What are the major changes to medical insurance? How does the ACA affect Medicare?
Numerous other factors that are placing stress on health-care providers began prior to the ACA and remain an integral portion of reform. These include the following:
- Value-based purchasing (VBP): VBP has its roots back in 2006 when Pay for Performance began. Today, as a cornerstone of health-care reform, VBP has evolved from simply reporting standards of care to providers' payments hinging upon quality. This involves a greater emphasis on primary and preventative care, greater attention to standardization of care, and greater patient participation in high-value health-care decisions.
- Changes in physician compensation models: In reaction to the emphasis on value and quality, institutions will be required to invest significantly in clinical decision support systems and realign their physician compensation to create incentives based on the value of care. We have already seen signs of this. For example, a 2012 New York Times article reported that, for the first time ever, NYC public hospitals will begin to link physician compensation to patient outcomes. Starting in 2015, Medicare will tie some physician payment to quality outcomes; however, most or all Medicare physician payments will be tied to quality outcomes in 2017.
- Mergers, acquisitions, and partners: Hospitals, physicians, and payers are all looking at the change in landscape, and questions of economies of scale emerge. Some providers need more advanced infrastructure to monitor and report quality initiatives while others have identified that making competitors partners or bringing complimentary services in house make good business sense in the current and future environment. Smaller providers are especially looking to become a part of systems with deeper pockets, and the independent physician practice will be virtually nonexistent in the future models. Ultimately, integration will be the key among significant players to provide superior care and create the operational efficiencies needed for organizations to continue moving forward.
- Commercial payers: As demonstrated in years past, commercial payers will adopt Medicare rules, especially when savings in payments or increases in quality can be realized. It is estimated that 5% of commercial payers have quality measures tied to payment today. In a survey conducted by Healthcare Financial Management Association, 80% of the respondents expect the commercial payers' payments to include at least some value-based payment mechanism within three to five years.
As the landscape changes, some of the key provisions that affect beneficiaries are as follows:
- Higher income tax: There will be a 0.9% tax to high-income workers who make more than $200,000 for single filers and $250,000 for joint filers. The ACA also includes a 3.8% tax on unearned income for higher-income taxpayers.
- Medicare beneficiaries will ultimately pay more for part B premiums: The ACA freezes the part B income thresholds at 2010 levels. These thresholds determine which beneficiaries will pay higher Medicare medical insurance (part B) premiums through 2019. The new provisions will increase the number and share of beneficiaries who pay the higher premium over time, while the percentage of beneficiaries who pay the higher premiums will increase from 5% in 2011 to 14% in 2019, according to the Kaiser Family Foundation.
- Mergers, acquisitions, and partners: As hospitals, physicians, and payers respond to changes and form collective efforts, objections begin to surface in fear of monopolies. According to the New York Times profiled instances in which a consolidation created higher prices or resulted in less autonomy for physicians. A Nov. 2012 report by catalyst for payment reform argued that increased provider consolidations would create monopolies, driving cost increases and higher unit prices across the board. The Federal Trade Commission is on alert, however, and can challenge and block health system mergers that it believes would stifle competition. In the 2012 fiscal year, the FTC blocked 17 proposed health-care merger, acquisitions, or partnerships.