Current events were top-of-mind last Friday, November 15, 2013, as Akerman LLP's Healthcare Practice Group and Wells Fargo invited clients and industry professionals to engage in a thoughtful discussion on healthcare reform and the future of the American healthcare system.
The Healthcare Briefing featured a distinguished panel of executives and legal advisors that included Gordon Bailey, Assistant General Counsel, Florida Blue; Jeffrey S. Bromme, Senior Vice President and Chief Legal Officer, Adventist Health System; Amy Mullen Ellison, Senior Vice President for Employee Benefit Consulting, Wells Fargo; and Kirk Davis, Chair of Akerman's Healthcare Practice Group.
The following summarizes key insights and themes from the discussion.
A. Health Reform: You Can't Unring a Bell
Whether you praise or despise the Affordable Care Act ("ACA"), burying your head in the sand is not an option. The ACA is dramatically changing the landscape of the healthcare coverage, delivery and reimbursement marketplace, and all market participants – providers, payors, employers and consumers alike – must plan for this brave new world. To that end, players in all aspects of the healthcare system have been adapting. Providers have been experimenting with innovative care delivery models to improve outcomes and reduce cost; payors have revised their insurance plan options to conform to the ACA; employers have been weighing their options in the face of the new employer mandate to provide health insurance; and consumers must maintain or sign up for new coverage. Those players who fail to adapt may see their reimbursements cut, lose market share, or be subject to employer or individual penalties. Whether or not the ACA survives in its present form is really not the issue; change has begun, and those ignoring it will be left behind.
B. Significant Changes
Providers: In response to the tectonic shift away from fee-for-service and towards accountable care, providers and payors are beginning to employ new (or previously discarded) business models. For example, many hospitals are vertically integrating by acquiring physician practices and ancillary healthcare providers; providers increasingly are accepting risk models such as capitation and incentive payments that focus on patient outcomes instead of volume of care; and similarly, some groups of providers have joined forces to create accountable care organizations. Providers, especially hospitals, are also navigating new incentives to improve patient outcomes while facing increasing pressure for price transparency. With a continuing shortage of physicians, the industry is using greater numbers of physician extenders such as nurse practitioners.
Insurers: Insurance companies are revisiting the employed provider model and are beginning to compete with hospitals for local practitioner pools. Insurers are also facing administrative challenges, such as pricing plans that cover pre-existing conditions and cover the minimum essential benefits required by the ACA, with very little actuarial experience to develop the prices. They have created new plans to sell on the state and federal insurance exchanges, and they are increasingly focusing on wellness and other preventative care programs. Insurers are also anticipating potential issues, such as the new requirement to continue coverage for 90 days even if a member stops paying his premium, leading to fears that some people could "game" the system. Health insurers and large hospital systems are also trying to work together in a more collaborative approach, again using risk-share features, as opposed to the more traditional, adversarial relationships.
Employers: Employers, another key player in the healthcare industry, are also making changes. Whether large or small, employers are considering the number of full- and part-time employees and balancing the costs and benefits of providing health insurance for those workers. Some are reducing the richness of their current benefits in order to afford to cover more employees. Others are declining to extend coverage to spouses who can obtain coverage from their own employers. Still other employers are preparing to shop on the forthcoming Small Employer Health Options ("SHOP") exchange for what they hope will be better and more affordable plans.
The Consumer: A small number of individuals have managed to learn whether they qualify for subsidies and sign up for new health coverage using the federal Health Insurance Marketplace despite the technical problems with healthcare.gov. A larger, but still modest group, has enrolled using state-run exchanges or signed up for expanded state Medicaid programs, which were made optional by the U.S. Supreme Court's 2012 ruling upholding the ACA. Other consumers are weighing their options after receiving cancellation notices from their insurers and, following President Obama's recent announcement that insurers may renew non-compliant plans into 2014, determining whether to stay with their current plan or look for a better deal on their state or federal exchange.
C. The Road Ahead
Despite the daily news coverage of the ACA's insurance exchange rollout, many questions remain unanswered. For instance, will enough healthy people obtain coverage to defray insurers' cost of covering pre-existing conditions? Will more states choose to expand their Medicaid programs? What effect will the employer mandate have on small businesses? What effect will the ACA have on the economy as a whole? Will health outcomes improve? The answers to these and many other questions are being formed in real time as all key players in the complex American healthcare system move, full steam ahead, toward 2014.