More on Reimbursement

Reimbursements top the list of providers' concerns in 2013

Now that the Affordable Care Act has survived the Supreme Court ruling and the presidential election, one of last year's other big issues is moving to the forefront for 2013: reimbursements. 

As the federal government moves away from reimbursing for healthcare services on a fee-for-service basis in favor of value-based purchasing, providers are beginning to embrace new care delivery models. Accountable care organizations are taking shape, and on Jan. 1, 106 new ACOs started participating in Medicare's shared savings program. 

"ACOs have helped to set Medicare on a more sustainable path today and into the future, as well as serve as a model for what improvements are possible for our nation's healthcare system," Jonathan Blum, CMS' acting principal duty administrator wrote in a recent blog post. 

But not everyone sees ACOs in such a positive light.

In a webcast hosted on Jan. 17 by research and publishing firm Irving Levin Associates, Joshua Nemzoff, president of New Hope, Penn.-based M&A consulting firm Nemzoff & Co., said, "ACOs are an interesting academic exercise. It sounds good on paper, and everyone is trying to get in on the act ... The concept behind it is to reduce the cost of healthcare and split the profits. I don't think that is what is going to happen. I don't see ACOs as being a savior for anything."  

The next 12 months will begin to reveal whether or not these cost containment strategies have merit and if providers can thrive under the new reimbursement regulations. 

Another reimbursement problem facing healthcare providers is the sustainable growth rate (SGR)

Last year ended with a depressing display of partisan politics around the fiscal cliff that followed us right into 2013. On Jan. 1, the House approved a bill  -  over the objections of several conservative Republicans  -  which avoided for one more year a 26.5 percent cut in Medicare payments to doctors as set forth in the SGR formula. Physicians have been haunted by this looming possibility since 1997, and while temporary fixes have been patched together for years, a real solution to the SGR is still yet to be hammered out. 

This newest version of the SGR quick fix also includes provisions that will cut Medicare payments to hospitals by $10.5 billion and Medicaid payments by $4.2 billion over the next 10 years. 

The news of a one-year plan to kick the can even farther down the road and to enact more Medicare and Medicaid was not exactly music to the ears of hospital financial executives and other healthcare industry groups who want to see Congress come up with a lasting resolution, and many in the industry were quick to criticize the lack of a permanent solution. 

Glen Stream, MD, board chair of the American Academy of Family Physicians, said in a statement that the one-year reprieve "is a welcome relief, but it is not the solution."

"This last-minute action on the part of Congress is a clear example of how the Medicare program is increasingly unreliable for physicians and patients," said  Jeremy Lazarus, MD, president of the American Medical Association, said in a press release.

When I attended a Massachusetts Medical Society meeting last October, I saw first hand how concerned physicians are about the SGR and changes to reimbursements. Massachusetts Democratic Gov. Deval Patrick spoke to the audience of mostly physicians about healthcare as one of the state's central issues. After delivering some prepared remarks, Patrick began a question and answer session. One doctor after another grilled the governor about payment reforms and new reimbursement models. 

From the questions being asked  -  and from the line of people waiting for their turn at the microphone  -  it was clear that the issue of reimbursements was the biggest thing on everyone's mind. It was also evident that Patrick didn't have any solid answers, although he did make promises to do some research and give a thoughtful response at some point in the future. 

Anxiety levels around reimbursements are high. No one in any industry would want to be threatened with a massive pay cut, and while the government experiments with new payment structures and refuses to do the hard work of fixing the SGR once and for all, healthcare providers will continue to be on edge about their financial futures.