Five years after the passage of the Patient Protection and Affordable Care Act, it is clear that the Act has had a major impact on Idaho’s businesses, including Idaho’s health care and health insurance industries.
For example, the Act forced some businesses to provide health insurance coverage to their employees. Similarly, the Act requires that health insurance policies meet certain minimum coverage standards. A primary objective of the Act was to reduce the cost of health care and health insurance. Idaho’s business community certainly has a significant stake in the effort to contain the cost of health care and health insurance.
A January report by the Centers for Medicare & Medicaid Services, CMS, provided a summary of CMS’s current view of the implementation of the Act. While many in Idaho, and elsewhere, still adamantly oppose the Act, CMS points to parts of the Act which are reducing the cost of health care. The CMS overview summarizes the Act as offering “many tools to improve the way providers are paid to reward quality and value instead of quantity, to strengthen care delivery by better integrating and coordinating care for patients, and to make information more readily available to consumers and providers.”
An important component of the Act is the improvement in the quality of health care. The Act contemplates a transition from the traditional fee-for-service model (where health care providers are paid based on how many procedures they perform) to a quality-based model where providers will be incentivized to provide good care and to better coordinate the patient’s care among providers.
The early stages of implementing these changes include Medicare’s shift to basing payments on the performance of important quality measures. For example, a hospital will see a reduction in its overall Medicare payments if the percentages of patients who receive an antibiotic before surgery do not meet certain thresholds. In addition, the Medicare payments will be reduced if the hospital’s readmission rate (a patient’s return to the hospital within 30 days of discharge) is unacceptably high. Finally, hospital Medicare reimbursement will decrease if the hospital’s rate of hospital-acquired infections does not meet certain threshold levels.
Health insurers are also moving in the direction of basing reimbursement on similar quality indicators. Under quality-based provider contracts, the hospital or physician has a financial incentive to improve the quality and better coordination of the patient’s care ‒ both hopefully reducing the cost of that care. In its January issue, Modern Healthcare magazine noted that a coalition of health systems, insurers and employers, including Trinity Health (one of the nation’s largest health systems) and Aetna (one of the nation’s largest health insurers), “vowed that 75 percent of their business would be tied to financial incentives by 2020.” In Idaho, health insurers are measuring quality indicators and sharing that information with patients. In the coming months and years, Idaho’s health insurers will certainly tie reimbursement to quality.
What does this mean for Idaho’s employers? If health care providers and health insurers align their incentives to drive quality and lower cost, Idaho’s businesses will certainly benefit. It remains to be seen how and when this will happen in Idaho, but hopefully the Act will continue to reduce health care spending while simultaneously improving the quality of patient care.
Mr. Mortell is a partner at Hawley Troxell and chairs the firm’s health law practice group. He is also a member of the firm’s governing board. He can be reached at firstname.lastname@example.org.