The Affordable Care Act (“ACA”) may have become the law of the land on March 23, 2010, but it became the reality of the marketplace on November 6, 2012.  Now, the health insurance reform package known as Obamacare will continue on course toward nearly full implementation in 2014.

We often refer to the “two halves” of the ACA.  The front half represents government as regulator, imposing changes on the private health insurance market with the goal of making coverage more affordable, available, and adequate.  By contrast, the back half represents government as market participant, looking to drive payment and delivery system reform in response to changes in how the Medicare and Medicaid program pays providers.

Today, our healthcare system is designed to maximize the delivery of healthcare services, as more services equal more payment.  Tomorrow, providers will be rewarded for maintaining the health of a defined population.  By changing the incentives, the government (and private payors, as well) expects providers to reinvent the system to improve efficiencies and the quality of care.

Providers, therefore, must pay careful attention to changes in the Medicare program as they are announced and identify and implement strategies in response to them.  As methods of payment change, your methods of business must do the same.  Otherwise, your financial future will be compromised.

Last week, the Centers for Medicare & Medicaid Services ("CMS") published its annual Medicare Physician Fee Schedule (“MPFS”) final rule.  This 1,362-page regulation (along with its 10 appendices) includes a few elements that fundamentally shift CMS’ historic payment policy philosophy, the impact of which we will see for years to come.

Here are our “Top Ten” critical provisions of the 2013 MPFS, all of which require careful study and near-immediate response:

(1)    New payment for transitional care management
(2)    Calculation of physician value-based payment modifier
(3)    Development and distribution of Physician Feedback Reports
(4)    Changes to Physician Quality Reporting System and Physician Compare website
(5)    Reduced payments to specialists due to misvalued code adjustments
(6)    Expansion of multiple procedure payment reduction
(7)    Additional payment for telehealth services
(8)    Foundation for new payment system for therapies
(9)    New preventive services coverage
(10)  Imposition of limits on coverage for durable medical equipment

Of course, the elephant in the room is the sustainable growth rate adjustment (“SGR”).  Absent Congressional action by January 1, 2013, the MPFS conversion factor will be reduced by 26.5%.  Some measure to forestall this one-quarter cut to Medicare rates likely will be part of whatever compromise is reached to avoid the looming “fiscal cliff” at the end of this year.  

As Congressional leaders and the President begin negotiating how to avoid the fiscal cliff, including the so-called “grand bargain” of tax increases and spending cuts, healthcare reimbursement will once again be on the chopping block.  Former Republican Senator Dr. Bill Frist recently commented, “I don’t think hospitals understand how deep these cuts are going to be in the grand bargain.”  He suggested the ultimate grand bargain solution would likely focus on a 2.5-to-1 ratio of spending cuts to tax increases.  That sort of philosophy, in the shadow of the looming fiscal cliff, brings into focus the very real possibility of SGR “type” draconian cuts in Medicare reimbursement.

Over the next two weeks, PYA will circulate additional Alerts to provide analysis of the impact of key provisions of the 2013 MPFS, as well as any “SGR fix” that comes into focus.  This information will also be available on PYA’s website.  The election (and speculation over the future of healthcare reform) is over; now the real work begins.  For more information, contact Butch Bullock, David McMillan or Martie Ross at (800) 270-9629.