The Affordable Care Act (ACA) was enacted to ensure that most people would have access to affordable health care insurance and to decrease the high cost of health care in our country. I have previously written about the Independent Payment Advisory Board (IPAB) and the role they will play in decreasing costs, but it looks like Health Care Insurers are already acting to cut payments without even waiting for guidance from the IPAB.
Insurance companies are not in business to lose money. When they are paying out more for health care than they are bringing in in premiums and governmental subsidies, they will raise premiums, increase deductibles, ask for more subsidies, or pay less for the care rendered. As a surgeon, it is the decrease in my payment that is of most concern.
The "fee for service" model, recognized as a key driver for increasing health care costs, is being challenged. The Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) establishes new ways for paying physicians who are taking care of Medicare patients. Other third party payers will follow the MACRA model.
MACRA's value based programs have two different models. In the Merit Based Incentive Payments System, payment will be based on quality, resource use, clinical practice improvement and meaningful use of electronic health record technology. The terms are vague and have not yet been clearly defined but increased paperwork and data collection and analysis look to be labor intensive. Either the physicians will need to do this work themselves or hire people and train them to enter and analyze the data for them. If the different electronic health records do not communicate with each other, the data analysis will be difficult, if not impossible.
The second model will pay more for providers who participate in Alternative Payment Models such as Accountable Care Organizations (ACO), Patient Centered Medical Homes, and Bundle Payment Models. Details of payment with this model are still being worked out.
Under MACRA, physician's payments will increasingly rely on outcomes of their care. Value will need to be defined and measures of good care will need to be selected so that performance can be fairly judged. Measures, once selected, will be used to determine Medicare payments. Third party payers will likely follow the MACRA model. Historically, performance measures have not been shown to have much to do with quality so I am not optimistic that these proposed models will be workable.
In the near future, it will be pay for performance, MACRA, and, eventually, capitation with a global fee for each patient. The health care providers who survive will be the ones who provide the least costly care.
Highmark, a Blue Cross and Blue Shield provider that has programs in Pennsylvania, Delaware, and West Virginia has recently announced that they will be cutting payments to their participating physicians because of mounting losses from the plans they have provided through the ACA exchanges in those states. Highmark has found that they are paying out more in claims than they are collecting in premiums.
Highmark reports they lost $221 million in 2014 and claimed to lose another $500 million in 2015 because of the mismatch in claims and premiums. In the original ACA plan, recognizing that health insurers may be facing some significant losses until the system comes into balance, the ACA originally had federal subsidies which were meant to offset losses for the first three years of the Act. However, the Congress, which is now under republican control, has blocked the administrations access to these funds for the time being. As a result, companies like Highmark are only getting 13% of the subsidy money they were counting on.
Some of these losses will be handled by pay cuts to the physicians who are Highmark providers. Of course, Highmark could spread some of the losses to the participating hospitals but they have chosen not to do this. Apparently, cutting reimbursements to hospitals would require hospital specific negotiations whereas the doctor contracts are more flexible and "adjustments" are already built in to the present contract structure.
Highmark could have taken the losses and remained viable by dipping into their reserve funds and they have done this in the past, but they have now decided that subsidizing money-losing exchange plans is no longer a reasonable option.
Highmark is not the only insurer that is losing money under the ACA. The United Health Group has recently reported a $720 million loss for 2015. If they don't see a financial turnaround soon, it is predictable that they will pull out of the exchanges. Other insurers such as Aetna and Anthem are also losing money on the exchanges.
The insurers are facing increasing losses because the patients opting into insurance purchases are a riskier pool than the insurers had originally anticipated. Highmark has shown that the congestive heart failure rates for those among the ACA purchasers was 43% higher than for members of their regular commercial plans. Chemotherapy claims per ACA users has been found to be 49% higher than the regular commercial users. According to Robert Lowes writing in the March 3, 2016 edition of Medscape Medical News, these patients have high cost for care and the premiums paid by these patients (due to community ratings) do not cover the costs.
To remain in business, the insurers will need to increase their premiums and decrease their payments on claims. Decreased payments can be done by increasing deductibles on the plans as well as paying less for each claim made. It is hoped that more healthy people will opt into buying health insurance since the penalty (tax?) for not having health insurance is scheduled to rise. However, if the penalty is still significantly less than the premiums, it is unlikely that a rational healthy person will participate in the exchanges. This is even more likely due to "guaranteed issue" which allows a person to buy insurance at any time; this means he can wait until he is sick to buy the needed insurance.
Another strategy being used by the insurers is to deny payment for those drugs or procedures that do not meet the insurance company guidelines. This denial usually results in the health care provider appealing the decision which can be labor intensive and time consuming. Providers are justifiably aggravated as it seems like gatekeepers for the insurance companies are making clinical decisions on patients they have never seen. Also, guidelines have never been deemed to be the "standard of care" as each patient has their own unique characteristics which the provider needs to understand in order to make a reasonable medical judgment.
The "pay for performance model", MACRA, or even capitation will necessarily increase the time spent by the clinician in documenting care and coding properly. If they don't document and code properly, they will not be paid. The time spent with each patient must decrease. These administrative duties are not why we physicians went into medicine in the first place.
If the payments to physicians continue to decrease, there will come a time when overhead costs will exceed remuneration. Providers will either refuse to see patients with certain insurance or they will retire. Either of these two options can put the Affordable Care Act in jeopardy as providers are a critical resource in the health care model.
As to the future of medicine, I am not so optimistic. The goals used to be to improve and prolong life. But now the costs for medical care have become a factor in the equation. Ethicists are now debating the costs of care related to the perceived benefits. The "right to die", "duty to die", and "assisted suicide" are, again, in the press. I hope that we physicians can be strong enough and principled enough to continue to do what we believe is right for our patients and fight to keep others out of our business.
Can the government force the physicians to participate in the ACA? Can the government prevent the physicians from retiring? These questions will need to be litigated and will probably have to go to the Supreme Court for a definitive decision. This process will take time.
Darryl Weiman's website is www.medicalmalpracticeandthelaw.com