Making sense of Obamacare: A primary care physician's guide

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There are thousands of pages of regulatory guidance on a slew of government-led mandates facing physicians this year and next. From sweeping revisions of the Affordable Care Act (ACA), to broad mandates of the Health Insurance Portability and Accountability Act of 1996 (HIPAA) to International Classification of Diseases, 10th revision’s (ICD-10) colossal transition, Medical Economics is introducing this update to keep you informed about the many changes that will impact your practice.

The ACA represents vast changes in the way healthcare is financed in the United States. With a net cost estimated at $1.2 trillion between 2012 and 2021, with offsets due to cost cuts, savings, taxes, and other government-led initiatives, the overall theme is about improving quality and access to healthcare while lowering costs.

Opinions vary wildly on whether Obamacare will succeed, but there is little debate that ACA will forever change the delivery of healthcare in the United States. In 2013, 14 provisions were slated to go into effect including increased Medicaid payments to primary care physicians (PCPs), a push to improve preventive healthcare by providing new funding to state Medicaid programs that choose to cover preventive services for patients at little or no cost, Medicare bundled payment initiatives, open enrollment in the health insurance exchanges (Oct. 2013), and a Medicare tax increase. ACA will also provide bonus payments for PCPs in underserved areas and increase payments to rural healthcare providers.

Here are some of the key provisions that will impact every U.S. physician in 2014 and beyond.

Everyone must have insurance or face penalties

This provision mandates that U.S. citizens and legal residents have qualifying health coverage. For those people who opt out, there is a phased-in tax penalty. Some exceptions do apply. On January 30, the U.S. Department of Health and Human Services (HHS) released a proposed rule on minimum essential coverage. The Internal Revenue Service (IRS) will enforce this provision.

Implementation: January 1, 2014.

Health insurance exchanges

Creates state-based American Health Benefit Exchanges and Small Business Health Options Program (SHOP) Exchanges, administered by a governmental agency or non-profit organization. Individuals and small businesses with up to 100 employees can purchase qualified coverage. Subsequent to its passage, HHS finalized two rules detailing how states must set up the exchanges and standards related to risk adjustment, risk corridors, and reinsurance provisions. The federally-facilitated exchanges will be run by HHS in states that have not established an exchange or have elected to run a partnership exchange.

Implementation: January 1, 2014

Expanded Medicaid coverage

Expands Medicaid to people not eligible for Medicare under age 65 (children, pregnant women, parents, and adults without dependent children) with incomes up to 133% of the federal poverty line and provides enhanced federal matching payments for new eligibles. (See page 37.) States may opt out of the increased income levels.

Implementation: January 1, 2014

Presumptive eligibility for Medicaid

Allows hospitals participating in Medicaid to make presumptive eligibility determinations for all Medicaid-eligible populations.

Implementation: January 1, 2014.

Health insurance premium, cost-sharing subsidies

Provides tax credits and cost sharing subsidies to eligible individuals. Premium subsidies are available to families with incomes between 133% and 400% of the federal poverty level to purchase insurance through the exchanges, while cost-sharing subsidies are available to those with incomes up to 250% of the poverty level.

Implementation: January 1, 2014

Note: On May 23, 2012, the Internal Revenue Service (IRS) released final regulations related to the health insurance premium tax credits. Corrections to this regulation were published on July 17, 2012. Additionally, on January 30, 2013, the IRS released a final rule on the premium tax credit test for affordability of employer-sponsored insurance.

Guaranteed availability of insurance

Requires guarantee issue and renewability of health insurance regardless of health status and allows rating variation based only on age (limited to a 3 to 1 ratio), geographic area, family composition, and tobacco use (limited to 1.5 to 1 ratio) in the individual and the small group market and the exchanges.

Implementation: January 1, 2014

No annual limits on coverage

Prohibits annual limits on the dollar value of coverage.

Implementation: January 1, 2014

Essential health benefits

An essential health benefits package outlining a comprehensive set of services, limiting annual cost-sharing to Health Savings Accounts ($5,950/individual and $11,900/family). Creates four categories of plans that will be offered through the exchanges and in the individual and small group markets.

Implementation: January 1, 2014

Multi-state health plans

Requires the Office of Personnel Management to contract with insurers to offer at least two multi-state plans in each exchange. At least one plan must be offered by a non-profit entity and at least one plan must not provide coverage for abortions beyond those permitted by federal law.

Implementation: January 1, 2014

Temporary reinsurance program for health plans

A temporary reinsurance program will collect payments from health insurers in the individual and group markets to provide payments to plans in the individual market that cover high-risk individuals. On March 23, 2012, HHS issued a final rule implementing standards for states related to reinsurance and risk adjustment and for health insurance providers related to implementing reinsurance, risk corridors, and risk adjustment.

Implementation: January 1, 2014 through December 31, 2016

Basic health plan

Allows states to create a basic health plan for uninsured individuals with incomes between 133% and 200% of the federal poverty level.

Implementation: HHS delayed implementation of the Basic Health Plan program until 2015 due to the scope of coverage changes being implemented on January 1, 2014.

Employer requirements

Assesses a fee of $2,000 per full-time employee, excluding the first 30 employees, on employers with more than 50 employees that do not offer coverage and have at least one full-time employee who receives a premium tax credit. Last year, the Internal Revenue Service issued proposed regulations on the Employer Shared
Responsibility provisions.

Implementation: January 1, 2014

Medicare Advantage plan loss ratios

Requires Medicare Advantage plans to have medical loss ratios not lower than 85%.

Implementation: January 1, 2014

Wellness programs

Permits employers to offer employees rewards of up to 30%, potentially increasing to 50%, of the cost of coverage for participating in a wellness program and meeting certain health-related standards; establishes 10 state pilot programs to permit participating states to apply similar rewards for participating in wellness programs in the individual market.

Implementation: Changes to employer wellness plans effective January 1, 2014; 10-state pilot programs established by July 1, 2014

Quality of care

An ACA provision will tie physician payments to the quality of care they provide. Physicians will see their payments modified so that those who provide higher-value care will receive higher payments than those who provide lower-quality care.

Implementation: January 2015

Experts advise you to prepare your practice for increased call volume, understand how your state will operate its exchange, get ready for new administrative challenges related to insurance claims, become familiar with the new insurance plans,and  prepare to handle increases in copays. Also, practice owners should  evaluate purchasing options for employees.

(Source for 2014 provisions: Kaiser Family Foundation)