Healthcare Milestones for 2013

Now is the time of year when we look back at the highs and lows from 2013. In healthcare, there is a lot to talk about, but today we will focus on three important healthcare objectives. In 2013, the Healthcare Reform Act focused on changing reimbursement models and laid the groundwork for health insurance exchanges to commence in 2014. These changes led to three main milestones.

First, in 2013, provider integration flourished because of reimbursement changes. The bundled payment demonstration program commenced while payments to primary care providers increased. Bundled payments require providers to work together to treat a patient under a best practice protocol to reduce the costs so the providers can split one payment for the full delivery of care provided to the patients. As with most of the demonstration programs, bundled payments also require providers to report quality data to the Centers for Medicare and Medicaid Services (“CMS”). Similar to other programs this changes the focus from a fee for service model to payments based upon achieving quality metrics. If the bundled payment program is successful in reducing costs or improving patient outcomes, providers should expect this form of payment to become a part of the Medicare reimbursement model.

In 2013, Accountable Care Organizations (ACOs) also expanded throughout the United States with the highest concentration of ACOs in California, Florida and the Northeast. ACOs are based upon the concept of providers integrating together under one organization to provide patient care based upon patient centered protocols. ACOs must also report to the government on specific quality metrics. Although initially, people believed ACOs would never take off, there are over 220 ACOs in the United States serving over 3.2 million individual Medicare patients.

These payment and care delivery models are causing hospitals to merge or partner together to provide care to the population. The trend for hospitals to purchase physician practices also continued in 2013. The changing reimbursement and Medicare’s demonstration programs will continue to cause consolidation and integration of providers in the marketplace.

Second, a renewed focus on population health and engaging the patient were themes for 2013. If you attended any healthcare conference in 2013, the terms “population health” and “patient engagement” were likely key components. Because reimbursement is declining and will change to focus on quality outcomes instead of a fee for service, healthcare providers are focused upon taking care of the population instead of one patient at a time. Hospitals, physicians and other providers are examining the data on the patient population in their community to determine what resources most of the patients require for their healthcare needs. For example, if a community has a high population of diabetic patients, the hospital may work with the primary care providers in the community to provide additional nutrition education workshops. The patients may also receive reminders to have lab work completed or receive information about nutrition requirements via email or text messaging to engage the patient to be responsible for his or her care.

Finally and most importantly 2013 was marked with the roll out of Notwithstanding the integration of providers and a driven focus to achieve quality outcomes, the enrollment into the insurance exchanges is the biggest event of 2013. The health insurance exchanges were intended to offer insurance plans to those individuals who do not receive insurance from an employer or need to purchase insurance to avoid the individual tax for not having insurance in 2014.

For the first half of 2013, providers were trying to gauge how many of their patients would be enrolling in the insurance exchange and even more difficult was determining what the rate of reimbursement would be through this program. In the last quarter of 2013, many employers either changed their benefit plan to place more of the financial responsibility on the employee or ceased offering health benefits and their employees were forced to purchase insurance through the insurance exchange. In addition, twenty-six states elected not to expand Medicaid coverage; accordingly, many of these patients will be purchasing insurance through the exchange. Therefore, for many hospitals a larger population than initially expected will likely obtain insurance through the exchanges.

Unfortunately, the insurance exchange enrollment process has caused even more chaos to the healthcare industry. The difficulty in enrolling and the fact that many applications did not make it to the insurer means many people will be left without insurance starting in January 2014. In addition, recent reports allege that the costs of care on the insurance exchange may be unaffordable for many individuals. This cost is impacted by a limited selection of insurance products in many states because several insurance plans did not initially participate in the insurance exchange and many hospitals do not participate in the insurance plans that did elect to participate. Therefore, in some regions, there is a lack of insurance plans to choose from and a lack of providers participating.

As 2013 comes to a close, hospitals and physicians are still left with the uncertainty of how the exchanges will impact revenues and the patient population. This uncertainty prevents providers from accurately preparing budgets for 2014 which leaves uncertainty for staffing, purchases or strategic plans for next year. Many patients are also faced with the uncertainty of how to obtain affordable insurance. Therefore, notwithstanding the healthcare reform objectives to change how care is delivered, 2013 will be remembered above all for the chaotic roll out of the insurance marketplace and unfortunately, it is a significant part of healthcare reform that will flow into 2014.

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