Expect lower reimbursement, data-driven decisions under either candidate’s reform plan
With the presidential election looming, we thought it would be appropriate to look at the visions for health care reform put forth by the two presidential candidates, with an eye toward what a urology practice should do today to prepare for the future. First, we look at life under the existing Affordable Care Act (ACA or “Obamacare”). With the Supreme Court ruling, it appears that if President Obama is re-elected, the ACA will roll out with few, if any, changes. That would include the following:
With the presidential election looming, we thought it would be appropriate to look at the visions for health care reform put forth by the two presidential candidates, with an eye toward what a urology practice should do today to prepare for the future. First, we look at life under the existing Affordable Care Act (ACA or “Obamacare”). With the Supreme Court ruling, it appears that if President Obama is re-elected, the ACA will roll out with few, if any, changes. That would include the followin:
- growth of accountable care organizations and other geographic networks
- value-based pricing program expansion
- medical home expansion
- transition of the Physician Quality Reporting System (PQRS) from a voluntary, incentive-based program to a required participation program with penalties
- electronic prescription writing requirements
- value bonus programs that require participation in PQRS, ERx, and meaningful use
- the implementation of the Independent Payment Advisory Board (IPAB) required by law to make recommendations for cost savings in Medicare in actionable form, focused on Medicare Part B for the first 5 years, with a high likelihood of decreased fees for specialists
- expansion of Medicaid.
What if Romney wins?
While it is unclear whether a change in the presidency will actually be accompanied by enough change in Congress to repeal the ACA, we will assume for this article that a Mitt Romney win will result in a repeal of ACA and the implementation of Republican vice presidential nominee Paul Ryan’s plan. The Ryan plan would include:p>
• a gradual phase-out of traditional Medicare fee for service (this will begin in 2021 and take 20-plus years)
• private payer expansion through vouchers to Medicare-aged individuals beginning in 2021
• dismantling of the IPAB (very difficult to do, legislatively)
• tax incentives and debit cards for patients to direct health care expenditures.
Of course, any plan will be modified as it moves through the system, so details are lacking.
Neither plan includes any clear decision related to the sustainable growth rate’s (SGR) cuts to physician fees, and both plans at present include cutting $716 billion from Medicare spending through revisions to payment of physicians, hospitals, suppliers, and long-term care services (above and beyond the SGR). Both plans seem to agree that we, as a country, spend too much on health care and that the aging of the baby boomers will increase our cost outlay. The real difference between the two plans is in who or what entities control the change.
Despite the uncertainty surrounding the details of the ACA or the Republican plan, there are a few trends that will require urology practices to take action, regardless of the outcome of the elections.
The current focus on primary care services and prevention seems common in both the public and private sectors. It is likely that increases in primary care funding will come at the expense of specialists. Simple math dictates that less or the same amount of money in combination with more services provided requires a lower cost per service. Thus, lower reimbursement will be part of any reform.
The urology practice will need to shore up its business models, become more efficient in providing care, and get better at collections. With no fat in the system, every dollar will count. Both plans seem to include increased shifting of costs from the plan to the patient and informing the patient as to cost and value. Practices will need to focus on a value to the patient and collection services that match.
Payment for ancillary services will be cut as well. We have already seen moves that indicate this is an issue from both public and private payers. This trend will continue. While it appears that payment to urologists for ancillary services will continue, the amount paid will likely decrease. We would recommend that any projections for revenue from ancillary services be decreased in any practice budget.
Electronic medical records data and communication of that data will be required for contracting with networks and likely private payers. We recommend that you implement EMR programs fully and address the issues of interoperability demanded by meaningful use.
Clinical pathway development and/or compliance with clinical pathways, guidelines, and accepted “best practices” will be important for contracting or participation with networks. Outcomes will need to be added to quality and cost efficiency for marketing and contracting. Practices will need to build templates in their EMR to allow data mining for treatment protocol and compliance. Additionally, practices will need to develop methods to obtain feedback from patients relative to outcomes and satisfaction with services.
The ability of the practice to understand its own data is an absolute must. Profitability per procedure, cost to the system, best practices, and comparison to other practices will dictate contracting rates and participation with plans, networks, or ACOs. Each practice will need to be able to analyze its own data from the EMR, practice management information system, and accounting systems to make solid business decisions. Access to comparative data or industry benchmarks will be critical in marketing and negotiation with networks or payers. Urologists as a group will need to find a way to share data or risk being consumed by the data produced by others whose agenda is not concerned with the health of the urology practice.
Negotiation skills and operational knowledge of cost will be needed to preserve profitability. Regardless of whether you are contracting with ACOs, hospitals, or private payers, the ability of your practice to contract for services, fee for service, total treatment of a specific disease, or capitation will be paramount to survival of your practice. Start building your data set, secure access to benchmarks, and develop or hire negotiating skills.
Analyze your market for opportunities to merge, collaborate, or affiliate. Bigger is better from both a data and negotiation perspective. We see this in other markets, as chains and big box stores have dominated retail and restaurant models. Health care will be no different. This does not mean that solo practices are going the way of the dinosaur; however, they will be fewer in number and likely left to smaller markets, niches, and lower revenue earners.
Think creatively when looking for ways to become bigger. Large single-specialty groups, multispecialty groups, and hospital alliance/employment are growing models in today’s market. There are other models being explored, including co-ops or loose networks, multi-alliance agreements, and limited specialty groups, just to name a few. Virtual networks may allow solo and small practices to participate in the new “contract-for-service” health care system.
Although the changes in health care will occur over time, it is not too early to start building your practice for the future. It is apparent that, regardless of the outcome of the November election, the overall pressures in health care will drive change, requiring more for less.
Remember that physicians are in limited supply relative to current and future demand. With careful planning and leadership, a practice cannot only survive the upcoming changes in the system but can maintain profitability. Chaos and change, while uncomfortable, are rich with opportunity for the creative and well organized.
