When the Patient Protection and Affordable Care Act (ACA) was signed into law on March 23, 2010, the year 2014 seemed a long way off. Now that we are on the down side of 2013, the “big” changes of the ACA are fast approaching. Some are good, some are bad, and some are just plain ugly.
2014 is just around the corner, which means so is the next wave of changes from the Affordable Care Act. Here are the top changes you need to know to be ready for the transition.
When the Patient Protection and Affordable Care Act (ACA) was signed into law on March 23, 2010, the year 2014 seemed a long way off. Now that we are on the down side of 2013, the “big” changes of the ACA are fast approaching. Some are good, some are bad, and some are just plain ugly.
#5 Changes to your taxes
Okay, this one has really already started. There are three major “new” taxes that will affect individuals earning more than $200K or households earning more than $250K. The increases are:
- Increased payroll tax of 0.9% on wages over the amounts noted above.
- Income tax of 3.8% on unearned income, including investments, interest, dividends, certain capital gains, rent, annuities, and royalties.{Note: the projected combined revenue from 1 & 2 is $210 billion, the largest source of funding for PPACA initiatives}
- Decrease in Flexible Spending Accounts: By reducing the cap on these plans from $5,000 to $2,500 your taxable income took a small jump up if you max out your account and spend more on healthcare.
#4 Mandates . . . maybe
The Obama administration has delayed the implementation of the Employer Mandate until 2015. That’s good for businesses, but probably not for employees (i.e. patients). Not that the penalty of $2000 per employee was ever going to balance out against actually paying for health insurance for employees. On the individual side, there is not much of a disincentive to forego insurance either. Don’t buy health insurance and you will pay a whopping $95 a year or 1% of your income (whichever is higher) in 2014 (if the IRS figures out a way to collect this). This goes up to only $695 or 2.5% of income by 2016. It is unclear what effect the mandates will really have on businesses and individuals wanting to “jump into the risk pool”.
#3 Payment Changes
CMS will continue to be the engine of change for the way payments are made to providers. In the “volume to value” transition, CMS will continue to financially incentivize (or penalize) providers to improve healthcare through “the triple aim”: (1) improving the experience of care, (2) improving the health of populations, and (3) reducing per capita costs of health care. Under the categories of ACOs, Bundled Payments, Primary Care Transformation, Medicaid/CHIP Initiatives and Initiatives to Speed the Adoption of Best Practices, CMS has 41 different demonstration projects experimenting with different payment models for healthcare. There are now nearly 500 Accountable Care Organizations (ACOs) which will try to reduce healthcare expenditures by more efficiently delivering care under the umbrella of the Advanced Payment Model and the Shared Savings Model. You can check whether your hospital or health care system is participating in a CMS payment model by going to innovation.cms.gov and using the interactive map application. Do you know who in your hospital or health care system is driving the Medical Home/Clinically Integrated Network bus? If you don’t, you should, because they are defining who will get paid and how much for patient-centered episodes of care.
#2 Medicaid Expansion . . . or Not
If you thought that the 2700+ pages of PPACA weren’t confusing enough, the Supreme Court in their 2012 ruling on the ACA muddied the waters even more. By giving individual states the right to either expand criteria for Medicaid eligibility as laid out in the ACA for “newly eligibles” or maintain their current eligibility levels but give up billions of dollars in federal monies, Chief Justice Roberts and the rest of the Supreme Court made a complex situation utter chaos. Looking at the map on the CMS website you can see whether your state has decided to participate in the expansion of Medicaid (and also whether they have set up their own Health Insurance Exchange, partnered with another state, or simply let the federal government set up an exchange). Under the ACA, the “floor” for Medicaid eligibility for adults would be raised to 138% of the Federal Poverty Level (FPL). (Yes, the law says 133% but there is another provision within the law that standardizes a 5% income exemption for everyone, so effectively it becomes 138 %.) Not that we are talking big money here. For 2012 the FPL for an individual was $11,170 and for a family of four is was still only $23, 050. Of the 21 states that have decided to NOT expand Medicaid eligibility, 14 of them have Medicaid eligibility levels equal to or lower than 50% of the FPL, with Alabama at the lowest level of 23%.
What’s the bottom line? In states that refuse to expand their eligibility many people will remain uninsured. In other words, they will not meet eligibility for Medicaid and they fall below the threshold for premium subsidy assistance under the ACA plan of helping those between 100% and 400% of the FPL to purchase insurance under an HIE product. This could mean that more than five million people will remain uninsured.
#1 Health Insurance Exchanges. A New Paradigm
Under the ACA, HIEs were created so that individuals and businesses could “shop” for health insurance coverage in a better “marketplace”. The HIE program is scheduled to “go live” for enrollments on October 1st, with new coverage purchased through the HIE to start on January 1, 2014. It is anticipated that nearly 30 million individuals will purchase coverage through an exchange (with or without a subsidy based upon their income levels). Although federal lawmakers anticipated that all states would create and operate their own exchange, 17 states have opted to NOT establish their own exchange and will have the federal government operate one for its citizens (11 of the 17 also opted not to expand Medicaid eligibility). Insurance products within the exchange will be offered at different tiers based on actuarial values (or the share of medical expenses the health plan pays for a standard member) to help consumers make apples-to-apples comparisons when choosing a health insurance plan. Those tiers are set at Bronze (60 percent actuarial value), Silver (70 percent), Gold (80 percent), and Platinum (90 percent). Although the ACA requires all insurance products to cover the same categories of “essential benefits” including emergency services, the requirements in each state may differ as to which “essential services” are covered and how much insurance companies offering products through the exchange will pay for these services.
So what’s the bottom line on the ACA in 2014? The real “meat and potatoes” changes are coming. What does that mean for us on January 1st (other than a really busy shift on New Year’s Day?) More patients with insurance (as opposed to self pay) in the ED is good. Insurance companies having to spend a higher portion (80-85%) of premium dollars on direct care (including patients with pre-existing conditions with no lifetime benefit limits) is good for patients, but may result in pressure to reduce payments to providers. Expansion of Medicaid eligibility (in some states) will guarantee at least some healthcare coverage for “newly eligible” adults but leave others behind. The expansion of ACOs and Bundled Payment Models together with Value Based Purchasing will change the way many emergency physicians get paid.
If that sounds like a lot, this is just the beginning. Stay tuned for more updates as ACA reforms come to fruition.
References
1. Merritt Hawkins. 2013 Physician Inpatient/Outpatient Revenue Survey.
2. Herman, Bob. “51 Statistics on Physician Salaries vs. Hospital Revenue Generated.” Becker’s Hospital Review. May 14, 2013.
3. Pitts, Stephen R. MD. “Higher Complexity ED Billing Codes-Sicker Patients, More Intensive Practice, or Improper Payments?” NEJM. Vol. 367. 12/27/2012.
4. Medscape. Physician Compensation Report 2013.