By PEYTON HOWELL, MHA, SVP, AmerisourceBergen Corp., & President, Global Sourcing and Manufacturer Relationships
The 2012 election was filled with tight races, close victories and upsets. Now that the votes are in, and the Obama Administration begins a second term in office, questions remain about the continued implementation of the Patient Protection and Affordable Care Act (ACA) and its impact on patient access. At the most basic level, the reelection of President Obama means the ACA will move forward, which does provide some clarity on key patient access issues, such as the expansion of insurance coverage to benefit the uninsured in 2014.
With the election behind us, we at AmerisourceBergen Consulting Services now expect to see a flurry of regulations released related to healthcare reform — many of which were slowed prior to the election, as insurance companies, states, hospitals and other providers were waiting for more details before moving forward.
The following article outlines the key actions of a second Obama Administration and its impact on access to healthcare, payment reform, quality initiatives and industry; the solidification of trends occurring in the public and private sectors — some of which pre-dated the ACA, and some of which the ACA spurred; and steps manufacturers will need to take to succeed in the evolving healthcare marketplace.
Key Actions of a Second Obama Administration
We expect a number of potential controversial regulations to be released, as we’ve been waiting for clarification on what benefits an insurance policy needs to cover. In addition, we have many specific questions related to employers and how the penalties might be leveraged depending on the definition of part-time vs. full-time employees — and other aspects of the individual mandate.
Without further payment reforms and provider incentives, patients will likely experience reduced access to physicians and/or longer wait times due to a few factors. While we expect to see an increase in the number of the insured Americans through the individual mandate and Medicaid expansion, and the increased availability of insurance plans via state exchanges, there won’t be an increase in the number of physicians accommodating the increased demand for services.
In fact, we expect to see more physicians retiring sooner than anticipated and fewer admissions to expensive medical schools, as a result of the continuation of decreasing physician payment rates.
Because terms around the expansion of Medicaid remain unclear, we may see the administration offer more flexibility to the states, particularly in terms of encouraging participation and expanding Medicaid as a way to extend access to the uninsured. This will be a key issue to watch because not only will it vary by state, but it will also grow fairly significantly in the coming year, spurring important changes to reimbursement. It could potentially have a negative impact to the pharmaceutical, biotechnology and medical device industries from an economics perspective, given that Medicaid expansion will result in the likely implementation of additional cost containment affecting drug payments.
From a payment reform perspective, it does look like more states are moving toward drug reimbursement based on average acquisition cost (AAC) or other similar methodologies.
State Insurance Exchange Implementation
Following the election, the Department of Health and Human Services (HHS) announced that states would have additional time to submit plans for health insurance exchanges under the ACA. States still must meet the mid-November deadline to declare whether they plan to run their own exchange, but they have until mid-December to submit the detailed applications required by federal officials. States that will be running exchanges must have them fully certified and operational by January 1, 2014.
There are about 30 states that are unclear in terms of how they will move forward on the state insurance exchange. Many were waiting for the election results to decide whether or not they’d move forward, while others have been working behind the scenes and are ready to go. Those that are behind also have the option of going with the federal program.
At this point in time, it’s unclear whether or not we’ll see the independent payment advisory board (IPAB) take a more aggressive stance in term of coverage. In the current model, the IPAB can make coverage decisions based on the comparisons of different treatments, drugs, etc. using tools such as comparative effectiveness research (CER). This is an area of growing bipartisan concern, so it’s quite possible we will see the authority of this piece of healthcare reform be scaled back over time.
The sustainable growth rate (SGR) fix is another area to watch, as it’s a looming threat to Medicare reimbursement for physicians. This is the one area where the short-term impact was the same regardless of the outcome of the election. Both parties were very committed to addressing this issue in the short-term, as there is widespread recognition that providers cannot take sharp cuts in reimbursement and provide the same level of patient access to care.
Overall, Medicare reimbursement to physicians has not kept pace with inflation for more than a decade, and the issue needs to be addressed. The Fiscal Commission’s solution to the SGR fix is to freeze physician payment rates in 2013, decrease them by one percent in 2014, and then subject rates to an SGR that could be reset in 2015, using the 2014 spending level as the base.
There are other groups, including the American Medical Association (AMA), that have talked about doing away with this formula entirely and transitioning to a new process. Recommendations for this include:
- Doing away with a “one-size-fits-all” approach.
- Setting a five-year transition period.
- Enacting models such as capitation or “case management” fees for coordinating care.
- Providing incentives for meeting quality benchmarks.
- Developing medical homes and related models.
- Drafting new legislation allowing patients and providers to contract directly with Medicare.
Confirmation of Marilyn Tavenner
There’s been widespread speculation as to whether or not Marilyn Tavenner will be confirmed as the permanent leader of the Centers for Medicare and Medicaid Services (CMS). She’s been serving as acting administrator since Dr. Donald Berwick resigned in December 2011. Because officials at CMS are taking a leading role in the implementation of the ACA, the Medicare federal health insurance program for the elderly, and the joint federal-state Medicaid for low-income Americans, the appointment of a permanent lead to the agency will be an issue to watch.
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