customer premiums affordable. Due to the addition of previously uninsurable members and emphasis on assessing provider quality, changes in the provider reimbursement structures are expected to profoundly alter the landscape of the nation’s entire health delivery system.

Five ways Obamacare can improve your practice’s reimbursements

ACA‘s changes

Some of these changes enacted by the ACA, which began as early as 2011 and 2012 and will continue into 2016, include:

  • The Hospital Acquired Condition Payment Adjustment for Medicaid, which removes states’ reimbursement for conditions acquired at a hospital, per HHS guidelines.
  • The Performance Adjustment and Rebate Phase-in for Medicare Advantage plans links in the rebate percentages of Medicare Advantage’s quality performance, resulting in higher-performing plans being reimbursed at higher rates.
  • By authorizing hospital payment adjustments Medicare hospitals will be encouraged to implement reforms to reduce preventable admissions.
  • The Hospital Value-based Purchasing Program Inclusion of Efficiency Measures for Medicare includes efficiency measures affecting payments to acute-care hospitals.
  • The Disproportionate Share Hospital payment program, which reimburses hospitals for treatments for the uninsured, will be reduced by 25 percent. These cuts as well as ones to other public insurance programs can result in cost increase shifts to insured private patients, which was not an intended consequence by the payment reform supporters.

The purpose of the health care reforms was to encourage private insurers to follow the government’s lead in payment reforms, such as bundling payments and bringing the payment structure across public and private insurance into better alignment. A recent Milliman study, however, suggests that providers often respond to lowered reimbursements of public programs by consolidating to increase efficiency. One unfortunate result is to give larger hospitals and provider groups a greater market share which is advantageous in negotiating reimbursements. These higher reimbursements from insurers in turn increase premiums for consumers.

The takeaway

Insurance companies and other payers are expected to further streamline their own operating procedures and implement ACA’s medical cost-reduction policies within their networks. This in turn translates into the need for providers to increase their efficiency of healthcare delivery and its subsequent reimbursement. For Medicare providers, along with the new ICD-10 coding system, changes in policies and procedures may be confusing to your billing and accounting staff.

M-Scribe can help your medical practice navigate through the maze of health reform’s changes to ensure that your practice is fully compliant, resulting in improved reimbursement rates. As a leader in the medical billing services industry, we have helped health organizations and practices of all sizes stay compliant and increase reimbursement rates. Contact us at 888-727-4234 or email for a free evaluation of your organization’s reimbursement needs.


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