The ACA in 2015 Brings Challenges to Conform and Consolidate

In 2014, the implementation of the Affordable Care Act left businesses, medical practices, and the general public scrambling to learn the ins and outs of the new healthcare regulations. Next year, the ACA will hit its stride, with an estimated 10 million additional Americans expected to enroll.

The problem, says Matt Kinley, partner at Tredway Lumsdaine & Doyle LLP, is that many medical practices are still scrambling to catch up from the 2014 launch.

“For sure,” Kinley says. “And maybe the biggest 2 or 3 issues are the narrow network, consolidation, and dealing with the models of care that the ACA promotes.”

In other words, the ACA in 2015 could present even more headaches for physicians and medical practices.

Narrow networks

Kinley explains that as part of the ACA launch in 2014, qualified health plans agreed to sell insurance to patients, but also to provide networks from which patients could select primary care providers or specialists. These networks, however, are called skinny or narrow networks in that they’re comprised of fewer physicians seeing more patients and getting paid less per patient.

“The problem it’s causing is that some physicians who want to be part of [a network] can’t be,” Kinley says. “They’re excluding the more expensive providers, and some of the specialists are getting excluded. So if you’re a primary care physician, one of the problems is the difficulty finding a specialist.”

For example, under California contracts, physicians may only refer to in-plan providers. Failing to do so could result in a penalty.

“They’ve put the onus on the physician to make sure the provider they refer to is in the plan,” Kinley says.

And the penalty? Monetary?

“That’s unclear at this point,” Kinley says. “But the language in the contract suggests as much. It’s a very difficult problem for physicians.”

Models of care and consolidation

Kinley explains that one of the goals of these exchanges centers around models of care. Specifically, accountable care organizations and medical homes. The focus, he says, is on value-based medicine, which is placing increased pressure on practices to conform.

“An increase in technology, definitely an increased use of nurse practitioners and physician assistants,” he says. “That’s all on the horizon.”

As such, many smaller practices are consolidating. In California, the market Kinley is most familiar with, a growing trend is hospitals releasing physicians, particularly older ones, who are unable to transition to the new models of care.

“On the one hand [the exchanges are] making practices go through these hoops where they have to have nurse practitioners, computers, and have to have systems that handle value-based payments,” Kinley says. “And on the other hand, the smaller practices are not able to do that. So they’re either scrambling to try and keep up with everything, or they’re giving up and joining a hospital or a provider network that’s bigger.”

Payment models

Kinley says the practices that are going to be successful are those that are able to deal with the new payment models brought about by the ACA. To do that, they need to understand what it takes for them to deal with their patients. For example, with a diabetic patient, how much time does it take to deal with that patient, and how successful are you in keeping that patient out of the hospital?

“If you’re successful using nurse practitioners or some sort of technological tool to keep the patient healthy, then you’re going to do better under these value-based systems that penalize you for the more you see the patient, and if that patient ends up in the hospital,” he explains.

To help facilitate that, Kinley suggests physicians might want to bring in an actuary who can examine the practice’s patient population, and provide a projection of what it will cost to care for those patients.

A new world

Kinley advises physicians, especially those in small- to mid-size practices, to consider consolidation, or aligning with partners. He says the goal is to have enough critical mass and the capital to change the way they practice medicine.

“You want to be able to hire the nurse practitioners and physician assistants, and integrate the computer system you need to communicate better with your patients,” he says.

And if all that sounds like a strange, new type of risk sharing, Kinley agrees that’s a fair analogy.

“You want to find a group of people who are interested in working to make sure that they transform their practice,” he says. “If you can find those people, that’s going to be the best way to transform in this environment. Because if you don’t transform in this environment you’re not going to make it.”