In 2014 the Affordable Care Act will create the largest insurance coverage expansion since the 1960s. The influx in patients with coverage will have a drastic change on how practices receive payments.
In 2014 the Affordable Care Act will create the largest insurance coverage expansion since the 1960s. The influx in patients with coverage will have a drastic change on how practices receive payments. There are three ways the ACA will affect your income: by having more patients with coverage, higher out-of-pocket payments, and physicians heading for larger entities.
1. More Patients With Coverage
Millions of newly insured Americans will be looking for a primary care physician, and eventually specialists as well. Enrollees in the new health insurance exchange program will be mostly low-income citizens who will get subsidies to buy coverage and to pay for extra out of pocket charges.
The other group of newly covered Americans will be part of the ACA’s expansion of Medicaid coverage. This will be crucial for low-income and childless adults, who currently have little or no coverage.
Many physicians speculate that coverage through the exchanges and the Medicaid expansion will be a boon for family physicians, who see an average of eight patients a week on a discounted or free basis. If everything pans out according to plan, the new coverage will mean that family physicians are receiving more payments for their services.
2. Higher Out-of-Pocket Payments
The ACA will create higher out-of-pocket charges, which is forcing practices to alter their payment policies for patients.
In the benchmark “silver” plan on the California exchange, for example, an enrollee with a $45,000 annual income would have a $2,500 deductible and copays of $45 to $65 for an office visit.
High out-of-pocket payments will have the biggest impact on specialists with expensive services, such as neurosurgeons, but they can also be a problem for primary care practices because they can add up quickly with high volumes of patients.
To make sure that the out-of-pocket charge is collected for lower-income patients, the practice has to collect these charges up front, prior to providing care. Another option that some practices are implementing, is to ask patients to provide their credit card number and give permission to draw payments from it.
3. Physicians Heading for Larger Entities
Even before the ACA, hospitals were beginning to buy up individual practices. Solo practices need to align with someone bigger because of falling reimbursements, increasing regulations and the cost of installing new tools like EHR systems.
In the 1990s, hospitals went on a spree of buying up smaller practices, but it imploded because they couldn’t manage outpatient care and lost a lot of money. Laid off by the hospitals, these physicians quickly returned to a private practice. This time around, however, physicians at private practices will have a harder time staying afloat. Reimbursements are lower than they were in the 90s, it’s harder to get bank loans, and loans interest rates are higher as well.
Small practices have two options: share resources with other local, independent practices to lower costs or dissolve into larger entities to protect themselves against low payment reimbursement rates.
Set Yourself Up For The Future You Deserve
Have you done anything to prepare for the changes? Do you feel comfortable with your practice’s payment system? Residents looking for their first job need to be aware of these issues and select a practice that they will be stable in for many years to come.
(physician payments / shutterstock)
